New York v. Nat'l Highway Traffic Safety Admin.

Citation974 F.3d 87
Decision Date31 August 2020
Docket Number19-2508-ag (CON),August Term, 2019,Nos. 19-2395-ag (L),s. 19-2395-ag (L)
Parties State of NEW YORK, State of California, State of Connecticut, State of Delaware, District of Columbia, State of Illinois, State of Maryland, Commonwealth of Massachusetts, State of New Jersey, State of Oregon, State of Rhode Island, State of Vermont, State of Washington, State of Maine, Natural Resources Defense Council, Inc., Sierra Club, Petitioners, v. NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION, James C. Owens, in his capacity as Acting Administrator of the National Highway Traffic Safety Administration, Elaine Chao, in her capacity as Secretary of the United States Department of Transportation, Respondents, Alliance for Automotive Innovation, Intervenor.
CourtU.S. Court of Appeals — Second Circuit

Steven C. Wu (Attorney General Letitia James, Solicitor General Barbara D. Underwood, Yueh-Ru Chu, on the brief), New York, NY, for Petitioner State of New York.

Attorney General Xavier Becerra, David Zaft, David A. Zonana, Laura J. Zuckerman, Los Angeles, CA, for Petitioner State of California.

Attorney General William Tong, Matthew I. Levine, Hartford, CT, for Petitioner State of Connecticut.

Attorney General Karl A. Racine, Jacqueline R. Bechara, Washington, DC, for Petitioner District of Columbia.

Attorney General Kathleen Jennings, Kayli H. Spialter, Wilmington, DE, for Petitioner State of Delaware.

Attorney General Kwame Raoul, Bridget DiBattista, Matthew J. Dunn, Jason E. James, Daniel I. Rottenberg, Chicago, IL, for Petitioner State of Illinois.

Attorney General Aaron M. Frey, Laura Jensen, Augusta, ME, for Petitioner State of Maine.

Attorney General Brian E. Frosh, Joshua M. Segal, Roberta R. James, Baltimore, MD, for Petitioner State of Maryland.

Attorney General Maura Healey, Christophe Courchesne, Carol Iancu, Matthew Ireland, David S. Frankel, Megan M. Herzog, Boston, MA, for Petitioner Commonwealth of Massachusetts.

Attorney General Gurbir S. Grewal, Jeremy M. Feigenbaum, Trenton, NJ, for Petitioner State of New Jersey.

Attorney General Ellen F. Rosenblum, Paul Garrahan, Salem, OR, for Petitioner State of Oregon.

Attorney General Thomas J. Donovan, Jr., Laura B. Murphy, Montpelier, VT, for Petitioner State of Vermont.

Attorney General Peter F. Neronha, Tricia K. Jedele, Providence, RI, for Petitioner State of Rhode Island.

Attorney General Robert W. Ferguson, Emily C. Nelson, Olympia, WA, for Petitioner State of Washington.

Ian Fein (Alexander L. Tom, Gabriel Daly, on the brief), Natural Resources Defense Council, San Francisco, CA, for Petitioner Natural Resources Defense Council.

Vera Pardee, Law Offices of Vera Pardee, Berkeley, CA, for Petitioner Sierra Club.

Dennis Fan (Steven G. Bradbury, Paul M. Geier, Jonathan C. Morrison, Kerry E. Kolodziej, Joseph H. Hunt, H. Thomas Byron III, on the brief), Washington, DC, for Respondents.

Ashley C. Parrish, Jacqueline Glassman, King & Spalding LLP, Washington, DC, Andrew J. Chinsky, King & Spalding LLP, Chicago IL, Erika Z. Jones, Daniel E. Jones, Mayer Brown LLP, Washington, DC, for Intervenor Alliance for Automotive Innovation.

Richard L. Revesz, Bethany A. Davis Noll, Max Sarinsky, Jason A. Schwartz, New York University School of Law, New York, NY, for The Institute for Policy Integrity at New York University School of Law as Amicus Curiae in support of Petitioners.

Joseph Mendelson III, Arlington, VA, for Tesla, Inc. as Amicus Curiae in support of Petitioners.

Before: Sullivan, Park, and Nardini, Circuit Judges.

William J. Nardini, Circuit Judge:

During the oil crisis of the 1970s, Congress created a system of fuel economy standards for automobiles to boost fuel efficiency and drive down American dependence on foreign energy supplies. To promote those Corporate Average Fuel Economy ("CAFE") standards, Congress exposed automobile manufacturers to penalties if their annual fleets fell short of the mark. Congress first set the penalty at $5 for every tenth of a mile per gallon ("mpg") below the standard, multiplied by the number of cars in a manufacturer's fleet, subject to certain offsets.

Inflation, however, can take the bite out of fines. In recognition of this basic economic phenomenon, Congress enacted laws in 1990, 1996, and 2015 to identify civil monetary penalties that were losing ground to inflation and to periodically update them to catch up with the Consumer Price Index. After the first act, the National Highway Traffic Safety Administration ("NHTSA") and the Office of Management and Budget ("OMB") identified the CAFE penalty as among those to be adjusted. Following the 1996 law, NHTSA engaged in rulemaking that increased the CAFE penalty rate from $5 to $5.50, and then, following the 2015 law, to $14.

NHTSA shifted gears, however, starting in 2017. First, it indefinitely delayed implementation of the increase to $14. Acting on a petition for review, this Court held that the delay violated NHTSA's statutory authority and that the increase was therefore in effect for the 2019 model year.1 In 2019, following our decision, NHTSA issued a final rule that rolled back the penalty to $5.50 on the theory that the inflation-adjustment laws do not apply to the CAFE penalty in the first place, and that even if they did, an increase would be unwarranted as a matter of economic policy.

Following this latest move by NHTSA, we are presented with petitions for review that require us to answer two questions of statutory construction: (1) whether the penalty for violating the CAFE standards is a "civil monetary penalty" as defined in these inflation-adjustment laws; and, if so, (2) whether these laws authorized NHTSA to reconsider, in 2019, the 2016 catch-up inflation adjustment based on its economic effects. We hold that the CAFE penalty is a "civil monetary penalty" and that NHTSA's reversal of the catch-up adjustment was untimely. Accordingly, we grant the petitions for review and vacate NHTSA's final rule reversing the CAFE penalty increase.

I. Background

In 1975, Congress enacted the Energy Policy and Conservation Act ("EPCA"), which, among other things, created the CAFE standards.2 Congress delegated authority to administer these standards to the Secretary of Transportation,3 who then, in turn, delegated that authority to NHTSA.4 For each model year, NHTSA establishes the CAFE standards as separate "fuel economy targets for different categories of vehicles, measured in miles per gallon."5 If a manufacturer fails to meet the model year target for a given category of vehicles, it is subject to a penalty assessed by multiplying the base penalty rate — which Congress initially pegged at $56 — by the amount the manufacturer falls short, as measured by each tenth of an mpg that the manufacturer's fleet-wide average mpg is below the standard, multiplied by the number of vehicles in that fleet.7 A manufacturer can reduce its shortfall in compliance by applying "credits," which may be earned when a fleet's average mpg exceeds the CAFE standard for a given model year or purchased from another manufacturer.8 EPCA authorizes NHTSA to make discretionary increases to the base penalty rate if it finds that certain factors have been met,9 but NHTSA has never acted under this authority.

In 1990, Congress passed the Federal Civil Penalties Inflation Adjustment Act ("Inflation Adjustment Act") to study whether inflation had diminished the efficacy of "civil monetary penalties," which Congress defined as penalties that are (a) either "for a specific monetary amount" or having "a maximum amount" and (b) "assessed or enforced by an agency pursuant to Federal law."10 This law effectively mandated a research exercise, requiring the executive branch to submit annual reports to Congress about existing civil monetary penalties.11 In July 1991, OMB submitted a compilation of civil monetary penalties reported by 41 federal agencies. In that list, NHTSA identified the CAFE penalty as fitting the statutory definition of civil monetary penalty.12

Congress amended the Inflation Adjustment Act in 1996 to mandate inflation-related adjustments to "civil monetary penalties," as defined by the Inflation Adjustment Act.13 It directed agencies to adjust each of their civil monetary penalties for inflation within six months and to continue doing so "at least once every four years thereafter."14 Importantly, however, the initial adjustment was capped at 10% of the penalty's base amount.15 In 1997, pursuant to this amendment, NHTSA increased the base rate for the CAFE penalty from $5 to $5.50 — the maximum permitted adjustment.16 In doing so, NHTSA concluded (as it had in 1991) that the CAFE penalty was a civil monetary penalty under the Inflation Adjustment Act. NHTSA did not make further increases to the base penalty rate under this authority, because the statute's rounding procedure effectively precluded them.17

In 2015, Congress further amended the Inflation Adjustment Act through the enactment of the Federal Civil Penalties Inflation Adjustment Act Improvements Act (the "Improvements Act"), which required new inflation adjustments and eliminated the provisions that had prevented certain increases.18 Like its predecessors, the Improvements Act added language referencing "civil monetary penalties," leaving the definition in the Inflation Adjustment Act unaltered.19

The Improvements Act's method for calculating inflation adjustments, however, differed from the previous method in two key ways. First, it replaced the requirement that agencies calculate inflation adjustments based on the year in which the penalty was last adjusted with a requirement that adjustments be calculated based on the year that the penalty "was established ... or last adjusted other than pursuant to the Inflation Adjustment Act ."20 Second, it changed the rounding rules. Instead of rounding increases to the nearest $10 figure, it now rounded to the nearest $1.21 The Improvements Act required that all federal agencies responsible...

To continue reading

Request your trial
4 cases
  • Picard v. Citibank, N.A. (In re Bernard L. Madoff Inv. Sec. LLC)
    • United States
    • U.S. Court of Appeals — Second Circuit
    • August 30, 2021
    ...the time Congress enacted the statute, and with a view to their place in the overall statutory scheme." New York v. Nat'l Highway Traffic Safety Admin. , 974 F.3d 87, 95 (2d Cir. 2020) (internal quotation marks and citations omitted).Dictionary definitions and case law predating the Bankrup......
  • New York v. Scalia
    • United States
    • U.S. District Court — Southern District of New York
    • September 8, 2020
    ...Some Reflections on the Reading of Statutes , 47 Colum. L. Rev. 527, 537 (1947)); see also New York v. Nat'l Highway Traffic Safety Admin. , 974 F.3d 87, 98-99 (2d Cir. 2020) (slip op.) (quoting Frankfurter, Some Reflections on the Reading of Statutes , 47 Colum. L. Rev. at 537). So the sou......
  • Pne Energy Supply LLC v. Eversource Energy
    • United States
    • U.S. Court of Appeals — First Circuit
    • September 9, 2020
  • Wilson v. United States
    • United States
    • U.S. Court of Appeals — Second Circuit
    • July 28, 2021
    ...the statute's meaning is clear based from its text, we need not consider any extrinsic sources. See New York v. Nat'l Highway Traffic Safety Admin. , 974 F.3d 87, 95 (2d Cir. 2020).II. The Applicability of Forms 3520 and 3520-AThe district court and Plaintiffs devote their energies to the t......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT