Appeals court slams White House for delaying higher penalties for fuel violations

Source: Amanda Reilly, E&E News reporter • Posted: Monday, July 2, 2018

A federal court says the Trump administration ignored Congress and flouted basic administrative procedures when it delayed a rule setting higher penalties for automakers that don’t meet fuel economy standards.

The manner in which the administration stayed the rule was also “not in the public interest,” the 2nd U.S. Circuit Court of Appeals said today in an opinion explaining an earlier order vacating the delay.

At issue is the National Highway Traffic Safety Administration’s July 2017 decision to indefinitely delay an Obama-era rule that tripled fines for automakers. The rule was in response to a law Congress passed in 2015 requiring agencies to adjust fines for inflation.

NHTSA said it wanted to reconsider “appropriate” penalties in the corporate average fuel economy program.

“The final rule did not give adequate consideration of all relevant issues, including the potential economic consequences of increasing CAFE penalties by potentially $1 billion per year,” NHTSA explained.

The agency later proposed a rule to overturn the increased penalties on the grounds that the fines are exempt from the statute because they’re not a “civil monetary penalty” (Greenwire, March 28).

The lawsuits filed by environmentalists and New York, California, Vermont, Maryland and Pennsylvania argued that the administration violated both proper rulemaking procedures and the 2015 Federal Civil Penalties Inflation Adjustment Act Improvements Act.

In April, a three-judge panel of the 2nd Circuit issued a one-page order vacating the delay. Today’s opinion explains the court’s reasoning (Greenwire, April 23).

According to the court, there are no grounds in the 2015 law for indefinitely delaying higher penalties.

“Given Congress’s determination to ensure that civil penalties retain their value over time through regular inflationary adjustments … we conclude that the statute does not authorize NHTSA to indefinitely delay implementation of these penalty increases,” the court said.

Judges also rebuffed the Trump administration’s arguments that NHTSA possesses “inherent authority” to reconsider final rules published in the Federal Register.

The 2nd Circuit found that, along with violating the civil penalties law, the agency failed to abide by the Administrative Procedure Act by announcing the indefinite delay without first going through formal notice-and-comment procedures.

The judges rejected NHTSA’s arguments that it couldn’t provide for notice and comment because the effective date of the penalty increases was “imminent.”

“Any imminence was NHTSA’s own creation,” the judges wrote. “NHTSA promulgated the Civil Penalties Rule on December 26, 2016, and NHTSA subsequently delayed its implementation of the rule through a trio of successive delays of finite durations. The effective date of the Civil Penalties Rule was imminent only insofar as NHTSA’s third finite delay was scheduled to elapse.”

It was also “not in the public interest” for NHTSA to suspend the rule without taking comment, the court said, lecturing the Trump administration on the general importance of following proper rulemaking procedures.

“Notice and comment are not mere formalities,” the court said. “They are basic to our system of administrative law.”

Environmentalists cheered the opinion as an example of courts checking the Trump administration’s deregulatory efforts.

“This opinion underscores that the Trump administration can’t just stop enforcing our laws to benefit corporate polluters,” said Vera Pardee, senior counsel at the Center for Biological Diversity. “The Trump administration’s sloppy efforts to kill fundamental health and environmental protections won’t survive in court.”

Click here to read the opinion.