Competitive Enterprise Institute v. National Highway Traffic Safety Administration

The National Highway Traffic Safety Administration (the agency) (defendant) had rulemaking authority over setting the corporate average fuel economy (CAFE) standard for motor vehicles. The agency set the CAFE standard for passenger cars with a model year of 1990 at 27.5 miles per gallon (mpg). In its notice of rulemaking, the agency queried automobile manufacturers about what actions they would take if the 1990 standard were set at 27.5 mpg or between 26.5 and 27.5 mpg. The agency specifically asked whether manufacturers would downsize or not upsize vehicles if the level set for the 1990 standard remained at 27.5 mpg. Not a single manufacturer asserted that it would make any change in the size or weight of its vehicles if the agency lowered the 1990 standard below 27.5 mpg. The agency considered many studies in reaching its decision, including a study by Robert Crandall and John Graham on the effect of CAFE standards on automobile safety. The study claimed that CAFE standards caused a reduction in the average weight of cars from model year 1989 and, as a result, a significant increase in the risk of death for occupants. However, the agency speculated without evidence that other factors, like changes in consumer preferences, could explain why the weights of cars decreased better than the imposition of fuel-efficiency standards. The Competitive Enterprise Institute and Consumer Alert (plaintiffs) petitioned for review of the agency’s rule setting the 1990 CAFE standard for passenger cars at 27.5 mpg, arguing that the rule was arbitrary and capricious for failing to properly consider the Crandall and Graham study.