Public Citizen v. National Highway Traffic Safety Administration

Public Citizen, three other consumer and environmental organizations, four municipalities, and the State of California (the opposition group) (plaintiffs) opposed the rollback of the Corporate Average Fuel Economy (CAFE) standard for the model year 1986 as set by the Energy Policy and Conservation Act of 1975 (EPCA) by the National Highway Transportation Safety Administration (NHTSA) (defendant). The EPCA set the 1986 CAFE standard at 27.5 miles per gallon (mpg) for passenger automobiles. The NHTSA released a rule lowering the standard to 26.0 mpg, which it determined to be the maximum feasible average-fuel-economy level. NHTSA had found that General Motors and Ford were unable to meet the 27.5 mpg standard due to an unforeseen event (the rapid decline in gasoline prices that had caused a shift in consumer demand away from more fuel-efficient vehicles) but that they both had made significant progress toward reaching the 27.5 mpg level. General Motors and Ford would have had to take sales losses in the hundreds of thousands and job losses in the tens of thousands if forced to comply with the higher CAFE standard. Further, NHTSA found that the maximum increase in gasoline consumption due to the lower standard would only be 0.09 percent of the annual petroleum consumption in the United States. The NHTSA concluded that the higher CAFE standard would have caused severe industry-wide effects based on the economic analysis it received from other federal agencies. The opposition group brought an action challenging the NHTSA’s decision to lower the CAFE standard as arbitrary, capricious, and contrary to the EPCA. The district court rejected the opposition group’s challenge. The opposition group appealed.