Center for Biological Diversity v. National Highway Traffic Safety Administration, 538 F.3d 1172 (9th Cir. 2008) (available at https://casetext.com/case/center-for-biological-v-nhtsa)
[NOTE: The opinion filed on November 15, 2007 and published at 508 F.3d 508 (9th Cir. 2007) was vacated and withdrawn. This summary describes the revised decision cited above.]
Several states and public-interest organizations challenged a rule issued by the National Highway Traffic Safety Administration (NHTSA) setting corporate average fuel economy standards (“CAFE standards") for certain categories of vehicles. The petitioners brought a two-pronged challenge, alleging that the proposed fuel economy standards were contrary to the Energy Policy and Conservation Act of 1975 (EPCA), 49 U.S.C. § 32901 et seq., and that the environmental assessment accompanying the new standards was inadequate under the National Environmental Policy Act (NEPA), 42 U.S.C. § 4321 et seq. 538 F.3d 1172, 1181 (9th Cir. 2008).
1. NHTSA Improperly Assigned Zero Value to the Benefits of Carbon Dioxide Emissions Reductions in its Cost-Benefit Analysis.
Under EPCA, NHTSA is required to set "maximum feasible" fuel economy standards after considering factors such as technological feasibility, economic practicability, safety, and the need to conserve energy. See 49 U.S.C. § 32902. In this case, NHTSA used a cost-benefit analysis that the Court of Appeals found to be a generally acceptable approach. Id., at p. 1197. The Court took issue, however, with certain aspects of the analysis, including the agency's decision to exclude what the Court called "the most significant benefit" of more stringent fuel economy standards -- carbon dioxide emissions reductions. Id., at p. 1199.
The Court provided an apt description of NHTSA's skewed cost-benefit analysis:
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.
Id., at p. 1198. In their comments on the proposed CAFE standards, the petitioners provided ample peer-reviewed figures for the benefit of CO2 reduction and urged NHTSA to include these values in its analysis. NHTSA refused, stating that the figures were too uncertain and wide-ranging to support their inclusion in the cost-benefit analysis. Id., at p. 1200.
The Court found this reasoning to be arbitrary and capricious for several reasons. While there might be a range of values assigned to the benefit of carbon emissions reduction, the value is unequivocally not zero. Id., at p. 1200. Moreover, the Court did not accept NHTSA's excuse that the range of values was so extreme that NHTSA could not have possibly selected a value. Id. (noting that several commenters suggested the same estimate). Most crucially, NHTSA undermined itself when it chose to assign monetary value to other uncertain benefits, such as pollution reduction, reduced traffic congestion, and the value of increased energy security. Id., at 1202. The Court remanded the analysis back to NHTSA and directed the agency to include a monetized value associated with carbon dioxide emissions reductions. Id., at p. 1203.
2. NHTSA's Environmental Assessment Failed to Adequately Address Climate Change Impacts.
NHTSA did not prepare a full environmental impact statement prior to adopting the CAFE standards. Instead it prepared an abridged assessment, known as an environmental assessment (EA). Under NEPA, an EA must include discussions of the environmental impact of a proposal or project, including a cumulative impacts analysis. Id., at p. 1215. The petitioners alleged that the EA accompanying the rule did not adequately assess the cumulative impact of the proposed fuel economy standards on GHG emissions. Id., at p. 1181. The Court of Appeals agreed, explaining that although the EA quantified the anticipated amount of CO2 that would be emitted from vehicles subject to the CAFE standards, the EA did 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. Id., at p. 1216. In other words, simply disclosing projected CO2 emissions of a project or proposal does not fulfill the legal obligation to describe the actual environmental impacts of the proposed action, including impacts on the global climate.
The Court also rejected NHTSA's argument that it was not required to discuss the impact of the CAFE standards on climate change because the agency itself has no control of other actions contributing to increased CO2 emissions. The Court explained:
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.
Id., at p. 1217 (internal quotations and citations omitted).
Although the Ninth Circuit found the EA to be "markedly deficient," it left the decision whether to prepare a revised EA or EIS after remand to NHTSA's discretion. The Court strongly cautioned NHTSA not to overlook the many factors pointing to the need to prepare a detailed EIS describing the impacts of the proposed fuel standards on climate change, and not to dismiss climate impacts as too speculative to warrant analysis. Id., at pp. 1220, 1226. Among other things, the Court criticized NHTSA for concluding, with no supporting evidence, that the proposed rule establishing CAFE standards would not have a significant effect on the environment because the standards would result in a slight decrease in CO2 emissions. The Court stated:
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 greenhouse gases. Instead of providing the required "convincing statement of reasons" [that the impacts of the CAFE standards will not cause significant environmental impacts], NHTSA simply asserts that the insignificant of the effects is "self-evident[.]"
Id., at p. 1225 (internal citation omitted).