CENTER FOR BIOLOGICAL DIVERSITY, Petitioner, v. NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION, Respondent. People of the State of California Ex Rel. Bill Lockyer, Attorney General; State of Connecticut; State of Maine; Commonwealth of Massachusetts; State of New Jersey; State of New Mexico; State of New York; State of Oregon; State of Rhode Island; State of Vermont; District of Columbia; City of New York, Petitioners, v. National Highway Traffic Safety Administration, an agency within the United States Department of Transportation, Respondents. State of Minnesota, Petitioner, v. National Highway Traffic Safety Administration, an agency within the United States Department of Transportation, Respondent. Sierra Club; Public Citizen, Inc., Petitioners, v. Department of Transportation, Respondent. Environmental Defense, Petitioner, v. Department of Transportation, Respondent. Natural Resources Defense Council, Inc., Petitioner, v. Department of Transportation, Respondent.
Nos. 06-71891, 06-72317, 06-72641, 06-72694, 06-73807, 06-73826
United States Court of Appeals, Ninth Circuit
Filed Nov. 15, 2007
508 F.3d 508
Argued and Submitted May 14, 2007.
Deborah A. Sivas, Holly D. Gordon, Stanford Law School Environmental Law Clinic; Kassia R. Siegel, Brendan R. Cummings, Center for Biological Diversity for Public Interest petitioner-appellants on National Environmental Policy Act Issues.
Edmund Brown, Jr., Thomas Greene, Theodora Berger, Ken Alex, Susan S. Fiering (argued), Office of the Attorney General of California; Richard Blumenthal, Kimberly Massicotte, Jose Suarez, Office of the Attorney General of Connecticut; G. Steven Rowe, Gerald D. Reid, Office of the Attorney General of Maine; Thomas F. Reilly, William L. Pardee, Matthew Brock, Office of the Attorney General of Massachusetts; Stuart Rabner, Howard Geduldig, Lisa J. Morelli, Office of the Attorney General of New Jersey; Patricia A. Madrid, Stephen R. Farris, Office of the Attorney General of New Mexico; Eliot Spitzer, Caitlin Halligan, Jared Snyder, Office of the Attorney General of New York; Hardy Myers, Philip Schradle, Richard M. Whitman, Office of the Attorney General of Oregon; Patrick C. Lynch, Tricia K. Jedele, Office of the Attorney General of Rhode Island; William H. Sorrell, Kevin O. Leske, Office of the Attorney General of Vermont; Eugene A. Adams, Todd S. Kim, Donna M. Murasky, Office of the Attorney General for the District of Columbia; Michael A. Cardozo, Susan M. Kath, Scott Pasternack, Tracy Triplett, Corporation Counsel for the City of New York; Mike Hatch, Ronald Gitek, Office of the Attorney General of Minnesota for petitioner-appellants in Consolidated Cases Nos. 06-72317 and 06-72641.
Before: B. FLETCHER, EUGENE E. SILER, JR.,* and HAWKINS, Circuit Judges.
BETTY B. FLETCHER, Circuit Judge:
Eleven states, the District of Columbia, the City of New York, and four public interest organizations petition for review of a rule issued by the National Highway Traffic Safety Administration (NHTSA) entitled “Average Fuel Economy Standards for Light Trucks, Model Years 2008-2011,” 71 Fed.Reg. 17,566 (Apr. 6, 2006) (“Final Rule“) (codified at 49 C.F.R. pt. 533). Pursuant to the Energy Policy and Conservation Act of 1975 (EPCA),
Petitioners challenge the Final Rule under the EPCA and the National Environmental Policy Act of 1969 (NEPA),
Second, Petitioners argue that NHTSA‘s Environmental Assessment is inadequate under NEPA because it fails to take a “hard look” at the greenhouse gas implications of its rulemaking and fails to analyze a reasonable range of alternatives or examine the rule‘s cumulative impact. Petitioners also argue that NEPA requires NHTSA to prepare an Environmental Impact Statement.
NHTSA argues that the Final Rule is not arbitrary and capricious or contrary to the EPCA, the Environmental Assessment‘s evaluation of the environmental consequences of its action is adequate, and an Environmental Impact Statement is not required.
We have jurisdiction under
I. FACTUAL AND PROCEDURAL BACKGROUND
A. CAFE Regulation Under the Energy Policy and Conservation Act
In the aftermath of the energy crisis created by the 1973 Mideast oil embargo, Congress enacted the Energy Policy and Conservation Act of 1975, Pub.L. No. 94-163, 89 Stat. 871, 901-16. See H.R.Rep. No. 94-340 at 1-3 (1975), as reprinted in 1975 U.S.C.C.A.N. 1762, 1763-65. Congress observed that “[t]he fundamental reality is that this nation has entered a new era in which energy resources previously abundant, will remain in short supply, retarding our economic growth and necessitating an alteration in our life‘s habits and expectations.” Id. at 1763. The goals of the EPCA are to “decrease dependence on foreign imports, enhance national security, achieve the efficient utilization of scarce resources, and guarantee the availability of domestic energy supplies at prices consumers can afford.” S.Rep. No. 94-516 (1975) (Conf.Rep.), as reprinted in 1975 U.S.C.C.A.N. 1956, 1957. These goals are more pressing today than they were thirty years ago: since 1975, American consumption of oil has risen from 16.3 million barrels per day to over 20 million barrels per day, and the percentage of U.S. oil that is imported has risen from 35.8 to 56 percent. NRDC Cmt. at 11;2 see also 71 Fed.Reg. at 17,644.
In furtherance of the goal of energy conservation, Title V of the EPCA establishes automobile fuel economy standards. An “average fuel economy standard” (often referred to as a CAFE standard) is “a
Under the EPCA‘s definitional scheme, vehicles not manufactured primarily for highway use and vehicles rated at 10,000 lbs. gross vehicle weight or more are excluded from fuel economy regulation altogether because they are not “automobiles.”6 An “automobile” is defined as:
a 4-wheeled vehicle that is propelled by fuel, or by alternative fuel, manufactured primarily for use on public streets, roads, and highways and rated at—
(A) not more than 6,000 pounds gross vehicle weight;7 or
(B) more than 6,000, but less than 10,000, pounds gross vehicle weight, if the Secretary decides by regulation that—
(i) an average fuel economy standard under this chapter for the vehicle is feasible; and
(ii) an average fuel economy standard under this chapter for the vehicle will result in significant energy conservation or the vehicle is substantially used for the same purposes as a vehicle rated at not more than 6,000 pounds gross vehicle weight.
The CAFE standards NHTSA sets for non-passenger automobiles or “light trucks,” as referred to by the agency in its regulations,8 are lower than the standards for passenger automobiles. Compare
an automobile that the Secretary decides by regulation is manufactured primarily for transporting not more than 10 individuals, but does not include an automobile capable of off-highway operation that the Secretary decides by regulation—
(A) has a significant feature (except 4-wheel drive) designed for off-highway operation; and
(B) is a 4-wheel drive automobile or is rated at more than 6,000 pounds gross vehicle weight.
The Final Rule sets CAFE standards for “light trucks,” defined by NHTSA to include many SUVs, vans, and pickup trucks, for MYs 2008-2011. See 71 Fed.Reg. at 17,568;
an automobile other than a passenger automobile which is either designed for off-highway operation, as described in paragraph (b) of this section,9 or
An automobile capable of off-highway operation is an automobile—
(1)(i) That has 4-wheel drive; or designed to perform at least one of the following functions: (1) Transport more than 10 persons; (2) Provide temporary living quarters; (3) Transport property on an open bed; (4) Provide greater cargo-carrying than passenger-carrying volume; or (5) Permit expanded use of the automobile for cargo-purposes or other non-passenger-carrying purposes through [removable or foldable, stowable seats to create a flat floor].
For MYs 1996 to 2004, Congress froze the light truck CAFE standard at 20.7 mpg. See 71 Fed.Reg. at 17,568. After the legislative restrictions were lifted, NHTSA set new light truck CAFE standards in April 2003: 21.0 mpg for MY 2005, 21.6 mpg for MY 2006, and 22.2 mpg for MY 2007. Light Truck Average Fuel Economy Standards Model Years 2005-2007, 68 Fed.Reg. 16,868, 16,871 (Apr. 7, 2003) (codified at 49 C.F.R. pt. 533).
In response to a request from Congress, the National Academy of Sciences (NAS) published in 2002 a report entitled “Effectiveness and Impact of Corporate Average Fuel Economy (CAFE) Standards.”10 The NAS committee made several findings and recommendations. It found that from 1970 to 1982, CAFE standards helped contribute to a 50 percent increase in fuel economy for new light trucks. Id. at 14. In the subsequent decades, however, light trucks became more popular since domestic manufacturers faced less competition in
The NAS committee found that the CAFE program has increased fuel economy, but that certain aspects of the program “have not functioned as intended,” including “[t]he distinction between a car for personal use and a truck for work use/cargo transport,” which “has been stretched well beyond the original purpose.” Id. at 3. The committee also found that technologies exist to “significantly reduce fuel consumption,” for cars and light trucks and that raising CAFE standards would reduce fuel consumption. Id. at 3-4. Significantly, the committee found that of the many reasons for improving fuel economy, “[t]he most important . . . is concern about the accumulation in the atmosphere of so-called greenhouse gases, principally carbon dioxide. Continued increases in carbon dioxide emissions are likely to further global warming.” Id. at 2. In addition, the committee found “externalities of about $0.30/gal of gasoline associated with the combined impacts of fuel consumption on greenhouse gas emissions and on world oil market conditions”11 that “are not necessarily taken into account when consumers purchase new vehicles.” Id. at 4.
B. National Environmental Policy Act
NEPA requires a federal agency “to the fullest extent possible,” to prepare “a detailed statement on . . . the environmental impact” of “major Federal actions significantly affecting the quality of the human environment.”
If there is a substantial question whether an action “may have a significant effect” on the environment, then the agen-
Whether an action may “significantly affect” the environment requires consideration of “context” and “intensity.” Id.
C. NHTSA‘s Proposed Rulemaking and Draft Environmental Assessment
On December 29, 2003, NHTSA published an advance notice of proposed rulemaking (ANPRM) that solicited comments on several proposed regulatory changes intended to increase fuel economy, including a proposal to modernize the light truck/car distinction and a proposal to increase the GVWR limit on vehicles subject to CAFE standards. 68 Fed.Reg. 74,908 (Dec. 29, 2003). NHTSA acknowledged that its regulations define passenger and non-passenger vehicles “by the type of use to which they were generally put in the mid-1970s,” id. at 74,909, and that “[t]he markets for, and designs of, cars and light trucks have changed substantially,” with “some light trucks . . . used primarily to transport passengers,” id. at 74,913. NHTSA noted that in its original NPRM promulgated in December 1976, it concluded that “Congress intended that passenger automobiles be defined as those used primarily for the transport of individuals and that all other vehicles would fall within the category of non-passenger automobiles.” Id. at 74,926. NHTSA did not present any specific proposals for reforming the CAFE program, but it presented two options for including vehicles under 10,000 lbs. GVWR in the program: (1) regulating medium-duty passenger vehicles (MDPVs),13 which are vehi-
On August 30, 2005, NHTSA issued proposed CAFE standards for light trucks MYs 2008-2011 of 22.5 mpg for MY 2008, 23.1 mpg for MY 2009, and 23.5 mpg for MY 2010.14 70 Fed.Reg. 51,414, 51,424 (Aug. 30, 2005). NHTSA determined that these were the “maximum feasible” standards using a marginal cost-benefit analysis. See id. For MY 2011 and beyond, NHTSA proposed to adopt a “Reformed CAFE” system, which would set different CAFE standards for vehicles based on size, measured by the vehicle‘s footprint (the product of multiplying wheelbase by track width). Id. at 51,414, 51,429-41. NHTSA proposed six footprint categories (a step function), id. at 51,430, and it proposed a transition period (MY 2008-2010) to Reformed CAFE, during which manufacturers could choose to comply with either Reformed or Unreformed CAFE. NHTSA also proposed not to change the criteria by which vehicles are classified as passenger automobiles or light trucks, id. at 51,422, and it proposed to regulate only MDPVs within the 8,500 to 10,000 lb. vehicle class as light trucks, id. at 51,455-56.
NHTSA issued a Draft Environmental Assessment in August 2005. The Draft EA integrated much of the text from the Final EA that accompanied NHTSA‘s light truck rulemaking for MYs 2005-2007 released in April 2003. See Draft Environmental Assessment, NHTSA Proposed Corporate Average Fuel Economy (CAFE) Standards 9 (Aug.2005) (Draft EA). The Draft EA analyzed three alternatives to the proposed rule. Alternative A (“No Action“) would extend the MY 2007 standard of 22.2 mpg through MY 2011. Alternative B would be Unreformed CAFE in MY 2008-2010 and Reformed CAFE in MY 2011. Alternative C would be Reformed CAFE set at equalized cost with Unreformed CAFE in MY 2008-2010 and Reformed CAFE in MY 2011. Id.
The Draft EA noted that “CO2 . . . has started to be viewed as an issue of concern for its global climate change potential.” Id. at 18. With regard to biological resources, the Draft EA stated, “emissions of criteria pollutants and greenhouse gases could result in ozone layer depletion and promote climate change that could affect species and ecosystems.” Id. at 19. The projected lifetime fuel savings for MY 2008-2011 light trucks under Alternatives B and C would “rang[e] from 1.3% to 1.7% of their fuel compared to the baseline, corresponding to 4.7-6.0 billion gallons.” Id. at 25. The estimated lifetime emissions of CO2 ranged from 1,341.4 million metric tons (mmt) under baseline to
NHTSA received over 45,000 comments on the NPRM and Draft EA from states, consumer and environmental organizations, automobile manufacturers and associations, members of Congress, and private individuals. See 71 Fed.Reg. at 17,577. Manufacturers argued that reliance on a cost-benefit analysis might not “adequately account for the capabilities of the industry.” Id. They also generally opposed subjecting vehicles greater than 8,500 lbs. GVWR to CAFE regulation, arguing that those vehicles are used in a different manner than lighter vehicles and that their regulation would not result in significant fuel savings. Id. at 17,577-78. The states and environmental and consumer organizations generally argued that:
- The need of the nation to conserve energy and national security require more stringent standards, and such standards are feasible and practicable. E.g., NRDC Cmt. at 4-5; Environmental Defense, Cmt. at 1-7;15 Public Citizen Cmt. at 1-2.16 For example, the Alliance to Save Energy—American Council for an Energy-Efficient Economy (ACEEE) argued that “[t]he 10 billion gallons of fuel that NHTSA claims will be saved through the new standards over the three-decade life of model year 2008-2011 vehicles amount to less than one month‘s supply of gasoline for U.S. light-duty vehicles. These savings are also insufficient to offset the expected growth in gasoline usage for even the four-year period covered by the rule.” ACEEE Cmt. at 1.17
- NHTSA‘s use of marginal cost-benefit analysis unlawfully overemphasizes cost at the expense of technological feasibility and energy conservation and is not “technology-forcing,” as EPCA intended. E.g., NRDC Cmt. at 14-16; Environmental Defense Cmt. at 4-5; Public Citizen Cmt. at 1-2.
- Even if NHTSA‘s cost-benefit analysis is permissible, the “maximum feasible” standard cannot be determined properly without taking environmental impacts into account, and the failure to monetize certain benefits such as greenhouse gas (GHG) emissions underestimates benefits of stricter standards. E.g., CBD Cmt. at 1-4;18 NRDC Cmt. at 8 (suggesting specific figures and sources for the value per ton of CO2 emissions avoided, from $8/ton to $26.50/ton); Environmental Defense Cmt. at 5-6; Environmental Defense Cmt. Re: Carbon Costs at 1-3 (citing new studies from the United Kingdom that value carbon at $96-174/ton carbon).19
- Reformed CAFE “rewards fuel economy laggards while penalizing industry leaders,” Sierra Club Cmt. at 4,20 and, like Unreformed CAFE, promotes the manufacture of larger, less fuel-efficient vehicles. E.g., App. G to NRDC Cmt. at 3-4;21 States Cmt. at 5;22 Environmental Defense Cmt. at 12-13.23
- NHTSA‘s analysis of the adverse safety effects of vehicle weight reduction is flawed and confounds size and weight. E.g., Sierra Club Cmt. at 8-10; App. C to Environmental Defense Cmt. at 1-4; Public Citizen Cmt. at 12-19; App. B to Public Citizen Cmt. at 1-16.
- Since the Reformed CAFE standard for a particular manufacturer depends on its fleet mix, NHTSA should include a “backstop” or guarantee that average fuel economy levels will not fall below the “maximum feasible” level. E.g., NRDC Cmt. at 24-25; ACEEE Cmt. at 5; see also App. E to NRDC Cmt. at 6-12 (analysis of gaming scenarios and upsizing trends); Environmental Defense Cmt. at 13-14 (same); App. G. to Environmental Defense Cmt. at 1-14 (same).
- The transition period (MY 2008-2010) to Reformed CAFE is unnecessary and undercuts fuel economy savings. E.g., NRDC Cmt. at 27-28; ACEEE Cmt. at 2; Environmental Defense Cmt. at 8-9; UCS Cmt. at 9.
- All Class 2b trucks between 8,500-10,000 lbs. GVWR should be regulated because fuel economy standards for them are feasible, would result in significant energy conservation, and they are used for substantially the same purposes as vehicles 6,000 lbs. or less. Environmental Defense Cmt. at 9-11; App. F to Environmental Defense Cmt. at 1-2; and Polk Study.24
- Higher fuel economy standards would help domestic automakers remain competitive in the long term and protect U.S. jobs. App. D to NRDC Cmt. at 22.25 The California Energy Resources Conservation and Development Commission commented that “[u]pgrading CAFE requirements could enhance jobs in the United States, especially in the automobile manufacturing sector . . . . Increasing lighttruck CAFE to 26.9 mpg in 2010 and 31 mpg in 2015 (with corresponding changes for passenger cars) would increase net jobs up to 346,000.” California Energy Commission Cmt. at 9-10.26
- NHTSA‘s draft EA is inadequate and fails to consider the proposed rule‘s impact on climate change. States Cmt. at 1-11; CBD Cmt. at 5-12.
See also 71 Fed.Reg. at 17,578-79 (summarizing comments).
Commenters also submitted to NHTSA numerous scientific reports and studies regarding the relationship between climate change and greenhouse gas emissions and the expected impacts on the environment.27 Emissions from light trucks make up about eight percent of annual U.S. greenhouse gas emissions. Final EA at 22 (citing EPA, EPA-430-R-05-003, Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2004 (Draft 2006)). The transportation sectors account for about 31 percent of human-generated CO2 emissions in the U.S. economy. NAS Report at 14. “Overall, U.S. light-duty vehicles [passenger cars and light trucks] produce about 5 percent of the entire world‘s greenhouse gases.” Id. at 20. The NAS committee concluded, “Since the United States produces about 25 percent of the world‘s greenhouse gases, fuel economy improvements could have a significant impact on the rate of CO2 accumulation in the atmosphere.” Id. at 14.
The Intergovernmental Panel on Climate Change (IPCC)‘s “Third Assessment Report,” published in 2001, presented the consensus view of hundreds of scientists on key issues relating to climate change. The IPCC concluded that “CO2 concentrations increasing over [the] 21st century[are] virtually certain to be mainly due to fossilfuel emissions,” and that “[s]tabilization of atmospheric CO2 concentrations at 450, 650, or 1,000 ppm would require global anthropogenic CO2 emissions to drop below year 1990 levels, within a few decades, about a century, or about 2 centuries, respectively, and continue to decrease steadily thereafter to a small fraction of current emissions.”28 Id. The average earth surface temperature has increased by about 0.6 degree Celsius since the late 19th century, see Technical Summary of IPCC Working Group I Report at 26; snow and ice cover have decreased about 10 percent since the late 1960s, id. at 30; and global average sea level has risen between 10 to 20 cm during the 20th century, id. at 31. The IPCC also developed a range of emissions scenarios as its basis for predicting the environmental effect of increased emissions. Id. at 62-63.29
More recent evidence shows that there have already been severe impacts in the Arctic due to warming, including sea ice decline. See Attachments J, L, & Q to CBD Cmt. Global warming has already affected plants, animals, and ecosystems around the world. See, e.g., Attachment M to CBD Cmt. at 15-16. Some scientists predict that “on the basis of mid-range climate-warming scenarios for 2050, that 15-37% of species in our sample of regions and taxa will be ‘committed to extinction.‘” Attachment O to CBD Cmt (Thomas, Extinction Risk from Climate Change, 427 Nature at 145). In addition, there will be serious consequences for human health, including the spread of infectious and respiratory diseases, if worldwide emissions continue on current trajectories. See, e.g., Attachment F to CBD Cmt. at 32-64. Sea level rise and increased ocean temperatures are also associated with increasing weather variability and heightened intensity of storms such as hurricanes. Id. at 21-24. Past projections have underestimated sea level rise. See id. at 20. Several studies also show that climate change may be non-linear, meaning that there are positive feedback mechanisms that may push global warming past a dangerous threshold (the “tipping point“). Id. at 26-27; see also Technical Summary of IPCC Working Group I Report at 46-53; Attachment F to CBD Cmt. at 26-27; IPCC Report at 14-16; States Cmt. 9.
D. The Final Rule: CAFE Standards for Light Trucks MYs 2008-2011
NHTSA issued the Final Rule on April 6, 2006. 71 Fed.Reg. at 17,566. NHTSA set the CAFE standards for MY 2008-2010 (Unreformed CAFE) at the same levels as proposed in the NPRM.30 Unreformed CAFE sets a fleet-wide average fuel economy standard “with particular regard to the ‘least capable manufacturer with a significant share of the market.‘” 71 Fed.Reg. at 17,580. NHTSA has reformed the structure of the CAFE program for light trucks, effective MY 2011 (Reformed CAFE). Under Reformed CAFE, fuel economy standards are based on a truck‘s footprint, with larger footprint trucks subject to a lower standard and smaller footprint trucks subject to higher standards.31 71 Fed.Reg. at 17,566. Instead of six footprint categories (a step function) as proposed in the NPRM, Reformed CAFE would be based on a continuous function, meaning a separate fuel economy target for each vehicle of a different footprint. See id. at 17,595-96. “A particular manufacturer‘s compliance obligation for a model year will be calculated as the harmonic average of the fuel economy targets for the manufacturer‘s vehicles, weighted by the distribution of manufacturer‘s production volumes among the footprint increments.” Id. at 17,566. A manufacturer‘s CAFE compliance obligation will vary with its fleet mix. A manufacturer that produces more large footprint light trucks will have a lower required CAFE standard than one that produces more small footprint light trucks.32
During MYs 2008-2010, manufacturers may choose to comply with Unreformed CAFE or Reformed CAFE. See id. at 17,593-94.
NHTSA used the manufacturers’ preexisting product plans as the baseline for its analyses of technical and economic feasibility under both Unreformed and Reformed CAFE. Id. at 17,579. NHTSA made adjustments to the product plans by applying additional technologies in a “cost-minimizing fashion,”33 id. at 17,582, and stopping at the point where marginal costs equaled marginal benefits, id. at 17,597. NHTSA considered the cost of new technologies and the benefits of fuel savings over the lifetime of the vehicle as the costs and benefits of higher fuel economy standards. Id. at 17,585-87, 17,622-23. NHTSA monetized some externalities such as emission of criteria pollutants during gasoline refining and distribution and crash and noise costs associated with driving. See Final Regulatory Impact Analysis, Corporate Average Fuel Economy and CAFE Reform for MY 2008-2011 Light Trucks at VIII-60, VIII-74-80 (March 2006) (FRIA). However, NHTSA did not monetize the benefit of reducing carbon dioxide emissions, which it recognized was the “the main greenhouse gas emitted as a result of refining, distribution, and use of transportation fuels.” FRIA at VIII-61 to 62.34 NHTSA acknowledged the estimates suggested in the scientific literature, see 71 Fed.Reg. at 17,638; FRIA at VIII-63, but concluded:
[T]he value of reducing emissions of CO2 and other greenhouse gases [is] too uncertain to support their explicit valuation and inclusion among the savings in environmental externalities from reducing gasoline production and use. There is extremely wide variation in published estimates of damage costs from greenhouse gas emissions, costs for controlling or avoiding their emissions, and costs of sequestering emissions that do occur, the three major sources for developing estimates of economic benefits from reducing emissions of greenhouse gases.
71 Fed.Reg. at 17,638; see also FRIA at VIII-64 to 65.
In its cost-benefit analysis, NHTSA also excluded weight reduction for vehicles between 4,000 and 5,000 lbs. curb weight as a potential measure that manufacturers could use to increase fuel economy. 71 Fed.Reg. at 17,627. NHTSA accepted the possibility of weight reduction for vehicles over 5,000 lbs. curb weight as a cost-effective technology35 that would not reduce overall safety. Id. NHTSA relied on a study by Dr. Charles Kahane36 for this 5,000 lb. figure:
[T]he net safety effect of removing 100 pounds from a light truck is zero for light trucks with a curb weight greater than 3,900 lbs. However, given the significant statistical uncertainty around that figure, we assumed a confidence bound of approximately 1,000 lbs. and used 5,000 lbs. as the threshold for considering weight reduction.
Id. (footnotes omitted). By “net safety effect,” NHTSA means that 3,900 lbs. is the breakeven point: “the point where the total effect of reducing all vehicles heavier than the breakeven weight by an equal amount is zero.” Id. at 17,628. In the FRIA, NHTSA explained that it chose the approximately 1,000 lb. confidence bound based on additional empirical work found in Kahane‘s study:
Kahane estimated a crossover weight37 of 5,085 lbs. if manufacturers changed both weight and footprint, and the interval estimated ranged from 4,224 lbs. to 6,121 lbs[.], i.e., an interval +/- 1000 lbs[.] around the point estimate. Although the crossover weight differs from the point of zero net impact, they would both tend to have similar sampling errors. We applied this interval to the 3,900 lbs. point of zero net impact (which is based on the assumption that footprint is held constant); therefore, the agency felt it would be prudent to limit weight reductions to those vehicles above 5,000 lbs. curb weight.
FRIA at V-15 (internal citation omitted).
NHTSA rejected the idea of a “backstop” under Reformed CAFE. 71 Fed.Reg. at 17,592; id. at 17,617. NHTSA stated that a backstop, or a required fuel economy level applicable to a manufacturer if its required level under Reformed CAFE fell below a certain minimum, “would essentially be the same as an Unreformed CAFE standard.” Id. at 17,592. NHTSA argued that “EPCA permits the agency to consider consumer demand and the resulting market shifts in setting fuel economy standards,” id. at 17,593, and that a backstop “would essentially limit the ability of manufacturers to respond to market shifts arising from changes in consumer demand. If consumer demand shifted towards larger vehicles, a manufacturer potentially could be faced with a situation in which it must choose between limiting its production of the demanded vehicles, and failing to comply with the CAFE light truck standard.” Id.
Finally, NHTSA declined to change the regulatory definition of cars and light trucks to close the SUV loophole and refused to regulate vehicles between 8,500 and 10,000 lbs. GVWR, other than MDPVs. See id. at 17,574.
II. STANDARD OF REVIEW
The Administrative Procedure Act (APA),
the agency has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise.
Id. The reviewing court “may not supply a reasoned basis for the agency‘s action that the agency itself has not given.” Id. (quoting SEC v. Chenery Corp., 332 U.S. 194, 196 (1947)).
If Congress has spoken directly to the “precise question at issue,” then we must give effect to Congress‘s “unambiguously expressed intent.” Chevron U.S.A., Inc. v. NRDC, 467 U.S. 837, 842-43 (1984). However, “if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency‘s answer is based on a permissible construction of the statute.” Id. at 843. We “must reject administrative constructions which are contrary to clear congressional intent.” Id. at 843 n. 9.
NHTSA‘s compliance with NEPA is reviewed under an arbitrary and capricious standard pursuant to the APA. See, e.g., Nat‘l Parks & Conservation Ass‘n, 241 F.3d at 730. With respect to NEPA documents, the agency must take a “hard look” at the impacts of its action by providing “a reasonably thorough discussion of the significant aspects of the probable environmental consequences.” Thomas, 137 F.3d at 1149 (quoting Or. Nat. Res. Council v. Lowe, 109 F.3d 521, 526 (9th Cir.1997)). We must determine whether the EA “foster[s] both informed decision-making and informed public participation.” Native Ecosystems Council v. U.S. Forest Serv., 418 F.3d 953, 960 (9th Cir.2005) (quoting California v. Block, 690 F.2d 753, 761 (9th Cir.1982)).
III. DISCUSSION
A. Energy Policy and Conservation Act Issues
1. NHTSA‘s use of marginal cost-benefit analysis to determine “maximum feasible average fuel economy level”
With respect to non-passenger automobiles (i.e., light trucks), the fuel economy standard “shall be the maximum feasible average fuel economy level that the Secretary decides the manufacturers can achieve in that model year.”
Petitioners argue that the meaning of “maximum feasible” is plain, and that NHTSA‘s decision to maximize economic benefits is contrary to the plain language of the EPCA because “feasible” means “‘capable of being done,’ not economically optimal.” But even if “feasible” means “capable of being done,” technological feasibility, economic practicability, the effect of other motor vehicle standards, and the need of the nation to conserve energy must be considered in determining the “maximum feasible” standard. American Textile Manufacturers Institute v. Donovan does not support Petitioners’ interpretation of “feasible.” 452 U.S. 490 (1981). In that case, no other language in the statute modified the phrase at issue: “to the extent feasible.” Id., 452 U.S. at 508-11. Here, “maximum feasible” standards are to be determined in light of technological feasibility, economic practicability, the effect of other motor vehicle standards, and the need of the nation to conserve energy.38
The EPCA clearly requires the agency to consider these four factors, but it gives NHTSA discretion to decide how to balance the statutory factors—as long as NHTSA‘s balancing does not undermine the fundamental purpose of the EPCA: energy conservation. In Center for Auto Safety v. NHTSA, the D.C. Circuit considered whether NHTSA gave “impermissible weight to shifts in consumer demand” in setting the MY 1985 and 1986 standards for light trucks. 793 F.2d 1322, 1338 (D.C.Cir.1986). Petitioners in that case challenged NHTSA‘s rule that revised the standards downward. Id. at 1323-24. The court held that since Congress had not directly spoken to the issue of consumer demand, the court must determine whether the agency‘s interpretation represented
a “reasonable accommodation of conflict-ing policies that were committed to the agency‘s care by the statute.” Id. at 1338 (quoting Chevron, 467 U.S. at 845, 104 S. Ct. 2778). The court reasoned that:
Congress intended energy conservation to be a long term effort that would continue through temporary improvements in energy availability. Thus, it would clearly be impermissible for NHTSA to rely on consumer demand to such an extent that it ignored the overarching goal of fuel conservation. At the other extreme, a standard with harsh economic consequences for the auto industry also would represent an unreasonable balancing of EPCA‘s policies.
Id. at 1340 (footnote omitted). The court concluded that NHTSA‘s consideration of consumer demand was permissible because Congress did not speak to the precise issue, and “it specifically delegated the process of setting light truck fuel economy standards with broad guidelines concerning the factors that the agency must consider. NHTSA has remained within the reasonable range permitted by those factors.” Id. at 1341; see also Pub. Citizen v. NHTSA, 848 F.2d 256, 265 (D.C. Cir. 1988) (R. Ginsburg, J.).
In Public Citizen, the petitioners challenged the NHTSA‘s lowering of the fuel economy standard for passenger cars for MY 1986. 848 F.2d at 259. They argued that NHTSA‘s determination that the statutory 27.5 mpg standard was not economically practicable improperly elevated consumer demand and market forces, subordinated the statute‘s technology-forcing design, and ignored the need of the nation to conserve energy. Id. at 264. The court held that NHTSA‘s “consideration of the likelihood of economic hardship within its assessment of ‘economic practicability’ must be accorded due weight.” Id. at 264-65. Based on economic analyses supplied by other governmental agencies, “NHTSA concluded that the industry-wide economic effects of the higher CAFE standard would be severe,” id. at 265, “including sales losses well into the hundreds of thousands, and job losses well into the tens of thousands,” id. at 264; see also
Petitioners cite Public Citizen for the proposition that consideration of “economic practicability” allows lowering fuel economy standards only if a higher standard would cause substantial economic hardship to a manufacturer with a substantial share of the market. But that is not precisely what Public Citizen held. Rather, that court concluded that given the extensive evidence in the record showing that severe economic hardship would result from a higher standard, NHTSA‘s decision to lower the standard under those circumstances was not devoid of rational support. Pub. Citizen, 848 F.2d at 265.
The Public Citizen court held that NHTSA‘s balancing of the statutory factors in
In this rulemaking, NHTSA does not set forth its interpretation of the four factors in
NHTSA “recognize[s] that [it] in the past has expressed its belief that the statutory consideration of economic practicability differs from, but does not preclude consideration of, cost/ benefit analysis.”
We agree with NHTSA that “EPCA neither requires nor prohibits the
To be clear, we reject only Petitioners’ contention that EPCA prohibits NHTSA‘s use of marginal cost-benefit analysis to set CAFE standards. Whatever method it uses, NHTSA cannot set fuel economy standards that are contrary to Congress‘s purpose in enacting the EPCA-energy conservation. We must still review whether NHTSA‘s balancing of the statutory factors is arbitrary and capricious. Additionally, the persuasiveness of the analysis in Public Citizen and Center for Auto Safety is limited by the fact that they were decided two decades ago, when scientific knowledge of climate change and its causes were not as advanced as they are today.41 The need of the nation to conserve energy is even more pressing today than it was at the time of EPCA‘s enactment. See, e.g., NRDC Cmt. at 4, 11 (“When fuel economy legislation was first enacted, America consumed 16.3 million barrels of oil per day and 35.8 percent of U.S. oil came from imports. In the nearly 30 years since then, oil consumption has risen to over 20 million barrels per day and 56 percent of U.S. oil is imported. If fuel economy standards are not strengthened, these trends are only expected to get worse, with transportation oil use driving 80 percent of U.S. oil demand growth through 2025 and imports rising to 68 percent of U.S. oil demand. The light duty vehicle fleet currently consumes 8.3 million barrels per day, and in the absence of stronger standards, that is projected to grow to 12.45 million barrels by 2025.“); NAS Report at 13-14, 20. What was a
2. Failure to monetize benefits of greenhouse gas emissions reduction
Even if NHTSA may use a cost-benefit analysis to determine the “maximum feasible” fuel economy standard, it cannot put a thumb on the scale by undervaluing the benefits and overvaluing the costs of more stringent standards. NHTSA fails to include in its analysis the benefit of carbon emissions reduction in either quantitative or qualitative form. It did, however, include an analysis of the employment and sales impacts of more stringent standards on manufacturers. See
To determine the “maximum feasible” CAFE standards, NHTSA began with the fuel economy baselines for each of the seven largest manufacturers - that is, “the fuel economy levels that manufacturers were planning to achieve in those years.”
Under this methodology, the values that NHTSA assigns to benefits are critical. Yet, NHTSA assigned no value to the most significant benefit of more stringent CAFE standards: reduction in carbon emissions. Petitioners strongly urged NHTSA to include this value in its analysis, and they cited peer-reviewed scientific literature in support. NRDC cited figures for the benefit of carbon emissions reduction ranging from $8 to $26.50 per ton CO2, based on values assigned by the California Public Utilities Commission, the Idaho Power Company, and the European Union (EU) carbon trading program.43
NHTSA acknowledged that “[c]onserving energy, especially reducing the nation‘s dependence on petroleum, benefits the U.S. in several ways. [It] has benefits for economic growth and the environment, as well as other benefits, such as reducing pollution and improving security of energy supply.”
The agency continues to view the value of reducing emissions of CO2 and other greenhouse gases as too uncertain to support their explicit valuation and inclusion among the savings in environmental externalities from reducing gasoline production and use. There is extremely wide variation in published
estimates of damage costs from greenhouse gas emissions, costs for controlling or avoiding their emissions, and costs of sequestering emissions that do occur, the three major sources for developing estimates of economic benefits from reducing emissions of greenhouse gases. Moreover, . . . commenters did not reliably demonstrate that the unmonetized benefits, which include CO2, and costs, taken together, would alter the agency‘s assessment of the level of the standard for MY 2011. Thus, the agency determined the stringency of that standard on the basis of monetized net benefits.
NHTSA‘s reasoning is arbitrary and capricious for several reasons. First, while the record shows that there is a range of values, the value of carbon emissions reduction is certainly not zero. NHTSA conceded as much during oral argument when, in response to questioning, counsel for NHTSA admitted that the range of values begins at $3 per ton carbon. NHTSA insisted at argument that it placed no value on carbon emissions reduction rather than zero value. We fail to see the difference. The value of carbon emissions reduction is nowhere accounted for in the agency‘s analysis, whether quantitatively or qualitatively. This position also contradicts NHTSA‘s own explanation in the Final Rule that “the agency determined the stringency of [the MY 2011] standard on the basis of monetized net benefits.”
Second, NHTSA gave no reasons why it believed the range of values presented to it was “extremely wide“; in fact, several commenters and the NAS committee recommended the same value: $50 per ton carbon. The NAS committee selected the value of $50 per ton carbon although it acknowledged the wide range of values in the literature and the potential controversy in selecting a particular value. NAS Report at 85. NHTSA argues that the problem was not simply “the ultimate value to be assigned, but the wide variation in published estimates of the three major underlying costs of carbon dioxide emissions-the cost of damages caused by such emissions, the costs of avoiding or controlling such emissions, and the costs of sequestering resulting emissions.” NHTSA Br. at 49. But NHTSA fails to explain why those three “underlying costs” are relevant to the question of how carbon emissions should be valued. We are convinced by Petitioners’ response:
To monetize the benefits of reducing CO2 emissions from automobiles, NHTSA did not need to calculate the “costs of sequestering emissions.” Car-
bon capture and sequestration, though a feasible means of reducing emissions from large stationary sources such as coal-fired power plants, was not within the range of actions at issue in this automobile fuel economy rulemaking. Nor were “costs for controlling or avoiding [CO2] emissions” a genuine methodological barrier here: NHTSA already performed an elaborate analysis of the costs of mandating increases in fuel economy. For purposes of this rulemaking, that was the relevant category of control costs.
EPCA Reply Br. at 10-11.49 In sum, there is no evidence to support NHTSA‘s conclusion that the appropriate course was not to monetize or quantify the value of carbon emissions reduction at all.
Citizens for Clean Air v. EPA, 959 F.2d 839 (9th Cir. 1992), which NHTSA cites to support its contention that agencies may decline to adopt a “particular monetary value” when the “costs and benefits are too uncertain,” NHTSA Br. at 48, is inapposite. In Citizens for Clean Air, petitioners filed for administrative review of a state agency‘s grant of a permit for construction of a solid waste incinerator. 959 F.2d at 841. EPA denied the petitions, and this court held that the decision of the EPA not to consider recycling as a possible “best available control technology” under the Clean Air Act was not arbitrary or capricious. Id. at 841-42. The EPA noted in its proposed rule that “it was ‘unable to reliably quantify the emission reductions attributable to materials separation when a[ ] [waste incinerator] is equipped with highly efficient at-the-stack air pollution control devices.‘” Id. at 844 (citation omitted). Petitioners submitted “no hard evidence” that recycling would reduce air pollution when the waste incinerators are already equipped with “state-of-the-art pollution control equipment” (e.g., scrubbers). Id. at 847-48. In addition, the Clean Air Act required “that the proposed technology [i.e., recycling] be the best available control technology, and in the absence of anything specific or quantifiable in support . . . we conclude that EPA‘s decision not to consider recycling in permitting Spokane‘s incinerator was not arbitrary or capricious.” Id. at 848. The petitioners in Citizens for Clean Air had to satisfy such a high statutory threshold (“best available control technology“), and they could not satisfy that threshold without hard evidence. By contrast, Petitioners here provided substantial evidence of the value of carbon emissions reduction, and they do not have to satisfy a high statutory threshold.
Third, NHTSA‘s reasoning is arbitrary and capricious because it has monetized other uncertain benefits, such as the reduction of criteria pollutants, crash, noise, and congestion costs, see FRIA at VIII-73 to 80, and “the value of increased energy security,”
Fourth, NHTSA‘s conclusion that commenters did not “reliably demonstrate” that monetizing the value of carbon reduction would have affected the stringency of the CAFE standard “runs counter to the evidence” before it. NRDC v. U.S. Forest Serv., 421 F.3d 797, 806 (9th Cir. 2005) (citation omitted). The Union of Concerned Scientists concluded that “including [a $50/tC value] in the determination of cost-efficient fuel economy could increase the 2011 targets by an average of 0.4-1.1 mpg.” UCS Cmt. at 16. Given that the CAFE standards set by NHTSA increase only 1.5 mpg from MY 2008 to 2011,52 an additional 0.4 to 1.1 mpg increase by MY 2011 is significant. In addition, Environmental Defense “calculate[d] the benefits of the cumulative reductions at $50/ tC and 3% discount rate at $19.7 billion by 2020 and $28.4 billion by 2030 (current dollars).” Environmental Defense Cmt. at 6.
We agree with Petitioners that the values they suggest, 10-22 cents per gallon of gasoline in NHTSA‘s estimation, would not be a small benefit. Under NHTSA‘s own calculation that Reformed CAFE will save 2.8 billion gallons of gasoline for MY 2011 light trucks, see
Finally, there is no merit to NHTSA‘s unfounded assertion that if it had accounted for the benefit of carbon emissions reduction, it would have had to account for the adverse safety effects of downweighting, and the two would have balanced out, resulting in no change to the final CAFE standards. No evidence supports this assertion. The assertion is also based on the controversial assumption that higher fuel economy standards for light trucks causes adverse safety effects from downweighting.
Thus, NHTSA‘s decision not to monetize the benefit of carbon emissions reduction was arbitrary and capricious, and we remand to NHTSA for it to include a monetized value for this benefit in its analysis of the proper CAFE standards.
3. Vehicle safety analysis
Petitioners argue that NHTSA acted arbitrarily and capriciously when it omitted weight reduction for vehicles between 4,000 and 5,000 lbs. curb weight53 as a cost-effective measure manufacturers could use to increase fuel economy. The NAS committee found that weight reduc-
The study by Dr. Charles Kahane, cited by the NAS committee and NHTSA, did not find a safety benefit resulting from reducing the weight of light trucks between 4,000 to 5,000 lbs., but it found that “[o]verall, light trucks weighing 3,870 pounds or more are involved in fatal crashes that result in a total of 14,705 fatalities per year. A 100-pound reduction would not significantly change those fatalities.” Kahane Study at 161.56
In the Final Rule, NHTSA applied a “confidence bound” of approximately 1,000 lbs. to the 3,900 figure, “given the significant statistical uncertainty around that figure,” and “used 5,000 lbs. as the threshold for considering weight reduction.”
Petitioners argue that NHTSA‘s selection of a 1,000 lbs. confidence bound is arbitrary and capricious because Kahane‘s 4,000 lbs. figure already accounts for uncertainty, and the confidence bound is taken from a different part of Kahane‘s study.
Petitioners’ arguments have some merit, and we believe this is a close question. However, we conclude that NHTSA‘s explanation for using the confidence interval for the crossover weight-that both the crossover weight and the point of zero net impact would have similar sampling errors-does not “rel[y] on factors which Congress has not intended it to consider, entirely fail[ ] to consider an important aspect of the problem, . . . [or] run[ ] counter to the evidence before the agency, [and is not] so implausible that it could not be ascribed to a difference in view or the product of agency expertise.” Motor Vehicle Mfrs. Ass‘n, 463 U.S. at 43, 103 S. Ct. 2856. Petitioners have not sufficiently established the deficiencies in NHTSA‘s reasoning.
4. Backstop for Reformed CAFE
Under Reformed CAFE, a manufacturer‘s required CAFE level would depend on its fleet mix. See
Petitioners generally agree that Reformed CAFE, with its progressive fuel economy targets based on vehicle footprint, is an improvement over Unreformed CAFE. However, they argue that Reformed CAFE must include a “backstop” so that the “minimum level of average fuel economy applicable to a manufacturer in a model year” would not be determined solely by the manufacturer‘s fleet mix. See
NHTSA argues that a backstop would unduly limit consumer choice and perpetuate the problems with Unreformed CAFE.
Neither the EPCA‘s language nor structure explicitly requires NHTSA to adopt a backstop.58 The issue is whether it was arbitrary or capricious in not adopting a backstop. Under Reformed CAFE, manufacturers would still be required to meet a minimum average fuel economy level-there would simply be no corporate minimum average fuel economy level. That is, each vehicle of a particular footprint would be required to meet a minimum average fuel economy level, but there would be no fleet-wide minimum. See
Although Congress has not directly spoken on this issue, it has directed the agency to set the average fuel economy level for light trucks at the “maximum feasible” level,
The intent of the CAFE program is not to preclude future mix shifts and design changes in response to consumer demand. A backstop would likely have this influence. . . . Such a system would be in opposition to congressional intent to establish a regulatory system that does not unduly limit consumer choice.
We do agree with NHTSA that the continuous function of Reformed CAFE will likely reduce the incentive to upsize because there will no longer be only two categories of CAFE standards (light trucks and passenger cars). See
5. Transition period
The Final Rule permits manufacturers to choose to comply with Unreformed CAFE or Reformed CAFE in MYs 2008-2010.
We conclude that the transition period is not prohibited by EPCA, and NHTSA‘s decision to allow it is not arbitrary or capricious. First, NHTSA has not granted an “exemption” to manufacturers during the transition period, because manufacturers are still required to comply with the CAFE program-they just have a choice as to which standard with which to comply.
Second, and more importantly, NHTSA has provided a reasoned explanation for the transition period: it “will minimize the potential for unintended compliance burdens that may be experienced by a manufacturer as the result of shifting to a new regulatory structure,” it is “critical given that this is the first comprehensive reform of the light truck CAFE program since its inception,” and “the structure of the Reformed CAFE might require some manufacturers to revise their compliance strategies,” since it “minimizes the ability of manufacturers to offset the low fuel economy performance of larger vehicles by increasing the production of smaller vehicles with higher fuel economies. Manufacturers that relied on such a compliance strategy in the past might need to revise their product plans in order to comply with the Reformed CAFE standard.”
6. Changing the definition of passenger and non-passenger automobiles in order to close the SUV loophole
Petitioners challenge NHTSA‘s decision not to reform the SUV loophole. They argue that this decision is arbitrary and capricious because it runs counter to the evidence showing that the majority of SUVs, minivans, and pickup trucks function solely or primarily as passenger vehicles, and because NHTSA has not provided a reasoned explanation for why the transition to Reformed CAFE could not be accomplished at the same time as a revision in the definitions.
The EPCA defines “passenger automobile” as “an automobile that the Secretary decides by regulation is manufactured primarily for transporting not more than 10 individuals,” excluding “an automobile capable of off-highway operation that the
NHTSA initially sought input on ways to revise the regulatory distinction because the passenger automobile/light truck distinction had become obsolete: “The application of the regulation to the current vehicle fleet (designed with the regulatory distinctions in mind) less clearly differentiates between passenger cars and light trucks than it did in the 1970s.”
chang[e] those classification regulations at this time in part because [NHTSA] believe[s] an orderly transition to Reformed CAFE could not be accomplished if [NHTSA] simultaneously change[s] which vehicles are included in the light truck program and because, as applied in MY 2011, Reformed CAFE is likely to reduce the incentive to produce vehicles classified as light trucks instead of as passenger cars.
We conclude that NHTSA‘s decision not to otherwise revise the passenger automobile/light truck definitions is arbitrary and capricious. First, NHTSA has not provided a reasoned explanation of why an orderly transition to Reformed CAFE could not be accomplished at the same time that the passenger automobile/light truck definitions are revised.
Second, NHTSA asserts that it reasonably decided to look to the purpose for which a vehicle is manufactured instead of consumers’ use of a vehicle because it is a more objective way of differentiating between passenger and non-passenger automobiles. But this overlooks the fact that many light trucks today are manufactured primarily for transporting passengers, as NHTSA itself has acknowledged: “Many vehicles produced today, while smaller than many other passenger cars, qualify as light trucks because they have been designed so that their seats can be easily removed and their cargo carrying capacity significantly enhanced.”
In addition, NHTSA‘s new focus on the purpose for which automobiles are manufactured conflicts with its earlier assertion that “Congress intended that passenger automobiles be defined as those used primarily for the transport of individuals.”
Third, NHTSA‘s decision runs counter to the evidence showing that SUVs, vans, and pickup trucks are manufactured primarily for the purpose of transporting passengers and are generally not used for off-highway operation. The NAS committee found that:
The less stringent CAFE standards for trucks did provide incentives for manufacturers to invest in minivans and SUVs and to promote them to consumers in place of large cars and station wagons. . . . By shifting their product development and investment focus to trucks, they created more desirable trucks with more carlike features: quiet, luxurious interiors with leather upholstery, top-of-the-line audio systems, extra rows of seats, and extra doors.
NAS Report at 18 (emphasis added); see also id. at 23 (noting the exploding demand for light trucks such as minivans and “four-door SUVs and pickup trucks with passenger-friendly features such as extra rows of seats“). Consumers use light trucks primarily for passenger-carrying purposes in large part because that is precisely the purpose for which manufacturers have manufactured and marketed them. See, e.g., App. A to Public Citizen Cmt. (Kathleen Kerwin, “You Call This the Family Car? Pickups with Roomy Cabs Become a Status Accessory,” Business Week, Apr. 26, 1999.). A pickup truck usage study conducted by R.L. Polk & Co.59 showed that 73% of light pickup users use their trucks to carry passengers on a daily or weekly basis, 68% use them for personal trips on a daily or weekly basis, 58% use them for commuting on a daily or weekly basis, 59% never use them for towing, and 69% never use them for driving off-road. Polk Study at 11. Seventy-three percent of medium pickup users use them for carrying passengers on a daily or weekly basis, 65% use them for commuting on a daily or weekly basis (61% daily), and 64% never use them for driving off-road. Polk Study at 12. Even among heavy pickup users, 76% use them for carrying passengers on a daily or weekly basis, and 52% never use them for driving off-road. Polk Study at 13.60 The NAS Committee further found:
When CAFE regulations were originally formulated, different standards were set for passenger vehicles and for work/cargo vehicles . . . because [work/ cargo vehicles] needed extra power, different gearing, and less aerodynamic body configurations to carry out their utilitarian, load-carrying functions. . . . [But this] working definition distinction between a car for personal use and a truck for work use/cargo transport[ ] has broken down, initially with minivans, and more recently with sport utility vehicles and other “cross-over” vehicles that may be designed for peak use but which are actually used almost exclusively for personal transport. . . . The car/truck distinction has been stretched well beyond its original purpose.
NAS Report at 88 (internal quotation marks and citation omitted). One of the changes the NAS committee recommended to alleviate this problem was to “tighten” the definition of a light truck, a step the EPA has already taken for emissions stan-
7. Exclusion of 8,500-10,000 lb. pickup trucks from CAFE regulation
Petitioners argue that NHTSA‘s decision not to regulate the fuel economy of vehicles between 8,500 and 10,000 lbs. GVWR (generally referred to as Class 2b trucks),61 other than MDPVs, is arbitrary and capricious because fuel economy standards for these vehicles are feasible and will result in significant energy conservation. See
All 4-wheeled, fuel- and alternative fuel-propelled vehicles manufactured for use on roads and highways that are 6,000 lbs. gross vehicle weight or less are automobiles. See
The ANPRM presented two options under which the fuel economy of vehicles with a GVWR of up to 10,000 lbs. could be regulated. See
The Final Rule incorporates MDPVs into the definition of “automobile” such that these vehicles would be regulated as light trucks beginning in MY 2011.
We conclude that this is not a reasoned explanation for excluding Class 2b trucks from CAFE regulation. First, Petitioners presented compelling evidence that setting fuel economy standards for Class 2b trucks is feasible. For example, a Department of Energy research planning study included estimates:
based on detailed simulation modeling of both the city and highway driving cycles working from a baseline Class 2b truck; baseline estimates were 21.1 mpg city, 15.4 mpg highway, and 13.6 mpg combined. . . . [The study] identified technology options capable of yielding substantial improvements, including 50% higher fuel economy with technologies available over a 7-year horizon and, with use of hybrid engines in diesel versions of the vehicles, a near doubling of the fuel economy of a baseline gasoline Class 2b pickup would be a feasible “stretch goal.”
App. F to Environmental Defense Cmt. at 1. An Argonne National Laboratory study identified numerous technological improvements that could be applied to Class 2b trucks, including “aerodynamic improvements,” “lower tire rolling resistance,” “improved transmissions,” “turbocharging for diesel engines,” “other engine refinements,” “integrated starter-generator,” and “hybrid-electric powertrains.” Id. Another study, published by the American Council for an Energy-Efficient Economy, found that the potential fuel economy improvement was “37% . . . over a baseline full-size pickup.” Id. at 2. Overall, while Class 2b trucks are “designed with heavier frames and higher capacities, and therefore larger powertrains and other components, [they] (primarily heavy-duty pickups) entail substantially the same engineering as vehicles under 8500 lbs GVWR, and in many cases share components.” Id. at 1; see also UCS Cmt. at 34.
Second, Petitioners presented substantial evidence that setting CAFE standards for Class 2b trucks would result in significant energy conservation and that these vehicles are substantially used for the same purposes as a vehicle 6,000 lbs. GVWR or less.62 Class 2b trucks constitute the majority of vehicles in the 8,500 to 10,000 lb. GVWR class. See ACEEE Cmt. to ANPRM at 10 (“[P]ickups constitute about 85% of vehicles in the 8,500-10,000 lb. weight range.“).63 One of the Petitioners argued:
EPA estimates sales of class 2b trucks at 931,000 per year. Given higher per vehicle oil consumption, we estimate that 2b trucks consume 13% of overall de-
mand from trucks under 10,000 pounds GVWR. . . . If class 2b trucks were to improve their fuel economy by 4% per year . . . over MY 2008-2011, it would save 47,000 barrels of gasoline and diesel fuel per day by 2020 and reduce GHG emissions by a cumulative 16 mmtC over that time frame. Even at comparable fuel economy improvements to those NHTSA proposes for the largest class 2a trucks regulated under the Reformed system-roughly 2% per year, the country would save 24,000 barrels of gasoline and diesel fuel per day by 2020. These amounts are significant: A 24,000 barrel per day (bpd) saving would be equivalent to $700 million of annual savings at a relatively modest shadow price of $1.90/ gallon. This far exceeds the $100 million threshold for a ‘significant energy action’ under [Executive Order] 13211.
Environmental Defense Cmt. at 10; see also UCS Cmt. at 34 (estimating that “[i]f these vehicles had been held to the same fuel economy standard as other light-duty trucks, the total fuel consumption by trucks under 10,000 lbs GVWR would be approximately 890 million gallons less in 2005, for a savings of nearly 60,000 barrels of oil per day. This corresponds to about 18% of Class 2b fuel use.“).64
The evidence also shows that Class 2b trucks are “substantially used for the same purposes” as vehicles not more than 6,000 lbs. GVWR. The Polk Study showed that 76% of heavy pickup truck owners use them for carrying passengers on a daily or weekly basis, 57% use them for personal trips on a daily or weekly basis, 49% use them for commuting on a daily basis, and 52% never use them for driving off-road. Polk Study at 13; see also Environmental Defense Cmt. at 10 (citing a 2002 vehicle inventory and use survey conducted by the U.S. Census Bureau for the argument that “[i]n the intervening decades [since NHTSA revised its definition of ‘automobile’ to include Class 2a trucks but exclude Class 2b trucks], trucks of all sizes have increasingly shifted from commercial uses to personal uses.“).65
NHTSA did not address any of this evidence in the Final Rule, and it does not argue that setting CAFE standards for Class 2b trucks would not be feasible,65 that it would not result in significant energy conservation, or that Class 2b trucks are not substantially used for the same purposes as smaller trucks. See
NHTSA asserts that without EPA testing data, it cannot set CAFE standards for Class 2b trucks.
Finally, NHTSA‘s reasoning is arbitrary because it decided that it is feasible to set CAFE standards for MDPVs even though they are not currently subject to EPA testing. See
In sum, NHTSA‘s decision not to set average fuel economy standards for all vehicles between 8,500 and 10,000 lbs. GVWR is arbitrary and capricious. That Class 2b trucks have never been regulated by NHTSA is not a reason for not regulating them now. We remand to NHTSA to revisit this issue and promulgate average fuel economy standards for these vehicles, or to provide a validly reasoned basis for continuing to exclude them from the regulation.
B. National Environmental Policy Act
1. The EPCA does not limit NHTSA‘S NEPA obligations
NHTSA argues both that it has broad discretion to balance the factors of
NHTSA relies on Department of Transportation v. Public Citizen, 541 U.S. 752, 124 S. Ct. 2204, 159 L. Ed. 2d 60 (2004), for its contention that it did not have to consider the effect of its rule on climate change. Public Citizen is inapposite.
In Public Citizen, the Supreme Court held that the Federal Motor Carrier Safety Administration (FMCSA) did not need to consider the environmental effects of cross-border operations of motor carriers in its EA, since it had no ability to prevent those operations. 541 U.S. at 770, 124 S. Ct. 2204. The Court reasoned, “where an agency has no ability to prevent a certain effect due to its limited statutory authority over the relevant actions, the agency cannot be considered a legally relevant ‘cause’ of the effect.” Id. The “critical feature” of the case was the fact that “FMCSA has no ability to countermand the President‘s lifting of the moratorium or otherwise categorically to exclude Mexican motor carriers from operating within the United States.” Id. at 766, 124 S. Ct. 2204. “FMCSA has only limited discretion regarding motor vehicle carrier registration: It must grant registration to all domestic or foreign motor carriers that are ‘willing and able to comply with’ the applicable safety, fitness, and financial-responsibility requirements. FMCSA has no statutory authority to impose or enforce emissions controls or to establish environmental requirements unrelated to motor carrier safety.” Id. at 758-59, 124 S. Ct. 2204 (emphasis added) (citation omitted). Moreover, neither of the purposes of NEPA-informing the public and ensuring agency consideration of the environmental impacts of its actions-would be served. Knowledge of the environmental impacts would not affect FMCSA decisionmaking since FMCSA “simply lacks the power to act on whatever information might be contained in the EIS.” Id. at 768, 124 S. Ct. 2204.
Here, in contrast, NHTSA clearly has statutory authority to impose or enforce fuel economy standards,
Moreover, the CAFE standard will affect the level of the nation‘s greenhouse gas emissions and impact global warming. See Ctr. for Auto Safety, 793 F.2d at 1334-35 (“If setting a higher standard cannot result in vehicles with increased fuel efficiency, then the entire regulatory scheme is pointless.“); NAS Report at 3 (“The CAFE program has clearly contributed to increased fuel economy of the nation‘s light-duty vehicle fleet during the past 22 years.“). NHTSA does not dispute that light trucks account for a significant percentage of the U.S. transportation sector, that the U.S. transportation sector accounts for about six percent of the world‘s greenhouse gas gases, and that “fuel economy improvements could have a significant impact on the rate of CO2 accumulation in the atmosphere,” which would affect climate change. NAS Report at 14; cf. Massachusetts, 127 S. Ct. at 1457 (“EPA does not dispute the existence of a causal connection between man-made greenhouse gas emissions and global warming. At a minimum, therefore, EPA‘s refusal to regulate such emissions ‘contributes’ to Massachusetts’ injuries.“).68
In sum, the EPCA does not limit NHTSA‘s duty under NEPA to assess the environmental impacts, including the impact on climate change, of its rule. EPCA‘s goal of energy conservation and NEPA‘s goals of “help[ing] public officials make decisions that are based on understanding of environmental consequences, and take actions that protect, restore, and enhance the environment,”
2. Sufficiency of the Environmental Assessment
We examine the EA with two purposes in mind: to determine whether it has adequately considered and elaborated the possible consequences of the proposed agency action when concluding that it will have no significant impact on the environment, and whether its determination that no EIS is required is a reasonable conclusion.
Even though an EA need not “conform to all the requirements of an EIS,” it must be “sufficient to establish the reasonableness of th[e] decision” not to prepare an EIS. Found. for N. Am. Wild Sheep, 681 F.2d at 1178 n. 29 (1982);69 see also
a. Cumulative impacts of greenhouse gas emissions on climate change and the environment
A cumulative impact is defined as “the impact on the environment which results from the incremental impact of the action when added to other past, present, and reasonably foreseeable future actions regardless of what agency ... or person undertakes such other actions. Cumulative impacts can result from individually minor but collectively significant actions taking place over a period of time.”
Cumulative impacts of multiple projects can be significant in different ways. The most obvious way is that the greater total magnitude of the environmental effects may demonstrate by itself that the environmental impact will be significant. Sometimes the total impact from a set of actions may be greater than the sum of the parts. 387 F.3d at 994.
The EA catalogues the total tonnage of CO2 emissions for light trucks for MYs 2005-2011. Final EA at 35-39. Table 4-5 of the Final EA lists the amount of fuel
together with the previous action raising MY 2005-07 light truck CAFE standards, the various alternatives for the current action will reduce lifetime carbon dioxide (CO2) emissions from MY 2005-11 light trucks by 122 to 196 million metric tons, or by 2.4 to 3.8 percent from their level if neither action had been taken. ... MY 2008-11 light truck CAFE standards are projected to result in cumulative reductions from the previous and current actions ranging from 0.2 to 0.3 percent of U.S. greenhouse gas emissions over the lifetimes of MY 2005-11 light trucks.
Id. at 36-37 (emphasis added).
We conclude that the EA‘s cumulative impacts analysis is inadequate. While the EA quantifies the expected amount of CO2 emitted from light trucks MYs 2005-2011, it does not evaluate the “incremental impact” that these emissions will have on climate change or on the environment more generally in light of other past, present, and reasonably foreseeable actions such as other light truck and passenger automobile CAFE standards.70 The EA does not discuss the actual environmental effects resulting from those emissions or place those emissions in context of other CAFE rulemakings. This is a similar deficiency as that found in the Bureau of Land Management‘s EA in Klamath-Siskiyou Wildlands Center, where this court held that the BLM‘s cumulative impacts analysis was inadequate because “[a] calculation of the total number of acres to be harvested in the watershed is a necessary component of a cumulative effects analysis, but it is not a sufficient description of the actual environmental effects that can be expected from logging those acres” and “stating the total miles of roads to be constructed is similar to merely stating the sum of the acres to be harvested—it is not a description of the actual environmental effects.” 387 F.3d at 995.
NHTSA does not dispute that the CAFE standard will have an effect on global warming due to an increase in greenhouse gas emissions. The new rule will not actually result in a decrease in carbon emissions, but potentially only a decrease in the rate of growth of carbon emissions. NHTSA concedes that “the new CAFE standards will not entirely offset the projected effect of increases in the number of light trucks.” NHTSA Br. at 92. However, NHTSA contends that Congress is “the cause of that shortfall,” not the agency, since it “is Congress‘s decision in EPCA to require that CAFE standards be technologically feasible and economically practicable.” Id. NHTSA concludes from this that it has no obligation to assess the cumulative impact of its rule on climate change.
This argument is without merit for the reasons already discussed. NHTSA has the power to change the CAFE standards based on information contained in an EIS.
The impact of greenhouse gas emissions on climate change is precisely the kind of cumulative impacts analysis that NEPA requires agencies to conduct. Any given rule setting a CAFE standard might have an “individually minor” effect on the environment, but these rules are “collectively significant actions taking place over a period of time.”
b. Reasonable alternatives
NHTSA must “[r]igorously explore and objectively evaluate all reasonable alternatives.”
In the EA, NHTSA considered a very narrow range of alternatives. All the alternatives evaluated were derived from NHTSA‘s cost-benefit analysis.
- Alternative A (“Baseline“): MY 2007 standard of 22.2 mpg for MYs 2008-2011.
- Alternative B: Unreformed CAFE for MYs 2008-201071 and Reformed CAFE for MY 2011 with fuel economy targets set using continuous function. MPDVs included in MY 2011 only.
- Alternative C: Reformed CAFE for MYs 2008-2011 with fuel economy targets set using continuous function. Impacts are shown including MDPVs for MY 2011 only and excluding MDPVs altogether.
- Alternative D: Reformed CAFE as described in NPRM, with fuel economy targets set using step function (six footprint categories). Entirely excludes MDPVs.
- Alternative E: Reformed CAFE described in NPRM, with revised fuel economy targets for each of its six footprint categories. Impacts are shown including MDPVs for MY 2011 only and excluding MDPVs altogether.
Final EA at vii, 8-15. The alternative NHTSA ultimately chose is a mix between Alternatives B and C: NHTSA adopted Reformed CAFE beginning in MY 2011 and Unreformed CAFE for MYs 2008-2010, but it allowed a transition period to Reformed CAFE in MY 2011, so manufacturers may choose to continue to follow Unreformed CAFE in MYs 2008-2010. The adopted alternative includes MDPVs for MY 2011 only.
These alternatives are hardly different from the option that NHTSA ultimately adopted. The EA states that “Alternatives C and E are projected to result in the largest reductions in fuel consumption, energy use, and environmental effects among these alternatives,” id. at vii, but Alternative C is close to what NHTSA adopted (the only difference being no transition period), and Alternative E barely results in less CO2 emissions than Alternative C. See id. at x (change from baseline for Alternative C and Alternative E with MDPVs in MY 2011 are the same (-73 mmt), and change in baseline without MDPVs is -70 mmt for Alternative C and -71 mmt for Alternative E). The entire range of alternatives considered in the EA ranged from “22.2 to 22.7 mpg for MY 2008, 22.2 to 23.3 mpg for MY 2009, and 22.2 to 23.6 mpg for MY 2010.” Id. at 16. The estimated lifetime fuel and energy use by MY 2008-2011 light trucks under the alternatives ranged from a 1.8 to 2.6 percent decrease from “baseline,” id. at 27-28, and the estimated lifetime emissions of CO2 ranged from 2,767 to 2,840 mmt, id. at 29, which is extremely small compared to the overall volume of emissions.72
NHTSA acknowledged that “the range of impacts from the considered al-
NHTSA also erroneously contends that Petitioners have not identified any specific alternative the agency should have considered. To the contrary, Environmental Defense submitted a detailed appendix to its comment titled, “Revised Benefit-Cost Analysis for Calculating Optimal CAFE Targets.” See Environmental Defense Cmt. App. A.73 In this document, Environmental Defense performed a marginal cost-benefit analysis, using a variety of different assumptions and inputs. Table A-1 set forth 28 different possible CAFE standards for MY 2011 (including NHTSA‘s figure). On the basis of its calculations, it recommended a final rule that would increase CAFE standards at a rate of 4% per year and achieve a standard of 26 mpg by MY 2011. Environmental Defense Cmt., Letter from Kevin Mills, Director, Clean Car Program, Environmental Defense, to Jacqueline Glassman, Acting Administrator, NHTSA (Nov. 22, 2005).
We also disagree with NHTSA that Petitioners’ suggested alternatives would not be reasonably related to the project‘s purpose. The purpose of the Final Rule is to set CAFE standards for light trucks for MYs 2008-2011.
3. NHTSA must prepare an Environmental Impact Statement
An agency must prepare an EIS “if ‘substantial questions are raised as to whether a project ... may cause significant degradation of some human environmental factor.‘” Idaho Sporting Cong. v. Thomas, 137 F.3d 1146, 1149 (9th Cir. 1998). Petitioners “need not show that significant effects will in fact occur,” but only that there are “substantial questions whether a project may have a significant effect.” Id. at 1150 (internal quotation
“Whether there may be a significant effect on the environment requires consideration of two broad factors: ‘context and intensity.‘” Nat‘l Parks & Conservation Ass‘n, 241 F.3d at 731 (quoting
NHTSA‘s finding of no significant impact (FONSI) stated that the agency determined that its Final Rule “will not have a significant effect on the human environment. This finding of no significant impact is based on the attached Final Environmental Assessment (EA)....” Finding of No Significant Environmental Impact for Model Year 2008-2011 Light Truck Fuel Economy Standards, NHTSA Docket No. 2006-24309-3 (Mar. 28, 2006). In the Final EA, NHTSA explained that compared to the “baseline” alternative of extending the MY 2007 light truck CAFE standard through MYs 2008-2011, its evaluated alternatives would have a minor beneficial impact on various environmental resources. Final EA at 26-33, 39-42. NHTSA concluded that “the final rule would produce, compared to U.S. emissions of CO2, a small decrease in emissions of CO2, the primary component of greenhouse gas emissions, under the selected alternative. Accordingly, the agency determined that the action we are adopting today will not have a significant impact on the environment.”
Petitioners argue that the evidence raises a substantial question as to whether the Final Rule may have a significant impact on the environment and that NHTSA failed to provide a convincing statement of reasons for why a small decrease (rather than a larger decrease) in the growth of CO 2 emissions would not have a significant impact on the environment. Petitioners note that NHTSA has never evaluated the impacts of carbon emissions from light trucks or other vehicles, much less the effect of any reduction or increase in those emissions on climate change. Petitioners
NHTSA argues that its “conclusion that a 0.2 percent decrease in carbon dioxide emissions will not have a significant impact upon the environment is self-evidently reasonable and consistent” with City of Los Angeles v. NHTSA, 912 F.2d 478 (D.C. Cir. 1990), and Public Citizen v. NHTSA, 848 F.2d 256 (D.C. Cir. 1988). NHTSA Br. at 111. NHTSA also argues that the impact of the rule on global warming is too speculative to warrant NEPA analysis.
We conclude that NHTSA‘S FONSI is arbitrary and capricious and the agency must prepare an EIS because the evidence raises a substantial question as to whether the Final Rule may have a significant impact on the environment. See Idaho Sporting Congress, 137 F.3d at 1149 (holding that an EIS must be prepared “if substantial questions are raised as to whether a project may cause significant degradation of some human environmental factor” (alteration in original; internal quotation marks omitted)). Moreover, NHTSA has failed to provide a convincing statement of reasons for its finding of insignificance. See, e.g., Blue Mountains Biodiversity Project, 161 F.3d at 1212; Nat‘l Parks & Conservation Ass‘n, 241 F.3d at 730.
Petitioners have raised a “substantial question” as to whether the CAFE standards for light trucks MYs 2008-2011 “may cause significant degradation of some human environmental factor,” particularly in light of the compelling scientific evidence concerning “positive feedback mechanisms” in the atmosphere.74 Among the evidence Petitioners presented to the agency was the following:
- The IPCC Third Assessment Report, which discusses the history of anthropogenic interference with the climate system, the projected increase in climate variability and extreme weather events, and the projected effects on various ecological systems. See IPCC Third Assessment Report at 2-33. The IPCC found:
Changes in climate could increase the risk of abrupt and non-linear changes in many ecosystems, which would affect their function, biodiversity, and productivity. The greater the magnitude and rate of the change, the greater the risk of adverse impacts. For example:
Changes in disturbance regimes and shifts in the location of suitable climatically defined habitats may lead to abrupt breakdown of terrestrial and marine ecosystems with significant changes in composition and function and increased risk of extinctions.
Sustained increases in water temperatures of as little as 1°C, alone or in combination with any of several stresses ... can lead to corals ejecting their algae (coral bleaching) and the eventual death of some corals....
Inertia is a widespread inherent characteristic of the interacting climate, ecological, and socioeconomic systems. Thus some impacts of anthropogenic climate change may be slow to become apparent, and some could be irrevers-
ible if climate change is not limited in both rate and magnitude before associated thresholds, whose positions may be poorly known, are crossed.
IPCC Third Assessment Report at 16 (emphasis added); see also id. at 15 (Table SPM-2 shows “[e]xamples of climate variability and extreme climate events and examples of their impacts.“).
- The IPCC Working Group I Technical Summary provided: “The possibility for rapid and irreversible changes in the climate system exists, but there is a large degree of uncertainty about the mechanisms involved and hence also about the likelihood or time-scales of such transitions. The climate system involves many processes and feedbacks that interact in complex non-linear ways. This interaction can give rise to thresholds in the climate system that can be crossed if the system is perturbed sufficiently.” Technical Summary of IPCC Working Group I Report at 53 (emphasis added); see also id. at 46-53 (discussion of positive feedback mechanism).
- “The American Meteorological Society, the American Geophysical Union, and the American Association for Advancement of Science, among many, many other scientific organizations have all concluded that the evidence of human induced warming is compelling.... In an April 2004 article, leading NASA and Department of Energy scientists stated that emissions of carbon dioxide and other heat-trapping gases have warmed the oceans and led to an energy imbalance that is causing and will continue to cause, significant warming, increasing the urgency of reducing CO2 emissions.” States’ Cmt. at 9 (citing essay that reviewed 928 peer-reviewed scientific papers).
- The Climate Change Futures Report published by the Center for Health and the Global Environment at Harvard Medical School, which analyzed in detail climate change scenarios that “will affect the health of humans as well as the ecosystems and species on which we depend.” Climate Change Futures Report at 5; see generally id. at 32-90 (case studies involving infectious and respiratory diseases, extreme weather events, and natural and managed systems).
Finally, Petitioners have satisfied several of the “intensity” factors listed in
Petitioners have also satisfied the “controversy” factor. See
In light of the evidence in the record, it is hardly “self-evident” that a 0.2 percent decrease in carbon emissions (as opposed to a greater decrease) is not significant. NHTSA‘s conclusion that a small reduction (0.2% compared to baseline) in the growth of carbon emissions would not have a significant impact on the environment was unaccompanied by any analysis or supporting data, either in the Final Rule or the EA. See, e.g.,
Nowhere does the EA provide a “statement of reasons” for a finding of no significant impact, much less a “convincing statement of reasons.” For example, the EA discusses the amount of CO2 emissions expected from the Rule, but does not discuss the potential impact of such emissions on climate change. In the “Affected Environment” section of the EA, NHTSA states that “[i]ncreasing concentrations of greenhouse gases are likely to accelerate the rate of climate change.” Final EA at 22. The agency notes that “[t]he transportation sector is a significant source of greenhouse gas (GHG) emissions, accounting for approximately 28 percent of all greenhouse gas emissions in the United States.” Id. From this, NHTSA jumps to the conclusion that “[c]oupled with the effects resulting from the 2003 light truck rule, the effects resulting from the agency‘s current action are expected to lessen the GHG impacts discussed above.” Id.
Table 3-2 of the EA, which shows the potential health effects of criteria air pollutants, is similarly devoid of meaningful analysis or a statement of reasons why the effects would be insignificant. The potential health effect for CO2 is described: “Increase in greenhouse gases can lead to climate change. Hot temperatures can lead to cardiovascular problems, heat exhaustion, and some respiratory problems. There may be an increased risk of infectious diseases due to increased temperatures. Heat can also increase the concentration of ground-level ozone.” Id. at 20.
Nor is there any analysis or statement of reasons in the section of the EA that discusses environmental impacts. The EA states that reduction in fuel production and consumption would reduce “contamination of water resources,” acid rain, risk of oil spills and contamination, and “lead to minor reductions in impacts to biological resources ... includ[ing] habitat encroachment and destruction, air and water pollution, greenhouse gases, and oil contamination from petroleum refining and distribution.” Id. at 32-33; see also id. at 39 (Table 4-7 compares the impacts under the baseline CAFE standard of 22.2 mpg and the analyzed alternatives. It cursorily summarizes the impacts as “slower rate of growth in fuel consumption for light trucks,” “reduction of GHG emissions,” and “minor benefit [to water and biological resources] from reductions in energy consumption, GHG emissions and extremely
NHTSA‘s EA “shunted aside [significant questions] with merely conclusory statements,” failed to “directly address[]” “substantial questions,” and most importantly, “provide[d] no foundation” for the important inference NHTSA draws between a decrease in the rate of carbon emissions growth and its finding of no significant impact. Found. for N. Am. Wild Sheep, 681 F.2d at 1179. NHTSA makes “vague and conclusory statements” unaccompanied by “supporting data,” and the EA “do[es] not constitute a ‘hard look’ at the environmental consequences of the action as required by NEPA.” Great Basin Mine Watch v. Hankins, 456 F.3d 955, 973 (9th Cir. 2006). Thus, the FONSI is arbitrary and capricious. See Klamath-Siskiyou Wildlands Center, 387 F.3d at 994 (“[T]he problem with the entire table is that it does not provide any objective quantification of the impacts. Instead, the reader is informed only that a particular environmental factor will be ‘unchanged,’ ‘improved,’ or ‘degraded’ and whether that change will be ‘minor’ or ‘major.’ The reader is not told what data the conclusion was based on, or why objective data cannot be provided.“).
The only reason NHTSA provided for why the environmental impact of the Final Rule would be insignificant is that it results in a decreased rate of growth of GHG emissions compared to the light truck CAFE standard for MY 2007. But simply because the Final Rule may be an improvement over the MY 2007 CAFE standard does not necessarily mean that it will not have a “significant effect” on the environment. NHTSA has not explained why its rule will not have a significant effect.76
In light of the emergent consensus on global warming, Chief Judge Wald‘s reasoning in her dissent in City of Los Angeles is not only prescient but persuasive:
Then-Judge Ruth Bader Ginsburg joined in Judge D. Ginsburg‘s opinion on NRDC‘s NEPA challenge, and she provided two reasons for her concurrence: “(1) NRDC‘s apparent acceptance of NHTSA‘s finding that the 1.0 mpg CAFE rollback at issue would yield a ‘maximum theoretical increase of less than one percent in greenhouse gases,’ ... and (2) NRDC‘s failure even to allege that such an increase ‘would produce any marginal effect on the probability, the severity, or the imminence’ of the global warming disaster petitioners project.” Id. at 504 (citation omitted). These reasons do not apply here. Petitioners have provided substantial evidence that even a small increase in greenhouse gases could cause abrupt and severe climate changes. Cf. Massachusetts, 127 S.Ct. at 1458 (“[T]he rise in sea levels associated with global warming has already harmed and will continue to harm Massachusetts. The risk of catastrophic harm, though remote, is nevertheless real. That risk would be reduced to some extent if petitioners received the relief they seek.“).
Petitioners have raised a substantial question of whether the Final Rule may significantly affect the environment. NHTSA acknowledges that carbon emissions contribute to global warming, and it does not dispute the scientific evidence that Petitioners presented concerning the significant effect of incremental increases in greenhouses gases. NHTSA has not provided a “statement of reasons why potential effects are insignificant,” much less a “convincing statement of reasons.” See Blue Mountains Biodiversity Project, 161 F.3d at 1211 (emphasis added) (internal quotation marks omitted). It asserts simply that the insignificance of the effects is “self-evident[].” In order that the public and the agency be fully advised, we remand and order the agency to prepare a full EIS.
IV. CONCLUSION
NHTSA‘s failure to monetize the value of carbon emissions in its determination of the MY 2008-2011 light truck CAFE standards, failure to set a backstop, failure to revise the passenger automobile/light truck classifications, and failure to set fuel economy standards for all vehicles in the 8,500 to 10,000 lb. GVWR class, was arbitrary and capricious and contrary to the EPCA. We therefore remand to NHTSA to promulgate new standards consistent with this opinion as expeditiously as possible and for the earliest model year practicable.
We also hold that the EA was inadequate and Petitioners have raised a substantial question as to whether the Final Action may have a significant impact on the environment. Thus, we remand to NHTSA for the preparation of a full EIS.
REVERSED AND REMANDED.
SILER, Circuit Judge, concurring in part and dissenting in part:
I concur in the conclusions by the majority on all points, with the exception of its conclusion in Section III.A.4. I would not find that the NHTSA acted arbitrarily or capriciously in failing to adopt a backstop for a minimum level of average fuel economy. The majority admits that the EPCA does not require NHTSA to adopt a backstop. We must realize that the arbitrary or capricious standard is one that grants an agency a significant amount of deference. Its failure to adopt this backstop was not an act which ignored factors that Congress required to be taken into account. Under those circumstances, when the EPCA did not require the adoption of a backstop, I would not find that NHTSA acted arbitrarily or capriciously by failing to do so.
Notes
These results support monetizing the carbon benefits of the light truck fuel economy rule using values in the range of $96 to $174 per ton of carbon [$26 to $47 per ton of CO2] (at current exchange rates). . . . These values translate into shadow values of 30 to 54 cents per gallon. . . . Calculating the benefits of these savings at the new values consistent with the SCC study recommendations would yield present value benefits of $54 billion by 2020 . . . and $82 billion by 2030 . . . calculated using a 3% discount rate. On an annual basis, benefits would grow from $1.1 billion in 2011 to $5.9 billion in 2030. [ ] These benefits are substantial in relation to the costs estimated by NHTSA for its proposal. Yet [they] were entirely omitted from NHTSA‘s calculations. . . .
NAS Report at 5 (emphasis added); see also id. at 27, 72. The only dispute here is whether NHTSA should have included weight reduction as a cost-effective technology for light trucks weighing between 4,000 and 5,000 lbs. curb weight.If an increase in fuel economy is effected by a system that encourages either downweighting or the production and sale of more small cars, some additional traffic fatalities would be expected. However, the actual effects would be uncertain, and any adverse safety impact could be minimized, or even reversed, if weight and size reductions were limited to heavier vehicles (particularly those over 4,000 lb). Larger vehicles would then be less damaging (aggressive) in crashes with all other vehicles and thus pose less risk to other drivers on the road.