Natural Resources Defense Coun v. National Highway Traffic Safet
Court Docket Sheet

2nd Circuit Court of Appeals

2017-02780 (ca2)

NOTICE OF APPEARANCE AS ADDITIONAL COUNSEL, on behalf of Movant Alliance of Automobile Manufacturers, Inc. in 17-2780, 17-2806, FILED. Service date 10/06/2017 by CM/ECF. [2142756] [17-2780, 17-2806] [Entered: 10/06/2017 05:22 PM]

NOTICE OF APPEARANCE FOR SUBSTITUTE, ADDITIONAL, OR AMICUS COUNSEL Natural Resources Defense Council v. National Highway Traffic Safety Short Title: Administration Docket No.: 17-2780, 17-2806 Substitute, Additional, or Amicus Counsel’s Contact Information is as follows: Name: Matthew A. Waring Firm: Mayer Brown LLP Address: 1999 K St NW Washington, DC 20006 Telephone: (202) 263-3273 Fax: (202) 830-0336 E-mail: mwaring@mayerbrown.com Appearance for: Alliance of Automobile Manufacturers, Inc./Movant-Proposed Intervenor (party/designation) Select One: Substitute counsel (replacing lead counsel:) (name/firm) Substitute counsel (replacing other counsel:) (name/firm) Additional counsel (co-counsel with: Erika Z. Jones/Mayer Brown LLP) (name/firm) Amicus (in support of:) (party/designation) CERTIFICATION I certify that: I am admitted to practice in this Court and, if required by Interim Local Rule 46.1(a)(2), have renewed my admission on 2/29/2016 OR I applied for admission on. Signature of Counsel:/s/Matthew A. Waring Type or Print Name:Matthew A. Waring

OPPOSITION TO MOTION, [{{52}}], [{{53}}], on behalf of Petitioner Center for Biological Diversity, Natural Resources Defense Council and Sierra Club in 17-2780, FILED. Service date 10/12/2017 by CM/ECF. [2146318] [17-2780, 17-2806] [Entered: 10/12/2017 04:36 PM]

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT NATURAL RESOURCES DEFENSE COUNCIL, INC., et al., Petitioners, v. Case Nos. 17-2780 (L), 17-2806 NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION, et al., Respondents. PETITIONERS’ RESPONSE TO MOTIONS TO INTERVENE Petitioners Natural Resources Defense Council, Sierra Club, and Center for Biological Diversity ("Petitioners") hereby respond to the motions to intervene filed by the Alliance of Automobile Manufacturers, Inc., and Association of Global Automakers ("Movants"). Petitioners do not oppose Movants’ intervention in this case so long as the Court conditions their intervention to ensure that their involvement does not impede the speedy and efficient resolution of the case. See Floyd v. City of New York, 770 F.3d 1 1051, 1057 (2d Cir. 2014) (intervention should not make the case "unnecessarily complex, unwieldy or prolonged"); Shore v. Parklane Hosiery Co., Inc., 606 F.2d 354, 356 (2d Cir. 1979) (recognizing courts’ "well-established practice" of conditioning intervention to ensure the "‘efficient conduct of the proceedings’" (quoting Fed. R. Civ. P. 24 advisory committee’s note to 1966 amendment)); see also Friends of Tims Ford v. Tennessee Valley Auth., 585 F.3d 955, 963 n.1 (6th Cir. 2009) ("Federal courts have the authority to apply appropriate conditions or restrictions on an intervention"). Placing conditions on Movants’ involvement is particularly important here, where Petitioners are challenging the validity of Respondents’ delay of a final rule. Any further delay caused by Movants’ participation in the case would thus exacerbate the harms caused by Respondents’ unlawful behavior. Of note, another court, in a similar lawsuit challenging an agency’s unlawful delay of a final rule, also recently placed conditions on intervention "in the interests of judicial economy, sound case management, and avoiding undue delay." California v. U.S. 2 Bureau of Land Mgmt., No. 17-cv-03804-EDL, 2017 WL 4416409, at *3 (N.D. Cal. Oct. 4, 2017). To minimize delay associated with multiple intervenors, Petitioners therefore request that the Court condition intervention by requiring that Movants file joint briefs that adhere to page limitations for a single party, comply with all briefing deadlines applicable to Respondents, and seek no delays in briefing or argument. See id. (requiring that all intervenors "file joint briefs and abide by all existing schedules in the litigation"). Requiring joint briefs would be more efficient, reduce the burdens on the parties, and pose no undue burden on Movants, as the interests alleged in their intervention motions are the same. Movants are both associations of vehicle manufacturers and claim that their members will be affected economically if the challenged delay rule is vacated. Moreover, as part of the procedural history of this case, Movants jointly filed a petition for reconsideration before Respondents, see Alliance Motion at 4-6; Global Automakers Motion at 2—further confirming that their interests are aligned and they can file joint briefs in this Court. 3 In addition, the Court should condition intervention by requiring that Movants comply with all briefing deadlines applicable to Respondents and seek no delays in briefing or argument. Movant Global Automakers asserted in its motion that there is "no risk" that intervention would delay this litigation because it is "committed to working within any briefing schedule and limits … adopted by the Court." Global Automakers Motion at 4. The Court should hold both Movants to that commitment in order to ensure the efficient resolution of this case. Dated: October 12, 2017 Respectfully submitted,/s/Ian Fein Ian Fein Irene Gutierrez Michael E. Wall Natural Resources Defense Council 111 Sutter St., 21st Floor San Francisco, CA 94104 (415) 875-6100 ifein@nrdc.org Counsel for Petitioner Natural Resources Defense Council 4 Alejandra Núñez Joanne Spalding Sierra Club 2101 Webster Street, Suite 1300 Oakland, CA 94612 (415) 997-5725 alejandra.nunez@sierraclub.org Counsel for Petitioner Sierra Club Vera Pardee Howard Crystal Center for Biological Diversity 1212 Broadway, Suite 800 Oakland, CA 94612 (415) 632-5317 vpardee@biologicaldiversity.org Counsel for Petitioner Center for Biological Diversity 5 CORPORATE DISCLOSURE STATEMENT Petitioners Natural Resources Defense Council, Inc. (NRDC), Sierra Club, and Center for Biological Diversity are non-profit organizations with no parent corporations and no outstanding stock shares or other securities in the hands of the public. NRDC, Sierra Club, and Center for Biological Diversity do not have any parent, subsidiary, or affiliate that has issued stock shares or other securities to the public. No publicly held corporation owns any stock in NRDC, Sierra Club, or Center for Biological Diversity. Dated: October 12, 2017/s/Ian Fein Ian Fein 6 CERTIFICATE OF COMPLIANCE Pursuant to Federal Rule of Appellate Procedure 32(g), I certify that this Response complies with the type-volume limitations of Rule 27(d)(2)(a) because it contains fewer than 1,000 words. Dated: October 12, 2017/s/Ian Fein Ian Fein 7 CERTIFICATE OF SERVICE I hereby certify that I electronically filed the foregoing with the Clerk of the Court for the United States Court of Appeals for the Second Circuit by using the appellate CM/ECF system on October 12, 2017. I certify that all participants in the case are registered CM/ECF users and that service will be accomplished by the appellate CM/ECF system./s/Ian Fein Ian Fein 8

REPLY TO OPPOSITION [{{65}}], on behalf of Movant Alliance of Automobile Manufacturers, Inc. in 17-2780, 17-2806, FILED. Service date 10/19/2017 by CM/ECF.[2151310][73] [17-2780, 17-2806] [Entered: 10/19/2017 09:37 AM]

17-2780 (L) 17-2806 (CON) United States Court of Appeals for the Second Circuit NATURAL RESOURCES DEFENSE COUNCIL; SIERRA CLUB; CENTER FOR BIOLOGICAL DIVERSITY; STATE OF NEW YORK; STATE OF CALIFORNIA; STATE OF VERMONT; STATE OF MARYLAND; STATE OF PENNSYLVANIA, Petitioners, v. NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION; JACK DANIELSON, in his capacity as acting Deputy Administrator of the National Highway Traffic Safety Administration, United States Department of Transportation; ELAINE CHAO, in her capacity as Secretary of the United States Department of Transportation, Respondents. On Petition for Review of a Final Rule of the National Highway Traffic Safety Administration REPLY OF THE ALLIANCE OF AUTOMOBILE MANUFACTURERS, INC. IN SUPPORT OF ITS MOTION TO INTERVENE IN SUPPORT OF RESPONDENTS ERIKA Z. JONES MATTHEW A. WARING Mayer Brown LLP 1999 K Street NW Washington, DC 20006 ejones@mayerbrown.com (202) 263-3000 Counsel for the Alliance of Automobile Manufacturers, Inc. In their response to the Alliance’s motion to intervene in this pro-ceeding, petitioners in No. 17-2780 do not contest the Alliance’s showing that this Court should permit the Alliance to intervene in this case. But these petitioners argue that intervention should be conditioned on the Al-liance’s filing a joint brief with proposed intervenor Global Automakers, subject to "page limitations for a single party," without taking any exten-sions of time for briefing. Resp. 3. The Alliance expects that this Court will adhere to its usual proce-dures for cases involving multiple intervenors in deciding the matters raised by petitioners. Although the Alliance does not anticipate needing to seek an enlargement of its brief or an extension of time for filing, it oppos-es petitioners’ suggestion that it waive its right to seek such relief at this stage. Should exigencies require the Alliance to move at a later date for an enlargement of its brief or an extension of time, the Court can evaluate the motion in light of the circumstances then prevailing and the parties’ ar-guments on the motion. 1 CONCLUSION The motion to intervene should be granted. Dated: October 19, 2017 Respectfully submitted,/s/Erika Z. Jones ERIKA Z. JONES MATTHEW A. WARING Mayer Brown LLP 1999 K Street NW Washington, DC 20006 ejones@mayerbrown.com (202) 263-3000 Counsel for the Alliance of Automobile Manufacturers, Inc. 2 CERTIFICATE OF COMPLIANCE Pursuant to Federal Rule of Appellate Procedure 32(g), the under-signed counsel certifies that this reply: (i) complies with the type-volume limitation of Rule 27(d)(2)(C) be-cause it contains 184 words, including footnotes and excluding the parts of the brief exempted by Rule 32(f); and (ii) complies with the typeface requirements of Rule 32(a)(5) and the type style requirements of Rule 32(a)(6) because it has been prepared using Microsoft Office Word 2007 and is set in Century Schoolbook font in a size equivalent to 14 points or larger. Dated: October 19, 2017/s/Erika Z. Jones CERTIFICATE OF SERVICE I certify that I electronically filed the foregoing reply with the Clerk of the Court using the appellate CM/ECF system on October 19, 2017. I further certify that all participants in this case are registered CM/ECF us-ers and that service will be accomplished via CM/ECF. Dated: October 19, 2017/s/Erika Z. Jones

NOTICE OF APPEARANCE AS ADDITIONAL COUNSEL, on behalf of Movant Association of Global Automakers in 17-2780, 17-2806, FILED. Service date 10/19/2017 by CM/ECF. [2151877] [17-2780, 17-2806] [Entered: 10/19/2017 02:16 PM]

NOTICE OF APPEARANCE FOR SUBSTITUTE, ADDITIONAL, OR AMICUS COUNSEL Short Title: NRDC, et al. v. Nat. Highway Traffic Safety Admin., _____et al. Docket No.: 17-2780,________-2806 Substitute, Additional, or Amicus Counsel’s Contact Information is as follows: Name: Justin A. Torres Firm: King and Spalding LLP Address: 1700 Pennsylvania Avenue, NW, Washington, DC 20006 Telephone: (202) 737-0500 ___________________________ Fax: (202) 626-3737 E-mail: jtorres@kslaw.com Appearance for: Association of Global Automakers/Movant-Proposed Intervenor (party/designation) Select One: G Substitute counsel (replacing lead counsel:) (name/firm) G Substitute counsel (replacing other counsel: _______) (name/firm) ✔ G Additional counsel (co-counsel with: Ashley C. Parrish/King & Spalding LLP) (name/firm) G Amicus (in support of:) (party/designation) CERTIFICATION I certify that: ✔ G I am admitted to practice in this Court and, if required by Interim Local Rule 46.1(a)(2), have renewed my admission on OR G I applied for admission on. Signature of Counsel:/s/Justin A. Torres Type or Print Name: Justin A. Torres

REPLY TO OPPOSITION [{{65}}], on behalf of Movant Association of Global Automakers in 17-2780, 17-2806, FILED. Service date 10/19/2017 by CM/ECF.[2151960][77] [17-2780, 17-2806] [Entered: 10/19/2017 02:57 PM]

IN THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT) NATURAL RESOURCES DEFENSE) COUNCIL, SIERRA CLUB, and) CENTER FOR BIOLOGICAL) DIVERSITY,)) Petitioners,)) v.) No. 17-2780) (consol. w/No. 17-2806) NATIONAL HIGHWAY TRAFFIC) SAFETY ADMINISTRATION;) [On Petition for Review JACK DANIELSON, in his capacity as) from the National Acting Deputy Administrator of the) Highway Traffic Safety National Highway Traffic Safety) Administration, Administration; UNITED STATES) NHTSA-2016-0136] DEPARTMENT OF) TRANSPORTATION; and) ELAINE L. CHAO, in her capacity as) Secretary of the United States) Department of Transportation,)) Respondents.)) REPLY TO RESPONSE TO MOTION TO INTERVENE OF THE ASSOCIATION OF GLOBAL AUTOMAKERS Pursuant to Rules 15(d) and 27 of the Federal Rules of Appellate Procedure and Local Rule 27.1, the Association of Global Automakers ("Global Automakers") submits the following reply to the Response filed on October 12, 2017 by petitioners the Natural Resources Defense Council, Sierra Club, and Center for Biological Diversity. Petitioners state that they do not oppose Global Automakers’ motion to intervene. Resp. 1. Nonetheless, petitioners ask the Court to impose special conditions on intervention that they contend are needed to ensure that intervention "does not impede the speedy and efficient resolution of the case." Id. That request is unnecessary and premature. In its motion, Global Automakers committed to working within any briefing schedule and limits adopted by the Court. Mot. to Intervene at 4 (Oct. 4, 2017). Global Automakers repeats that pledge, and further pledges to do its best to avoid duplicative briefing. Petitioners have made no showing that granting intervention will cause any delay or complication, or otherwise attempted to justify their request for special conditions With no basis for concluding that intervention will impede the efficient resolution of this case, this Court should not pre-judge hypothetical questions that may or may not arise in this appeal, including questions about briefing deadlines and page/word limitations. Any issues that may arise can and should be resolved in the ordinary course of proceedings consistent with the ordinary rules. There is no reason the Court should make assumptions about movant-intervenors’ interests or require them to file a joint brief. 2 Petitioners note that there is precedent for imposing special conditions on intervention, but the cases they cite are inapposite. The two cases they cite from this Court merely conclude that the proposed intervenor failed to make an adequate showing on one or more of the four factors required to support intervention. See Resp. at 12 (citing Floyd v. City of New York, 770 F.3d 1051, 1058 (2d Cir. 2014) (intervenor "failed to meet the first and second requirements"); Shore v. Parklane Hosiery Co., 606 F.2d 354, 357 (2d Cir. 1979) (intervenors’ "interests were not impaired"). They do not support petitioners’ request. Petitioners also cite a Sixth Circuit decision that mentions (though it was not at issue in the case) that federal courts have authority to impose conditions on intervention. See Friends of Tims Ford v. Tenn. Valley Auth., 585 F.3d 955, 963 n.1 (6th Cir. 2009). But that is undisputed. The question in any case is whether conditions on intervention are appropriate under the circumstances and whether the party requesting them has justified its request. In the unpublished decision that petitioners cite, for example, the California district court found that imposing conditions was appropriate because the intervenors "either expressly agreed to [the] conditions" or made no objection. California v. U.S. Bureau of Land Mgmt., No. 17-cv-03804, 2017 WL 4416409, at *3 (N.D. Cal. Oct. 4, 2017). Here, Global Automakers has not agreed to petitioners’ proposed special conditions, and petitioners have made no showing to justify their attempt to depart 3 from the ordinary rules governing intervention. Accordingly, the Court should grant the unopposed motions to intervene and deny petitioners’ request to impose special conditions on intervention. Respectfully submitted,/s/Ashley C. Parrish Ashley C. Parrish Justin A. Torres KING & SPALDING LLP 1700 Pennsylvania Avenue, N.W., Suite 200 Washington, D.C. 20006 Telephone: (202) 737-0500 Facsimile: (202) 626-3737 Counsel for the Association of Global Automakers Of Counsel: Jacqueline Glassman KING & SPALDING LLP 1700 Pennsylvania Avenue, N.W., Suite 200 Washington, D.C. 20006 Telephone: (202) 737-0500 Facsimile: (202) 626-3737 Dated: October 19, 2017 4 CERTIFICATE OF COMPLIANCE Pursuant to Rule 32(g) of the Federal Rules of Appellate Procedure, I hereby certify that this reply: (i) complies with the type-volume limits of Rule 27(d)(2)(C), as it contains 538 words, including footnotes and excluding the parts of the document exempted by Rule 32(f); and (ii) complies with the typeface and style requirements of Rule 32(a)(5)– (6), as it has been prepared using Microsoft Word 2013 and is set in 14 point Times New Roman font./s/Ashley C. Parrish Ashley C. Parrish CERTIFICATE OF SERVICE Pursuant to Rule 25 of the Federal Rules of Appellate Procedure, I hereby certify that I have this 19th day of October, 2017, served a copy of the foregoing document on all parties through the Court’s CM/ECF system./s/Ashley C. Parrish Ashley C. Parrish

MOTION, for summary reversal, to stay, on behalf of Petitioner Center for Biological Diversity, Natural Resources Defense Council and Sierra Club in 17-2780, FILED. Service date 10/24/2017 by CM/ECF. [2155183] [17-2780, 17-2806] [Entered: 10/24/2017 12:42 PM]

Case 17-2780, Document 84-1, 10/24/2017, 2155183, Page1 of 1 UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT Thurgood Marshall U.S. Courthouse 40 Foley Square, New York, NY 10007 Telephone: 212-857-8500 MOTION INFORMATION STATEMENT 17-2780, 17-2806 Docket Number(s): ________________________________________ _______________Caption [use short title]_____________________ Summary Vacatur or, in the Alternative, Motion for: ______________________________________________ Stay Pending Judicial Review ________________________________________________________ ________________________________________________________ Set forth below precise, complete statement of relief sought: The Court should summarily vacate the National Highway Traffic ________________________________________________________ Natural Resources Defense Council v. National Highway Traffic Safety Administration Safety Administration's unlawful delay of a final rule that increased ________________________________________________________ the penalty rate for violations of fuel-economy standards, and reinstate ________________________________________________________ the unlawfully delayed rule as of its prior effective date. In the ________________________________________________________ alternative, the Court should stay the unlawful delay pending ________________________________________________________ its review of the merits. ________________________________________________________ NRDC, Sierra Club, Center for Biological Diversity OPPOSING PARTY:____________________________________________ MOVING PARTY:_______________________________________ NHTSA; Jack Danielson; Dep't of Transportation: Elaine Chao ___Plaintiff ___Defendant ✔ ___Appellant/Petitioner ___Appellee/Respondent Ian Fein MOVING ATTORNEY:___________________________________ H. Thomas Byron III OPPOSING ATTORNEY:________________________________________ [name of attorney, with firm, address, phone number and e-mail] Natural Resources Defense Council ________________________________________________________ U.S. Dep't of Justice; Civil Division, Appellate Staff _______________________________________________________________ 111 Sutter Street, 21st Floor, San Francisco, CA 94104 _______________________________________________________________ ________________________________________________________ Main (RFK) Room 7529; 950 Pennsylvania Ave., N.W., Washington, D.C. 20530 Ph: 415-875-6147; ifein@nrdc.org ________________________________________________________ Ph: 202-616-5367; H.Thomas.Byron@usdoj.gov _______________________________________________________________ Petition for Review from the National Highway Transportation Safety Administration Court-Judge/Agency appealed from: _________________________________________________________________________________________ Please check appropriate boxes: FOR EMERGENCY MOTIONS, MOTIONS FOR STAYS AND INJUCTIONS PENDING APPEAL: Has movant notified opposing counsel (required by Local Rule 27.1): Has this request for relief been made below? ✔ ___Yes ___No ✔ ___Yes ___No (explain):__________________________ Has this relief been previously sought in this court? ✔ ___Yes ___No _______________________________________________ Requested return date and explanation of emergency: ________________ _____________________________________________________________ Opposing counsel’s position on motion: _____________________________________________________________ ✔ ___Unopposed ___Opposed ___Don’t Know _____________________________________________________________ Does opposing counsel intend to file a response: _____________________________________________________________ ✔ ___Yes ___No ___Don’t Know Is oral argument on motion requested? ✔ ___Yes ___No (requests for oral argument will not necessarily be granted) Has argument date of appeal been set? ✔ ___ Yes ___No If yes, enter date:_______________________________________________________ Signature of Moving Attorney:/s/Ian Fein _________________________________ 10/24/2017 Date:__________________ ✔ Service by: ___CM/ECF ___Other [Attach proof of service] Form T F T-1080 1080 ((rev.12-13) 12 13) Case 17-2780, Document 84-2, 10/24/2017, 2155183, Page1 of 37 Nos. 17-2780 (L), 17-2806 IN THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT NATURAL RESOURCES DEFENSE COUNCIL, INC., et al., Petitioners, v. NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION, et al., Respondents. On Petition for Review of a Rule of the National Highway Traffic Safety Administration PETITIONERS’ MOTION FOR SUMMARY VACATUR OR, IN THE ALTERNATIVE, STAY PENDING JUDICIAL REVIEW Ian Fein Irene Gutierrez Michael E. Wall Natural Resources Defense Council 111 Sutter St., 21st Floor San Francisco, CA 94104 (415) 875-6100 ifein@nrdc.org Counsel for Petitioner Natural Resources Defense Council October 24, 2017 Case 17-2780, Document 84-2, 10/24/2017, 2155183, Page2 of 37 Alejandra Núñez Vera Pardee Joanne Spalding Howard Crystal Sierra Club Center for Biological Diversity 2101 Webster Street, Suite 1300 1212 Broadway, Suite 800 Oakland, CA 94612 Oakland, CA 94612 (415) 997-5725 (415) 632-5317 alejandra.nunez@sierraclub.org vpardee@biologicaldiversity.org Counsel for Petitioner Counsel for Petitioner Sierra Club Center for Biological Diversity Case 17-2780, Document 84-2, 10/24/2017, 2155183, Page3 of 37 CORPORATE DISCLOSURE STATEMENT Petitioners Natural Resources Defense Council, Inc. (NRDC), Sierra Club, and Center for Biological Diversity are non-profit organizations with no parent corporations and no outstanding stock shares or other securities in the hands of the public. NRDC, Sierra Club, and Center for Biological Diversity do not have any parent, subsidiary, or affiliate that has issued stock shares or other securities to the public. No publicly held corporation owns any stock in NRDC, Sierra Club, or Center for Biological Diversity. Dated: October 24, 2017/s/Ian Fein Ian Fein i Case 17-2780, Document 84-2, 10/24/2017, 2155183, Page4 of 37 TABLE OF CONTENTS CORPORATE DISCLOSURE STATEMENT............................................. i TABLE OF AUTHORITIES..................................................................... iii INTRODUCTION....................................................................................... 1 BACKGROUND.......................................................................................... 3 Civil penalties deter violations of fuel-economy standards............. 3 The Administration increases the outdated penalties.................... 5 The Administration unlawfully suspends the penalty increase, without notice or comment...................................................... 8 ARGUMENT............................................................................................... 9 I. The Delay Rule Is Unlawful and Should Be Summarily Vacated..................................................................................... 9 A. The Administration lacked authority to delay the effective date of the final Penalty Rule.......................... 9 B. The Administration violated the APA by failing to provide notice or an opportunity to comment.............. 13 II. In the Alternative, the Court Should Stay the Delay Rule.. 18 A. Delaying the penalty increase irreparably harms Petitioners..................................................................... 19 B. The public interest and balance of equities support a stay................................................................ 24 CONCLUSION......................................................................................... 26 CERTIFICATE OF COMPLIANCE CERTIFICATE OF SERVICE ADDENDUM ii Case 17-2780, Document 84-2, 10/24/2017, 2155183, Page5 of 37 TABLE OF AUTHORITIES Cases California v. Bureau of Land Mgmt., No. 17-cv-03804-EDL, 2017 WL 4416409, (N.D. Cal. Oct. 4, 2017)................................................................... 17 Clean Air Council v. Pruitt, 862 F.3d 1 (D.C. Cir. 2017)......................................... 2, 9, 11, 12, 13 Ctr. for Biological Diversity v. Nat’l Highway Traffic Safety Admin., 538 F.3d 1172 (9th Cir. 2008)........................................................... 3 Envtl. Def. Fund, Inc. v. Gorsuch, 713 F.2d 802 (D.C. Cir. 1983)......................................................... 14 Friends of the Earth v. Laidlaw, 528 U.S. 167 (2000)......................................................................... 22 Hunt v. Wash. State Apple Advert. Comm’n, 432 U.S. 333 (1977)......................................................................... 22 La. Pub. Serv. Comm’n v. FCC, 476 U.S. 355 (1986)........................................................................... 9 LaFleur v. Whitman, 300 F.3d 256 (2d Cir. 2002)............................................................. 22 League of Women Voters v. Newby, 838 F.3d 1 (D.C. Cir. 2016)....................................................... 24, 26 Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (1983)........................................................................... 11 Nat. Res. Def. Council v. Abraham, 355 F.3d 179 (2d Cir. 2004)........... 1, 9, 11, 12, 13, 14, 15, 16, 17, 18 iii Case 17-2780, Document 84-2, 10/24/2017, 2155183, Page6 of 37 Nat. Res. Def. Council v. Envtl. Prot. Agency, 683 F.2d 752 (3d Cir. 1982)............................................ 14, 15-16, 18 Nat. Res. Def. Council v. Reilly, 976 F.2d 36 (D.C. Cir. 1992)........................................................... 12 Nat’l Ass’n of Farmworkers Orgs. v. Marshall, 628 F.2d 604 (D.C. Cir. 1980).................................................... 24-25 Nat’l Nutritional Foods Ass’n v. Kennedy, 572 F.2d 377 (2d Cir. 1978).................................................. 14-15, 18 Nken v. Holder, 556 U.S. 418 (2009)................................................................... 19, 24 N.Y. Pub. Interest Research Grp. v. Whitman, 321 F.3d 316 (2d Cir. 2003)............................................................. 22 SEC v. Chenery Corp., 332 U.S. 194 (1947)......................................................................... 11 Time Warner Cable Inc. v. Fed. Commc’ns Comm’n, 729 F.3d 137 (2d Cir. 2013)........................................................ 13-14 Zhang v. Slattery, 55 F.3d 732 (2d Cir. 1995)............................................................... 14 Statutes 5 U.S.C. § 705........................................................................................... 10 5 U.S.C. § 706....................................................................................... 13 5 U.S.C. § 551(5)....................................................................................... 13 5 U.S.C. § 553............................................................................. 8, 13, 14 8 U.S.C. § 1101(a)(42)............................................................................... 14 iv Case 17-2780, Document 84-2, 10/24/2017, 2155183, Page7 of 37 28 U.S.C. § 2461 note................................................................. 5, 6, 22, 26 42 U.S.C. § 7607(d)(7)(B).................................................................... 10, 12 49 U.S.C. §§ 32901-32919............................................................... 3, 11,26 49 U.S.C. § 32902.................................................................................. 3, 25 49 U.S.C. § 32903...................................................................................... 20 49 U.S.C. § 32909........................................................................................ 9 49 U.S.C. § 32912.................................................................................... 3, 4 Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, Pub. L. 114-74, § 701, 129 Stat. 584.................. 5, 6, 10 Regulations 49 C.F.R. § 1.95......................................................................................... 4 49 C.F.R. § 578.2................................................................................... 4, 20 Other Authorities Fed. R. App. P. 18..................................................................................... 19 62 Fed. Reg. 5167 (Feb. 4, 1997)................................................................ 4 77 Fed. Reg. 62,624 (Oct. 15, 2012)......................................... 3, 19, 20, 25 81 Fed. Reg. 43,524 (July 5, 2016)....................................................... 6, 20 81 Fed. Reg. 95,489 (Dec. 28, 2016)..................................................... 7, 20 82 Fed. Reg. 8346 (Jan. 24, 2017).............................................................. 8 v Case 17-2780, Document 84-2, 10/24/2017, 2155183, Page8 of 37 82 Fed. Reg. 8694 (Jan. 30, 2017).............................................................. 8 82 Fed. Reg. 15,302 (Mar. 28, 2017).......................................................... 8 82 Fed. Reg. 29,009 (June 27, 2017).......................................................... 8 82 Fed. Reg. 32,139 (July 12, 2017)................... 1, 8, 11, 12, 15, 16, 17, 18 82 Fed. Reg. 32,140 (July 12, 2017)......................................... 9, 21, 22, 23 All. of Auto. Mfrs. & Ass’n of Glob. Automakers, Petition for Partial Reconsideration (Aug. 1, 2016)............................................................... 6, 7, 20, 21, 23 Ctr. for Biological Diversity, Petition for Rulemaking (Oct. 1, 2015)............................................. 5 Gov’t Accountability Office, GAO-10-336, Vehicle Fuel Economy (2010).................................................. 4, 5, 21 Lisa Heinzerling, The Legal Problems (So Far) of Trump’s Deregulatory Binge, Harv. L. & Pol’y Rev. (forthcoming), https://ssrn.com/abstract=3049004................................................. 11 Nat’l Highway Traffic Safety Admin., CAFE Public Information Center, Civil Penalties, https://one.nhtsa.gov/cafe_pic/CAFE_PIC_Fines_LIVE.html (last visited Oct. 20, 2017)................................................................ 4 vi Case 17-2780, Document 84-2, 10/24/2017, 2155183, Page9 of 37 INTRODUCTION The National Highway Traffic Safety Administration (Administration) recently suspended, without notice or comment, an important final rule that increased civil penalties for violating fuel-economy standards. Congress mandated that increase because decades of inflation had eroded the penalty’s deterrent effect. After the recent change in administration, however, the agency indefinitely delayed the penalty increase without statutory authority and in blatant disregard of the Administrative Procedure Act (APA). 82 Fed. Reg. 32,139 (July 12, 2017) [ADD-2-31]. This Court should summarily vacate the unlawful delay because it directly contravenes settled Circuit precedent. This Court’s decision in Natural Resources Defense Council v. Abraham, 355 F.3d 179 (2d Cir. 2004), is dispositive. Like the present case, Abraham involved an agency’s attempt, at the start of a new presidential administration, to delay an energy efficiency rule promulgated by the prior administration. This Court rejected the agency’s assertion, also made here, that such a delay was within its "inherent power," as well as its further claim that the imminent 1 Attachments are included in an Addendum and cited as ADD-__. Case 17-2780, Document 84-2, 10/24/2017, 2155183, Page10 of 37 effective date of the rule constituted "good cause" to delay it without notice or comment. This Court vacated the agency’s unlawful delay and reinstated the energy efficiency rule as of its original effective date. The Administration here has done precisely what this Court forbade in Abraham. It relied on the same meritless justifications this Court already rejected. And it did so one week after the D.C. Circuit summarily vacated another agency’s similar attempt to suspend a final rule, without notice or comment, based on non-existent "inherent authority." Clean Air Council v. Pruitt, 862 F.3d 1 (D.C. Cir. 2017). This Court too should summarily vacate the Administration’s manifestly invalid suspension. A quick ruling is important here because delay is precisely what the Administration has sought to achieve with its unlawful behavior; any further delay would reward its disregard for Circuit precedent. Further delay would also harm Petitioners’ members and the public. Automakers are deciding, now, whether to comply with fuel-economy standards based on the applicable penalty: delaying the long-overdue penalty increase will thus lead to less efficient vehicles and greater emissions of harmful air pollutants. Meanwhile, the only countervailing purpose for the delay is to make it easier for automakers to evade the 2 Case 17-2780, Document 84-2, 10/24/2017, 2155183, Page11 of 37 standards. Thus, even if the Court does not grant summary vacatur, it should stay the suspension and expedite its review of the merits.2 BACKGROUND Civil penalties deter violations of fuel-economy standards The Energy Policy and Conservation Act of 1975 (Energy Conservation Act) requires the Secretary of Transportation to establish mandatory fuel-economy standards for cars and light trucks. 49 U.S.C. §§ 32901-32919. The fleet-wide standards must be set at the "maximum feasible" levels. Id. § 32902; Ctr. for Biological Diversity v. Nat’l Highway Traffic Safety Admin., 538 F.3d 1172, 1182-85 (9th Cir. 2008). Although designed primarily to reduce the nation’s oil consumption, the standards also reduce emissions of harmful air pollutants and thereby benefit public health. See 77 Fed. Reg. 62,624, 63,003 (Oct. 15, 2012). The Energy Conservation Act further requires the Secretary to enforce the fuel-economy standards by assessing civil monetary penalties against automakers that produce noncompliant fleets. 49 U.S.C. § 32912. The Secretary delegated these responsibilities to the 2Petitioners notified Respondents’ and Movants’ counsel of the instant motion. Respondents and Movants oppose the requested relief and intend to file responses. 3 Case 17-2780, Document 84-2, 10/24/2017, 2155183, Page12 of 37 Administration. 49 C.F.R. § 1.95(a). The purpose of the penalties is to deter violations of the fuel-economy standards and "foster compliance with the law." Id. § 578.2. However, when it is cheaper for automakers to pay the penalty than to meet the standards by implementing fuel-saving technology, many automakers will choose to forego the improvements and pay the penalty instead—as they have in the past, see Nat’l Highway Traffic Safety Admin., CAFE Pub. Info. Ctr., Civil Penalties, https://one.nhtsa.gov/cafe_pic/CAFE_PIC_Fines_LIVE.html (last visited Oct. 24, 2017). In 1975, when Congress first created the fuel-economy penalties, it set the penalty rate at $5 per tenth of a mile per gallon.3 See 49 U.S.C. § 32912(b). In 1997, the Administration raised that rate slightly, to $5.50. 62 Fed. Reg. 5167, 5168 (Feb. 4, 1997). By 2010, many experts had concluded that the outdated $5.50 penalty rate "may not provide a strong enough incentive for manufacturers to comply" with the fuel-economy standards. Gov’t 3 The formula for calculating the civil penalty is: (penalty rate) x (number of tenths of a mile per gallon by which a non-compliant fleet falls short of the fuel-economy standard) x (number of vehicles in the non-compliant fleet). 4 Case 17-2780, Document 84-2, 10/24/2017, 2155183, Page13 of 37 Accountability Office, GAO-10-336, Vehicle Fuel Economy 17 (2010) [hereinafter GAO Report] [ADD-31].4 The Government Accountability Office thus recommended that the Administration consider increasing the penalty to restore its deterrent effect. Id. at 18 [ADD-32]. The Administration increases the outdated penalties In October 2015, Petitioner Center for Biological Diversity formally requested that the Administration increase the fuel-economy penalties. See Ctr. for Biological Diversity, Petition for Rulemaking 13-14 (Oct. 1, 2015) [hereinafter Environmental Petition] [ADD-46-47].5 One month later, while the Administration was considering that request, Congress enacted the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015. Pub. L. 114-74, § 701, 129 Stat. 584, 599 (codified at 28 U.S.C. § 2461 note). That law recognized that inflation had significantly eroded the deterrent effect of many civil penalties. Congress thus required that agencies "shall" increase their penalties with an initial catch-up adjustment in 2016, followed by subsequent annual inflation adjustments. Id. § 701(b)(1)(D). And 4 Available at http://www.gao.gov/assets/310/301194.pdf. 5 Available at http://www.biologicaldiversity.org/programs/climate_ law_institute/transportation_and_global_warming/fuel_economy_stand ards/pdfs/15_10_1_Center_Petition_re_Civil_Penalties.pdf. 5 Case 17-2780, Document 84-2, 10/24/2017, 2155183, Page14 of 37 because these increases were long overdue, Congress required agencies to act promptly: It instructed that the initial increase "shall take effect no later than August 1, 2016," and the subsequent adjustments "not later than January 15 of every year thereafter." Id. § 701(b)(1)(A), (D). In July 2016, the Administration issued an interim rule updating the various civil penalties that it administers. 81 Fed. Reg. 43,524 (July 5, 2016) [ADD-17-22]. The agency found, based on changes in the Consumer Price Index, that the original fuel-economy penalty rate of $5 would be $22 as adjusted for inflation. Id. at 43,526 [ADD-19]. The Administration thus raised the $5.50 penalty rate by the maximum adjustment of 150 percent, to $14 per tenth of a mile per gallon. Id. The Alliance of Automobile Manufacturers and Association of Global Automakers acknowledged the Administration was "obligated" to increase the fuel-economy penalty rate. All. of Auto. Mfrs. & Ass’n of Glob. Automakers, Petition for Partial Reconsideration 1 (Aug. 1, 2016) [hereinafter Industry Petition] [ADD-49].6 They requested, however, that the agency not apply the $14 penalty rate to pre-Model Year 2019 6 Available at https://www.globalautomakers.org/system/files/document/attachments/joint_petition_for_reconsideration_cafe_civil_ penalties_8-01-16_final.pdf. 6 Case 17-2780, Document 84-2, 10/24/2017, 2155183, Page15 of 37 vehicles. Id. at 5-6 [ADD-53-54]. They argued that, given the time involved in designing and producing a fleet, automakers had already decided whether to comply with the standards for Model Years 2016, 2017, and 2018 based on the $5.50 penalty rate. Id. In December 2016, the Administration issued a final rule addressing both the Industry and Environmental Petitions. 81 Fed. Reg. 95,489 (Dec. 28, 2016) [hereinafter Penalty Rule] [ADD-12-15]. The agency concluded that, because the purpose of the civil penalty is to "encourage manufacturers to comply with the [fuel-economy] standards," it would allow manufacturers additional time "to design and produce vehicles in response to the increased penalties." Id. at 95,490-91 [ADD-13-14]. The Administration thus granted automakers’ request to apply the $14 penalty rate beginning with Model Year 2019 fleets. Id. The agency also determined that the Penalty Rule effectively addressed the Environmental Petition because "the increased penalty will accomplish [the] goal of encouraging manufacturers to apply more fuel-saving technologies to their vehicles in those future model years." Id. The Administration published the final Penalty Rule in the Federal Register on December 28, 2016, with an effective date of January 27, 2017. Id. at 95,489 [ADD-12]. 7 Case 17-2780, Document 84-2, 10/24/2017, 2155183, Page16 of 37 The Administration unlawfully suspends the penalty increase, without notice or comment On January 20, 2017, the Trump administration announced plans to postpone final regulations that had not yet taken effect. 82 Fed. Reg. 8346 (Jan. 24, 2017). Among these was the Penalty Rule. 82 Fed. Reg. 8694 (Jan. 30, 2017). The Administration temporarily delayed the rule three times, setting a new effective date of July 10, 2017. Id.; 82 Fed. Reg. 15,302 (Mar. 28, 2017); 82 Fed. Reg. 29,009 (June 27, 2017).7 On July 12, 2017, two days after that new effective date, the Administration announced that it had indefinitely delayed the Penalty Rule as of July 7. 82 Fed. Reg. 32,139 [hereinafter Delay Rule] [ADD-2-3]. The agency did not provide any notice or opportunity to comment on the delay. It asserted that the delay was "consistent with [its] statutory authority to administer the [fuel-economy] program and its inherent authority to do so efficiently." Id. at 32,140 [ADD-3]. And it further claimed that it had "good cause" to evade notice-and-comment procedures because the effective date of the Penalty Rule was "imminent." Id. 7 The Administration did not provide notice or an opportunity to comment on these temporary delays, claiming they were exempt as "rules of … procedure" under the APA, 5 U.S.C. § 553(b)(3)(A). 8 Case 17-2780, Document 84-2, 10/24/2017, 2155183, Page17 of 37 The Administration also announced that it was reconsidering the penalty rate and accepting public comments on that reconsideration. 82 Fed. Reg. 32,140 (July 12, 2017) [ADD-5-10]. The agency provided no timeline for completing its reconsideration. And based on the Delay Rule, it asserted that "[d]uring reconsideration, the applicable civil penalty rate is $5.50." Id. at 32,143 [ADD-8]. Petitioners timely asked this Court to review the Delay Rule. See 49 U.S.C. § 32909(a)(2); Abraham, 355 F.3d at 192-94 (court of appeals had jurisdiction to review delays to effective date of final rules under Energy Conservation Act). So did several states. Case No. 17-2806. ARGUMENT I. The Delay Rule Is Unlawful and Should Be Summarily Vacated A. The Administration lacked authority to delay the effective date of the final Penalty Rule It is "well-established" that "‘an agency literally has no power to act … unless and until Congress confers power upon it.’" Abraham, 355 F.3d at 202 (quoting La. Pub. Serv. Comm’n v. FCC, 476 U.S. 355, 374 (1986)). That is because an agency, as a "creature of statute," has "only those authorities conferred upon it by Congress." Id. (internal quotation marks omitted); see also Clean Air Council, 862 F.3d at 9 (it is 9 Case 17-2780, Document 84-2, 10/24/2017, 2155183, Page18 of 37 "axiomatic" that agencies "may act only pursuant to authority delegated to them by Congress"). The Delay Rule is invalid because Congress did not authorize suspending the Penalty Rule. Congress has permitted agencies to postpone or stay a final rule’s effective date in narrow circumstances, e.g., 5 U.S.C. § 705; 42 U.S.C. § 7607(d)(7)(B), none of which apply here. In fact, Congress instructed the Administration here not to delay—much less suspend indefinitely—the effective date of the long-overdue increase to the fuel-economy penalty rate. Instead, Congress directed that the inflation adjustment "shall take effect not later than August 1, 2016." Pub. L. 114-74, § 701(b)(1)(D), 129 Stat. at 599. Congress mandated this prompt increase because decades of inflation had significantly eroded the deterrent effect of the fuel-economy penalty. And Congress further instructed that the Administration "shall" make subsequent annual adjustments "not later than January 15 of every year thereafter." Id. § 701(b)(1)(A). The agency’s indefinite delay of the penalty increase thus violates at least two separate statutory deadlines. The Administration here did not explain how indefinitely delaying the Penalty Rule could be squared with Congress’s instruction for a 10 Case 17-2780, Document 84-2, 10/24/2017, 2155183, Page19 of 37 prompt penalty increase and subsequent annual adjustments. Nor can it belatedly do so now. This Court "‘must judge the propriety of [the Delay Rule] solely by the grounds invoked by the agency’ when it acted." Clean Air Council, 862 F.3d at 9 (quoting SEC v. Chenery Corp., 332 U.S. 194, 196 (1947)); accord Abraham, 355 F.3d at 204 n.13 ("[I]t is well-established that an agency’s action must be upheld, if at all, on the basis articulated by the agency itself." (quoting Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 50 (1983))). Instead, the Administration suggested that summarily suspending the penalty increase was somehow "consistent with" its statutory authority to administer the fuel-economy program and its "inherent authority" to do so efficiently. 82 Fed. Reg. at 32,140 [ADD-3]. This vague assertion does not support the ultra vires action.8 The Administration’s authority to administer the fuel-economy program derives from the Energy Conservation Act. 49 U.S.C. §§ 32901-32919. That statute contains no provision authorizing the suspension of 8 See generally Lisa Heinzerling, The Legal Problems (So Far) of Trump’s Deregulatory Binge, Harv. L. & Pol’y Rev. (forthcoming) (manuscript at 7-14), https://ssrn.com/abstract=3049004 (explaining how agencies under the Trump administration have failed to identify legal authority for their delay or suspension of dozens of final rules). 11 Case 17-2780, Document 84-2, 10/24/2017, 2155183, Page20 of 37 a final rule. See Abraham, 355 F.3d at 202 (comparing Clean Air Act section 307(d)(7)(B), which authorizes staying a final rule for three months during reconsideration in limited circumstances, to Energy Conservation Act provisions that do not even provide for reconsideration, much less a stay). And an agency’s general authority to administer a regulatory program does not alone provide the power to suspend final rules—especially where, as here, Congress separately established deadlines for those rules to take effect. See Nat. Res. Def. Council v. Reilly, 976 F.2d 36, 40-41 (D.C. Cir. 1992) (rejecting agency’s contention that its "general authority" to prescribe regulations "includes the power to stay regulations already promulgated"). Lacking any statutory authorization for the delay, the Administration also resorted to claiming an "inherent authority" to suspend the penalty increase during reconsideration. 82 Fed. Reg. at 32,140 [ADD-3]. But the agency "cites nothing for the proposition that it has such authority, and for good reason." Clean Air Council, 862 F.3d at 9. This Court in Abraham already "reject[ed] the contention" that an agency has "‘inherent power’ to suspend a duly promulgated rule where no statute conferred such authority." Id. (citing Abraham, 355 F.3d at 202). The Administration’s assertion of such inherent authority here is 12 Case 17-2780, Document 84-2, 10/24/2017, 2155183, Page21 of 37 thus even more "puzzling" than the Department of Energy’s similar meritless claim that this Court already rejected in Abraham. 355 F.3d at 202. In short, the Administration "must point to something in [the relevant statutes] that gives it authority" to delay the Penalty Rule. Clean Air Council, 862 F.3d at 9. It did not, because it cannot. The Delay Rule must therefore be "set aside" as "in excess of statutory … authority." 5 U.S.C. § 706(2)(C). B. The Administration violated the APA by failing to provide notice or an opportunity to comment Even if the Administration had authority to delay the Penalty Rule (which it did not), the Delay Rule is still plainly unlawful because the agency failed to provide notice or an opportunity to comment and thus acted "without observance of procedure required by law." 5 U.S.C. § 706(2)(D). The APA generally requires notice and comment for all agency rulemakings, including the amendment or repeal of a final rule. Id. §§ 551(5), 553(b)-(c). These procedures "serve the need for public participation in agency decisionmaking" and "ensure the agency has all 13 Case 17-2780, Document 84-2, 10/24/2017, 2155183, Page22 of 37 pertinent information before it when making a decision." Time Warner Cable Inc. v. Fed. Commc’ns Comm’n, 729 F.3d 137, 168 (2d Cir. 2013). Because suspending a rule is tantamount to an amendment or repeal, notice and comment is also required for any such suspension. See Abraham, 355 F.3d at 204-06 (agency violated APA by delaying final rule without notice or comment); Nat. Res. Def. Council v. Envtl. Prot. Agency (NRDC v. EPA), 683 F.2d 752, 762-64 & n.23 (3d Cir. 1982) (same); see also Envtl. Def. Fund, Inc. v. Gorsuch, 713 F.2d 802, 816 (D.C. Cir. 1983) ("agency action which has the effect of suspending a duly promulgated [rule] …. constitutes rulemaking subject to notice and comment requirements"). The APA provides a limited exception to the notice-and-comment requirement where the agency for "good cause" finds that such procedures are "impracticable, unnecessary, or contrary to the public interest." 5 U.S.C. § 553(b)(B). But this Court has repeatedly made clear that the exception "should be narrowly construed and only reluctantly countenanced." Zhang v. Slattery, 55 F.3d 732, 744 (2d Cir. 1995) (internal quotation marks omitted), superseded by statute on other grounds, 8 U.S.C. § 1101(a)(42). It is "not an'escape clause’"; a "true and … supportable finding of necessity or emergency must be made and 14 Case 17-2780, Document 84-2, 10/24/2017, 2155183, Page23 of 37 published." Nat’l Nutritional Foods Ass’n v. Kennedy, 572 F.2d 377, 385 (2d Cir. 1978) (internal quotation marks omitted). Each of the justifications that the Administration offered for invoking the good-cause exception here has already been squarely rejected by this Court. First, the Administration claimed it had good cause to circumvent notice-and-comment procedures because the effective date of the Penalty Rule was "imminent" and it needed "additional time" to reconsider the rule. 82 Fed. Reg. at 32,140 [ADD-3]. But the APA does not permit an agency to suspend a rule without notice or comment simply because the agency decides to revisit it on the eve of its effective date. This Court rejected precisely the same argument in Abraham, where the agency claimed that it "wished for more time to'review and consider[]’" the final rule that had an "imminent" effective date. 355 F.3d at 205. This Court held that such imminence does not provide good cause to avoid notice-and-comment procedures. Id. And the Third Circuit reached the same conclusion when the Environmental Protection Agency sought to postpone and reconsider a rule at the start of the Reagan administration. "[T]he imminence of a deadline … is not sufficient to constitute'good cause’ within the meaning of the APA," the 15 Case 17-2780, Document 84-2, 10/24/2017, 2155183, Page24 of 37 court explained, because otherwise an agency "could simply wait until the eve of a … deadline, then raise up the'good cause’ banner and promulgate rules without following APA procedures." NRDC v. EPA, 683 F.2d at 765 & n.25. Second, the Administration attempted to justify its failure to follow APA procedures here because it is "already seeking out public comments" as part of its penalty rate reconsideration. 82 Fed. Reg. at 32,140 [ADD-3]. But providing "notice and comment procedures after the postponement [of a final rule] does not cure the failure to provide them before the postponement." NRDC v. EPA, 683 F.2d at 768 (emphasis added). Inviting comment on the appropriate penalty rate "cannot replace" the requirement to separately solicit comment on "whether the [rule] should [have] be[en] postponed in the first place." Id. Thus, in Abraham, this Court rejected as "without merit" the agency’s argument that providing notice and comment on replacement efficiency standards either "cured or mooted the absence of notice and comment prior to the amendment of the original standards’ effective date." 355 F.3d at 206 n.14. This Court explained that the reconsideration process "addressed questions wholly different from 16 Case 17-2780, Document 84-2, 10/24/2017, 2155183, Page25 of 37 those that would have been addressed in a proceeding to amend the standards’ effective date." Id. So too here. Third, and finally, the Administration also suggested that "no party will be harmed by the delay" because the Penalty Rule would "not affect the civil penalty amounts assessed against any manufacturer for violating a [fuel-economy] standard prior to the 2019 model year." 82 Fed. Reg. at 32,140 [ADD-3]. But as Abraham made clear, notice-and-comment procedures are required to delay the effective date of a final rule even when that rule’s compliance date may be years away. See 355 F.3d at 189 (compliance date for unlawfully delayed efficiency rule was five years after original effective date); see also California v. Bureau of Land Mgmt., No. 17-cv-03804-EDL, 2017 WL 4416409, at *7-8 (N.D. Cal. Oct. 4, 2017) (postponement of rule’s effective date was unlawful, even where compliance date of delayed rule was several months away). And in any event, the Administration’s suggestion is also factually mistaken because the public here is harmed by the unlawful delay. The Delay Rule weakens the deterrence for fuel-economy violations, and thus likely will result in less efficient vehicles and greater emissions of harmful air pollutants because automakers are deciding now whether to comply with fuel-economy standards in future model years. See infra at 17 Case 17-2780, Document 84-2, 10/24/2017, 2155183, Page26 of 37 19-24. Indeed, if there were no "concrete impact from the delay," as the Administration falsely suggests, 82 Fed. Reg. at 32,140 [ADD-3], that would undermine any reason for the Delay Rule in the first place— much less the asserted "good cause" to circumvent notice-and-comment procedures. See Abraham, 355 F.3d at 205 (exception applies only where such procedures would pose a "threat to the public interest" or do "real harm"); Nat’l Nutritional Foods, 572 F.2d at 385 (exception requires a "supportable finding of necessity or emergency"). In short, "indefinite postponement of the effective date of the [Penalty Rule] required notice and comment," and the Administration "did not have good cause for dispensing with the APA’s requirements." NRDC v. EPA, 683 F.2d at 767. Because the Delay Rule was "promulgated without complying with the APA’s notice-and-comment requirements" and "failed to meet any of the exceptions to those requirements," it is an "invalid rule" that must be vacated. Abraham, 355 F.3d at 206. II. In the Alternative, the Court Should Stay the Delay Rule If the Court does not summarily vacate the Delay Rule, it should stay that rule and expedite its review of the merits. Issuance of a stay involves consideration of four factors: (1) likelihood of success on the 18 Case 17-2780, Document 84-2, 10/24/2017, 2155183, Page27 of 37 merits; (2) irreparable injury absent a stay; (3) substantial injury to other parties if a stay is granted; and (4) the public interest. Nken v. Holder, 556 U.S. 418, 434 (2009). As discussed above, the Delay Rule is clearly unlawful, so the first factor strongly favors a stay. As discussed below, so do the other three.9 A. Delaying the penalty increase irreparably harms Petitioners Unless the Delay Rule is stayed (or quickly vacated), it will irreparably injure Petitioners by reducing compliance with fuel-economy standards, resulting in greater emissions of dangerous air pollutants that harm their members’ health. Vehicle fuel consumption, as well as the production and distribution of that fuel, results in emissions of harmful air pollutants like nitrogen oxide, particulate matter, and volatile organic compounds. See 77 Fed. Reg. at 62,901-08, 63,003. These air pollutants have immediate and harmful effects on local air quality and human health; exposure to such pollutants is associated with higher rates of 9 Petitioners informed Respondents of their desire to stay the Delay Rule pending judicial review. Respondents stated they oppose such relief. See Fed. R. App. P. 18(a)(2)(A). 19 Case 17-2780, Document 84-2, 10/24/2017, 2155183, Page28 of 37 respiratory disease, especially among children, and even premature death. Id. Fuel-economy standards reduce emissions of these pollutants and can result in "significant declines in the adverse health effects" they cause. Id. at 63,062. Civil penalties play a key role in achieving these public health benefits by deterring violations of fuel-economy standards. See 49 C.F.R. § 578.2 (fuel-economy penalties "foster compliance with the law"). Automakers admit that they decide whether to comply with the standards based in part on the penalties they would pay if they do not. Industry Petition at 2, 5 [ADD-50, 53]. The Administration recognizes this too. 81 Fed. Reg. at 95,490-91 [ADD-13-14]. The penalties are also important because they influence the price of credits that some automakers purchase in lieu of achieving the standards. See 49 U.S.C. § 32903; Industry Petition at 3 [ADD-51] (acknowledging the price of credits are "directly related" to the penalty amount). And because "manufacturers will pursue the strategy … that results in the lowest overall cost to the manufacturer," 81 Fed. Reg. at 43,527 [ADD-20], a higher penalty rate means that more automakers will actually achieve the standards by implementing fuel-saving technology, rather than merely purchasing credits or paying penalties instead. 20 Case 17-2780, Document 84-2, 10/24/2017, 2155183, Page29 of 37 Absent a stay, the Delay Rule will thus likely result in more violations of fuel-economy standards (and greater emissions of harmful air pollutants) because it reverts to the $5.50 penalty rate that does "not provide a strong enough incentive for manufacturers to comply." GAO Report at 17 [ADD-31]. That outdated penalty rate is only one-fourth the original $5 statutory rate as adjusted for inflation, see supra at 6, and is significantly less expensive than the costs to achieve the fuel-economy standards, Tonachel Decl. ¶¶10-15 [ADD-66-70]. Indeed, the Administration acknowledges that "many manufacturers are falling behind the [fuel-economy] standards for model year 2016 and … 2017," 82 Fed. Reg. at 32,141 [ADD-6], years when automakers based their compliance decisions on the $5.50 penalty rate, see Industry Petition at 5 [ADD-53]. If the $5.50 rate did not sufficiently incentivize compliance with the standards in those years, it will not do so for future model years either, given the standards "are set to rise at a significant rate over the next several years," 82 Fed. Reg. at 32,141 [ADD-6]. By contrast, if the Court stays the Delay Rule, the reinstated $14 penalty rate will properly deter violations because the resulting penalties would be comparatively more expensive than the costs to achieve the fuel-economy standards. See Tonachel Decl. ¶¶11-15 [ADD-21 Case 17-2780, Document 84-2, 10/24/2017, 2155183, Page30 of 37 67-70]; see also 28 U.S.C. § 2461 note, § 2(b)(2) (inflation adjustments "maintain the deterrent effect of civil monetary penalties"). Indeed, the Administration itself "expects that increasing the level of the [fuel-economy] penalty rate will lead to … increased compliance with [the fuel-economy] standards, which would result in greater fuel savings and other benefits." 82 Fed. Reg. at 32,142 [ADD-7].10 10 For the same reasons, Petitioners have standing to challenge the unlawful Delay Rule. See Hunt v. Wash. State Apple Advert. Comm’n, 432 U.S. 333, 343 (1977). Petitioners are dedicated to protecting human health and the environment by promoting energy efficiency and curbing harmful pollution. Tonachel Decl. ¶¶4-5 [ADD-64-65]; Trujillo Decl. ¶5 [ADD-74]; Linhardt Decl. ¶¶3-5 [ADD-76-77]; Siegel Decl. ¶¶2-6 [ADD-83-84]. Petitioners have members who were procedurally injured when the Administration failed to allow comment on the Delay Rule. Munguia Decl. ¶¶14-15 [ADD-96-97]; Woodfield Decl. ¶¶10-11 [ADD-102]; Hume Decl. ¶¶9-10 [ADD-107-108]; Blomquist Decl. ¶9 [ADD-112]; Dietzkamei Decl. ¶16 [ADD-120]. That rule also substantively injures these members because they live close to oil refineries and major highways, and thus face increased health risks from greater emissions of harmful air pollutants. Munguia Decl. ¶¶2-13 [ADD-93-96]; Woodfield Decl. ¶¶2-9 [ADD-99-102]; Hume Decl. ¶¶5-10 [ADD-105-107]; Blomquist Decl. ¶¶6-9 [ADD-111-112]; Dietzkamei Decl. ¶¶8-15 [ADD-116-120]; see LaFleur v. Whitman, 300 F.3d 256, 270 (2d Cir. 2002) (petitioner had standing where she lived and worked near sulfur dioxide-emitting solid waste facility and had "no choice but to breathe the air"); N.Y. Pub. Interest Research Grp. v. Whitman, 321 F.3d 316, 325-26 (2d Cir. 2003) (similar). These harms are traceable to the Delay Rule and redressable by this Court because reinstating the Penalty Rule will deter violations of fuel-economy standards and lessen harmful pollution. See Friends of the Earth v. Laidlaw, 528 U.S. 167, 187 (2000) ("civil penalties provide sufficient deterrence to support redressability"). 22 Case 17-2780, Document 84-2, 10/24/2017, 2155183, Page31 of 37 This harm is irreparable, absent a stay, because automakers are already designing their Model Year 2019-and-after fleets and deciding whether to comply with the fuel-economy standards based on the applicable penalty. Unless the Delay Rule is stayed, a later ruling on the merits likely will not result in sufficient compliance because, by automakers’ own account, they will have less ability to improve the fuel-economy of their fleets at that time. See Industry Petition at 5, 8 [ADD-53, 56] (claiming that once automakers "set their compliance plans" for a particular model year, they have "very limited technology options" to improve the fuel-economy of their fleets). Nor does the Administration’s ongoing reconsideration of the penalty rate provide adequate relief, because the agency has not set a deadline for completing that process and has indicated that it likely will not apply its new rate to Model Year 2019 fleets. See 82 Fed. Reg. at 32,143 [ADD-8] (noting the agency "expects that its inflationary adjustment will provide lead time in advance of assessing a new [fuel-economy] penalty"). It is therefore critical to stay the Delay Rule (or vacate it quickly). Otherwise, the air pollutants emitted by non-compliant fleets will 23 Case 17-2780, Document 84-2, 10/24/2017, 2155183, Page32 of 37 continue for the life of those vehicles. And the harms caused by those emissions cannot be undone.11 B. The public interest and balance of equities support a stay The final two stay factors—harm to opposing parties and weighing the public interest—"merge when the Government is the opposing party." Nken, 556 U.S. at 435. Here, the public benefits from staying the Delay Rule far outweigh any countervailing interest in preserving the Administration’s invalid delay. See League of Women Voters v. Newby, 838 F.3d 1, 12 (D.C. Cir. 2016) ("There is generally no public interest in the perpetuation of unlawful agency action."). A stay will cause no harm to the Administration. It will simply restore the $14 penalty rate that the agency previously promulgated pursuant to the Energy Conservation Act and Inflation Adjustment Act. Enforcing that rate while this Court reviews the Delay Rule’s merits "do[es] not constitute substantial harm" to the Administration because it is "no different from [the agency’s] burdens under the statutory scheme[s]." Nat’l Ass’n of Farmworkers Orgs. v. Marshall, 628 F.2d 604, 11 If the Court does not grant a stay, Petitioners respectfully request that it still expedite briefing and argument in this case. 24 Case 17-2780, Document 84-2, 10/24/2017, 2155183, Page33 of 37 615 (D.C. Cir. 1980). Nor will a stay prevent the Administration’s ongoing reconsideration of the penalty rate. A stay will not substantially harm automakers either. The Penalty Rule did not impose any new regulatory standards on automakers. Instead, it merely increased the penalty for automakers who choose to violate the "feasible" fuel-economy standards. 49 U.S.C. § 32902(a). Any technology investments automakers make in response to a stay will thus be to achieve standards that govern irrespective of the applicable penalty rate. Nor will a stay itself result in any higher penalties paid by automakers, because this Court will have resolved the merits of Petitioners’ challenge before any Model Year 2019 penalties are due. Meanwhile, on the other side of the scale, the public benefits from a stay are substantial. In addition to the public health benefits described above, staying the Delay Rule and incentivizing greater compliance with fuel-economy standards will also promote the nation’s energy security, save consumers money at the pump, encourage technology innovation, and reduce emissions of greenhouse gases that destabilize the global climate. See 77 Fed. Reg. at 62,658-62, 62,999-63,006, 63,055-62; see also Tonachel Decl. ¶¶16-18 [ADD-70-71] 25 Case 17-2780, Document 84-2, 10/24/2017, 2155183, Page34 of 37 (societal benefits from $14 penalty rate far outweigh those from $5.50 rate). A stay will thus further Congress’s twin goals of enforcing the fuel-economy program, 49 U.S.C. §§ 32901-32919, and "maintain[ing] the deterrent effect of civil monetary penalties," 28 U.S.C. § 2461 note, § 2(b)(2). "[T]here is a substantial public interest in having governmental agencies abide by the federal laws that govern their … operations." League of Women Voters, 838 F.3d at 12 (internal quotation marks omitted). In short, the public benefits from staying the Delay Rule far outweigh any hypothetical interest in making it cheaper for automakers to evade the fuel-economy standards. CONCLUSION The Court should grant the motion, vacate the unlawful Delay Rule, and reinstate the Penalty Rule as of its prior effective date. In the alternative, the Court should stay the Delay Rule pending its review of the merits. Dated: October 24, 2017 Respectfully submitted, 26 Case 17-2780, Document 84-2, 10/24/2017, 2155183, Page35 of 37/s/Ian Fein Ian Fein Irene Gutierrez Michael E. Wall Natural Resources Defense Council 111 Sutter St., 21st Floor San Francisco, CA 94104 (415) 875-6100 ifein@nrdc.org Counsel for Petitioner Natural Resources Defense Council Alejandra Núñez Joanne Spalding Sierra Club 2101 Webster Street, Suite 1300 Oakland, CA 94612 (415) 997-5725 alejandra.nunez@sierraclub.org Counsel for Petitioner Sierra Club Vera Pardee Howard Crystal Center for Biological Diversity 1212 Broadway, Suite 800 Oakland, CA 94612 (415) 632-5317 vpardee@biologicaldiversity.org Counsel for Petitioner Center for Biological Diversity 27 Case 17-2780, Document 84-2, 10/24/2017, 2155183, Page36 of 37 CERTIFICATE OF COMPLIANCE Pursuant to Federal Rule of Appellate Procedure 32(g), I certify that this Motion complies with the type-volume limitations of Rule 27(d)(2)(a) because it contains 5,170 words, excluding parts of the document exempted by Rule 32(f). Dated: October 24, 2017/s/Ian Fein Ian Fein Case 17-2780, Document 84-2, 10/24/2017, 2155183, Page37 of 37 CERTIFICATE OF SERVICE I hereby certify that I electronically filed the foregoing with the Clerk of the Court for the United States Court of Appeals for the Second Circuit by using the appellate CM/ECF system on October 24, 2017. I certify that all participants in the case are registered CM/ECF users and that service will be accomplished by the appellate CM/ECF system./s/Ian Fein Ian Fein Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page1 of 123 ADDENDUM Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page2 of 123 ADDENDUM TABLE OF CONTENTS Natural Res. Def. Council v. Nat’l Highway Traffic Safety Admin. Nos. 17-2780 (L), 17-2806 Exhibit Description Page A 82 Fed. Reg. 32,139 (July 12, 2017) ADD-1 B 82 Fed. Reg. 32,140 (July 12, 2017) ADD-4 C 81 Fed. Reg. 95,489 (Dec. 28, 2016) ADD-11 D 81 Fed. Reg. 43,524 (July 5, 2016) ADD-16 Gov’t Accountability Office, GAO-10-336, E ADD-23 Vehicle Fuel Economy (2010) (excerpts) Ctr. for Biological Diversity, Petition for F ADD-33 Rulemaking (Oct. 1, 2015) All. of Auto. Mfrs. & Ass’n of Glob. G Automakers, Petition for Partial ADD-48 Reconsideration (Aug. 1, 2016) H Declaration of Luke Tonachel ADD-62 I Declaration of Gina Trujillo ADD-72 J Declaration of Andrew Linhardt ADD-75 K Declaration of Kassia Siegel ADD-82 L Declaration of Faviola Munguia ADD-92 M Declaration of Kathleen Woodfield ADD-98 N Declaration of Diana Hume ADD-104 O Declaration of James Blomquist ADD-109 P Declaration of Janet Dietzkamei ADD-114 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page3 of 123 Exhibit A ADD-001 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page4 of 123 Federal Register/Vol. 82, No. 132/Wednesday, July 12, 2017/Rules and Regulations 32139 Review) defines a'‘significant approved this document on July 5, 2017, exceeding an applicable Corporate regulatory action,’’ which requires for publication. Average Fuel Economy (CAFE) standard review by the Office of Management and was among the penalties adjusted for List of Subjects in 38 CFR Part 74 Budget, as'‘any regulatory action that is inflation in the interim final rule. In likely to result in a rule that may: (1) Administrative practice and accordance with the Inflation Have an annual effect on the economy procedures, Privacy, Reporting and Adjustment Act and guidance on of $100 million or more or adversely recordkeeping requirements, Small calculating the inflationary adjustment affect in a material way the economy, a business, Veteran, Veteran-owned small mandated by the Act issued by the sector of the economy, productivity, business, Verification. Office of Management and Budget, competition, jobs, the environment, Dated: July 7, 2017. NHTSA increased the civil penalty for public health or safety, or State, local, Michael Shores, failing to meet an applicable CAFE or tribal governments or communities; Director, Regulation Policy & Management, standard from $5.50 per tenth of a mile (2) Create a serious inconsistency or Office of the Secretary, Department of per gallon (mpg) to $14 per tenth of an otherwise interfere with an action taken Veterans Affairs. mpg. or planned by another agency; (3) The Auto Alliance and Global Materially alter the budgetary impact of PART 74—VETERANS SMALL Automakers jointly petitioned NHTSA entitlements, grants, user fees, or loan BUSINESS REGULATIONS for reconsideration of the interim final programs or the rights and obligations of rule regarding the inflationary Accordingly, the interim rule adjustment of CAFE non-compliance recipients thereof; or (4) Raise novel amending 38 CFR part 74 which was penalties (hereafter, the Alliance and legal or policy issues arising out of legal published at 82 FR 11154 on February Global petition will be referred to as the mandates, the President’s priorities, or 21, 2017, is adopted as final without'‘Industry Petition’’) 1 on August 1, the principles set forth in this Executive change. 2016. The Industry Petition argued that Order.’’ [FR Doc. 2017–14600 Filed 7–11–17; 8:45 am] NHTSA used the wrong base year to The economic, interagency, budgetary, legal, and policy BILLING CODE 8320–01–P calculate the inflationary adjustment to implications of this regulatory action the CAFE civil penalty and raised have been examined and it has been concerns about applying the adjusted DEPARTMENT OF TRANSPORTATION civil penalty retroactively. The Industry determined not to be a significant regulatory action under Executive Order Petition also argued that in the event National Highway Traffic Safety 12866. that NHTSA chose not to adopt the base Administration year suggested in the petition, NHTSA Unfunded Mandates should seek comment on whether 49 CFR Part 578 The Unfunded Mandates Reform Act NHTSA should adopt a lower penalty of 1995 requires, at 2 U.S.C. 1532, that [Docket No. NHTSA–2016–0136] level than the one in the interim final agencies prepare an assessment of RIN 2127–AL82 rule based on'‘negative economic anticipated costs and benefits before impacts,’’ as permitted by the Inflation issuing any rule that may result in the Civil Penalties Adjustment Act. expenditure by state, local, and tribal On December 28, 2016, NHTSA AGENCY: National Highway Traffic published a final rule in response to the governments, in the aggregate, or by the Safety Administration (NHTSA), Industry Petition.2 To address concerns private sector, of $100 million or more Department of Transportation (DOT). raised in the Industry Petition about (adjusted annually for inflation) in any given year. This final rule has no such ACTION: Final rule; delay of effective applying the adjusted penalty effect on state, local, and tribal date. retroactively, NHTSA delayed governments, or on the private sector. application of the $14 per tenth of an SUMMARY: NHTSA is delaying the mpg penalty until the 2019 model year, Paperwork Reduction Act effective date of the final rule entitled which begins in October 2018 for most'‘Civil Penalties,’’ published in the manufacturers. The final rule did not This document contains no provisions Federal Register on December 28, 2016, constituting a collection of information address the other points raised in the because NHTSA is reconsidering the Industry Petition. under the Paperwork Reduction Act of appropriate level for CAFE civil 1995 (44 U.S.C. 3501–3521). The December 28, 2016 final rule is penalties. not yet effective and would currently Catalog of Federal Domestic Assistance DATES: As of July 7, 2017, the effective become effective on July 10, 2017.3 date of the final rule published in the NHTSA is now reconsidering the final This final rule affects the verification Federal Register on December 28, 2016, rule because the final rule did not give guidelines of veteran-owned small at 81 FR 95489, is delayed indefinitely adequate consideration to all of the businesses, for which there is no Catalog pending reconsideration. relevant issues, including the potential of Federal Domestic Assistance program FOR FURTHER INFORMATION CONTACT: economic consequences of increasing number. Rebecca Schade, Office of Chief CAFE penalties by potentially $1 billion Signing Authority Counsel, at (202) 366–2992. per year, as estimated in the Industry Petition. Thus, in a separate document The Secretary of Veterans Affairs, or SUPPLEMENTARY INFORMATION: On July 5, designee, approved this document and 2016, NHTSA published an interim 1 Jaguar Land Rover North America, LLC also authorized the undersigned to sign and final rule updating the maximum civil nlaroche on DSK30NT082PROD with RULES filed a petition for reconsideration in response to submit the document to the Office of the penalty amounts for violations of the July 5, 2016 interim final rule raising the same Federal Register for publication statutes and regulations administered by concerns as those raised in the Industry Petition. Both petitions can be found in Docket No. NHTSA– electronically as an official document of NHTSA, pursuant to the Federal Civil 2016–0075, accessible via www.regulations.gov. the Department of Veterans Affairs. Gina Penalties Inflation Adjustment Act 2 81 FR 95489. S. Farrisee, Deputy Chief of Staff, Improvements Act of 2015 (Inflation 3 82 FR 8694 (Jan. 30, 2017); 82 FR 15302 (Mar. Department of Veterans Affairs, Adjustment Act). The penalty for 28, 2017); 82 FR 29009 (June 27, 2017). VerDate Sep<11>2014 17:19 Jul 11, 2017 Jkt 241001 PO 00000 Frm 00017 Fmt 4700 Sfmt 4700 E:\FR\FM\12JYR1.SGM 12JYR1 ADD-002 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page5 of 123 32140 Federal Register/Vol. 82, No. 132/Wednesday, July 12, 2017/Rules and Regulations published in this Federal Register, DEPARTMENT OF TRANSPORTATION Docket: For access to the docket to NHTSA is seeking comment on whether read background documents or $14 per tenth of an mpg is the National Highway Traffic Safety comments received, go to http://appropriate penalty level for civil Administration www.regulations.gov or the street penalties for violations of CAFE address listed above. NHTSA will standards given the requirements of the 49 CFR Part 578 continue to file relevant information in Inflation Adjustment Act and the Energy [Docket No. NHTSA–2017–0059] the Docket as it becomes available. Policy and Conservation Act (EPCA) of Privacy Act: In accordance with 5 1975, which authorizes civil penalties Civil Penalties U.S.C. 553(c), DOT solicits comments for violations of CAFE standards.4 from the public to better inform its AGENCY: National Highway Traffic Because NHTSA is reconsidering the rulemaking process. DOT posts these Safety Administration (NHTSA), final rule, NHTSA is delaying the comments, without edit, including any Department of Transportation (DOT). effective date pending reconsideration. personal information the commenter ACTION: Reconsideration of final rule; provides, to http://www.regulations.gov, There is good cause to implement this request for comments. as described in the system of records delay without notice and comment notice (DOT/ALL–14 FDMS), which can SUMMARY: NHTSA seeks comment on under 5 U.S.C. 553(b)(B) and 553(d)(3) be reviewed at https://whether and how to amend the civil because those procedures are www.transportation.gov/privacy. penalty rate for violations of Corporate impracticable, unnecessary, and Anyone is able to search the electronic Average Fuel Economy (CAFE) contrary to the public interest in these standards. NHTSA initially raised the form of all comments received into any circumstances, where the effective date civil penalty rate for CAFE standard of DOT’s dockets by the name of the of the rule is imminent. Moreover, the violations for inflation in 2016, but individual submitting the comment (or agency is, through a separate document, upon further consideration, NHTSA signing the comment, if submitted on already seeking out public comments on believes that obtaining additional public behalf of an association, business, labor the underlying issues, which may be input on how to proceed with CAFE union, etc.). extensive, and additional time will be civil penalties in the future will be FOR FURTHER INFORMATION CONTACT: required to thoughtfully consider and helpful. Therefore, NHTSA is issuing Thomas Healy, Office of the Chief address those comments before deciding this document to seek public comment Counsel, NHTSA, telephone (202) 366– on the appropriate course of regulatory as it sua sponte reconsiders its final rule 2992, facsimile (202) 366–3820, 1200 action. A delay in the effective date is regarding the appropriate inflationary New Jersey Avenue SE., Washington, therefore consistent with NHTSA’s adjustment for CAFE civil penalties. DC 20590. statutory authority to administer the DATES: Comments: Comments must be SUPPLEMENTARY INFORMATION: CAFE standards program and its received by October 10, 2017. See the inherent authority to do so efficiently SUPPLEMENTARY INFORMATION section I. Statutory and Regulatory Background and in the public interest. In addition, below for more information on NHTSA sets 1 and enforces 2 CAFE no party will be harmed by the delay in submitting comments. standards for the United States, and in the effective date of the rule. On the ADDRESSES: You may submit comments doing so, assesses civil penalties against contrary, the rule does not increase to the docket number identified in the vehicle manufacturers who fall short of CAFE penalties before Model Year 2019, heading of this document by any of the their compliance obligations and are and therefore, the delay will not affect following methods: unable to make up the shortfall with the civil penalty amounts assessed • Federal eRulemaking Portal: Go to credits.3 The amount of the civil penalty against any manufacturer for violating a http://www.regulations.gov. Follow the was originally set by statute in 1975, CAFE standard prior to the 2019 model online instructions for submitting and for most of the duration of the year at the earliest, i.e., until sometime comments. CAFE program, has been $5.50 per each • Mail: Docket Management Facility, in 2020. Therefore, the increased tenth of a mile per gallon that a M–30, U.S. Department of penalty rate set forth in the rule would manufacturer’s fleet average CAFE level Transportation, West Building, Ground not be applied for current violations, so falls short of its compliance obligation, Floor, Room W12–140, 1200 New Jersey there is no immediate, concrete impact multiplied by the number of vehicles in Avenue SE., Washington, DC 20590. from the delay. • Hand Delivery or Courier: U.S. the fleet 4 that has the shortfall. The Department of Transportation, West basic equation for calculating a Authority: Pub. L. 101–410, Pub. L. 104– Building, Ground Floor, Room W12– manufacturer’s civil penalty amount is 134, Pub. L. 109–59, Pub. L. 114–74, Pub L. 140, 1200 New Jersey Avenue SE., as follows: 114–94, 49 U.S.C. 32902 and 32912; delegation of authority at 49 CFR 1.81, 1.95. Washington, DC, between 9 a.m. and 5 1 49 U.S.C. 32902. p.m. Eastern time, Monday through Jack Danielson, Friday, except Federal holidays. 2 49 U.S.C. 32911, 32912. 3 Credits may be either earned (for over-Acting Deputy Administrator. • Fax: 202–493–2251. compliance by a given manufacturer’s fleet, in a [FR Doc. 2017–14526 Filed 7–7–17; 11:15 am] Regardless of how you submit your given model year) or purchased (in which case, BILLING CODE 4910–59–P comments, you must include the docket another manufacturer earned the credits by over-number identified in the heading of this complying and chose to sell that surplus). 49 U.S.C. 32903; 49 CFR part 538. document. Note that all comments 4 A manufacturer may have up to three fleets of nlaroche on DSK30NT082PROD with RULES received, including any personal vehicles, for CAFE compliance purposes, in any information provided, will be posted given model year—a domestic passenger car fleet, without change to http://an imported passenger car fleet, and a light truck www.regulations.gov. Please see the fleet. Each fleet belonging to each manufacturer has its own compliance obligation, with the potential 4 NHTSA incorporates the discussions in the'‘Privacy Act’’ heading below. for either over-compliance or under-compliance. document seeking comment on the appropriate You may call the Docket Management There is no overarching CAFE requirement for a CAFE civil penalties level by reference. Facility at 202–366–9324. manufacturer’s total production. VerDate Sep<11>2014 14:05 Jul 11, 2017 Jkt 241001 PO 00000 Frm 00018 Fmt 4700 Sfmt 4700 E:\FR\FM\12JYR1.SGM 12JYR1 ADD-003 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page6 of 123 Exhibit B ADD-004 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page7 of 123 32140 Federal Register/Vol. 82, No. 132/Wednesday, July 12, 2017/Rules and Regulations published in this Federal Register, DEPARTMENT OF TRANSPORTATION Docket: For access to the docket to NHTSA is seeking comment on whether read background documents or $14 per tenth of an mpg is the National Highway Traffic Safety comments received, go to http://appropriate penalty level for civil Administration www.regulations.gov or the street penalties for violations of CAFE address listed above. NHTSA will standards given the requirements of the 49 CFR Part 578 continue to file relevant information in Inflation Adjustment Act and the Energy [Docket No. NHTSA–2017–0059] the Docket as it becomes available. Policy and Conservation Act (EPCA) of Privacy Act: In accordance with 5 1975, which authorizes civil penalties Civil Penalties U.S.C. 553(c), DOT solicits comments for violations of CAFE standards.4 from the public to better inform its AGENCY: National Highway Traffic Because NHTSA is reconsidering the rulemaking process. DOT posts these Safety Administration (NHTSA), final rule, NHTSA is delaying the comments, without edit, including any Department of Transportation (DOT). effective date pending reconsideration. personal information the commenter ACTION: Reconsideration of final rule; provides, to http://www.regulations.gov, There is good cause to implement this request for comments. as described in the system of records delay without notice and comment notice (DOT/ALL–14 FDMS), which can SUMMARY: NHTSA seeks comment on under 5 U.S.C. 553(b)(B) and 553(d)(3) be reviewed at https://whether and how to amend the civil because those procedures are www.transportation.gov/privacy. penalty rate for violations of Corporate impracticable, unnecessary, and Anyone is able to search the electronic Average Fuel Economy (CAFE) contrary to the public interest in these standards. NHTSA initially raised the form of all comments received into any circumstances, where the effective date civil penalty rate for CAFE standard of DOT’s dockets by the name of the of the rule is imminent. Moreover, the violations for inflation in 2016, but individual submitting the comment (or agency is, through a separate document, upon further consideration, NHTSA signing the comment, if submitted on already seeking out public comments on believes that obtaining additional public behalf of an association, business, labor the underlying issues, which may be input on how to proceed with CAFE union, etc.). extensive, and additional time will be civil penalties in the future will be FOR FURTHER INFORMATION CONTACT: required to thoughtfully consider and helpful. Therefore, NHTSA is issuing Thomas Healy, Office of the Chief address those comments before deciding this document to seek public comment Counsel, NHTSA, telephone (202) 366– on the appropriate course of regulatory as it sua sponte reconsiders its final rule 2992, facsimile (202) 366–3820, 1200 action. A delay in the effective date is regarding the appropriate inflationary New Jersey Avenue SE., Washington, therefore consistent with NHTSA’s adjustment for CAFE civil penalties. DC 20590. statutory authority to administer the DATES: Comments: Comments must be SUPPLEMENTARY INFORMATION: CAFE standards program and its received by October 10, 2017. See the inherent authority to do so efficiently SUPPLEMENTARY INFORMATION section I. Statutory and Regulatory Background and in the public interest. In addition, below for more information on NHTSA sets 1 and enforces 2 CAFE no party will be harmed by the delay in submitting comments. standards for the United States, and in the effective date of the rule. On the ADDRESSES: You may submit comments doing so, assesses civil penalties against contrary, the rule does not increase to the docket number identified in the vehicle manufacturers who fall short of CAFE penalties before Model Year 2019, heading of this document by any of the their compliance obligations and are and therefore, the delay will not affect following methods: unable to make up the shortfall with the civil penalty amounts assessed • Federal eRulemaking Portal: Go to credits.3 The amount of the civil penalty against any manufacturer for violating a http://www.regulations.gov. Follow the was originally set by statute in 1975, CAFE standard prior to the 2019 model online instructions for submitting and for most of the duration of the year at the earliest, i.e., until sometime comments. CAFE program, has been $5.50 per each • Mail: Docket Management Facility, in 2020. Therefore, the increased tenth of a mile per gallon that a M–30, U.S. Department of penalty rate set forth in the rule would manufacturer’s fleet average CAFE level Transportation, West Building, Ground not be applied for current violations, so falls short of its compliance obligation, Floor, Room W12–140, 1200 New Jersey there is no immediate, concrete impact multiplied by the number of vehicles in Avenue SE., Washington, DC 20590. from the delay. • Hand Delivery or Courier: U.S. the fleet 4 that has the shortfall. The Department of Transportation, West basic equation for calculating a Authority: Pub. L. 101–410, Pub. L. 104– Building, Ground Floor, Room W12– manufacturer’s civil penalty amount is 134, Pub. L. 109–59, Pub. L. 114–74, Pub L. 140, 1200 New Jersey Avenue SE., as follows: 114–94, 49 U.S.C. 32902 and 32912; delegation of authority at 49 CFR 1.81, 1.95. Washington, DC, between 9 a.m. and 5 1 49 U.S.C. 32902. p.m. Eastern time, Monday through Jack Danielson, Friday, except Federal holidays. 2 49 U.S.C. 32911, 32912. 3 Credits may be either earned (for over-Acting Deputy Administrator. • Fax: 202–493–2251. compliance by a given manufacturer’s fleet, in a [FR Doc. 2017–14526 Filed 7–7–17; 11:15 am] Regardless of how you submit your given model year) or purchased (in which case, BILLING CODE 4910–59–P comments, you must include the docket another manufacturer earned the credits by over-number identified in the heading of this complying and chose to sell that surplus). 49 U.S.C. 32903; 49 CFR part 538. document. Note that all comments 4 A manufacturer may have up to three fleets of nlaroche on DSK30NT082PROD with RULES received, including any personal vehicles, for CAFE compliance purposes, in any information provided, will be posted given model year—a domestic passenger car fleet, without change to http://an imported passenger car fleet, and a light truck www.regulations.gov. Please see the fleet. Each fleet belonging to each manufacturer has its own compliance obligation, with the potential 4 NHTSA incorporates the discussions in the'‘Privacy Act’’ heading below. for either over-compliance or under-compliance. document seeking comment on the appropriate You may call the Docket Management There is no overarching CAFE requirement for a CAFE civil penalties level by reference. Facility at 202–366–9324. manufacturer’s total production. VerDate Sep<11>2014 14:05 Jul 11, 2017 Jkt 241001 PO 00000 Frm 00018 Fmt 4700 Sfmt 4700 E:\FR\FM\12JYR1.SGM 12JYR1 ADD-005 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page8 of 123 Federal Register/Vol. 82, No. 132/Wednesday, July 12, 2017/Rules and Regulations 32141 (penalty rate, in $) × (amount of deleterious impact’’ may only be made $14.12 NHTSA also indicated in that shortfall, in tenths of an mpg) × (# if NHTSA determines that it is likely document that the new maximum of vehicles in manufacturer’s non-that the increase in the penalty (A) will penalty rate that the Secretary is compliant fleet) = $ due as penalty not cause a significant increase in permitted to establish for such for non-compliant fleet. unemployment in a State or a region of violations is $25. To date, automakers have paid more a State, (B) adversely affect competition, In response to the changes to the than $890 million in penalties relating or (C) cause a significant increase in automobile imports. Nowhere does CAFE provisions promulgated in the to the CAFE standards.5 Additionally, EPCA define'‘substantial’’ or interim final rule, the Auto Alliance and since the introduction of credit trading and transfers in MY 2011, some'‘significant’’ in the context of this Global Automakers jointly petitioned manufacturers have turned to acquiring provision. The rulemaking process to NHTSA for reconsideration (the credits from competitors rather than raise penalties includes specifically Industry Petition).13 The Industry paying civil penalties for non-soliciting comments from the Federal Petition raised concerns with compliance, and it is likely that this Trade Commission, among others, and retroactivity (applying the penalty involves significant expenditures. In requires a public hearing following a increase associated with model years light of the fact that CAFE standards are comment period of at least 45 days. that have already been completed or for set to rise at a significant rate over the NHTSA has never adjusted the CAFE which a company’s compliance plan next several years, and since NHTSA’s civil penalty using this EPCA provision. had already been'‘set’’); which'‘base Projected Fuel Economy Performance If NHTSA seeks to compromise or year’’ NHTSA should use for calculating Report 6 indicates that many remit penalties for a given the adjusted penalty rate; and whether manufacturers are falling behind the manufacturer, a rulemaking is not an immediate increase in the penalty standards for model year 2016 and necessary, but the amount of a penalty rate to $14 would cause a'‘negative increasingly so for model year 2017, it may be compromised or remitted only economic impact.’’ is likely that many manufacturers will to the extent (1) necessary to prevent a face the possibility of paying larger manufacturer’s insolvency or In response to the Industry Petition, CAFE penalties over the next several bankruptcy, (2) the manufacturer shows NHTSA issued a final rule published on years than at present. that the violation was caused by an act December 28, 2016.14 NHTSA agreed NHTSA has long had authority under of God, a strike, or a fire, or (3) the that raising the penalty rate for model the Energy Policy and Conservation Act Federal Trade Commission certifies that years already fully complete would be (EPCA) of 1975, Public Law 94–163, a reduction in the penalty is necessary inappropriate, given how courts section 508, 89 Stat. 912 (1975), to raise to prevent a substantial lessening of generally disfavor the retroactive the amount of the penalty for CAFE competition. As with raising penalties, application of statutes. NHTSA also shortfalls if it can make certain NHTSA has never previously attempted agreed that raising the rate for model findings,7 as well as the authority to to undertake this process. years for which product changes were compromise and remit such penalties The Center for Biological Diversity infeasible due to lack of lead time, did under certain circumstances.8 If NHTSA petitioned NHTSA on October 1, 2015, not seem consistent with Congress’ were to raise penalties for CAFE to conduct rulemaking to raise the intent that the CAFE program be shortfalls, the higher amount would amount of the penalty to $10, the responsive to consumer demand. apply to any manufacturer who owed maximum possible under EPCA at that NHTSA therefore stated that it would them; the authority to compromise and time.9 A month later, while NHTSA was considering that petition, Congress not apply the inflation-adjusted penalty remit penalties, however, is limited and rate of $14 until model year 2019, as on a case-by-case basis. enacted the Federal Civil Penalties For both raising penalties and Inflation Adjustment Act Improvements that seemed to be the first year in which compromising them under EPCA, Act of 2015 (Inflation Adjustment product changes could be made in NHTSA’s burden is considerable. If Act),10 which applied to all civil response to the higher penalty rate. NHTSA seeks to raise CAFE penalties penalties administered by federal NHTSA further stated that its December under EPCA, NHTSA may only do so if agencies, as discussed in the prior final rule responded to the CBD petition it concludes through rulemaking that Federal Register documents cited for rulemaking. The December 28, 2016 the increase in the penalty both (1) will above. OMB guidance directed NHTSA final rule is not yet effective, and, in a result in, or substantially further, and other federal agencies to follow a separate document published in this substantial energy conservation for specific formula to adjust its civil Federal Register, NHTSA is delaying automobiles in model years in which penalties, pursuant to the Act’s the effective date of the rule pending the increased penalty may be imposed, requirements, including the penalty for reconsideration to allow for public and (2) will not have a substantial CAFE shortfalls, pursuant to the comment on this issue.15 deleterious impact on the economy of Inflation Adjustment Act.11 the United States, a State, or a region of On July 5, 2016, NHTSA published an 12 81 FR 43524 (July 5, 2016). This interim final the State. A finding of'‘no substantial interim final rule, adopting inflation rule also updated the maximum civil penalty adjustments for penalties under its amounts for violations of all statutes and 5 The highest CAFE penalty paid to date for a administration, following the formula in regulations administered by NHTSA, and was not shortfall in a single fleet was $30,257,920, paid by the Act. One of these adjustments limited solely to penalties administered for CAFE DaimlerChrysler for its imported passenger car fleet included raising the penalty rate for violations. in MY 2006. Since MY 2012, only Jaguar Land 13 Jaguar Land Rover North America, LLC also Rover and Volvo have paid civil penalties. See CAFE non-compliance from $5.50 to filed a petition for reconsideration in response to nlaroche on DSK30NT082PROD with RULES https://one.nhtsa.gov/cafe_pic/CAFE_PIC_Fines_ LIVE.html. 9 A copy of this petition is available in the the July 5, 2016 interim final rule raising the same 6 Available at https://one.nhtsa.gov/CAFE_PIC/rulemaking docket. concerns as those raised in the Industry Petition. MY%202016%20and%202017%20Projected% 10 Public Law 114–74, Sec. 701. Both petitions can be found in docket listed on this 20Fuel%20Economy% 11 This OMB guidance is available at https://document accessible via www.regulations.gov. 20Performance%20Report%20Final.pdf. 14 81 FR 95489 (Dec. 28, 2016). www.whitehouse.gov/sites/whitehouse.gov/files/7 49 U.S.C. 32912. 15 82 FR 8694 (Jan. 30, 2017); 82 FR 15302 (Mar. omb/memoranda/2016/m-16-06.pdf (last accessed 8 49 U.S.C. 32913. May 22, 2017). 28, 2017); 82 FR 29009 (June 27, 2017). VerDate Sep<11>2014 14:05 Jul 11, 2017 Jkt 241001 PO 00000 Frm 00019 Fmt 4700 Sfmt 4700 E:\FR\FM\12JYR1.SGM 12JYR1 ADD-006 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page9 of 123 32142 Federal Register/Vol. 82, No. 132/Wednesday, July 12, 2017/Rules and Regulations II. NHTSA’s Reconsideration of Final determined that it was appropriate to consider in raising CAFE penalty rates Rule and Request for Comment on How use a different base year than the 1975 under that section interact with To Adjust CAFE Civil Penalties base year used to calculate the NHTSA’s obligations under the Inflation CAFE penalties are straightforward to adjustment in the interim final rule, that Adjustment Act. NHTSA therefore seeks administer, but determining the decision could have a significant impact comment on the following: appropriate amount of inflation on the future CAFE penalties level. • If NHTSA were to consider adjustment is more complicated than After further consideration of these potential'‘negative economic impacts’’ originally understood. As CAFE issues, and because the July 5, 2016 associated with raising the CAFE standard stringency continues to interim final rule did not provide an penalty rate, what impacts, specifically, increase, the nation’s increased opportunity for interested parties to should NHTSA evaluate, why are those abundance of fuel resources has reduced provide input fully, NHTSA has impacts relevant and not others, and fuel prices and is causing consumers to determined that it should seek public what magnitude of impacts should be make purchasing decisions based on comment on whether and how NHTSA regarded as constituting'‘negative factors other than fuel economy, the should consider the issues raised above economic impacts’’? potential effects of higher penalties for in seeking to implement the Inflation • Do commenters have information shortfalls may be more widely felt. In Adjustment Act as it pertains to CAFE that could be useful to NHTSA in fact, NHTSA’s data indicates that many penalties. evaluating'‘negative economic impacts’’ automakers are projected to fall behind Both exceptions to the Inflation that they would be willing to provide? the standards for model years 2016 and Adjustment Act require the agency to •'‘Negative economic impact’’ also 2017. Moreover, as explained earlier, assess the economic effects of increasing potentially requires the agency to once NHTSA settles on an amount for the penalty amount. Relevant, therefore, consider impacts that are similar to CAFE penalties, that becomes the to both exceptions is information those considered in cost-benefit amount applicable to all shortfalls, and concerning the costs and benefits of analysis. For example: NHTSA has no leeway to compromise increased penalties. In general, the Æ If there are increased prices due to or remit penalties for manufacturers agency expects that increasing the level increased penalties, what effect may who feel that their compliance of the CAFE penalty rate will lead to that have on sales, including transfer of circumstances are dire, unless they are both increased penalties being paid and sales from new vehicles to used actually facing bankruptcy. The increased compliance with CAFE vehicles? consequences of this decision, therefore, standards, which would result in greater Æ If any impact on sales exists, would are considerable and fairly permanent. fuel savings and other benefits. We there be any adverse safety, fuel NHTSA is therefore sua sponte request comment on any information economy, or environmental impacts if reconsidering the December 28, 2016 related to these costs and benefits, consumers remain in older vehicles, final rule. including: which are less likely to have advanced The Inflation Adjustment Act • What would be the aggregate safety and environmental features, or provides an exception to give federal increased cost of applying a higher fine may be less fuel efficient than new agencies the ability to adjust the'‘catch-rate? To what extent would this be model year vehicles? Would rising up’’ amount of a civil monetary penalty based on increased fines versus increase prices have a disproportionate impact by less than the required amount. In compliance? on rural and disadvantaged order to make such an adjustment, the • What would be the effect on penalty communities, including with respect to head of the agency must determine payments of applying a higher fine rate? safety, fuel economy, and through notice and comment • What would be the effect on the environmental benefits? rulemaking that either (1) increasing the average price of passenger cars and light Æ If prices are affected by raising the penalty by the otherwise required trucks sold in the U.S? • How much additional fuel would be penalties, would this restrict consumer amount will have a'‘negative economic choice? impact,’’ or (2) the social costs of saved by raising the CAFE penalty rate any amount between $5.50 per tenth of Æ If the prices of new model year increasing the penalty by the otherwise vehicles rise as a result of higher CAFE required amount outweigh the benefits. a mile per gallon and $14 per tenth of a mile per gallon, and based on current penalties, would there be an impact on The Director of the Office of the price of older model year vehicles, Management and Budget must agree projections of fuel prices, what would be the monetized benefit to consumers, and what economic impact might there with either conclusion by an agency be as a result?; before an agency can act upon such a if any, as compared to additional costs to consumers associated with higher Æ If increased penalties increase the conclusion.16 The term'‘negative costs of vehicles, would that lead to any economic impact’’ is not defined in the penalties? • What would be the environmental secondary economic impacts on the Inflation Adjustment Act, though OMB’s nation, on a state or group of states, or guidance noted that it expected a impacts of this fuel savings? • Are there any other costs or benefits on a region within a state or group of concurrence that a penalty increase the agency should consider? states, if as a result consumers spend would have a'‘negative economic impact’’ to be'‘rare.’’ 17 • Do commenters have data less money on other desired goods and Additionally, the OMB guidance suggesting whether societal costs services?; directed agencies to calculate the initial outweigh societal benefits? Æ If penalties rise, could that create'‘catch-up adjustment’’ based on either In acting under the'‘negative disincentives for automakers to build the year the penalty was originally economic impact’’ exception, two certain types of vehicles with lower fuel slightly different overarching questions economy, such as vehicles specially nlaroche on DSK30NT082PROD with RULES established by Congress, or last adjusted (by Congress or by the agency), also present themselves: First, whether designed to accommodate Americans whichever is later.18 If NHTSA the'‘impact’’ resulting from raising the with disabilities? And if, as a result of CAFE penalty rate leads to a'‘negative higher CAFE penalties, the prices of 16 See Section 701(c), Public Law 114–74. economic impact,’’ and second, whether such vehicles rise or the availability of 17 OMB Guidance, at 3. and how the EPCA requirements in 49 such vehicles falls, what might be the 18 Id. U.S.C. 32912 for what NHTSA must impact on consumers of such vehicles? VerDate Sep<11>2014 14:05 Jul 11, 2017 Jkt 241001 PO 00000 Frm 00020 Fmt 4700 Sfmt 4700 E:\FR\FM\12JYR1.SGM 12JYR1 ADD-007 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page10 of 123 Federal Register/Vol. 82, No. 132/Wednesday, July 12, 2017/Rules and Regulations 32143 • Do commenters believe that the commenters’ belief? That is, could it be NHTSA expects that its inflationary EPCA considerations for raising CAFE argued that Congress, as a whole, adjustment will provide lead time in penalty rates under 49 U.S.C. 32912 are explicitly considered and rejected a advance of assessing a new CAFE relevant to the catch-up adjustment change to the specific civil penalty penalty level.20 As NHTSA explained in required by the Inflation Adjustment dollar amount in the statute ($5.00) and the December 28, 2016 Federal Register Act? Why or why not? instead ratified the penalty while at the document, absent lead time, increasing • Do commenters believe that the same time amending the penalty the civil penalties for falling short of EPCA considerations for'‘substantial provision to authorize the use of civil CAFE standards would not lead to an deleterious impact’’ are relevant to a penalty revenue to support NHTSA’s increase in fuel economy. Most determination of'‘negative economic CAFE rulemaking and to support manufacturers could not alter their impact’’? If so, do commenters believe research and development of the compliance plans in response to the that those considerations must be advanced technology vehicles? 19 Under increase in civil penalties for several accounted for in determining negative such an interpretation, Congress may model years, and therefore raising the economic impact, or simply that they have re-‘‘established’’ the CAFE penalty penalty rate without lead time would are informational, and what is the legal in 2007, meaning that it could be used seem to impose retroactive punishment basis for that belief? as the base year to apply the inflation without generating any additional fuel • If the EPCA considerations are adjustment multiplier. If so, what would savings. Neither of these outcomes relevant, how should they be applied in the economic consequences of such a seems consistent with Congress’ intent this instance? change in base year be? either in EPCA or in the Inflation • Do commenters have data In the event that NHTSA decides that Adjustment Act. suggesting what levels of'‘substantial it should adopt a CAFE civil penalty energy conservation,’’ as envisioned by level other than $14, how much lead IV. Public Participation EPCA, would outweigh any'‘substantial time (in model years) should NHTSA deleterious impact’’ of raising penalties? NHTSA requests comment on all provide to manufacturers to allow them aspects of this document. This section Why or why not? to adjust their production to the new • Assuming the factors under 32912 describes how you can participate in penalty level? What is the factual and this process. are relevant, can commenters provide legal basis to support such lead time if specific, documented information NHTSA determines to adopt a different How do I prepare and submit (including references to the sources penalty level? comments? relied on) with regard to the following: Æ Would there be any potential III. CAFE Penalty During To ensure that your comments are effects on employment nationally, on Reconsideration correctly filed in the Docket, please specific states or groups of states, or include the Docket Number NHTSA– within regions of a state or groups of Since NHTSA is reconsidering its December 28, 2016 final rule, including 2017–0073 in your comments. Your states, which could result from raising comments must not be more than 15 the CAFE penalty rate any amount whether $14 per tenth of a mile per gallon is the appropriate inflationary-pages long.21 NHTSA established this between $5.50 per tenth of a mile per limit to encourage you to write your gallon and $14 per tenth of a mile per adjusted penalty level, NHTSA is delaying the effective date of the final primary comments in a concise fashion. gallon? However, you may attach necessary Æ Would rising penalties affect rule pending reconsideration in a separate document also published in additional documents to your employment on specific sectors of the this Federal Register. During comments, and there is no limit on the economy? Æ Are there any potential effects on reconsideration, the applicable civil length of the attachments. If you are competition within the automotive penalty rate is $5.50 per tenth of a mile submitting comments electronically as a sector and the market shares of per gallon, which was the civil penalty PDF (Adobe) file, NHTSA asks that the individual automakers that could result rate prior to NHTSA’s inflationary documents be submitted using the from raising the CAFE penalty rate any adjustment. Since $5.50 is also the Optical Character Recognition (OCR) amount between $5.50 per tenth of a penalty rate that applies under the process, thus allowing NHTSA to search mile per gallon and $14 per tenth of a December 28, 2016 final rule until and copy certain portions of your mile per gallon? Model Year 2019, NHTSA expects that submissions.22 Please note that Æ Are there any potential effects on delaying the final rule pending pursuant to the Data Quality Act, in automobile imports that could result reconsideration will not affect the actual order for substantive data to be relied on from raising the CAFE penalty rate any payment of CAFE penalties that would and used by NHTSA, it must meet the amount between $5.50 per tenth of a have otherwise applied prior to Model information quality standards set forth mile per gallon and $14 per tenth of a Year 2019. in the OMB and DOT Data Quality Act mile per gallon? guidelines. Accordingly, NHTSA Finally, regarding whether NHTSA 19 In a September 16, 2016 letter to NHTSA encourages you to consult the used the appropriate base year to supplementing their August 1, 2016 petition for guidelines in preparing your comments. reconsideration of the July 5, 2016 interim final rule DOT’s guidelines may be accessed at calculate the adjustment in the interim adjusting the CAFE penalties, the petitioners argued final rule, should NHTSA instead use that Congress had considered increasing the CAFE https://www.transportation.gov/the passage of EISA in 2007 as the'‘base penalty and instead ultimately ratified the existing regulations/dot-information-year’’ for calculating the catch-up one. As support for this argument, the petitioners dissemination-quality-guidelines. cited a subcommittee discussion draft of June 1, adjustment? Do commenters believe that nlaroche on DSK30NT082PROD with RULES 2007, published in the record of a hearing before Congress, as a whole,'‘adjusted’’ or re-the Subcommittee on Energy and Air Quality of the 20 The appropriate lead time is one of the issues'‘established’’ the CAFE penalty amount House Committee on Energy and Commerce on which NHTSA is seeking public comment. 21 See 49 CFR 553.21. in EISA within the meaning of the entitled'‘Legislative Hearing on Discussion Draft Concerning Alternative Fuels, Infrastructure and 22 Optical character recognition (OCR) is the Inflation Adjustment Act when Vehicles,’’ June 7, 2007, Serial Number 110–53, process of converting an image of text, such as a Congress amended the penalty available at https://www.gpo.gov/fdsys/pkg/CHRG-scanned paper document or electronic fax file, into provision? What is the basis for 110hhrg42440/pdf/CHRG-110hhrg42440.pdf. computer-editable text. VerDate Sep<11>2014 14:05 Jul 11, 2017 Jkt 241001 PO 00000 Frm 00021 Fmt 4700 Sfmt 4700 E:\FR\FM\12JYR1.SGM 12JYR1 ADD-008 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page11 of 123 32144 Federal Register/Vol. 82, No. 132/Wednesday, July 12, 2017/Rules and Regulations Tips for Preparing Your Comments consider comments received after that motor vehicles and equipment ought not When submitting comments, please date. If a comment is received too late change as the result of this rule. remember to: for us to practicably consider as part of C. Executive Order 13132 (Federalism) • Identify the rulemaking by docket this action, NHTSA will consider that number and other identifying comment as an informal suggestion for Executive Order 13132 requires information (subject heading, Federal a future rulemaking action. NHTSA to develop an accountable Register date and page number). process to ensure'‘meaningful and How can I read the comments submitted • Explain why you agree or disagree, by other people? timely input by State and local officials suggest alternatives, and substitute in the development of regulatory language for your requested changes. You may read the materials placed in policies that have federalism • Describe any assumptions and the docket for this document (e.g., the implications.’’'‘Policies that have provide any technical information and/comments submitted in response to this federalism implications’’ is defined in or data that you used. document by other interested persons) the Executive Order to include • If you estimate potential costs or at any time by going to http://regulations that have'‘substantial direct burdens, explain how you arrived at www.regulations.gov and following the effects on the States, on the relationship your estimate in sufficient detail to online instructions for accessing the between the national government and allow for it to be reproduced. dockets. You may also read the the States, or on the distribution of • Provide specific examples to materials at the DOT Docket power and responsibilities among the illustrate your concerns, and suggest Management Facility by going to the various levels of government.’’ Under alternatives. street address given above under Executive Order 13132, the agency may • Explain your views as clearly as ADDRESSES. not issue a regulation with Federalism possible, avoiding the use of profanity implications, that imposes substantial V. Regulatory Notices and Analyses or personal threats. direct compliance costs, and that is not • Make sure to submit your A. Executive Order 12866, Executive required by statute, unless the Federal comments by the comment period Order 13563, and DOT Regulatory government provides the funds deadline identified in the DATES section Policies and Procedures necessary to pay the direct compliance above. costs incurred by State and local NHTSA has considered the impact of How can I be sure that my comments this rulemaking action under Executive governments, or the agency consults were received? Order 12866, Executive Order 13563, with State and local governments early and the Department of Transportation’s in the process of developing the If you submit your comments by mail proposed regulation. and wish Docket Management to notify regulatory policies and procedures. This rulemaking document was not reviewed This rule will not have substantial you upon its receipt of your comments, under Executive Order 12866 or direct effects on the States, on the enclose a self-addressed, stamped Executive Order 13563. This action is relationship between the national postcard in the envelope containing limited to seeking comment on an government and the States, or on the your comments. Upon receiving your adjustment of a civil penalty under a distribution of power and comments, Docket Management will statute that NHTSA enforces, and has responsibilities among the various return the postcard by mail. been determined not to be'‘significant’’ levels of government, as specified in How do I submit confidential business under the Department of Executive Order 13132. The reason is information? Transportation’s regulatory policies and that this rule applies to motor vehicle If you wish to submit any information procedures and the policies of the Office manufacturers. Thus, the requirements under a claim of confidentiality, you of Management and Budget. Because of Section 6 of the Executive Order do should submit three copies of your this rulemaking seeks comment on the not apply. complete submission, including the penalty amounts enacted under the IFR D. Unfunded Mandates Reform Act of information you claim to be confidential and does not change the number of 1995 (UMRA) business information, to the Chief entities that are subject to civil Counsel, NHTSA, at the address given penalties, the impacts are anticipated to The Unfunded Mandates Reform Act above under FOR FURTHER INFORMATION be non-significant. of 1995, Public Law 104–4, requires CONTACT. When you send a comment agencies to prepare a written assessment B. Regulatory Flexibility Act of the cost, benefits, and other effects of containing confidential business information, you should include a cover NHTSA has also considered the proposed or final rules that include a letter setting forth the information impacts of this rule under the Federal mandate likely to result in the specified in NHTSA’s confidential Regulatory Flexibility Act. I certify that expenditure by State, local, or tribal business information regulation.23 this rule will not have a significant governments, in the aggregate, or by the In addition, you should submit a copy impact on a substantial number of small private sector, of more than $100 from which you have deleted the entities. The following provides the million annually. Because NHTSA does claimed confidential business factual basis for this certification under not believe that this rule will information to the Docket by one of the 5 U.S.C. 605(b). The amendments only necessarily have a $100 million effect, methods set forth above. affect manufacturers of motor vehicles. no Unfunded Mandates assessment will Low-volume manufacturers can petition be prepared. Will NHTSA consider late comments? NHTSA for an alternate CAFE standard E. Executive Order 12778 (Civil Justice NHTSA will consider all comments under 49 CFR part 525, which lessens nlaroche on DSK30NT082PROD with RULES Reform) received before midnight Eastern the impacts of this rulemaking on small Standard Time on the comment closing businesses by allowing them to avoid This rule does not have a retroactive date indicated above under DATES. To liability for potential penalties under 49 or preemptive effect. Judicial review of the extent practicable, NHTSA will also CFR 578.6(h)(2). Small organizations this rule may be obtained pursuant to 5 and governmental jurisdictions will not U.S.C. 702. That section does not 23 49 CFR part 512. be significantly affected as the price of require that a petition for VerDate Sep<11>2014 14:05 Jul 11, 2017 Jkt 241001 PO 00000 Frm 00022 Fmt 4700 Sfmt 4700 E:\FR\FM\12JYR1.SGM 12JYR1 ADD-009 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page12 of 123 Federal Register/Vol. 82, No. 132/Wednesday, July 12, 2017/Rules and Regulations 32145 reconsideration be filed prior to seeking Atmospheric Administration (NOAA), extends from Maine to North Carolina judicial review. Commerce. from the coast out to the end of the F. Paperwork Reduction Act ACTION: Final rule. continental shelf. The Councils manage the fishery as two management units, In accordance with the Paperwork SUMMARY: This action approves and with the Northern Fishery Management Reduction Act of 1980, NHTSA states implements regulations submitted by Area (NFMA) covering the Gulf of that there are no requirements for the New England and Mid-Atlantic Maine (GOM) and northern part of information collection associated with Fishery Management Councils in Framework Adjustment 10 to the Georges Bank, and the Southern Fishery this rulemaking action. Monkfish Fishery Management Plan. Management Area (SFMA) extending G. Privacy Act from the southern flank of Georges Bank This action sets monkfish specifications Please note that anyone is able to for fishing years 2017–2019 (May 1, through Southern New England and into search the electronic form of all 2017 through April 30, 2020). It also the Mid-Atlantic Bight to North comments received into any of DOT’s increases current days-at-sea allocations Carolina. dockets by the name of the individual and trip limits. This action is intended The monkfish fishery is primarily submitting the comment (or signing the to allow the fishery to more effectively managed by landing limits and a yearly comment, if submitted on behalf of an harvest its optimum yield. allocation of monkfish days-at-sea association, business, labor union, etc.). DATES: This rule is effective July 12, (DAS) calculated to enable vessels You may review DOT’s complete 2017. participating in the fishery to catch, but Privacy Act statement in the Federal ADDRESSES: Copies of Framework not exceed, the target total allowable Register published on April 11, 2000 (65 FR 19477–78) or you may visit Adjustment 10 and the accompanying landings (TAL) for each management https://www.transportation.gov/privacy. environmental assessment (EA) are area. The catch limits are calculated to available on request from: John K. maximize yield in the fishery over the Jack Danielson, Bullard, Regional Administrator, long term. Based on a yearly evaluation Acting Deputy Administrator. National Marine Fisheries Service, 55 of the monkfish fishery, the Councils [FR Doc. 2017–14525 Filed 7–7–17; 11:15 am] Great Republic Drive, Gloucester, MA may revise existing management BILLING CODE 4910–59–P 01930. Framework 10 and the EA are measures through the framework also accessible via the Internet at: provisions of the FMP to better achieve https://the goals and objectives of the FMP and DEPARTMENT OF COMMERCE www.greateratlantic.fisheries.noaa.gov/achieve optimum yield, as required by sustainable/species/monkfish/the Magnuson-Stevens Fishery National Oceanic and Atmospheric index.html. These documents are also Conservation and Management Act Administration accessible via the Federal eRulemaking (Magnuson-Stevens Act). Portal: http://www.regulations.gov. 50 CFR Part 648 FOR FURTHER INFORMATION CONTACT: The monkfish fishery has not fully William Whitmore, Fishery Policy harvested its quota since 2011. The [Docket Number 170314267–7566–02] Analyst, (978) 281–9182. fishery underharvested its available RIN 0648–BG48 SUPPLEMENTARY INFORMATION: quota in the last three years (Table 1). The Councils developed Framework 10 Fisheries of the Northeastern United Background to enhance the operational efficiency of States; Monkfish; Framework existing management measures in an The New England and the Mid-Adjustment 10 Atlantic Fishery Management Councils effort to better achieve optimum yield. AGENCY: National Marine Fisheries jointly manage the Monkfish Fishery Service (NMFS), National Oceanic and Management Plan (FMP). The fishery TABLE 1—MONKFISH LANDINGS COMPARISON FOR FISHING YEARS 2013–2015 Target TAL Average (mt) for fishing 2013 Landings 2014 Landings 2015 Landings percent (%) of Management area years (mt) (mt) (mt) TAL landed 2013–2015 2013–2015 NFMA................................................................................... 5,854 3,596 3,403 4,080 63 SFMA................................................................................... 8,925 5,088 5,415 4,733 57 Approved Measures the NFMA and 23,204 mt for the SFMA. Although the biological reference 1. Establish Specifications for Fishing The acceptable biological catch (ABC) points are unchanged, this action Years 2017–2019 for each area, which equals the annual increases monkfish total allowable catch limit (ACL), is 7,592 mt for the landings (TAL), or quotas, for the next This action retains the biological NFMA and 12,316 mt for the SFMA. three fishing years (Table 2). The TALs reference points previously established Additional background information on are derived after reducing an assumed in Framework 8 (79 FR 41919; July 8, nlaroche on DSK30NT082PROD with RULES these specifications is available in the amount of discards and a management 2014). The overfishing limit (OFL) for proposed rule (82 FR 21498; May 9, uncertainty buffer from the ABC. fishing years 2017–2019 (May 1, 2017 2017), and is not repeated here. through April 30, 2020) is 17,805 mt for VerDate Sep<11>2014 14:05 Jul 11, 2017 Jkt 241001 PO 00000 Frm 00023 Fmt 4700 Sfmt 4700 E:\FR\FM\12JYR1.SGM 12JYR1 ADD-010 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page13 of 123 Exhibit C ADD-011 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page14 of 123 Federal Register/Vol. 81, No. 249/Wednesday, December 28, 2016/Rules and Regulations 95489 [FR Doc. 2016–31215 Filed 12–27–16; 8:45 am] compliance with standards in another monetary penalties administered by the BILLING CODE 6560–50–P year or purchased from another Agency, including those prescribed by manufacturer. If a manufacturer does the CAFE program. In accordance with not have credits to apply, and does not the Act and OMB guidance, the updated DEPARTMENT OF TRANSPORTATION apply sufficient fuel economy-penalty rate increased from $5.50 per improving technologies to their vehicles tenth of a mile per gallon (mpg) to $14 National Highway Traffic Safety to meet their fleet-wide standards, then per tenth of an mpg.5 NHTSA stated in Administration that manufacturer is liable for civil implementation guidance that it issued penalties.3 following the IFR that the Agency 49 CFR Part 578 Congress has prescribed the formula intended to apply the $14 rate to any for calculating a civil penalty for penalties assessed on and after August [Docket No. NHTSA–2016–0136] violation of a CAFE standard. That 4, 2016, beginning with penalties RIN 2127–AL82 formula multiplies the penalty rate applicable to violations for MY 2015, times the number of tenths-of-a-mile-and also applying to any violations from Civil Penalties per-gallon by which a non-compliant prior model years that resulted from AGENCY: National Highway Traffic fleet falls short of an applicable CAFE recalculation of a manufacturer’s Safety Administration (NHTSA), standard, times the number of vehicles previous CAFE levels.6 Department of Transportation (DOT). in that non-compliant fleet.4 For many II. Industry Petition for ACTION: Final rule; response to petition years, the penalty rate has been $5.50 Reconsideration for reconsideration; response to petition per tenth-of-a-mile-per-gallon. As an illustration, assume that Manufacturer A The Auto Alliance and Global for rulemaking. Automakers jointly petitioned NHTSA produced 1,000,000 light trucks in SUMMARY: On July 5, 2016, NHTSA model year 2010. Assume further that A for reconsideration of the interim final published an interim final rule updating has a light truck standard of 20 mpg for rule with regard to the inflation the maximum civil penalty amounts for MY 2010, and an achieved light truck adjustment for CAFE non-compliance violations of statutes and regulations average fuel economy level of 19.7 mpg penalties (hereafter, the Alliance and administered by NHTSA, pursuant to in that model year. If A has no credits Global petition will be referred to as the the Federal Civil Penalties Inflation to apply, then A’s assessed civil penalty'‘Industry Petition’’) on August 1, 2016. Adjustment Act Improvements Act of under this historical penalty rate would The Industry Petition asked that NHTSA 2015. This decision responds to a be: not apply the penalty increase to non-petition for partial reconsideration of compliances associated with'‘model $5.50 (penalty rate) × 3 (tenths of an that interim final rule. After carefully years that have already been completed mpg) × 1,000,000 (vehicles in considering the issues raised, the or for which a company’s compliance Manufacturer A’s light truck fleet) = Agency grants some aspects of the plan has already been set.’’ Specifically, $16,500,000 due for A’s light truck petition, and denies other aspects. This the Industry Petition stated that: fleet for MY 2010. decision amends the relevant regulatory To date, few manufacturers have Our most significant concern with the IFR text accordingly. This decision also is that it would apply retroactively to the actually paid civil penalties, and the 2014 and 2015 Model Years (which have responds to a petition for rulemaking on amounts of CAFE penalties paid a similar topic. been completed for all manufacturers but for generally have been relatively low. which the compliance files are not all DATES: Effective date: This rule is Additionally, since the introduction of closed), to the 2016 Model Year (which is effective January 27, 2017. credit trading and transfers for MY 2011 complete for many manufacturers) and to the FOR FURTHER INFORMATION CONTACT: Ms. and after, many manufacturers have 2017 and 2018 Model Years (for which Rebecca Yoon, Office of the Chief taken advantage of those flexibilities manufacturers have already set compliance Counsel, NHTSA, telephone (202) 366– rather than paying civil penalties for plans based on guidance from NHTSA, 2992, facsimile (202) 366–3820, 1200 including the [historical penalty amounts of non-compliance. $5.50 per tenth of an mpg]). Applying the New Jersey Avenue SE., Washington, The Federal Civil Penalties Inflation increased civil penalties in this manner is DC 20590. Adjustment Act Improvements Act profoundly unfair to manufacturers, does not SUPPLEMENTARY INFORMATION: (November 2, 2015) (the'‘Act’’) improve the effectiveness of this penalty, and prescribed an inflation adjustment for does nothing to further the policies I. Background on CAFE Penalties and many civil monetary penalties, underlying the CAFE statute. Interim Final Rule including CAFE’s civil penalty rate. In Industry Petition at 3. The National Highway Traffic Safety that Act, Congress generally required In the alternative, the Industry Administration (NHTSA) administers Federal agencies that administer civil Petition requested that if NHTSA Corporate Average Fuel Economy monetary penalties to make an initial decided to apply the penalty increase to (CAFE) standards under 49 U.S.C. 32901'‘catch-up’’ adjustment for inflation MYs 2014–2018, the Agency should et seq. Vehicle manufacturers that through an interim final rule by July 1, recalculate the adjusted penalty rate produce passenger cars and light trucks 2016, and then to make subsequent for sale in the United States are subject annual adjustments for inflation (see 5 NHTSA’s explanation of its process, including to these standards,1 and are subject to Pub. L. 114–74, Sec. 701). NHTSA reliance on OMB guidance for calculating the initial civil penalties for failure to meet the developed an interim final rule (IFR) adjustment required by the Act, is set forth in the interim final rule at 81 FR 43524–26 (Jul. 5, 2016). standards.2 Manufacturers generally implementing the Agency’s sradovich on DSK3GMQ082PROD with RULES The interim final rule also discusses the'‘rounding meet the standards by applying responsibilities under that Act, and that rule’’ under the prior version of the Federal Civil technology to their vehicles to improve IFR published in the Federal Register Penalties Inflation Adjustment Act, which their fleet-wide fuel economy, but may on July 5, 2016. The NHTSA IFR prevented NHTSA from raising the $5.50 rate after 1997. also apply credits earned from over-included adjustments for all civil 6 Memorandum,'‘Implementation of the Federal Civil Penalties Inflation Adjustment Act 1 49 U.S.C. 32911(b). 3 Civil penalties are remitted to the U.S. Treasury. Improvement Act of 2015 for the Corporate Average 2 49 U.S.C. 32912(b). 4 49 U.S.C. 32912(b). Fuel Economy (CAFE) Program,’’ July 18, 2016. VerDate Sep<11>2014 16:15 Dec 27, 2016 Jkt 241001 PO 00000 Frm 00093 Fmt 4700 Sfmt 4700 E:\FR\FM\28DER1.SGM 28DER1 ADD-012 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page15 of 123 95490 Federal Register/Vol. 81, No. 249/Wednesday, December 28, 2016/Rules and Regulations using 2007 as the'‘base year’’ for penalty rate to violations of CAFE believes that Congress would not have calculating the inflation adjustment. As standards in model years prior to the intended retroactive application of an another alternative, the Industry enactment of the Act would not result inflation adjustment to overcome this Petition sought a finding that in additional fuel savings, and thus core substantive purpose and intent of immediately increasing the penalty to would seem to impose retroactive EPCA. This analysis compels the $14 would cause a'‘negative economic punishment without accomplishing conclusion that applying an increased impact,’’ thereby requiring a smaller Congress’ specific intent in establishing penalty rate to MYs 2014 and 2015 initial penalty increase. See Public Law the civil penalty provision of the Energy would not be appropriate, nor would 114–74, Sec. 701(c) (providing for an Policy and Conservation Act (‘‘EPCA’’). applying it to MY 2016, which was exception to the otherwise-applicable Model years typically begin prior to underway by November 2, 2015 and penalty increase, if the Agency finds their respective calendar year. By over halfway complete by July 5, 2016.9 through a rulemaking proceeding that November 2, 2015 (the date of B. Model Years 2017 and 2018 the increase would cause a'‘negative enactment of the civil penalties economic impact,’’ a term that the adjustment Act), nearly all The Industry Petition asserts that statute does not define).7 manufacturers subject to the CAFE manufacturers have set their product standards had completed both model and compliance plans for MY 2017 and III. Petition for Rulemaking To Raise 2018 based on the CAFE penalty years 2014 and 2015, and no further Civil Penalty Rate provisions in place prior to July 2016, vehicles in those model years were The Center for Biological Diversity being produced in significant numbers. and that it is too late at this juncture to (CBD) petitioned NHTSA on October 1, This argument is even stronger make significant changes to those plans 2015, just over a month prior to passage considering that all manufacturers and avoid non-compliances (for the of the Act, to conduct a rulemaking to would have completed these model manufacturers already intending not to raise the civil penalty rate for CAFE years prior to July 5, 2016, the date of comply). The Agency determined above standard violations under NHTSA’s the IFR. If all the vehicles for a model that it is not appropriate to apply an then-existing statutory authority. The year have already been produced, then increased penalty rate to CAFE non-CBD petition stated correctly that there is no way for their manufacturers compliance in past model years, i.e., NHTSA had not adjusted the $5.50 civil to raise the fuel economy level of those MY 2016 and before, which could not penalty rate for inflation since 1997, and vehicles in order to avoid higher penalty be changed in response to a higher requested that the Agency follow the rates for non-compliance. penalty rate. The next question procedure laid out at 49 U.S.C. 32912(c) In the specific context of EPCA as presented by the Industry Petition is to undertake a rulemaking to raise the amended, the purpose of civil penalties how to address future model years’ amount to the maximum then allowed for non-compliance is to encourage vehicles whose fuel economy levels by Congress, $10 per tenth-of-an-mpg. A manufacturers to comply with the CAFE cannot be changed at this juncture. month later, Congress changed the standards. See 49 CFR 578.2 (section For immediate future model years statutory landscape by enacting the addressing penalties states that a (i.e., 2017 and 2018), the theoretical Federal Civil Penalties Inflation'‘purpose of this part is to effectuate the possibility exists that manufacturers Adjustment Act Improvements Act of remedial impact of civil penalties and to could respond to a higher penalty rate 2015. foster compliance with the law’’); see by increasing their fleet fuel economy generally, 49 U.S.C. 32911–32912; and thus achieving CAFE compliance or IV. NHTSA Response to Petitions mitigating their non-compliance. United States v. General Motors, 385 Having carefully considered the F.Supp. 598, 604 (D.D.C. 1974), vacated However, because of industry design, issues raised by the petitioners, NHTSA on other grounds, 527 F.2d 853 (D.C. development, and production cycles, will grant the Industry Petition in part Cir. 1975) (‘‘The policy of the Act with vehicle designs (including drivetrains, and deny it in part. Beginning with regard to civil penalties is clearly to which are where many fuel economy model year 2019, NHTSA will apply the discourage noncompliance’’). Assuming improvements are made) are often fixed full penalty prescribed by the Federal that higher civil penalty rates are years in advance, making adjustments to Civil Penalties Inflation Adjustment intended, in the particular context of fleet fuel economy difficult without a Improvements Act of 2015. NHTSA is CAFE, to provide greater incentives for lead time of multiple years. required by the Act to continue manufacturers to comply with Here, the Industry Petitioners assert adjusting the civil penalty for inflation applicable standards, then raising that their plans for what technology to each year, so the penalty rate applicable penalty rates for model years already put on which MYs 2017 and 2018 to MY 2019 and after fleets will be $14 completed and thus unchangeable vehicles are, at the point the IFR was per tenth-of-an-mpg, plus any would be not only retroactive,8 but issued, fixed and inalterable. NHTSA adjustment(s) for inflation that occur incapable of serving the purpose of takes manufacturers’ product cycles into between now and a violation’s causing greater compliance with CAFE account when NHTSA sets fuel assessment. The Agency concludes that standards. Based on the governing economy standards. For example, this decision also effectively addresses statutory framework and the specific 9 The decision not to apply the increased the issue raised by the CBD Petition. CAFE regulatory scheme, NHTSA penalties retroactively is similar to the approach The discussion below presents the taken by various other federal agencies in Agency’s analysis and conclusion. 8 Retroactivity is not favored in the law. The implementing the Federal Civil Penalties Inflation Supreme Court has stated that'‘congressional Adjustment Act Improvements Act of 2015. See, A. Model Years 2014–2016 enactments... will not be construed to have e.g., Department of Justice, Interim final rule with sradovich on DSK3GMQ082PROD with RULES NHTSA agrees with the Industry retroactive effect unless their language requires this request for comments: Civil Monetary Penalties result.’’ Landgraf v. USI Film Products, 511 U.S. Inflation Adjustment, 81 FR 42491 (June 30, 2016) Petitioners that applying the $14 civil 244, 280 (1994), citing Bowen v. Georgetown (applying increased penalties only to violations University Hospital, 488 U.S. 204, 208 (1988). after November 2, 2015, the date of the Act’s 7 Because the Agency is granting the Industry NHTSA believes that in the specific context of the enactment); Federal Aviation Administration, Petition’s request to apply inflation-adjusted CAFE program and the statutes that govern it, Interim Final Rule: Revisions to Civil Penalty penalties only to MY 2019 and after, the Agency Congress could not have intended to impose higher Inflation Adjustment Tables, 81 FR 43463 (July 5, need not address the Industry Petition’s alternative civil penalty rates for time periods when they 2016) (applying increased penalties only to requests. would not incentivize increased fuel economy. violations after August 1, 2016). VerDate Sep<11>2014 16:15 Dec 27, 2016 Jkt 241001 PO 00000 Frm 00094 Fmt 4700 Sfmt 4700 E:\FR\FM\28DER1.SGM 28DER1 ADD-013 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page16 of 123 Federal Register/Vol. 81, No. 249/Wednesday, December 28, 2016/Rules and Regulations 95491 because NHTSA recognizes that lower-or higher-fuel-economy models, In summary, NHTSA partially grants manufacturers’ product and compliance which could help them to reduce or the Industry Petition for plans are difficult to alter significantly avoid CAFE non-compliance penalties. Reconsideration insofar as it seeks for years ahead of a given model year,10 However, in this particular instance, implementation of the civil penalties the Agency includes product cadence in compelling such a result through the adjustment only to MY 2019 and after, its assessment of CAFE standards, by immediate application of higher penalty and denies the Industry Petition in all limiting application of technology in its rates to product design decisions that other respects. analytical model to years in which have already been made and cannot be This action also effectively responds vehicles are refreshed or redesigned. changed would be contrary to a to the petition for rulemaking from CBD NHTSA believes that this approach fundamental congressional purpose of to increase the civil penalty rate as facilitates continued fuel economy the CAFE program. The Energy permitted by EPCA/EISA. The civil improvements over the longer term by Independence and Security Act (EISA) penalty rate beginning in MY 2019 will accounting for the fact that amendments of 2007 required that fuel be substantially higher than the CBD manufacturers will seek to make economy standards be attribute-based, petition requested, and NHTSA believes improvements when and where they are demonstrating congressional intent that that the increased penalty will most cost-effective. the CAFE program be responsive to accomplish CBD’s goal of encouraging In an analogous context, EPCA consumer demand. See 49 U.S.C. manufacturers to apply more fuel-saving provides that when DOT amends a fuel 32902(b)(3). Applying higher civil technologies to their vehicles in those economy standard to make it more penalty rates in a way that would force future model years. To the extent that stringent, that new standard must be manufacturers to disregard consumer the CBD Petition requests an earlier promulgated'‘at least 18 months before demand (e.g., by restricting the penalty rate increase, it is denied for the the beginning of the model year to availability of vehicles that consumers reasons set forth in this decision. which the amendment applies.’’ 49 want) would be inconsistent with that U.S.C. 32902(a)(2). The 18 months’ V. Regulatory Notices and Analyses fundamental statutory command. notice requirement for increases in fuel Providing some lead time, as here, A. Executive Order 12866, Executive economy standards represents a mitigates that concern. Order 13563, and DOT Regulatory congressional acknowledgement of the In order to reconcile competing Policies and Procedures importance of advance notice to vehicle statutory objectives in the unique manufacturers to allow them the lead NHTSA has considered the impact of context of multi-year vehicle product this rulemaking action under Executive time necessary to adjust their product cycles, NHTSA will grant the Industry Order 12866, Executive Order 13563, plans, designs, and compliance plans to Petition insofar as it seeks to apply the and the Department of Transportation’s address changes in fuel economy penalty increase only for model years regulatory policies and procedures. This standards. Similarly here, affording 2019 and after. For CAFE standard non-rulemaking document was not reviewed manufacturers lead time to adjust their compliances that occur(ed) for model under Executive Order 12866 or products and compliance plans helps years 2014–2018, NHTSA intends to Executive Order 13563, and has been them to account for such an increase in assess civil penalties at the rate of $5.50 determined not to be'‘significant’’ the civil penalty amount. In this unique per tenth of an mpg. Beginning with under the Department of case, the 18-month lead time for model year 2019, NHTSA will apply the Transportation’s regulatory policies and increases in the stringency of fuel economy standards provides a full penalty prescribed by the Federal procedures and the policies of the Office reasonable proxy for appropriate Civil Penalties Inflation Adjustment of Management and Budget. advance notice of the application of Improvements Act of 2015. NHTSA is required by the Act to continue B. Regulatory Flexibility Act substantially increased—here nearly tripled—civil penalties. adjusting the civil penalty for inflation NHTSA has also considered the Given that NHTSA issued the IFR in each year, so the penalty rate applicable impacts of this rule under the July 2016, 18 months from that date to MY–2019-and-after fleets will be $14 Regulatory Flexibility Act. I certify that would be January 2018, which would per tenth-of-an-mpg, plus any this rule will not have a significant encompass MY 2017 for most adjustment(s) for inflation that occur impact on a substantial number of small manufacturers and models and part of between now and then. See Public Law entities. The following provides the MY 2018. Based on the Industry 114–74, Sec. 701(b)(2). factual basis for this certification under Petition, comments, and agency NHTSA believes this approach 5 U.S.C. 605(b). The amendments only expertise, NHTSA believes that, in this appropriately harmonizes the two affect manufacturers of motor vehicles. instance, applying the adjusted congressional directives of adjusting Low-volume manufacturers can petition penalties only for MY 2019 and after civil penalties to account for inflation NHTSA for an alternate CAFE standard provides a reasonable amount of lead and maintaining attribute-based, under 49 CFR part 525, which lessens time for manufacturers to adjust their consumer-demand-focused standards, the impacts of this rulemaking on small plans and products to take into account applied in the context of the businesses by allowing them to avoid the substantial change in penalty level. presumption against retroactive liability for potential penalties under 49 For future model years for which the application of statutes. See, e.g., Bowen CFR 578.6(h)(2). Small organizations vehicles to be produced and their v. Georgetown Univ. Hosp., 488 U.S. and governmental jurisdictions will not technologies are essentially fixed (i.e., 204, 208. This decision increases civil be significantly affected as the price of MYs 2017–2018), it is conceivable that penalties starting with the model year motor vehicles and equipment ought not sradovich on DSK3GMQ082PROD with RULES some manufacturers might be able to that manufacturers, in this particular change as the result of this rule. change production volumes of certain instance, are reasonably able to design and produce vehicles in response to the C. Executive Order 13132 (Federalism) 10 One of the Industry Petitioners, the Alliance, increased penalties. See Industry Executive Order 13132 requires submitted supplemental materials describing the Petition at 4–6 (seeking application of NHTSA to develop an accountable activities and events that make up product cycles, which support this point. See Docket No. NHTSA– the adjusted civil penalties only to MY process to ensure'‘meaningful and 2016–0136. 2019 and after). timely input by State and local officials VerDate Sep<11>2014 16:15 Dec 27, 2016 Jkt 241001 PO 00000 Frm 00095 Fmt 4700 Sfmt 4700 E:\FR\FM\28DER1.SGM 28DER1 ADD-014 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page17 of 123 95492 Federal Register/Vol. 81, No. 249/Wednesday, December 28, 2016/Rules and Regulations in the development of regulatory G. Privacy Act Issued on: December 21, 2016. policies that have federalism Please note that anyone is able to Mark R. Rosekind, implications.’’'‘Policies that have search the electronic form of all Administrator. federalism implications’’ is defined in comments received into any of our [FR Doc. 2016–31136 Filed 12–27–16; 8:45 am] the Executive Order to include dockets by the name of the individual BILLING CODE 4910–59–P regulations that have'‘substantial direct submitting the comment (or signing the effects on the States, on the relationship comment, if submitted on behalf of an between the national government and association, business, labor union, etc.). DEPARTMENT OF COMMERCE the States, or on the distribution of You may review DOT’s complete power and responsibilities among the Privacy Act statement in the Federal National Oceanic and Atmospheric various levels of government.’’ Under Register published on April 11, 2000 Administration Executive Order 13132, the agency may (65 FR 19477–78) or you may visit not issue a regulation with Federalism https://www.transportation.gov/privacy. 50 CFR Part 648 implications, that imposes substantial direct compliance costs, and that is not List of Subjects in 49 CFR Part 578 RIN 0648–XF074 required by statute, unless the Federal Fuel economy, Motor vehicles, government provides the funds Fisheries of the Northeastern United Penalties. States; Northeast Multispecies necessary to pay the direct compliance In consideration of the foregoing, 49 costs incurred by State and local Fishery; Possession and Trip Limit CFR part 578 is amended as set forth Modifications for the Common Pool governments, or the agency consults below. with State and local governments early Fishery in the process of developing the PART 578—CIVIL AND CRIMINAL AGENCY: National Marine Fisheries proposed regulation. PENALTIES Service (NMFS), National Oceanic and This rule will not have substantial Atmospheric Administration (NOAA), direct effects on the States, on the ■ 1. The authority citation for 49 CFR Commerce. relationship between the national part 578 is revised to read as follows: ACTION: Temporary rule; inseason government and the States, or on the Authority: Pub. L. 101–410, Pub. L. 104– adjustment. distribution of power and 134, Pub. L. 109–59, Pub. L. 114–74, Pub L. responsibilities among the various 114–94, 49 U.S.C. 32902 and 32912; SUMMARY: This action increases the levels of government, as specified in delegation of authority at 49 CFR 1.81, 1.95. possession and trip limits for Southern Executive Order 13132. The reason is ■ 2. Section 578.6 is amended by New England/Mid-Atlantic yellowtail that this rule applies to motor vehicle revising paragraph (h) to read as flounder and reduces the possession manufacturers. Thus, the requirements follows: and trip limits for Georges Bank cod in of Section 6 of the Executive Order do place for Northeast multispecies not apply. § 578.6 Civil penalties for violations of common pool vessels for the remainder specified provisions of Title 49 of the United of the 2016 fishing year. The Regional D. Unfunded Mandates Reform Act of States Code. Administrator is authorized to adjust 1995 (UMRA) * * * * * possession and trip limits for common The Unfunded Mandates Reform Act (h) Automobile fuel economy. (1) A pool vessels to facilitate harvesting, or of 1995, Public Law 104–4, requires person that violates 49 U.S.C. 32911(a) prevent exceeding, the pertinent agencies to prepare a written assessment is liable to the United States common pool quotas during the fishing of the cost, benefits, and other effects of Government for a civil penalty of not year. Increasing the possession and trip proposed or final rules that include a more than $40,000 for each violation. A limits on Southern New England/Mid-Federal mandate likely to result in the separate violation occurs for each day Atlantic yellowtail flounder is intended expenditure by State, local, or tribal the violation continues. to provide additional fishing governments, in the aggregate, or by the (2) Except as provided in 49 U.S.C. opportunities and help allow the private sector, of more than $100 32912(c), beginning with model year common pool fishery to catch its million annually. Because NHTSA does 2019, a manufacturer that violates a allowable quota for the stock, while not believe that this rule will standard prescribed for a model year reducing the possession and trip limits necessarily have a $100 million effect, under 49 U.S.C. 32902 is liable to the for Georges Bank cod is necessary to no Unfunded Mandates assessment will United States Government for a civil prevent overharvest of the common pool be prepared. penalty of $14, plus any adjustments for quota for that stock. inflation that occurred or may occur (for E. Executive Order 12778 (Civil Justice model years before model year 2019, the DATES: The action increasing the Reform) civil penalty is $5.50), multiplied by possession and trip limits for Southern each.1 of a mile a gallon by which the New England/Mid-Atlantic yellowtail This rule does not have a retroactive applicable average fuel economy flounder is effective December 22, 2016, or preemptive effect. Judicial review of standard under that section exceeds the through April 30, 2017. The action this rule may be obtained pursuant to 5 average fuel economy— decreasing the possession and trip U.S.C. 702. That section does not (i) Calculated under 49 U.S.C. limits for Georges Bank cod is effective require that a petition for 32904(a)(1)(A) or (B) for automobiles to January 1, 2017, through April 30, 2017. reconsideration be filed prior to seeking judicial review. which the standard applies produced by FOR FURTHER INFORMATION CONTACT: Kyle sradovich on DSK3GMQ082PROD with RULES the manufacturer during the model year; Molton, Fishery Management Specialist, F. Paperwork Reduction Act (ii) Multiplied by the number of those 978–281–9236. In accordance with the Paperwork automobiles; and SUPPLEMENTARY INFORMATION: The Reduction Act of 1980, we state that (iii) Reduced by the credits available regulations at 50 CFR 648.86(o) there are no requirements for to the manufacturer under 49 U.S.C. authorize the Regional Administrator to information collection associated with 32903 for the model year. adjust the possession and trip limits for this rulemaking action. * * * * * common pool vessels in order to VerDate Sep<11>2014 16:15 Dec 27, 2016 Jkt 241001 PO 00000 Frm 00096 Fmt 4700 Sfmt 4700 E:\FR\FM\28DER1.SGM 28DER1 ADD-015 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page18 of 123 Exhibit D ADD-016 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page19 of 123 43524 Federal Register/Vol. 81, No. 128/Tuesday, July 5, 2016/Rules and Regulations authority for this collection of below-1–GHz spectrum (In the Matter of DEPARTMENT OF TRANSPORTATION information is contained in 47 U.S.C. Policies Regarding Mobile Spectrum 151, 152, 154, 154(i), 155(c), 157, 201, Holdings, Expanding the Economic and National Highway Traffic Safety 202, 208, 214, 301, 302a, 303, 307, 308, Innovation Opportunities of Spectrum Administration 309, 310, 311, 314, 316, 319, 324, 331, Through Incentive Auctions, FCC 14–63, 332, 333, 336, 534, 535 and 554. Report and Order, 29 FCC Rcd 6133, 49 CFR Part 578 Nature and Extent of Confidentiality: 6190, para. 135 (2014) (Mobile Spectrum [Docket No. NHTSA–2016–0075] There is no need for confidentiality Holdings R&O). See also Application required with this collection of RIN 2127–AL73 Procedures for Broadcast Incentive information. Privacy Impact Assessment: Yes. Auction Scheduled to Begin on March Civil Penalties Needs and Uses: On July 20, 2015, the 29, 2016; Technical Formulas for Competitive Bidding, Public Notice, 30 AGENCY: National Highway Traffic Commission released the Part 1 R&O in Safety Administration (NHTSA), which it updated many of its Part 1 FCC Rcd 11034, Appendix 3 (WTB 2015); Wireless Telecommunications Department of Transportation (DOT). competitive bidding rules (See Updating Bureau Releases Updated List of ACTION: Interim final rule. Part 1 Competitive Bidding Rules; Expanding the Economic and Reserve-Eligible Nationwide Service SUMMARY: This interim final rule Innovation Opportunities of Spectrum Providers in each PEA for the Broadcast updates the maximum civil penalty Through Incentive Auctions; Petition of Incentive Auction, Public Notice, AU amounts for violations of statutes and DIRECTV Group, Inc. and EchoStar LLC No. 14–252 (WTB 2016). regulations administered by NHTSA for Expedited Rulemaking to Amend pursuant the Federal Civil Penalties The Commission also revised the Section 1.2105(a)(2)(xi) and 1.2106(a) of Inflation Adjustment Act Improvement currently approved collection of the Commission’s Rules and/or for Act of 2015. This final rule also amends Interim Conditional Waiver; information under OMB Control Number 3060–0798 to permit the our regulations to reflect the new civil Implementation of the Commercial penalty amounts for violations of the Spectrum Enhancement Act and collection of the additional information for Commission licenses and permits, National Traffic and Motor Vehicle Modernization of the Commission’s Safety (the Safety Act) Act authorized Competitive Bidding Rules and pursuant to the rules and information collection requirements adopted by the by the Fixing America’s Surface Procedures, Report and Order, Order on Transportation Act (FAST Act). Reconsideration of the First Report and Commission in the Part 1 R&O and the Mobile Spectrum Holdings R&O. As part DATES: Effective date: This rule is Order, Third Order on Reconsideration of the Second Report and Order, and of the collection, the Commission is effective August 4, 2016. Petitions for reconsideration: Petitions Third Report and Order, FCC 15–80, 30 now approved for the information for reconsideration of this final rule FCC Rcd 7493 (2015), modified by collection and recordkeeping must be received not later than August Erratum, 30 FCC Rcd 8518 (2015) (Part requirements associated with 47 CFR 1 R&O)). Of relevance to the information 19, 2016. 1.2110(j), 1.2112(b)(2)(iii), collection at issue here, the ADDRESSES: Any petitions for 1.2112(b)(2)(v), 1.2112(b)(2)(vii), and Commission: (1) Implemented a new reconsideration should refer to the 1.2112(b)(2)(viii). Also, in certain general prohibition on the filing of docket number of this document and be circumstances, the Commission requires submitted to: Administrator, National auction applications by entities the applicant to provide copies of their controlled by the same individual or set Highway Traffic Safety Administration, agreements and/or submit exhibits. 1200 New Jersey Avenue SE., West of individuals (but with a limited exception for qualifying rural wireless In addition, the Commission is now Building, Fourth Floor, Washington, DC partnerships); (2) modified the approved for various other, non-20590. eligibility requirements for small substantive editorial/consistency edits FOR FURTHER INFORMATION CONTACT: business benefits, and updated the and updates to FCC Form 601 that Thomas Healy, Office of Chief standardized schedule of small business correct inconsistent capitalization of Counsel, NHTSA, telephone (202) sizes, including the gross revenues words and other typographical errors, 366–2992, facsimile (202) 366–3820, thresholds used to determine eligibility; and better align the text on the form 1200 New Jersey Ave SE., Washington, (3) established a new bidding credit for with the text in the Commission rules DC 20590. eligible rural service providers; (4) both generally and in connection with SUPPLEMENTARY INFORMATION: adopted targeted attribution rules to recent non-substantive, organizational prevent the unjust enrichment of I. Background amendments to the Commission’s rules. ineligible entities; and (5) adopted rules On November 2, 2015, the Federal prohibiting joint bidding arrangements Federal Communications Commission. Civil Penalties Inflation Adjustment Act with limited exceptions. The updated Gloria J. Miles, Improvement Act (the 2015 Act), Pub. L. Part 1 rules apply to applicants seeking Federal Register Liaison Officer, Office of the 114–74, Section 701, was signed into licenses and permits. Secretary. law. The purpose of the 2015 Act is to Additionally, on June 2, 2014, the [FR Doc. 2016–15819 Filed 7–1–16; 8:45 am] improve the effectiveness of civil Commission released the Mobile BILLING CODE 6712–01–P monetary penalties and to maintain Spectrum Holdings R&O, in which the their deterrent effect. The 2015 Act Commission updated its spectrum requires agencies to make an initial sradovich on DSK3GDR082PROD with RULES screen and established rules for its catch up adjustment to the civil upcoming auctions of low-band monetary penalties they administer spectrum. Of relevance to the through an interim final rule and then information collection at issue here, the to make subsequent annual adjustments Commission stated that it could reserve for inflation. The amount of increase of spectrum in order to ensure against any adjustment to a civil penalty excessive concentration in holdings of pursuant to the 2015 Act is limited to VerDate Sep<11>2014 16:06 Jul 01, 2016 Jkt 238001 PO 00000 Frm 00062 Fmt 4700 Sfmt 4700 E:\FR\FM\05JYR1.SGM 05JYR1 ADD-017 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page20 of 123 Federal Register/Vol. 81, No. 128/Tuesday, July 5, 2016/Rules and Regulations 43525 150 percent of the current penalty. 2015 CPI–U. The February 24, 2016 Pub. L. 112–141, established a Agencies are required to issue the memorandum contains a table with a maximum civil penalty for persons interim final rule with the initial catch multiplier for the change in CPI–U from knowingly or willfully submitting up adjustment by July 1, 2016. the year the penalty was established or materially false or misleading The method of calculating last adjusted to 2015. To arrive at the information to NHTSA after certifying inflationary adjustments in the 2015 Act adjusted penalty the agency must that the information was accurate differs substantially from the methods multiply the penalty amount when it pursuant to 49 U.S.C. 30166(o) of $5,000 used in past inflationary adjustment was established or last adjusted by per day. Applying the multiplier for the rulemakings conducted pursuant to the Congress, excluding adjustments under increase in CPI–U for 2012 in Table A Federal Civil Penalties Inflation the Inflation Adjustment Act, by the of the February 24, 2016 memorandum Adjustment Act of 1990 (the Inflation multiplier for the increase in CPI–U Adjustment Act), Pub. L. 101–410. (1.02819) results in an adjusted civil from the year the penalty was penalty of $5,141. MAP–21 established Previously, adjustments to civil established or adjusted provided in the penalties were conducted under rules a maximum civil penalty for a related February 24, 2016 memorandum. The that required significant rounding of series of daily violations of 49 U.S.C. 2015 Act limits the initial inflationary figures. For example, a penalty increase adjustment to 150 percent of the current 30166(o) of $1,000,000. Applying the that was greater than $1,000, but less penalty. To determine whether the multiplier for the increase in CPI–U for than or equal to $10,000, would be increase in the adjusted penalty is less 2012 results in an adjusted civil penalty rounded to the nearest multiple of than 150 percent, the agency must of $1,028,190 for a related series of daily $1,000. While this allowed penalties to multiply the current penalty by 250 violations of 49 U.S.C. 30166(o). be kept at round numbers, it meant that percent. The adjusted penalty is the penalties would often not be increased Change to Penalty for Violation of 49 lesser of either the adjusted penalty U.S.C. Chapter 305 (49 CFR 578.6(b)) at all if the inflation factor was not large based on the multiplier for CPI–U in enough. Furthermore, increases to Table A of the February 24, 2016 The Anti Car Theft Act of 1992, Pub. penalties were capped at 10 percent. memorandum or an amount equal to L. 102–519, 204, 106 Stat. 3393 (1992) Over time, this formula caused penalties 250% of the current penalty. This established a civil penalty of $1,000 for to lose value relative to total inflation. interim final rule adjusts the civil The 2015 Act has removed these each violation of the reporting penalties for violations of statutes and requirements related to maintaining the rounding rules; now, penalties are regulations that NHTSA administers simply rounded to the nearest $1. While Nation Motor Vehicle Title Information consistent with the February 24, 2016 System. Applying the multiplier for the this creates penalty values that are no memorandum. longer round numbers, it does ensure increase in CPI–U for 1992 in Table A that penalties will be increased each II. Inflationary Adjustments to Penalty of the February 24, 2016 memorandum year to a figure commensurate with the Amounts in 49 CFR Part 578 (1.67728) results in an adjusted civil actual calculated inflation. Furthermore, penalty of $1,677. Changes to Civil Penalties for School the 2015 Act'‘resets’’ the inflation Bus Related Violations of the Safety Act Change to Maximum Penalty Under 49 calculations by excluding prior (49 CFR 578.6(a)(2)) U.S.C. 32506(a) (49 CFR 578.6(c)) inflationary adjustments under the Inflation Adjustment Act, which The maximum civil penalty for a The Motor Vehicle Information and contributed to a decline in the real value single violation of 30112(a)(1) of Title Cost Savings Act (Cost Savings Act), of penalty levels. To do this, the 2015 49 of the United States Code involving Pub. L. 92–513, 86 Stat. 953, (1972), Act requires agencies to identify, for school buses or school bus equipment, or of the prohibition on school system established a civil penalty of $1,000 for each penalty, the year and each violation of a bumper standard corresponding amount(s) for which the purchases and leases of 15 passenger vans as specified in 30112(a)(2) of Title established pursuant to the Cost Savings maximum penalty level or range of 49 of the United States Code was set at Act. Applying the multiplier for the minimum and maximum penalties was established (i.e., originally enacted by $10,000 when the penalty was increase in CPI–U for 1972 in Table A Congress) or last adjusted other than established by the Safe, Accountable, of the February 24, 2016 memorandum pursuant to the Inflation Adjustment Flexible, Efficient Transportation Equity (5.62265) results in an adjusted civil Act. Act: A Legacy for Users (SAFETEA–LU), penalty of $5,623. Since this would The Director of the Office of Pub. L. 109–59, 119 Stat. 1942, enacted result in an increase to the current civil Management and Budget (OMB) in 2005. Applying the multiplier for the penalty of greater than 150 percent, the provided guidance to agencies in a increase in CPI–U for 2005 in Table A adjusted civil penalty is $2,750 (Current February 24, 2016 memorandum on of the February 24, 2016 memorandum penalty $1,100 × 2.5). how to calculate the initial adjustment (1.19397) results in an adjusted civil The Cost Savings Act also established required by the 2015 Act.1 The initial penalty of $11,940. The maximum civil a maximum civil penalty of $800,000 for catch up adjustment is based on the penalty for a related series of violations a related series of violations of the change between the Consumer Price of 30112(a)(1) and 30112(a)(2) was bumper standards established pursuant Index for all Urban Consumers (CPI–U) $15,000,000 when the penalty was to the Act. Applying the multiplier for for the month of October in the year the established by SAFETEA–LU in 2005. the increase in CPI–U for 1972 in Table penalty amount was established or last Applying the multiplier for the increase in CPI–U for 2005 results in an adjusted A of the February 24, 2016 adjusted by Congress and the October sradovich on DSK3GDR082PROD with RULES maximum civil penalty of $17,909,550. memorandum (5.62265) results in an 1 Memorandum from the Director of OMB to adjusted civil penalty of $4,498,120. Heads of Executive Departments and Agencies, Changes to Civil Penalties for Filing Since this would result in an increase to Implementation of the Federal Civil Penalties False or Misleading Reports Under 49 the current civil penalty of greater than Inflation Adjustment Act Improvements Act of 2015 U.S.C. 30165(a)(4) 150 percent, the adjusted civil penalty (Feb. 24, 2016), available at www.whitehouse.gov/sites/default/files/omb/memoranda/2016/m-16– The Moving Ahead for Progress in the is $3,062,500 (Current penalty 06.pdf. 21st Century Act (MAP–21) of 2012, $1,225,000 × 2.5). VerDate Sep<11>2014 16:06 Jul 01, 2016 Jkt 238001 PO 00000 Frm 00063 Fmt 4700 Sfmt 4700 E:\FR\FM\05JYR1.SGM 05JYR1 ADD-018 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page21 of 123 43526 Federal Register/Vol. 81, No. 128/Tuesday, July 5, 2016/Rules and Regulations Change to Penalties Under the 2012 in Table A of the February 24, gallon by which the applicable average Consumer Information Provisions (49 2016 memorandum (1.02819) results in fuel economy standard under that CFR 578.6(d)(1)) an adjusted civil penalty of $10,282. section exceeds the average fuel The Cost Savings Act established a MAP–21 established a maximum civil economy for automobiles to which the civil penalty of $1,000 for each violation penalty of $1,000,000 for a related series standard applies manufactured by the of 49 U.S.C. 32308(a) related to of violations of 49 U.S.C. Chapter 327 or manufacturer during the model year, providing information on a regulation issued thereunder. multiplied by the number of those crashworthiness and damage Applying the multiplier for the increase automobile and reduced by the credits susceptibility. Applying the multiplier in CPI–U for 2012 results in an adjusted available to the manufacturer. Applying for the increase in CPI–U for 1972 in civil penalty of $1,028,190 for a related the multiplier for the increase in CPI– Table A of the February 24, 2016 series of violations. U for 1975 results in an adjusted civil memorandum (5.62265) results in an MAP–21 also adjusted the civil penalty of $22. Since this would result adjusted civil penalty of $5,623. Since penalty for violations of 49 U.S.C. in an increase to the current civil this would result in an increase to the Chapter 327 or a regulation issued penalty of greater than 150 percent, the current civil penalty of greater than 150 thereunder with intent to defraud to adjusted civil penalty is $14 (Current percent, the adjusted civil penalty is $10,000 per violation. Applying the penalty $5.50 × 2.5). $2,750 (Current penalty $1,100 × 2.5). multiplier for the increase in CPI–U for In 1978 Congress amended EPCA, The Cost Savings established a 2012 results in an adjusted civil penalty Public Law 95–619, 402, 92 Stat. 3255 maximum civil penalty of $400,000 for of $10,282. (Nov. 9, 1978) to allow the Secretary of a series of related violations of 49 U.S.C. Transportation to establish a new civil Change to Penalties Under the Vehicle 32308(a). Applying the multiplier for penalty for each.1 of a mile a gallon by Theft Protection Provisions (49 CFR the increase in CPI–U for 1972 in Table which the applicable average fuel 578.6(g)) A of the February 24, 2016 economy standard under EPCA exceeds The Motor Vehicle Theft Law the average fuel economy for memorandum (5.62265) results in an Enforcement Act of 1984 (Vehicle Theft automobiles to which the standard adjusted civil penalty of $2,249,060. Act), Public Law 98–547, § 608, 98 Stat. applies manufactured by the Since this would result in an increase to 2762 (1984), established a civil penalty manufacturer during the model year. the current civil penalty of greater than of $1,000 for each violation of 49 U.S.C. These amendments, which are codified 150 percent, the adjusted civil penalty 33114(a)(1)–(4). Applying the multiplier in 49 U.S.C. 32912(c), state that the new is $1,500,000 (Current penalty $600,000 for the increase in CPI–U for 1984 in civil penalty cannot be more than $10. × 2.5). Table A of the February 24, 2016 Applying the multiplier for the increase Change to Penalties Under the Tire memorandum (2.25867) results in an in CPI–U for 1978 in Table A of the Consumer Information Provisions (49 adjusted civil penalty of $2,259. The February 24, 2016 memorandum CFR 578.6(d)(2)) Vehicle Theft Act also established a (3.54453) to the $10 maximum penalty The Energy Independence and maximum penalty of $250,000 for a the Secretary is permitted to establish Security Act of 2007, Pub. L. 110–140, related series of violations of 49 U.S.C. under 49 U.S.C. 32912(c) results in an 121 Stat. 1507 (2007) established a civil 33114(a)(1)–(4). Applying the multiplier adjusted civil penalty of $35. Since this penalty of $50,000 for each violation for the increase in CPI–U for 1984 would result in an increase of greater related to the tire information fuel results in an adjusted civil penalty of than 150 percent, the adjusted efficiency information program under $564,668. maximum civil penalty that the 49 U.S.C. 32304A. Applying the The Anti Car Theft Act of 1992 Secretary is permitted to establish under multiplier for the increase in CPI–U for established a civil penalty of $100,000 49 U.S.C. 32912(c) is $25 (Current 2007 in Table A of the February 24, per day for violations of the Anti Car maximum penalty $10 × 2.5). Because 2016 memorandum (1.13833) results in Theft Act related to operation of a chop the new maximum penalty that the an adjusted civil penalty of $56,917. shop. Applying the multiplier for the Secretary is permitted to establish under increase in CPI–U for 1992 in Table A 49 U.S.C. 32912(c) is $25, the new Change to Penalties Under the Country of the February 24, 2016 memorandum adjusted civil penalty in 49 CFR of Origin Content Labeling Provisions (1.67728) results in an adjusted civil 578.6(h)(2) of $14 does not exceed the (49 CFR 578.6(d)(2)) penalty of $167,728. maximum penalty that the Secretary is The American Automobile Labeling permitted to impose. Change to Penalties Under the Act, Pub L. 102–388, § 210, 106 Stat. Automobile Fuel Economy Provisions Change to Penalties Under the Medium 1556 (1992), established a civil penalty (49 CFR 578.6(g)) and Heavy Duty Vehicle Fuel Efficiency of $1,000 for willfully failing to affix, or failing to maintain, the label required by The Energy Policy and Conservation Program (49 CFR 578.6(i)) the Act. Applying the multiplier for the Act (EPCA) of 1975, Public Law 94–163, In 2011, the agency established a increase in CPI–U for 1992 in Table A § 508, 89 Stat. 912 (1975), established a maximum penalty of $37,500 per of the February 24, 2016 memorandum civil penalty of $10,000 for each vehicle or engine for violations of 49 (1.67728) results in an adjusted civil violation of 49 U.S.C. 32911(a). CFR 535. Applying the multiplier for penalty of $1,677. Applying the multiplier for the increase the increase in CPI–U for 2011 in Table in CPI–U for 1975 in Table A of the A of the February 24, 2016 Change to Penalties Under the February 24, 2016 memorandum memorandum (1.05042) results in an Odometer Tampering and Disclosure (4.3322) results in an adjusted civil adjusted civil penalty of $39,391. sradovich on DSK3GDR082PROD with RULES Provisions (49 CFR 578.6(f)) penalty of $43,322. Since this would MAP–21 adjusted the civil penalty for result in an increase to the current civil III. Codification of Increases to each violation of 49 U.S.C. Chapter 327 penalty of greater than 150 percent, the NHTSA’s Civil Penalty Authority in the or a regulation issued thereunder related adjusted civil penalty is $40,000 FAST Act to odometer tampering and disclosure to (Current penalty $16,000 × 2.5). On December 4, 2015, the FAST Act, $10,000 per violation. Applying the EPCA also established a civil penalty Public Law 114–94, was signed into multiplier for the increase in CPI–U for of $5 multiplied by each.1 of a mile a law. Section 24110 of the FAST Act VerDate Sep<11>2014 16:06 Jul 01, 2016 Jkt 238001 PO 00000 Frm 00064 Fmt 4700 Sfmt 4700 E:\FR\FM\05JYR1.SGM 05JYR1 ADD-019 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page22 of 123 Federal Register/Vol. 81, No. 128/Tuesday, July 5, 2016/Rules and Regulations 43527 increased the maximum civil penalty increases in NHTSA’s civil penalty overall cost to the manufacturer. For that NHTSA may collect for each authority authorized by the FAST Act this reason the expected economic violation of the Safety Act under 49 are already in effect and the impacts of this rule can be expected to U.S.C. 30165(a)(1) and 49 U.S.C. amendments merely update 49 CFR be lower than the amount of the 30165(a)(3) to $21,000 per violation 578.6 to reflect the new statutory civil increase to the civil penalty amount in (previously $7,000) and the maximum penalty. For these reasons, NHTSA 49 CFR 578.6(h)(2). amount of civil penalties that NHTSA finds that notice and comment would be Regulatory Flexibility Act can collect for a related series of impracticable and is unnecessary in this violations to $105 million (previously situation. We have also considered the impacts $35 million). In order for these increases of this rule under the Regulatory to become effective, the Secretary of V. Rulemaking Analyses and Notices Flexibility Act. I certify that this rule Transportation was required to certify to Executive Order 12866, Executive Order will not have a significant economic Congress that NHTSA has issued the 13563, and DOT Regulatory Policies and impact on a substantial number of small final rule required by Section 31203 of Procedures entities. The following provides the MAP–21. Section 31203 required factual basis for this certification under NHTSA has considered the impact of 5 U.S.C. 605(b). The amendments NHTSA to provide an interpretation of this rulemaking action under Executive almost entirely potentially affect civil penalty factors in 49 U.S.C. 30165 Order 12866, Executive Order 13563, manufacturers of motor vehicles and for NHTSA to consider in determining and the Department of Transportation’s motor vehicle equipment. the amount of penalty or compromise regulatory policies and procedures. This The Small Business Administration’s for violations of the Safety Act. Pub. L. rulemaking document was not reviewed regulations define a small business in 112–141, § 31203, 126 Stat. 758 (2012). under Executive Order 12866 or part as a business entity'‘which The increases in maximum civil Executive Order 13563. This action is operates primarily within the United penalties in Section 24110 of the FAST Act became effective the date of the limited to the adoption of adjustments States.’’ 13 CFR 121.105(a). SBA’s size Secretary’s certification. of civil penalties under statutes that the standards were previously organized NHTSA issued the final rule required agency enforces, and has been according to Standard Industrial by Section 31203 of MAP–21 on determined to be not'‘significant’’ Classification (‘‘SIC’’) Codes. SIC Code February 24, 2016. On March 17, 2016, under the Department of 336211'‘Motor Vehicle Body the Secretary certified to Congress by Transportation’s regulatory policies and Manufacturing’’ applied a small letter to the Chairman and Ranking procedures and the policies of the Office business size standard of 1,000 Member of the Senate Committee on of Management and Budget. Because employees or fewer. SBA now uses size Commerce, Science, and Transportation, this rulemaking does not change the standards based on the North American and to the Chairman and Ranking number of entities that are subject to Industry Classification System Member of the House Committee on civil penalties, the impacts are limited. (‘‘NAICS’’), Subsector 336— Energy and Commerce that NHTSA had Furthermore, excluding the penalties in Transportation Equipment issued the Final Rule. On March 22, 49 CFR 578.6(h)(2) for violations of Manufacturing, which provides a small 2016, the Office of the Secretary of Corporate Average Fuel Economy business size standard of 1,000 Transportation published a notice in the standards, this final rule does not employees or fewer for automobile Federal Register notifying the public establish civil penalty amounts that manufacturing businesses. Other motor that the increase was in effect.2 NHTSA NHTSA is required to seek. vehicle-related industries have lower is codifying these increases in this We also do not expect the increase in size requirements that range between interm final rule. the civil penalty amount in 49 CFR 500 and 750 employees. 578.6(h)(2) to be economically For example, according to the SBA IV. Public Comment significant. Over the last five model coding system, businesses that NHTSA is promulgating this interim years, NHTSA has collected an average manufacture truck trailers, travel final rule to ensure that the amount of of $20 million per model year in civil trailers/campers, carburetors, pistons, civil penalties contained in 49 CFR penalties under 49 CFR 578.6(h)(2). piston rings, valves, vehicular lighting 578.6 reflect the statutorily mandated Therefore, increasing the current civil equipment, motor vehicle seating/ranges as adjusted for inflation. penalty amount by 150 percent would interior trim, and motor vehicle Pursuant to the 2015 Act, NHTSA is not result in an annual effect on the stamping qualify as small businesses if required to promulgate a'‘catch-up economy of $100 million or more. they employ 500 or fewer employees. adjustment’’ through an interim final Furthermore, NHTSA contends that Similarly, businesses that manufacture rule. Pursuant to the 2015 Act and 5 the economic effects of increasing the gasoline engines, engine parts, electrical U.S.C. 553(b)(3)(B), NHTSA finds that civil penalty in 49 CFR 578.6(h)(2) are and electronic equipment (non-vehicle good cause exists for immediate not directly proportional to the increase lighting), motor vehicle steering/implementation of this interim final rule in the amount of civil penalty. suspension components (excluding without prior notice and comment Manufacturers could pursue several springs), motor vehicle brake systems, because it would be impracticable to strategies to avoid liability for civil transmissions/power train parts, motor delay publication of this rule for notice penalties under 49 CFR 578.6(h)(2), vehicle air-conditioning, and all other and comment and because public including purchasing offset credits from motor vehicle parts qualify as small comment is unnecessary. By operation other manufacturers, production and businesses if they employ 750 or fewer of the Act, NHTSA must publish the marketing changes to influence the employees. See http://www.sba.gov/sradovich on DSK3GDR082PROD with RULES catch-up adjustment by July 1, 2016. average fuel economy of vehicles size/sizetable.pdf for further details. Additionally, the 2015 Act provides a produced by the manufacturer, and Many small businesses are subject to clear formula for adjustment of the civil vehicle design changes intended to the penalty provisions of 49 U.S.C. penalties, leaving the agency little room increase the vehicle’s fuel economy. Chapter 301 (Safety Act) and therefore for discretion. Furthermore, the NHTSA contends that manufacturers may be affected by the adjustments will pursue the strategy, or mix on made in this rulemaking. For example, 2 81 FR 15413. strategies, that results in the lowest based on comprehensive reporting VerDate Sep<11>2014 16:06 Jul 01, 2016 Jkt 238001 PO 00000 Frm 00065 Fmt 4700 Sfmt 4700 E:\FR\FM\05JYR1.SGM 05JYR1 ADD-020 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page23 of 123 43528 Federal Register/Vol. 81, No. 128/Tuesday, July 5, 2016/Rules and Regulations pursuant to the early warning reporting power and responsibilities among the submitting the comment (or signing the (EWR) rule under the Safety Act, 49 CFR various levels of government.’’ Under comment, if submitted on behalf of an part 579, of the more than 60 light Executive Order 13132, the agency may association, business, labor union, etc.). vehicle manufacturers reporting, over not issue a regulation with Federalism You may review DOT’s complete half are small businesses. Also, there are implications, that imposes substantial Privacy Act Statement in the Federal other, relatively low production vehicle direct compliance costs, and that is not Register published on April 11, 2000 manufacturers that are not subject to required by statute, unless the Federal (Volume 65, Number 70; Pages 19477– comprehensive EWR reporting. government provides the funds 78), or you may visit http://dms.dot.gov. Furthermore, there are about 70 necessary to pay the direct compliance registered importers. Equipment List of Subjects in 49 CFR Part 578 costs incurred by State and local manufacturers (including importers), governments, the agency consults with Imports, Motor vehicle safety, Motor entities selling motor vehicles and State and local governments, or the vehicles, Rubber and rubber products, motor vehicle equipment, and motor agency consults with State and local Tires, Penalties. vehicle repair businesses are also officials early in the process of In consideration of the foregoing, 49 subject to penalties under 49 U.S.C. developing the proposed regulation. CFR part 578 is amended as set forth 30165. This rule will not have substantial below. As noted throughout this preamble, direct effects on the States, on the this rule will only increase the penalty relationship between the national PART 578—CIVIL AND CRIMINAL amounts that the agency could obtain government and the States, or on the PENALTIES for violations covered by 49 CFR 578.6. distribution of power and Under the Safety Act, the penalty responsibilities among the various ■ 1. The authority citation for 49 CFR provision requires the agency to take levels of government, as specified in part 578 is revised to read as follows: into account the size of a business when Executive Order 13132. The reason is Authority: Pub. L. 101–410, Pub. L. 104– determining the appropriate penalty in that this rule will generally apply to 134, Pub. L. 109–59, Pub. L. 114–74, Pub. L. an individual case. See 49 U.S.C. motor vehicle and motor vehicle 114–94, 49 U.S.C. 30165, 30170, 30505, 30165(b). The agency would also equipment manufacturers (including 32308, 32309, 32507, 32709, 32710, 32902, consider the size of a business under its 32912, and 33115; delegation of authority at importers), entities that sell motor civil penalty policy when determining 49 CFR 1.81, 1.95. vehicles and equipment and motor the appropriate civil penalty amount. vehicle repair businesses. Thus, the ■ 2. Section 578.6 is revised to read as See 62 FR 37115 (July 10, 1997) requirements of Section 6 of the follows: (NHTSA’s civil penalty policy under the Executive Order do not apply. Small Business Regulatory Enforcement § 578.6 Civil penalties for violations of Fairness Act (‘‘SBREFA’’)). The penalty Unfunded Mandates Reform Act of 1995 specified provisions of Title 49 of the United States Code. adjustments would not affect our civil The Unfunded Mandates Reform Act penalty policy under SBREFA. of 1995, Public Law 104–4, requires (a) Motor vehicle safety—(1) In Since, this regulation does not agencies to prepare a written assessment general. A person who violates any of establish a penalty amount that NHTSA of the cost, benefits and other effects of sections 30112, 30115, 30117 through is required to seek, except for civil proposed or final rules that include a 30122, 30123(a), 30125(c), 30127, or penalties under 49 CFR 578.6(h)(2), this Federal mandate likely to result in the 30141 through 30147 of Title 49 of the rule will not have a significant expenditure by State, local, or tribal United States Code or a regulation economic impact on small businesses. governments, in the aggregate, or by the prescribed under any of those sections Furthermore, low volume manufacturers private sector, of more than $100 is liable to the United States can petition for an exemption from the million annually. Because this rule will Government for a civil penalty of not Corporate Average Fuel Economy not have a $100 million effect, no more than $21,000 for each violation. A standards under 49 CFR part 525. This Unfunded Mandates assessment will be separate violation occurs for each motor will lessen the impacts of this prepared. vehicle or item of motor vehicle rulemaking on small business by equipment and for each failure or allowing them to avoid liability for Executive Order 12778 (Civil Justice refusal to allow or perform an act penalties under 49 CFR 578.6(h)(2). Reform) required by any of those sections. The Small organizations and governmental This rule does not have a retroactive maximum civil penalty under this jurisdictions will not be significantly or preemptive effect. Judicial review of paragraph for a related series of affected as the price of motor vehicles this rule may be obtained pursuant to 5 violations is $105,000,000. and equipment ought not change as the U.S.C. 702. That section does not (2) School buses. Notwithstanding result of this rule. require that a petition for paragraph (a)(1) of this section, a person reconsideration be filed prior to seeking who: Executive Order 13132 (Federalism) (i) Violates section 30112(a)(1) of Title judicial review. Executive Order 13132 requires 49 United States Code by the NHTSA to develop an accountable Paperwork Reduction Act manufacture, sale, offer for sale, process to ensure'‘meaningful and In accordance with the Paperwork introduction or delivery for introduction timely input by State and local officials Reduction Act of 1980, we state that into interstate commerce, or importation in the development of regulatory there are no requirements for of a school bus or school bus equipment policies that have federalism information collection associated with (as those terms are defined in 49 U.S.C. sradovich on DSK3GDR082PROD with RULES implications.’’'‘Policies that have this rulemaking action. 30125(a)); or federalism implications’’ is defined in (ii) Violates section 30112(a)(2) of the Executive Order to include Privacy Act Title 49 United States Code, shall be regulations that have'‘substantial direct Please note that anyone is able to subject to a civil penalty of not more effects on the States, on the relationship search the electronic form of all than $11,940 for each violation. A between the national government and comments received into any of our separate violation occurs for each motor the States, or on the distribution of dockets by the name of the individual vehicle or item of motor vehicle VerDate Sep<11>2014 16:06 Jul 01, 2016 Jkt 238001 PO 00000 Frm 00066 Fmt 4700 Sfmt 4700 E:\FR\FM\05JYR1.SGM 05JYR1 ADD-021 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page24 of 123 Federal Register/Vol. 81, No. 128/Tuesday, July 5, 2016/Rules and Regulations 43529 equipment and for each failure or person who violates 49 U.S.C. 32308(a), single motor vehicle to conform to an refusal to allow or perform an act regarding crashworthiness and damage applicable standard under 49 U.S.C. required by this section. The maximum susceptibility, is liable to the United 33102 or 33103 is only a single penalty under this paragraph for a States Government for a civil penalty of violation. The maximum penalty under related series of violations is not more than $2,750 for each violation. this paragraph for a related series of $17,909,550. Each failure to provide information or violations is $564,668. (3) Section 30166. A person who comply with a regulation in violation of (2) A person that violates 49 U.S.C. violates section 30166 of Title 49 of the 49 U.S.C. 32308(a) is a separate 33114(a)(5) is liable to the United States United States Code or a regulation violation. The maximum penalty under Government for a civil penalty of not prescribed under that section is liable to this paragraph for a related series of more than $167,728 a day for each the United States Government for a civil violations is $1,500,000. violation. penalty for failing or refusing to allow (2) Consumer tire information. Any (h) Automobile fuel economy. (1) A or perform an act required under that person who fails to comply with the person that violates 49 U.S.C. 32911(a) section or regulation. The maximum national tire fuel efficiency program penalty under this paragraph is $21,000 is liable to the United States under 49 U.S.C. 32304A is liable to the Government for a civil penalty of not per violation per day. The maximum United States Government for a civil penalty under this paragraph for a more than $40,000 for each violation. A penalty of not more than $56,917 for separate violation occurs for each day related series of daily violations is each violation. $105,000,000. the violation continues. (e) Country of origin content labeling. (4) False and misleading reports. A A manufacturer of a passenger motor (2) Except as provided in 49 U.S.C. person who knowingly and willfully vehicle distributed in commerce for sale 32912(c), a manufacturer that violates a submits materially false or misleading in the United States that willfully fails standard prescribed for a model year information to the Secretary, after to attach the label required under 49 under 49 U.S.C. 32902 is liable to the certifying the same information as U.S.C. 32304 to a new passenger motor United States Government for a civil accurate under the certification process vehicle that the manufacturer penalty of $14 multiplied by each.1 of established pursuant to section manufactures or imports, or a dealer a mile a gallon by which the applicable 30166(o), shall be subject to a civil that fails to maintain that label as average fuel economy standard under penalty of not more than $5,141 per day. required under 49 U.S.C. 32304, is liable that section exceeds the average fuel The maximum penalty under this to the United States Government for a economy— paragraph for a related series of daily civil penalty of not more than $1,677 for (i) Calculated under 49 U.S.C. violations is $1,028,190. each violation. Each failure to attach or 32904(a)(1)(A) or (B) for automobiles to (b) National Automobile Title which the standard applies maintain that label for each vehicle is a Information System. An individual or manufactured by the manufacturer separate violation. entity violating 49 U.S.C. Chapter 305 is during the model year; (f) Odometer tampering and liable to the United States Government (ii) Multiplied by the number of those disclosure. (1) A person that violates 49 for a civil penalty of not more than automobiles; and U.S.C. Chapter 327 or a regulation $1,677 for each violation. (c) Bumper standards. (1) A person prescribed or order issued thereunder is (iii) Reduced by the credits available that violates 49 U.S.C. 32506(a) is liable liable to the United States Government to the manufacturer under 49 U.S.C. to the United States Government for a for a civil penalty of not more than 32903 for the model year. civil penalty of not more than $2,750 for $10,281 for each violation. A separate (i) Medium-and heavy-duty vehicle each violation. A separate violation violation occurs for each motor vehicle fuel efficiency. The maximum civil occurs for each passenger motor vehicle or device involved in the violation. The penalty for a violation of the fuel or item of passenger motor vehicle maximum civil penalty under this consumption standards of 49 CFR part equipment involved in a violation of 49 paragraph for a related series of 535 is not more than $39,391 per U.S.C. 32506(a)(1) or (4)— violations is $1,028,190. vehicle or engine. The maximum civil (i) That does not comply with a (2) A person that violates 49 U.S.C. penalty for a related series of violations standard prescribed under 49 U.S.C. Chapter 327 or a regulation prescribed shall be determined by multiplying 32502, or or order issued thereunder, with intent $39,391 times the vehicle or engine (ii) For which a certificate is not to defraud, is liable for three times the production volume for the model year provided, or for which a false or actual damages or $10,281, whichever is in question within the regulatory misleading certificate is provided, under greater. averaging set. 49 U.S.C. 32504. (g) Vehicle theft protection. (1) A person that violates 49 U.S.C. Issued on: June 22, 2016. (2) The maximum civil penalty under this paragraph (c) for a related series of 33114(a)(1)-(4) is liable to the United Mark R. Rosekind, violations is $3,062,500. States Government for a civil penalty of Administrator. (d) Consumer information—(1) Crash-not more than $2,259 for each violation. [FR Doc. 2016–15800 Filed 7–1–16; 8:45 am] worthiness and damage susceptibility. A The failure of more than one part of a BILLING CODE 4910–59–P sradovich on DSK3GDR082PROD with RULES VerDate Sep<11>2014 16:06 Jul 01, 2016 Jkt 238001 PO 00000 Frm 00067 Fmt 4700 Sfmt 9990 E:\FR\FM\05JYR1.SGM 05JYR1 ADD-022 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page25 of 123 Exhibit E ADD-023 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page26 of 123 United States Government Accountability Office GAO Report to the Chairman, Subcommittee on Energy and Environment, Committee on Energy and Commerce, House of Representatives February 2010 VEHICLE FUEL ECONOMY NHTSA and EPA’s Partnership for Setting Fuel Economy and Greenhouse Gas Emissions Standards Improved Analysis and Should Be Maintained GAO-10-336 ADD-024 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page27 of 123 Although NHTSA and EPA Worked to Propose CAFE and GHG Emissions Standards That Are Aligned, the Programs Have Several Key Differences Although the Proposed Although the proposed CAFE and GHG emissions standards are distinct Standards Based on and automobile manufacturers will be subject to both sets, EPA and Vehicle Footprint Should NHTSA have worked to develop standards that are aligned (what the agencies refer to as "harmonized") with the intention that manufacturers Result in Benefits, Actual can build one fleet of vehicles to comply with both sets of standards. This Vehicle Sales May Affect should lower the cost of compliance for manufacturers compared to a the Level of Benefits case in which the standards were set separately and without regard for the Realized other’s design. This harmonization is possible because fuel economy and GHG emissions have a clear and direct relationship—specifically, vehicle tailpipe carbon dioxide emissions are directly related to the quantity of fuel burned. 20 Given the relationship between GHG emissions and fuel economy, actions to increase fuel economy also necessarily reduce GHG emissions; therefore, manufacturers can use the same technologies to help meet both standards. NHTSA and EPA have proposed standards for both passenger cars and light trucks that are based on vehicle footprint so that each vehicle is subject to a target level based on its footprint, with smaller vehicles having a stricter target (see fig. 3). The footprint-based standard is applied to individual vehicle models based on the size of each vehicle. Because each manufacturer sells a different mix of vehicle sizes, under the proposed standards each manufacturer will have different CAFE and GHG emissions standards. 20 Vehicle tailpipe emissions of carbon dioxide account for 90 to 95 percent of all vehicle GHG emissions. Page 11 GAO-10-336 Vehicle Fuel Economy ADD-025 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page28 of 123 NHTSA first adopted a footprint-based approach—as opposed to a single fleetwide standard—for model year 2008 through 2011 light truck standards. 21 A number of the experts we interviewed supported the current approach of subjecting both passenger car and light truck fleets to footprint-based standards. In the model year 2008 through 2011 light truck rule, NHTSA cited several potential benefits of a footprint-based approach over a single, fleetwide CAFE standard, including the following: • Larger reductions in oil consumption. Oil consumption would be reduced because automakers would be required to improve the fuel economy of vehicles of all sizes rather than only those near the standard. • Enhanced safety. Manufacturers would not have an incentive to comply with CAFE standards by pursuing strategies that compromise safety— such as (1) reducing the size of vehicles (applicable fuel-economy targets now become higher as size decreases) or (2) designing models to be classified as light trucks rather than cars, which can increase a vehicle’s propensity to roll over—in order to comply with CAFE standards. Under a single standard, manufacturers could reduce vehicle size as one approach for CAFE compliance. • More even disbursement of the regulatory cost burden. Fuel-economy improvements would be spread across the industry, instead of concentrating on manufacturers of heavier, lower fuel-economy vehicles. • Addressing concerns about consumer choice. Manufacturers now must improve the fuel economy of all light trucks, regardless of size, which addresses criticisms that single, fleetwide CAFE standards were hindering the efforts of some companies to offer a mix of vehicles matching consumer desires. For instance, under the previous system, instead of installing more fuel-saving technologies across their fleets, manufacturers might have moved toward building fewer large vehicles and more small vehicles to meet new CAFE standards, even though consumers typically have not demanded small vehicles. In a footprint-based standard, manufacturers must improve the fuel economy of all light trucks, no matter their size. 21 For model year 2008 through 2010 light trucks standards, manufacturers could opt to comply with the reformed footprint-based standards or an equivalent single fleetwide standard. Only General Motors opted to voluntarily comply with the reformed standard in 2008 and 2009. Starting with model year 2011 light trucks, all manufacturers must adhere to the footprint-based standard. Page 12 GAO-10-336 Vehicle Fuel Economy ADD-026 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page29 of 123 Figure 3: Proposed CAFE Footprint Curves for Passenger Cars and Light Trucks, Model Years 2012 through 2016 and Existing 2011 Curve Passenger cars CAFE target (MPG) 45 2016 40 2015 2014 2013 2012 35 2011 30 25 20 0 35 40 45 50 55 60 65 70 Vehicle footprint (square feet) Light trucks CAFE target (MPG) 45 40 35 2016 2015 2014 30 2013 2012 2011 25 20 0 35 40 45 50 55 60 65 70 Vehicle footprint (square feet) Source: Notice of Proposed Rulemaking for CAFE standards for MY 2012 to 2016. Page 13 GAO-10-336 Vehicle Fuel Economy ADD-027 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page30 of 123 The CAFE requirement for each manufacturer—which is the basis for determining compliance 22 —will be determined at the end of the model year based on actual production. For example, manufacturers selling a greater proportion of large vehicles will have a lower average target to meet than will manufacturers focusing on smaller vehicles. Based on estimated sales projections, the proposed targets are estimated to achieve an average of 34.1 mpg across all model year 2016 vehicles sold. While NHTSA and EPA expect benefits from adopting a standard based on vehicle footprint and predict that the administration’s goal of a fleetwide average 34.1 mpg and 250 grams per mile carbon dioxide in 2016 will be met, there is no guarantee that a specific national target will be achieved. 23 This is a tradeoff of adopting a footprint standard compared to the single national CAFE standard NHTSA used in the past. Because the actual fleetwide fuel-economy levels will depend on actual vehicle sales— specifically, the size of cars consumers buy—there is the possibility that the actual fleetwide mpg in 2016 will be higher or lower and realized costs and benefits of the standards will be higher or lower than estimated. For example, even though all of the vehicles in each manufacturer’s fleet may be in compliance with its footprint-based requirement, manufacturers may sell a greater number of large-footprint vehicles than predicted, which would lower each manufacturer’s CAFE requirement. If this is the case, the national fleet may not reach the target of 34.1 mpg by 2016, and the estimated benefits of the standards, which assume achieving a national fleetwide average of 34.1 mpg, would not be fully realized. 24 The opposite, however, could also be the case. If a greater number of smaller vehicles (generally with higher CAFE levels) are sold than expected, manufacturers will have higher CAFE requirements, the national fleet may exceed the 22 Manufacturer compliance will be determined based on the fuel economy levels of actual vehicles produced compared with the CAFE footprint standard for each of those vehicles. 23 The administration’s goal has often been stated as a fleetwide average of 35.5 mpg. This value is equivalent to the 250 grams per mile carbon dioxide value if all of the carbon dioxide reductions come from fuel economy improvements. 24 Some public comments on the Notice of Proposed Rulemaking suggested that NHTSA should mitigate against this possibility by imposing a "backstop"—a minimum CAFE standard that all manufacturers would be required to meet regardless of the footprint of their vehicles. EISA requires a backstop standard for domestically-manufactured passenger cars of either 27.5 mpg or 92 percent of the average projected fuel economy level of passenger cars in any given model year, whichever is greater. However, NHTSA did not include a backstop for imported passenger cars or light trucks in the September 2009 proposed rule. Page 14 GAO-10-336 Vehicle Fuel Economy ADD-028 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page31 of 123 target of 34.1 mpg, and estimated benefits assuming a fleetwide average of 34.1 mpg would be exceeded (see fig. 4). Similar scenarios could occur with respect to EPA’s GHG standards. Figure 4: Potential Scenarios for Meeting CAFE Targets, Based on Varying Vehicle Sales Vehicle 1 Vehicle 2 Vehicle 3 Small vehicle Average size vehicle Large vehicle CAFE level: 38.1 MPG CAFE level: 34.1 MPG CAFE level: 30.9 MPG Scenario #1 Sales=100,000 vehicles Sales=100,000 vehicles Sales=100,000 vehicles (CAFE target met) Total fleet average = 34.1 MPG Scenario #2 Sales=50,000 vehicles Sales=100,000 vehicles Sales=150,000 vehicles (CAFE target not met) Total fleet average = 33.0 MPG Scenario #3 Sales=150,000 vehicles Sales=100,000 vehicles Sales=50,000 vehicles (CAFE target exceeded) Total fleet average = 35.3 MPG Source: GAO analysis of proposed CAFE standards. Variation in the Standards, Several key differences between the EPA and NHTSA standards largely Which Result Primarily arise from the legal authorities under which the standards are set. from Differences in Legal NHTSA’s authority to administer the CAFE program is derived from EPCA, as amended by EISA, requires that NHTSA, for passenger cars and light Authorities, May Present trucks in each future model year, establish standards at "the maximum Challenges, but GHG feasible average fuel-economy level that it decides manufacturers can Penalties May Increase achieve in that model year." EPCA further directs NHTSA to make this Compliance determination based on consideration of four statutory factors: technological feasibility, economic practicability, the effect of other standards of the government on fuel economy, and the need of the nation to conserve energy. However, the law does not direct NHTSA on how to balance these four factors—which can conflict—thereby giving NHTSA discretion to define, give weight to, and balance the four factors based on the circumstances in each CAFE rulemaking. Furthermore, how NHTSA balances these four factors can vary from rulemaking to rulemaking. For example, in the model year 2012 through 2016 rulemaking, NHTSA cited Page 15 GAO-10-336 Vehicle Fuel Economy ADD-029 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page32 of 123 economic practicability concerns—given the state of the economy and the financial state of automakers—to set standards at a level lower than it otherwise could have in accordance with Office of Management and Budget (OMB) guidelines on federal regulatory impact analysis. 25 In addition to the four statutory factors, NHTSA also considers the potential for adverse safety consequences and consumer demand when establishing CAFE standards. EPA’s authority to set GHG standards is derived from the CAA, which authorizes EPA to regulate emissions of air pollutants from all mobile source categories. EPA must prescribe standards for the emission of any air pollutant from motor vehicles which causes or contributes to air pollution that endangers public health or welfare. In prescribing these statutory standards, EPA considers such issues as technology effectiveness, cost of compliance, the lead time necessary to implement the technology, safety, energy impacts associated with the use of the technology, and other impacts on consumers. EPA has the discretion to consider and weigh these various factors, particularly those related to issues of technical feasibility and lead time. Some differences affect the process each agency must use to set standards, which in turn leads to key differences between the standards. For example, EPCA requires that EPA, in testing fuel economy of passenger vehicles, use 1975 test procedures or procedures that give comparable results under which air conditioning is not turned on. As a result, manufacturers cannot realize the benefits of air conditioning improvements for complying with CAFE standards, and NHTSA has, to date, not taken into account air conditioning improvements when setting CAFE standards. 26 Under the CAA, however, EPA is not subject to the same limitations, and its proposed GHG standards account for air conditioner improvements. Specifically, the mpg equivalent of EPA’s 2016 target of 250 g/mi of CO2 emissions corresponds to 35.5 mpg. The CAFE target is 34.1 mpg because it cannot account for air conditioning improvements. In addition, certain flexibility mechanisms designed to achieve and reduce the cost of compliance are authorized by one program but not the other. 25 OMB Circular A-4, September 17, 2003. 26 However, in the current proposed rule, NHTSA sought comment on providing manufacturers with CAFE credits for improving air conditioner efficiency for light trucks. Page 16 GAO-10-336 Vehicle Fuel Economy ADD-030 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page33 of 123 This creates potential challenges to harmonization and for manufacturers attempting to manage the design of a fleet. For example, EPA’s proposed GHG standards offer a "temporary lead time" mechanism for manufacturers that sell a limited number of vehicles in the U.S. 27 Although this specific flexibility does not exist in the CAFE standards, under EPCA, NHTSA may exempt qualifying small-volume manufacturers (defined as manufacturers that produce under 10,000 vehicles worldwide annually) from the passenger car standard for a model year. As a result, manufacturers that are able to take advantage of EPA’s temporary lead time mechanism to comply with GHG standards may face challenges in complying with CAFE standards. Some experts we met with said that these inconsistencies in flexibility mechanisms between the two sets of standards may present challenges to some manufacturers in meeting the harmonized standards. Mechanisms available for enforcing the standards also differ between the two agencies due to statutory differences. For example, the Clean Air Act prohibits the sale of vehicles without a certificate of conformity from EPA which indicates that the vehicle meets applicable emission standards. 28 If EPA determines that a vehicle does not meet the emission standards, it may not issue a certificate, thus preventing the manufacturer from legally selling the vehicle. The Clean Air Act also gives EPA authority to recall noncompliant vehicles. NHTSA can take neither of these actions. Because a CAFE standard applies to a manufacturer’s entire fleet for a model year, CAFE fines are assessed for the entire noncomplying fleet. Pursuant to EPCA, fines associated with CAFE noncompliance are currently $5.50 for every tenth of an mpg a manufacturer’s fuel economy is short of the standard multiplied by the number of vehicles in a manufacturer’s fleet for a given model year. NHTSA recognizes that some manufacturers regularly pay fines instead of complying with CAFE standards; in particular, many European manufacturers pay fines each year. Fines for CAFE standards have not been increased since 1997, and GAO has reported that, as a result, CAFE penalties may not provide a strong enough incentive for manufacturers to comply with CAFE. NHTSA officials noted that under EPCA, NHTSA has the authority to raise the fines up to $10 per tenth of an mpg. However, raising fines requires an analysis finding that substantial energy conservation would result and that raising fines would not have 27 This allowance is available during model years 2012 though 2015 to manufacturers whose vehicles sales in the U.S. in model year 2009 are below 400,000 vehicles. 28 42 USCS § 7522(a)(1). Page 17 GAO-10-336 Vehicle Fuel Economy ADD-031 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page34 of 123 substantially deleterious impact on the U.S. economy. GAO has recommended that agencies collecting penalties regularly conduct these types of analyses. 29 In contrast to CAFE fines, penalties for violation of a motor vehicle emission standard under the CAA, which may be much higher, are determined on a per-vehicle basis. The CAA gives EPA broad authority to levy fines and require manufacturers to remedy vehicles if the agency determines there are a substantial number of noncomplying vehicles. 30 EPA must consider an assortment of factors, such as the gravity of the violation, the economic impact of the violation, the violator’s history of compliance, and other matters, 31 in determining the appropriate penalty. The CAA does not authorize manufacturers to intentionally pay fines as an alternative to compliance, and EPA does not include in its standard-setting modeling analysis the option for manufacturers to pay fines instead of compliance. Manufacturers may be subject to fines as high as $37,500 per vehicle under Section 205 of the CAA. Given that fines for noncompliance with GHG standards may be higher than fines for noncompliance with CAFE, having harmonized standards may provide incentives to manufacturers that have traditionally chosen to pay CAFE penalties instead of complying with standards, to comply with both sets of standards. 29 See GAO, Vehicle Fuel Economy: Reforming Fuel Economy Standards Could Help Reduce Oil Consumption by Cars and Light Trucks, and Other Options Could Complement These Standards, GAO-07-921(Washington, D.C.: Aug. 2, 2007) and GAO, Civil Penalties: Agencies Unable to Fully Adjust Penalties for Inflation under Current Law, GAO-03-409 (Washington, D.C.: Mar. 14, 2003). 30 74 Fed. Reg. 49454, 49477 (Sept. 28, 2009). 31 42 U.S.C. § 7524(c)(2). Page 18 GAO-10-336 Vehicle Fuel Economy ADD-032 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page35 of 123 Exhibit F ADD-033 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page36 of 123 Via Electronic and First Class Mail October 1, 2015 Gina McCarthy, Administrator U.S. Environmental Protection Agency 1200 Pennsylvania Avenue, N.W. Washington, DC 20460 Email: McCarthy.Gina@epa.gov Mark R. Rosekind, Ph.D., Administrator National Highway Traffic Safety Administration U.S. Department of Transportation 400 Seventh Street, S.W. Washington, DC 20590 Email: Mark.Rosekind@dot.gov RE: Petition for Rulemaking to Implement New Emissions Testing for Motor Vehicles and Increase Penalties for Violations of Fuel Standards Dear Administrator McCarthy and Administrator Rosekind, The Center for Biological Diversity (the "Center") requests that you take immediate action to protect public health and the environment from the toxic impacts of greenhouse gas and nitrogen oxides emissions from motor vehicles, and from corporate practices designed to evade regulations restricting the quantity of these dangerous emissions. Specifically, pursuant to the Administrative Procedure Act, 5 U.S.C. § 553(e), Title II of the Clean Air Act ("CAA"), 42 U.S.C. §§ 7521-7554, and Title VI of the Energy Policy and Conservation Act ("EPCA"), 49 U.S.C. §§ 32901-32919, the Center requests that the U.S. Environmental Protection Agency ("EPA") and the National Highway Traffic Safety Administration ("NHTSA"): (1) immediately conduct in-use emissions testing of each make and model of diesel-powered motor vehicles sold in the United States since 2009 that have not previously undergone such tests; (2) immediately conduct in-use emissions testing of each make and model of other fossil fuel-powered motor vehicles sold in the United States since 2009 that have not previously undergone such tests; (3) promulgate regulations to require on-road emissions testing for all types of new diesel-powered motor vehicles; ADD-034 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page37 of 123 (4) promulgate regulations to require on-road emissions testing for all other types of new fossil fuel-powered motor vehicles; and (5) promulgate regulations to increase the penalties for violations of corporate average fuel economy standards. As you are well-aware, Volkswagen recently admitted that 11 million of its diesel cars sold worldwide since 2009, including nearly half a million sold in the United States, contain software specifically designed to cheat emissions tests. The software — known as "defeat devices" — can detect when a car is being tested in a laboratory setting and adjusts engine operations to emit less-polluting exhaust during the test than in real-world driving conditions. EPA has said that these devices allowed each car to spew up to 40 times the legal limit of nitrogen oxides emissions in the United States. Accordingly, in addition to the specific actions requested above, the Center also requests that EPA assess the maximum permissible penalties against VW for such egregious violations of law. This widespread fraud not only deceived consumers who purchased VW cars based on the belief the cars were "clean diesel," but is a significant threat to public health and the environment. Emissions of nitrogen oxides contribute to climate change and ocean acidification — nitrogen oxides react with other substances to form the greenhouse gas ozone, and contain a highly potent and long-lived greenhouse gas. In addition, ground-level ozone can trigger or worsen asthma and other respiratory ailments, make the lungs more susceptible to infection, damage vegetation and reduce crop yields. Nitrogen oxides are also a precursor to particulate matter which causes breathing problems, lung tissue damage and premature death. To make matters worse, the use of such devices, and thus unlawful emissions of such dangerous pollutants, may not be limited to VW. Indeed, defeat devices have existed almost since the inception of the CAA, and EPA has previously levied fines against car and truck manufacturers for the use of such devices. Recent reports indicate that tests of on-road emissions of cars made by other companies exceed that of laboratory testing, indicating that these manufactures might also be using defeat devices — or, at a minimum, are not performing as required. Despite the existence of technology that can measure emissions during normal operation and use, EPA does not require such tests for the vast majority of motor vehicles. And the recent scandal highlights yet another industry-wide problem — that car manufacturers routinely pay fines, rather than comply with mandatory fuel economy standards that seek to improve fuel efficiency and reduce carbon dioxide emissions. As we have frequently pointed out, and as government reports indicate, the meager fines are too low to act as a deterrent, thereby failing to inspire the technological innovation contemplated by EPCA and the CAA. Yet NHTSA has not increased the penalty for violation of the standards in nearly two decades. Comprehensive action is therefore needed to ensure long-term solutions to such pervasive problems. Taking the actions requested in this petition will improve the accuracy of emissions testing of motor vehicles and help ensure against future deception, and incentivize compliance with fuel economy standards intended to reduce greenhouse gas emissions and improve energy security. In other words, granting this petition will help better protect public health and the 2 ADD-035 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page38 of 123 environment from dangerous air pollutants from motor vehicles, while ensuring fuel economy continues to improve as intended by the CAA and EPCA.1 The Center requests that EPA and NHTSA take the regulatory actions requested in this petition within 180 days. I. Factual Background: Harmful Emissions from Motor Vehicles As the VW scandal demonstrates, motor vehicles emit harmful air pollutants. In fact, according to the Union of Concerned Scientists, transportation is the largest single source of air pollution in the United States.2 Motor vehicles emit carbon dioxide, oxides of nitrogen, particulate matter, hydrocarbons, carbon monoxide, sulfur dioxide, as well as benzene and other hazardous air pollutants.3 These emissions contribute to a myriad of public health problems, negative impacts to public welfare and the environment, and climate change. A. Emissions from Motor Vehicles Are Harmful to Public Health Motor vehicles emit air pollutants that cause or contribute to health problems, including nitrogen oxides. For example, ground level ozone is created by chemical reaction between nitrogen oxides and volatile organic compounds. Ground-level ozone pollution is linked to many public health impacts, especially those related to respiratory function. Ozone can irritate the respiratory tract and throat, impair lung function, and cause coughing, chest pains and lung inflammation.4 EPA has recognized the association between ozone exposure and hospital visits for respiratory problems — especially for children — noting that ozone pollution is responsible for as much as twenty percent of all summertime respiratory hospital visits.5 Ozone is also linked to the development of respiratory diseases, such as asthma.6 But the health effects of ozone are not limited to respiratory illnesses. Ozone pollution is linked to other serious health impacts, such as heart disease and certain types of strokes.7 "[M]ost importantly," according to the American Lung Association, ozone exposure and the associated health impacts can shorten lives 1 The provisions of this Petition are severable. If any request contained within this Petition is found to be invalid or unenforceable, the invalidity or lack of legal obligation shall not affect other provisions of the Petition. 2 Union of Concerned Scientists, Cars, Trucks and Air Pollution, http://www.ucsusa.org/clean_vehicles/why-clean-cars/air-pollution-and-health/cars-trucks-air-pollution html#.Vgh8P_lViko (last updated Dec. 5, 2014). 3 Id. 4 Barbara Hackley et al., Air Pollution: Impact on Maternal and Perinatal Health, 52 J. MIDWIFERY & WOMEN’S HEALTH 435, 436 table 1 (2010), available at http://www.sciencedirect.com/science/article/pii/S1526952307001079. 5 Ozone Action Days, Region 7 Air Program, U.S. ENVTL. PROT. AGENCY, http://www.epa.gov/region07/air/quality/action htm (last updated Aug. 28, 2015). 6 Id.; Michelle L. Bell et al., The Exposure-Response Curve for Ozone and Risk of Mortality and the Adequacy of Current Ozone Regulations, 114 ENVTL. HEALTH PERSPECTIVES 532, 532 (2006), available at http://www ncbi.nlm.nih.gov/pubmed/16581541. 7 Jean-Bernard Ruidavets et al., Ozone Air Pollution Is Associated with Acute Myocardial Infarction, 111 CIRCULATION 563, 566 (2005), available at http://circ.ahajournals.org/content/111/5/563.long; J. B. Henrotin et al., Short Term Effects of Ozone Air Pollution on Ischaemic Stroke Occurrence: A Case Crossover Analysis from a 10-Year Population-Based Study in Dijon, France, 64 OCCUPATIONAL & ENVTL. MED. 439, 442 (2007), available at http://oem.bmj.com/content/64/7/439.short 3 ADD-036 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page39 of 123 by months and even years.8 "Even at very low levels including days that meet current regulatory requirements," ozone is associated with premature mortality.9 Ozone also has detrimental ecological effects. According to EPA, ozone "affects sensitive vegetation and ecosystems, including forests, parks, wildlife refuges, and wilderness areas," especially during growing seasons.10 Ozone can interfere with a plant’s ability to produce and store food, visibly damage leaves, and make plants susceptible to damage from disease, insects, competition and severe weather.11 Nitrogen oxides also mix with other air pollutants to create particulate matter ("PM"). The effects associated with PM exposure are "premature mortality, increased hospital admissions and emergency department visits, and development of chronic respiratory disease."12 California has identified diesel PM as a toxic air contaminant and has estimated that 70 percent of the cancer risk from the air Californians breathe is attributable to diesel PM; EPA says that diesel PM is "likely to be a carcinogen."13 Diesel exhaust is a major contributor to PM pollution. In fact, it is estimated that diesel-powered vehicles and equipment account for nearly half of all nitrogen oxides and more than two-thirds of all PM emissions from U.S. transportation sources.14 B. Emissions from Motor Vehicles Contribute to Climate Change The burning of fossil fuels is the largest source of domestic greenhouse gas emissions, accounting for 77 percent of total warming emissions in 2013.15 One of the primary sources of such emissions is from the transportation sector, which in 2013 accounted for 27 percent of all greenhouse gas emissions in the United States.16 The largest source of such emissions from the transportation sector is passenger cars, representing nearly 43 percent of emissions in 2013.17 8 Stephanie Carroll Carson, Ozone, Warming Temperatures, Coal-Fired Power Plants Impact NC Air, PUB. NEWS SERV. (May 2, 2014), http://www.publicnewsservice.org/2014-05-02/climate-change-air-quality/ozone-warmingtemperatures-coal-fired-power-plants-impact-nc-air/a39132-1. 9 Bell, supra note 6 at 535. 10 Ecosystem Effects, Ground-Level Ozone, U.S. ENVTL. PROT. AGENCY, http://www.epa.gov/airquality/ozonepollution/ecosystem html (last updated Sept. 25, 2015). 11 Id. 12 EPA, Fine Particulate Matter National Ambient Air Quality Standards, 80 Fed. Reg. 15340, 15347 (Mar. 23, 2015). 13 Union of Concerned Scientists, California: Diesel Trucks, Air Pollution and Public Health, http://www.ucsusa.org/clean_vehicles/why-clean-cars/air-pollution-and-health/trucks-buses-and-other-commercial-vehicles/diesel-trucks-air-pollution.html#.VXRuhc9Viko; Trade, Health and Environmental Impact Project, Driving Harm: Health and Community Impacts of Living Near Truck Corridors (Jan. 2012), http://hydra.usc.edu/scehsc/pdfs/Trucks%20issue%20brief.%20January%202012.pdf. 14 Union of Concerned Scientists, Diesel Engines and Pubic Health, http://www.ucsusa.org/clean_vehicles/why-clean-cars/air-pollution-and-health/trucks-buses-and-other-commercial-vehicles/diesel-engines-and-public.html#.Vgh-7vlViko (last accessed Sept. 28, 2015). 15 EPA, Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990 – 2013 (Apr. 15, 2015), EPA 430-R-15-004, available at http://www3.epa.gov/climatechange/Downloads/ghgemissions/US-GHG-Inventory-2015-Main-Text.pdf. 16 Id. 17 Id. 4 ADD-037 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page40 of 123 The transportation sector has been the fastest-growing source of greenhouse gas emissions since 1990.18 Carbon dioxide is the dominant greenhouse gas driving observed changes in the Earth’s climate.19 Emissions of nitrogen oxides also contribute to climate change through two primary means: (1) nitrogen oxides react with other substances to form the greenhouse gas ozone; and (2) nitrous oxide is itself a highly potent and long-lived greenhouse gas. Nitrous oxide behaves very similarly to carbon dioxide in that it both directly traps heat in the atmosphere and remains in existence for many decades once emitted.20 There is a strong, international scientific consensus that anthropogenic climate threatens human society and natural systems. The U.S. Global Change Research Program in its 2009 report Climate Change Impacts in the United States similarly stated that "global warming is unequivocal and primarily human-induced" and "widespread climate-related impacts are occurring now and are expected to increase."21 The U.S. National Research Council similarly concluded that "[c]limate change is occurring, is caused largely by human activities, and poses significant risks for — and in many cases is already affecting — a broad range of human and natural systems."22 Based on observed and expected harms from climate change, in 2009 EPA concluded that greenhouse gas pollution endangers the health and welfare of current and future generations.23 Current atmospheric concentrations of greenhouse gases are already resulting in significant climate change impacts that are projected to worsen as emissions rise.24 Key changes include warming temperatures, the increasing frequency of extreme weather events, rapidly melting glaciers, ice sheets, and sea ice and rising sea levels.25 There will be significant costs associated with these changes. For example, in the United States in 2011 alone, a record 14 weather and climate disasters occurred, including droughts, heat waves, and floods, that cost at least $1 billion each in damages and loss of human lives.26 In addition, air pollution components that trigger asthma attacks, specifically air particulates and ozone, are expected to increase with climate change;27 in 2020, the continental United States could pay an average of 18 Id. 19 NRC. 2011. Climate Stabilization Targets: Emissions, Concentrations, and Impacts over Decades to Millennia. Washington, DC: National Academies Press, available at http://www.nap.edu/catalog/12877.html. 20 Solomon, S., et al., Technical Summary, Working Group I, (2007), at 27, available at http://ipccwg1.ucar.edu/wg1/Report/AR4WG1_Print_TS.pdf. 21 Karl, T. R. et al. 2009. Global Climate Change Impacts in the United States. U.S. Global Change Research Program. Thomas R. Karl, Jerry M. Melillo, and Thomas C. Peterson, (eds.). Cambridge University Press, 2009. 22 NRC. 2010. Advancing the Science of Climate Change, National Research Council, available at www nap.edu. 23 U.S. Environmental Protection Agency, Endangerment and Cause or Contribute Findings for Greenhouse Gases Under Section 202(a) of the Clean Air Act; Final Rule, 74 Federal Register 66496 (2009). 24 Melillo, Jerry M., Terese (T.C.) Richmond, and Gary W. Yohe, Eds., 2014: Climate Change Impacts in the United States: The Third National Climate Assessment. U.S. Global Change Research Program, 841 pp. doi:10.7930/J0Z31WJ2; IPCC. 2013. Summary for Policymakers. Working Group I Contribution to the IPCC Fifth Assessment Report Climate Change 2013: The Physical Science Basis. 25 Melillo, supra n. 24; IPCC, supra n. 24. 26 NOAA. 2012. NOAA: Extreme Weather 2011, available at http://www.noaa.gov/extreme2011/; WMO. 2012. World’s 10th warmest year, warmest year with La Niña on record, second-lowest Arctic sea ice extent. 27 Bernstein, A. S., and S. S. Myers. 2011. Climate change and children’s health. Current Opinion in Pediatrics 23:221–6. 5 ADD-038 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page41 of 123 $5.4 billion (2008$) in health impact costs associated with the climate penalty on ozone, with California experiencing the greatest estimated impacts averaged at $729 million.28 Anthropogenic climate change also poses a significant threat to biodiversity. Climate change is already causing changes in distribution, phenology, physiology, genetics, species interactions, ecosystem services, demographic rates and population viability: many animals and plants are moving poleward and upward in elevation, shifting their timing of breeding and migration, and experiencing population declines and extirpations.29 Because climate change is occurring at an unprecedented pace with multiple synergistic impacts, climate change is predicted to result in catastrophic species losses during this century. The Intergovernmental Panel on Climate Change ("IPCC") concluded that 20 to 30 percent of plant and animal species will face an increased risk of extinction if global average temperature rise exceeds 1.5°C to 2.5°C relative to 1980-1999, with an increased risk of extinction for up to 70 percent of species worldwide if global average temperature exceeds 3.5°C relative to 1980-1999.30 Other studies have predicted similarly severe losses: 15 to 37 percent of the world’s plants and animals committed to extinction by 2050 under a mid-level emissions scenario;31 the potential extinction of 10 to 14 percent of species by 2100 if climate change continues unabated;32 and the loss of more than half of the present climatic range for 58 percent of plants and 35 percent of animals by the 2080s under the current emissions pathway, in a sample of 48,786 species.33 Scientists have warned that the Earth is fast approaching a global "state-shift" that could result in unanticipated and rapid changes to Earth’s biological systems.34 As summarized by the 2014 National Climate Assessment, "landscapes and seascapes are changing rapidly, and species, including many iconic species, may disappear from regions where they have been prevalent or become extinct, altering some regions so much that their mix of plant and animal life will become almost unrecognizable."35 In addition, the ocean’s absorption of anthropogenic greenhouse gas emissions, including both carbon dioxide and nitrogen oxides, has already resulted in more than a 30 percent increase 28 Union of Concerned Scientists, Rising Temperatures and Your Health: After the Storm-The Hidden Health Risks of Flooding in a Warming World (2012), available at http://www.ucsusa.org/sites/default/files/legacy/assets/documents/global_warming/climate-change-and-flooding.pdf. 29 Maclean, I. M. D., and R. J. Wilson. 2011. Recent ecological responses to climate change support predictions of high extinction risk. Proceedings of the National Academy of Sciences of the United States of America 108: 12337-1234; Warren, R., J. Price, A. Fischlin, S. de la Nava Santos, and G. Midgley, Increasing impacts of climate change upon ecosystems with increasing global mean temperature rise, 106 CLIMATE CHANGE 141–177 (2011); Cahill, A.E. et al. 2012. How does climate change cause extinction? Proceedings of the Royal Society B, doi:10.1098/rspb.2012.1890. 30 IPCC. 2007. Climate Change 2007: Synthesis Report: An Assessment of the Intergovernmental Panel on Climate Change. www.ipcc.ch. 31 Thomas, C. D., et al., Extinction risk from climate change, 427 NATURE 145-48 (2004). 32 Maclean and Wilson, supra n. 29. 33 Warren, R. et al. 2013. Quantifying the benefit of early climate change mitigation in avoiding biodiversity loss. Nature Climate Change 3:678-682. 34 Barnosky, A.D. et al., Approaching a state shift in Earth’s biosphere, 486 NATURE 52 (2012). 35 Melillo, Jerry M., Terese (T.C.) Richmond, and Gary W. Yohe, Eds., 2014: Climate Change Impacts in the United States: The Third National Climate Assessment. U.S. Global Change Research Program, 841 pp. doi:10.7930/J0Z31WJ2. 6 ADD-039 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page42 of 123 in the acidity of ocean surface waters, at a rate faster than anything believed to have occurred in the past 300 million years.36 Ocean acidity is projected to increase by 150 to 200 percent by the end of the century if carbon dioxide emissions continue unabated.37 Ocean acidification negatively affects a wide range of marine species by hindering the ability of calcifying marine creatures to build protective shells and skeletons and by disrupting metabolism and critical biological functions.38 The adverse effects of ocean acidification are already being observed in wild populations, including reduced coral calcification rates,39 dissolution of pteropod shells in the California Current,40 reduced shell weights of foraminifera in the Southern Ocean,41 and mass die-offs of larval Pacific oysters in the Pacific Northwest.42 II. Legal Background: The Regulation of Emissions from Motor Vehicles Given the negative impacts on public health and the environment caused by the emission of air pollutants from various sources, including the transportation sector, Congress has enacted several laws to regulate and limit the amount of air pollutants from motor vehicles. A. The Clean Air Act In enacting the CAA, Congress found that "that the growth in the amount and complexity of air pollution brought about by urbanization, industrial development, and the increasing use of 36 Doney, S.C., Mahowald N. Lima, et al., "Impact of Anthropogenic Atmospheric Nitrogen and Sulfur Deposition on Ocean Acidification and the Inorganic Carbon System", Proc. Nat. Acad. Sci. 2007; 104(37); 14580. doi: 10173/pnas.0702218104; James C Orr, et al., Anthropogenic Ocean Acidification over the Twenty-First Century and its Impacts on Calcifying Organisms, 437 NATURE 681-86 (2005). 37 Feely, Richard A., S. Doney and S. Cooley, 2009, "Ocean Acidification: Present Conditions and Future Changes in a High CO2 World", Oceanography 22 (4) (June): 36-47; Hönisch, Bärbel, Andy Ridgwell, Daniela N. Schmidt, Ellen Thomas, Samantha J. Gibbs, Apply Slujs, Re Zeebe et al. 2012; "The Geological Record of Ocean Acidification", Science 335 (6072) March: 1058-63. doi. 10. 1126/science. 1208277; Orr, James C. Victoria, J. Fabry, Oliver Aumont, Laurent Bopp, Scott C. Doney, Richard A. Feely, Anand Gnandaesikan, et al., Anthropogenic Ocean Acidification over the Twenty-First Century and Its Impact on Calcifying Organisms, 437 NATURE 681-86 (2005), doi: 10, 1038/nature 04095. 38 Feely, supra n. 37; Fabry V.J., Seibel BA, Feely, RA, Orr J., "Impacts of Ocean Acidification on Marine Fauna and Ecosystem Processes" 65 ICES J. MAR SCI. 414 (2008); Kroeker K.J., Kordas, R.L., Crim R.N., Singh G.G., Meta-analysis Reveals Negative Yet Variable Effects of Ocean Acidification on Marine Organisms, ECOL. LETT., 2010:no-no. doi:10.1111/j.1461-0248.2010.01518.x. 39 De’ath G. Lough JM, Fabricius KE, "Declining Coral Calcification on the Great Barrier Reef", 323 SCIENCE 116, doi:10.1126/science.1165283; Cooper T.F., De’Ath G., Fabricius KE, Lough, JM, Declining Coral Calcification in Massive Porties in Two Nearshore Regions of the Northern Great Barrier Reef, 14 GLOB CHANGE BIO. 529-538 (2008), doi:10.1111/j. 1365-2486.2007.01520 x; Bates N. Amat A., Andersson A., Feedbacks and Responses of Coral Calcification on the Bermuda Reef System to Seasonal Changes in Biological Processes and Ocean Acidification on the Bermuda Reef System, 7 BIOGEOSCIENCES 2509-2530 (2010), doi:105194/bg-7-2509-2010. 40 Bednaršek N. Feely, RA, Reum JCP, Peterson B., Menkel J., Limacina Helicina Shell Dissolution as an Indicator of Declining Habitat Suitability Owing to Ocean Acidification in the California Current Ecosystem, Proc. R. Soc. B. 2014:281:20140123; Gledhill, D.K., Wannikhof R. Millero FJ, Eakin M. Ocean Acidification of the Greater Caribbean Region 1996-2006, J. Geophys Res. 2008; 113(C10): C10031. doi:10.1029/2007JC004629. 41 Moy, A.D., Howard W.R., Bray S.G., Trull, T.W., Reduced Calcification in Modern Southern Ocean Planktonic Foraminifera, 2 NAT. GEOSCI. 276-280 (2009), doi:10,1038/ngeo460. 42 Barton A., Hales B., Waldbusser G.G., Langdo C., Feely R., The Pacific Oyster, Crassostrea Gigas, Shows A Negative Correlation to Naturally Elevated Carbon Dioxide levels: Implications for Near Term Ocean Acidification Effects, 57 LIMMOL OCEANOGR. 698-710 (2012), doi:10.4319/lo. 2012.573.0698. 7 ADD-040 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page43 of 123 motor vehicles, has resulted in mounting dangers to the public health and welfare, including injury to agricultural crops and livestock..."43 Accordingly, the CAA establishes a comprehensive scheme "to protect and enhance the quality of the Nation’s air resources so as to promote the public health and welfare and the productive capacity of its population."44 To reach these goals, Title II of the CAA prescribes a regulatory scheme to control emissions from mobile sources.45 Specifically, the CAA requires EPA to promulgate regulations that establish standards for the emissions of air pollutants from new motor vehicles that "cause, or contribute to, air pollution which may reasonably be anticipated to endanger public health or welfare" and prohibits exceedances of those standards.46 The CAA mandates that EPA set emission standards for particular pollutants from light and heavy duty vehicles, including carbon monoxide, hydrocarbons and oxides of nitrogen and amend the standards as necessary to protect public health and welfare.47 Pursuant to these statutory requirements, EPA has established emissions standards and testing procedures for light duty vehicles and heavy trucks.48 To ensure compliance with these standards, EPA requires manufacturers to receive a certificate of conformity from EPA before a manufacturer can introduce vehicles into U.S. commerce.49 To receive such a certificate, manufacturers must submit a detailed application to EPA for each test group of vehicles it intends to sell in the United States; the application must include a certification that the vehicles comply with emission standards as determined by specific testing procedures required by EPA, and a description of any air emission control devices contained within the vehicles.50 The CAA provides for a fine of up to $37,500 for each car that does not conform to details within the certificate of compliance.51 In recognition of the fact that manufacturers may attempt to circumvent emission standards, the CAA prohibits any person from manufacturing, selling, offering to sell or installing any part in a motor vehicle that bypasses, defeats or renders inoperative any device or element of a vehicle’s emission control technology.52 EPA’s implementing regulations specifically prohibit the use of "defeat devices," defined generally as an air emission control device "that reduces the effectiveness of the emission control system under conditions which may reasonably be expected to be encountered in normal vehicle operation and use…"53 Under the CAA and EPA’s regulations, manufacturers may be liable for up to $3,750 for each use of a defeat device.54 43 42 U.S.C. § 7401(a)(2). 44 Id. § 7401(b)(1). 45 Id. §§ 7521-7590. 46 Id. §§ 7521; 7522. 47 Id. § 7521. 48 40 C.F.R. Part 86 (emission standards and testing procedures for light-duty vehicles and light trucks); 40 C.F.R. § 86.1811-04 (emission standards for light-duty vehicles including NOx); id. § 86.1816-05,-18 (emission standards for heavy-duty vehicles). 49 40 C.F.R. § 86.1848-01. 50 Id. §§ 86.1843-01; 86.1844-01. 51 42 U.S.C. § 7524(a); 40 C.F.R. § 19.4. 52 42 U.S.C. § 7522(a)(3)(B). 53 40 C.F.R. § 86.1809-01; id. § 86.1803-01. 54 42 U.S.C. § 7524(a); 40 C.F.R. § 19.4. 8 ADD-041 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page44 of 123 B. The Energy Policy and Conservation Act Congress enacted the EPCA in 1975 following the energy crisis caused by the 1973 Mideast oil embargo.55 In enacting EPCA, 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 habitats and expectations."56 Among the goals of EPCA are to "‘decrease dependence on foreign imports, enhance national security [and to] achieve the efficient utilization of scarce resources...’"57 The fundamental purpose of EPCA, however, is energy conservation.58 To comply with these goals, EPCA vests NHTSA with broad regulatory authority,59 and requires NHTSA to set fuel economy standards at "the maximum feasible average fuel economy level that the Secretary decides the manufacturers can achieve in that model year."60 In this way, EPCA is meant to encourage technological innovation — meaning new technologies, not simply better versions of what exists today. As the court in Center for Auto Safety v. Thomas noted, "[t]he experience of a decade leaves little doubt that the congressional scheme in fact induced manufacturers to achieve major technological breakthroughs as they advanced towards the mandated goal."61 And as explained by the D.C. Circuit "when a statute is technology forcing, the agency can impose a standard which only the most technologically advanced plants in an industry have been able to achieve — even if only in some of their operations some of the time."62 In 2007, Congress passed the Energy Independence and Security Act of 2007 ("EISA"), which amended EPCA.63 The EISA eliminated the previous 27.5 mpg standard for passenger cars with a mandate that NHTSA set separate passenger car and light truck standards for each model year beginning in 2011 "to achieve a combined fuel economy average for model year 2020 of at least 35 miles per gallon for the total fleet of passenger and non-passenger automobiles manufactured for sale in the United States for that model year."64 Fuel economy standards for model years 2021 through 2030 must be the maximum feasible average fuel economy standard for each fleet of passenger and non-passenger cars for that model year.65 These standards are known as the corporate average fuel economy ("CAFE") standards. 55 Center for Biological Diversity v. Nat’l Highway Safety Transportation Administration, 538 F.3d 1172, 1182 (9th Cir. 2008). 56 H.R. Rep. No. 94-340 at 1-3 (1975), as reprinted in 1975 U.S.C.C.A.N. 1762, 1763. 57 Center for Biological Diversity, 538 F.3d at 1182 (quoting S.Rep. No. 94-516 (1975) (Conf. Rep.), as reprinted in 1975 U.S.C.C.A.N. 1956, 1957). 58 Id. at 1195. 59 49 U.S.C. § 32910. 60 Id. § 32902(a). In determining what constitutes the "maximum feasible" level, NHTSA must take into account four factors: technological feasibility, economic practicability, the effect of other motor vehicle standards of the Government on fuel economy, and the need of the United States to conserve energy. Id. § 32902(f). 61 847 F.2d 843, 870 (D.C. Cir. 1988) (overruled on other grounds); see also Green Mt. Chrysler Plymouth Dodge Jeep v. Crombie, 508 F. Supp. 2d 295, 358-59 (D. Vt. 2008) (discussing technology-forcing character of EPCA and the use of increased fuel efficiency to augment performance rather than mileage). 62 Kennecott Greens Creek Min. Co. v. Mine Safety and Health Admin., 476 F.3d 946, 957 (D.C. Cir. 2008). 63 Pub. L. 11-140, 121 Sat. 1492 (Dec. 18, 2007). 64 49 U.S.C. § 32902(b)(2)(A). 65 Id. § 32902(b)(2)(B). 9 ADD-042 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page45 of 123 To help manufacturers comply with the CAFE standards, EPCA prescribes civil penalties that NHTSA can impose if their cars do not meet regulatory requirements. Specifically, a manufacturer is liable for a civil penalty of five dollars per automobile for each 0.1 mile per gallon shortfall.66 The Act vests NHTSA with the authority to raise the total penalty up to ten dollars for each 0.1 mile per gallon shortfall, provided it first makes certain findings. NHTSA raised the penalty to $5.50 for each 0.1 mile per gallon shortfall in 1997, but has not raised it since, nor has the penalty been adjusted for inflation.67 III. The VW Scandal Reveals the Need to Issues Regulations to Amend Testing Procedures and Increase Penalties for Violations of Fuel Economy Standards Volkswagen recently admitted that 11 million of its diesel cars sold worldwide since 2009, including nearly half a million sold in the United States, contain software specifically designed to cheat emissions tests. EPA has said that these devices allowed each car to spew up to 40 times the legal limit of nitrogen oxides in the United States. Better testing procedures that more accurately reflect a vehicle’s on-road emissions could prevent such egregious actions from occurring in the future. This scandal raises yet another problem in the government’s regulation of emissions from motor vehicles — that manufacturers regularly pay civil penalties rather than comply with NHTSA’s CAFE standards. The penalties are therefore clearly inadequate to deter violations and inspire the technological innovation contemplated by EPCA, and reduce carbon dioxide emissions, and must be increased as a result. A. EPA Must Promulgate Regulations to Require On-Road Emissions Testing, and Must Test Cars Sold in the United States Since 2009 The VW scandal demonstrates that EPA’s current testing procedures for passenger cars and light trucks do not accurately reflect the actual emissions of these vehicles. EPA must promulgate regulations that require accurate, on-road testing sufficiently rigorous to detect defeat devices and thereby protect public health and welfare from the deleterious impacts of motor vehicle emissions. As explained by EPA in its Notice of Violation to VW, "defeat devices" can detect when a car is being tested in a laboratory setting and adjusts engine operations to emit less-polluting exhaust during the test than in real-world driving conditions. Specifically, VW manufactured and installed software in the electronic control modules ("ECM") of vehicles equipped with 2.0 liter diesel engines.68 The software could sense when the vehicle was being tested pursuant to EPA’s dynamometer testing equipment.69 When the software sensed testing, it produced compliant emission results under an ECM calibration, but at all other times the ECM ran a separate calibration that reduced the effectiveness of the emission control system, and the selective 66 Id. § 32912(b). 67 See 62 Fed. Reg. 5,167, 5,168 (Feb. 4, 1997) (raising the penalty to $5.50 for every 0.1 mpg); codified at 49 C.F.R. § 578.6(h)(2). 68 EPA, Notice of Violation to Volkswagen AG, Sept. 18, 2015. 69 Id. 10 ADD-043 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page46 of 123 catalytic reduction, or the lean NOx trap, in particular.70 EPA has determined that the software is an air emission control device that was not described in VW’s certification applications and is an illegal defeat device, and that "VW violated section 203(a)(1) the CAA, 42 U.S.C. § 7522(a)(1), each time it sold, offered for sale, introduced into commerce, delivered for introduction into commerce, or imported…" one of the offending vehicles as a result.71 But this is not the first time a manufacturer has used these illegal, deceitful devices. Despite the express prohibitions on the use of defeat devices in the CAA and EPA’s regulations, the use of such devices by a variety of manufacturers has been discovered on several occasions.72 Indeed, such devices have been used beginning shortly after the enactment of the CAA, with early regulatory actions specifically intended to prevent their use.73 And car and truck manufacturers have repeatedly been caught using such devices for almost as long as their use has been prohibited. For example, in 1973, EPA found that VW had installed temperature-sensitive devices that turned off emissions controls on tens of thousands of its vehicles.74 And in 1998, the U.S. Department of Justice and EPA settled an enforcement case against the diesel engine industry for the widespread use of defeat devices in everything from tractor trailers to pick-up trucks. The settlement required seven companies, which comprised 95 percent of the U.S. heavy duty diesel engine market, to pay over one billion dollars, including $83.4 million in civil penalties, the largest ever imposed in environmental enforcement at that time.75 As suggested by EPA’s letter to VW, a key reason vehicle manufacturers are able to use such devices to beat emissions tests are the inadequate testing procedures currently required by EPA. In particular, EPA’s requirements for testing light-duty vehicles and trucks, known as the Federal Test Procedure ("FTP"), use a chassis dynamometer to test for various emissions, including nitrogen oxides, in a laboratory setting by simulating driving conditions. But given the artificial, predictable conditions in which the tests are run, software can sense when treadmill-like dynamometer equipment is being used based on the position of the steering wheel, vehicle speed and how long the engine operates, among other inputs.76 But alternative, on-road testing technologies exist. For example, on-road vehicle remote sensing is a type of technology that can scan the emissions of thousands of vehicles within a single day, and has previously been used to monitor real driving conditions by using optical sensors or a laboratory vehicle that follows cars and samples exhaust plumes.77 And EPA already 70 Id. 71 Id. 72 See e.g., U.S. Dep’t of Justice, Clean Air Act Mobile Sources Cases, http://www.justice.gov/enrd/mobile-sources (updated May 14, 2015) (describing past enforcement actions for the use of defeat devices). 73 See e.g., 37 Fed. Reg. 28,775 (Dec. 29, 1972) (order requiring defeat devices to be eliminated by March 1973). 74 See e.g., Michael Biesecker and Eric Tucker, German automaker facing'tsunami’ of possible enforcement actions after emissions scandal, Associated Press, Sept. 28, 2015, http://www.usnews.com/news/business/articles/2015/09/28/volkswagen-faces-major-legal-trouble-in-emissions-scandal. 75 U.S. Dep’t of Justice, Press Release: DOJ, EPA Announce One Billion Dollar Settlement With Diesel Engine Industry For Clean Air Act Violations, Oct. 22, 1998, available at http://www.justice.gov/archive/opa/pr/1998/October/499_enr.htm. 76 Notice of Violation to Volkswagen. 77 International Council on Clean Transportation, Guidance note about on-road vehicle emissions remote sensing, June 2013, available at http://www.theicct.org/sites/default/files/publications/RSD_Guidance_BorKlee.pdf. 11 ADD-044 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page47 of 123 requires on-road testing for heavy-duty diesel trucks.78 Specifically, EPA has established a mandatory manufacturer-run, in-use emissions testing for heavy-duty diesel trucks using a portable emission measurement system ("PEMS").79 PEMS typically involves equipping a test vehicle with a portable gas analyzer, and measuring emission rates during the driving. In announcing the regulatory change, EPA specifically noted that using such systems is "a significant step forward... in helping ensure that heavy-duty diesel engines comply with applicable emission standards" and that "these systems offer[] advantages over conventional approaches to assess in-use exhaust emissions from engines for design improvement, research, modeling, and compliance purposes."80 Nevertheless, EPA has not implemented a similar requirement for passenger cars and light trucks. The urgent need for such testing is now beyond dispute, and its benefits would not be limited to detecting the use of unlawful defeat devices alone. Even when cars do not contain defeat devices, the laboratory tests often fail to accurately reflect emissions as laboratory settings do not adequately incorporate road and weather conditions, use of accessories and aggressive driving. On-road tests reflect normal operation and use, and therefore a more accurate picture of emissions. And the benefits would not be limited to emissions of nitrogen oxides — the use of on-road emissions testing would also enable tests to more accurately reflect a vehicle’s fuel efficiency and thus, its carbon dioxide emissions. While current regulations vest EPA with the authority to conduct or require testing on any vehicle using driving cycles and conditions that may reasonably be expected to be encountered in normal operation and use (i.e., on-road conditions) for purposes of investigating the use of defeat devices,81 the regulations do not go far enough as they do not mandate such inspections prior to putting new cars and light trucks on the road.82 Mandating on-road inspections prior to the introduction of new light-duty motor vehicles is thus necessary to ensure cars comply with emission standards. Accordingly, the Center hereby requests that EPA promulgate regulations to require on-road testing for all types of new diesel-powered motor vehicles not already subject to such testing requirements. The Center also requests that EPA promulgate regulations to require on-road testing for all other types of fossil fuel-powered motor vehicles. While VW’s scandal involved diesel-powered cars, there is no indication that the use of such devices is limited to diesel vehicles. In fact, recent reports indicate that VW’s gasoline-powered cars, as well as models from other manufacturers, consume significantly more fuel than measured in laboratory tests. 78 See e.g., EPA, Regulatory Announcement: Final Rule on In-Use Testing Program for Heavy-Duty Diesel Engines and Vehicles, EPA420-F-05-021, June 2005, available at http://www3.epa.gov/otaq/regs/hd-hwy/inuse/420f05021.pdf. 79 Id. 80 Id. 81 40 C.F.R. § 86.1809. 82 See e.g., International Council on Clean Transportation, In-use emission testing of light-duty diesel vehicles in the U.S., May 30, 2015, available at http://www.theicct.org/sites/default/files/publications/WVU_LDDV_in-use_ICCT_Report_Final_may2014.pdf (noting that there is no regulatory requirement in the United States to verify compliance of Tier 2 vehicles for emissions standards over off-cycle tests such as on road emissions testing). 12 ADD-045 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page48 of 123 Specifically, the Center requests that EPA adopt regulations in 40 C.F.R. part 86 and/or 1066 requiring on-road emissions testing as part of the certification process necessary to introduce any vehicle type into U.S commerce. These regulations could emulate those required for heavy-duty highway engines, adjusted as necessary to accommodate testing parameters needed for passenger cars and lighter trucks, and require state-of-the art on-road emission testing technology.83 The Center also requests that EPA conduct immediate in-use testing of each make and model of diesel-powered motor vehicles sold in the United States since 2009 that have not already undergone such tests, and each make and model of other fossil fuel-powered motor vehicles sold in the United States since 200984 to ensure that emissions comply with relevant standards, and any additional violators are held accountable. B. NHTSA Must Promulgate Regulations to Increase the Penalties for Violations of CAFE Standards NHTSA must increase the penalty for violations of CAFE standards. As explained above, EPCA vests NHTSA with the authority to impose a civil penalty of five dollars per automobile for each 0.1 mile per gallon a car falls short of the standards.85 EPCA also vests NHTSA with the authority to increase the penalty for violations, provided it first makes certain findings. These findings include that increasing the penalty "will result in, or substantially further, substantial energy conservation for automobiles in model years in which the increased penalty may be imposed;... will not have a substantial deleterious impact on the economy of the United States, a State, or a region of a State" and will not cause significant unemployment, a significant increase in automobile imports or adversely affect competition.86 NHTSA exercised its statutory authority to increase the maximum civil penalty to $5.50 for each 0.1 mile per gallon shortfall in 1997. But NHTSA has not increased the penalty since, nor has it been adjusted for inflation. It is no surprise then that NHTSA has repeatedly acknowledged that many companies choose to regularly pay the fines rather than comply with the standards.87 Indeed, the Government Accountability Office ("GAO") has reported that because the fines for violations of the CAFE standards have not increased, "CAFE penalties may not provide a strong enough incentive for manufacturers to comply with CAFE."88 In this way, EPCA has not been implemented to its full potential, and continuing technological innovation and reductions in greenhouse emissions are thwarted. However, the GAO also found that "stricter penalties" for "noncompliance could improve compliance with CAFE standards."89 83 See 40 C.F.R. part 1065 (emission testing requirements for heavy-duty highway vehicles). 84 To the extent conducting these tests is not feasible, the Center alternatively requests that EPA conduct in-use testing of a significant portion of the top selling makes and models of motor vehicles in the United States. 85 49 U.S.C. § 32912(b). 86 Id. 87 GAO, Report to Congress, Vehicle Fuel Economy: NHTSA and EPA's Partnership for Setting Fuel Economy and Greenhouse Gas Emissions Standards Improved Analysis and Should Be Maintained, Feb. 2010, GAO-10-336, available at http://www.gao.gov/assets/310/301199 html. 88 Id. 89 Id. 13 ADD-046 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page49 of 123 Accordingly, the Center hereby requests that NHTSA promulgate regulations to increase the penalty for a violation of the CAFE standards. Specifically, the Center requests that NHTSA amend its regulation at 49 C.F.R. § 578.6(h)(2) to increase the penalty to the statutory maximum of $10 per 0.1 mile per gallon shortfall. The Center believes that NHTSA can easily make the requisite statutory findings in order to do so. Ensuring compliance with CAFE standards will promote competition by encouraging innovation and technological improvements, and will lead to economic benefits by reducing costly greenhouse gas emissions.90 And the requested increase in the penalty is reasonable, as it is still below the statutory minimum adjusted for inflation. Specifically, the five dollar fine in 1975 adjusted for inflation would be roughly $22.15 today.91 IV. Conclusion The transportation sector is the single largest source of air pollution and the second largest source of greenhouse gas emissions in the United States. While there are laws in place to attempt to reduce the impacts of these emissions by prescribing limits on the quantity of such emissions, the recent VW scandal reveals that car manufacturers often find ways to skirt such requirements. Improving testing procedures by requiring in-use testing of vehicles currently on the road, and on-road testing of all new motor vehicles in the future would help ensure emissions tests better reflect actual emissions, and thus provide a more accurate picture of whether car manufacturers are actually complying with emission standards. Similarly, increasing the penalties for a violation of the CAFE standards would incentivize compliance with fuel economy standards and reduce emissions of greenhouse gases from motor vehicles. All of these actions would promote the protection of public health, welfare and the environment by reducing dangerous emissions and reducing our dependency on dirty fossil fuels, as envisioned by the CAA and EPCA. Sincerely,/s/Kristen Monsell Kristen Monsell Staff Attorney Center for Biological Diversity 1212 Broadway, Suite 800 Oakland, CA 94612 kmonsell@biologicaldiversity.org 90 See e.g., Ker Than, Estimated social cost of climate change not accurate, Stanford scientists say, Stanford Report, Jan. 12, 2015, http://news.stanford.edu/news/2015/january/emissions-social-costs-011215.html (estimating the social cost of carbon to be $220 per ton rather than $37 as estimated by the government); see also Marten, A.L., and Newbold, S.C., Estimating the social cost of non-CO2 GHG emissions: Methane and nitrous oxide, 51 Energy Policy 957 (2012), available as EPA Working Paper No. 11-10 at http://yosemite.epa.gov/ee/epa/eed nsf/ec2c5e0aaed27ec385256b330056025c/f7c9fc6133698cc38525782b00556de1/$FILE/2011-01v2.pdf (estimating the social cost of nitrous oxide to be $4,300 to $33,000 per metric ton in 2015). 91 U.S. Dep’t of Labor, CPI Inflation Calculator, http://www.bls.gov/data/inflation_calculator htm. 14 ADD-047 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page50 of 123 Exhibit G ADD-048 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page51 of 123 August 1, 2016 The Honorable Mark Rosekind, Ph.D. Administrator National Highway Traffic Safety Administration 1200 New Jersey Avenue, S.E. West Building, Fourth Floor Washington, D.C. 20590 RE: Petition for Partial Reconsideration of the Interim Final Rule on Civil Penalties, NHTSA Docket 2016-0075, 81 Fed. Reg. 43524, July 5, 2016 Dear Dr. Rosekind: The Alliance of Automobile Manufacturers1 (the Alliance) and the Association of Global Automakers2 (Global Automakers) are petitioning for partial reconsideration of the Interim Final Rule3 (IFR) adjusting the civil penalties under several statutes administered by NHTSA. According to the IFR, the adjustments were made pursuant to the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (the Improvements Act).4 The Alliance and Global Automakers seek reconsideration of the portion of the IFR that applies to civil penalties under the Corporate Average Fuel Economy (CAFE) program and the CAFE standards at 49 C.F.R. Parts 531 and 533. Introduction The Alliance and Global Automakers recognize that NHTSA was obligated to take some action in response to the Improvements Act, which directed nearly all federal agencies to make inflation adjustments to monetary civil penalties. We realize that NHTSA is not empowered to exempt the CAFE program from this directive. We do, however, have serious concerns about the effects of the significant adjustment to the CAFE penalty in the IFR. 1 The Alliance of Automobile Manufacturers is an association of 12 vehicle manufacturers which account for roughly 77% of all car and light truck sales in the United States. These members are BMW Group, FCA US LLC, Ford Motor Company, General Motors, Jaguar Land Rover, Mazda, Mercedes-Benz USA, Mitsubishi Motors, Porsche Cars North America, Toyota, Volkswagen Group of America, and Volvo Car USA. 2 The Association of Global Automakers represents international motor vehicle manufacturers, original equipment suppliers, and other automotive-related trade associations. Our members include American Honda Motor Co., Aston Martin Lagonda of North America, Inc., Ferrari North America, Inc., Hyundai Motor America, Isuzu Motors America, Inc., Kia Motors America, Inc., Maserati North America, Inc., McLaren Automotive Ltd., Nissan North America, Inc., Subaru of America, Inc., Suzuki Motor of America, Inc., and Toyota Motor North America, Inc. 3 81 Fed. Reg. 43524 (July 5, 2016). 4 Pub. L. 114-74, Section 701. 1 ADD-049 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page52 of 123 At the outset, the Alliance and Global Automakers respectfully submit that the agency used the wrong base year for the calculation of the inflation adjustment. Specifically, the Alliance and Global Automakers note that the last time the CAFE civil penalty was "established or adjusted" was 2007, when Congress adopted the Energy Independence and Security Act (EISA).5 Congress explicitly considered and rejected a change to the specific civil penalty dollar amount in the statute ($5.00/0.1 mpg), and instead ratified the penalty while at the same time amending the penalty provision to authorize the use of civil penalty revenue to support NHTSA’s CAFE rulemaking and to support research and development of advanced technology vehicles.6 Thus, Congress reset the CAFE penalty in 2007, albeit at the same $5.00/0.1 mpg level, and that is the base year that should have been used to apply the inflation adjustment multiplier. Moreover, due to the unique nature of the civil penalties under the CAFE program, including especially the statutory requirement to provide a minimum of eighteen months leadtime before making a CAFE standard more stringent, it is not appropriate to apply such increases retroactively to penalties applicable to model years that have already been completed or for which a company’s compliance plan has already been set. The Alliance and Global Automakers observe that NHTSA can follow some alternative pathways that would enable NHTSA to make adjustments to the standard penalty adjustment approach, yet also take these unique factors into account. The factors that distinguish CAFE civil penalties from most other civil penalty schemes include the following:  As NHTSA has acknowledged in various contexts, a number of manufacturers meet their CAFE obligations by electing to pay civil penalties. Indeed, NHTSA itself has characterized the option of paying the civil penalty as a "compliance flexibility."7 An increase in the CAFE civil penalties will therefore directly impact the actual costs of the CAFE program on such manufacturers.  In recognition of the fact that CAFE compliance through the use of technology requires significant leadtime on the part of automakers, the CAFE statute provides that increases in CAFE standards can therefore be made only with a minimum of 18 months’ lead time in advance of a model year. This is intended to provide manufacturers time to develop their compliance strategy and to anticipate any civil penalties they may need to pay. The sudden imposition of a large civil penalty increase would upset this statutory schedule and expose manufacturers to far higher penalties than they had planned for, in contravention of Congress’ intent.  Different from most other federal programs that impose civil penalties, the CAFE program contemplates compliance levels that are not static and, indeed, have been 5 Pub. L. 110-140. 6 Section 112 of Pub. L. 110-140. 7 http://www.nhtsa.gov/CAFE_PIC/CAFE_PIC_home.htm, last accessed July 27, 2016. 2 ADD-050 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page53 of 123 adjusted on an annual basis since adoption of the One National Program in 2009 and the 2011 Joint Final Rule on CAFE and Greenhouse Gas Standards.  And, unlike most civil penalty schemes in other statutes, CAFE civil penalties follow a prescribed formula that may not be compromised by NHTSA (except under extremely rare circumstances, as discussed below). Thus, an adjustment to the CAFE civil penalties does not merely increase the maximum theoretical penalties that the Agency could collect; it automatically increases the actual penalties that the manufacturers will pay, and this is true whether a company chooses to purchase credits or pay penalties directly as the price of credits is connected to the penalty amount. Our most significant concern with the IFR is that it would apply retroactively to the 2014 and 2015 Model Years (which have been completed for all manufacturers but for which the compliance files are not all closed), to the 2016 Model Year (which is complete for many manufacturers) and to the 2017 and 2018 Model Years (for which manufacturers have already set compliance plans based on guidance from NHTSA, including the existing civil penalty amounts). Applying the increased civil penalties in this manner is profoundly unfair to manufacturers, does not improve the effectiveness of this penalty, and does nothing to further the policies underlying the CAFE statute. Additionally, given NHTSA’s recognition that paying civil penalties is a "compliance flexibility" that some manufacturers have elected, NHTSA’s past estimates of the cost of compliance with the CAFE program have taken into account the costs of paying penalties. The sudden and retroactive imposition of the higher civil penalty amounts contained in the IFR (which were estimated by NHTSA to result in only $50 million in civil penalties being collected) would actually increase the annual estimated cost of compliance with the CAFE program by at least $1 billion based on NHTSA’s own modeling tools. Finally, the IFR significantly underestimated the economic impact of the increases. According to the IFR, economic impact was estimated solely by reviewing historic penalties paid by manufacturers. The economic impact instead should have been derived from an analysis of expected current and future compliance costs based on the Final Rules for Model Years 2011-2016 and Model Years 2017-2021. Equally important, in focusing exclusively on penalties, the IFR failed to take into account at all the impact on the credit market, even though the recently released Draft Technical Assessment Report identified credit trading as "the primary flexibility in model year 2014."8 Clearly, the purchase price of credits is directly related to the penalty that would otherwise be paid by a manufacturer. Thus, any analysis of the potential economic impact of a penalty increase should have quantified the impact on the credit market. All of these issues are discussed in more detail below. 8 U.S. Environmental Protection Agency, National Highway Traffic Safety Administration, California Air Resources Board. Draft Technical Assessment Report: Midterm Evaluation of Light-Duty Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards for Model Years 2022-2025 (EPA-420-D-16-900. July 2016. Available at http://www.nhtsa.gov/staticfiles/rulemaking/pdf/cafe/Draft-TAR-Final.pdf (last accessed July 26, 2016) at Page 3-19. 3 ADD-051 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page54 of 123 This Petition raises fundamental issues with respect to the administration of the CAFE program. The industry is already facing significant challenges in planning for compliance with the Model Year 2017-2021 CAFE standards, so the implementation of the IFR would only serve to increase those challenges without any environmental benefits in the short term, and without attempting to harmonize the goals of the Improvements Act with the requirements of the CAFE statute. The Alliance and Global Automakers strongly urge NHTSA to withdraw the Interim Final Rule as it pertains to CAFE civil penalties and reissue a new Interim Final Rule that applies the inflation adjustment to the base year of 2007. If NHTSA is unable to agree that 2007 is the base year, this petition urges NHTSA to withdraw the IFR and to undertake a notice-and-comment rulemaking as authorized by the Improvements Act to develop a more appropriate formula for an inflation adjustment to the CAFE civil penalties, and to harmonize the timetable for any such adjustment with the unique leadtime requirements of the CAFE statute under the Improvements Act. In either case, NHTSA should confirm that it will not apply the new penalties before Model Year 2019. Discussion 1. The Interim Final Rule Used the Wrong Base Year for Calculating the Inflation Adjustment of the CAFE Civil Penalty The Improvements Act requires federal agencies to adjust civil monetary penalties contained in their statutes by applying a defined "cost of living adjustment" to the penalty measured from the last calendar year in which the penalty was "established or adjusted" by Congress (other than by operation of the Federal Civil Penalties Inflation Adjustment Act of 1990). The IFR concluded that the last calendar year in which the CAFE penalty was "established or adjusted" by Congress was 1975, the year that the CAFE statute was originally enacted. In fact, however, the last time the CAFE civil penalty was "established or adjusted" was 2007, when Congress adopted the Energy Independence and Security Act (EISA).9 In considering that legislation, Congress explicitly considered and rejected a change to the specific civil penalty dollar amount in the statute ($5.00/0.1 mpg),10 and instead ratified the penalty while at the same time modified the penalty provision to authorize the use of civil penalty revenue to support NHTSA’s CAFE rulemaking and to support research and development of advanced technology vehicles.11 Thus, Congress reset the CAFE penalty in 2007, albeit at the same 9 Pub. L. 110-140. 10 See Discussion Draft of June 1, 2007, published in the Hearing Record of the Committee on Energy and Commerce entitled Legislative Hearing on Discussion Draft Concerning Alternative Fuels, Infrastructure and Vehicles, June 7, 2007, Serial Number 110-53. 11 Section 112 of Pub.L. 110-140. 4 ADD-052 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page55 of 123 $5.00/0.1 mpg level,12 and that is the base year that should have been used to apply the inflation adjustment multiplier.13 If NHTSA had applied the adjustment factor for 2007, instead of 1975, the significant economic consequences of the adjustment that are discussed in more detail below would, of course, be substantially mitigated. 2. A Sudden and Retroactive Increase In Civil Penalties Would Not Be Consistent With the Leadtime Provisions of the CAFE Statute. In support of its conclusion that the increase in CAFE civil penalties will not have a significant economic impact, NHTSA states in the IFR that manufacturers may make "production and marketing changes to influence the average fuel economy of vehicles produced by the manufacturer" to account for the increased civil penalties.14 As a practical matter, however, this is simply not the case, at least in the near term. The enhanced civil penalties set forth in the IFR are scheduled to become effective August 4, 2016, and NHTSA has indicated that it intends to apply them to all Model Years that have not been closed out, including the 2015 Model Year.15 (It is unclear what NHTSA intends for manufacturers whose compliance file is still open for the 2014 Model Year). But the 2015 Model Year is complete for all manufacturers, and many manufacturers have already ended (or shortly will end) production for the 2016 Model Year. Additionally, manufacturers have already set their compliance plans for the 2017 and 2018 Model Years based on the civil penalty amounts in effect prior to August 4 based on previous guidance from NHTSA. As NHTSA itself noted in its Implementation White Paper, however, its goal is to "ensure that the new civil penalties are fairly and uniformly applied," a goal which cannot be met if some manufacturers’ compliance files are still open for Model Years 2014 or 2015, and some are closed. Additionally, the CAFE statute itself recognizes the need for sufficient leadtime to make changes to improve fuel efficiency in a manufacturer’s fleet. For this reason, the statute provides that any amendment to a CAFE standard that has the effect of making the standard more stringent must be promulgated at least 18 months before the beginning of the model year to which the amendment applies.16 This leadtime requirement is Congress’ recognition that manufacturers need to be able to engage in advance planning not only for purposes of compliance, but also for the potential payment of civil penalties. A sudden and substantial increase in the civil penalty formula would upset this statutory balance by unfairly upsetting the manufacturers’ reasonable expectations regarding the penalty amounts that would be due. Moreover, applying the enhanced civil penalties to model years that have ended, or to model 12 By 2007, the actual CAFE civil penalty was $5.50/0.1 mpg as a result of a previous inflation adjustment rulemaking by NHTSA, and presumably Congress knew that fact and expected NHTSA to continue to apply the inflation adjusted amount. 13 See Final floor votes in the House and Senate which overwhelmingly approved the final version of EISA by 314-100 and 86-8 respectfully (House Floor vote #1170 and Senate Recorded Vote #430). 14 81 Fed. Reg. at 43527. 15 NHTSA White Paper entitled "Implementation of the Federal Civil Penalties Inflation Adjustment Act Improvement[s] Act of 2015 for the Corporate Average Fuel Economy (CAFE) Program," July 18, 2016. 16 49 U.S.C. 32902(g)(2). 5 ADD-053 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page56 of 123 years where it is too late for manufacturers to make significant changes, does nothing to further the fuel savings goals of the CAFE statute, or to improve the effectiveness of this penalty. The Alliance and Global Automakers are aware that courts (and administrative agencies) generally apply the law as it is in effect at the time they adjudicate compliance, and that there is nothing inherently problematic in most cases with Congress’ decision to apply penalty adjustments to conduct that occurred prior to the effective dates of the penalty adjustments. However, the Supreme Court has noted an exception to this general rule: if applying a change retroactively would disturb settled rights, the change is not applied retroactively. "The Court has refused to apply an intervening change to a pending action where it has concluded that to do so would infringe upon or deprive a person of a right that had matured or become unconditional." Bennett v. New Jersey, 470 U.S. 632, 639 (1985), citing Bradley v. School Board, 416 U.S. 696, 720 (1974). The manufacturers have substantial "right[s] that ha[ve] matured" with respect to Model Years 2014, 2015 and 2016, and, these rights are largely matured for Model Years 2017 and 2018 due to the compliance flexibilities built into the CAFE program. While the Alliance and Global Automakers acknowledge that NHTSA must take action to adjust the CAFE penalty in accordance with the Improvements Act, it must also do so in a way that harmonizes that adjustment with the underlying structure and purposes of the CAFE law. The Bennett exception to the general retroactivity rule applies. NHTSA should not apply the adjusted penalty to any Model Year prior to Model Year 2019. 3. If NHTSA Retains the 1975 Baseline Year for the Adjusted Penalties, There Will Be A Significantly Higher Economic Impact on the Costs of Compliance with the CAFE Standards than NHTSA Estimated in the IFR. In the IFR, NHTSA asserted that the proposed increase in CAFE civil penalties would not be economically significant, based on a review of penalties paid over the last five years: We also do not expect the increase in the civil penalty amount in 49 CFR 578.6(h)(2) to be economically significant. Over the last five model years, NHTSA has collected an average of $20 million per model year in civil penalties under 49 CFR 578.6(h)(2). Therefore, increasing the current civil penalty amount by 150 percent would not result in an annual effect on the economy of $100 million or more.17 However, a recitation of the penalties manufacturers previously paid fails fully to comprehend the economic impact of the proposed increase in two important ways: it does not accurately reflect NHTSA’s own estimates of the impact of the increases in CAFE standards in coming years and it completely overlooks the impact of the increases on the CAFE credit market. NHTSA has recognized that some manufacturers may elect to pay civil penalties in lieu of meeting the CAFE standards for a given model year. NHTSA has acknowledged this practice in a number of contexts and has treated the civil penalties as part of the industry’s overall costs 17 81 Fed. Reg. at 43527. 6 ADD-054 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page57 of 123 of compliance with the CAFE program. NHTSA included the following passage in the preamble to the 2012 Final Rule establishing the CAFE Standards for Model Years 2017-2021: As it has in past rulemakings and in the NPRM preceding today’s final rule, NHTSA has also applied its CAFE model in a manner that simulates the potential that, as allowed under EISA/EPCA and as suggested by their past CAFE levels, some manufacturers could elect to pay civil penalties rather than achieving compliance with future CAFE standards. EISA/EPCA allows NHTSA to take this flexibility into account when determining the maximum feasible stringency of future CAFE standards.18 NHTSA proceeded to apply its CAFE Compliance and Effects Model ("the Volpe model") with the assumption that several manufacturers would elect to pay civil penalties. NHTSA observed that "to assume these manufacturers would exhaust available technologies before paying civil penalties would cause unrealistically high estimates of market penetration of expensive technologies such as diesel engines and strong HEV’s as well as correspondingly inflated estimates of both the costs and benefits of any potential CAFE standards."19 In other words, NHTSA clearly recognizes that manufacturers have the choice to pay civil penalties in lieu of meeting the applicable fuel economy standards and relied on the Volpe Model to justify the cost-effectiveness and economic practicability of the Model Year 2017-2021 CAFE standards. The Alliance and Global Automakers have run the latest Volpe Model using the recent and increased higher civil penalty amounts against the 2015 Model Year fleet (the same assumption used by NHTSA in the Draft Technical Assessment Report).20 The Volpe model calculated an average annual cost increase of approximately $1 billion over the baseline with the higher penalty amount inputted.21 It is worth noting that the $1 billion is just the cost of technologies and civil penalties and does not take into consideration the unintended consequence of subsequently higher costs for the purchase of CAFE credits which will exponentially increase as the standards increase and the volume of CAFE credits available in the market diminish. The impact on CAFE credits is discussed further in this petition. 18 77 Fed. Reg. 62624 at 62666 (October 15, 2012) (Emphasis added). 19 77 Fed. Reg. at 63008 (Footnote 1111). 20 U.S. Environmental Protection Agency, National Highway Traffic Safety Administration, California Air Resources Board. Draft Technical Assessment Report: Midterm Evaluation of Light-Duty Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards for Model Years 2022-2025 (EPA-420-D-16-900. July 2016. Available at http://www.nhtsa.gov/staticfiles/rulemaking/pdf/cafe/Draft-TAR-Final.pdf (last accessed July 26, 2016). 21 Value derived from analysis of NHTSA Volpe model results with inputs of $14.00 and $5.50 per 0.1 mpg CAFE non-compliance civil penalties using the most recent version of the Volpe model ("2016 Draft TAR for Model Years 2022-2025 Passenger Cars and Light Trucks", available at http://www.nhtsa.gov/Laws+&+Regulations/CAFE+-+Fuel+Economy/CAFE+Compliance+and+Effects+Modeling+System:+The+Volpe+Model, last accessed July 27, 2016). Class 2b and 3 medium-duty vehicles removed for consistency with compliance fleets to which the CAFE non-compliance civil penalty applies. 7 ADD-055 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page58 of 123 In light of the Volpe model output, we do not believe the analysis that was used in the IFR is the correct methodology for making a determination regarding the economic significance of the penalty increase. The IFR also omitted from its analysis the impact that the increases would have on another important compliance flexibility, credit trading among the manufacturers. The recently released Draft Technical Assessment Report (Draft TAR) identified various flexibilities that the CAFE program allows for manufacturers to reach compliance. According to the Draft TAR, in recent model years many manufacturers (reflecting a significant portion of all vehicle production) have needed to utilize various credit flexibilities to achieve compliance. Among the range of credit flexibilities available, the Draft TAR cites trading as an increasingly important and commonly utilized flexibility. As previously noted, the Draft TAR explicitly states that credit trading among manufacturers was "the primary [credit] flexibility in model year 2014." During the last five years (the same time period that the IFR reviewed for penalties historically paid), the Draft TAR shows that approximately 50 million CAFE credits were traded among manufacturers.22 While credit transaction terms are not public, the theoretical ceiling price of credits prior to the IFR would have been $5.50 per credit, discounted based on several factors, including overall supply and demand and the expiration date of the individual credit. Assuming for the sake of argument a 25% discount, over the last five years, manufacturers would have spent over $200 million purchasing credits. Assuming the same 25% discount from $14.00, manufacturers would have spent over $500 million over the past five years to purchase the same number of credits (with no real world benefits in terms of fuel savings) – an economic impact of over $300 million purely within the credit market. The IFR’s penalty increase will dramatically impact the credit trading market, including the price of credits. The availability of credits will be significantly reduced as the CAFE standards rapidly increase over the next few years, and the price of credits will increase substantially if the CAFE penalty is adjusted to $14.00/0.1 mpg, a factor the agency should have incorporated into its analysis of the economic impact of the proposed increase. Finally, the IFR significantly overstates the options available to manufacturers for avoiding liability for civil penalties (even with credit trading). As discussed in Section 2, above, manufacturers have no technology options for compliance with respect to Model Years 2014 – 2016, and very limited technology options (if any) for Model Years 2017-2018. With respect to credit trading, the IFR did not account for the limitations on that option. By law, the domestic minimum passenger car CAFE standard cannot be met by purchasing CAFE credits at all; thus automakers may have to cover that gap by paying civil penalties. 4. CAFE Civil Penalties Are Formulaic and Not Subject to Being Compromised. Unlike nearly all civil penalty statutes, which establish maximum penalties but confer extensive discretion on the regulating agency to impose a lesser amount when circumstances warrant, the CAFE statute establishes a precise and immutable formula for determining the 22 Draft TAR Figure 3.15 showing the volume of credits traded between Model Years 2010 and 2014. 8 ADD-056 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page59 of 123 amount of civil penalties applicable to a shortfall to the fuel economy standards. NHTSA does not have any discretion to alter the civil penalty formula, nor to impose a lesser amount than that which the statute dictates.23 For this reason, the large CAFE penalty increase as set forth in the IFR would have a harsher and more direct effect than will occur in other programs and statutes administered by NHTSA, as well as the other civil penalty statutes over which the Improvements Act mandated a penalty increase. As noted above, NHTSA has acknowledged that the payment of civil penalties is a CAFE "compliance flexibility" that some manufacturers elect to undertake. In order to exercise this flexibility, the manufacturers must to be able to estimate the amount of the penalties far enough in advance to weigh that against the alternative path of making fleet changes to meet the standards. If the IFR were to be implemented as written, a number of manufacturers will have elected to pay civil penalties based on one set of assumptions and guidance from NHTSA, only to have a different penalty framework imposed at the eleventh hour without warning. This, coupled with the inability of NHTSA to compromise or adjust the civil penalties, (absent extremely rare circumstances that virtually never apply), means that NHTSA would effectively be unable to take into account the reasonable expectations of the manufacturer in its collection of civil penalties, in contradiction to the leadtime structure that Congress wrote into the CAFE statute from the beginning. 5. As CAFE Standards Rise, the Effective Penalty for Excess Gallons of Fuel Already Increases Automatically. We also note that since the fundamental goals of EPCA that was enacted in 1975 and EISA that was enacted in 2007 are to reduce oil consumption, it is important to note that the standards themselves have already accounted for inflation. NHTSA uses harmonic averaging for fleet calculations and adjustment factors for credit trades and transfers. These mechanisms ensure that gallons of fuel are properly reflected in the mathematics of compliance.24 It would be similarly appropriate to consider the gallons of excess fuel consumption in determining the final inflation adjustment, as outlined below: o Consider a theoretical manufacturer that made one passenger car in 1978 when the standard was 18 mpg. If that vehicle achieved only 17.9 mpg, the penalty for that vehicle would be $5.00. In its lifetime, that vehicle would use 60.6 gallons of fuel more than it would have had it achieved its 18 mpg target. On a gallon basis, that manufacturer’s penalty would have been $5.00/60.6 gallons or $0.083/gallon. 23 We note that 49 U.S.C § 32913 (a) allows NHTSA to compromise civil penalties under extremely rare circumstances (e.g., manufacturer insolvency or an Act of God, or a certification by the Federal Trade Commission that a reduction in the penalty is needed to prevent a substantial lessening of competition), but this provision has rarely if ever come into play and is fundamentally different in character than the typical ability of government agencies to compromise penalties based on enforcement discretion. 24 NHTSA already adjusts traded credits on a "gallon" basis to comply with the statutory requirements of 49 U.S.C. 32903(f) to ensure that traded credits are adjusted to preserve total oil savings. See 49 CFR 536.4(c). 9 ADD-057 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page60 of 123 o Now consider that same theoretical manufacturer in 2015, again making one passenger car when the standards were 36.2 mpg. If again that manufacturer failed to meet its fuel economy target by 0.1 mpg, that vehicle would use 14.9 gallons more than it would have had it met its target. The gallon based penalty would be $5.50/14.9 gallons or $0.369/gallon in 2015 dollars. Converting to 1975 dollars using the OMB factor of 4.3322 would yield $0.085/gallon, effectively the same penalty on a per-gallon basis as the 1978 example. The methodology by which the excess fuel consumption is calculated is similar to NHTSA’s methods when converting CAFE credits to gallons saved in the document "LD-CAFE credit gallon equivalent."25 The example above demonstrates the well-known fact that fuel consumption and fuel economy have a non-linear relationship. As a result of this non-linearity, increases in CAFE standards build in an "inflation adjustment" under which manufacturers pay more and more for each excess gallon of fuel used due to a failure to meet the standards. This is illustrated by the graph below, which shows that even if CAFE penalties remain at $5.50/0.1 mpg, the per-gallon penalty will increase due to the increasing stringency of the CAFE program. If the penalties were suddenly increased to $14.00/0.1mpg, the per-gallon penalty amount would far exceed the 250% maximum increase called for in the Improvements Act. Request for Relief In light of the above, the Alliance and Global Automakers petition NHTSA to withdraw the Interim Final Rule as it pertains to CAFE civil penalties and reissue a new Interim Final Rule that applies the inflation adjustment to the base year of 2007. If NHTSA is unable to agree that 2007 is the base year, this petition urges NHTSA to withdraw the IFR and to undertake a notice-25 Available at http://www.nhtsa.gov/Laws+&+Regulations/CAFE+-+Fuel+Economy/CAFE_credit_status (last accessed July 30, 2016). 10 ADD-058 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page61 of 123 and-comment rulemaking as authorized by the Improvements Act that accomplishes the following objectives: 1. The Baseline Year for the Inflation Adjustment Should Be 2007. The Alliance and Global Automakers request that NHTSA withdraw the Interim Final Rule as it pertains to CAFE civil penalties and reissue a new Interim Final Rule that applies the inflation adjustment to the base year of 2007. 2. If NHTSA Does Not Concur that 2007 is the Proper Baseline Year, then the Final Rule Should Impose a Smaller Increase for the First Penalty Adjustment. The Improvements Act imposed a largely non-discretionary obligation on agencies to adjust their civil penalties for inflation according to a specified formula that was created by the Office of Management and Budget (OMB). The Improvements Act does, however, contain an exception permitting the head of an agency to adjust the amount of a civil penalty by less than the formula would otherwise dictate if the head of the agency finds that increasing the civil penalty by the required amount would have a negative economic impact. If the Director of OMB concurs with the agency’s finding, then a smaller increase may be adopted for the first adjustment (which then establishes the baseline for future adjustments.) It is appropriate for NHTSA to exercise this discretion with respect to the CAFE penalties. As noted above, the Volpe model for CAFE cost estimates shows an average annual cost increase for CAFE compliance of approximately $1 billion, more than ten times higher than the threshold for "significance" under Executive Order 12866 – and significantly higher than the $50 million estimate that NHTSA included in the IFR. Moreover, NHTSA should seek public comment on whether the increase dictated by the Improvements Act would have other cascading effects on the assumptions underlying NHTSA’s CAFE analysis, such as whether the higher penalties would alter the conclusions about the economic practicability of the Model Year 2017-2021 standards and how the increased civil penalty amount is affecting the market price of tradeable CAFE credits. 3. The Final Rule Should Clarify that the Penalty Increases Will Not Apply to Open Model Years. Given the unique nature of the CAFE program, in which paying a penalty is an accepted alternative to meeting the fuel economy standards and in which NHTSA has no authority to alter the statutory penalty formula, it would be particularly unfair to apply any increased penalty to a manufacturer with respect to its Model Years 2014, 2015 and 2016 fleet performance that was completed in accordance with prior CAFE guidance from NHTSA. The CAFE compliance files are still open for at least some manufacturers with respect to Model Years 2014 and 2015, and Model Year 2016 is open for all manufacturers; however, it is obviously too late for manufacturers to make any changes to these fleets, even if leadtime were not an issue. Thus, applying the IFR’s increased penalty levels to these model years would be purely punitive with absolutely no environmental or fuel-saving benefit and would unfairly disturb the longstanding 11 ADD-059 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page62 of 123 expectations of the manufacturers in light of the previous CAFE standard-setting rulemaking by NHTSA. NHTSA’s sister agency, Federal Motor Carrier Safety Administration, has already determined not to apply its increased penalties to open matters because "recalculating the amount of the proposed penalty would not induce further compliance."26 Similar logic can be applied in the case of CAFE fines. As noted above, the CAFE compliance fines are open for some 2014, 2015 and all 2016 Model Years. Further efforts to comply with those Model Years simply cannot occur. NHTSA should observe that fact, and draw the same conclusion. It is acknowledged that FMCSA has a separate statutory provision to exercise its penalty authority in a manner that induces further compliance, and that the CAFE statute does not confer the same discretion on NHTSA. The point here is that another DOT agency has decided that it would be unreasonable to apply the new penalties retroactively, noting that applying an inflation adjustment to cases awaiting administrative review could raise questions of equity. 4. The Final Rule Should Apply the Improvements Act in a Manner that is Consistent with the CAFE Statute. Beyond the issues of open model years and the first penalty adjustment, NHTSA should set forth an overall timetable and approach for penalty increases that makes sense in light of the various factors discussed above. In particular, NHTSA should reset the adjustment against the 2007 baseline. In the alternative, NHTSA should seek comment on whether a lower initial adjustment to the CAFE penalties is warranted, given the strict penalty formula in the CAFE statute and the agency’s lack of discretion to adjust the formula. And, because increased penalties have the effect of making the CAFE standard more stringent, NHTSA should also seek comment on a reasonable timetable for penalty increases that enable manufacturers to adjust their compliance plans as appropriate. Because the CAFE statute provides for at least 18 months leadtime for more stringent standards, it would not be appropriate for any penalty increases to be imposed before Model Year 2019. Any subsequent penalty increases should be announced at least 18 months prior to the effective date of each increase. 5. NHTSA Should Defer Assessing Any CAFE Penalties Until the Issues Raised by This Petition Are Fully Resolved. Because of the unique nature of the CAFE program, the Alliance and Global Automakers urge NHTSA to refrain from assessing any CAFE penalties for Model Year 2014, 2015 or 2016 until the concerns outlined in this petition are fully resolved. While the IFR specified that the adjustment for CAFE penalties will take effect on August 4, 2016, there will be unnecessary confusion should NHTSA proceed with imposing CAFE penalties during the pendency of this petition. As there is no statutory imperative specifying a schedule for resolving CAFE penalties, a modest suspension of activity on open CAFE penalty cases while the issues raised by this petition are resolved would help avoid that confusion, or any unnecessary proceedings under the refund provisions of Section 32903(h) of the CAFE statute. 26 81 Fed. Reg. 41453, 41454 (June 27, 2016). 12 ADD-060 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page63 of 123 Conclusion The Alliance and Global Automakers respectfully request NHTSA to act promptly to withdraw the IFR and reissue a new IFR that applies the inflation adjustment to the base year of 2007. If NHTSA is unable to agree that 2007 is the base year for which the CAFE penalty was reset, we urge NHTSA to withdraw the IFR and undertake a notice-and-comment rulemaking to consider an appropriate civil penalty adjustment for the CAFE program, taking into account the unique interplay between the stringency of the CAFE standard and the civil penalty levels. Any such penalty increase should 1) not apply to open model years; 2) impose a smaller increase for the first penalty adjustment (either the adjustment applicable to the 2007 baseline or such other smaller increase as NHTSA determines by rulemaking); and 3) provide overall consistency with the goals and directives of the CAFE statute. We appreciate NHTSA’s consideration of this very important request. Representatives of both the Alliance and Global Automakers are available to meet with NHTSA to discuss this petition in more detail. Sincerely, Chris Nevers Julia Rege Vice President of Energy and Environment Director, Environment and Energy Affairs Alliance of Automobile Manufacturers Association of Global Automakers Cc: Thomas Healy, NHTSA James Tamm, NHTSA Ryan Harrington, DOT Kevin Green, DOT 13 ADD-061 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page64 of 123 Exhibit H ADD-062 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page65 of 123 UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT NATURAL RESOURCES DEFENSE COUNCIL, INC., et al., Petitioners, v. Case No. 17-2780 NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION, et al., Respondents. DECLARATION OF LUKE TONACHEL I, Luke Tonachel, state and declare as follows: 1. I am the Director of the Clean Vehicles and Fuels Project at the Natural Resources Defense Council (NRDC). I have been employed by NRDC for the past 13 years. I have personal knowledge of the subject matter of this declaration and, if called as a witness, could and would competently testify as to its contents. 2. I received my Bachelor of Science Degree in Mechanical Engineering from the University of Rochester and my Master of Public Policy Degree from the University of California, Berkeley. 3. I have extensive professional experience working on clean transportation policies at the state and federal level. I have provided detailed technical comments on clean and efficient vehicle regulatory policies, 1 ADD-063 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page66 of 123 such as the Corporate Average Fuel Economy standards, through proceedings conducted by the National Highway Traffic Safety Administration and the Environmental Protection Agency and state environmental and utility regulatory agencies. I have conducted detailed analysis of environmental and economic impacts to support comments and testimony before the agencies and have been a lead author of recent reports including Supplying Ingenuity II: U.S. Suppliers of Key Clean, Fuel-Efficient Vehicle Technologies by NRDC and the BlueGreen Alliance and the Environmental Assessment of a Full Electric Transportation Portfolio by NRDC and the Electric Power Research Institute. 4. For decades, a core part of NRDC’s work has been decarbonizing and cleaning up transportation sector emissions, through strengthening fuel economy and carbon-pollution standards for passenger vehicles and heavy-duty trucks, promoting policies encouraging the adoption of electric vehicles, and advocating for cleaner fuels. Our staff relies on various tools to achieve these goals, ranging from education and advocacy at the state and federal level to litigation. 5. Ensuring strong Corporate Average Fuel Economy (CAFE) standards is an essential part of our transportation work to reduce reliance on petroleum and associated pollution. Our advocacy on CAFE standards has included participating and submitting comments in the following rulemakings: Reforming the Automobile Fuel Economy Standards Program 2 ADD-064 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page67 of 123 (Docket No. 2003-16128); Average Fuel Economy Standards for Light Trucks Model Years 2008-2011 (Docket No. 2006-24306); Average Fuel Economy Standards for Passenger Cars and Light Trucks, Model Years 2011-2015 (Docket No. NHTSA-2008-0089) and the accompanying environmental review process; Light-Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards for Model Years 2012-2016 (Docket No. EPA-HQ-OAR-2009-0472; NHTSA-2009-0059); and 2017 and Later Model Year Light-Duty Vehicle Greenhouse Gas Emissions and Corporate Average Fuel Economy Standards (Docket No. EPA-HQ-OAR-2010-0799; NHTSA-2010-0131) and the accompanying environmental review process. NRDC also helped litigate Center for Biological Diversity v. National Highway Traffic Safety Administration, 538 F.3d 1172 (9th Cir. 2008), which challenged the 2006 final rule setting CAFE standards for model years 2008-2011 and the environmental analysis accompanying the rule. 6. The National Highway Traffic Safety Administration (NHTSA) enforces compliance with its CAFE standards by imposing civil monetary penalties on manufacturers that violate the standards. 7. NHTSA uses the following formula to calculate the appropriate penalty: (the civil penalty rate) times (each tenth of a mile per gallon by which the manufacturer’s fleet falls short of the applicable CAFE standard) times (the number of vehicles in the manufacturer’s non-compliant fleet). 3 ADD-065 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page68 of 123 8. The Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 requires federal agencies to adjust their civil penalties for inflation, to maintain the deterrent effect of these penalties and promote compliance with the law. Pursuant to this requirement, NHTSA in December 2016 raised the penalty rate to $14 for Model Years 2019 and after. NHTSA had last adjusted the penalty rate to account for inflation in 1997, from $5 to $5.50. 9. Incentivizing manufacturer compliance with CAFE standards depends on a penalty structure which is strong enough to cause manufacturers to improve the fuel economy of new passenger vehicles rather than to pay a fine. 10. NHTSA’s own data underscores the importance of an appropriately-designed penalty. Based on data from NHTSA’s Public Information Center and its Projected Fuel Economy Performance Report, NHTSA has projected that, as CAFE standards continue to rise, more manufacturers are expected to fall short of the standards in Model Years (MY) 2016 and 2017, when the penalty rate is only $5.50. NRDC used this data to prepare Figure 1 below. Moving forward, it will become increasingly important to ensure that the penalty is strong enough to incentivize greater compliance. 4 ADD-066 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page69 of 123 Figure 1: CAFE Actual versus Standard History and Near-Term Projections 11. NRDC’s analysis of the CAFE penalty adjustment shows that $14 per tenth of a mile provides an appropriate regulatory incentive by making it more economically attractive for manufacturers to meet the standards than to pay the penalty. We based our analysis on the outputs of NHTSA’s own publicly available Compliance and Effects Modeling System1 used to assess CAFE standards (commonly referred to as "Volpe model"), and which utilizes the agency’s updated set of assumptions under the Midterm Evaluation process as part of the Technical Assessment Report (TAR 2016).2 1Available at https://www.nhtsa.gov/corporate-average-fuel-economy/compliance-and-effects-modeling-system. 2Available at https://www.epa.gov/regulations-emissions-vehicles-and-engines/midterm-evaluation-light-duty-vehicle-greenhouse-gas#TAR. 5 ADD-067 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page70 of 123 12. Based on the results of the Volpe model runs, passenger vehicle and light truck manufacturers are estimated to achieve a fleetwide average fuel economy of 30.9 miles per gallon (mpg) in MY2016. For MY2019, the same manufacturers are estimated to achieve an industry fleetwide average of 34.7 mpg—or an increase of roughly 4 mpg compared to MY2016. For MY2020, the estimated fleetwide average is 35.4 mpg—an increase of 4.5 mpg above MY2016. 13. Using the NHTSA Volpe model, which includes the agency’s updated technology cost inputs from 2016, NRDC calculated the marginal cost of compliance for improving fuel economy beyond the MY2016 levels. NRDC also confirmed the marginal costs represented by the Volpe model by conducting a quadratic regression for the fuel economy cost curve. As shown in Table 1 below, which summarizes these marginal cost results, improving efficiency by 1 mpg would cost approximately $107 per vehicle; improving efficiency by 2 mpg would cost an additional $114 above the initial $107; and so on. Table 1: Marginal Cost Results Marginal Marginal MPG Cost Cost Increase ($/MPG) ($/0.1MPG) 1 107 10.7 2 114 11.4 3 120 12.0 4 126 12.6 5 132 13.2 6 139 13.9 7 145 14.5 6 ADD-068 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page71 of 123 14. Thus, with a penalty rate of $14 per tenth of a mile per gallon (or $140 per mpg), it would be more economically attractive for manufacturers to improve fuel economy by 4 mpg to meet the MY2019 achieved levels (as compared to MY2016) than to pay the penalty. Conversely, with a penalty rate of $5.50 per tenth of a mile per gallon (or $55 per mpg) it would be more economically attractive to not adopt fuel economy improvements and to pay the penalty instead. The same holds true for the 4.5 mpg increase required to meet the MY2020 levels. 15. NHTSA’s Volpe model further confirms that the updated penalty rate of $14 would improve compliance. Using the Volpe model, NRDC modeled two scenarios: (a) where the penalty rate remained at $5.50 ("Flat Penalty CAFE"); and (b) where the updated penalty rate of $14 applies in MY2019 and after ("Increased Penalty CAFE"). NRDC also adjusted the model to assume that manufacturers will behave in an economically rational manner and choose to pay the penalty when it is less expensive than the costs of compliance. As illustrated in Figure 2 below, NRDC found that a penalty rate of $5.50 leads to under-compliance with the CAFE standards, while the updated penalty rate of $14 incentivizes compliance. 7 ADD-069 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page72 of 123 Figure 2: Effects of Penalty on Full Manufacturer Penalty Response 16. Applying the $14 penalty rate not only induces manufacturer compliance, it also brings significant net benefits to consumers. One output from the Volpe model is a summary of the social costs and benefits of a particular set of inputs. NRDC used two different Volpe model runs to compare the net societal benefits of a $14 penalty rate to those of a $5.50 penalty rate. The model shows that the societal benefits of a $14 penalty rate (i.e., fuel savings, decreased refueling time, greater energy security, decreased pollution) greatly outweigh the societal costs (i.e., technology and maintenance costs, safety and congestion issues), when that penalty rate is applied to MY2019 and beyond. Table 2: Economic Impact of $14 Penalty Rate with Full Manufacturer Penalty Response (Nominal $M) (Nominal $M) 2018 2019 2020 2021 2022 2023 Social Costs 393 977 1,643 2,123 2,141 2,209 Societal 1,234 3,054 4,945 6,047 5,931 6,399 Benefits Net Benefit 841 2,077 3,303 3,924 3,789 4,190 8 ADD-070 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page73 of 123 ADD-071 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page74 of 123 Exhibit I ADD-072 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page75 of 123 ADD-073 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page76 of 123 ADD-074 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page77 of 123 Exhibit J ADD-075 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page78 of 123 DECLARATION OF ANDREW LINHARDT I, Andrew Linhardt, declare as follows: 1. I am the Deputy Legislative Director for Transportation at Sierra Club. I was formerly the organization’s Associate Director for Legislative and Administrative Advocacy. 2. In my current role, I manage and coordinate Sierra Club’s policies and efforts on behalf of its members to advocate for greater fuel efficiency for our nation’s vehicle fleet. I also serve as the organization’s lead lobbyist on transportation issues. While at the Sierra Club, I have worked on numerous matters involving the National Highway Traffic Safety Administration’s (NHTSA) corporate average fuel (CAFE) standards and the Environmental Protection Agency’s (EPA) greenhouse gas regulations for light-duty and heavy-duty vehicles. 3. The Sierra Club is a non-profit membership organization incorporated under the laws of the State of California, with its principal place of business in Oakland. The Sierra Club’s mission is to explore, enjoy and protect the wild places of the Earth; to practice and promote the responsible use of the Earth’s resources and ecosystems; to educate and enlist humanity to protect and restore the quality of the natural and human environment; and to use all lawful means to carry out these objectives. ADD-076 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page79 of 123 4. As part of carrying out this mission, for decades the Sierra Club has used the traditional tools of advocacy--organizing, lobbying, litigation, and public outreach—to push for policies that decrease air and climate pollution by reducing our nation’s dependence on fossil fuels. 5. Sierra Club has a long history of involvement in vehicle regulations aimed at tackling pollution and lessening our dependence on oil as a transportation fuel. Together with other organizations, Sierra Club has in the past challenged NHTSA’s CAFE standards for light-duty vehicles for failure to comply with the relevant requirements under the Energy Policy and Conservation Act. Center for Biological Diversity v. National Highway Traffic Safety Administration, 538 F.3d 1172 (9th Cir. 2008). 6. Sierra Club has long advocated for climate regulations for vehicles. In 2002, Sierra Club and other organizations filed a lawsuit against EPA requesting the agency to regulate greenhouse gases from motor vehicles. EPA settled that lawsuit and denied the petition in 2003, on the grounds that the agency lacked authority to do so. Sierra Club and numerous states and environmental organizations challenged that denial, ultimately leading to the Supreme Court’s decision in Massachusetts v. EPA, which held that greenhouse gases are air pollutants subject to regulation under the Clean Air Act. 549 U.S. 497 (2007). 7. The Supreme Court’s ruling resulted in EPA’s issuance of a finding ADD-077 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page80 of 123 that six greenhouse gases endanger the public health and welfare of current and future generations, which forms the basis of the agency’s greenhouse gas regulations for light-duty and heavy-duty vehicles. Endangerment and Cause or Contribute Findings for Greenhouse Gases Under Section 202(a) of the Clean Air Act, 74 Fed. Reg. 66,496 (Dec. 15, 2009). 8. In 2010, NHTSA and EPA jointly issued CAFE and greenhouse gas emission standards for light-duty vehicles. Light-Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards; Final Rule, 75 Fed. Reg. 25,324 (May 7, 2010). Sierra Club and others commented on the proposed rule and intervened in the industry’s lawsuit challenging the standards. Coalition for Responsible Regulation, Inc. v. EPA, 684 F.3d 102 (D.C. Cir. 2012), rev’d on other grounds sub nom. Utility Air Regulatory Group v. EPA, 134 S. Ct. 2427 (2014). NHTSA and EPA updated these standards in 2012. 2017 and Later Model Year Light-Duty Vehicle Greenhouse Gas Emissions and Corporate Average Fuel Economy Standards, 77 Fed. Reg. 62,624 (Oct. 15, 2012). 9. In 2011, NHTSA and EPA adopted CAFE and greenhouse gas standards for heavy-duty trucks, updating these standards in 2016. Greenhouse Gas Emission Standards and Fuel Efficiency Standards for Medium-and Heavy-Duty Engines and Vehicles; Final Rule, 76 Fed. Reg. 57,106 (Sep. 15, 2011); Greenhouse Gas Emissions and Fuel Efficiency Standards for Medium-and ADD-078 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page81 of 123 Heavy-Duty Engines and Vehicles-Phase 2, 81 Fed. Reg. 73,478 (Oct. 25, 2016). Sierra Club and others intervened to defend those rules against industry challenges. Delta Construction Company v. EPA, 783 F.3d 1291 (D.C. Cir. 2015); Truck Trailer Manufacturers Association v. EPA, Nos. 16-1430, 16-1447 (D.C. Cir. 2017). 10. For years, Sierra Club has actively engaged in the rulemaking and litigation around EPA’s National Ambient Air Quality Standards that regulate criteria air pollutants, many of which are emitted by vehicles. These conventional pollutants contribute to the formation of smog and soot, which cause respiratory and heart disease, and even premature death. See, e.g., American Lung Association v. EPA, No. 17-1172 (D.C. Cir. 2017). 11. The Energy Policy and Conservation Act authorizes NHTSA to establish civil penalties for violations of the fuel economy standards, and to raise the amount of such penalties if it makes certain findings. The amount of the CAFE civil penalty was established by statute in 1975 and, for most of the duration of the program was set at $5.50 for each tenth of a mile per gallon that a manufacturer’s fleet, on average, falls short of its compliance obligation, multiplied by the number of vehicles in the fleet with this shortfall. 12. In 2015, Congress amended the Inflation Adjustment Act, directing all federal agencies to adjust their civil penalties following a formula set forth therein. ADD-079 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page82 of 123 To comply with the law, in July 2016 NHTSA issued an interim rule that adjusted the CAFE civil penalty from $5.50 to $14. Civil Penalties, 81 Fed. Reg. 43,524 (July 5, 2016). In response to industry’s petitions for reconsideration, in December 2016 NHTSA issued a final rule that provides that the $14 penalty rate applies to model year 2019 and later vehicles. Civil Penalties, 81 Fed. Reg. 95,489 (Dec. 28, 2016). 13. On July 6, 2017, NHTSA published two notices in the Federal Register. The first notice announced that the agency is reconsidering the December rule that adjusts the CAFE civil penalties for inflation. Civil Penalties, 82 Fed. Reg. 32,140 (July 12, 2017). The second notice indefinitely delays the effective date of that rule pending its reconsideration in order to allow for public comment. Civil Penalties, 82 Fed. Reg. 32,139 (July 12, 2017). This delay, which was issued without opportunity for public comment, is the basis for this lawsuit. 14. CAFE civil penalties are a critical part of Sierra Club’s advocacy to reduce pollution in the transportation sector because those penalties encourage automobile manufacturers to comply with the fuel economy standards. If Sierra Club’s challenge to NHTSA’s delay is successful, higher civil penalties will remain in place and influence automakers’ planning for compliance with the standards. It is critical that these higher penalties are properly implemented. ADD-080 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page83 of 123 ADD-081 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page84 of 123 Exhibit K ADD-082 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page85 of 123 1 DECLARATION OF KASSIA R. SIEGEL 2 I, Kassia R. Siegel, declare as follows: 3 1. I am the director of the Center for Biological Diversity’s Climate Law Institute. I 4 have personal knowledge of the facts and statements contained herein and, if called as a witness, 5 could and would competently testify to them. 6 2. The Center for Biological Diversity (the "Center") is a non-profit corporation with 7 offices in California and throughout the United States. The Center works to protect wild places 8 and their inhabitants. The Center believes that the health and vigor of human societies and the 9 integrity and wildness of the natural environment are closely linked. Combining conservation 10 biology with litigation, policy advocacy, and strategic vision, the Center is working to secure a 11 future for animals and plants hovering on the brink of extinction, for the wilderness they need to 12 survive, and by extension, for the spiritual welfare of generations to come. In my role as director 13 of the Center’s Climate Law Institute, I oversee all aspects of the Center’s climate and air quality 14 work. 15 3. The Center works on behalf of it members, who rely upon the organization to 16 advocate for their interests in front of state, local and federal entities, including EPA and the 17 courts. The Center has approximately 61,400 members. 18 4. The Center has developed several different practice areas and programs, including 19 the Climate Law Institute, an internal institution with the primary mission of curbing global 20 warming and other air pollution, and sharply limiting its damaging effects on endangered species, 21 their habitats, and human health for all of us who depend on clean air, a safe climate, and a healthy 22 web of life. 23 5. Global warming represents the most significant and pervasive threat to biodiversity 24 worldwide, affecting both terrestrial and marine species from the tropics to the poles. Absent 25 major reductions in greenhouse gas emissions, by the middle of this century upwards of 35 percent 26 of the earth’s species could be extinct or committed to extinction as a result of global warming. 27 With even moderate warming scenarios producing sufficient sea level rise to largely inundate 28 otherwise "protected" areas like the Everglades and the Northwest Hawaiian Islands, climate Declaration of Kassia R. Siegel Page 1 ADD-083 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page86 of 123 1 change threatens to render many other biodiversity conservation efforts futile. To prevent 2 extinctions from occurring at levels unprecedented in the last 65 million years, emissions of 3 carbon dioxide and other greenhouse gases must be reduced deeply and rapidly. Given the lag 4 time in the climate system and the likelihood that positive feedback loops will accelerate global 5 warming, leading scientists have warned that we have only a few decades, at most, to significantly 6 reduce greenhouse gas emissions if we are to avoid catastrophic effects. Deep and immediate 7 greenhouse gas reductions are required if we are to save many species which the Center is 8 currently working to protect, including but not limited to the polar bear, Pacific walrus, bearded 9 seal, ringed seal, ribbon seal, Kittlitz’s murrelet, American pika, Emperor penguin, and many 10 species of corals. Leading scientists have also stated that levels of carbon dioxide, the most 11 important greenhouse gas, must be reduced to no more than 350 parts per million (ppm) and likely 12 less than that, "to preserve a planet similar to that on which civilization developed and to which 13 life on Earth is adapted" (J. Hansen et al., Target Atmospheric CO2: Where Should Humanity 14 Aim?, 2 Open Atmospheric Sci. J. 217, 218 (2008)). 15 6. One of the Climate Law Institute’s top priorities is the full and immediate use of 16 the Clean Air Act to rein in greenhouse gases and other pollutants. The Clean Air Act is our 17 strongest and best existing tool for doing so, and we have long worked to enforce the Clean Air 18 Act’s mandates to accomplish this goal. For example, the Center was a Plaintiff in Massachusetts 19 vs. EPA, which resulted in the landmark Supreme Court decision finding that greenhouse gases are 20 pollutants under the Clean Air Act, which ultimately led to EPA’s first-ever rulemaking to reduce 21 greenhouse gas emissions from passenger cars and light trucks under section 202. That rulemaking 22 is comprised of the Endangerment and Cause or Contribute Findings for Greenhouse Gases 23 Under Section 202(a) of the Clean Air Act, 74 Fed. Reg. 66,496 (Dec. 15, 2009) ("Endangerment 24 Finding"), and the Light-Duty Vehicle Greenhouse Gas Emission Standards and Corporate 25 Average Fuel Economy Standards, 75 Fed. Reg. 25,324, 25,397 (May 7, 2010), updated twice 26 since then, the last time by EPA and the National Highway Traffic Safety Administration through 27 2025, 2017 and Later Model year Light-Duty Vehicle Greenhouse Gas Emissions and Corporate 28 Average Fuel Economy Standards, Final Rule, 77 Fed. Reg. 62624 (Oct. 15, 2012). EPA affirmed Declaration of Kassia R. Siegel Page 2 ADD-084 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page87 of 123 1 these latest light-duty vehicle standards in a mid-term evaluation. Final Determination on the 2 Appropriateness of the Model Year 2022-2025 Light-Duty Vehicle Greenhouse Gas Emissions 3 Standards under the Midterm Evaluation (January 2018), available at 4 https://nepis.epa.gov/Exe/ZyPDF.cgi?Dockey=P100QQ91.pdf. The Center submitted comments to 5 each of those successor light duty vehicle rules, as well as to the first medium duty/heavy duty 6 vehicle rule and its proposed successor, the Greenhouse Gas Emissions and Fuel Efficiency 7 Standards for Medium-and Heavy-Duty Engines and Vehicles, Phase 2; Proposed Rule, 80 Fed. 8 Reg. 40138 (July 13, 2015). 9 7. EPA’s rulemaking to reduce greenhouse gases from passenger vehicles preceded 10 significant additional regulatory activity for greenhouse gases under other Clean Air Act 11 programs, including rulemakings that enforce the Clean Air Act’s PSD permitting program and 12 best available control technology ("BACT") requirements for greenhouse gases emitted by 13 stationary sources and implementation of New Source Performance Standards for various 14 industrial facilities. E.g., Prevention of Significant Deterioration and Title V Greenhouse Gas 15 Tailoring Rule, 75 Fed. Reg. 31,514 (2010). EPA’s rulemakings were upheld in 2012 in Coalition 16 for Responsible Regulation v. EPA (D.C. Cir. 2012) 684 F.3d 102, a matter in which the Center 17 submitted an amicus brief. The Supreme Court affirmed Coalition for Responsible Regulation in 18 part, upholding EPA’s authority to require BACT for greenhouse gas emissions from facilities that 19 must obtain PSD permits due to their potential to emit non-greenhouse gas pollutants. See Util. 20 Air Reg. Group v. EPA, 573 U.S. __, 134 S. Ct. 2427, 2449 (2014). 21 8. We have also worked to obtain an endangerment finding and emission standards 22 for greenhouse gases from aircraft for nearly a decade. In 2007, we and others petitioned EPA to 23 issue an endangerment finding and greenhouse gas standards for aircraft under Clean Air Act 24 section 231. When EPA failed to respond, we and others sued EPA for unreasonable delay in 25 2010, and obtained a court order requiring EPA to undertake an endangerment finding for aircraft 26 in 2011. Center for Biological Diversity v. EPA, 794 F. Supp. 2d 151 (D.D.C. 2011). When EPA 27 failed to act, we notified it of our intent to sue for unreasonable delay in 2014. In 2015, EPA 28 released a proposed endangerment finding and an advance notice of proposed rulemaking for Declaration of Kassia R. Siegel Page 3 ADD-085 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page88 of 123 1 aircraft greenhouse gases, Proposed Finding That Greenhouse Gas Emissions from Aircraft Cause 2 or Contribute to Air Pollution That May Reasonably Be Anticipated To Endanger Public Health 3 and Welfare and Advance Notice of Proposed Rulemaking, Proposed Rule, 80 Fed. Reg. 37758 4 (July 1, 2015). When EPA failed to finalize the endangerment finding, we filed a second lawsuit in 5 April 2016 to compel EPA to act. Center for Biological Diversity v. EPA, No. 1:16-CV-00681. 6 On August 15, 2016, EPA issued the Aircraft Endangerment Finding. 7 9. We also commented on EPA’s proposed rulemakings to set standards and 8 guidelines for greenhouse gas emissions from new, modified/reconstructed, and existing power 9 plants under Clean Air Act sections 111(b) and 111(d). (Center comments, EPA-EPA-HQ-OAR-10 2011-0660-10171 [June 22, 2012]; HQ-OAR-2013-0495-10119 [May 9, 2014]; EPA-HQ-OAR-11 2013-0602-25292 [Dec. 1, 2014].) We sought leave from this Court to intervene on behalf of EPA 12 in the ongoing litigation over both the existing and the new, modified/reconstructed final power 13 plant greenhouse gas rulemakings, and were granted that leave. West Virginia v. EPA, No. 15-14 1363 (D.C. Cir. filed October 23, 2015); North Dakota v. EPA, No. 15-1381 (D.C. Cir. Oct. 23, 15 2015). We have since actively participated in that litigation through numerous filings. We have 16 also been involved in many other Clean Air Act administrative proceedings and legal actions 17 seeking to enforce the Act’s provisions for greenhouse gases. For example, the Center and others 18 filed a lawsuit challenging an EPA rule exempting large-scale biomass-burning facilities from 19 carbon dioxide limits under the Clean Air Act. See Center for Biological Diversity v. EPA, 722 20 F.3d 401 (D.C. Cir 2013). On July 12, 2013, this Court overturned EPA’s exemption for 21 "biogenic carbon dioxide," confirming that Clean Air Act limits on carbon dioxide pollution apply 22 to industrial facilities that burn biomass, including tree-burning power plants. Id. We have 23 participated in numerous other legal actions, including but not limited to Sierra Club v. EPA, 762 24 F.3d 971 (9th Cir. 2014) (challenging EPA’s decision to exempt the Avenal power plant from 25 Clean Air Act requirements applicable at the time of permit issuance), and Resisting 26 Environmental Destruction on Indigenous Lands v. EPA, 716 F.3d 1155 (9th Cir. 2013) 27 (challenging errors in air permits that would allow Shell to conduct exploratory drilling in the 28 Arctic ocean). In September, 2010, we petitioned EPA to issue greenhouse gas standards for Declaration of Kassia R. Siegel Page 4 ADD-086 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page89 of 123 1 locomotive engines pursuant to Clean Air Act section 213(a)(5). Petition for Rulemaking Under 2 the Clean Air Act to Reduce Greenhouse Gas and Black Carbon Emissions from Locomotives 3 (Sept. 21, 2010). In December 2009, we petitioned EPA to designate greenhouse gases as criteria 4 air pollutants under Clean Air Act section 108 and to issue National Ambient Air Quality 5 Standards (NAAQS) sufficient to protect public health and welfare. Petition to Establish National 6 Pollution Limits for Greenhouse Gases Pursuant to the Clean Air Act (Dec. 2, 2009). These 7 examples are illustrative of our advocacy in this area, not exhaustive. 8 10. In addition to our work on greenhouse pollution, the Center has worked through the 9 Clean Air Act to address other pollutants that adversely impact biodiversity and human health. 10 For example, we filed suit against EPA for failing to review and revise the air quality criteria for 11 oxides of nitrogen and sulfur oxides and the NAAQS for nitrogen dioxide and sulfur dioxide. This 12 case resulted in a court-ordered settlement agreement setting forth deadlines for EPA to update 13 these critically important standards. On February 9, 2010, EPA issued updated primary NAAQS 14 for nitrogen dioxide. Primary National Ambient Air Quality Standards for Nitrogen Dioxide; 15 Final Rule, 75 Fed. Reg. 6474 (February 9, 2010). On June 22, 2010, EPA issued updated primary 16 NAAQS for sulfur dioxide. Primary National Ambient Air Quality Standard for Sulfur Dioxide; 17 Final Rule, 75 Fed. Reg. 35520 (June 22, 2010). On April 3, 2012, EPA decided not to revise the 18 40-year-old secondary NAAQS for sulfur and nitrogen oxides, despite acknowledging ongoing 19 harm to terrestrial and aquatic ecosystems from acid rain and other depositional pollution. 20 Secondary National Ambient Air Quality Standards for Oxides of Nitrogen and Sulfur, 77 Fed. 21 Reg. 20218 (April 3, 2012). We challenged the latter decision as contrary to the Clean Air Act. 22 See Ctr. for Biological Diversity v. EPA, 749 F.3d 1079 (D.C. Cir. 2014). We also filed suit in 23 2010 against EPA for failing to meet numerous deadlines for limiting dangerous particle pollution, 24 including deadlines for: (a) determining whether areas in five western states are complying with 25 existing air pollution standards, and (b) ensuring that states are implementing legally required 26 plans to meet the standards. Ctr. for Biological Diversity v. Jackson, N.D. Cal. No. CV 10-1846 27 MMC (filed April 29, 2010). This case resulted in another settlement establishing deadlines for 28 EPA to carry out these important duties. Declaration of Kassia R. Siegel Page 5 ADD-087 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page90 of 123 1 11. On October 1, 2015, the Center filed a petition with NHTSA requesting the agency 2 to increase civil penalties applicable to manufacturers whose vehicle fleets fail to meet the annual 3 average corporate fuel efficiency standards ("CAFE standards"). Those penalties are established 4 under the Energy Policy and Conservation Act, 39 U.S.C. § 32912(b) ("EPCA"), and apply to 5 every one-tenth of a mile per gallon that a manufacturer’s average corporate fuel efficiency 6 standards falls short of the applicable CAFE standards in any model year, multiplied by the 7 number of vehicles failing to reach that standard. The Center pointed out that the penalty amount 8 of $5.50 had not been increased and noted that some automobile manufacturers elect to pay 9 penalties rather than comply with NHTSA’s CAFE standards, resulting in increased emissions of 10 greenhouse gases and other pollutants. A month later, on November 2, 2015, Congress enacted 11 the Federal Civil Penalties Inflation Adjustment Act Improvement Act ("2015 Civil Penalties 12 Adjustment Act"). The 2015 Civil Penalty Act requires federal agencies to adjust civil penalties 13 applicable to violations of statutes they implement to account for inflation, with the goal of 14 "deterring violations and furthering the policy goals embodied in such laws and regulations...." 15 Public Law 101-74, Title VII, § 701(b), sec. 2(a)(1). 16 12. In 2016, NHTSA implemented the 2015 Civil Penalties Adjustment Act and 17 increased CAFE penalties from $5.50 to $14. NHTSA took this step by means of a memorandum 18 entitled Implementation of the Federal Civil Penalties Inflation Adjustment Act Improvement Act 19 of 2015 for the Corporate Average Fuel Economy (CAFE) Program, available at 20 https://www.nhtsa.gov/sites/nhtsa.dot.gov/files/civilpenaltyincreaseupdate.pdf (July 18, 2016) 21 ("Civil Penalty Rule"). In response to a reconsideration petition, NHTSA delayed the effective 22 date of the Civil Penalty Rule to July 10, 2017. Final rule; response to petition for 23 reconsideration; response to petition for rulemaking, 81 Fed. Reg. 95489 (Dec. 28, 2016.) But on 24 July 12, 2017, NHTSA issued a new final rule, Final Rule; delay of effective date, 82 Fed. Reg. 25 32139 ("Delay Rule"), which delayed the Civil Penalty Rule’s effective date "indefinitely pending 26 reconsideration." Id. NHTSA provided neither notice nor opportunity to comment on the Delay 27 Rule. 28 Declaration of Kassia R. Siegel Page 6 ADD-088 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page91 of 123 1 13. NHTSA and EPA estimate that the CAFE standards save approximately 170 billion 2 gallons, or 4 billion barrels, of oil, and reduce greenhouse gas emissions by the some 2 billion 3 metric tons over the lifetime of the vehicles they covers. 77 Fed. Reg. 62627. The vehicles 4 regulated by the standards are responsible for some 60 percent of all U.S. transportation-related 5 fuel consumption and greenhouse gas emissions. Id. The ground-level ozone and particulate matter 6 emissions reductions the CAFE standards produce are critical components of the attainment of 7 primary National Ambient Air Quality Standards, significantly reducing the national inventory 8 and ambient concentrations of criteria pollutants, especially PM2.5 and ozone, id. at 62627, and 9 significantly reducing serious health issues, including premature mortality. Id. at 62629. Net 10 economic benefits from the CAFE standards are estimated to be in the range of $326 billion to 11 $451 billion. Id. at 62631. 12 14. The 2017-2025 light-duty vehicle greenhouse gas and CAFE standards are critical 13 to reducing the dangerous pollution caused by the nation’s vehicle fleet. The pollutants from these 14 vehicles include oxides of nitrogen, particulate matter, ground-level ozone, and greenhouse gases, 15 all of which endanger human health and welfare and cause serious adverse health effects to the 16 public, including members of the Center. These pollutants particularly affect persons living next to 17 busy highways and freeways. Short-term exposure to emissions of nitrogen dioxide "can aggravate 18 respiratory diseases, particularly asthma, leading to respiratory symptoms (such as coughing, 19 wheezing, or difficulty breathing), hospital admissions and visits to emergency rooms"; longer-20 term exposure "may contribute to the development of asthma and potentially increase 21 susceptibility to respiratory infections."1 Emissions of nitrogen oxides also contribute to the 22 formation of tropospheric ozone. Ozone can reduce lung function, harm lung tissue, and trigger a 23 variety of respiratory health problems in humans, and can damage "sensitive vegetation and 24 ecosystems, including forests, parks, wildlife refuges and wilderness areas."2 Exposure to 25 particulate matter can affect both the lungs and heart and cause premature death in people with 26 heart or lung disease, nonfatal heart attacks, aggravated asthma, decreased lung function, and 27 1 EPA, Basic Information about NO2, available at https://www.epa.gov/no2-pollution/basic-information-about-no2#Effects. 28 2 EPA, Ozone Basics, available at https://www.epa.gov/ozone-pollution/ozone-basics#effects. Declaration of Kassia R. Siegel Page 7 ADD-089 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page92 of 123 1 increased respiratory symptoms, such as irritation of the airways, coughing or difficulty 2 breathing.3 3 15. Center members suffer ill health effects directly traceable to the oxides of nitrogen, 4 particulate matter and ozone emissions from the light-duty vehicle fleet. Because low civil penalty 5 rates encourage non-compliance with CAFE standards, which can result in the nation’s vehicle 6 fleet’s failure to meet the stringency set by law, an indefinite delay of the adjusted penalties will 7 increase emissions of these pollutants and directly affect the health and well-being of our 8 members. Conversely, reversal of the Delay Rule will remove incentives for non-compliance, 9 reduce dangerous pollution, improve air quality and increase our members’ health and well-being. 10 16. The Center’s members rely on the organization to support efforts to increase fuel 11 efficiency and thereby reduce harmful pollution from vehicles, to enforce the provisions of EPCA, 12 the 2015 Civil Penalty Act, the Clean Air Act, and other laws, and to compel the light-duty vehicle 13 fleet to meet the actual stringency levels (both for CAFE standards and for greenhouse gas 14 emissions) NHTSA and EPA promulgate. 15 17. The Center’s members also rely on the organization to protect their procedural and 16 informational rights. As shown above, the Center, on behalf of its members, frequently comments 17 on agency rulemakings, including many of the regulations affecting motor vehicles, and the Center 18 disseminates the information it obtains, advocates on behalf of more stringent and effective 19 standards, and seeks to enforce applicable laws and regulations to protect its members’ health and 20 well-being from the negative effects of vehicle pollution. Because the Delay Rule was 21 implemented without notice and an opportunity to comment, the Center and its members were 22 deprived of the opportunity to weigh in and be heard concerning the ill effects of this rule, to 23 disseminate information about NHTSA’s intended actions to its members, and to seek to change 24 the outcome. The lack of notice and comment directly injured the Center’s and its members’ 25 procedural and informational rights. 26 27 3 EPA, Health and Environmental Effects of Particulate Matter (PM), available at 28 https://www.epa.gov/pm-pollution/health-and-environmental-effects-particulate-matter-pm. Declaration of Kassia R. Siegel Page 8 ADD-090 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page93 of 123 1 18. Conversely, a reversal of the Delay Rule would require NHTSA to provide notice 2 and comment to the public and follow the applicable procedural rules if it again determined to 3 alter the effective date of the Civil Penalty Rule. Providing notice and the opportunity to comment 4 would allow the Center, on behalf of its members, and those members themselves to submit 5 comments that may influence the agency’s ultimate decision and lead it to retain the 2019 6 effective date. Those actions would address both the substantive and the procedural harm caused 7 by the indefinite delay of the Civil Penalties Rule. 8 9 I declare under penalty of perjury under the laws of the United States of America that the 10 foregoing is true and correct. Executed on August 31, 2017, at Oakland, California. 11 12 13 Kassia R. Siegel 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Declaration of Kassia R. Siegel Page 9 ADD-091 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page94 of 123 Exhibit L ADD-092 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page95 of 123 ADD-093 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page96 of 123 ADD-094 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page97 of 123 ADD-095 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page98 of 123 ADD-096 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page99 of 123 ADD-097 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page100 of 123 Exhibit M ADD-098 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page101 of 123 UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT NATURAL RESOURCES DEFENSE COUNCIL, INC., et al., Petitioners, v. Case No. 17-2780 NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION, et al., Respondents. DECLARATION OF KATHLEEN WOODFIELD I, Kathleen Woodfield, state and declare as follows: 1. I am a member of the Natural Resources Defense Council (NRDC). I joined NRDC about 15 years ago because I was concerned about air pollution in my community. I rely on NRDC to advocate on behalf of me and the health of my community. 2. I live in San Pedro, California. I have lived within the same few blocks since 1985. San Pedro is part of the City of Los Angeles, and is adjacent to the Port of Los Angeles and the community of Wilmington. 3. San Pedro falls within the South Coast Air Basin, a region that suffers from some of the worst air quality in the nation. According to the American Lung Association, it is the most ozone-polluted region in the country. Air quality in the South Coast Air Basin violates federal and state 1 ADD-099 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page102 of 123 standards for ozone and particulate matter, among other pollutants. These pollutants can create and exacerbate cardiovascular and respiratory problems such as asthma. 4. The air quality in San Pedro is especially affected by emissions of pollutants caused by fuel production, transportation, and consumption. My home is only a few blocks away—or about a half-mile, as the crow flies—from Interstate 110, one of the most heavily travelled urban highways in the country. I also live close to several refineries in Wilmington: less than four miles from the Phillips 66 refinery and about six miles from the Valero and Tesoro refineries. The fuel and byproducts produced in these refineries are often stored nearby, including massive amounts of highly volatile butane at the Rancho LPG facility only two miles from my house. These products are also transported via rail and trucks through my community. 5. I am deeply concerned about the health risks I face from breathing air pollution caused by fuel consumption and production. The health impacts associated with air pollution are extensive, and more information about those impacts comes forward regularly. Older adults, like myself, are especially at risk because our bodies are less able to compensate for the effects of environmental hazards. I suffer from chronic sinusitis, an inflammation of the sinuses that can be caused by air pollution. My husband has had throat cancer and also suffered from pneumonia this past year. 2 ADD-100 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page103 of 123 6. Because of these health risks, I strongly support all efforts to reduce air pollution, including stringent Corporate Average Fuel Economy (CAFE) standards. I believe it is critically important to have rules in place that help keep the air as clean as possible. Increased fuel economy translates to less fuel consumed and refined—and therefore fewer emissions of dangerous air pollutants. For these reasons, I drive a hybrid Toyota Prius. 7. I understand that the National Highway Traffic Safety Administration (NHTSA) enforces the CAFE standards by assessing civil penalties for non-compliance. I believe it is critically important that the penalty be high enough to deter violations. If paying the penalty is cheaper than implementing technological improvements to comply with the CAFE standards, more automakers will choose to violate those standards. 8. I also understand that NHTSA in 2016 had increased the penalty rate for CAFE standard violations from $5.50 to $14 per tenth of a mile per gallon for Model Year 2019-and-after vehicles. However, after the change in administration, NHTSA in 2017 indefinitely delayed the effective date of that increase, and did so without providing notice or an opportunity to comment. 9. I am strongly opposed to any delay of the effective date of the penalty increase. I believe it is vitally important that auto manufactures have the proper incentives to invest in cleaner technologies as they design and produce their Model Year 2019-and-after vehicles. Any delay in the 3 ADD-101 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page104 of 123 penalty increase will likely cause more auto manufacturers to violate the CAFE standards, resulting in increased fuel consumption and production and emissions of dangerous air pollutants—and even worse air quality and public health in communities like my own. Relaxing fuel-economy standards or penalties for noncompliance is unconscionable, really. Wherever possible, the government should try to direct costs back to the industry itself—and not externalize the health costs on people who happen to live in vulnerable areas. 10. I am also very unhappy with NHTSA’s failure to provide notice or an opportunity to comment before indefinitely delaying the effective date of the penalty increase. Had NHTSA allowed for public input on the delay, I would have expected NRDC to submit comments strongly opposing any delay. I am always looking for NRDC to be in the room, so to speak, advocating on behalf of me and the many other NRDC members whose health is negatively affected by air pollution. I also expect the California Air Resources Board, South Coast Air Quality Management District, and other public health organizations would have weighed in to oppose any delay. 11. These are public health issues—and if the government is not listening to the public, it is creating policy in a bubble. If the government is only listening to industry and looking at what is advantageous to their bottom line, the government is not taking into consideration the externalized costs and health impacts on the citizens that breathe the air. 4 ADD-102 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page105 of 123 ADD-103 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page106 of 123 Exhibit N ADD-104 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page107 of 123 DECLARATION OF DIANA HUME I, Diana Hume, declare as follows: 1. My name is Diana Hume and I am over the age of 18 and competent to give this declaration. All of the following information is based on my experience and personal knowledge. 2. I have lived in Richmond, CA for 17 years. 3. I joined the Sierra Club in 2001. I joined the Club because I believe that the organization is very effective at using different advocacy strategies to protect and preserve our environment. Sierra Club represents my interests in litigation on matters that affect me and my community, and also participates in stakeholder processes related to the development of pollution regulations on my behalf. 4. I am retired. Previously I worked for the University of California, as a policy analyst at the President’s Office of General Counsel. 5. For the past 17 years, my partner and I have lived in a WWII development called Atchison Village, which is located adjacent to the Richmond Parkway and the Burlington Northern Santa Fe (BNSF) tracks. I live less than a mile from the Chevron Richmond refinery. Because of the location of our home, I am exposed to particulate matter pollution from oil cars traveling on these tracks. I am also exposed to conventional and hazardous air pollutants ADD-105 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page108 of 123 emitted by the Chevron refinery, which was recently allowed to introduce new equipment to process heavier crude. I am very concerned about Chevron finding a way to process dirtier crude, which I have heard is a possibility. If the Sierra Club is successful in its efforts to reduce fuel use, that will help mitigate this concern. 6. I spend a lot of time outdoors in the area where I live. I like walking, and I garden a lot in Point Richmond, so I breathe polluted air on a daily basis. I have been coughing more lately. I believe the emissions from the Chevron refinery are a major cause of this dirty air. 7. I am aware that ozone and particulate matter pollution harm human health, causing respiratory illnesses, heart attacks, and premature death. This pollution especially affects children and the elderly, like me. Asthma is actually a big problem here in Richmond. Contra Costa County is in marginal non-attainment for ozone. I am also aware that hazardous air pollutant emissions from refineries, like benzene and volatile organic compounds, cause cancer. There have in fact been several cancer cases in Atchinson Village. One woman in her 50s, who was not a smoker, recently died of lung cancer. I believe that, at least in part, all these illnesses are related to the high air pollution levels caused by the oil industry facilities that operate in this area. ADD-106 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page109 of 123 8. The extent of air pollution in my community and of the illnesses caused by it has made me well aware of the importance of enacting strong regulations aimed at decreasing our oil consumption. I know that this is the key purpose of the National Highway Traffic Safety Administration’s (NHTSA) fuel economy standards for vehicles. The law requires carmakers to pay penalties if their new cars do not meet the required standards; these penalties are a crucial tool for improving the fuel economy of our cars. 9. I have been told that last year NHTSA issued a regulation that establishes higher penalties for violations of the fuel economy standards for passenger cars and light duty trucks, in order to foster compliance with those standards and reduce our reliance on oil. With the change of administration, however, in July NHTSA issued a rule that delays the effective date of these higher penalties indefinitely. NHTSA issued this rule without providing the public any opportunity to comment on it. 10. I am extremely concerned that this delay will encourage automakers’ non-compliance with the standards and increase our oil use. If NHTSA had provided an opportunity to comment on this rule, Sierra Club would have filed comments on my behalf opposing this delay. That is why I support Sierra Club’s challenge to this delay. If Sierra Club succeeds, higher penalties will be applied as established in NHTSA’s regulation from last ADD-107 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page110 of 123 ADD-108 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page111 of 123 Exhibit O ADD-109 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page112 of 123 ADD-110 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page113 of 123 ADD-111 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page114 of 123 ADD-112 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page115 of 123 ADD-113 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page116 of 123 Exhibit P ADD-114 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page117 of 123 1 DECLARATION OF JANET DIETZKAMEI 2 I, Janet DietzKamei, state and declare as follows: 3 1. I am over 18 years of age and competent to give this declaration. I have personal 4 knowledge of the following facts, and if called as a witness could and would testify competently to 5 them. As to those matters which reflect an opinion, they reflect my personal opinion and judgment 6 on the matter. 7 2. I live in Fresno, California, and have lived there since 2003. I am retired from a 8 career as a Federal employee, having worked for the Air Force, the U.S. Department of the Treasury, 9 the Veterans’ Administration and the United States Department of Agriculture Forest Service for 25 10 years. 11 3. I am deeply concerned and care greatly about the quality of the air in Fresno and the 12 surrounding areas. The poor air quality in my home town, my community and California’s Central 13 Valley makes me severely ill, and I am keenly interested in doing all I can to improve the air I must 14 breathe. I am a member of the Center for Biological Diversity (the "Center"), and I rely upon the 15 Center to represent my interests in protecting our air quality and our environment through the 16 gathering and dissemination of information about air pollution, advocacy to remediate that pollution, 17 and enforcement of our environmental laws. I am also a member of the Central Valley Air Quality 18 Coalition ("CVAQ"), since June, 2016, I have been active with CVAQ since May, 2015, and the 19 Fresno Environmental Reporting Network ("FERN"), since December, 2015, organizations that 20 monitor and report on the pollution in our air and advocate on behalf of myself and other citizens to 21 reduce that pollution. 22 4. I am aware that the National Highway Transportation and Safety Administration 23 (NHTSA) has issued performance standards for the nation’s fleet of cars and light duty trucks that 24 require these vehicles’ average fuel efficiency to increase year over year. These standards are 25 known as Corporate Average Fuel Efficiency, or CAFE, rules. Increased fuel efficiency means that 26 vehicles combust less and less gasoline per mile traveled, thereby decreasing the amount of 27 dangerous pollutants they emit, including ozone-forming greenhouse gases and particulate matter. I 28 am aware that NHTSA’s last rulemaking for CAFE standards for passenger vehicles and light trucks 1 ADD-115 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page118 of 123 1 set increasingly stringent average fuel efficiency standards for vehicles in model years through 2022, 2 with further projected, increasingly stringent efficiency standards for vehicles in model years 3 through 2025. 4 5. I am also aware that NHTSA’s CAFE rules allow manufacturers to pay civil penalties 5 if their vehicle fleets do not meet the standards in any year. I understand that the penalties are 6 assessed for every one-tenth of a mile per gallon by which a manufacturer’s vehicle fleet’s fuel 7 efficiency falls below the CAFE standards in any year, multiplied by the number of vehicles that do 8 so. The original penalty amount of the applicable civil penalty NHTSA assesses was set in 1975 at 9 $5.00, and was later increased to $5.50. I further understand that over the years, some manufacturers 10 have paid penalties because their vehicle fleets did not comply with the CAFE standards. 11 6. I know that in November 2015, Congress enacted a law, the Federal Civil Penalties 12 Inflation Adjustment Act Improvement Act (the Act), that required federal agencies to adjust the 13 amount of civil penalties they administer to account for inflation since the date the penalties were 14 originally set, in order to ensure that penalties remain high enough to discourage non-compliance 15 with regulations the agencies set. I am aware that in 2016, NHTSA, in compliance with this Act, 16 issued a rule that increased the amount of the CAFE civil penalties to $14 and applied the increased 17 penalty to all vehicles sold in model year 2019 or thereafter. I understand that the purpose of this 18 rule, and the increase of the penalty, was to make sure that the penalty was high enough to promote 19 compliance by vehicle manufacturers with the applicable CAFE standards. 20 7. I have also learned that in July 2017, NHTSA issued another rule (the 2017 Stay 21 Rule) which delayed the imposition of the increased penalty indefinitely. NHTSA provided no notice 22 of this indefinite delay and accepted no comments before issuing this final rule. Therefore, as it 23 stands, the civil penalty is $5.50. The date when the adjusted penalty of $14 will be applied to 24 manufacturers has now been indefinitely delayed, and it is unknown whether or when it will ever be 25 applied. 26 8. I am extremely concerned about and personally injured by the 2017 Stay Rule. It is 27 my understanding that manufacturers make a decision whether to comply with CAFE standards in 28 part by weighing the costs of noncompliance – that is, the penalty amount – against the cost of 2 ADD-116 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page119 of 123 1 implementing technology that increases fuel efficiency. In other words, if manufacturers conclude 2 that paying penalties costs them less and forgo implementing technologies that actually increase the 3 fuel efficiency of their vehicles and thus reduce pollution, then the millions of cars and trucks they 4 produce that year will not comply with the CAFE standards then or during the vehicles’ lifetimes; 5 and, as a result, the harmful air pollution these vehicles produce will not be reduced in the amount 6 that compliance with the standards would accomplish. This outcome directly harms my health and 7 has concrete, direct and frightening daily effects on my personal quality of life. 8 9. Since about 2006, or some three years after moving to Fresno, I have suffered from 9 severe asthma. I had allergies before moving to Fresno in 2003, but had never had asthma. I was 10 diagnosed with asthma after having a severe reaction to an unknown trigger pollutant. Within 5 days, 11 I was in the Emergency Room ("ER") with severe bronchitis, exceedingly sick. The consulting 12 doctor was leaning toward admitting me to hospital. I was prescribed inhalers and other asthma 13 relieving medications with the understanding that if I did not improve, I would return to the ER. 14 10. Air quality in Fresno and the San Joaquin Valley is among the worst in the nation, 15 and the many cars and trucks on the road in Fresno and in the Valley contribute enormously to the 16 problem. My house is located about 1,400 feet from the busy California Highway-180 freeway as 17 the crow flies. I have a personal monitor positioned in my back porch, a part of the Purple Air 18 Network. I must monitor, using Purple Air monitors and Air Resources Board District monitors, 19 both the particulate matter and the ozone in my area on a daily and sometimes hourly basis, and 20 when the air quality for either of these pollutants turns from good to moderate, if ozone is above 21 good, I cannot leave the house, when particulates are above good, I cannot leave the house without 22 wearing a mask, and even then I still take the risk of suffering a severe and debilitating asthma 23 attack. I also cannot leave my house any time there is smoke in the air. During the months of 24 November through February, my asthma symptoms are exacerbated by smoky air. To prevent 25 pollutants picked up while outside, from coming into our home, my husband and I take off outside 26 clothing to put on clean clothing only worn inside of the house. I have towels on my sofa and chairs 27 which can be washed after visitors sit on our furniture. No one can wear shoes inside of the house. 28 3 ADD-117 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page120 of 123 1 We have a 9 pound dog which lives inside of the house. When he returns from a walk, or goes out 2 for potty breaks, we wash his feet and wipe him with a damp towel. 3 11. Asthma has made me exceedingly sick. When I suffer an attack, it is difficult just to 4 breathe. A particularly severe attack occurred in the summer of 2012 when I simply went outside to 5 take my dog for a walk. Even though I wore a mask, PM2.5 particulates and ozone were in the 6 moderate level, I began having trouble breathing as I could not inhale any air. Feeling faint and 7 lightheaded, I panicked and turned around to go back home. I nearly lost consciousness right there 8 on the road. I believe that only the adrenaline produced by my panic allowed me to make it back 9 home, where I administered asthma medication and then passed out. The mask only protected me 10 from the PM2.5 particulates, not the ozone, a lesson I learned that day. The entire experience was 11 horrific. Because I never want to experience such an attack again, I now do not leave my home if 12 either the particulate matter or the ozone is not within the "good" range as indicated by real-time 13 monitoring websites. I access those sites with my computer or on the phone, and often again on my 14 phone after leaving my house to make sure the air quality has not changed. I receive alerts on my 15 phone indicating air quality has degraded to air I can not breathe. I depend upon these alerts. 16 12. When I begin having an attack, I feel a heaviness in my chest and cannot get air. 17 Often I also start coughing. I feel like a fish out of water, gasping. If I am outside and begin to feel 18 this chest pressure, shortness of breath, and/or coughing, I go into a building, a house, a car, or 19 anywhere else that is enclosed so that I am better sheltered from the polluted air. Other effects of 20 particulate matter and ozone air pollution on my health sometimes include sneezing and sniffling, 21 feeling tired, achy, suffering from headaches, and feeling as if I am about to come down with a cold 22 or flu. I also have a chronic cough when the particulate matter count increases. I love to ride my 23 bike and have been an avid outdoor person for my entire life, but now must spend most of my time 24 inside my house. Because my activity level is so severely restricted, I now also suffer from 25 unhealthy weight gain. To protect myself from pollutants, I always check air quality before going to 26 the gym to do some water aerobics. Sometimes there is an unexpected trigger, resulting in when I do 27 drive to the gym, I sometimes cannot walk from the parking lot to the gym because I begin to feel an 28 asthma attack coming on, and I must drive back home. 4 ADD-118 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page121 of 123 1 13. I sometimes take Interstates 580 and 680 when I travel to speak on air pollution or to 2 see family and friends, and pass by the oil refineries in Richmond and Martinez. I am aware of and 3 remember these refineries well from my childhood, as at that time they emitted a terrible smell. I 4 know that increased gasoline consumption by vehicles requires more oil refining and more 5 transportation of that oil in tankers on our highways, including the highway close to my house. I am 6 aware that the pollutants that affect me so seriously are emitted by these refineries and by the big oil 7 tankers that bring gasoline to the gas stations where I live, and I am worried about their effects on 8 my health and mobility. If the penalties for not complying with the efficiency rules are not raised 9 and manufacturers simply pay penalties rather than comply, then more oil will be needed and refined 10 and transported to the areas around my home, and more of the pollutants that harm me will be 11 emitted. 12 14. Many of my friends and acquaintances and their children who live in Fresno or 13 elsewhere in the Central Valley suffer from asthma or other severe health complications because of 14 the air pollution caused by motor vehicles. I am concerned for them as well and fear for their well-15 being. During periods when air pollution is above moderate, many asthmatics end up in Central 16 Valley Emergency Rooms and hospitals. I do all I can possibly do to avoid becoming so ill. 17 15. As long as the 2017 Stay Rule delays the application of appropriately adjusted civil 18 penalties, manufacturers may not be incentivized to comply with the CAFE standards by 19 implementing technologies that otherwise would increase their vehicles’ fuel efficiency and decrease 20 the pollution they cause. As a result, the air I must breathe will often continue to be too polluted, and 21 I will become sick or be compelled to stay shut into my house. NHTSA’s 2017 Stay Rule therefore 22 causes direct and severe harm to me personally. If fuel efficiency does not increase, or increases less 23 than it would if penalties actually did deter non-compliance with CAFE standards, my health will 24 continue to suffer and get even worse, and my quality of life cannot improve. I suffer emotional 25 distress knowing that the effectiveness of CAFE rules is undercut because the imposition of effective 26 penalties is indefinitely delayed. On the other hand, if the indefinite delay is overturned and the 27 higher penalties are assessed so that they do deter non-compliance, particulate matter and ozone 28 5 ADD-119 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page122 of 123 1 pollution will be reduced, days when the air quality remains good will increase, my health will 2 improve and I will be able to leave my house more often. 3 16. NHTSA’s finalized the 2017 Stay Rule without providing any notice or opportunity 4 to comment. This lack of notice and comment opportunity deprives me of my procedural rights to be 5 informed about forthcoming agency action so that I can talk about or rely on the Center to comment 6 on them, inform others about them, and seek to stop or alter them if they affect me or my friends and 7 neighbors negatively or if they are unlawful. I am active in learning about and disseminating 8 information about Fresno’s poor air quality and its causes. When the air quality permits it, I speak 9 about the effects of air pollution on my health at local, district and state-level air quality board 10 meetings and I travel to Sacramento to speak to lawmakers on the subject. I also participate in air 11 quality improving workshops and air quality improving training on subjects such as electric vehicle 12 programs. I am currently attending workshops, participating in, and following Fresno City Plans to 13 develop strategies to reduce city vehicle usage, including promoting and improving city 14 transportation such as bus service. NHTSA’s final decision to delay, indefinitely, the application of 15 higher CAFE penalties, without providing notice and an opportunity to comment, has deprived me of 16 my ability to obtain information about the agency’s intended action before it takes place, and to rely 17 on the Center to submit comments in opposition. It has also deprived me of the opportunity to 18 communicate with others about this action so it might be stopped. As such, the imposition of the stay 19 without notice or comment has harmed my procedural rights as a citizen and a member of the 20 Center. 21 17. However, if the 2017 Stay Rule is overturned and NHTSA must provide notice and 22 an opportunity to comment regarding any new proposed rule concerning the implementation of the 23 civil penalty adjustment to the CAFE standards, the violation of these procedural and informational 24 rights will be effectively resolved. 25////26////27////28////6 ADD-120 Case 17-2780, Document 84-3, 10/24/2017, 2155183, Page123 of 123 ADD-121

RECORD ON APPEAL STATUS UPDATE LETTER, on behalf of Attorney Mr. H. Thomas Byron, III for Respondent Elaine Chao, Jack Danielson, National Highway Traffic Safety Administration and United States Department of Transportation in 17-2780, Attorney Mr. H. Thomas Byron, III for Respondent Jack Danielson, Elaine Chao and National Highway Traffic Safety Administration in 17-2806, informing court of record delays, RECEIVED.Service date 10/24/2017 by CM/ECF. [2155664] [17-2780, 17-2806] [Entered: 10/24/2017 04:45 PM]

U.S. Department of Justice Civil Division, Appellate Staff 950 Pennsylvania Ave., NW, Rm. 7529 Washington, DC 20530 DJ # 145-18-3989 H. Thomas Byron III Tel: 202-616-5367 H.Thomas.Byron@usdoj.gov Fax: 202-514-8151 October 24, 2017 by cm/ecf Ms. Catherine O’Hagan Wolfe Clerk, United States Court of Appeals for the Second Circuit 40 Foley Square New York, NY 10007 RE: Natural Resources Defense Coun. v. National Highway Traffic Safety Admin.; State of New York v. National Highway Traffic Safety Admin., 2d Cir. Nos. 17-2780 (L), 17-2806 (CON) Dear Ms. Wolfe: I represent respondents, National Highway Traffic Safety Administration, et al., in the captioned consolidated cases. I spoke last week with Case Manager Jennifer Thompson concerning the administrative record in these cases. As I explained to Ms. Thompson, we are consulting with agency personnel concerning the administrative record, and will file a certified index of the administrative record by Friday, November 3, 2017. Sincerely,/s/H. Thomas Byron III H. THOMAS BYRON III Attorney cc: counsel of record (by cm/ecf)

MOTION, to extend time, on behalf of Respondent Elaine Chao, Jack Danielson, National Highway Traffic Safety Administration and United States Department of Transportation in 17-2780, Respondent Elaine Chao, Jack Danielson and National Highway Traffic Safety Administration in 17-2806, FILED. Service date 10/30/2017 by CM/ECF. [2160398] [17-2780, 17-2806] [Entered: 10/30/2017 07:40 PM]

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT Thurgood Marshall U.S. Courthouse 40 Foley Square, New York, NY 10007 Telephone: 212-857-8500 MOTION INFORMATION STATEMENT 17-2780 (L), 17-2806 (CON) Docket Number(s): ________________________________________ _______________Caption [use short title]_____________________ Extensions of time to file responses to Motion for: ______________________________________________ motions for summary vacatur or stay, and to file ________________________________________________________ replies in support of motions ________________________________________________________ Set forth below precise, complete statement of relief sought: 14-day extension, to and including Friday, November 17, ________________________________________________________ Natural Resources Defense Coun. v. National Highway Traffic Safety Admin. 2017, to respond to two motions filed by petitioners ________________________________________________________ on October 24, 2017, seeking summary vacatur or, in the ________________________________________________________ alternative, stay pending judicial review; additionally, ________________________________________________________ 7-day extension, to and including Friday, December 1, ________________________________________________________ 2017, to reply in support of motions. ________________________________________________________ National Highway Traffic Safety Admin., et al. OPPOSING PARTY:____________________________________________ MOVING PARTY:_______________________________________ Natural Resources Def. Council, et al.; State of New York, et al. ___Plaintiff ___Defendant ___Appellant/Petitioner ✔ ___Appellee/Respondent H. Thomas Byron III MOVING ATTORNEY:___________________________________ Ian Fein; Monica Wagner OPPOSING ATTORNEY:________________________________________ [name of attorney, with firm, address, phone number and e-mail] Civil-Appellate, US DOJ, 950 Pennsylvania Ave., NW, Rm 7529 _______________________________________________________________ ________________________________________________________ NRDC, 111 Sutter St., SF, CA 94104; NY AG Off., 120 B'way, NY, NY 10271 (202) 616-5367 ________________________________________________________ (415) 875-6100; (212) 416-6351 _______________________________________________________________ H.Thomas.Byron@usdoj.gov ________________________________________________________ ifein@nrdc.org; Monica.Wagner@ag.ny.gov _______________________________________________________________ National Highway Traffic Safety Admin., U.S. Dept of Transportation Court-Judge/Agency appealed from: _________________________________________________________________________________________ Please check appropriate boxes: FOR EMERGENCY MOTIONS, MOTIONS FOR STAYS AND INJUCTIONS PENDING APPEAL: Has movant notified opposing counsel (required by Local Rule 27.1): Has this request for relief been made below? ✔ ___Yes ___No ✔ ___Yes ___No (explain):__________________________ Has this relief been previously sought in this court? ✔ ___Yes ___No _______________________________________________ Requested return date and explanation of emergency: ________________ A decision is requested by Thursday, November 2, prior to the current deadline of _____________________________________________________________ Opposing counsel’s position on motion: Friday, November 3, 2017. _____________________________________________________________ ✔ ___Unopposed ___Opposed ___Don’t Know _____________________________________________________________ Does opposing counsel intend to file a response: _____________________________________________________________ ✔ ___Yes ___No ___Don’t Know Is oral argument on motion requested? ✔ (requests for oral argument will not necessarily be granted) ___Yes ___No Has argument date of appeal been set? ✔ ___ Yes ___No If yes, enter date:_______________________________________________________ Signature of Moving Attorney:/s/H. Thomas Byron III _________________________________ 10/30/17 Date:__________________ ✔ Service by: ___CM/ECF ___Other [Attach proof of service] Form T F T-1080 1080 ((rev.12-13) 12 13) IN THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT Natural Resources Defense Council, et al., Petitioners, v. No. 17-2780 (L) National Highway Traffic Safety Admin., et al., consolidated with Respondents. State of New York, et al., Petitioners, No. 17-2806 (Con) v. National Highway Traffic Safety Admin., et al., Respondents. UNOPPOSED MOTION OF RESPONDENTS FOR 14-DAY EXTENSION OF TIME TO RESPOND TO MOTIONS FOR SUMMARY VACATUR OR STAY, AND FOR 7-DAY EXTENSION OF TIME TO REPLY IN SUPPORT OF MOTIONS Respondents National Highway Transportation Safety Administra-tion, et al., hereby respectfully move for a 14-day extension of time, to and including Friday, November 17, 2017, within which to respond to two motions filed by petitioners in these consolidated cases. On behalf of petitioners, respondents also request a 7-day extension of the deadline, to and including Friday, December 1, 2017, to reply in support of the motions. 1. On October 24, 2017, petitioners in these two consolidated cases filed motions seeking summary vacatur of the agency decision on review or, in the alternative, a stay of that order. The government’s responses to those motions are due by Friday, November 3, 2017, "unless the court * * * extends the time." FRAP 27(a)(3)(A). 2. Petitioners filed two separate motions, totaling over 10,000 words, accompanied by nearly 70 pages of declarations. Moreover, the motions raise multiple legal issues that would ordinarily be addressed with full briefing and argument on the merits. The government will require additional time to consider the issues and arguments raised in the motions. The government will endeavor to respond to both motions in a single filing, which will require additional time, coordination, and review. 3. The government’s response must also consider whether petitioners have standing to challenge the agency rule at issue here. Because 2 this Court must address its jurisdiction, the government intends to analyze petitioners’ standing in its response to the motions. 4. Litigation deadlines and related responsibilities will preclude filing a response to the motions by November 3. Undersigned government counsel H. Thomas Byron III is principally responsible for representing respondents in these cases, and is also responsible for handling or supervising the following cases with deadlines during the relevant period: Smith v. Trump, D.C. Cir. No. 16-5377 (Oral argument held Friday, Oct. 20, 2017); IRAP v. Trump, 4th Cir. No. 17-2231 and consolidated cases (emergency stay reply due Monday, Oct. 30, 2017; opening brief due Wednesday, Nov. 1, 2017) (both pursuant to proposed expedited schedule); FLRA v. DOJ, BOP, FCC Tucson, 9th Cir. No. 16-71035 (mediation Wednesday, Nov. 1, 2017); Hawaii v. Trump, 9th Cir. No. 17-17168 (emergency stay reply and opening brief due Thursday, Nov. 2, 2017); Broward Bulldog v. DOJ, 11th Cir. No. 17-13787 (appellee/cross-appellant brief Wednesday, November 15, 2017). In addition, Mr. Byron is a member of the faculty presenting training for Justice Department attorneys on Wednesday, 3 November 8, 2017, and will be representing the Justice Department at the Federal Judiciary’s Advisory Committee on Appellate Rules all day on Thursday, November 9, 2017. In light of those obligations, and the federal holiday on Friday, November 10, 2017, a shorter extension will not suffice. 5. The requested extension will not prejudice petitioners. The pending motions for summary disposition or stay were not filed as emergency motions and did not request a decision by this Court by any particular date. And the circumstances here confirm the lack of urgency. Petitioners filed the motions more than six weeks after filing the petitions for review, and more than three months after the rule under review was issued. The Court and the parties will benefit from providing a short additional period for the government to respond to the motions. 6. On Friday, October 20, 2017, undersigned counsel for respondents consulted with counsel for petitioners to seek their position concerning the requested extension. On Monday, October 30, 2017, Ian Fein, on behalf of petitioners (Natural Resources Defense Council, et al.) in No. 17-2780, and David Zaft, on behalf of petitioners (State of New York, et al.) 4 in No. 17-2806, informed us that they do not oppose the requested extension, so long as petitioners are afforded an additional 7-day extension to file a reply in support of their motions. On behalf of petitioners, we respectfully request that the Court extend the deadline to file a reply until December 1, 2017. CONCLUSION For the foregoing reasons, we respectfully request that this Court extend the deadline to respond to the motions for summary vacatur or stay until November 17, 2017, and extend the deadline to file a reply until December 1, 2017. 5 Respectfully submitted, DOUGLAS N. LETTER (202) 514-3602/s/H. Thomas Byron III H. THOMAS BYRON III (202) 616-5367 Attorneys, Appellate Staff Civil Division U.S. Department of Justice 950 Pennsylvania Ave., N.W. Room 7529 Washington, D.C. 20530 OCTOBER 2017 6 CERTIFICATE OF SERVICE I hereby certify that on October 30, 2017, I electronically filed the foregoing motion with the Clerk of the Court by using the appellate CM/ECF system. I certify that the participants in the case are registered CM/ECF users and that service will be accomplished by the appellate CM/ECF system./s/H. Thomas Byron III H. THOMAS BYRON III

OPPOSITION TO MOTION, to extend time [{{93}}], on behalf of Petitioner Center for Biological Diversity, Natural Resources Defense Council and Sierra Club in 17-2780, FILED. Service date 10/30/2017 by CM/ECF. [2160412] [17-2780, 17-2806] [Entered: 10/30/2017 11:28 PM]

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT NATURAL RESOURCES DEFENSE COUNCIL, INC., et al., Petitioners, v. Case Nos. 17-2780 (L), 17-2806 NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION, et al., Respondents. PETITIONERS’ RESPONSE TO RESPONDENTS’ MOTION FOR EXTENSION OF TIME As indicated in Respondents’ motion for an extension of time, ECF No. 93, Petitioners Natural Resources Defense Council, Sierra Club, and Center for Biological Diversity ("Petitioners") do not oppose Respondents’ request for a 14-day extension of time to respond to Petitioners’ motion for summary vacatur or a stay, so long as Petitioners receive a corresponding 7-day extension to file a reply in support of that motion. To avoid any further delay of this briefing schedule, however, Petitioners also respectfully request that Movants 1 Alliance of Automobile Manufacturers, Inc., and Association of Global Automakers—if they are permitted to intervene in these cases—be required to adhere to the same schedule, and file any response to Petitioners’ summary vacatur motion by November 17. See Pet’rs’ Resp. to Mots. to Intervene 3-4, ECF No. 65 (requesting that the Court condition intervention by requiring Movants to file joint briefs, comply with briefing deadlines applicable to Respondents, and seek no further extensions of time). Dated: October 30, 2017 Respectfully submitted,/s/Ian Fein Ian Fein Irene Gutierrez Michael E. Wall Natural Resources Defense Council 111 Sutter St., 21st Floor San Francisco, CA 94104 (415) 875-6100 ifein@nrdc.org Counsel for Petitioner Natural Resources Defense Council 2 Alejandra Núñez Joanne Spalding Sierra Club 2101 Webster Street, Suite 1300 Oakland, CA 94612 (415) 997-5725 alejandra.nunez@sierraclub.org Counsel for Petitioner Sierra Club Vera Pardee Howard Crystal Center for Biological Diversity 1212 Broadway, Suite 800 Oakland, CA 94612 (415) 632-5317 vpardee@biologicaldiversity.org Counsel for Petitioner Center for Biological Diversity 3 CERTIFICATE OF SERVICE I hereby certify that I electronically filed the foregoing with the Clerk of the Court for the United States Court of Appeals for the Second Circuit by using the appellate CM/ECF system on October 30, 2017. I certify that all participants in the case are registered CM/ECF users and that service will be accomplished by the appellate CM/ECF system./s/Ian Fein Ian Fein 4

OPPOSITION TO MOTION, [{{88}}], [{{88}}], [{{84}}], [{{84}}], on behalf of Movant Association of Global Automakers in 17-2780, 17-2806, FILED. Service date 11/17/2017 by CM/ECF. [2175470] [17-2780, 17-2806] [Entered: 11/17/2017 04:34 PM]

Case 17-2780, Document 103-1, 11/17/2017, 2175470, Page1 of 34 IN THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT) NATURAL RESOURCES DEFENSE) COUNCIL, et al.,)) No. 17-2780 Petitioners,) (consol. w/No. 17-2806)) v.) [On Petition for Review) from the National NATIONAL HIGHWAY TRAFFIC) Highway Traffic Safety SAFETY ADMINISTRATION, et al.,) Administration, NHTSA-) 2016-0136]) Respondents.)) RESPONSE OF PROPOSED INTERVENOR THE ASSOCIATION OF GLOBAL AUTOMAKERS TO PETITIONERS’ MOTIONS FOR SUMMARY REVERSAL OR TO STAY Of Counsel: Ashley C. Parrish Counsel of Record Jacqueline Glassman Justin A. Torres KING & SPALDING LLP KING & SPALDING LLP 1700 Pennsylvania Ave., N.W., 1700 Pennsylvania Ave., N.W., Washington, D.C. 20006 Washington, D.C. 20006 Telephone: (202) 737-0500 Telephone: (202) 737-0500 Facsimile: (202) 626-3737 Facsimile: (202) 626-3737 Email: aparrish@kslaw.com Counsel for Proposed Intervenor the Association of Global Automakers Dated: November 17 2017 Case 17-2780, Document 103-1, 11/17/2017, 2175470, Page2 of 34 TABLE OF CONTENTS TABLE OF AUTHORITIES....................................................................... ii INTRODUCTION AND SUMMARY OF ARGUMENT............................ 1 BACKGROUND.......................................................................................... 2 A. The 2015 Act............................................................................. 2 B. NHTSA’s Interim Rule and Global Automakers’ Petition..................................................................................... 4 C. The Revised Rule and Reconsideration................................... 7 STANDARD OF REVIEW.......................................................................... 9 ARGUMENT............................................................................................. 10 I. Petitioners Are Not Entitled To Summary Reversal..................... 10 A. NHTSA’s Decision to Reconsider the Rule Was Appropriate............................................................................. 11 B. NHTSA’s Decision To Stay the Rule Was Consistent With The Requirements Of Reasoned Decisionmaking....... 15 C. Petitioners’ Motion Implicates Other Issues Not Appropriate For Summary Consideration............................ 22 II. Petitioners Are Not Entitled To A Stay......................................... 24 CONCLUSION......................................................................................... 26 CERTIFICATE OF COMPLIANCE CERTIFICATE OF SERVICE i Case 17-2780, Document 103-1, 11/17/2017, 2175470, Page3 of 34 TABLE OF AUTHORITIES Cases Alabama Power Co. v. Costle, 636 F.2d 323 (D.C. Cir. 1979)...................................................... 11, 12 Am. Civil Liberties Union v. FCC, 823 F.2d 1554 (D.C. Cir. 1987).......................................................... 11 Americans for Clean Energy v. EPA, 864 F.3d 691, 719 (D.C. Cir. 2017).................................................... 19 Boddie v. Connecticut, 401 U.S. 371 (1971)............................................................................ 12 Chobani, LLC v. Dannon Co., 157 F. Supp. 3d 190 (N.D.N.Y. 2016)................................................ 24 Citizens Against Pellissippi Parkway Extension, Inc. v. Mineta, 375 F.3d 412 (6th Cir. 2004).............................................................. 18 Clean Air Council v. Pruitt, 862 F.3d 1 (D.C. Cir. 2017).................................................... 16, 17, 18 Doninger v. Niehoff, 527 F.3d 41 (2d Cir. 2008).................................................................. 25 Ethyl Corp. v. Browner, 989 F.2d 522 (D.C. Cir. 1993)............................................................ 14 FBME Bank Ltd. v. Lew, 209 F. Supp. 3d 299 (D.D.C. 2016).............................................. 20, 21 Fox Television Stations, Inc. v. FCC, 489 F.3d 444 (2d Cir. 2007), rev’d on other grounds and remanded, 556 U.S. 502 (2009)............. 21 Garcia-Mir v. Meese, 781 F.2d 1450 (11th Cir. 1986)............................................................ 9 Home Box Office, Inc. v. FCC, 567 F.2d 9 (D.C. Cir. 1977)................................................................ 14 Islander E. Pipeline Co., LLC v. Connecticut Dep’t of Envtl. Prot., 482 F.3d 79 (2d Cir. 2006).................................................................. 11 ii Case 17-2780, Document 103-1, 11/17/2017, 2175470, Page4 of 34 Ivy Sports Med., LLC v. Burwell, 767 F.3d 81 (D.C. Cir. 2014).............................................................. 14 Mazaleski v. Treusdell, 562 F.2d 701 (D.C. Cir. 1977)............................................................ 15 McHugh v. Rubin, 220 F.3d 53 (2d Cir. 2000).................................................................. 20 Melrose Credit Union v. City of New York, 247 F. Supp. 3d 356 (S.D.N.Y. 2017)................................................. 12 Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (1983)............................................................ 11, 13, 15, 18 Natural Resources Defense Council v. Abraham, 355 F.3d 179 (2d Cir. 2004).......................................................... 16, 17 Nken v. Holder, 556 U.S. 418 (2009)............................................................................ 10 O Centro Espirita Beneficiente Uniao Do Vegetal v. Ashcroft, 389 F.3d 973 (10th Cir. 2004)............................................................ 24 Pension Benefit Guar. Corp. v. LTV Corp., 496 U.S. 633 (1990)............................................................................ 20 Plante v. Dake, 599 F. App’x 13 (2d Cir. 2015)....................................................... 9, 22 Plaza Health Labs., Inc. v. Perales, 878 F.2d 577 (2d Cir. 1989)................................................................ 24 Portland Cement Ass’n v. EPA, 665 F.3d 177 (D.C. Cir. 2011)............................................................ 14 Sussman v. Jenkins, 642 F.3d 532 (7th Cir. 2011).............................................................. 10 Taxpayers Watchdog, Inc. v. Stanley, 819 F.2d 294 (D.C. Cir. 1987)............................................................ 10 TRAC v. FCC, 750 F.2d 70 (D.C. Cir. 1984)........................................................ 19, 20 Verizon Telephone Co. v. FCC, 374 F.3d 1229 (D.C. Cir. 2004).......................................................... 12 iii Case 17-2780, Document 103-1, 11/17/2017, 2175470, Page5 of 34 Winter v. NRDC, Inc., 555 U.S. 7 (2008)................................................................................ 10 Xiao Ji Chen v. U.S. Dep’t of Justice, 471 F.3d 315 (2d Cir. 2006)................................................................ 21 Statutes 5 U.S.C. § 553..................................................................................... 12, 15 5 U.S.C. § 555........................................................................................... 19 42 U.S.C. § 6295........................................................................................ 16 49 U.S.C. § 32902...................................................................................... 24 49 U.S.C. § 32909...................................................................................... 22 Pub. L. No. 101-410 (1990)......................................................................... 2 Pub. L. No. 110-140 (2007)......................................................................... 5 Pub. L. No. 114-74 (2015)................................................................... 1, 2, 3 Regulations 77 Fed. Reg. 62,624 (Oct. 15, 2012)......................................................... 26 81 Fed. Reg. 43,524 (July 5, 2016)......................................................... 4, 5 81 Fed. Reg. 95,489 (Dec. 28, 2016)........................................................... 7 82 Fed. Reg. 8694 (Jan. 30, 2017).............................................................. 7 82 Fed. Reg. 32,139 (July 12, 2017)..................................................... 8, 18 82 Fed. Reg. 32,140 (July 12, 2017)..................................................... 9, 15 Rules Fed. Ct. App. Manual § 25:4 (6th ed.)........................................................ 9 Other Authorities NHTSA, CAFE Overview, available at https://one.nhtsa.gov/cafe_pic/CAFE_PIC_home.htm.......................................................... 23 iv Case 17-2780, Document 103-1, 11/17/2017, 2175470, Page6 of 34 INTRODUCTION AND SUMMARY OF ARGUMENT Petitioners’ motion for summary reversal or a stay should be denied. The Court should require full briefing on the important, complex issues raised in this appeal. Petitioners are improperly attempting to prevent the National Highway Traffic Safety Administration ("NHTSA") from reconsidering its revision of an interim rule to ensure that the rule complies with statutory criteria and satisfies the requirements of reasoned decisionmaking. In December 2016, acting under the Federal Civil Penalties Inflation Adjustment Act Improvements Act, Pub. L. No 114-74 (2015) ("2015 Act"), the agency issued a rule that would have nearly tripled the maximum civil penalty for violations of the Corporate Average Fuel Economy Standards ("CAFE"). But the rule was legally invalid. As NHTSA later acknowledged, it issued the rule without responding to substantial comments showing that (1) it used the wrong "baseline year" to calculate the penalty increase, and (2) the increase would have severe economic consequences. To its credit, NHTSA took steps to address this failure of reasoned decisionmaking by granting petitions for reconsideration and staying 1 Case 17-2780, Document 103-1, 11/17/2017, 2175470, Page7 of 34 implementation of the rule, so it could comply with statutory requirements and undertake the reasoned analysis that the Administrative Procedure Act ("APA") requires. In doing so, NHTSA acted both responsibly and well within its discretion to correct its own mistakes. Petitioners now urge the Court to pretermit NHTSA’s consideration of these critical issues and to force the agency to implement a rule that is invalid and, if it had not been stayed, would have been successfully challenged on appeal. Petitioners’ request lacks merit and should be denied. BACKGROUND A. The 2015 Act Annual adjustments to civil penalties under federal statutes are governed by the Federal Civil Penalties Inflation Adjustment Act, Pub. L. No. 101-410 (1990) ("the 1990 Act"). In 2015, Congress amended the statute to require most federal agencies to (1) promulgate an interim rule setting an initial "catch-up" increase to account for inflation and (2) make subsequent annual adjustments using the "catch-up" year as a baseline. 2015 Act § 4(b). The catch-up increase is determined by applying a standard cost-of-living adjustment to the maximum civil penalty in effect when the penalty was "most recently established or 2 Case 17-2780, Document 103-1, 11/17/2017, 2175470, Page8 of 34 adjusted under a provision of law other" than the 1990 Act. Id. § 5(b)(2)(B). Under the statutory scheme, the date that a civil penalty was "established or adjusted" has a substantial impact on the size of the initial catch-up increase. Because of natural compounding, applying a fixed cost-of-living adjustment to a recent "baseline year" yields a much smaller increase than if the baseline year is set far in the past. Recognizing the importance of setting an appropriate baseline, Congress gave agencies broad discretion to adjust the catch-up increase if applying the statutory formula would yield a civil penalty that was unjustified or economically damaging. With the concurrence of the Office of Management and Budget, agencies may impose a lower catch-up amount when increasing the maximum civil penalty "will have a negative economic impact" or the "social costs... outweigh the benefits." 2015 Act § 4(c). Arguably, this exception applies only to the initial catch-up. Subsequent annual adjustments key off the initial catch-up increase and are determined by formula, with no discretion to adjust for economic or social consequences. Because the initial increase may dictate the course of future increases, it is therefore important that agencies set the initial increase at an appropriate level. 3 Case 17-2780, Document 103-1, 11/17/2017, 2175470, Page9 of 34 B. NHTSA’s Interim Rule and Global Automakers’ Petition On July 5, 2016, without employing notice-and-comment procedures, NHTSA issued an interim rule setting the catch-up increase applicable to all programs under its supervision, including the CAFE program. See 81 Fed. Reg. 43,524 (July 5, 2016). Without any analysis, the agency set 1975 as the baseline, because that was the year the CAFE program and the civil penalties provision were codified. Id. at 43,526. For most of the time since then, the maximum fine for a CAFE violation has been $5.50 for each tenth of a mile per gallon ("mpg") that a manufacturer’s fleet-average CAFE level falls short, multiplied by the number of fleet vehicles that fail to meet the standard. Applying the cost-of-living adjustment to the 1975 baseline year, NHTSA set the catch-up increase at $14 per 1/10th mpg per vehicle, nearly triple the current maximum. Id. The adjustment’s effective date made it applicable to the 2014–15 model years, which were completed but for which compliance files were not closed, and the then-current 2016–17 model years. Based on a simple extrapolation from the average annual amount of civil penalties collected, NHTSA estimated that "increasing the 4 Case 17-2780, Document 103-1, 11/17/2017, 2175470, Page10 of 34 current civil penalty amount by 150 percent would not result in an annual effect on the economy of $100 million or more," the threshold for significance under Executive Order 12866. Id. at 43,257. But NHTSA did not account for the increasing stringency of CAFE standards over time or for falling gas prices that have caused consumers to choose less fuel-efficient vehicles, making the standards more difficult to meet. Global Automakers, together with the Alliance of Automobile Manufacturers ("the Alliance"), timely filed a petition for partial reconsideration. The petition advanced three arguments supporting reconsideration. First, retroactively applying the increase to the 2014– 17 model years, long after it was feasible to make design changes, would impermissibly disturb manufacturers’ settled expectations. Ex. A at 5–6. Second, NHTSA had applied the wrong baseline year. In 2007, Congress passed the Energy Independence and Security Act ("EISA"), Pub. L. No. 110-140 (2007), which amended 49 U.S.C. § 32912 — the provision setting forth the CAFE civil penalty — and ratified the current $5.50 per 1/10th mpg per vehicle penalty while changing the uses to which penalties could be directed. See EISA § 112. Accordingly, 5 Case 17-2780, Document 103-1, 11/17/2017, 2175470, Page11 of 34 2007 was the most recent year in which Congress "established or adjusted" the CAFE civil penalty and, therefore, 2007 is the baseline year to which the cost-of-living adjustment should apply. Ex. A at 4–5. Third, NHTSA’s assessment of the economic impact of the increase was vastly understated because the nearly three-fold increase in civil penalties would result in an "average annual cost increase of approximately $1 billion over the baseline." Ex. A at 7. (More recent estimates provided during the recently closed comment period have topped $3 billion.) That calculation was reached by inputting the two civil penalty amounts ($14.00 and $5.50 per 1/10th mpg per vehicle) into the "Volpe Model," the mathematical model that NHTSA relies on to set CAFE standards. Id. As the petition noted, the extra $1 billion in annual costs would have serious economic consequences that were not accounted for in the interim rule. Id. at 8. The petition requested alternative relief, asking the agency either (1) to issue a new interim rule that "applies the inflation adjustment to the base year of 2007," or (2) "[i]f NHTSA does not concur that 2007 is the proper baseline year," to exercise the agency’s Section 4(c) "discretion with respect to the CAFE penalties." Ex. A. at 11. 6 Case 17-2780, Document 103-1, 11/17/2017, 2175470, Page12 of 34 C. The Revised Rule and Reconsideration NHTSA granted the reconsideration petition as to the retroactive application of the catch-up increase, delaying implementation of the rule until model year 2019. See 81 Fed. Reg. 95,489, 95,491 (Dec. 28, 2016). NHTSA did not respond, however, to the petition’s argument that it should either set 2007 as the baseline year or use its Section 4(c) authority to reduce the catch-up increase. Nor did it acknowledge the $1 billion cost estimate based on the agency’s own Volpe Model. Instead, the rule mischaracterized the petition, summarily concluding that because the agency addressed the petition’s comment on retroactivity, it "need not address" the petition’s "alternative requests" regarding the baseline year or Section 4(c). Id. at 95,489–90 & n.7. NHTSA’s revision to the interim rule was initially scheduled to take effect January 25, 2017, but the effective date was delayed several times. See 82 Fed. Reg. 8694 (Jan. 30, 2017); id. at 15,302; id. at 29,009. NHTSA’s delay of the rule’s effective date and its decision to grant reconsideration before it became effective obviated the need for the industry to challenge the revised final rule. 7 Case 17-2780, Document 103-1, 11/17/2017, 2175470, Page13 of 34 On July 7, 2017, NHTSA stayed implementation of the revised rule pending reconsideration of issues that had been raised, but the agency had failed to address. The agency corrected its earlier misunderstanding, noting that the petition for reconsideration had argued that NHTSA used the wrong base year to calculate the inflationary adjustment to the CAFE civil penalty and raised concerns about applying the adjusted civil penalty retroactively. The Industry Petition also argued that in the event that NHTSA chose not to adopt the base year suggested in the petition, NHTSA should seek comment on whether NHTSA should adopt a lower penalty level than the one in the interim final rule based on "negative economic impacts[.]" 82 Fed. Reg. 32,139, 32,139 (July 12, 2017). NHTSA noted that while it responded to the comments about retroactivity, the rule "did not address the other points raised in" the petition — namely, the alternative requests to use 2007 as the baseline year or to exercise Section 4(c) discretion to reduce the catch-up increase. Id. The agency announced that it was "now reconsidering" because its revision to the interim rule "did not give adequate consideration to all of the relevant issues, including the potential economic consequences of increasing CAFE penalties by potentially $1 billion per year, as estimated in the Industry Petition." Id. In a separate notice, NHTSA acknowledged 8 Case 17-2780, Document 103-1, 11/17/2017, 2175470, Page14 of 34 that the "interim final rule did not provide an opportunity for interested parties to provide input fully" on issues related to the baseline year and economic costs, and therefore it was seeking "information concerning the costs and benefits of increased penalties" as well as whether to use 2007 as the baseline. 82 Fed. Reg. 32,140, 32,142 (July 12, 2017). STANDARD OF REVIEW Summary reversal is a disfavored remedy because it deprives litigants of a full opportunity to be heard and the Court of a thorough airing of legal and factual issues. See Garcia-Mir v. Meese, 781 F.2d 1450, 1457 (11th Cir. 1986) (declining to grant the "extraordinary" remedy of summary reversal without "according the adverse party the constitutional imperative of due process—a hearing before this Court"); Fed. Ct. App. Manual § 25:4 (6th ed.) (summary reversal "is an extraordinary remedy reserved for extreme cases"). Summary reversal is not appropriate where disputed issues make a case "clearly worthy of consideration by a merits panel in the course of a full appeal." Plante v. Dake, 599 F. App’x 13, 14 (2d Cir. 2015). To be entitled to summary reversal, the movant "bears the heavy burden of establishing" that the merits of the case are "so clear" that expedited action is justified and 9 Case 17-2780, Document 103-1, 11/17/2017, 2175470, Page15 of 34 that "no benefit will be gained from further briefing and argument." Taxpayers Watchdog, Inc. v. Stanley, 819 F.2d 294, 298 (D.C. Cir. 1987). Similarly, a stay is "not a matter of right, even if irreparable injury might otherwise result." Nken v. Holder, 556 U.S. 418, 433 (2009). It is "an exercise of judicial discretion" that should be granted only if the party requesting a stay carries its heavy burden to show "that the circumstances justify an exercise of that discretion." Id. The "burden is on the party seeking a stay" to meet all the requirements for a stay, including irreparable injury. Sussman v. Jenkins, 642 F.3d 532, 537 (7th Cir. 2011); see also Winter v. NRDC, Inc., 555 U.S. 7, 21 (2008). ARGUMENT I. Petitioners Are Not Entitled To Summary Reversal. The motion for summary reversal should be denied. NHTSA’s decision to grant reconsideration was an appropriate step necessary to correct the agency’s earlier failure to satisfy its obligations to apply the statutory factors and engage in reasoned decisionmaking. Petitioners cite no precedent establishing that an agency must implement a procedurally infirm rule, and the cases they rely on are readily distinguished. 10 Case 17-2780, Document 103-1, 11/17/2017, 2175470, Page16 of 34 A. NHTSA’s Decision to Reconsider the Rule Was Appropriate. NHTSA’s failure to address Global Automakers’ arguments that it should use 2007 as the baseline year or exercise its authority under Section 4(c) was arbitrary and capricious. As a result, the agency’s revision to the interim rule would not have been able to withstand judicial scrutiny. "[A]n agency must cogently explain why it has exercised its discretion in a given manner." Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 48 (1983). As part of this obligation, agencies must consider and "respond to all significant comments, for'the opportunity to comment is meaningless unless the agency responds to significant points raised by the public.’" Am. Civil Liberties Union v. FCC, 823 F.2d 1554, 1581 (D.C. Cir. 1987) (quoting Alabama Power Co. v. Costle, 636 F.2d 323, 384 (D.C. Cir. 1979)). An agency’s "failure to acknowledge... record evidence directly contradicting its conclusion is arbitrary and capricious." Islander E. Pipeline Co., LLC v. Connecticut Dep’t of Envtl. Prot., 482 F.3d 79, 102 (2d Cir. 2006) (citing State Farm, 463 U.S. at 43). Requiring agencies to address substantive comments ensures the efficacy of judicial review: 11 Case 17-2780, Document 103-1, 11/17/2017, 2175470, Page17 of 34 unaddressed comments "leave a reviewing court unable to say that the agency has considered all relevant factors." Alabama Power, 636 F.2d at 385. It is also a critical component of the due process right encapsulated by the APA’s requirement that "interested person[s]" be afforded "the right to petition for the issuance, amendment, or repeal of a rule." 5 U.S.C. § 553(e); see also Melrose Credit Union v. City of New York, 247 F. Supp. 3d 356, 375 (S.D.N.Y. 2017) ("[T]he opportunity to be heard remains the Constitution’s'root requirement.’") (quoting Boddie v. Connecticut, 401 U.S. 371, 378–79 (1971)). An agency’s obligation to consider substantive comments and explain its reasoning is heightened in cases where, as here, Congress has prescribed the manner in which the agency is to undertake its statutory duties and identified the factors that are to guide its discretion. See, e.g., Verizon Telephone Co. v. FCC, 374 F.3d 1229, 1235 (D.C. Cir. 2004) (agency’s decision was arbitrary and capricious because it failed to provide "a reasoned explanation for denying forbearance according to the statutory requirements"). In the 2015 Act, Congress directed agencies to choose a baseline year and what factors to consider when determining whether to reduce the catch-up increase to a civil 12 Case 17-2780, Document 103-1, 11/17/2017, 2175470, Page18 of 34 penalty. Significantly, Congress left it to the agencies to determine whether particular programs required something less than the automatic adjustment. Global Automakers’ petition for reconsideration argued that, under the statute’s plain language, the agency had selected the wrong baseline year. Global Automakers also objected that the agency’s own model showed that using a 1975 baseline and nearly tripling the maximum civil penalty would cause serious negative economic consequences. NHTSA was therefore required to consider adjusting the catch-up increase, as Congress expressly permitted. NHTSA was obliged to address these comments and, in failing to do so, it "entirely failed to consider an important aspect of the problem" identified by Congress. State Farm, 463 U.S. at 43. Moreover, the agency’s initial excuse for ignoring Global Automakers’ comments — that it was an "alternative request for relief" mooted by the agency’s decision to apply the catch-up increase starting in model year 2019 — was wrong. The petition’s arguments on retroactivity were independent of its arguments about the baseline year and the cost of the catch-up increase. See Ex. A. at 11. Because Global Automakers’ 13 Case 17-2780, Document 103-1, 11/17/2017, 2175470, Page19 of 34 comments regarding the baseline year and the cost of compliance, "if true, raise points relevant to the agency’s decision [that] if adopted, would require a change" to the rule, the agency could not just brush them aside. Home Box Office, Inc. v. FCC, 567 F.2d 9, 35 n.58 (D.C. Cir. 1977). Given the procedural infirmities of the revised rule, NHTSA appropriately decided to defer implementation to consider the industry’s comments. Agencies often grant reconsideration to correct their own mistakes, and an agency’s decision to grant reconsideration is not reviewable. See Portland Cement Ass’n v. EPA, 665 F.3d 177, 185 (D.C. Cir. 2011) (noting that review is available only "if reconsideration is denied" (emphasis added)). As courts have explained, agency requests to reconsider are "commonly grant[ed]" because it is preferable for "agencies to cure their own mistakes rather than wasting the courts’ and the parties’ resources reviewing a record" that is "incorrect or incomplete." Ethyl Corp. v. Browner, 989 F.2d 522, 524 (D.C. Cir. 1993); see also Ivy Sports Med., LLC v. Burwell, 767 F.3d 81, 86 (D.C. Cir. 2014) ("administrative agencies are assumed to possess at least some inherent authority to revisit their prior decisions, at least if done 14 Case 17-2780, Document 103-1, 11/17/2017, 2175470, Page20 of 34 in a timely fashion"); Mazaleski v. Treusdell, 562 F.2d 701, 720 (D.C. Cir. 1977). Indeed, although NHTSA characterized its action as a stay pending re-consideration, in reality the agency stayed implementation to consider in the first instance Global Automakers’ substantial comments that went directly to the statutory factors Congress set forth in Section 4(c). NHTSA acknowledged that the rule did not respond to Global Automakers’ comments on these points, and it therefore stayed the rule to undertake the reasoned decisionmaking that is required by law. See 82 Fed. Reg. at 32,142. NHTSA’s authority for acting responsibly in this fashion is clear: the requirement embedded in 5 U.S.C. § 553(e) to give meaningful consideration, and respond to, substantial comments that address "important aspect[s] of the problem" before promulgating a rule. State Farm, 463 U.S. at 43. B. NHTSA’s Decision To Stay the Rule Was Consistent With The Requirements Of Reasoned Decisionmaking. Petitioners cannot dispute that NHTSA did not respond to substantial comments by Global Automakers and others before revising the interim rule. Nor can it dispute that when an agency fails to respond to comments, the agency must be given an opportunity to consider them in the first instance. Petitioners nonetheless urge the 15 Case 17-2780, Document 103-1, 11/17/2017, 2175470, Page21 of 34 Court to prevent the agency from staying implementation of the rule while it complies with these bedrock requirements of reasoned decisionmaking. Their position is meritless. 1. Abraham and Clean Air Council Do Not Apply. Petitioners rely principally on Natural Resources Defense Council v. Abraham, 355 F.3d 179 (2d Cir. 2004), and Clean Air Council v. Pruitt, 862 F.3d 1 (D.C. Cir. 2017) ("CAC"). Both cases are readily distinguished. In Abraham, the statutory provision that was "at the heart of the[] proceedings," 355 F.3d at 187, prohibited the agency from revising appliance standards downward to make them less energy efficient. See 42 U.S.C. § 6295(o)(1) ("The Secretary may not prescribe any amended standard which... decreases the minimum required energy efficiency, of a covered product."). In light of the statutory mandate, this Court determined that publication of the final rule was the date on which standards were locked in and that the statute’s "anti-backsliding" provision prevented the agency from granting reconsideration. Abraham, 355 F.3d at 195–97. In contrast, in this case, the 2015 Act describes certain conditions that give the agency discretion to reduce 16 Case 17-2780, Document 103-1, 11/17/2017, 2175470, Page22 of 34 the catch-up increase, and Global Automakers made a substantial showing that those conditions are satisfied. As NHTSA has correctly recognized, it must consider that showing before its interim rule can lawfully take effect. More fundamentally, in both Abraham and CAC, the agencies seeking to stay implementation had fully considered the objections that later became the grounds for reconsideration; there was no failure to consider and respond to substantive comments. In Abraham, this Court noted that the agency had "invited... public comment" on its proposed rule "and set a date for a public hearing." 355 F.3d at 189. The agency received "extensive submissions of public comment, and as the result of the[se] processes... promulgated a final rule." Id. Likewise, in CAC, the industry groups that eventually sought reconsideration filed comments, and EPA "[r]espond[ed] to these comments in the final rule." CAC, 862 F.3d at 11. The D.C. Circuit noted that "[t]he final rule thus responded directly to comments and information" received from regulated parties, id., and "[t]he administrative record... makes clear that industry groups had ample opportunity to comment on all... issues... and... the agency incorporated those comments directly into 17 Case 17-2780, Document 103-1, 11/17/2017, 2175470, Page23 of 34 the final rule," id. at 14. In fact, the petitioner’s argument for jurisdiction rested on its acknowledgement that "all of the issues [the agency] identified [as reasons for staying implementation] could have been, and actually were, raised (and extensively deliberated) during the comment period." Id. at 6 (second emphasis added). In Abraham and CAC, the agencies stayed a final rule to re-weigh a record that was complete and accounted for all "important aspect[s] of the problem." State Farm, 463 U.S. at 43. These cases thus reflect the general principle that an "agency may not reconsider its own decision if to do so would be arbitrary, capricious, or an abuse of discretion." Citizens Against Pellissippi Parkway Extension, Inc. v. Mineta, 375 F.3d 412, 417–18 (6th Cir. 2004). But NHTSA’s decision here to grant reconsideration, far from being arbitrary, was required. NHTSA has admitted that it failed to consider Global Automakers’ comments regarding the baseline year and the cost of compliance when it revised its interim rule. See 82 Fed. Reg. at 32,140. This failure renders the underlying rule fatally flawed and unsupportable, and makes petitioners’ reliance on Abraham and CAC inapt. 18 Case 17-2780, Document 103-1, 11/17/2017, 2175470, Page24 of 34 2. The 2015 Act’s Statutory Deadline Is Not Cause To Issue an Invalid Rule. Petitioners argue that the revised interim rule must be implemented because the statutory deadline to adjust civil penalties has already run. But petitioners cite no authority for the proposition that a statutory deadline requires the agency to issue a rule that short-circuits the APA’s meaningful-consideration and adequate-explanation requirements. Statutory deadlines are not an excuse to act arbitrarily. Cf. Americans for Clean Energy v. EPA, 864 F.3d 691, 719 (D.C. Cir. 2017) (even when an agency misses a statutory deadline, it remains "bound by our precedents (not to mention basic principles of due process)... [to] reasonably balance its statutory duties with the rights of the entities it regulates"). NHTSA’s statutory duty is not to issue any rule, but a valid rule that complies with the basic requirements of reasoned decisionmaking. Petitioners have made no showing of "egregious[ly]" unreasonable delay that courts have generally required when asked to compel agency action, even in cases of a missed statutory deadline. See TRAC v. FCC, 750 F.2d 70, 80 (D.C. Cir. 1984); see also 5 U.S.C. § 555(b). Nor could they. NHTSA has stated that it will act after appropriate notice-and-19 Case 17-2780, Document 103-1, 11/17/2017, 2175470, Page25 of 34 comment procedures to adjust civil penalty amounts consistent with the 2015 Act, and the comment period closed on October 10, 2017. See TRAC, 750 F.2d at 80 (declining to compel agency action where agency was "moving expeditiously" to complete proceedings). In any event, the Court’s power to compel withheld action extends only that far — to compel the agency to act, not to impose a particular substantive outcome. See McHugh v. Rubin, 220 F.3d 53, 61 (2d Cir. 2000). Forcing the agency to implement a legally flawed rule will only cause more, not less, delay and uncertainty. The interim rule, if implemented as revised, will be immediately vulnerable to challenge — a challenge that must succeed given the agency’s acknowledged failure to consider and respond to substantial comments. The remedy for this serious procedural infirmity is remand to the agency. See Pension Benefit Guar. Corp. v. LTV Corp., 496 U.S. 633, 654 (1990); FBME Bank Ltd. v. Lew, 209 F. Supp. 3d 299, 341 (D.D.C. 2016) (remanding rule to the agency to "respond to significant comments made" by petitioner). Remand would put the parties in the same position they occupy now — waiting as NHTSA takes comment on whether to use a different baseline year or to adjust the formula-derived catch-up increase. Nor 20 Case 17-2780, Document 103-1, 11/17/2017, 2175470, Page26 of 34 could the rule be implemented during the comment period. Respondents would have strong arguments in favor of a stay pending remand, since they would be directly harmed (and the public indirectly so) by the imposition of $1 billion in additional compliance costs and civil penalties. See id. at 341–42 (remanding a rule to consider substantial comments while "stay[ing] implementation of the rule so as to avoid potentially irreparable harm" to petitioner). Indeed, given the agency’s acknowledgement that it failed to consider substantial comments implicating statutory factors, the agency itself would be justified in seeking a voluntary remand for reconsideration in response to a challenge to the rule. See, e.g., Fox Television Stations, Inc. v. FCC, 489 F.3d 444, 453 (2d Cir. 2007) (court previously granted agency’s request for remand and stay), rev’d on other grounds and remanded, 556 U.S. 502 (2009). Judicial review of agency action is not meant to be "a ping-pong game," Xiao Ji Chen v. U.S. Dep’t of Justice, 471 F.3d 315, 338 (2d Cir. 2006), and the Court should not create uncertainty and disruption in the market by forcing the agency to implement a rule that is plainly flawed. 21 Case 17-2780, Document 103-1, 11/17/2017, 2175470, Page27 of 34 C. Petitioners’ Motion Implicates Other Issues Not Appropriate For Summary Consideration. Petitioners’ motion raises a host of issues relating to the statute and the posture of this petition that require more probing treatment than is possible on summary consideration. See Plante, 599 F. App’x at 14 (summary reversal inappropriate where disputed issues make a case "clearly worthy of consideration by a merits panel in the course of a full appeal"). Those issues include: Jurisdiction, Ripeness, and Statute of Limitations: There are substantial questions that should be addressed on the merits, including (1) petitioners lack standing; (2) the fact that petitioners’ challenge is not ripe, because the increase in civil penalties will not apply to vehicles until the 2019 model year, and compliance files for those vehicles will not be closed for several years after that; (3) petitioners have defaulted on the deadline to file this petition; and (4) a challenge to NHTSA’s rule on civil penalties must be brought in the district court. These issues deserve more extensive briefing than can be afforded on summary consideration. Connection to the CAFE statutory requirements: Petitioners’ motion is silent on how the increase in civil penalties interacts with the 22 Case 17-2780, Document 103-1, 11/17/2017, 2175470, Page28 of 34 CAFE statute itself, but this critical issue also should not be approached haphazardly. Under the CAFE statute, civil penalties are not a punitive, action-forcing tool, but are instead part of a suite of measures that provide "compliance flexibilit[y]." NHTSA, CAFE Overview, available at https://one.nhtsa.gov/cafe_pic/CAFE_ PIC_home.htm. A manufacturer whose fleet over-complies with an applicable standard can bank "credits" equal to the exceedance that can be "spent" on past or future shortfalls, carrying them forward over five model years or carrying them back three model years. Credits can also be traded, transferred, and purchased to cover shortfalls or, if more efficient, shortfalls can be resolved by paying civil penalties. A critical issue that the agency — and ultimately, the courts — must consider is whether a large increase in civil penalty amounts will disrupt this carefully balanced scheme. The agency’s approach also should be considered in light of the explicit statutory directive that NHTSA balance environmental and energy concerns with economic practicability in setting standards and penalties. See 49 U.S.C. § 32902(f). Petitioners’ motion takes a simplistic approach that is based on speculative assumptions at odds with the complexity of the statutes 23 Case 17-2780, Document 103-1, 11/17/2017, 2175470, Page29 of 34 involved. The Court should not pretermit NHTSA’s consideration of these complex issues — and certainly not on summary briefing. II. Petitioners Are Not Entitled To A Stay. Petitioners’ alternative request for a stay of NHTSA’s action deferring implementation of the final rule should also be denied. The purpose of a stay is to preserve the status quo pending review of a contested change. See O Centro Espirita Beneficiente Uniao Do Vegetal v. Ashcroft, 389 F.3d 973, 1013 (10th Cir. 2004); Chobani, LLC v. Dannon Co., 157 F. Supp. 3d 190, 201 (N.D.N.Y. 2016). A stay is justified only if it is required to prevent irreparable harm from some imminent government action. See, e.g., Plaza Health Labs., Inc. v. Perales, 878 F.2d 577, 580 (2d Cir. 1989). Here, petitioners seek not to stay government action but to lock in a contested regulatory outcome that is legally flawed and will result in significant harm, both to consumers and to an entire industry. Essentially, the stay petitioners seek would be akin to a mandatory injunction requiring the agency to act to alter the status quo, but they have not come close to making the "more rigorous" showing required. Doninger v. Niehoff, 527 F.3d 41, 47 (2d Cir. 2008). 24 Case 17-2780, Document 103-1, 11/17/2017, 2175470, Page30 of 34 Likelihood of success: Petitioners are not likely to prevail on their argument that the agency must implement a rule that is procedurally infirm. They have identified no precedent supporting their reading of the APA and the requirements of due process. As noted above, the cases they do cite are readily distinguished. Irreparable Harm: Petitioners argue that failing to immediately implement the catch-up increase will increase pollution. That is wrong. They ignore that the new civil penalty amount will not actually take effect, and thus drive compliance — even to the limited extent that CAFE civil penalties are compliance forcing — until model year 2019. In fact, the full effect of the increased civil penalty will not be felt for several more years after that, because the "carry-forward" and "carry-back" provisions permit manufacturers to use existing credits to cover shortfalls before paying civil penalties. Petitioners also ignore that CAFE standards are part of a joint rule issued by NHTSA and the Environmental Protection Agency ("EPA") addressing motor vehicle fuel economy and greenhouse gas emissions, under the same regulatory framework. See 77 Fed. Reg. 62,624 (Oct. 15, 2012). EPA retains full authority to implement and 25 Case 17-2780, Document 103-1, 11/17/2017, 2175470, Page31 of 34 enforce its mobile source standards under the Clean Air Act, and petitioners make no showing that EPA will fail to do so. Against this speculative, non-imminent harm, Global Automakers has shown that using 1975 as the baseline year and failing to adjust the catch-up increase under Section 4(c) will add more than $1 billion in increased compliance costs and civil penalties. Public Interest Factors: The public interest factors also weigh in favor of denying the stay. There is a strong public interest in ensuring that agencies not set civil penalties at a level that has negative economic consequences. The public also has a clear, overriding interest in seeing that agencies adhere to their duty to give meaningful consideration to substantive comments. Although petitioners argue that staying implementation of the civil penalty increase will cause market disruption, forcing the agency to implement a flawed rule would cause more market disruption and be more unsettling to consumer and industry expectations than allowing the agency to get things right and undertake the reasoned decisionmaking that the law requires. CONCLUSION The motion should be denied. 26 Case 17-2780, Document 103-1, 11/17/2017, 2175470, Page32 of 34 Respectfully submitted,/s/Ashley C. Parrish Ashley C. Parrish Counsel of Record Justin A. Torres KING & SPALDING LLP 1700 Pennsylvania Avenue, N.W., Suite 200 Washington, D.C. 20006 Telephone: (202) 737-0500 Facsimile: (202) 626-3737 Email: aparrish@kslaw.com Of Counsel: Jacqueline Glassman KING & SPALDING LLP 1700 Pennsylvania Avenue, N.W., Suite 200 Washington, D.C. 20006 Telephone: (202) 737-0500 Facsimile: (202) 626-3737 Counsel for Proposed Intervenor the Association of Global Automakers Dated: November 17, 2017 27 Case 17-2780, Document 103-1, 11/17/2017, 2175470, Page33 of 34 CERTIFICATE OF COMPLIANCE Pursuant to Rule 32(g) of the Federal Rules of Appellate Procedure, I hereby certify that this response: (i) complies with the type-volume limits of Rule 27(d)(2)(A), as it contains 5,112 words, including footnotes and excluding the parts of the document exempted by Rule 32(f); and (ii) complies with the typeface and style requirements of Rule 32(a)(5)–(6), as it has been prepared using Microsoft Word 2013 and is set in 14 point Century Schoolbook font./s/Ashley C. Parrish Ashley C. Parrish Case 17-2780, Document 103-1, 11/17/2017, 2175470, Page34 of 34 CERTIFICATE OF SERVICE Pursuant to Rule 25 of the Federal Rules of Appellate Procedure, I hereby certify that I have this 17th day of November, 2017, served a copy of the foregoing document on all parties through the Court’s CM/ECF system./s/Ashley C. Parrish Ashley C. Parrish Case 17-2780, Document 103-2, 11/17/2017, 2175470, Page1 of 14 Exhibit A Case 17-2780, Document 103-2, 11/17/2017, 2175470, Page2 of 14 August 1, 2016 The Honorable Mark Rosekind, Ph.D. Administrator National Highway Traffic Safety Administration 1200 New Jersey Avenue, S.E. West Building, Fourth Floor Washington, D.C. 20590 RE: Petition for Partial Reconsideration of the Interim Final Rule on Civil Penalties, NHTSA Docket 2016-0075, 81 Fed. Reg. 43524, July 5, 2016 Dear Dr. Rosekind: The Alliance of Automobile Manufacturers1 (the Alliance) and the Association of Global Automakers2 (Global Automakers) are petitioning for partial reconsideration of the Interim Final Rule3 (IFR) adjusting the civil penalties under several statutes administered by NHTSA. According to the IFR, the adjustments were made pursuant to the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (the Improvements Act).4 The Alliance and Global Automakers seek reconsideration of the portion of the IFR that applies to civil penalties under the Corporate Average Fuel Economy (CAFE) program and the CAFE standards at 49 C.F.R. Parts 531 and 533. Introduction The Alliance and Global Automakers recognize that NHTSA was obligated to take some action in response to the Improvements Act, which directed nearly all federal agencies to make inflation adjustments to monetary civil penalties. We realize that NHTSA is not empowered to exempt the CAFE program from this directive. We do, however, have serious concerns about the effects of the significant adjustment to the CAFE penalty in the IFR. 1 The Alliance of Automobile Manufacturers is an association of 12 vehicle manufacturers which account for roughly 77% of all car and light truck sales in the United States. These members are BMW Group, FCA US LLC, Ford Motor Company, General Motors, Jaguar Land Rover, Mazda, Mercedes-Benz USA, Mitsubishi Motors, Porsche Cars North America, Toyota, Volkswagen Group of America, and Volvo Car USA. 2 The Association of Global Automakers represents international motor vehicle manufacturers, original equipment suppliers, and other automotive-related trade associations. Our members include American Honda Motor Co., Aston Martin Lagonda of North America, Inc., Ferrari North America, Inc., Hyundai Motor America, Isuzu Motors America, Inc., Kia Motors America, Inc., Maserati North America, Inc., McLaren Automotive Ltd., Nissan North America, Inc., Subaru of America, Inc., Suzuki Motor of America, Inc., and Toyota Motor North America, Inc. 3 81 Fed. Reg. 43524 (July 5, 2016). 4 Pub. L. 114-74, Section 701. 1 Case 17-2780, Document 103-2, 11/17/2017, 2175470, Page3 of 14 At the outset, the Alliance and Global Automakers respectfully submit that the agency used the wrong base year for the calculation of the inflation adjustment. Specifically, the Alliance and Global Automakers note that the last time the CAFE civil penalty was "established or adjusted" was 2007, when Congress adopted the Energy Independence and Security Act (EISA).5 Congress explicitly considered and rejected a change to the specific civil penalty dollar amount in the statute ($5.00/0.1 mpg), and instead ratified the penalty while at the same time amending the penalty provision to authorize the use of civil penalty revenue to support NHTSA’s CAFE rulemaking and to support research and development of advanced technology vehicles.6 Thus, Congress reset the CAFE penalty in 2007, albeit at the same $5.00/0.1 mpg level, and that is the base year that should have been used to apply the inflation adjustment multiplier. Moreover, due to the unique nature of the civil penalties under the CAFE program, including especially the statutory requirement to provide a minimum of eighteen months leadtime before making a CAFE standard more stringent, it is not appropriate to apply such increases retroactively to penalties applicable to model years that have already been completed or for which a company’s compliance plan has already been set. The Alliance and Global Automakers observe that NHTSA can follow some alternative pathways that would enable NHTSA to make adjustments to the standard penalty adjustment approach, yet also take these unique factors into account. The factors that distinguish CAFE civil penalties from most other civil penalty schemes include the following:  As NHTSA has acknowledged in various contexts, a number of manufacturers meet their CAFE obligations by electing to pay civil penalties. Indeed, NHTSA itself has characterized the option of paying the civil penalty as a "compliance flexibility."7 An increase in the CAFE civil penalties will therefore directly impact the actual costs of the CAFE program on such manufacturers.  In recognition of the fact that CAFE compliance through the use of technology requires significant leadtime on the part of automakers, the CAFE statute provides that increases in CAFE standards can therefore be made only with a minimum of 18 months’ lead time in advance of a model year. This is intended to provide manufacturers time to develop their compliance strategy and to anticipate any civil penalties they may need to pay. The sudden imposition of a large civil penalty increase would upset this statutory schedule and expose manufacturers to far higher penalties than they had planned for, in contravention of Congress’ intent.  Different from most other federal programs that impose civil penalties, the CAFE program contemplates compliance levels that are not static and, indeed, have been 5 Pub. L. 110-140. 6 Section 112 of Pub. L. 110-140. 7 http://www.nhtsa.gov/CAFE_PIC/CAFE_PIC_home.htm, last accessed July 27, 2016. 2 Case 17-2780, Document 103-2, 11/17/2017, 2175470, Page4 of 14 adjusted on an annual basis since adoption of the One National Program in 2009 and the 2011 Joint Final Rule on CAFE and Greenhouse Gas Standards.  And, unlike most civil penalty schemes in other statutes, CAFE civil penalties follow a prescribed formula that may not be compromised by NHTSA (except under extremely rare circumstances, as discussed below). Thus, an adjustment to the CAFE civil penalties does not merely increase the maximum theoretical penalties that the Agency could collect; it automatically increases the actual penalties that the manufacturers will pay, and this is true whether a company chooses to purchase credits or pay penalties directly as the price of credits is connected to the penalty amount. Our most significant concern with the IFR is that it would apply retroactively to the 2014 and 2015 Model Years (which have been completed for all manufacturers but for which the compliance files are not all closed), to the 2016 Model Year (which is complete for many manufacturers) and to the 2017 and 2018 Model Years (for which manufacturers have already set compliance plans based on guidance from NHTSA, including the existing civil penalty amounts). Applying the increased civil penalties in this manner is profoundly unfair to manufacturers, does not improve the effectiveness of this penalty, and does nothing to further the policies underlying the CAFE statute. Additionally, given NHTSA’s recognition that paying civil penalties is a "compliance flexibility" that some manufacturers have elected, NHTSA’s past estimates of the cost of compliance with the CAFE program have taken into account the costs of paying penalties. The sudden and retroactive imposition of the higher civil penalty amounts contained in the IFR (which were estimated by NHTSA to result in only $50 million in civil penalties being collected) would actually increase the annual estimated cost of compliance with the CAFE program by at least $1 billion based on NHTSA’s own modeling tools. Finally, the IFR significantly underestimated the economic impact of the increases. According to the IFR, economic impact was estimated solely by reviewing historic penalties paid by manufacturers. The economic impact instead should have been derived from an analysis of expected current and future compliance costs based on the Final Rules for Model Years 2011-2016 and Model Years 2017-2021. Equally important, in focusing exclusively on penalties, the IFR failed to take into account at all the impact on the credit market, even though the recently released Draft Technical Assessment Report identified credit trading as "the primary flexibility in model year 2014."8 Clearly, the purchase price of credits is directly related to the penalty that would otherwise be paid by a manufacturer. Thus, any analysis of the potential economic impact of a penalty increase should have quantified the impact on the credit market. All of these issues are discussed in more detail below. 8 U.S. Environmental Protection Agency, National Highway Traffic Safety Administration, California Air Resources Board. Draft Technical Assessment Report: Midterm Evaluation of Light-Duty Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards for Model Years 2022-2025 (EPA-420-D-16-900. July 2016. Available at http://www.nhtsa.gov/staticfiles/rulemaking/pdf/cafe/Draft-TAR-Final.pdf (last accessed July 26, 2016) at Page 3-19. 3 Case 17-2780, Document 103-2, 11/17/2017, 2175470, Page5 of 14 This Petition raises fundamental issues with respect to the administration of the CAFE program. The industry is already facing significant challenges in planning for compliance with the Model Year 2017-2021 CAFE standards, so the implementation of the IFR would only serve to increase those challenges without any environmental benefits in the short term, and without attempting to harmonize the goals of the Improvements Act with the requirements of the CAFE statute. The Alliance and Global Automakers strongly urge NHTSA to withdraw the Interim Final Rule as it pertains to CAFE civil penalties and reissue a new Interim Final Rule that applies the inflation adjustment to the base year of 2007. If NHTSA is unable to agree that 2007 is the base year, this petition urges NHTSA to withdraw the IFR and to undertake a notice-and-comment rulemaking as authorized by the Improvements Act to develop a more appropriate formula for an inflation adjustment to the CAFE civil penalties, and to harmonize the timetable for any such adjustment with the unique leadtime requirements of the CAFE statute under the Improvements Act. In either case, NHTSA should confirm that it will not apply the new penalties before Model Year 2019. Discussion 1. The Interim Final Rule Used the Wrong Base Year for Calculating the Inflation Adjustment of the CAFE Civil Penalty The Improvements Act requires federal agencies to adjust civil monetary penalties contained in their statutes by applying a defined "cost of living adjustment" to the penalty measured from the last calendar year in which the penalty was "established or adjusted" by Congress (other than by operation of the Federal Civil Penalties Inflation Adjustment Act of 1990). The IFR concluded that the last calendar year in which the CAFE penalty was "established or adjusted" by Congress was 1975, the year that the CAFE statute was originally enacted. In fact, however, the last time the CAFE civil penalty was "established or adjusted" was 2007, when Congress adopted the Energy Independence and Security Act (EISA).9 In considering that legislation, Congress explicitly considered and rejected a change to the specific civil penalty dollar amount in the statute ($5.00/0.1 mpg),10 and instead ratified the penalty while at the same time modified the penalty provision to authorize the use of civil penalty revenue to support NHTSA’s CAFE rulemaking and to support research and development of advanced technology vehicles.11 Thus, Congress reset the CAFE penalty in 2007, albeit at the same 9 Pub. L. 110-140. 10 See Discussion Draft of June 1, 2007, published in the Hearing Record of the Committee on Energy and Commerce entitled Legislative Hearing on Discussion Draft Concerning Alternative Fuels, Infrastructure and Vehicles, June 7, 2007, Serial Number 110-53. 11 Section 112 of Pub.L. 110-140. 4 Case 17-2780, Document 103-2, 11/17/2017, 2175470, Page6 of 14 $5.00/0.1 mpg level,12 and that is the base year that should have been used to apply the inflation adjustment multiplier.13 If NHTSA had applied the adjustment factor for 2007, instead of 1975, the significant economic consequences of the adjustment that are discussed in more detail below would, of course, be substantially mitigated. 2. A Sudden and Retroactive Increase In Civil Penalties Would Not Be Consistent With the Leadtime Provisions of the CAFE Statute. In support of its conclusion that the increase in CAFE civil penalties will not have a significant economic impact, NHTSA states in the IFR that manufacturers may make "production and marketing changes to influence the average fuel economy of vehicles produced by the manufacturer" to account for the increased civil penalties.14 As a practical matter, however, this is simply not the case, at least in the near term. The enhanced civil penalties set forth in the IFR are scheduled to become effective August 4, 2016, and NHTSA has indicated that it intends to apply them to all Model Years that have not been closed out, including the 2015 Model Year.15 (It is unclear what NHTSA intends for manufacturers whose compliance file is still open for the 2014 Model Year). But the 2015 Model Year is complete for all manufacturers, and many manufacturers have already ended (or shortly will end) production for the 2016 Model Year. Additionally, manufacturers have already set their compliance plans for the 2017 and 2018 Model Years based on the civil penalty amounts in effect prior to August 4 based on previous guidance from NHTSA. As NHTSA itself noted in its Implementation White Paper, however, its goal is to "ensure that the new civil penalties are fairly and uniformly applied," a goal which cannot be met if some manufacturers’ compliance files are still open for Model Years 2014 or 2015, and some are closed. Additionally, the CAFE statute itself recognizes the need for sufficient leadtime to make changes to improve fuel efficiency in a manufacturer’s fleet. For this reason, the statute provides that any amendment to a CAFE standard that has the effect of making the standard more stringent must be promulgated at least 18 months before the beginning of the model year to which the amendment applies.16 This leadtime requirement is Congress’ recognition that manufacturers need to be able to engage in advance planning not only for purposes of compliance, but also for the potential payment of civil penalties. A sudden and substantial increase in the civil penalty formula would upset this statutory balance by unfairly upsetting the manufacturers’ reasonable expectations regarding the penalty amounts that would be due. Moreover, applying the enhanced civil penalties to model years that have ended, or to model 12 By 2007, the actual CAFE civil penalty was $5.50/0.1 mpg as a result of a previous inflation adjustment rulemaking by NHTSA, and presumably Congress knew that fact and expected NHTSA to continue to apply the inflation adjusted amount. 13 See Final floor votes in the House and Senate which overwhelmingly approved the final version of EISA by 314-100 and 86-8 respectfully (House Floor vote #1170 and Senate Recorded Vote #430). 14 81 Fed. Reg. at 43527. 15 NHTSA White Paper entitled "Implementation of the Federal Civil Penalties Inflation Adjustment Act Improvement[s] Act of 2015 for the Corporate Average Fuel Economy (CAFE) Program," July 18, 2016. 16 49 U.S.C. 32902(g)(2). 5 Case 17-2780, Document 103-2, 11/17/2017, 2175470, Page7 of 14 years where it is too late for manufacturers to make significant changes, does nothing to further the fuel savings goals of the CAFE statute, or to improve the effectiveness of this penalty. The Alliance and Global Automakers are aware that courts (and administrative agencies) generally apply the law as it is in effect at the time they adjudicate compliance, and that there is nothing inherently problematic in most cases with Congress’ decision to apply penalty adjustments to conduct that occurred prior to the effective dates of the penalty adjustments. However, the Supreme Court has noted an exception to this general rule: if applying a change retroactively would disturb settled rights, the change is not applied retroactively. "The Court has refused to apply an intervening change to a pending action where it has concluded that to do so would infringe upon or deprive a person of a right that had matured or become unconditional." Bennett v. New Jersey, 470 U.S. 632, 639 (1985), citing Bradley v. School Board, 416 U.S. 696, 720 (1974). The manufacturers have substantial "right[s] that ha[ve] matured" with respect to Model Years 2014, 2015 and 2016, and, these rights are largely matured for Model Years 2017 and 2018 due to the compliance flexibilities built into the CAFE program. While the Alliance and Global Automakers acknowledge that NHTSA must take action to adjust the CAFE penalty in accordance with the Improvements Act, it must also do so in a way that harmonizes that adjustment with the underlying structure and purposes of the CAFE law. The Bennett exception to the general retroactivity rule applies. NHTSA should not apply the adjusted penalty to any Model Year prior to Model Year 2019. 3. If NHTSA Retains the 1975 Baseline Year for the Adjusted Penalties, There Will Be A Significantly Higher Economic Impact on the Costs of Compliance with the CAFE Standards than NHTSA Estimated in the IFR. In the IFR, NHTSA asserted that the proposed increase in CAFE civil penalties would not be economically significant, based on a review of penalties paid over the last five years: We also do not expect the increase in the civil penalty amount in 49 CFR 578.6(h)(2) to be economically significant. Over the last five model years, NHTSA has collected an average of $20 million per model year in civil penalties under 49 CFR 578.6(h)(2). Therefore, increasing the current civil penalty amount by 150 percent would not result in an annual effect on the economy of $100 million or more.17 However, a recitation of the penalties manufacturers previously paid fails fully to comprehend the economic impact of the proposed increase in two important ways: it does not accurately reflect NHTSA’s own estimates of the impact of the increases in CAFE standards in coming years and it completely overlooks the impact of the increases on the CAFE credit market. NHTSA has recognized that some manufacturers may elect to pay civil penalties in lieu of meeting the CAFE standards for a given model year. NHTSA has acknowledged this practice in a number of contexts and has treated the civil penalties as part of the industry’s overall costs 17 81 Fed. Reg. at 43527. 6 Case 17-2780, Document 103-2, 11/17/2017, 2175470, Page8 of 14 of compliance with the CAFE program. NHTSA included the following passage in the preamble to the 2012 Final Rule establishing the CAFE Standards for Model Years 2017-2021: As it has in past rulemakings and in the NPRM preceding today’s final rule, NHTSA has also applied its CAFE model in a manner that simulates the potential that, as allowed under EISA/EPCA and as suggested by their past CAFE levels, some manufacturers could elect to pay civil penalties rather than achieving compliance with future CAFE standards. EISA/EPCA allows NHTSA to take this flexibility into account when determining the maximum feasible stringency of future CAFE standards.18 NHTSA proceeded to apply its CAFE Compliance and Effects Model ("the Volpe model") with the assumption that several manufacturers would elect to pay civil penalties. NHTSA observed that "to assume these manufacturers would exhaust available technologies before paying civil penalties would cause unrealistically high estimates of market penetration of expensive technologies such as diesel engines and strong HEV’s as well as correspondingly inflated estimates of both the costs and benefits of any potential CAFE standards."19 In other words, NHTSA clearly recognizes that manufacturers have the choice to pay civil penalties in lieu of meeting the applicable fuel economy standards and relied on the Volpe Model to justify the cost-effectiveness and economic practicability of the Model Year 2017-2021 CAFE standards. The Alliance and Global Automakers have run the latest Volpe Model using the recent and increased higher civil penalty amounts against the 2015 Model Year fleet (the same assumption used by NHTSA in the Draft Technical Assessment Report).20 The Volpe model calculated an average annual cost increase of approximately $1 billion over the baseline with the higher penalty amount inputted.21 It is worth noting that the $1 billion is just the cost of technologies and civil penalties and does not take into consideration the unintended consequence of subsequently higher costs for the purchase of CAFE credits which will exponentially increase as the standards increase and the volume of CAFE credits available in the market diminish. The impact on CAFE credits is discussed further in this petition. 18 77 Fed. Reg. 62624 at 62666 (October 15, 2012) (Emphasis added). 19 77 Fed. Reg. at 63008 (Footnote 1111). 20 U.S. Environmental Protection Agency, National Highway Traffic Safety Administration, California Air Resources Board. Draft Technical Assessment Report: Midterm Evaluation of Light-Duty Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards for Model Years 2022-2025 (EPA-420-D-16-900. July 2016. Available at http://www.nhtsa.gov/staticfiles/rulemaking/pdf/cafe/Draft-TAR-Final.pdf (last accessed July 26, 2016). 21 Value derived from analysis of NHTSA Volpe model results with inputs of $14.00 and $5.50 per 0.1 mpg CAFE non-compliance civil penalties using the most recent version of the Volpe model ("2016 Draft TAR for Model Years 2022-2025 Passenger Cars and Light Trucks", available at http://www.nhtsa.gov/Laws+&+Regulations/CAFE+-+Fuel+Economy/CAFE+Compliance+and+Effects+Modeling+System:+The+Volpe+Model, last accessed July 27, 2016). Class 2b and 3 medium-duty vehicles removed for consistency with compliance fleets to which the CAFE non-compliance civil penalty applies. 7 Case 17-2780, Document 103-2, 11/17/2017, 2175470, Page9 of 14 In light of the Volpe model output, we do not believe the analysis that was used in the IFR is the correct methodology for making a determination regarding the economic significance of the penalty increase. The IFR also omitted from its analysis the impact that the increases would have on another important compliance flexibility, credit trading among the manufacturers. The recently released Draft Technical Assessment Report (Draft TAR) identified various flexibilities that the CAFE program allows for manufacturers to reach compliance. According to the Draft TAR, in recent model years many manufacturers (reflecting a significant portion of all vehicle production) have needed to utilize various credit flexibilities to achieve compliance. Among the range of credit flexibilities available, the Draft TAR cites trading as an increasingly important and commonly utilized flexibility. As previously noted, the Draft TAR explicitly states that credit trading among manufacturers was "the primary [credit] flexibility in model year 2014." During the last five years (the same time period that the IFR reviewed for penalties historically paid), the Draft TAR shows that approximately 50 million CAFE credits were traded among manufacturers.22 While credit transaction terms are not public, the theoretical ceiling price of credits prior to the IFR would have been $5.50 per credit, discounted based on several factors, including overall supply and demand and the expiration date of the individual credit. Assuming for the sake of argument a 25% discount, over the last five years, manufacturers would have spent over $200 million purchasing credits. Assuming the same 25% discount from $14.00, manufacturers would have spent over $500 million over the past five years to purchase the same number of credits (with no real world benefits in terms of fuel savings) – an economic impact of over $300 million purely within the credit market. The IFR’s penalty increase will dramatically impact the credit trading market, including the price of credits. The availability of credits will be significantly reduced as the CAFE standards rapidly increase over the next few years, and the price of credits will increase substantially if the CAFE penalty is adjusted to $14.00/0.1 mpg, a factor the agency should have incorporated into its analysis of the economic impact of the proposed increase. Finally, the IFR significantly overstates the options available to manufacturers for avoiding liability for civil penalties (even with credit trading). As discussed in Section 2, above, manufacturers have no technology options for compliance with respect to Model Years 2014 – 2016, and very limited technology options (if any) for Model Years 2017-2018. With respect to credit trading, the IFR did not account for the limitations on that option. By law, the domestic minimum passenger car CAFE standard cannot be met by purchasing CAFE credits at all; thus automakers may have to cover that gap by paying civil penalties. 4. CAFE Civil Penalties Are Formulaic and Not Subject to Being Compromised. Unlike nearly all civil penalty statutes, which establish maximum penalties but confer extensive discretion on the regulating agency to impose a lesser amount when circumstances warrant, the CAFE statute establishes a precise and immutable formula for determining the 22 Draft TAR Figure 3.15 showing the volume of credits traded between Model Years 2010 and 2014. 8 Case 17-2780, Document 103-2, 11/17/2017, 2175470, Page10 of 14 amount of civil penalties applicable to a shortfall to the fuel economy standards. NHTSA does not have any discretion to alter the civil penalty formula, nor to impose a lesser amount than that which the statute dictates.23 For this reason, the large CAFE penalty increase as set forth in the IFR would have a harsher and more direct effect than will occur in other programs and statutes administered by NHTSA, as well as the other civil penalty statutes over which the Improvements Act mandated a penalty increase. As noted above, NHTSA has acknowledged that the payment of civil penalties is a CAFE "compliance flexibility" that some manufacturers elect to undertake. In order to exercise this flexibility, the manufacturers must to be able to estimate the amount of the penalties far enough in advance to weigh that against the alternative path of making fleet changes to meet the standards. If the IFR were to be implemented as written, a number of manufacturers will have elected to pay civil penalties based on one set of assumptions and guidance from NHTSA, only to have a different penalty framework imposed at the eleventh hour without warning. This, coupled with the inability of NHTSA to compromise or adjust the civil penalties, (absent extremely rare circumstances that virtually never apply), means that NHTSA would effectively be unable to take into account the reasonable expectations of the manufacturer in its collection of civil penalties, in contradiction to the leadtime structure that Congress wrote into the CAFE statute from the beginning. 5. As CAFE Standards Rise, the Effective Penalty for Excess Gallons of Fuel Already Increases Automatically. We also note that since the fundamental goals of EPCA that was enacted in 1975 and EISA that was enacted in 2007 are to reduce oil consumption, it is important to note that the standards themselves have already accounted for inflation. NHTSA uses harmonic averaging for fleet calculations and adjustment factors for credit trades and transfers. These mechanisms ensure that gallons of fuel are properly reflected in the mathematics of compliance.24 It would be similarly appropriate to consider the gallons of excess fuel consumption in determining the final inflation adjustment, as outlined below: o Consider a theoretical manufacturer that made one passenger car in 1978 when the standard was 18 mpg. If that vehicle achieved only 17.9 mpg, the penalty for that vehicle would be $5.00. In its lifetime, that vehicle would use 60.6 gallons of fuel more than it would have had it achieved its 18 mpg target. On a gallon basis, that manufacturer’s penalty would have been $5.00/60.6 gallons or $0.083/gallon. 23 We note that 49 U.S.C § 32913 (a) allows NHTSA to compromise civil penalties under extremely rare circumstances (e.g., manufacturer insolvency or an Act of God, or a certification by the Federal Trade Commission that a reduction in the penalty is needed to prevent a substantial lessening of competition), but this provision has rarely if ever come into play and is fundamentally different in character than the typical ability of government agencies to compromise penalties based on enforcement discretion. 24 NHTSA already adjusts traded credits on a "gallon" basis to comply with the statutory requirements of 49 U.S.C. 32903(f) to ensure that traded credits are adjusted to preserve total oil savings. See 49 CFR 536.4(c). 9 Case 17-2780, Document 103-2, 11/17/2017, 2175470, Page11 of 14 o Now consider that same theoretical manufacturer in 2015, again making one passenger car when the standards were 36.2 mpg. If again that manufacturer failed to meet its fuel economy target by 0.1 mpg, that vehicle would use 14.9 gallons more than it would have had it met its target. The gallon based penalty would be $5.50/14.9 gallons or $0.369/gallon in 2015 dollars. Converting to 1975 dollars using the OMB factor of 4.3322 would yield $0.085/gallon, effectively the same penalty on a per-gallon basis as the 1978 example. The methodology by which the excess fuel consumption is calculated is similar to NHTSA’s methods when converting CAFE credits to gallons saved in the document "LD-CAFE credit gallon equivalent."25 The example above demonstrates the well-known fact that fuel consumption and fuel economy have a non-linear relationship. As a result of this non-linearity, increases in CAFE standards build in an "inflation adjustment" under which manufacturers pay more and more for each excess gallon of fuel used due to a failure to meet the standards. This is illustrated by the graph below, which shows that even if CAFE penalties remain at $5.50/0.1 mpg, the per-gallon penalty will increase due to the increasing stringency of the CAFE program. If the penalties were suddenly increased to $14.00/0.1mpg, the per-gallon penalty amount would far exceed the 250% maximum increase called for in the Improvements Act. Request for Relief In light of the above, the Alliance and Global Automakers petition NHTSA to withdraw the Interim Final Rule as it pertains to CAFE civil penalties and reissue a new Interim Final Rule that applies the inflation adjustment to the base year of 2007. If NHTSA is unable to agree that 2007 is the base year, this petition urges NHTSA to withdraw the IFR and to undertake a notice-25 Available at http://www.nhtsa.gov/Laws+&+Regulations/CAFE+-+Fuel+Economy/CAFE_credit_status (last accessed July 30, 2016). 10 Case 17-2780, Document 103-2, 11/17/2017, 2175470, Page12 of 14 and-comment rulemaking as authorized by the Improvements Act that accomplishes the following objectives: 1. The Baseline Year for the Inflation Adjustment Should Be 2007. The Alliance and Global Automakers request that NHTSA withdraw the Interim Final Rule as it pertains to CAFE civil penalties and reissue a new Interim Final Rule that applies the inflation adjustment to the base year of 2007. 2. If NHTSA Does Not Concur that 2007 is the Proper Baseline Year, then the Final Rule Should Impose a Smaller Increase for the First Penalty Adjustment. The Improvements Act imposed a largely non-discretionary obligation on agencies to adjust their civil penalties for inflation according to a specified formula that was created by the Office of Management and Budget (OMB). The Improvements Act does, however, contain an exception permitting the head of an agency to adjust the amount of a civil penalty by less than the formula would otherwise dictate if the head of the agency finds that increasing the civil penalty by the required amount would have a negative economic impact. If the Director of OMB concurs with the agency’s finding, then a smaller increase may be adopted for the first adjustment (which then establishes the baseline for future adjustments.) It is appropriate for NHTSA to exercise this discretion with respect to the CAFE penalties. As noted above, the Volpe model for CAFE cost estimates shows an average annual cost increase for CAFE compliance of approximately $1 billion, more than ten times higher than the threshold for "significance" under Executive Order 12866 – and significantly higher than the $50 million estimate that NHTSA included in the IFR. Moreover, NHTSA should seek public comment on whether the increase dictated by the Improvements Act would have other cascading effects on the assumptions underlying NHTSA’s CAFE analysis, such as whether the higher penalties would alter the conclusions about the economic practicability of the Model Year 2017-2021 standards and how the increased civil penalty amount is affecting the market price of tradeable CAFE credits. 3. The Final Rule Should Clarify that the Penalty Increases Will Not Apply to Open Model Years. Given the unique nature of the CAFE program, in which paying a penalty is an accepted alternative to meeting the fuel economy standards and in which NHTSA has no authority to alter the statutory penalty formula, it would be particularly unfair to apply any increased penalty to a manufacturer with respect to its Model Years 2014, 2015 and 2016 fleet performance that was completed in accordance with prior CAFE guidance from NHTSA. The CAFE compliance files are still open for at least some manufacturers with respect to Model Years 2014 and 2015, and Model Year 2016 is open for all manufacturers; however, it is obviously too late for manufacturers to make any changes to these fleets, even if leadtime were not an issue. Thus, applying the IFR’s increased penalty levels to these model years would be purely punitive with absolutely no environmental or fuel-saving benefit and would unfairly disturb the longstanding 11 Case 17-2780, Document 103-2, 11/17/2017, 2175470, Page13 of 14 expectations of the manufacturers in light of the previous CAFE standard-setting rulemaking by NHTSA. NHTSA’s sister agency, Federal Motor Carrier Safety Administration, has already determined not to apply its increased penalties to open matters because "recalculating the amount of the proposed penalty would not induce further compliance."26 Similar logic can be applied in the case of CAFE fines. As noted above, the CAFE compliance fines are open for some 2014, 2015 and all 2016 Model Years. Further efforts to comply with those Model Years simply cannot occur. NHTSA should observe that fact, and draw the same conclusion. It is acknowledged that FMCSA has a separate statutory provision to exercise its penalty authority in a manner that induces further compliance, and that the CAFE statute does not confer the same discretion on NHTSA. The point here is that another DOT agency has decided that it would be unreasonable to apply the new penalties retroactively, noting that applying an inflation adjustment to cases awaiting administrative review could raise questions of equity. 4. The Final Rule Should Apply the Improvements Act in a Manner that is Consistent with the CAFE Statute. Beyond the issues of open model years and the first penalty adjustment, NHTSA should set forth an overall timetable and approach for penalty increases that makes sense in light of the various factors discussed above. In particular, NHTSA should reset the adjustment against the 2007 baseline. In the alternative, NHTSA should seek comment on whether a lower initial adjustment to the CAFE penalties is warranted, given the strict penalty formula in the CAFE statute and the agency’s lack of discretion to adjust the formula. And, because increased penalties have the effect of making the CAFE standard more stringent, NHTSA should also seek comment on a reasonable timetable for penalty increases that enable manufacturers to adjust their compliance plans as appropriate. Because the CAFE statute provides for at least 18 months leadtime for more stringent standards, it would not be appropriate for any penalty increases to be imposed before Model Year 2019. Any subsequent penalty increases should be announced at least 18 months prior to the effective date of each increase. 5. NHTSA Should Defer Assessing Any CAFE Penalties Until the Issues Raised by This Petition Are Fully Resolved. Because of the unique nature of the CAFE program, the Alliance and Global Automakers urge NHTSA to refrain from assessing any CAFE penalties for Model Year 2014, 2015 or 2016 until the concerns outlined in this petition are fully resolved. While the IFR specified that the adjustment for CAFE penalties will take effect on August 4, 2016, there will be unnecessary confusion should NHTSA proceed with imposing CAFE penalties during the pendency of this petition. As there is no statutory imperative specifying a schedule for resolving CAFE penalties, a modest suspension of activity on open CAFE penalty cases while the issues raised by this petition are resolved would help avoid that confusion, or any unnecessary proceedings under the refund provisions of Section 32903(h) of the CAFE statute. 26 81 Fed. Reg. 41453, 41454 (June 27, 2016). 12 Case 17-2780, Document 103-2, 11/17/2017, 2175470, Page14 of 14 Conclusion The Alliance and Global Automakers respectfully request NHTSA to act promptly to withdraw the IFR and reissue a new IFR that applies the inflation adjustment to the base year of 2007. If NHTSA is unable to agree that 2007 is the base year for which the CAFE penalty was reset, we urge NHTSA to withdraw the IFR and undertake a notice-and-comment rulemaking to consider an appropriate civil penalty adjustment for the CAFE program, taking into account the unique interplay between the stringency of the CAFE standard and the civil penalty levels. Any such penalty increase should 1) not apply to open model years; 2) impose a smaller increase for the first penalty adjustment (either the adjustment applicable to the 2007 baseline or such other smaller increase as NHTSA determines by rulemaking); and 3) provide overall consistency with the goals and directives of the CAFE statute. We appreciate NHTSA’s consideration of this very important request. Representatives of both the Alliance and Global Automakers are available to meet with NHTSA to discuss this petition in more detail. Sincerely, Chris Nevers Julia Rege Vice President of Energy and Environment Director, Environment and Energy Affairs Alliance of Automobile Manufacturers Association of Global Automakers Cc: Thomas Healy, NHTSA James Tamm, NHTSA Ryan Harrington, DOT Kevin Green, DOT 13 Case 17-2780, Document 103-3, 11/17/2017, 2175470, Page1 of 1

MOTION ORDER, granting motion to intervene [{{52}}] in 17-2780, granting motion to intervene [{{53}}] in 17-2780, by JAC, Circuit Judge, FILED. [2223475][121] [17-2780, 17-2806] [Entered: 01/29/2018 10:58 AM]

Case 17-2780, Document 120, 01/29/2018, 2223436, Page1 of 1 UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT At a Stated Term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 29th day of January, two thousand and eighteen. Before: José A. Cabranes, Circuit Judge. _______________________________ Natural Resources Defense Council, et al., Petitioners, ORDER v. Docket Nos. 17-2780(L), 17-2806(Con) National Highway Traffic Safety Administration, et al., Respondents. ________________________________ The Association of Global Automakers and the Alliance of Automobile Manufacturers, Inc. move for leave to intervene in support of Respondents pursuant to Fed. R. App. P. 15(d). IT IS HEREBY ORDERED that the motions for leave to intervene are GRANTED absent objection. The intervenors must comply with the briefing schedules applicable to the respondents and they should not seek delays in briefing or argument. The intervenors may file separate briefs. For the Court: Catherine O'Hagan Wolfe, Clerk of Court

ARGUMENT NOTICE, to attorneys/parties, TRANSMITTED.[2224532] [17-2780, 17-2806] [Entered: 01/30/2018 10:43 AM]

United States Court of Appeals for the Second Circuit Thurgood Marshall U.S. Courthouse 40 Foley Square New York, NY 10007 ROBERT A. KATZMANN CATHERINE O'HAGAN WOLFE CHIEF JUDGE CLERK OF COURT Date: January 30, 2018 Agency #: NHTSA-2016-0136 Docket #: 17-2780ag Agency: DEPT.OF TRANS. - Short Title: Natural Resources Defense Council v. National NAT.TRANSPORT.SAFETY Highway Traffic Safety BDAgency #: NHTSA-2016- 0136] Agency: DEPT.OF TRANS. - NAT.TRANSPORT.SAFETY BD NOTICE OF MOTION PLACED ON THE CALENDAR A motion for summary reversal or for a stay filed in the above-referenced case has been added as an argued case to the substantive motions calendar for Tuesday, February 13, 2018 at 10:00am. The argument will be held in the Thurgood Marshall U.S. Courthouse, New York, NY 10007, 17th floor, Room 1705. Inquiries regarding this case may be directed to 212-857-8595.

CAPTION, Association of Global Automakers, Alliance of Automobile Manufacturers, Inc. added as Intervenors, AMENDED.[2224728] [17-2780, 17-2806] [Entered: 01/30/2018 12:05 PM]

United States Court of Appeals for the Second Circuit Thurgood Marshall U.S. Courthouse 40 Foley Square New York, NY 10007 ROBERT A. KATZMANN CATHERINE O'HAGAN WOLFE CHIEF JUDGE CLERK OF COURT Date: January 30, 2018 Agency #: NHTSA-2016-0136 Docket #: 17-2780ag Agency: DEPT.OF TRANS. - Short Title: Natural Resources Defense Coun v. National NAT.TRANSPORT.SAFETY Highway Traffic Safet BDAgency #: NHTSA-2016- 0136] Agency: DEPT.OF TRANS. - NAT.TRANSPORT.SAFETY BD AMENDED CAPTION NOTICE As noted on the docket sheet, the caption has been changed. If the brief has been filed, six copies of a revised brief cover accurately reflecting the change in official caption must be submitted within 14 days of this notice. Inquiries regarding this case may be directed to. (212) 857-8613

ORDER, dated 02/16/2018, expediting the appeal and oral argument, by JMW, PWH, RJL, Circuit Judges, FILED.[2238301] [17-2780, 17-2806] [Entered: 02/16/2018 02:36 PM]

82 Fed. Reg. 32139 (July 12, 2017) NHTSA-2016-0136 United States Court of Appeals FOR THE SECOND CIRCUIT _________________ At a stated term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 16th day of February, two thousand eighteen. Present: John M. Walker, Jr., Peter W. Hall, Raymond J. Lohier, Jr., Circuit Judges. Natural Resources Defense Council, Sierra Club, Center for Biological Diversity, State of New York, State of California, State of Vermont, State of Maryland, State of Pennsylvania, Petitioners, v. 17-2780 (L), 17-2806 (Con) National Highway Traffic Safety Administration, Jack Danielson, in his capacity as Acting Deputy Administrator of the National Highway Traffic Safety Administration, United States Department of Transportation, Elaine Chao, in her capacity as Secretary of the United States Department of Transportation, Respondents, Association of Global Automakers, Alliance of Automobile Manufacturers, Inc., Intervenors.* Petitioners filed petitions for review of an agency rule, invoking this Court's jurisdiction under 49 U.S.C. § 32909(a)(2). Petitioners now move for summary vacatur, or, alternatively, a stay of the * The Clerk of Court is directed to amend the dockets to conform with the caption of this order. rule. Petitioners Natural Resources Defense Council, Sierra Club, and Center for Biological Diversity also request that these proceedings be expedited if summary vacatur is not granted. Upon due consideration, it is hereby ORDERED that Petitioners' motions for summary vacatur are DENIED. See Plante v. Dake, 599 F. App'x 13, 14 (2d Cir. 2015). It is further ORDERED that Petitioners' motions for a stay are DENIED. See U.S. Sec. & Exch. Comm'n v. Citigroup Glob. Mkts. Inc., 673 F.3d 158, 162 (2d Cir. 2012). Finally, it is ORDERED that the request to expedite the proceedings is GRANTED. The parties are directed to brief, in addition to all other relevant issues, the following issues: (1) under principles of statutory construction, whether the rule was "prescribed" when it was filed with the Office of the Federal Register, when it was published in the Federal Register, or on some other date for purposes of 49 U.S.C. § 32909(b); (2) whether the 59-day deadline in § 32909(b) is a jurisdictional rule, a claim-processing rule, or a time-related directive, see Dolan v. United States, 560 U.S. 605, 610-11 (2010); (3) whether the term "person" in § 32909(a) includes states, see Vermont Agency of Natural Resources v. United States ex rel. Stevens, 529 U.S. 765, 780-81 (2000); and (4) whether Petitioners Sierra Club, Center for Biological Diversity, California, Maryland, and Pennsylvania "reside[]" or have their "principal place of business" in this Circuit, see 49 U.S.C. § 32909(a). This appeal will be expedited with briefing and argument to occur on the following schedule: Petitioners' Briefs shall be served and filed on or before March 9, 2018. Respondents' and Intervenors' Briefs shall be served and filed on or before March 30, 2018. Reply Briefs, if any, shall be served and filed on or before April 3, 2018. Argument will be set the week of April 10, 2018. FOR THE COURT: Catherine O'Hagan Wolfe, Clerk of Court 2

MOTION, for___relief, on behalf of Petitioner State of New York in 17-2780, 17-2806, FILED. Service date 02/21/2018 by CM/ECF. [2240531] [17-2780, 17-2806] [Entered: 02/21/2018 04:00 PM]

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT Thurgood Marshall U.S. Courthouse 40 Foley Square, New York, NY 10007 Telephone: 212-857-8500 MOTION INFORMATION STATEMENT 17-2780; 17-2806 Docket Number(s): ________________________________________ _______________Caption [use short title]_____________________ Modify Briefing Schedule on Consent of All Motion for: ______________________________________________ Parties ________________________________________________________ ________________________________________________________ Set forth below precise, complete statement of relief sought: On consent of all parties, petitioners seek to amend the ________________________________________________________ NRDC v. Nat'l Highway Traffic Safety Admin. briefing schedule, bringing forward the deadlines for the ________________________________________________________ opening and response briefs by three days each, while ________________________________________________________ maintaining the April 3 date for completion of all briefing. ________________________________________________________ ________________________________________________________ ________________________________________________________ State of New York et al. MOVING PARTY:_______________________________________ Nat'l Highway Traffic Safety Admin., et al. OPPOSING PARTY:____________________________________________ ___Plaintiff ___Defendant ✔ ___Appellant/Petitioner ___Appellee/Respondent David S. Frankel MOVING ATTORNEY:___________________________________ H. Thomas Byron (cont'd in addendum) OPPOSING ATTORNEY:________________________________________ [name of attorney, with firm, address, phone number and e-mail] New York Office of the Attorney General ________________________________________________________ U.S. Department of Justice _______________________________________________________________ 120 Broadway, 25th Fl., New York, NY 10271 ________________________________________________________ Main (RFK) Room 7529, 950 Pennsylvania Ave., Washington, D.C. 20530 _______________________________________________________________ (212) 416-6197 ________________________________________________________ (202) 307)-2551 _______________________________________________________________ Administrative Action by National Highway Traffic Safety Administration Court- Judge/ Agency appealed from: _________________________________________________________________________________________ Please check appropriate boxes: FOR EMERGENCY MOTIONS, MOTIONS FOR STAYS AND INJUCTIONS PENDING APPEAL: Has movant notified opposing counsel (required by Local Rule 27.1): Has this request for relief been made below? ___Yes ___No ✔ ___Yes ___No (explain):__________________________ Has this relief been previously sought in this court? ___Yes ___No _______________________________________________ Requested return date and explanation of emergency: ________________ _____________________________________________________________ Opposing counsel's position on motion: _____________________________________________________________ ✔ ___Unopposed ___Opposed ___Don't Know _____________________________________________________________ Does opposing counsel intend to file a response: _____________________________________________________________ ✔ ___Yes ___No ___Don't Know Is oral argument on motion requested? ✔ (requests for oral argument will not necessarily be granted) ___Yes ___No Has argument date of appeal been set? ✔ Yes ___No If yes, enter date:_______________________________________________________ ___ Week of April 10, 2018 Signature of Moving Attorney: /s/ David S. Frankel _________________________________ Date:__________________ ✔ February 21, 2018 Service by: ___CM/ECF ___Other [Attach proof of service] Form T F T-1080 1080 ((rev.12-13) 12 13) Counsel Information (continued from Form T-1080) Co-Lead Attorney for State Petitioners David Zaft, Esq. Deputy Attorney General 300 S. Spring St., Suite 1702 Los Angeles, CA 90013 (213) 269-6372 Lead Attorney for Environmental Petitioners Ian Fein, Esq. Natural Resources Defense Council 111 Sutter St., 21st Floor San Francisco, CA 94104 (415) 875-6100 Attorney for Respondent-Intervenor Alliance of Automobile Manufacturers, Inc. Erika Z. Jones, Esq. Mayer Brown LLP 1999 K Street NW Washington, DC 20006 (202) 263-3000 Attorney for Respondent-Intervenor Global Automakers Ashley C. Parish, Esq. King & Spalding LLP 1700 Pennsylvania Ave. NW Washington, DC 20006 (202) 737-0500 UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT NATURAL RESOURCES DEFENSE Docket Nos. COUNCIL, et al., STATE OF NEW YORK, et 17-2780, 17-2806 al., Petitioners, v. NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION, et al., Respondents, ASSOCIATION OF GLOBAL AUTOMAKERS, et al., Intervenors. PETITIONERS' UNOPPOSED MOTION TO MODIFY BRIEFING SCHEDULE ON CONSENT OF ALL PARTIES ERIC T. SCHNEIDERMAN Attorney General of the State of New York Co-Lead Counsel for State Petitioners DAVID S. FRANKEL 120 Broadway, 25th Floor Assistant Solicitor General New York, NY 10271 of Counsel (212) 416-6184 (additional counsel listed in Dated: February 21, 2018 signature blocks) On February 16, 2018, this Court issued an expedited schedule, directing the parties to complete merits briefing by April 3, 2018, and to appear for oral argument the following week. No. 17-2780, ECF No. 128. The petitioning parties (both the State and environmental petitioners) hereby seek a slight modification of that schedule: to bring forward the date when opening and response briefs are due by three days each:  Opening Briefs would be served and filed on or before March 6, 2018 (changed from March 9, 2018).  Respondents' and intervenors' Briefs would be served and filed on or before March 27, 2018 (changed from March 30, 2018).  Reply Briefs, if any, would be served and filed on or before April 3, 2018 (no change). This would not change the April 3 date when briefing will be complete but will ensure that petitioners have sufficient time to draft and obtain internal review of their respective reply briefs. In effect, petitioners will have three fewer days for opening briefs, and three additional days on reply briefs. Petitioners have sought and obtained consent from all respondents and intervenors, who will have the same amount of time (twenty-one days) to draft their response and intervenor briefs as under the existing schedule. 1 Dated: New York, NY February 21, 2018 Respectfully submitted, Co-Lead Counsel for the State Petitioners: ERIC T. SCHNEIDERMAN Attorney General of the State of New York By: /s/ David S. Frankel DAVID S. FRANKEL Assistant Solicitor General 120 Broadway, 25th Floor New York, NY 10271 (212) 416-6184 david.frankel@ag.ny.gov XAVIER BECERRA Attorney General of the State of California By: /s/ David Zaft DAVID ZAFT Deputy Attorney General 300 S. Spring St., Suite 1702 Los Angeles, CA 90013 (213) 269-6372 david.zaft@doj.ca.gov Lead counsel for the Environmental Petitioners: /s/ Ian Fein IAN FEIN Natural Resources Defense Council 111 Sutter St., 21st Floor San Francisco, CA 94104 (415) 875-6100 ifein@nrdc.org 2

MOTION ORDER, granting motionto modify the brief schedule [{{133}}] filed by Petitioner State of New York in 17-2780, Petitioners' briefs shall be filed on or before March 6, 2018, Respondents' and Intervenors' briefs shall be filed by March 27, 2018, Reply briefs, if any, shall be filed by April 3, 2018, FILED. [2242052][136] [17-2780, 17-2806] [Entered: 02/23/2018 09:23 AM]

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT ____________________________________________ At a Stated Term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 23rd day of February, two thousand and eighteen, ____________________________________ Natural Resources Defense Council, Sierra Club, Center ORDER for Biological Diversity, State of California, State of Docket No. 17-2780 Maryland, State of New York, State of Pennsylvania, State of Vermont, lllllllllllllllllllllPetitioners, v. National Highway Traffic Safety Administration, Jack Danielson, in his capacity as Acting Deputy Administrator of the National Highway Traffic Safety Administration, United States Department of Transportation, Elaine Chao, in her capacity as Secretary of the United States Department of Transportation, lllllllllllllllllllllRespondents, Association of Global Automakers, Alliance of Automobile Manufacturers, Inc., lllllllllllllllllllllIntervenors. _______________________________________ IT IS HEREBY ORDERED that the motion by Petitioner to modify briefing schedule is GRANTED. Petitioners' briefs shall be served and filed on or before March 6, 2018. Respondents' and Intervenors' briefs shall be served and filed on or before March 27, 2018. Reply briefs, if any, shall be served and filed on or before April 3, 2018. For The Court: Catherine O'Hagan Wolfe, Clerk of Court

JOINT APPENDIX, volume 1 of 1, (pp. 1-93), on behalf of Petitioner Center for Biological Diversity, Natural Resources Defense Council and Sierra Club in 17-2780, FILED. Service date 03/06/2018 by CM/ECF.[2250913] [17-2780, 17-2806] [Entered: 03/06/2018 06:32 PM]

17-2780(L) 17-2806 (Con) IN THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT NATURAL RESOURCES DEFENSE COUNCIL, SIERRA CLUB, CENTER FOR BIOLOGICAL DIVERSITY, STATE OF CALIFORNIA, STATE OF MARYLAND, STATE OF NEW YORK, STATE OF PENNSYLVANIA, STATE OF VERMONT, Petitioners, v. NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION, JACK DANIELSON, in his capacity as Acting Deputy Administrator of the National Highway Traffic Safety Administration, UNITED STATES DEPARTMENT OF TRANSPORTATION, ELAINE CHAO, in her capacity as Secretary of the United States Department of Transportation Respondents, ASSOCIATION OF GLOBAL AUTOMAKERS, ALLIANCE OF AUTOMOBILE MANUFACTURERS, INC., Intervenors. On Petition for Review of a Rule of the National Highway Traffic Safety Administration JOINT APPENDIX JOINT APPENDIX TABLE OF CONTENTS NRDC v. Nat'l Highway Traffic Safety Admin. No. 17-2780 (L), No. 17-2806 (Con) Date Description Page(s) Center for Biological Diversity, Oct. 1, 2015 1-14 Petition for Rulemaking Feb. 24, 2016 Memo (M-16-06) from OMB Director 15-24 Interim Final Rule; July 5, 2016 25-30 81 Fed. Reg. 43,524 Alliance of Automobile Manufacturers, Aug. 1, 2016 31-43 Joint Petition for Partial Reconsideration Jaguar Land Rover North America, Aug. 3, 2016 44-47 Petition for Partial Reconsideration Sept. 12, 2016 Supplement to Alliance Joint Petition 48-50 Final Rule; Response to Petitions for Dec. 28, 2016 Reconsideration and Rulemaking; 51-54 81 Fed. Reg. 95,489 Memo from Reince Priebus, Jan. 20, 2017 55 Regulatory Freeze Pending Review Date Description Page(s) Final Rule; Delay of Effective Date; Jan. 30, 2017 56 82 Fed. Reg. 8694 NHTSA, Projected Fuel Economy Feb. 14, 2017 57-58 Performance Report Final Rule; Delay of Effective Date; Mar. 28, 2017 59 82 Fed. Reg. 15,302 NHTSA, Summary of CAFE Civil May 9, 2017 60-74 Penalties Collected Final Rule; Delay of Effective Date; June 27, 2017 75-76 82 Fed. Reg. 29,009 Final Rule; Delay of Effective Date; July 12, 2017 77-78 82 Fed. Reg. 32,139 Reconsideration of Final Rule; July 12, 2017 Request for Comments; 78-83 82 Fed. Reg. 32,140 Sept. 7, 2017 Envtl. Petitioners, Petition for Review 84-89 Sept. 8, 2017 State Petitioners, Petition for Review 90-93 Via Electronic and First Class Mail October 1, 2015 Gina McCarthy, Administrator U.S. Environmental Protection Agency 1200 Pennsylvania Avenue, N.W. Washington, DC 20460 Email: McCarthy.Gina@epa.gov Mark R. Rosekind, Ph.D., Administrator National Highway Traffic Safety Administration U.S. Department of Transportation 400 Seventh Street, S.W. Washington, DC 20590 Email: Mark.Rosekind@dot.gov RE: Petition for Rulemaking to Implement New Emissions Testing for Motor Vehicles and Increase Penalties for Violations of Fuel Standards Dear Administrator McCarthy and Administrator Rosekind, The Center for Biological Diversity (the "Center") requests that you take immediate action to protect public health and the environment from the toxic impacts of greenhouse gas and nitrogen oxides emissions from motor vehicles, and from corporate practices designed to evade regulations restricting the quantity of these dangerous emissions. Specifically, pursuant to the Administrative Procedure Act, 5 U.S.C. § 553(e), Title II of the Clean Air Act ("CAA"), 42 U.S.C. §§ 7521-7554, and Title VI of the Energy Policy and Conservation Act ("EPCA"), 49 U.S.C. §§ 32901-32919, the Center requests that the U.S. Environmental Protection Agency ("EPA") and the National Highway Traffic Safety Administration ("NHTSA"): (1) immediately conduct in-use emissions testing of each make and model of diesel- powered motor vehicles sold in the United States since 2009 that have not previously undergone such tests; (2) immediately conduct in-use emissions testing of each make and model of other fossil fuel-powered motor vehicles sold in the United States since 2009 that have not previously undergone such tests; (3) promulgate regulations to require on-road emissions testing for all types of new diesel-powered motor vehicles; JA0001 (4) promulgate regulations to require on-road emissions testing for all other types of new fossil fuel-powered motor vehicles; and (5) promulgate regulations to increase the penalties for violations of corporate average fuel economy standards. As you are well-aware, Volkswagen recently admitted that 11 million of its diesel cars sold worldwide since 2009, including nearly half a million sold in the United States, contain software specifically designed to cheat emissions tests. The software — known as "defeat devices" — can detect when a car is being tested in a laboratory setting and adjusts engine operations to emit less-polluting exhaust during the test than in real-world driving conditions. EPA has said that these devices allowed each car to spew up to 40 times the legal limit of nitrogen oxides emissions in the United States. Accordingly, in addition to the specific actions requested above, the Center also requests that EPA assess the maximum permissible penalties against VW for such egregious violations of law. This widespread fraud not only deceived consumers who purchased VW cars based on the belief the cars were "clean diesel," but is a significant threat to public health and the environment. Emissions of nitrogen oxides contribute to climate change and ocean acidification — nitrogen oxides react with other substances to form the greenhouse gas ozone, and contain a highly potent and long-lived greenhouse gas. In addition, ground-level ozone can trigger or worsen asthma and other respiratory ailments, make the lungs more susceptible to infection, damage vegetation and reduce crop yields. Nitrogen oxides are also a precursor to particulate matter which causes breathing problems, lung tissue damage and premature death. To make matters worse, the use of such devices, and thus unlawful emissions of such dangerous pollutants, may not be limited to VW. Indeed, defeat devices have existed almost since the inception of the CAA, and EPA has previously levied fines against car and truck manufacturers for the use of such devices. Recent reports indicate that tests of on-road emissions of cars made by other companies exceed that of laboratory testing, indicating that these manufactures might also be using defeat devices — or, at a minimum, are not performing as required. Despite the existence of technology that can measure emissions during normal operation and use, EPA does not require such tests for the vast majority of motor vehicles. And the recent scandal highlights yet another industry-wide problem — that car manufacturers routinely pay fines, rather than comply with mandatory fuel economy standards that seek to improve fuel efficiency and reduce carbon dioxide emissions. As we have frequently pointed out, and as government reports indicate, the meager fines are too low to act as a deterrent, thereby failing to inspire the technological innovation contemplated by EPCA and the CAA. Yet NHTSA has not increased the penalty for violation of the standards in nearly two decades. Comprehensive action is therefore needed to ensure long-term solutions to such pervasive problems. Taking the actions requested in this petition will improve the accuracy of emissions testing of motor vehicles and help ensure against future deception, and incentivize compliance with fuel economy standards intended to reduce greenhouse gas emissions and improve energy security. In other words, granting this petition will help better protect public health and the 2 JA0002 environment from dangerous air pollutants from motor vehicles, while ensuring fuel economy continues to improve as intended by the CAA and EPCA.1 The Center requests that EPA and NHTSA take the regulatory actions requested in this petition within 180 days. I. Factual Background: Harmful Emissions from Motor Vehicles As the VW scandal demonstrates, motor vehicles emit harmful air pollutants. In fact, according to the Union of Concerned Scientists, transportation is the largest single source of air pollution in the United States.2 Motor vehicles emit carbon dioxide, oxides of nitrogen, particulate matter, hydrocarbons, carbon monoxide, sulfur dioxide, as well as benzene and other hazardous air pollutants.3 These emissions contribute to a myriad of public health problems, negative impacts to public welfare and the environment, and climate change. A. Emissions from Motor Vehicles Are Harmful to Public Health Motor vehicles emit air pollutants that cause or contribute to health problems, including nitrogen oxides. For example, ground level ozone is created by chemical reaction between nitrogen oxides and volatile organic compounds. Ground-level ozone pollution is linked to many public health impacts, especially those related to respiratory function. Ozone can irritate the respiratory tract and throat, impair lung function, and cause coughing, chest pains and lung inflammation.4 EPA has recognized the association between ozone exposure and hospital visits for respiratory problems — especially for children — noting that ozone pollution is responsible for as much as twenty percent of all summertime respiratory hospital visits.5 Ozone is also linked to the development of respiratory diseases, such as asthma.6 But the health effects of ozone are not limited to respiratory illnesses. Ozone pollution is linked to other serious health impacts, such as heart disease and certain types of strokes.7 "[M]ost importantly," according to the American Lung Association, ozone exposure and the associated health impacts can shorten lives 1 The provisions of this Petition are severable. If any request contained within this Petition is found to be invalid or unenforceable, the invalidity or lack of legal obligation shall not affect other provisions of the Petition. 2 Union of Concerned Scientists, Cars, Trucks and Air Pollution, http://www.ucsusa.org/clean_vehicles/why-clean- cars/air-pollution-and-health/cars-trucks-air-pollution html#.Vgh8P_lViko (last updated Dec. 5, 2014). 3 Id. 4 Barbara Hackley et al., Air Pollution: Impact on Maternal and Perinatal Health, 52 J. MIDWIFERY & WOMEN'S HEALTH 435, 436 table 1 (2010), available at http://www.sciencedirect.com/science/article/pii/S1526952307001079. 5 Ozone Action Days, Region 7 Air Program, U.S. ENVTL. PROT. AGENCY, http://www.epa.gov/region07/air/quality/action htm (last updated Aug. 28, 2015). 6 Id.; Michelle L. Bell et al., The Exposure-Response Curve for Ozone and Risk of Mortality and the Adequacy of Current Ozone Regulations, 114 ENVTL. HEALTH PERSPECTIVES 532, 532 (2006), available at http://www ncbi.nlm.nih.gov/pubmed/ 16581541. 7 Jean-Bernard Ruidavets et al., Ozone Air Pollution Is Associated with Acute Myocardial Infarction, 111 CIRCULATION 563, 566 (2005), available at http://circ.ahajournals.org/content/111/5/563.long; J. B. Henrotin et al., Short Term Effects of Ozone Air Pollution on Ischaemic Stroke Occurrence: A Case Crossover Analysis from a 10- Year Population-Based Study in Dijon, France, 64 OCCUPATIONAL & ENVTL. MED. 439, 442 (2007), available at http://oem.bmj.com/content/64/7/439.short 3 JA0003 by months and even years.8 "Even at very low levels including days that meet current regulatory requirements," ozone is associated with premature mortality.9 Ozone also has detrimental ecological effects. According to EPA, ozone "affects sensitive vegetation and ecosystems, including forests, parks, wildlife refuges, and wilderness areas," especially during growing seasons.10 Ozone can interfere with a plant's ability to produce and store food, visibly damage leaves, and make plants susceptible to damage from disease, insects, competition and severe weather.11 Nitrogen oxides also mix with other air pollutants to create particulate matter ("PM"). The effects associated with PM exposure are "premature mortality, increased hospital admissions and emergency department visits, and development of chronic respiratory disease."12 California has identified diesel PM as a toxic air contaminant and has estimated that 70 percent of the cancer risk from the air Californians breathe is attributable to diesel PM; EPA says that diesel PM is "likely to be a carcinogen."13 Diesel exhaust is a major contributor to PM pollution. In fact, it is estimated that diesel-powered vehicles and equipment account for nearly half of all nitrogen oxides and more than two-thirds of all PM emissions from U.S. transportation sources.14 B. Emissions from Motor Vehicles Contribute to Climate Change The burning of fossil fuels is the largest source of domestic greenhouse gas emissions, accounting for 77 percent of total warming emissions in 2013.15 One of the primary sources of such emissions is from the transportation sector, which in 2013 accounted for 27 percent of all greenhouse gas emissions in the United States.16 The largest source of such emissions from the transportation sector is passenger cars, representing nearly 43 percent of emissions in 2013.17 8 Stephanie Carroll Carson, Ozone, Warming Temperatures, Coal-Fired Power Plants Impact NC Air, PUB. NEWS SERV. (May 2, 2014), http://www.publicnewsservice.org/2014-05-02/climate-change-air-quality/ozone- warmingtemperatures-coal-fired-power-plants-impact-nc-air/a39132-1. 9 Bell, supra note 6 at 535. 10 Ecosystem Effects, Ground-Level Ozone, U.S. ENVTL. PROT. AGENCY, http://www.epa.gov/airquality/ozonepollution/ecosystem html (last updated Sept. 25, 2015). 11 Id. 12 EPA, Fine Particulate Matter National Ambient Air Quality Standards, 80 Fed. Reg. 15340, 15347 (Mar. 23, 2015). 13 Union of Concerned Scientists, California: Diesel Trucks, Air Pollution and Public Health, http://www.ucsusa.org/clean_vehicles/why-clean-cars/air-pollution-and-health/trucks-buses-and-other-commercial- vehicles/diesel-trucks-air-pollution.html#.VXRuhc9Viko; Trade, Health and Environmental Impact Project, Driving Harm: Health and Community Impacts of Living Near Truck Corridors (Jan. 2012), http://hydra.usc.edu/scehsc/pdfs/Trucks%20issue%20brief.%20January%202012.pdf. 14 Union of Concerned Scientists, Diesel Engines and Pubic Health, http://www.ucsusa.org/clean_vehicles/why- clean-cars/air-pollution-and-health/trucks-buses-and-other-commercial-vehicles/diesel-engines-and- public.html#.Vgh-7vlViko (last accessed Sept. 28, 2015). 15 EPA, Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990 – 2013 (Apr. 15, 2015), EPA 430-R-15-004, available at http://www3.epa.gov/climatechange/Downloads/ghgemissions/US-GHG- Inventory-2015-Main-Text.pdf. 16 Id. 17 Id. 4 JA0004 The transportation sector has been the fastest-growing source of greenhouse gas emissions since 1990.18 Carbon dioxide is the dominant greenhouse gas driving observed changes in the Earth's climate.19 Emissions of nitrogen oxides also contribute to climate change through two primary means: (1) nitrogen oxides react with other substances to form the greenhouse gas ozone; and (2) nitrous oxide is itself a highly potent and long-lived greenhouse gas. Nitrous oxide behaves very similarly to carbon dioxide in that it both directly traps heat in the atmosphere and remains in existence for many decades once emitted.20 There is a strong, international scientific consensus that anthropogenic climate threatens human society and natural systems. The U.S. Global Change Research Program in its 2009 report Climate Change Impacts in the United States similarly stated that "global warming is unequivocal and primarily human-induced" and "widespread climate-related impacts are occurring now and are expected to increase."21 The U.S. National Research Council similarly concluded that "[c]limate change is occurring, is caused largely by human activities, and poses significant risks for — and in many cases is already affecting — a broad range of human and natural systems."22 Based on observed and expected harms from climate change, in 2009 EPA concluded that greenhouse gas pollution endangers the health and welfare of current and future generations.23 Current atmospheric concentrations of greenhouse gases are already resulting in significant climate change impacts that are projected to worsen as emissions rise.24 Key changes include warming temperatures, the increasing frequency of extreme weather events, rapidly melting glaciers, ice sheets, and sea ice and rising sea levels.25 There will be significant costs associated with these changes. For example, in the United States in 2011 alone, a record 14 weather and climate disasters occurred, including droughts, heat waves, and floods, that cost at least $1 billion each in damages and loss of human lives.26 In addition, air pollution components that trigger asthma attacks, specifically air particulates and ozone, are expected to increase with climate change;27 in 2020, the continental United States could pay an average of 18 Id. 19 NRC. 2011. Climate Stabilization Targets: Emissions, Concentrations, and Impacts over Decades to Millennia. Washington, DC: National Academies Press, available at http://www.nap.edu/catalog/12877.html. 20 Solomon, S., et al., Technical Summary, Working Group I, (2007), at 27, available at http://ipccwg1.ucar.edu/wg1/Report/AR4WG1_Print_TS.pdf. 21 Karl, T. R. et al. 2009. Global Climate Change Impacts in the United States. U.S. Global Change Research Program. Thomas R. Karl, Jerry M. Melillo, and Thomas C. Peterson, (eds.). Cambridge University Press, 2009. 22 NRC. 2010. Advancing the Science of Climate Change, National Research Council, available at www nap.edu. 23 U.S. Environmental Protection Agency, Endangerment and Cause or Contribute Findings for Greenhouse Gases Under Section 202(a) of the Clean Air Act; Final Rule, 74 Federal Register 66496 (2009). 24 Melillo, Jerry M., Terese (T.C.) Richmond, and Gary W. Yohe, Eds., 2014: Climate Change Impacts in the United States: The Third National Climate Assessment. U.S. Global Change Research Program, 841 pp. doi:10.7930/J0Z31WJ2; IPCC. 2013. Summary for Policymakers. Working Group I Contribution to the IPCC Fifth Assessment Report Climate Change 2013: The Physical Science Basis. 25 Melillo, supra n. 24; IPCC, supra n. 24. 26 NOAA. 2012. NOAA: Extreme Weather 2011, available at http://www.noaa.gov/extreme2011/; WMO. 2012. World's 10th warmest year, warmest year with La Niña on record, second-lowest Arctic sea ice extent. 27 Bernstein, A. S., and S. S. Myers. 2011. Climate change and children's health. Current Opinion in Pediatrics 23:221–6. 5 JA0005 $5.4 billion (2008$) in health impact costs associated with the climate penalty on ozone, with California experiencing the greatest estimated impacts averaged at $729 million.28 Anthropogenic climate change also poses a significant threat to biodiversity. Climate change is already causing changes in distribution, phenology, physiology, genetics, species interactions, ecosystem services, demographic rates and population viability: many animals and plants are moving poleward and upward in elevation, shifting their timing of breeding and migration, and experiencing population declines and extirpations.29 Because climate change is occurring at an unprecedented pace with multiple synergistic impacts, climate change is predicted to result in catastrophic species losses during this century. The Intergovernmental Panel on Climate Change ("IPCC") concluded that 20 to 30 percent of plant and animal species will face an increased risk of extinction if global average temperature rise exceeds 1.5°C to 2.5°C relative to 1980-1999, with an increased risk of extinction for up to 70 percent of species worldwide if global average temperature exceeds 3.5°C relative to 1980-1999.30 Other studies have predicted similarly severe losses: 15 to 37 percent of the world's plants and animals committed to extinction by 2050 under a mid-level emissions scenario;31 the potential extinction of 10 to 14 percent of species by 2100 if climate change continues unabated;32 and the loss of more than half of the present climatic range for 58 percent of plants and 35 percent of animals by the 2080s under the current emissions pathway, in a sample of 48,786 species.33 Scientists have warned that the Earth is fast approaching a global "state-shift" that could result in unanticipated and rapid changes to Earth's biological systems.34 As summarized by the 2014 National Climate Assessment, "landscapes and seascapes are changing rapidly, and species, including many iconic species, may disappear from regions where they have been prevalent or become extinct, altering some regions so much that their mix of plant and animal life will become almost unrecognizable."35 In addition, the ocean's absorption of anthropogenic greenhouse gas emissions, including both carbon dioxide and nitrogen oxides, has already resulted in more than a 30 percent increase 28 Union of Concerned Scientists, Rising Temperatures and Your Health: After the Storm - The Hidden Health Risks of Flooding in a Warming World (2012), available at http://www.ucsusa.org/sites/default/files/legacy/assets/documents/global_warming/climate-change-and- flooding.pdf. 29 Maclean, I. M. D., and R. J. Wilson. 2011. Recent ecological responses to climate change support predictions of high extinction risk. Proceedings of the National Academy of Sciences of the United States of America 108: 12337- 1234; Warren, R., J. Price, A. Fischlin, S. de la Nava Santos, and G. Midgley, Increasing impacts of climate change upon ecosystems with increasing global mean temperature rise, 106 CLIMATE CHANGE 141–177 (2011); Cahill, A.E. et al. 2012. How does climate change cause extinction? Proceedings of the Royal Society B, doi:10.1098/rspb.2012.1890. 30 IPCC. 2007. Climate Change 2007: Synthesis Report: An Assessment of the Intergovernmental Panel on Climate Change. www.ipcc.ch. 31 Thomas, C. D., et al., Extinction risk from climate change, 427 NATURE 145-48 (2004). 32 Maclean and Wilson, supra n. 29. 33 Warren, R. et al. 2013. Quantifying the benefit of early climate change mitigation in avoiding biodiversity loss. Nature Climate Change 3:678-682. 34 Barnosky, A.D. et al., Approaching a state shift in Earth's biosphere, 486 NATURE 52 (2012). 35 Melillo, Jerry M., Terese (T.C.) Richmond, and Gary W. Yohe, Eds., 2014: Climate Change Impacts in the United States: The Third National Climate Assessment. U.S. Global Change Research Program, 841 pp. doi:10.7930/J0Z31WJ2. 6 JA0006 in the acidity of ocean surface waters, at a rate faster than anything believed to have occurred in the past 300 million years.36 Ocean acidity is projected to increase by 150 to 200 percent by the end of the century if carbon dioxide emissions continue unabated.37 Ocean acidification negatively affects a wide range of marine species by hindering the ability of calcifying marine creatures to build protective shells and skeletons and by disrupting metabolism and critical biological functions.38 The adverse effects of ocean acidification are already being observed in wild populations, including reduced coral calcification rates,39 dissolution of pteropod shells in the California Current,40 reduced shell weights of foraminifera in the Southern Ocean,41 and mass die-offs of larval Pacific oysters in the Pacific Northwest.42 II. Legal Background: The Regulation of Emissions from Motor Vehicles Given the negative impacts on public health and the environment caused by the emission of air pollutants from various sources, including the transportation sector, Congress has enacted several laws to regulate and limit the amount of air pollutants from motor vehicles. A. The Clean Air Act In enacting the CAA, Congress found that "that the growth in the amount and complexity of air pollution brought about by urbanization, industrial development, and the increasing use of 36 Doney, S.C., Mahowald N. Lima, et al., "Impact of Anthropogenic Atmospheric Nitrogen and Sulfur Deposition on Ocean Acidification and the Inorganic Carbon System", Proc. Nat. Acad. Sci. 2007; 104(37); 14580. doi: 10173/pnas.0702218104; James C Orr, et al., Anthropogenic Ocean Acidification over the Twenty-First Century and its Impacts on Calcifying Organisms, 437 NATURE 681-86 (2005). 37 Feely, Richard A., S. Doney and S. Cooley, 2009, "Ocean Acidification: Present Conditions and Future Changes in a High CO2 World", Oceanography 22 (4) (June): 36-47; Hönisch, Bärbel, Andy Ridgwell, Daniela N. Schmidt, Ellen Thomas, Samantha J. Gibbs, Apply Slujs, Re Zeebe et al. 2012; "The Geological Record of Ocean Acidification", Science 335 (6072) March: 1058-63. doi. 10. 1126/science. 1208277; Orr, James C. Victoria, J. Fabry, Oliver Aumont, Laurent Bopp, Scott C. Doney, Richard A. Feely, Anand Gnandaesikan, et al., Anthropogenic Ocean Acidification over the Twenty-First Century and Its Impact on Calcifying Organisms, 437 NATURE 681-86 (2005), doi: 10, 1038/nature 04095. 38 Feely, supra n. 37; Fabry V.J., Seibel BA, Feely, RA, Orr J., "Impacts of Ocean Acidification on Marine Fauna and Ecosystem Processes" 65 ICES J. MAR SCI. 414 (2008); Kroeker K.J., Kordas, R.L., Crim R.N., Singh G.G., Meta-analysis Reveals Negative Yet Variable Effects of Ocean Acidification on Marine Organisms, ECOL. LETT., 2010:no-no. doi:10.1111/j.1461-0248.2010.01518.x. 39 De'ath G. Lough JM, Fabricius KE, "Declining Coral Calcification on the Great Barrier Reef", 323 SCIENCE 116, doi:10.1126/science.1165283; Cooper T.F., De'Ath G., Fabricius KE, Lough, JM, Declining Coral Calcification in Massive Porties in Two Nearshore Regions of the Northern Great Barrier Reef, 14 GLOB CHANGE BIO. 529-538 (2008), doi:10.1111/j. 1365-2486.2007.01520 x; Bates N. Amat A., Andersson A., Feedbacks and Responses of Coral Calcification on the Bermuda Reef System to Seasonal Changes in Biological Processes and Ocean Acidification on the Bermuda Reef System, 7 BIOGEOSCIENCES 2509-2530 (2010), doi:105194/bg-7-2509-2010. 40 Bednaršek N. Feely, RA, Reum JCP, Peterson B., Menkel J., Limacina Helicina Shell Dissolution as an Indicator of Declining Habitat Suitability Owing to Ocean Acidification in the California Current Ecosystem, Proc. R. Soc. B. 2014:281:20140123; Gledhill, D.K., Wannikhof R. Millero FJ, Eakin M. Ocean Acidification of the Greater Caribbean Region 1996- 2006, J. Geophys Res. 2008; 113(C10): C10031. doi:10.1029/2007JC004629. 41 Moy, A.D., Howard W.R., Bray S.G., Trull, T.W., Reduced Calcification in Modern Southern Ocean Planktonic Foraminifera, 2 NAT. GEOSCI. 276-280 (2009), doi:10,1038/ngeo460. 42 Barton A., Hales B., Waldbusser G.G., Langdo C., Feely R., The Pacific Oyster, Crassostrea Gigas, Shows A Negative Correlation to Naturally Elevated Carbon Dioxide levels: Implications for Near Term Ocean Acidification Effects, 57 LIMMOL OCEANOGR. 698-710 (2012), doi:10.4319/lo. 2012.573.0698. 7 JA0007 motor vehicles, has resulted in mounting dangers to the public health and welfare, including injury to agricultural crops and livestock..."43 Accordingly, the CAA establishes a comprehensive scheme "to protect and enhance the quality of the Nation's air resources so as to promote the public health and welfare and the productive capacity of its population."44 To reach these goals, Title II of the CAA prescribes a regulatory scheme to control emissions from mobile sources.45 Specifically, the CAA requires EPA to promulgate regulations that establish standards for the emissions of air pollutants from new motor vehicles that "cause, or contribute to, air pollution which may reasonably be anticipated to endanger public health or welfare" and prohibits exceedances of those standards.46 The CAA mandates that EPA set emission standards for particular pollutants from light and heavy duty vehicles, including carbon monoxide, hydrocarbons and oxides of nitrogen and amend the standards as necessary to protect public health and welfare.47 Pursuant to these statutory requirements, EPA has established emissions standards and testing procedures for light duty vehicles and heavy trucks.48 To ensure compliance with these standards, EPA requires manufacturers to receive a certificate of conformity from EPA before a manufacturer can introduce vehicles into U.S. commerce.49 To receive such a certificate, manufacturers must submit a detailed application to EPA for each test group of vehicles it intends to sell in the United States; the application must include a certification that the vehicles comply with emission standards as determined by specific testing procedures required by EPA, and a description of any air emission control devices contained within the vehicles.50 The CAA provides for a fine of up to $37,500 for each car that does not conform to details within the certificate of compliance.51 In recognition of the fact that manufacturers may attempt to circumvent emission standards, the CAA prohibits any person from manufacturing, selling, offering to sell or installing any part in a motor vehicle that bypasses, defeats or renders inoperative any device or element of a vehicle's emission control technology.52 EPA's implementing regulations specifically prohibit the use of "defeat devices," defined generally as an air emission control device "that reduces the effectiveness of the emission control system under conditions which may reasonably be expected to be encountered in normal vehicle operation and use…"53 Under the CAA and EPA's regulations, manufacturers may be liable for up to $3,750 for each use of a defeat device.54 43 42 U.S.C. § 7401(a)(2). 44 Id. § 7401(b)(1). 45 Id. §§ 7521-7590. 46 Id. §§ 7521; 7522. 47 Id. § 7521. 48 40 C.F.R. Part 86 (emission standards and testing procedures for light-duty vehicles and light trucks); 40 C.F.R. § 86.1811-04 (emission standards for light-duty vehicles including NOx); id. § 86.1816-05, -18 (emission standards for heavy-duty vehicles). 49 40 C.F.R. § 86.1848-01. 50 Id. §§ 86.1843-01; 86.1844-01. 51 42 U.S.C. § 7524(a); 40 C.F.R. § 19.4. 52 42 U.S.C. § 7522(a)(3)(B). 53 40 C.F.R. § 86.1809-01; id. § 86.1803-01. 54 42 U.S.C. § 7524(a); 40 C.F.R. § 19.4. 8 JA0008 B. The Energy Policy and Conservation Act Congress enacted the EPCA in 1975 following the energy crisis caused by the 1973 Mideast oil embargo.55 In enacting EPCA, 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 habitats and expectations."56 Among the goals of EPCA are to "'decrease dependence on foreign imports, enhance national security [and to] achieve the efficient utilization of scarce resources...'"57 The fundamental purpose of EPCA, however, is energy conservation.58 To comply with these goals, EPCA vests NHTSA with broad regulatory authority,59 and requires NHTSA to set fuel economy standards at "the maximum feasible average fuel economy level that the Secretary decides the manufacturers can achieve in that model year."60 In this way, EPCA is meant to encourage technological innovation — meaning new technologies, not simply better versions of what exists today. As the court in Center for Auto Safety v. Thomas noted, "[t]he experience of a decade leaves little doubt that the congressional scheme in fact induced manufacturers to achieve major technological breakthroughs as they advanced towards the mandated goal."61 And as explained by the D.C. Circuit "when a statute is technology forcing, the agency can impose a standard which only the most technologically advanced plants in an industry have been able to achieve — even if only in some of their operations some of the time."62 In 2007, Congress passed the Energy Independence and Security Act of 2007 ("EISA"), which amended EPCA.63 The EISA eliminated the previous 27.5 mpg standard for passenger cars with a mandate that NHTSA set separate passenger car and light truck standards for each model year beginning in 2011 "to achieve a combined fuel economy average for model year 2020 of at least 35 miles per gallon for the total fleet of passenger and non-passenger automobiles manufactured for sale in the United States for that model year."64 Fuel economy standards for model years 2021 through 2030 must be the maximum feasible average fuel economy standard for each fleet of passenger and non-passenger cars for that model year.65 These standards are known as the corporate average fuel economy ("CAFE") standards. 55 Center for Biological Diversity v. Nat'l Highway Safety Transportation Administration, 538 F.3d 1172, 1182 (9th Cir. 2008). 56 H.R. Rep. No. 94-340 at 1-3 (1975), as reprinted in 1975 U.S.C.C.A.N. 1762, 1763. 57 Center for Biological Diversity, 538 F.3d at 1182 (quoting S.Rep. No. 94-516 (1975) (Conf. Rep.), as reprinted in 1975 U.S.C.C.A.N. 1956, 1957). 58 Id. at 1195. 59 49 U.S.C. § 32910. 60 Id. § 32902(a). In determining what constitutes the "maximum feasible" level, NHTSA must take into account four factors: technological feasibility, economic practicability, the effect of other motor vehicle standards of the Government on fuel economy, and the need of the United States to conserve energy. Id. § 32902(f). 61 847 F.2d 843, 870 (D.C. Cir. 1988) (overruled on other grounds); see also Green Mt. Chrysler Plymouth Dodge Jeep v. Crombie, 508 F. Supp. 2d 295, 358-59 (D. Vt. 2008) (discussing technology-forcing character of EPCA and the use of increased fuel efficiency to augment performance rather than mileage). 62 Kennecott Greens Creek Min. Co. v. Mine Safety and Health Admin., 476 F.3d 946, 957 (D.C. Cir. 2008). 63 Pub. L. 11-140, 121 Sat. 1492 (Dec. 18, 2007). 64 49 U.S.C. § 32902(b)(2)(A). 65 Id. § 32902(b)(2)(B). 9 JA0009 To help manufacturers comply with the CAFE standards, EPCA prescribes civil penalties that NHTSA can impose if their cars do not meet regulatory requirements. Specifically, a manufacturer is liable for a civil penalty of five dollars per automobile for each 0.1 mile per gallon shortfall.66 The Act vests NHTSA with the authority to raise the total penalty up to ten dollars for each 0.1 mile per gallon shortfall, provided it first makes certain findings. NHTSA raised the penalty to $5.50 for each 0.1 mile per gallon shortfall in 1997, but has not raised it since, nor has the penalty been adjusted for inflation.67 III. The VW Scandal Reveals the Need to Issues Regulations to Amend Testing Procedures and Increase Penalties for Violations of Fuel Economy Standards Volkswagen recently admitted that 11 million of its diesel cars sold worldwide since 2009, including nearly half a million sold in the United States, contain software specifically designed to cheat emissions tests. EPA has said that these devices allowed each car to spew up to 40 times the legal limit of nitrogen oxides in the United States. Better testing procedures that more accurately reflect a vehicle's on-road emissions could prevent such egregious actions from occurring in the future. This scandal raises yet another problem in the government's regulation of emissions from motor vehicles — that manufacturers regularly pay civil penalties rather than comply with NHTSA's CAFE standards. The penalties are therefore clearly inadequate to deter violations and inspire the technological innovation contemplated by EPCA, and reduce carbon dioxide emissions, and must be increased as a result. A. EPA Must Promulgate Regulations to Require On-Road Emissions Testing, and Must Test Cars Sold in the United States Since 2009 The VW scandal demonstrates that EPA's current testing procedures for passenger cars and light trucks do not accurately reflect the actual emissions of these vehicles. EPA must promulgate regulations that require accurate, on-road testing sufficiently rigorous to detect defeat devices and thereby protect public health and welfare from the deleterious impacts of motor vehicle emissions. As explained by EPA in its Notice of Violation to VW, "defeat devices" can detect when a car is being tested in a laboratory setting and adjusts engine operations to emit less-polluting exhaust during the test than in real-world driving conditions. Specifically, VW manufactured and installed software in the electronic control modules ("ECM") of vehicles equipped with 2.0 liter diesel engines.68 The software could sense when the vehicle was being tested pursuant to EPA's dynamometer testing equipment.69 When the software sensed testing, it produced compliant emission results under an ECM calibration, but at all other times the ECM ran a separate calibration that reduced the effectiveness of the emission control system, and the selective 66 Id. § 32912(b). 67 See 62 Fed. Reg. 5,167, 5,168 (Feb. 4, 1997) (raising the penalty to $5.50 for every 0.1 mpg); codified at 49 C.F.R. § 578.6(h)(2). 68 EPA, Notice of Violation to Volkswagen AG, Sept. 18, 2015. 69 Id. 10 JA0010 catalytic reduction, or the lean NOx trap, in particular.70 EPA has determined that the software is an air emission control device that was not described in VW's certification applications and is an illegal defeat device, and that "VW violated section 203(a)(1) the CAA, 42 U.S.C. § 7522(a)(1), each time it sold, offered for sale, introduced into commerce, delivered for introduction into commerce, or imported…" one of the offending vehicles as a result.71 But this is not the first time a manufacturer has used these illegal, deceitful devices. Despite the express prohibitions on the use of defeat devices in the CAA and EPA's regulations, the use of such devices by a variety of manufacturers has been discovered on several occasions.72 Indeed, such devices have been used beginning shortly after the enactment of the CAA, with early regulatory actions specifically intended to prevent their use.73 And car and truck manufacturers have repeatedly been caught using such devices for almost as long as their use has been prohibited. For example, in 1973, EPA found that VW had installed temperature-sensitive devices that turned off emissions controls on tens of thousands of its vehicles.74 And in 1998, the U.S. Department of Justice and EPA settled an enforcement case against the diesel engine industry for the widespread use of defeat devices in everything from tractor trailers to pick-up trucks. The settlement required seven companies, which comprised 95 percent of the U.S. heavy duty diesel engine market, to pay over one billion dollars, including $83.4 million in civil penalties, the largest ever imposed in environmental enforcement at that time.75 As suggested by EPA's letter to VW, a key reason vehicle manufacturers are able to use such devices to beat emissions tests are the inadequate testing procedures currently required by EPA. In particular, EPA's requirements for testing light-duty vehicles and trucks, known as the Federal Test Procedure ("FTP"), use a chassis dynamometer to test for various emissions, including nitrogen oxides, in a laboratory setting by simulating driving conditions. But given the artificial, predictable conditions in which the tests are run, software can sense when treadmill- like dynamometer equipment is being used based on the position of the steering wheel, vehicle speed and how long the engine operates, among other inputs.76 But alternative, on-road testing technologies exist. For example, on-road vehicle remote sensing is a type of technology that can scan the emissions of thousands of vehicles within a single day, and has previously been used to monitor real driving conditions by using optical sensors or a laboratory vehicle that follows cars and samples exhaust plumes.77 And EPA already 70 Id. 71 Id. 72 See e.g., U.S. Dep't of Justice, Clean Air Act Mobile Sources Cases, http://www.justice.gov/enrd/mobile-sources (updated May 14, 2015) (describing past enforcement actions for the use of defeat devices). 73 See e.g., 37 Fed. Reg. 28,775 (Dec. 29, 1972) (order requiring defeat devices to be eliminated by March 1973). 74 See e.g., Michael Biesecker and Eric Tucker, German automaker facing 'tsunami' of possible enforcement actions after emissions scandal, Associated Press, Sept. 28, 2015, http://www.usnews.com/news/business/articles/2015/09/28/volkswagen-faces-major-legal-trouble-in-emissions- scandal. 75 U.S. Dep't of Justice, Press Release: DOJ, EPA Announce One Billion Dollar Settlement With Diesel Engine Industry For Clean Air Act Violations, Oct. 22, 1998, available at http://www.justice.gov/archive/opa/pr/1998/October/499_enr.htm. 76 Notice of Violation to Volkswagen. 77 International Council on Clean Transportation, Guidance note about on-road vehicle emissions remote sensing, June 2013, available at http://www.theicct.org/sites/default/files/publications/RSD_Guidance_BorKlee.pdf. 11 JA0011 requires on-road testing for heavy-duty diesel trucks.78 Specifically, EPA has established a mandatory manufacturer-run, in-use emissions testing for heavy-duty diesel trucks using a portable emission measurement system ("PEMS").79 PEMS typically involves equipping a test vehicle with a portable gas analyzer, and measuring emission rates during the driving. In announcing the regulatory change, EPA specifically noted that using such systems is "a significant step forward. . . in helping ensure that heavy-duty diesel engines comply with applicable emission standards" and that "these systems offer[] advantages over conventional approaches to assess in-use exhaust emissions from engines for design improvement, research, modeling, and compliance purposes."80 Nevertheless, EPA has not implemented a similar requirement for passenger cars and light trucks. The urgent need for such testing is now beyond dispute, and its benefits would not be limited to detecting the use of unlawful defeat devices alone. Even when cars do not contain defeat devices, the laboratory tests often fail to accurately reflect emissions as laboratory settings do not adequately incorporate road and weather conditions, use of accessories and aggressive driving. On-road tests reflect normal operation and use, and therefore a more accurate picture of emissions. And the benefits would not be limited to emissions of nitrogen oxides — the use of on-road emissions testing would also enable tests to more accurately reflect a vehicle's fuel efficiency and thus, its carbon dioxide emissions. While current regulations vest EPA with the authority to conduct or require testing on any vehicle using driving cycles and conditions that may reasonably be expected to be encountered in normal operation and use (i.e., on-road conditions) for purposes of investigating the use of defeat devices,81 the regulations do not go far enough as they do not mandate such inspections prior to putting new cars and light trucks on the road.82 Mandating on-road inspections prior to the introduction of new light-duty motor vehicles is thus necessary to ensure cars comply with emission standards. Accordingly, the Center hereby requests that EPA promulgate regulations to require on- road testing for all types of new diesel-powered motor vehicles not already subject to such testing requirements. The Center also requests that EPA promulgate regulations to require on- road testing for all other types of fossil fuel-powered motor vehicles. While VW's scandal involved diesel-powered cars, there is no indication that the use of such devices is limited to diesel vehicles. In fact, recent reports indicate that VW's gasoline-powered cars, as well as models from other manufacturers, consume significantly more fuel than measured in laboratory tests. 78 See e.g., EPA, Regulatory Announcement: Final Rule on In-Use Testing Program for Heavy-Duty Diesel Engines and Vehicles, EPA420-F-05-021, June 2005, available at http://www3.epa.gov/otaq/regs/hd- hwy/inuse/420f05021.pdf. 79 Id. 80 Id. 81 40 C.F.R. § 86.1809. 82 See e.g., International Council on Clean Transportation, In-use emission testing of light-duty diesel vehicles in the U.S., May 30, 2015, available at http://www.theicct.org/sites/default/files/publications/WVU_LDDV_in- use_ICCT_Report_Final_may2014.pdf (noting that there is no regulatory requirement in the United States to verify compliance of Tier 2 vehicles for emissions standards over off-cycle tests such as on road emissions testing). 12 JA0012 Specifically, the Center requests that EPA adopt regulations in 40 C.F.R. part 86 and/or 1066 requiring on-road emissions testing as part of the certification process necessary to introduce any vehicle type into U.S commerce. These regulations could emulate those required for heavy-duty highway engines, adjusted as necessary to accommodate testing parameters needed for passenger cars and lighter trucks, and require state-of-the art on-road emission testing technology.83 The Center also requests that EPA conduct immediate in-use testing of each make and model of diesel-powered motor vehicles sold in the United States since 2009 that have not already undergone such tests, and each make and model of other fossil fuel-powered motor vehicles sold in the United States since 200984 to ensure that emissions comply with relevant standards, and any additional violators are held accountable. B. NHTSA Must Promulgate Regulations to Increase the Penalties for Violations of CAFE Standards NHTSA must increase the penalty for violations of CAFE standards. As explained above, EPCA vests NHTSA with the authority to impose a civil penalty of five dollars per automobile for each 0.1 mile per gallon a car falls short of the standards.85 EPCA also vests NHTSA with the authority to increase the penalty for violations, provided it first makes certain findings. These findings include that increasing the penalty "will result in, or substantially further, substantial energy conservation for automobiles in model years in which the increased penalty may be imposed; . . . will not have a substantial deleterious impact on the economy of the United States, a State, or a region of a State" and will not cause significant unemployment, a significant increase in automobile imports or adversely affect competition.86 NHTSA exercised its statutory authority to increase the maximum civil penalty to $5.50 for each 0.1 mile per gallon shortfall in 1997. But NHTSA has not increased the penalty since, nor has it been adjusted for inflation. It is no surprise then that NHTSA has repeatedly acknowledged that many companies choose to regularly pay the fines rather than comply with the standards.87 Indeed, the Government Accountability Office ("GAO") has reported that because the fines for violations of the CAFE standards have not increased, "CAFE penalties may not provide a strong enough incentive for manufacturers to comply with CAFE."88 In this way, EPCA has not been implemented to its full potential, and continuing technological innovation and reductions in greenhouse emissions are thwarted. However, the GAO also found that "stricter penalties" for "noncompliance could improve compliance with CAFE standards."89 83 See 40 C.F.R. part 1065 (emission testing requirements for heavy-duty highway vehicles). 84 To the extent conducting these tests is not feasible, the Center alternatively requests that EPA conduct in-use testing of a significant portion of the top selling makes and models of motor vehicles in the United States. 85 49 U.S.C. § 32912(b). 86 Id. 87 GAO, Report to Congress, Vehicle Fuel Economy: NHTSA and EPA's Partnership for Setting Fuel Economy and Greenhouse Gas Emissions Standards Improved Analysis and Should Be Maintained, Feb. 2010, GAO-10-336, available at http://www.gao.gov/assets/310/301199 html. 88 Id. 89 Id. 13 JA0013 Accordingly, the Center hereby requests that NHTSA promulgate regulations to increase the penalty for a violation of the CAFE standards. Specifically, the Center requests that NHTSA amend its regulation at 49 C.F.R. § 578.6(h)(2) to increase the penalty to the statutory maximum of $10 per 0.1 mile per gallon shortfall. The Center believes that NHTSA can easily make the requisite statutory findings in order to do so. Ensuring compliance with CAFE standards will promote competition by encouraging innovation and technological improvements, and will lead to economic benefits by reducing costly greenhouse gas emissions.90 And the requested increase in the penalty is reasonable, as it is still below the statutory minimum adjusted for inflation. Specifically, the five dollar fine in 1975 adjusted for inflation would be roughly $22.15 today.91 IV. Conclusion The transportation sector is the single largest source of air pollution and the second largest source of greenhouse gas emissions in the United States. While there are laws in place to attempt to reduce the impacts of these emissions by prescribing limits on the quantity of such emissions, the recent VW scandal reveals that car manufacturers often find ways to skirt such requirements. Improving testing procedures by requiring in-use testing of vehicles currently on the road, and on-road testing of all new motor vehicles in the future would help ensure emissions tests better reflect actual emissions, and thus provide a more accurate picture of whether car manufacturers are actually complying with emission standards. Similarly, increasing the penalties for a violation of the CAFE standards would incentivize compliance with fuel economy standards and reduce emissions of greenhouse gases from motor vehicles. All of these actions would promote the protection of public health, welfare and the environment by reducing dangerous emissions and reducing our dependency on dirty fossil fuels, as envisioned by the CAA and EPCA. Sincerely, /s/ Kristen Monsell Kristen Monsell Staff Attorney Center for Biological Diversity 1212 Broadway, Suite 800 Oakland, CA 94612 kmonsell@biologicaldiversity.org 90 See e.g., Ker Than, Estimated social cost of climate change not accurate, Stanford scientists say, Stanford Report, Jan. 12, 2015, http://news.stanford.edu/news/2015/january/emissions-social-costs-011215.html (estimating the social cost of carbon to be $220 per ton rather than $37 as estimated by the government); see also Marten, A.L., and Newbold, S.C., Estimating the social cost of non-CO2 GHG emissions: Methane and nitrous oxide, 51 Energy Policy 957 (2012), available as EPA Working Paper No. 11-10 at http://yosemite.epa.gov/ee/epa/eed nsf/ec2c5e0aaed27ec385256b330056025c/ f7c9fc6133698cc38525782b00556de1/$FILE/2011-01v2.pdf (estimating the social cost of nitrous oxide to be $4,300 to $33,000 per metric ton in 2015). 91 U.S. Dep't of Labor, CPI Inflation Calculator, http://www.bls.gov/data/inflation_calculator htm. 14 JA0014 EXECUTIVE OFFICE OF THE PRESIDENT OFFICE OF MANAGEMENT AND BUDGET WASHINGTON, D.C. 20503 THE DIRECTOR February 24, 2016 M-16-06 CUTIVE DEPARTMENTS AND AGENCIES FROM: SUBJECT: Implementation of the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 Overview On November 2, 2015, the President signed into law the Federal Civil Penalties Inflation Adjustment Act Improvements Act of2015 (the 2015 Act) (Sec. 701 ofPublic Law 114-74), which further amended the Federal Civil Penalties Inflation Adjustment Act of 1990 (the Inflation Adjustment Act) (Public Law 101-410), to improve the effectiveness of civil monetary penalties and to maintain their deterrent effect. The 2015 Act requires agencies to: (1) adjust the level of civil monetary penalties with an initial "catch-up" adjustment through an interim final rulemaking (IFR); and (2) make subsequent annual adjustments for inflation. Catch-up adjustments will be based on the percent change between the Consumer Price Index for all Urban Consumers (CPI-U) for the month of October in the year ofthe previous adjustment, and the October 2015 CPI-U. Annual inflation adjustments will be based on the percent change between the October CPI-U preceding the date of the adjustment, and the prior year's October CPI-U. OMB Circular A-136, Financial Reporting Requirements, directs agencies to identify in the Agency Financial Report (APR) the affected penalties, the applicable statutes and regulations, and the corresponding dates and amounts of adjustments. Agencies are required to publish interim final rules with the initial penalty adjustment amounts by July 1, 2016, and the new penalty levels must take effect no later than August 1, 2016. These adjustments will apply to all civil monetary penalties covered by the Inflation Adjustment Act. In accordance with the 2015 Act, penalties under the Occupational Safety and Health Act and the Social Security Act, which were previously excluded by a 1996 amendment to the Inflation Adjustment Act, are now subject to the 2016 catch-up and annual inflation increases thereafter. Penalties under the Internal Revenue Code and the Tariff Act remain exempt from the inflation calculation of the 2015 Act. JA0015 Guidance This memorandum provides guidance to agencies to implement the civil monetary penalty adjustment requirements of the 2015 Act. In particular, this memorandum explains agency responsibilities for: • identifying applicable civil monetary penalties; • completing the catch-up adjustment in 2016; • making future annual adjustments for inflation beginning in 2017; and • performing agency oversight of inflation adjustments. Identifying applicable penalties Agencies are responsible for identifying the civil monetary penalties that fall under the statutes and regulations they enforce. The Inflation Adjustment Act defines "civil monetary penalty" as "any penalty, fine, or other sanction that— (A)(i) is for a specific monetary amount as provided by Federal law; or (ii) has a maximum amount provided for by Federal law; and (B) is assessed or enforced by an agency pursuant to Federal law; and (C) is assessed or enforced pursuant to an administrative proceeding or a civil action in the Federal courts." 1 Agencies are to adjust "the maximum civil monetary penalty or the range of minimum and maximum civil monetary penalties, as applicable, for each civil monetary penalty by the cost-of-living adjustment." 2 Therefore, a civil monetary penalty is any monetary assessment levied for a violation of a Federal civil statute or regulation, assessed or enforceable through a civil action in Federal court or an administrative proceeding. This does not include a penalty levied for violation of a criminal statute, or fees for services, licenses, permits, or other regulatory reviews. Furthermore, the adjustment will apply only to penalties with a dollar amount, and will not apply to penalties written as functions of violations. For example, a penalty written, "the penalty shall be the full cost of restoration and repair of archaeological resources damaged" will not be subject to adjustment. In the case of a penalty with only some dollar amounts, e.g., "the penalty shall be the maximum of either twice the value of the transaction or $250,000," only the dollar figure, in this case $250,000, will be subject to adjustment. Notably, the civil monetary penalties under the Occupational Safety and Health Act, the Social Security Act, and the regulations promulgated under those statutes, are now subject to the inflation adjustment requirements of the 2015 Act. Agencies with questions on the applicability of the inflation adjustment requirement to an individual penalty, should first consult with the Office of General Counsel of the agency for the applicable statute, and then seek clarifying guidance from OMB if necessary. 1 Federal Civil Penalties Inflation Adjustment Act of 1990, Pub. L. No. 101-410, § 3(2), 104 Stat. 890 (amended 2015) (codified as amended at 28 U.S.C. § 2461 note) (emphasis added). 2 Id. § 5(a). JA0016 Agencies should maintain and report updates to civil monetary penalties on an annual basis through the AFR, as directed by OMB Circular A-136. Completing the catch-up adjustment a. In order to complete the catch-up adjustment, agencies should identify, for each penalty, the year and corresponding amount(s) for which the maximum penalty level or range of minimum and maximum penalties was established (i.e., as originally enacted by Congress), or last adjusted (i.e., by Congress in statute, or by the agency through regulation), whichever is later, other than pursuant to the Inflation Adjustment Act. This will exclude prior inflationary adjustments under the Inflation Adjustment Act, which were capped at 10 percent and contributed to a decline in the real value of penalty levels. The 2015 Act's amendments to the Inflation Adjustment Act should remedy this issue and other implementation challenges. b. To calculate the catch-up adjustment, agencies shall modify the penalty level or range identified in part a. above based on the Consumer Price Index (CPI-U) for the month of October 2015, not seasonally adjusted. Below, Table A provides multipliers to adjust the penalty level or range of penalty levels based on the year the penalty was established or last adjusted by statute or regulation. (The appendix provides additional instructions and examples on using Table A for the 2016 catch-up adjustment.) After applying the multiplier, agencies shall round all penalty levels to the nearest dollar. In accordance with the 2015 Act, however, agencies shall not increase penalty levels by more than 150 percent of the corresponding levels in effect on November 2, 2015. Note: The 150 percent limitation is on the amount of the increase; therefore, the adjusted penalty level(s) will be up to 250 percent of the level(s) in effect on November 2, 2015. c. Agencies may request from OMB concurrence for a reduced catch-up adjustment determination, if they demonstrate the otherwise required increase of the penalty or penalty range would have a negative economic impact, or that the social costs would outweigh the benefits. Consistent with the 2015 Act, agencies should consult with OMB before proposing a reduced catch-up adjustment determination. Further, in accordance with the 2015 Act, the agency must have OMB concurrence before adjusting penalties pursuant to a reduced catch-up adjustment determination. Further, in making such a determination, the agency must use the standard rulemaking process, which includes publication in the Federal Register of a notice of proposed rulemaking and a final rule. Agencies seeking a reduced catch-up adjustment determination should submit their associated notices of proposed rulemaking to the Office of Information and Regulatory Affairs (OIRA), OMB, for review under Executive Order (E.O.) 12866 as soon as possible, and no later than May 2, 2016. OMB expects determination concurrences to be rare. d. Agencies implementing the prescribed catch-up adjustment must publish the new penalty levels through an interim final rule in the Federal Register no later than July 1, 2016, to take effect no later than August 1, 2016. As the 2015 Act requires agencies to adjust penalties for the catch-up adjustment through an interim final rulemaking, agencies are not required to complete a notice and comment process prior to promulgation. 3 e. The new penalty levels shall take effect no later than August 1, 2016. Agencies will apply the new penalty levels to any penalties assessed on and after the effective date. Agencies 3 Id. § 4(b)(1)(A). JA0017 will send their interim final rules to OIRA in order to determine whether the regulatory action is significant under E.O. 12866 by May 2, 2016. OIRA will endeavor to designate interim final rules as significant or not significant within 10 working days of receipt of the rulemaking document. f. Pursuant to the 2015 Act, in the event a violation took place prior to the effective date of the new penalty level, and the agency assesses a penalty after the effective date, the new penalty level shall be assessed in a manner consistent with applicable law. The 2015 Act does not alter an agency's statutory authority, to the extent it exists, to assess penalties below the maximum level; however, minimum penalty levels should be increased for inflation as discussed in other sections of this guidance. As the 2015 Act applies to penalties assessed after the effective date of the applicable adjustment, the 2015 Act adjusts penalties prospectively. The 2015 Act does not retrospectively change previously assessed or enforced penalties that the agency is actively collecting or has collected. Making future annual adjustments for inflation Previously, the Inflation Adjustment Act required agencies to adjust civil monetary penalty levels every four years. The 2015 Act updates this requirement with annual adjustments for inflation based on OMB guidance. In accordance with the 2015 Act, OMB plans to issue adjustment rate guidance no later than December 15, 2016, and no later than December 15 for each following year, to adjust for inflation in the CPI-U as of the most recent October. Agencies are required to publish annual inflation adjustments in the Federal Register no later than January 15, starting in 2017, and each subsequent year. In accordance with the 2015 Act, agencies shall adjust civil monetary penalties notwithstanding Section 553 of the Administrative Procedures Act. 4 The 2015 Act does not alter existing agency authorities to adjust penalties. Additionally, future penalties or penalty adjustments enacted by statute or regulation will not be adjusted for inflation in the first year those penalty levels are in effect. Finally, as described in part f. above, agencies should apply new penalty levels to any penalties assessed on and after the date that the new level takes effect. However, statutory authorities to assess penalties below the maximum level, within the new inflation-adjusted ranges, remain unchanged. Performing agency oversight of inflation adjustments Under the 2015 Act, agency heads are responsible for implementing this guidance on applicable civil monetary penalties and for submitting relevant information to OMB annually through AFRs in accordance with OMB Circular A–136. Summary The 2015 Act updates the process by which agencies adjust applicable civil monetary penalties for inflation to retain the deterrent effect of those penalties. Agencies are required to make a catch-up adjustment for civil monetary penalties with the new levels published by July 1, 4 Id. § 4(b)(2). JA0018 2016, to take effect no later than August 1, 2016. Moving forward, agencies are required to make annual inflationary adjustments, starting January 15, 2017, and each year following, based on OMB guidance with adjusted penalties to take effect immediately. Finally, each year in accordance with guidance in OMB Circular A-136, agencies will report in the AFRs the status of adjustments to civil monetary penalties. Questions regarding this memorandum should be directed to Dan Keenaghan (dkeenaghan@omb.eop.gov) in OMB's Office of Federal Financial Management or Claire Monteiro (cmonteiro@omb.eop.gov) in OMB's Labor Branch. JA0019 Table A: 2016 Civil Monetary Penalty Catch-Up Adjustment Multiplier by Calendar Year Select multiplier based on the latest year when the penalty level was established (originally enacted by Congress) or last adjusted by statute or regulation (other than pursuant to the Inflation Adjustment Act before November 2, 2015). A B A B A B Year Multiplier Year Multiplier Year Multiplier 1914* 23.54832 1948 9.74746 1982 2.42422 1915 23.31745 1949 10.03536 1983 2.35483 1916 21.04761 1950 9.66821 1984 2.25867 1917 17.61763 1951 9.07779 1985 2.18802 1918 14.86488 1952 8.90779 1986 2.15628 1919 13.14022 1953 8.80881 1987 2.06278 1920 11.95166 1954 8.87455 1988 1.97869 1921 13.59074 1955 8.84156 1989 1.89361 1922 14.24180 1956 8.64865 1990 1.78156 1923 13.74786 1957 8.40417 1991 1.73099 1924 13.82779 1958 8.22969 1992 1.67728 1925 13.43718 1959 8.08973 1993 1.63238 1926 13.51352 1960 7.98114 1994 1.59089 1927 13.66885 1961 7.92793 1995 1.54742 1928 13.82779 1962 7.82362 1996 1.50245 1929 13.74786 1963 7.72201 1997 1.47177 1930 14.41442 1964 7.64752 1998 1.45023 1931 15.96228 1965 7.50278 1999 1.41402 1932 17.88256 1966 7.22912 2000 1.36689 1933 18.01803 1967 7.05751 2001 1.33842 1934 17.61763 1968 6.73762 2002 1.31185 1935 17.36044 1969 6.37635 2003 1.28561 1936 16.98843 1970 6.03650 2004 1.24588 1937 16.29027 1971 5.81511 2005 1.19397 1938 16.98843 1972 5.62265 2006 1.17858 1939 16.98843 1973 5.21575 2007 1.13833 1940 16.98843 1974 4.65436 2008 1.09819 1941 15.54497 1975 4.33220 2009 1.10020 1942 14.24180 1976 4.10774 2010 1.08745 1943 13.66885 1977 3.86101 2011 1.05042 1944 13.43718 1978 3.54453 2012 1.02819 1945 13.14022 1979 3.16274 2013 1.01838 1946 11.43452 1980 2.80469 2014 1.00171 1947 10.34078 1981 2.54645 2015 1.00000 * For penalties established or last adjusted prior to 1914, use the multiplier for 1914. JA0020 Table B: Summary Schedule of Key Dates Action Agency Issued No Later Effective Than Issue OMB February 29, 2016 Upon Issuance Implementation and Catch-up Guidance Submit Interim Agencies with May 2, 2016 Not applicable Final Rules (IFRs) Applicable Civil for OMB review Monetary Penalties Publish Penalty Agencies with July 1, 2016 No Later Than Levels with Catch- Applicable Civil August 1, 2016 up Adjustment Monetary Penalties Report adjustments Agencies with November 15 Upon Publication in AFR Applicable Civil (Annually) Monetary Penalties Publish Adjusted OMB December 15 Upon Publication Rate Guidance (Annually) Publish Penalty Agencies with January 15 Upon Publication Levels with Annual Applicable Civil (Annually) Adjustments Monetary Penalties JA0021 Appendix: Instructions for the Catch-up Adjustment Calculation using Table A Step 1: In Table A, column A, identify the latest year the penalty level or penalty range was established (i.e., originally enacted) or last adjusted by statute or regulation (other than pursuant to the Inflation Adjustment Act). In column B, identify the corresponding multiplier to adjust the penalty level or range for inflation. Step 2: Multiply the corresponding amount in column B by the amount of the maximum penalty level or the range of minimum and maximum penalties as most recently established or adjusted by statute or regulation (other than pursuant to the Inflation Adjustment Act before November 2, 2015), as applicable. Round the amount to the nearest dollar. Step 3: Compare the new amount or range of the penalty with the amount or range reported by the agency in the prior year's AFR, to ensure the maximum increase is not more than 150 percent of the most recent level(s). 5 If the new amount or range exceeds 150 percent above the last reported level(s), the new amount or range should be reduced to 150 percent over the last reported level(s). The resulting penalty level(s) in this case will be 250 percent of the last reported level(s). Calculation: 1) Determine the year and amount that the maximum penalty level or the range of minimum and maximum penalties was established or last adjusted by statute or regulation (exclude any previous adjustments made under the Inflation Adjustment Act); then identify the corresponding multiplier from Table A, Column B. a. = Year _______ b. = Multiplier_______ c. = Penalty Level or Range_______ 2) Use the applicable multiplier (b.) to multiply the penalty level or range (c.) and achieve the penalty level or range adjusted for inflation (d.). Round to the nearest dollar. d. = (b.) X (c.) = Inflation-Adjusted Penalty Level or Range ________ Rounded to the nearest dollar _____ 3) Identify the penalty level(s) in effect on November 2, 2015, including Inflation Adjustment Act increases (this may come from the agency reported 2015 AFR). e. = November 2, 2015, Penalty Level or Range ________ 4) Multiply the November 2, 2015 level(s) (e.) by 2.5 to achieve a 150 percent increase (f.). Round to the nearest dollar. f. = (e.) X 2.5 = 150 percent increase _____ Rounded to the nearest dollar _____ 5) Compare the amounts of (d.) and (f.) If the maximum penalty level or range in (d.) is larger than the maximum penalty level or range in (f.), the 150 percent limit applies, and 5 In the event that the AFR does not include the amount or range, agencies should compare the new amount or range of the penalty with the previous amount or range of the penalty. JA0022 the penalty level or range in (f.) should be selected. The new "catchup" penalty level is the lesser of (d.) or (f.): _________ This is the new maximum civil monetary penalty level (or range of minimum and maximum civil monetary penalty levels), which applies (apply) to any civil monetary penalties assessed on or after the effective date of the adjustment. Examples for using Table A to calculate the Catch-Up Adjustment: A) Example in which a penalty level has not been adjusted since establishment: A maximum penalty level, established in 2002, is $1,000 and the agency has not updated the penalty level since establishment. • The table indicates the multiplier for 2002 is 1.31185. ($1,000 x 1.31185= $1,311.85, which rounds to $1,312.) • The new maximum penalty level is $1,312. B) Example in which a penalty level has been increased by previous Inflation Adjustment Act calculations and the catch-up adjustment is less than the 250 percent cap: A maximum penalty level established in 1981 was $5,000. The agency increased the amount in 1996, to $5,500 due to the Inflation Adjustment Act of 1990. • The agency should set aside the previous increase and use Table A to adjust the penalty starting from the 1981 amount of $5,000. • According to Table A, the adjustment multiplier for a penalty last established/adjusted in 1981 is 2.54645. • To determine the cost-of-living adjustment, the agency should multiply the originally enacted amount of $5,000 by 2.54645= $12,732.25, which rounds to $12,732. • The agency should then determine whether $12,732 exceeds the catch-up adjustment cap of 250 percent of the penalty level in effect as of November 2, 2015. • Using this formula, the catch-up adjustment cap for this penalty is $13,750 ($5,500 X 250 percent = $13,750). • The new maximum penalty level is the lesser of $12,732 vs. $13,750. • The new maximum penalty level is $12,732. C) Example in which a range of penalty levels has been increased by previous Inflation Adjustment Act calculations and the catch-up adjustment is less than the 250 percent cap: A penalty range established in 1990 was $3,000 - $5,000. The agency increased the range in 1996 to $3,300 - $5,500 due to the Inflation Adjustment Act. • According to Table A, the adjustment multiplier for a penalty last established/adjusted in 1990 is 1.78156. • To determine the cost-of-living adjustment, the agency should multiply the originally enacted minimum of $3,000 by 1.78156= $5,344.68, which rounds to $5,345, and the originally enacted maximum of $5,000 by 1.78156 = $8,907.80, which rounds to $8,908. • The agency should then determine whether the $5,345 and $8,908 exceed the catch-up JA0023 adjustment cap of 250 percent of the penalty level in effect as of November 2, 2015. o The 250 percent catch-up adjustment cap for $3,300 = $8,250 ($3,300 X 250 percent). o The 250 percent catch-up adjustment cap for $5,500 = $13,750 ($5,500 X 250 percent). o For the $3,300 last adjusted penalty level, the new maximum penalty level is the lesser of $5,345 vs. $8,250, which is $5,345. o For the $5,500 last adjusted penalty level, the new maximum penalty level is the lesser of $8,908 vs. $13,750, which is $8,908. • The new penalty range is $5,345-$8,908. D) Example in which a penalty level has been increased by Congress or by regulation, but not by previous Inflation Adjustment Act calculations: A penalty level was established in 1994 at $4,000 and adjusted to $6,000 in 2000 by enactment of legislation through Congress; the adjustment was made by statute and not due to agency compliance with the Inflation Adjustment Act. • The agency should take the penalty leveled enacted in 2000 at $6,000 and use the corresponding multiplier for the year 2000, which is 1.36689. ($6,000 x 1.36689 = $8,201.31, which rounds to $8,201.) • The new maximum penalty level is $8,201. E) Example in which the 250 percent cap must be applied: A penalty level was established in 1948 at $1,000. The agency had previously updated the penalty levels every four years since 1990, in compliance with the Inflation Adjustment Act. The penalty level was $1,200 on November 2, 2015, the date of enactment for the 2015 Act. • The agency should use the 1948 penalty level and the 1948 multiplier of 9.74746. ($1,000 x 9.74746 = $9,747.46, which rounds to $9,747.) • The agency should then determine whether $9,747 exceeds the catch-up adjustment cap of 250 percent of the penalty level in effect as of November 2, 2015. • Using this formula, the catch-up adjustment cap for this penalty is $1,200 ($1,200 X 250 percent = $3,000). • The new maximum penalty level is the lesser of $9,747 vs. $3,000. • The new maximum penalty level is $3,000. F) Example in which Congress established a penalty level by statute in 2015: A penalty level was established in 2015 at $10,000. • The agency should use the multiplier for 2015, which is 1.00000. ($10,000 x 1 = $10,000.) • The penalty remains at $10,000. Like all other penalties, the agency will review this penalty for inflation increases annually, and will publish the first annually updated penalty level in January 2017. Note: Agencies should apply the new penalty levels to penalties assessed on and after the effective date of the publication that adjusts the penalty levels, which shall be no later than August 1, 2016. Agencies will adjust these penalty levels annually for inflation in accordance with OMB guidance. JA0024 43524 Federal Register /Val. 81, No. 128/Tuesday, July 5, 2016/Rules and Regulations authority for this collection of below-1-GHz spectrum (In the Matter of DEPARTMENT OF TRANSPORTATION information is contained in 47 U.S.C. Policies Regarding Mobile Spectrum 151, 152, 154, 154(i), 155(c), 157, 201, Holdings, Expanding the Economic and National Highway Traffic Safety 202,208,214.301,302a,303,307,308, Innovation Opportunities of Spectrum Administration 309,310,311,314,316,319,324, 331, Through Incentive Auctions, FCC 14- 63, 332, 333, 336, 534, 535 and 554. Report and Order, 29 FCC Red 6133, 49 CFR Part 578 Nature and Extent of Confidentiality: 6190, para. 135 (2014) (Mobile Spectrum [Docket No. NHTSA-2016-0075] There is no need for confidentiality Holdings R&D). See also Application required with this collection of RIN 2127- AL73 information. Procedures for Broadcast Incentive Privacy Impact Assessment: Yes. Auction Scheduled to Begin on March Civil Penalties Needs and Uses: On July 20, 2015, the 29, 2016; Technical Formulas for Competitive Bidding, Public Notice, 30 AGENCY: National Highway Traffic Commission released the Part 1 R&D in Safety Administration (NHTSA), which it updated many of its Part 1 FCC Red 11034, Appendix 3 (WTB 2015); Wireless Telecommunications Department of Transportation (DOT). competitive bidding rules (See Updating Bureau Releases Updated List of ACTION: Interim final rule. Part 1 Competitive Bidding Rules; Expanding the Economic and Reserve-Eligible Nationwide Service SUMMARY: This interim final rule Innovation Opportunities of Spectrum Providers in each PEA for the Broadcast updates the maximum civil penalty Through Incentive Auctions; Petition of Incentive Auction, Public Notice, AU amounts for violations of statutes and DmECTV Group, Inc. and EchoStar LLC No. 14-252 (WTB 2016). regulations administered by NHTSA for Expedited Rulemaking to Amend The Commission also revised the pursuant the Federal Civil Penalties Section 1.2105(a){2)(xi) and 1.2106(a) of currently approved collection of Inflation Adjustment Act Improvement the Commission's Rules and/or for Act of 2015. This final rule also amends Interim Conditional Waiver; information under OMB Control Number 3060-0798 to permit the our regulations to reflect the new civil Implementation of the Commercial penalty amounts for violations of the Spectrum Enhancement Act a11d collection of the additional information for Commission licenses and permits, National Traffic and Motor Vehicle Modernization of the Commission's Safety (the Safety Act) Act authorized Competitive Bidding Rules and pursuant to the rules and information collection requirements adopted by the by the Fixing America's Surface Procedures, Report and Order, Order on Transportation Act (FAST Act). Reconsideration of the First Report and Commission in the Part 1 R&D and the Mobile Spectrum Holdings R&D. As part DATES: Effective date: This rule is Orcler, Third OrdP.r on RP.r.onsicleration of the Second Report and Order, and of the collection, the Commission is effective August 4, 2016. Third Report and Order, FCC 115- 80, 30 now approved for the information Petitions for reconsideration: Petitions for reconsideration of this final rule FCC Red 7493 (2015), modified by collection and recordkeeping must be received not later than August Erratum, 30 FCC Red 8518 (2015) (Pmt requirements associated with 4 7 CFR 1 R&D)). Of relevance to the information 19, 2016. 1.21 10(j), 1.2112(b)(2)(iii), collection at issue here, the ADDRESSES: Any petitions for 1.2112(b)(2)(v), 1.2112(b)(2)(vii), and Commission: (1) Implemented a new reconsideration should refer to the 1.21 12(b)(2)(viii). Also, in certain general prohibition on the filing of docket number of this document and be circumstances, the Commission requires submitted to: Administrator, National auction applications by entities the applicant to provide copies of their controlled by the same individual or set Highway Traffic Safety Administration, agreements and/or submit exhibits. 1200 New Jersey Avenue SE., West of individuals (but with a limited exception for qualifying rural wireless In addition, the Commission is now Building, Fourth Floor, Washington, DC partnerships); (2) modified the approved for various other, non- 20590. eligibility requirements for small substantive editorial/consistency edits FOR FURTHER INFORMATION CONTACT: business benefits, and updated the and updates to FCC Form 601 that Thomas Healy, Office of Chief standardized schedule of small business correct inconsistent capitalization of Counsel, NHTSA, telephone (202) sizes, including the gross revenues words and other typographical errors, 366-2992, facsimi~e (202) 366-3820, thresholds used to determine eligibility; and better align the text on the form 1200 New Jersey Ave SE., Washington, (3) established a new bidding credit for with the text in the Commission rules DC 20590. eligible rural service providers; (4) both generally and in connection with SUPPLEMENTARY INFORMATION: adopted target ed attribution rules to recent non-substantive, organizational I. Background prevent the unjust enrichment of amendments to the Commission's rules. ineligible entities; and (5) adopted rules On November 2, 2015, the Federal prohibiting joint bidding arrangements Federal Communications Commission. Civil Penalties Inflation Adjustment Act with limited exceptions. The updated Gloda J. Miles, Improvement Act (the 2015 Act), Pub. L. Part 1 rules apply to applicants seeking Federal Register Liaison Officer, Office of the 114- 74, Section 7011, was signed into license:; and IJennits. Secretaq. law. The purpose of the 2015 Act is to Additionally, on June 2, 2014, the [FR Doc. 2016- 15819 Filed 7- 1- 16; 8:45am) improve the effectiveness of civil Commission released the Mobile BILLING CODE 6712-ol- P monetary penalties and to maintain Spectrum Holdings R&D, in which the their deterrent effect. The 2015 Act Commission updated its spectrum requires agencies to make an initial screen and established rules for its catch up adjustment to the civil upcoming auctions of low-band monetary penalties they administer spectrum. Of relevance to the thr ough an interim final rule and then information collection at issue here, the to make subsequent annual adjustments Commission stated that it could reserve for inflation. The amount of increase of spectrum in order to ensure against any adjustment to a civil penalty excessive concentration in holdings of pursuant to the 2015 Act is limited to JA0025 Federal Register /Val. 81, No. 128/Tuesday, July 5, 2016/Rules and Regulations 43525 150 percent of the current penalty. 2015 CPI-U. The February 24, 2016 Pub. L. 112-141, established a Agencies are required to issue the memorandum contains a table with a maximum civil penalty for persons interim final rule with the initial catch multiplier for the change in CPI-U from knowingly or willfully submitting up adjustment by July 1, 2016. the year the penalty was established or materially false or misleading The method of calculating last adjusted to 2015. To arrive at the information to NHTSA after certifying inflationary adjustments in the 2015 Act adjusted penalty the agency must that the information was accurate differs substantially from the methods multiply the penalty amount when it pursuant to 49 U.S.C. 30166(o) of $5,000 used in past inflationary adjustment was. established or last adjusted by per day. Applying the multiplier for the rulemakings conducted pursuant to the Congress, excluding arljustments 11nder increase in CPI- U for 2012 in Table A Federal Civil Penalties Inflation the Inflation Adjustment Act, by the Adjustment Act of 1990 (the Inflation of the February 24, 2016 memorandum multiplier for the increase in CPJ- U (1.02819) results in an adjusted civil Adjustment Act). Pub. L. 101- 410. from the year the penalty was Previously, adjustments to civil penalty of $5,141. MAP-21 established established or adjusted provi ded in the a maximum civil penalty for a related penalties were conducted under rules February 24, 2016 memorandum. The that required significant rounding of 2015 Act limits the initial inflationary series of daily violations of 49 U.S.C. figures. For example, a penalty increase adjustment to 150 percent of the current 30166(o) of$1,000,000. Applying the that was greater than $1,000, but less penalty. To determine whether the multiplier for the increase in CPI-U for than or equal to $10,000, would be increase in the adjusted penalty is less 2012 results in an adjusted civil penalty rounded to the nearest multiple of than 150 percent, the agency must of $1,028,190 for a related series of daily $1,000. While this allowed penalties to multiply the current penalty by 250 violations of 49 U.S.C. 30166(o). be kept at round numbers, it meant that percent. The adjusted penalty is the penalties would often not be increased Change to Penalty for Violation of 49 lesser of either the adjusted penalty U.S.C. Chapter 305 (49 CFR 578.6(b)) at all if the inflation factor was not large based on the multiplier for CPI- U in enough. Furthermore, increases to Table A of the February 24, 2016 The Anti Car Theft Act of 1992, Pub. penalties were capped at 10 percent. memorandum or an amount equal to L. 102- 519, 204, 106 Stat. 3393 (1992) Over time, this formula caused penalties 250% of the current penalty. This established a civil penalty of $1,000 for to lose value relative to total inflation. interim final rule adjusts the civil The 2015 Act has removed these each violation of the reporting penalties for violations of statutes and requirements relate d to maintaining the rounding rules; now, penalties are regulations that NHTSA administers simply rounded to the nearest $1. While Nation Motor Vehicle Title Information consistent with the February 24, 2016 System. Applying the multiplier for the this creates penalty values that are no memorandum. longer round numbers, it does ensure increase in CPI-U for 1992 in Table A that penalties will be increased each II. Inflationary Adjusbnents to Penalty of the February 24, 2016 memorandum year to a figure commensurate with the Amounts in 49 CFR Part 578 (1.67728) results in an adjusted civil actual calculated inflation. Furthermore, penalty of $1,677. Changes to Civil Penalties for School the 2015 Act "resets" the inflation Bus Related Violations of the Safety Act Change to Maximum Penalty Under 49 calculations by excluding prior (49 CFR 578.6(a}(2)) U.S.C. 32506(a) (49 CFR 578.6{c)) inflationary adjustments under the Inflation Adjustment Act, which The maximum civil penalty for a The Motor Vehicle Information and contributed to a decline in the real value single violation of 30112(a)(1) of Title Cost Savings Act (Cost Savings Act). of penalty levels. To do this, the 2015 49 of the United States Code involving Pub. L. 92-513, 86 Stat. 953, (1972), Act requires agencies to identify, for school buses or school bus equipment, or of the prohibition on school system established a civil penalty of $1,000 for each penalty, the year and each violation of a bumper standard corresponding amount(s) for which the purchases and leases of 15 passenger vans as specified in 30112(a)(2) of Title established pursuant to the Cost Savings maximum penalty level or range of minimum and maximum penalties was 49 of the United States Code was set at Act. Applying the multiplier for the established (i.e., originally enacted by $10,000 when the penalty was increase in CPI- U for 1972 in Table A Congress) or last adjusted other than established by the Safe, Accountable, of the February 24, 2016 memorandum pursuant to the Inflation Adjustment Flexible, Efficient Transportation Equity (5.62265) results in an adjusted civil Act. Act: A Legacy for Users (SAFETEA- LU), penalty of $5,623. Since this would The Director of the Office of Pub. L. 109- 59, 119 Stat. 1942, enacted result in an increase to the current civil Management and Budget (OMB) in 2005. Applying the multiplier for the penalty of greater than 150 percent, the provided guidance to agencies in a increase in CPI-U for 2005 in Table A ad justed civil penalty is $2,750 (Current February 24, 2016 memorandum on of the February 24, 2016 memorandum penalty $1,100 x 2.5). how to calculate the initial adjustment (1.19397) results in an adjusted civil The Cost Savings Act also established required by the 2015 Act.l The initial penalty of $11,940. The maximum civil a maximum civil penalty of $800,000 for catch up adjustment is based on the penalty for a related series of violations a Jtelated series of violations of the change between the Consumer Price of 3011 2(a)(l) and 30112(a)(2) was bumper standards established pursuant Index for all Urban Consumers (CPI-U) $15,000,000 when the penalt y was to the Act. Applying the multiplier for for the month of October in the year the established by SAFETEA- LU in 2005. penalty amount was established or last Applying the multiplier for the increase the increase in CPI- U for 1972 in Table adjusted by Congress and the October in CPI-U for 2005 results in an adjusted A of the February 24, 2016 maximum civil penalty of $17,909,550. memorandum (5.62265) results in an 'Memorandum from the Director of OMB to ad justed civil penalty of $4,498,120. Heads of Executive Departments and Agencies, Changes to Civil Penalties for Filing Since this would result in an increase to Implementation of the Federal Civil Penalties False or Misleading Reports Under 49 the current civil penalty of greater than In nation Adjustment Act Improvements Act of 2015 U.S .C. 30165(a}(4) 150 percent, the ad justed civil penalty (Feb. 24, 2016), ovailable at www.white house.gov/ sites/defau/tlfiles/ omb/memoranda/20 16/m-16- The Moving Ahead for Progress in the is $3,062,500 (Current penalty 06.pdf. 21st Century Act (MAP-21) of 2012, $1,225,000 X 2.5). JA0026 43526 Federal Register /Val. 81, No. 128/Tuesday, July 5, 2016/Rules and Regulations Change to Penalties Under the 2012 in Table A of the February 24, gallon by which the applicable average Consumer Information Provisions (49 2016 memorandum (1.02819) results in fuel economy standard under that CFR 578.6(d](1)) an adjusted civil penalty of $10,282. section exceeds the average fuel The Cost Savings Act established a MAP-21 established a maximum civil economy for automobiles to which the civil penalty of $1,000 for each violation penalty of $1,000,000 for a related series standard applies manufactured by the of 49 U.S.C. 32308(a) related to of violations of 49 U.S.C. Chapter 327 or manufacturer during the model year, providing information on a regulation issued thereunder. multiplied by the number of those crashworthiness and damage Applying the multiplier for the increase automobile and reduced by the credits susceptibility. Applying the multiplier in CPI-U for 2012 results in an adjusted available to the ma nufacturer. Applying for the increase in CPI-U for 1972 in civil penalty of $1,028,190 for a related the multiplier for the increase in CPI- Table A of the February 24, 2016 series of violations. U for 1975 results in an adjusted civil memorandum (5.62265) results in an MAP- 21 also adjusted the civil penalty of $22. Since this would result adjusted civil penalty of $5,623. Since penalty for violations of 49 U.S.C. in an increase to the current civil this would result in an increase to the Chapter 327 or a regulation issued penalty of greater than 150 percent, the current civil penalty of greater than 150 thereunder with intent to defraud to ad justed civil penalty is $14 (Current percent, the adjusted civil penalty is $10,000 per violation. Applying the penalty $5.50 x 2.5). $2,750 (Curre!l1t penalty $1,100 x 2.5). multiplier for the increase in CPI-U for In 1978 Congress amended EPCA, The Cost Savings established a 2012 results in an adjusted civil penalty Public Law 95- 619,402,92 Stat. 3255 maximum civil penalty of $400,000 for of $10,282. (Nov. 9, 1978) to allow the Secretary of a series of related violations of 49 U.S.C. Transportation to establish a new civil Change to Penalties Under the Vehicle penalty for each .1 of a mile a gallon by 32308(a). Applying the multiplier for Theft Protection Provisions (49 CFR the increase in CPI-U for 1972 in Table which the applicable average fuel 578.6(g)) economy standard under EPCA exceeds A of the February 24, 2016 The Motor Vehicle Theft Law the average fuel economy for memorandum (5.62265) results in an Enforcement Act of1984 (Vehicle Theft automobiles to which the standard adjusted civil penalty of $2,249,060. Act), Public Law 98-547, § 608, 98 Stat. Since this would result in an increase to applies manufactured by the 276.2 (1984), established a civil penalty manufacturer during the model year. the current civil penalty of greater than of $1,000 for each violation of 49 U.S.C. These amendments, which are codified 150 percent, the adjusted civil penalty 33114(a)(1)-(4). Applying the multiplier in 49 U.S.C. 32912(c), state that the new is $1,500,000 (Current penalty $600,000 for the increase in CPI- U for 1984 in civil penalty cannot be more than $10. X 2.5). Table A of the February 24, 2016 Applying the multiplier for the increase Change to Penalties Under the Tire memorandum (2.25867) results in an in CPI-U for 1978 in Table A of the Consumer Information Provisions (49 adjusted civil penalty of $2,259. The February 24, 2016 memorandum CFR 578.6(d](2)) Vehicle Theft Act also established a (3.54453) to the $10 maximum penalty The Energy Independence and maximum penalty of $250,000 for a the Secretary is permitted to establish Security Act of 2007, Pub. L. 11Q-140, related series of violations of 49 U.S.C. under 49 U.S.C. 32912(c) results in an 121 Stat. 1507 (2007) established a civil 33114(a)(1)-(4). Applying the multiplier adjusted civil penalty of $35. Since this penalty of $50,000 for each violation for the increase in CPI-U for 1984 would result in an increase of greater related to the tire information fuel results in an adjusted civil penalty of than 150 percent, the adjusted efficiency information program under $564,668. maximum civil penalty that the 49 U.S.C. 32304A. Applying the The Anti Car Theft Act of 1992 Secretary is permitted to establish under multiplier for the increase in CPI-U for established a civil penalty of $100,000 49 U.S.C. 32912(c) is $25 (Current 2007 in Table A of the February 24, per day for violations of the Anti Car maximum penalty $10 x 2.5). Because 2016 memora!l1dum (1.13833) results in Theft Act related to operation of a chop the new maximum penalty that the an adjusted civil penalty of $56,917. shop. Applying the multiplier for the Secretary is permitted to establish under incr ease in CPI- U for 1992 in Table A 49 U.S.C. 32912(c) is $25, the new Change to Penalties Under the Country of the February 24, 2016 memorandum ad justed civil penalty in 49 CFR of Origin Content Labeling Provisions (1.6 7728) results in an adjusted civil 578.6(h)(2) of $14 does not exceed ithe (49 CFR 578.6{d)(2)) penalty of $167,728. maximum penalty that the Secretary is The American Automobile Labeling Change to Penalties Under the permitted to impose. Act, Pub L. 102-388, § 210, 106 Stat. Automobile Fuel Economy Provisions Change to Penalties Under the Medium 1556 (1992), established a civil penalty (49 CFR 578.6(g)) and Heavy Duty Vehicle Fuel Efficiency of $1,000 for willfully failing to affix, or failing to maintain, the label required by The Energy Policy and Conservation Program (49 CFR 578.6(i)] the Act. Applying the multiplier for the Act (EPCA) of 1975, Public Law 94-163, In 2011, the agency established a increase in CPI-U for 1992 in Table A § 508, 89 Stat. 912 (1975), established a maximum penalty of $37,500 per of the February 24, 2016 memorandum civil penalty of $10,000 for each vehicle or engine for violations of 49 (1.6772~) results in an adjusted civil violation of 49 U.S.C. 3Z911(a}. CFR 535. Applying the multiplier for penalty of $1,<677. Applying the multiplier for the increase the increase in CPI-U for 2011 in Table in CPI-U for 1975 in Table A of the A of the February 24, 2016 Change to Penalties Under the February 24, 2016 memorandum memorandum (1.05042) results in an Odometer Tampering and Disclosure (4.3 322) results in an adjusted civil ad justed civil penalty of $39,391. Provisions (49 CFR 578.6(/)) penalty of $43,322. Since this would MAP-21 adjusted the civil penalty for result in an increase to the current civil III. Codification oflncreases to each violation of 49 U.S.C. Chapter 327 penalty of greater than 150 percent, the NHTSA's Civil Penalty Authority in the or a regulation issued thereunder related adjusted civil penalty is $40,000 FAST Act to odometer tampering and disclosure to (Current penalty $16,000 x 2.5). On December 4, 2015, the FAST Act, $10,000 per violation. Applying the EPCA also established a ci vii penalty Public Law 114-94, was signed into multiplier for the increase in CPI-U for of $5 multiplied by each .1 of a mile a law. Section 24110 of the FAST Act JA0027 Federal Register /Val. 81, No. 128/Tuesday, July 5, 2016/Rules and Regulations 43527 increased the maximum civil penalty increases in NHTSA's civil penalty overall cost to the manufacturer. For that NHTSA may collect for each authority authorized by the FAST Act iliis reason the expected economic violation of the Safety Act under 49 are already in effect and the impacts of this rule can be expected to U.S.C. 30165(a)(1) and 49 U.S.C. amendments merely update 49 CFR be lower than the amount of the 30165(a)(3) to $21,000 per violation 578 .6 to reflect the new statutory civil increase to the civiil penalty amount in (previously $7,000) and the maximum penalty. For these reasons, NHTSA 49 CFR 578.6(h)(2). amount of civil penalties that NHTSA finds that notice and comment would be Regulato1y Flexibility Act can collect for a related series of impracticable and is unnecessary in this violations to $105 million (previously situation. We have also considered the impacts $35 million). In order for these increases of this rule under the Regulatory to become effective, the Secretary of V. Rulemaking Analyses and Notices Flexibility Act. I certify that this rule Transportation was required to certify to Executive Order 12866, Executive Order will not have a significant economic Congress that NHTSA has issued the 13563, and DOT Regulatory Policies and impact on a substantial number of small final rule required by Section 31203 of Procedures entities. The following provides the MAP-21. Section 31203 required factual basis for this certification under NHTSA has considered the impact of 5 U .S.C. 605(b). The amendments NHTSA to provide an interpretation of this rulemaking action under Executive almost entirely potentially affect civil penalty factors in 49 U.S. C. 30165 Order 12866, Executive Order 13563, for NHTSA to consider in determining manufacturers of motor vehicles and the amount of penalty or compromise and the Department of Transportation's motor vehicle equipment. for violations of the Safety Act. Pub. L. regulatory policies and procedures. This The Small Business Administration's 112-141, § 31203, 126 Stat. 758 (2012). rulemaking document was not reviewed regulations define a small business in The increases in maximum civil undler Executive Order 12866 or part as a business entity "which penalties in Section 24110 ofthe FAST Executive Order 13563. This action is operates primarily within the United Act became effective the date of the limited to the adoption of adjustments States." 13 CFR 121.105(a). SBA's size Secretary's certification. of civil penalties under statutes that the standards were previously organized NHTSA issued the final rule required agency enforces, and has been according to Standard Industrial by Section 31203 ofMAP-21 on determined to be not "significant" Classification ("SIC") Codes. SIC Code February 24,2016. On March 17, 2016, undler the Department of 336211 "Motor Vehicle Body the Secretary certified to Congress by Transportation's regulatory policies and Manufacturing" applied a small letter to the Chairman and Ranking procedures and the policies of the Office business size standard of 1,000 Member of the Senate Committee on of Management and Budget. Because employees or fewer. SBA now uses size Commerce, Science, and Transportation, iliis rulemaking does not change ilie standards based on the North Amer ican and to the Chairman and Ranking number of entities that are subject to Industry Classification System Member of the House Committee on civil penalties, the impacts are limited. ("NAICS"). Subsector 336- Energy and Commerce that NHTSA had Furthermore, excluding the penalties in Transportation Equipment issued the Final Rule. On March 22, 49 CFR 578.6(h)(2) for violations of Manufacturing, which provides a small 2016, the Office of the Secretary of Corporate Average Fuel Economy business size standard of 1,000 Transportation published a notice in the standards, this final rule does not employees or fewer for automobile Federal Register notifying the public establish civil penalty amounts that manufacturing businesses. Other motor that the increase was in effect. 2 NHTSA NHTSA is required to seek. vehicle-related industries have lower is codifying these increases in this We also do not expect the increase in size requirements that range between interm final rule. the dvil penalty amount in 49 CFR 500 and 750 employees. 578 .6(h)(2) to be economicaiJy For example, according to the SBA IV. Public Comment significant. Over the last five model coding system, businesses that NHTSA is promulgating this interim years, NHTSA has collected an average manufacture truck trailers, travel final rule to ensure that the amount of of $20 million per model year in civil trailers/campers, carburetors, pistons, civil penalties contained in 49 CFR penalties under 49 CFR 578.6(h)(2). piston rings, valves, vehicular lighting 578.6 reflect the statutorily mandated Therefore, increasing the current civil equipment, motor vehicle seating/ ranges as adjusted for inflation. penalty amount by 150 percent would interior trim, and motor vehicle Pursuant to the 2015 Act, NHTSA is not result in an annual effect on the stamping qualify as small businesses if required to promulgate a "catch-up economy of $100 million or more. they employ 500 or fewer employees. adjustment" through an interim final Furthermore, NHTSA contends that Similarly, businesses that manufactture rule. Pursuant to the 2015 Act and 5 the economic effects of increasing the gasoline engines, engine parts, electrical U.S.C. 553(b)(3)(B), NHTSA finds that civil penalty in 49 CFR 578.6(h)(2) are and electronic equipment (non-vehicle good cause exists for immediate not directly proportional to the increase lighting), motor vehicle steering/ implementation of this interim final rule in the amount of civil penalty. suspension components (excluding without prior notice and comment Manufacturers could pursue several springs), motor vehicle brake systems, because it would be impracticable to strategies to avoid liability for civil lran:;rnissions/power lrain parls, molor delay publication of this rule for notice penalties under 49 CFR 578.6(h)(2), vehicle air-conditioning, and all other and comment and because public including purchasing offset credits from motor vehicle parts qualify as small comment is unnecessary. By operation other manufacturers, production and businesses ifthey employ 750 or fewer of the Act, NHTSA must publish the marketing changes to influence the employees. See http://www.sba.gov/ catch-up adjustment by July 1, 2016. average fuel economy of vehicles sizelsizetable.pdf for further details. Additionally, the 2015 Act provides a produced by the manufacturer, and Many small businesses are subject to clear formula for adjustment of the civil vehicle design changes intended to the penalty provisions of 49 U.S.C. penalties, leaving the agency little room increase the vehicle's fuel economy. Chapter 301 (Safety Act) and therefore for discretion. Furthermore, the NHTSA contends that manufacturers may be affected by the adjustments will pursue the strategy, or mix on made in this rulemaking. For example, • 81 FR 15413. strategies, that results in the lowest based on comprehensive reporting JA0028 43528 Federal Register /Val. 81, No. 128/Tuesday, July 5, 2016/Rules and Regulations pursuant to the early warning reporting power and responsibilities among the submitting the comment (or signing the (EWR) rule under the Safety Act, 49 CFR various levels of government." Under comment, if submitted on behalf of an part 579, of the more than 60 light Executive Order 13132, the agency may association, business, labor union, etc.). vehicle manufacturers reporting, over not issue a regulation with Federalism You may review DOT's complete half are small businesses. Also, there are implications, that imposes substantial Privacy Act Statement in the Federal other, relatively low production vehicle direct compliance costs, and that is not Register published on Aprilll, 2000 manufacturers that are not subject to required by statute, unless the Federal (Volume 65, Number 70; Pages 19477- comprehensive EWR reporting. government provides the funds 78). or you may visit http://dms.dot.gov. Furthermore, there are about 70 necessary to pay the direct compliance registered importers. Equipment List of Subjects in 49 CFR Part 578 costs incurred by State and local manufacturers (including importers). governments, the agency consults with Imports, Motor veh icle safety, Motor entities selling motor vehicles and State and local governments, or the vehicles, Rubber an d rubber products, motor vehicle equipment, and motor agency consults with State and local Tires, Penalties. vehicle repair businesses are also officials early in the process of In consideration of the foregoing, 49 subject to penalties under 49 U.S.C. developing the proposed regulation. CFR part 578 is amended as set forth 30165. This rule will not have substantial below. As noted throughout this preamble, direct effects on the States, on the this rule will only increase the penalty relationship between the national PART 578-CJVIL AND CRIMINAL amounts that the agency could obtain government and the States, or on the PENALTIES for violations covered by 49 CFR 578.6. distribution of power and Under the Safety Act, the penalty responsibilities among the various • 1. The authority citation for 49 CFR provision requires the agency to take levels of government, as specified in part 578 is revised to read as follows: into account the size of a business when Executive Order 13132. The reason is Authority: Pub. L. 101-410, Pub. L. 104- determining tihe appropriate penalty in that this rule will generally apply to 134, Pub. L. 109-59, Pub. L. 114-74, Pub. L. an individual case. See 49 U.S.C. motor vehicle and motor vehicle 114- 94,49 u.s.c. 30165,30170,30505, 30165(b). The agency would also equipment manufacturers (including 32308,32309,32507,32709,32710, 32902, consider the size of a business under its 32912, and 33115; delegation of authority at importers), entities that sell motor civil penalty policy when determining 49 CFR 1 .81, 1.95. vehicles and equipment and motor the appropriat e civil penalty amount. vehicle repair businesses. Thus, the • 2. Section 578.6 iis revised to read as See 62 FR 37115 Ouly 10, 1997) requirements of Section 6 of the follows: (NHTSA's civil penalty policy under the Executive Order do not apply. Small Business Regulatory Enforcement § 578.6 Civil penalties for violations of Fairness Act ("SBREFA")). The penalty Unfunded Mandates Reform Act of 1995 specified provisions of Title 49 of the United States Code. adjustments would not affect our civil The Unfunded Mandates Reform Act penalty policy under SBREFA. (a) Motor vehicle safety-(1) In of 1995, Public Law 104--4, requires Since, this regulation does not agencies to prepare a written assessment general. A person who violates any of establish a penalty amount that NHTSA of the cost, benefits and other effects of sections 30112,30115,30117 through is required to seek, except for civil 30122, 30123(a), 31D125(c), 30127, or proposed or final rules that include a penalties under 49 CFR 578.6(h)(2), this Federal mandate likely to result in the 30141 through 30147 of Title 49 of the rule will not have a significant expenditure by State, local, or tribal United States Code or a regulation economic impact on small businesses. governments, in the aggregate, or by the prescribed under any of those sections Furthermore, low volume manufacturers private sector, of more than $100 is liable to the United States can petition for an exemption from the million annually. Because this rule will Government for a civil penalty of not Corporate Average Fuel Economy not have a $100 million effect, no more than $21,000 for each violation. A standards under 49 CFR part 525. This separate violation occurs for each motor Unfunded Mandates assessment will be will lessen the impacts of this prepared. vehicle or item of motor vehicle rulemaking on small business by equipment and for each failure or allowing them to avoid liability for Executive Order 12778 (Civil Justice refusal to allow or perform an act penalties under 49 CFR 578.6(h)(2). Reform) required by any of those sections. The Small organizations and governmental This rule does not have a retroactive maximum civil penalty under this jurisdictions will not be significantly or preemptive effect. Judicial review of paragraph for a related series of affected as the price of motor vehicles this rule may be obtained pursuant to 5 violations is $105,000,000. and equipment ought not change as the U.S.C. 702. That section does not (2) School buses. Notwithstanding result of this rule. require that a petition for paragraph (a)(1) of this section, a person reconsideration be filed prior to seeking who: Executive Order 13132 (Federalism) (i) Violates section 30112(a)(1) of Title judicial review. Executive Order 13132 requires 49 United States Code by the NI ITSA to develop an accountable Paperwork Reduction Act manufacture, sale, offer for sale, process to ensure "meaningful and In accordance with the Paperwork introduction or delivery for introduction timely input b y State and local officials Reduction Act of 1980, we state that into interstate commerce, or import ation in the development of regulatory ther e are no requirements for of a school bus or school bus equipment policies that have federalism information collection associated with (as those terms are defined in 49 U.S.C. implications." "Policies that have this rulemaking action. 30125(a)); or federalism implications" is de fined in (ii) Violates section 30112(a)(2) of the Executive Order to include Privacy Act Title 49 United States Code, shall be regulations that have "substantial direct Please note that anyone is able to subject to a civil penalty of not more effects on the States, on the relationship search the electronic form of all than $11,940 for each violation. A between the national government and comments received into any of our separate violation occurs for each motor the States, or on the distribution of dockets by the name ofthe individual vehicle or item of motor vehicle JA0029 Federal Register /Val. 81, No. 128/Tuesday, July 5, 2016/Rules and Regulations 43529 equipment and for each failure or person who violates 49 U.S.C. 32308(a), single motor vehicle to conform to .an refusal to allow or perform an act regarding crashworthiness and damage applicable standard under 49 U.S.C. required by this section. The maximum susceptibility, is liable to the United 33102 or 33103 is only a single penalty under this paragraph for a States Government for a civil penalty of violation. The maximum penalty under related series of violations is not more than $2,750 for each violation. this paragraph for a related series of $17,909,550. Each failure to provide information or violations is $564,668. (3) Section 30166. A person who comply with a regulation in violation of (2) A person that violates 49 U.S. C. violates section 30166 of Title 49 ofthe 49 U.S.C. 32308(a) is a separate 33114(a)(5) is liable to the United States United States Code or a regulation violation. The maximum penalty under Government for a civil penalty of not prescribed under that section is liable to this paragraph for a related series of more than $167,728 a day for each the United States Government for a civil violations is $1,500,000. violation. penalty for failing or refusing to allow (2) Consumer tire information. Any (h) Automobile fuel economy. (1) A or perform an act required under that person who fails to comply with the section or regulation. The maximum person that violates 49 U.S. C. 32911(a) nati anal tire fuel efficiency program is liable to the United States penalty under this paragraph is $21,000 undler 49 U.S.C. 32304A is liable to the per violation per day. The maximum Government for a civil penalty of not United States Government for a civil more than $40,000 for each violation. A penalty under this paragraph for a penalty of not more than $56,917 for related series of daily violations is separate violation occurs for each day each violation. the violation continues. $105,000,000.. (e) Country of origin content labeling. (4) False and misleading reports. A A manufacturer of a passenger motor (2) Except as provided in 49 U.S. C. person who kll1owingly and willfully vehicle distributed in commerce for sale 32912(c), a manufacturer that violates a submits materially false or misleading in the United States that willfully fails standard prescribed for a model year information to the Secretary, after to attach the label required under 49 under 49 U.S.C. 32902 is liable to the certifying the same information as U.S.C. 32304 to a new passenger motor United States Government for a civil accurate under the certification process vehicle that the manufacturer penalty of $14 mu~tiplied by each .1 of established pursuant to section manufactures or imports, or a dealer a mile a gallon by which the applicable 30166(o), shall be subject to a civil that fails to maintain that label as average fuel economy standard under penalty of not more than $5,141 per day. required under 49 U.S.C. 32304, is liable that section exceeds the average fuel The maximum penalty under this to the United States Government for a economy- paragraph for a related series of daily civil penalty of not more than $1,677 for (i) Calculated under 49 U.S.C. violations is $1,028,190. each violation. Each failure to attach or 32D04(a)(1)(A) or (!8) for automobiles to (b) National Automobile Title wh ich the standard applies Information System. An individual or maintain that label for each vehicle is a separate violation. manufactured by the manufacturer entity violating 49 U.S.C. Chapter 305 is (f) Odometer tampering and during the model year; liable to the United States Government disclosure. (1) A person that violates 49 (ii) Multiplied by the number of those for a civil penalty of not more than U.S.C. Chapter 327 or a regulation automobiles; and $1,677 for each violation. prescribed or order issued thereunder is (c) Bumper standards. (1) A person (iii) Reduced by the credits available that violates 49 U.S.C. 32506(a) is liable liable to the United States Government to the manufacturer under 49 U.S.C. to the United States Government for a for a civil penalty of not more than 32903 for the model year. civil penalty of not more than $2,750 for $10,281 for each violation. A separate (i) Medium- and heavy-duty vehicle each violation. A separate violation violation occurs for each motor vehicle fuel efficiency. The maximum civil occurs for each passenger motor vehicle or dlevice involved in the violation. The penalty for a violation of the fuel or item of passenger motor vehicle maximum civil penalty under this consumption standards of 49 CFR part equipment involved in a violation of 49 paragraph for a related series of 535 is not more than $39,391 per U.S.C. 32506(a)(1) or (4)- violations is $1,028,190. vehicle or engine. The maximum civil (i) That does not comply with a (2) A person that violates 49 U.S.C. penalty for a related series of violations standard prescribed under 49 U.S.C. Chapter 327 or a regulation prescribed shall be determined by multiplying 32502,or or order issued thereunder, with intent $39,391 times the vehicle or engine (ii) For which a certificate is not to defraud, is liable for three times the production volume for the model year provided, or f:or which a false or actual damages or $10,281, whichever is in question within the regulatory misleading certificate is provided, under greater. averaging set. 49 u.s.c. 32504. (g) Vehicle theft protection. (1) A [ssued on: June 22, 2016. (2) The maximum civil penalty under person that violates 49 U.S.C. this paragraph (c) for a related series of 33114(a)(1)-(4) is liable to the United Mark R. Roseki nd, violations is $3,062,500. States Government for a civil penalty of Administrator. (d) Consumer information- (1) Crash- not more than $2,259 for each violation. [FR Doc. 2016- 15800 Filed 7- 1- 16; 8:45am] worthiness and damage susceptibility. A The failure of more than one part of a BILLING COOE 491()-59--P JA0030 August 1, 2016 The Honorable Mark Rosekind, Ph.D. Administrator National Highway Traffic Safety Administration 1200 New Jersey Avenue, S.E. West Building, Fourth Floor Washington, D.C. 20590 RE: Petition for Partial Reconsideration of the Interim Final Rule on Civil Penalties, NHTSA Docket 2016-0075, 81 Fed. Reg. 43524, July 5, 2016 Dear Dr. Rosekind: The Alliance of Automobile Manufacturers1 (the Alliance) and the Association of Global Automakers2 (Global Automakers) are petitioning for partial reconsideration of the Interim Final Rule3 (IFR) adjusting the civil penalties under several statutes administered by NHTSA. According to the IFR, the adjustments were made pursuant to the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (the Improvements Act).4 The Alliance and Global Automakers seek reconsideration of the portion of the IFR that applies to civil penalties under the Corporate Average Fuel Economy (CAFE) program and the CAFE standards at 49 C.F.R. Parts 531 and 533. Introduction The Alliance and Global Automakers recognize that NHTSA was obligated to take some action in response to the Improvements Act, which directed nearly all federal agencies to make inflation adjustments to monetary civil penalties. We realize that NHTSA is not empowered to exempt the CAFE program from this directive. We do, however, have serious concerns about the effects of the significant adjustment to the CAFE penalty in the IFR. 1 The Alliance of Automobile Manufacturers is an association of 12 vehicle manufacturers which account for roughly 77% of all car and light truck sales in the United States. These members are BMW Group, FCA US LLC, Ford Motor Company, General Motors, Jaguar Land Rover, Mazda, Mercedes-Benz USA, Mitsubishi Motors, Porsche Cars North America, Toyota, Volkswagen Group of America, and Volvo Car USA. 2 The Association of Global Automakers represents international motor vehicle manufacturers, original equipment suppliers, and other automotive-related trade associations. Our members include American Honda Motor Co., Aston Martin Lagonda of North America, Inc., Ferrari North America, Inc., Hyundai Motor America, Isuzu Motors America, Inc., Kia Motors America, Inc., Maserati North America, Inc., McLaren Automotive Ltd., Nissan North America, Inc., Subaru of America, Inc., Suzuki Motor of America, Inc., and Toyota Motor North America, Inc. 3 81 Fed. Reg. 43524 (July 5, 2016). 4 Pub. L. 114-74, Section 701. JA0031 At the outset, the Alliance and Global Automakers respectfully submit that the agency used the wrong base year for the calculation of the inflation adjustment. Specifically, the Alliance and Global Automakers note that the last time the CAFE civil penalty was "established or adjusted" was 2007, when Congress adopted the Energy Independence and Security Act (EISA).5 Congress explicitly considered and rejected a change to the specific civil penalty dollar amount in the statute ($5.00/0.1 mpg), and instead ratified the penalty while at the same time amending the penalty provision to authorize the use of civil penalty revenue to support NHTSA's CAFE rulemaking and to support research and development of advanced technology vehicles.6 Thus, Congress reset the CAFE penalty in 2007, albeit at the same $5.00/0.1 mpg level, and that is the base year that should have been used to apply the inflation adjustment multiplier. Moreover, due to the unique nature of the civil penalties under the CAFE program, including especially the statutory requirement to provide a minimum of eighteen months leadtime before making a CAFE standard more stringent, it is not appropriate to apply such increases retroactively to penalties applicable to model years that have already been completed or for which a company's compliance plan has already been set. The Alliance and Global Automakers observe that NHTSA can follow some alternative pathways that would enable NHTSA to make adjustments to the standard penalty adjustment approach, yet also take these unique factors into account. The factors that distinguish CAFE civil penalties from most other civil penalty schemes include the following:  As NHTSA has acknowledged in various contexts, a number of manufacturers meet their CAFE obligations by electing to pay civil penalties. Indeed, NHTSA itself has characterized the option of paying the civil penalty as a "compliance flexibility."7 An increase in the CAFE civil penalties will therefore directly impact the actual costs of the CAFE program on such manufacturers.  In recognition of the fact that CAFE compliance through the use of technology requires significant leadtime on the part of automakers, the CAFE statute provides that increases in CAFE standards can therefore be made only with a minimum of 18 months' lead time in advance of a model year. This is intended to provide manufacturers time to develop their compliance strategy and to anticipate any civil penalties they may need to pay. The sudden imposition of a large civil penalty increase would upset this statutory schedule and expose manufacturers to far higher penalties than they had planned for, in contravention of Congress' intent.  Different from most other federal programs that impose civil penalties, the CAFE program contemplates compliance levels that are not static and, indeed, have been 5 Pub. L. 110-140. 6 Section 112 of Pub. L. 110-140. 7 http://www.nhtsa.gov/CAFE_PIC/CAFE_PIC_home.htm, last accessed July 27, 2016. JA0032 adjusted on an annual basis since adoption of the One National Program in 2009 and the 2011 Joint Final Rule on CAFE and Greenhouse Gas Standards.  And, unlike most civil penalty schemes in other statutes, CAFE civil penalties follow a prescribed formula that may not be compromised by NHTSA (except under extremely rare circumstances, as discussed below). Thus, an adjustment to the CAFE civil penalties does not merely increase the maximum theoretical penalties that the Agency could collect; it automatically increases the actual penalties that the manufacturers will pay, and this is true whether a company chooses to purchase credits or pay penalties directly as the price of credits is connected to the penalty amount. Our most significant concern with the IFR is that it would apply retroactively to the 2014 and 2015 Model Years (which have been completed for all manufacturers but for which the compliance files are not all closed), to the 2016 Model Year (which is complete for many manufacturers) and to the 2017 and 2018 Model Years (for which manufacturers have already set compliance plans based on guidance from NHTSA, including the existing civil penalty amounts). Applying the increased civil penalties in this manner is profoundly unfair to manufacturers, does not improve the effectiveness of this penalty, and does nothing to further the policies underlying the CAFE statute. Additionally, given NHTSA's recognition that paying civil penalties is a "compliance flexibility" that some manufacturers have elected, NHTSA's past estimates of the cost of compliance with the CAFE program have taken into account the costs of paying penalties. The sudden and retroactive imposition of the higher civil penalty amounts contained in the IFR (which were estimated by NHTSA to result in only $50 million in civil penalties being collected) would actually increase the annual estimated cost of compliance with the CAFE program by at least $1 billion based on NHTSA's own modeling tools. Finally, the IFR significantly underestimated the economic impact of the increases. According to the IFR, economic impact was estimated solely by reviewing historic penalties paid by manufacturers. The economic impact instead should have been derived from an analysis of expected current and future compliance costs based on the Final Rules for Model Years 2011- 2016 and Model Years 2017-2021. Equally important, in focusing exclusively on penalties, the IFR failed to take into account at all the impact on the credit market, even though the recently released Draft Technical Assessment Report identified credit trading as "the primary flexibility in model year 2014."8 Clearly, the purchase price of credits is directly related to the penalty that would otherwise be paid by a manufacturer. Thus, any analysis of the potential economic impact of a penalty increase should have quantified the impact on the credit market. All of these issues are discussed in more detail below. 8 U.S. Environmental Protection Agency, National Highway Traffic Safety Administration, California Air Resources Board. Draft Technical Assessment Report: Midterm Evaluation of Light-Duty Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards for Model Years 2022-2025 (EPA-420-D-16-900. July 2016. Available at http://www.nhtsa.gov/staticfiles/rulemaking/pdf/cafe/Draft-TAR-Final.pdf (last accessed July 26, 2016) at Page 3-19. JA0033 This Petition raises fundamental issues with respect to the administration of the CAFE program. The industry is already facing significant challenges in planning for compliance with the Model Year 2017- 2021 CAFE standards, so the implementation of the IFR would only serve to increase those challenges without any environmental benefits in the short term, and without attempting to harmonize the goals of the Improvements Act with the requirements of the CAFE statute. The Alliance and Global Automakers strongly urge NHTSA to withdraw the Interim Final Rule as it pertains to CAFE civil penalties and reissue a new Interim Final Rule that applies the inflation adjustment to the base year of 2007. If NHTSA is unable to agree that 2007 is the base year, this petition urges NHTSA to withdraw the IFR and to undertake a notice-and- comment rulemaking as authorized by the Improvements Act to develop a more appropriate formula for an inflation adjustment to the CAFE civil penalties, and to harmonize the timetable for any such adjustment with the unique leadtime requirements of the CAFE statute under the Improvements Act. In either case, NHTSA should confirm that it will not apply the new penalties before Model Year 2019. Discussion 1. The Interim Final Rule Used the Wrong Base Year for Calculating the Inflation Adjustment of the CAFE Civil Penalty The Improvements Act requires federal agencies to adjust civil monetary penalties contained in their statutes by applying a defined "cost of living adjustment" to the penalty measured from the last calendar year in which the penalty was "established or adjusted" by Congress (other than by operation of the Federal Civil Penalties Inflation Adjustment Act of 1990). The IFR concluded that the last calendar year in which the CAFE penalty was "established or adjusted" by Congress was 1975, the year that the CAFE statute was originally enacted. In fact, however, the last time the CAFE civil penalty was "established or adjusted" was 2007, when Congress adopted the Energy Independence and Security Act (EISA).9 In considering that legislation, Congress explicitly considered and rejected a change to the specific civil penalty dollar amount in the statute ($5.00/0.1 mpg),10 and instead ratified the penalty while at the same time modified the penalty provision to authorize the use of civil penalty revenue to support NHTSA's CAFE rulemaking and to support research and development of advanced technology vehicles.11 Thus, Congress reset the CAFE penalty in 2007, albeit at the same 9 Pub. L. 110-140. 10 See Discussion Draft of June 1, 2007, published in the Hearing Record of the Committee on Energy and Commerce entitled Legislative Hearing on Discussion Draft Concerning Alternative Fuels, Infrastructure and Vehicles, June 7, 2007, Serial Number 110-53. 11 Section 112 of Pub.L. 110-140. JA0034 $5.00/0.1 mpg level,12 and that is the base year that should have been used to apply the inflation adjustment multiplier.13 If NHTSA had applied the adjustment factor for 2007, instead of 1975, the significant economic consequences of the adjustment that are discussed in more detail below would, of course, be substantially mitigated. 2. A Sudden and Retroactive Increase In Civil Penalties Would Not Be Consistent With the Leadtime Provisions of the CAFE Statute. In support of its conclusion that the increase in CAFE civil penalties will not have a significant economic impact, NHTSA states in the IFR that manufacturers may make "production and marketing changes to influence the average fuel economy of vehicles produced by the manufacturer" to account for the increased civil penalties.14 As a practical matter, however, this is simply not the case, at least in the near term. The enhanced civil penalties set forth in the IFR are scheduled to become effective August 4, 2016, and NHTSA has indicated that it intends to apply them to all Model Years that have not been closed out, including the 2015 Model Year.15 (It is unclear what NHTSA intends for manufacturers whose compliance file is still open for the 2014 Model Year). But the 2015 Model Year is complete for all manufacturers, and many manufacturers have already ended (or shortly will end) production for the 2016 Model Year. Additionally, manufacturers have already set their compliance plans for the 2017 and 2018 Model Years based on the civil penalty amounts in effect prior to August 4 based on previous guidance from NHTSA. As NHTSA itself noted in its Implementation White Paper, however, its goal is to "ensure that the new civil penalties are fairly and uniformly applied," a goal which cannot be met if some manufacturers' compliance files are still open for Model Years 2014 or 2015, and some are closed. Additionally, the CAFE statute itself recognizes the need for sufficient leadtime to make changes to improve fuel efficiency in a manufacturer's fleet. For this reason, the statute provides that any amendment to a CAFE standard that has the effect of making the standard more stringent must be promulgated at least 18 months before the beginning of the model year to which the amendment applies.16 This leadtime requirement is Congress' recognition that manufacturers need to be able to engage in advance planning not only for purposes of compliance, but also for the potential payment of civil penalties. A sudden and substantial increase in the civil penalty formula would upset this statutory balance by unfairly upsetting the manufacturers' reasonable expectations regarding the penalty amounts that would be due. Moreover, applying the enhanced civil penalties to model years that have ended, or to model 12 By 2007, the actual CAFE civil penalty was $5.50/0.1 mpg as a result of a previous inflation adjustment rulemaking by NHTSA, and presumably Congress knew that fact and expected NHTSA to continue to apply the inflation adjusted amount. 13 See Final floor votes in the House and Senate which overwhelmingly approved the final version of EISA by 314- 100 and 86-8 respectfully (House Floor vote #1170 and Senate Recorded Vote #430). 14 81 Fed. Reg. at 43527. 15 NHTSA White Paper entitled "Implementation of the Federal Civil Penalties Inflation Adjustment Act Improvement[s] Act of 2015 for the Corporate Average Fuel Economy (CAFE) Program," July 18, 2016. 16 49 U.S.C. 32902(g)(2). JA0035 years where it is too late for manufacturers to make significant changes, does nothing to further the fuel savings goals of the CAFE statute, or to improve the effectiveness of this penalty. The Alliance and Global Automakers are aware that courts (and administrative agencies) generally apply the law as it is in effect at the time they adjudicate compliance, and that there is nothing inherently problematic in most cases with Congress' decision to apply penalty adjustments to conduct that occurred prior to the effective dates of the penalty adjustments. However, the Supreme Court has noted an exception to this general rule: if applying a change retroactively would disturb settled rights, the change is not applied retroactively. "The Court has refused to apply an intervening change to a pending action where it has concluded that to do so would infringe upon or deprive a person of a right that had matured or become unconditional." Bennett v. New Jersey, 470 U.S. 632, 639 (1985), citing Bradley v. School Board, 416 U.S. 696, 720 (1974). The manufacturers have substantial "right[s] that ha[ve] matured" with respect to Model Years 2014, 2015 and 2016, and, these rights are largely matured for Model Years 2017 and 2018 due to the compliance flexibilities built into the CAFE program. While the Alliance and Global Automakers acknowledge that NHTSA must take action to adjust the CAFE penalty in accordance with the Improvements Act, it must also do so in a way that harmonizes that adjustment with the underlying structure and purposes of the CAFE law. The Bennett exception to the general retroactivity rule applies. NHTSA should not apply the adjusted penalty to any Model Year prior to Model Year 2019. 3. If NHTSA Retains the 1975 Baseline Year for the Adjusted Penalties, There Will Be A Significantly Higher Economic Impact on the Costs of Compliance with the CAFE Standards than NHTSA Estimated in the IFR. In the IFR, NHTSA asserted that the proposed increase in CAFE civil penalties would not be economically significant, based on a review of penalties paid over the last five years: We also do not expect the increase in the civil penalty amount in 49 CFR 578.6(h)(2) to be economically significant. Over the last five model years, NHTSA has collected an average of $20 million per model year in civil penalties under 49 CFR 578.6(h)(2). Therefore, increasing the current civil penalty amount by 150 percent would not result in an annual effect on the economy of $100 million or more.17 However, a recitation of the penalties manufacturers previously paid fails fully to comprehend the economic impact of the proposed increase in two important ways: it does not accurately reflect NHTSA's own estimates of the impact of the increases in CAFE standards in coming years and it completely overlooks the impact of the increases on the CAFE credit market. NHTSA has recognized that some manufacturers may elect to pay civil penalties in lieu of meeting the CAFE standards for a given model year. NHTSA has acknowledged this practice in a number of contexts and has treated the civil penalties as part of the industry's overall costs 17 81 Fed. Reg. at 43527. JA0036 of compliance with the CAFE program. NHTSA included the following passage in the preamble to the 2012 Final Rule establishing the CAFE Standards for Model Years 2017-2021: As it has in past rulemakings and in the NPRM preceding today's final rule, NHTSA has also applied its CAFE model in a manner that simulates the potential that, as allowed under EISA/EPCA and as suggested by their past CAFE levels, some manufacturers could elect to pay civil penalties rather than achieving compliance with future CAFE standards. EISA/EPCA allows NHTSA to take this flexibility into account when determining the maximum feasible stringency of future CAFE standards.18 NHTSA proceeded to apply its CAFE Compliance and Effects Model ("the Volpe model") with the assumption that several manufacturers would elect to pay civil penalties. NHTSA observed that "to assume these manufacturers would exhaust available technologies before paying civil penalties would cause unrealistically high estimates of market penetration of expensive technologies such as diesel engines and strong HEV's as well as correspondingly inflated estimates of both the costs and benefits of any potential CAFE standards."19 In other words, NHTSA clearly recognizes that manufacturers have the choice to pay civil penalties in lieu of meeting the applicable fuel economy standards and relied on the Volpe Model to justify the cost-effectiveness and economic practicability of the Model Year 2017-2021 CAFE standards. The Alliance and Global Automakers have run the latest Volpe Model using the recent and increased higher civil penalty amounts against the 2015 Model Year fleet (the same assumption used by NHTSA in the Draft Technical Assessment Report).20 The Volpe model calculated an average annual cost increase of approximately $1 billion over the baseline with the higher penalty amount inputted.21 It is worth noting that the $1 billion is just the cost of technologies and civil penalties and does not take into consideration the unintended consequence of subsequently higher costs for the purchase of CAFE credits which will exponentially increase as the standards increase and the volume of CAFE credits available in the market diminish. The impact on CAFE credits is discussed further in this petition. 18 77 Fed. Reg. 62624 at 62666 (October 15, 2012) (Emphasis added). 19 77 Fed. Reg. at 63008 (Footnote 1111). 20 U.S. Environmental Protection Agency, National Highway Traffic Safety Administration, California Air Resources Board. Draft Technical Assessment Report: Midterm Evaluation of Light-Duty Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards for Model Years 2022-2025 (EPA-420-D-16- 900. July 2016. Available at http://www.nhtsa.gov/staticfiles/rulemaking/pdf/cafe/Draft-TAR-Final.pdf (last accessed July 26, 2016). 21 Value derived from analysis of NHTSA Volpe model results with inputs of $14.00 and $5.50 per 0.1 mpg CAFE non-compliance civil penalties using the most recent version of the Volpe model ("2016 Draft TAR for Model Years 2022-2025 Passenger Cars and Light Trucks", available at http://www.nhtsa.gov/Laws+&+Regulations/CAFE+- +Fuel+Economy/CAFE+Compliance+and+Effects+Modeling+System:+The+Volpe+Model, last accessed July 27, 2016). Class 2b and 3 medium-duty vehicles removed for consistency with compliance fleets to which the CAFE non-compliance civil penalty applies. JA0037 In light of the Volpe model output, we do not believe the analysis that was used in the IFR is the correct methodology for making a determination regarding the economic significance of the penalty increase. The IFR also omitted from its analysis the impact that the increases would have on another important compliance flexibility, credit trading among the manufacturers. The recently released Draft Technical Assessment Report (Draft TAR) identified various flexibilities that the CAFE program allows for manufacturers to reach compliance. According to the Draft TAR, in recent model years many manufacturers (reflecting a significant portion of all vehicle production) have needed to utilize various credit flexibilities to achieve compliance. Among the range of credit flexibilities available, the Draft TAR cites trading as an increasingly important and commonly utilized flexibility. As previously noted, the Draft TAR explicitly states that credit trading among manufacturers was "the primary [credit] flexibility in model year 2014." During the last five years (the same time period that the IFR reviewed for penalties historically paid), the Draft TAR shows that approximately 50 million CAFE credits were traded among manufacturers.22 While credit transaction terms are not public, the theoretical ceiling price of credits prior to the IFR would have been $5.50 per credit, discounted based on several factors, including overall supply and demand and the expiration date of the individual credit. Assuming for the sake of argument a 25% discount, over the last five years, manufacturers would have spent over $200 million purchasing credits. Assuming the same 25% discount from $14.00, manufacturers would have spent over $500 million over the past five years to purchase the same number of credits (with no real world benefits in terms of fuel savings) – an economic impact of over $300 million purely within the credit market. The IFR's penalty increase will dramatically impact the credit trading market, including the price of credits. The availability of credits will be significantly reduced as the CAFE standards rapidly increase over the next few years, and the price of credits will increase substantially if the CAFE penalty is adjusted to $14.00/ 0.1 mpg, a factor the agency should have incorporated into its analysis of the economic impact of the proposed increase. Finally, the IFR significantly overstates the options available to manufacturers for avoiding liability for civil penalties (even with credit trading). As discussed in Section 2, above, manufacturers have no technology options for compliance with respect to Model Years 2014 – 2016, and very limited technology options (if any) for Model Years 2017-2018. With respect to credit trading, the IFR did not account for the limitations on that option. By law, the domestic minimum passenger car CAFE standard cannot be met by purchasing CAFE credits at all; thus automakers may have to cover that gap by paying civil penalties. 4. CAFE Civil Penalties Are Formulaic and Not Subject to Being Compromised. Unlike nearly all civil penalty statutes, which establish maximum penalties but confer extensive discretion on the regulating agency to impose a lesser amount when circumstances warrant, the CAFE statute establishes a precise and immutable formula for determining the 22 Draft TAR Figure 3.15 showing the volume of credits traded between Model Years 2010 and 2014. JA0038 amount of civil penalties applicable to a shortfall to the fuel economy standards. NHTSA does not have any discretion to alter the civil penalty formula, nor to impose a lesser amount than that which the statute dictates.23 For this reason, the large CAFE penalty increase as set forth in the IFR would have a harsher and more direct effect than will occur in other programs and statutes administered by NHTSA, as well as the other civil penalty statutes over which the Improvements Act mandated a penalty increase. As noted above, NHTSA has acknowledged that the payment of civil penalties is a CAFE "compliance flexibility" that some manufacturers elect to undertake. In order to exercise this flexibility, the manufacturers must to be able to estimate the amount of the penalties far enough in advance to weigh that against the alternative path of making fleet changes to meet the standards. If the IFR were to be implemented as written, a number of manufacturers will have elected to pay civil penalties based on one set of assumptions and guidance from NHTSA, only to have a different penalty framework imposed at the eleventh hour without warning. This, coupled with the inability of NHTSA to compromise or adjust the civil penalties, (absent extremely rare circumstances that virtually never apply), means that NHTSA would effectively be unable to take into account the reasonable expectations of the manufacturer in its collection of civil penalties, in contradiction to the leadtime structure that Congress wrote into the CAFE statute from the beginning. 5. As CAFE Standards Rise, the Effective Penalty for Excess Gallons of Fuel Already Increases Automatically. We also note that since the fundamental goals of EPCA that was enacted in 1975 and EISA that was enacted in 2007 are to reduce oil consumption, it is important to note that the standards themselves have already accounted for inflation. NHTSA uses harmonic averaging for fleet calculations and adjustment factors for credit trades and transfers. These mechanisms ensure that gallons of fuel are properly reflected in the mathematics of compliance.24 It would be similarly appropriate to consider the gallons of excess fuel consumption in determining the final inflation adjustment, as outlined below: o Consider a theoretical manufacturer that made one passenger car in 1978 when the standard was 18 mpg. If that vehicle achieved only 17.9 mpg, the penalty for that vehicle would be $5.00. In its lifetime, that vehicle would use 60.6 gallons of fuel more than it would have had it achieved its 18 mpg target. On a gallon basis, that manufacturer's penalty would have been $5.00/60.6 gallons or $0.083/gallon. 23 We note that 49 U.S.C § 32913 (a) allows NHTSA to compromise civil penalties under extremely rare circumstances (e.g., manufacturer insolvency or an Act of God, or a certification by the Federal Trade Commission that a reduction in the penalty is needed to prevent a substantial lessening of competition), but this provision has rarely if ever come into play and is fundamentally different in character than the typical ability of government agencies to compromise penalties based on enforcement discretion. 24 NHTSA already adjusts traded credits on a "gallon" basis to comply with the statutory requirements of 49 U.S.C. 32903(f) to ensure that traded credits are adjusted to preserve total oil savings. See 49 CFR 536.4(c). JA0039 o Now consider that same theoretical manufacturer in 2015, again making one passenger car when the standards were 36.2 mpg. If again that manufacturer failed to meet its fuel economy target by 0.1 mpg, that vehicle would use 14.9 gallons more than it would have had it met its target. The gallon based penalty would be $5.50/14.9 gallons or $0.369/gallon in 2015 dollars. Converting to 1975 dollars using the OMB factor of 4.3322 would yield $0.085/gallon, effectively the same penalty on a per-gallon basis as the 1978 example. The methodology by which the excess fuel consumption is calculated is similar to NHTSA's methods when converting CAFE credits to gallons saved in the document "LD-CAFE credit gallon equivalent."25 The example above demonstrates the well-known fact that fuel consumption and fuel economy have a non-linear relationship. As a result of this non-linearity, increases in CAFE standards build in an "inflation adjustment" under which manufacturers pay more and more for each excess gallon of fuel used due to a failure to meet the standards. This is illustrated by the graph below, which shows that even if CAFE penalties remain at $5.50/0.1 mpg, the per-gallon penalty will increase due to the increasing stringency of the CAFE program. If the penalties were suddenly increased to $14.00/0.1mpg, the per-gallon penalty amount would far exceed the 250% maximum increase called for in the Improvements Act. Request for Relief In light of the above, the Alliance and Global Automakers petition NHTSA to withdraw the Interim Final Rule as it pertains to CAFE civil penalties and reissue a new Interim Final Rule that applies the inflation adjustment to the base year of 2007. If NHTSA is unable to agree that 2007 is the base year, this petition urges NHTSA to withdraw the IFR and to undertake a notice- 25 Available at http://www.nhtsa.gov/Laws+&+Regulations/CAFE+-+Fuel+Economy/CAFE_credit_status (last accessed July 30, 2016). JA0040 and-comment rulemaking as authorized by the Improvements Act that accomplishes the following objectives: 1. The Baseline Year for the Inflation Adjustment Should Be 2007. The Alliance and Global Automakers request that NHTSA withdraw the Interim Final Rule as it pertains to CAFE civil penalties and reissue a new Interim Final Rule that applies the inflation adjustment to the base year of 2007. 2. If NHTSA Does Not Concur that 2007 is the Proper Baseline Year, then the Final Rule Should Impose a Smaller Increase for the First Penalty Adjustment. The Improvements Act imposed a largely non-discretionary obligation on agencies to adjust their civil penalties for inflation according to a specified formula that was created by the Office of Management and Budget (OMB). The Improvements Act does, however, contain an exception permitting the head of an agency to adjust the amount of a civil penalty by less than the formula would otherwise dictate if the head of the agency finds that increasing the civil penalty by the required amount would have a negative economic impact. If the Director of OMB concurs with the agency's finding, then a smaller increase may be adopted for the first adjustment (which then establishes the baseline for future adjustments.) It is appropriate for NHTSA to exercise this discretion with respect to the CAFE penalties. As noted above, the Volpe model for CAFE cost estimates shows an average annual cost increase for CAFE compliance of approximately $1 billion, more than ten times higher than the threshold for "significance" under Executive Order 12866 – and significantly higher than the $50 million estimate that NHTSA included in the IFR. Moreover, NHTSA should seek public comment on whether the increase dictated by the Improvements Act would have other cascading effects on the assumptions underlying NHTSA's CAFE analysis, such as whether the higher penalties would alter the conclusions about the economic practicability of the Model Year 2017- 2021 standards and how the increased civil penalty amount is affecting the market price of tradeable CAFE credits. 3. The Final Rule Should Clarify that the Penalty Increases Will Not Apply to Open Model Years. Given the unique nature of the CAFE program, in which paying a penalty is an accepted alternative to meeting the fuel economy standards and in which NHTSA has no authority to alter the statutory penalty formula, it would be particularly unfair to apply any increased penalty to a manufacturer with respect to its Model Years 2014, 2015 and 2016 fleet performance that was completed in accordance with prior CAFE guidance from NHTSA. The CAFE compliance files are still open for at least some manufacturers with respect to Model Years 2014 and 2015, and Model Year 2016 is open for all manufacturers; however, it is obviously too late for manufacturers to make any changes to these fleets, even if leadtime were not an issue. Thus, applying the IFR's increased penalty levels to these model years would be purely punitive with absolutely no environmental or fuel-saving benefit and would unfairly disturb the longstanding JA0041 expectations of the manufacturers in light of the previous CAFE standard-setting rulemaking by NHTSA. NHTSA's sister agency, Federal Motor Carrier Safety Administration, has already determined not to apply its increased penalties to open matters because "recalculating the amount of the proposed penalty would not induce further compliance."26 Similar logic can be applied in the case of CAFE fines. As noted above, the CAFE compliance fines are open for some 2014, 2015 and all 2016 Model Years. Further efforts to comply with those Model Years simply cannot occur. NHTSA should observe that fact, and draw the same conclusion. It is acknowledged that FMCSA has a separate statutory provision to exercise its penalty authority in a manner that induces further compliance, and that the CAFE statute does not confer the same discretion on NHTSA. The point here is that another DOT agency has decided that it would be unreasonable to apply the new penalties retroactively, noting that applying an inflation adjustment to cases awaiting administrative review could raise questions of equity. 4. The Final Rule Should Apply the Improvements Act in a Manner that is Consistent with the CAFE Statute. Beyond the issues of open model years and the first penalty adjustment, NHTSA should set forth an overall timetable and approach for penalty increases that makes sense in light of the various factors discussed above. In particular, NHTSA should reset the adjustment against the 2007 baseline. In the alternative, NHTSA should seek comment on whether a lower initial adjustment to the CAFE penalties is warranted, given the strict penalty formula in the CAFE statute and the agency's lack of discretion to adjust the formula. And, because increased penalties have the effect of making the CAFE standard more stringent, NHTSA should also seek comment on a reasonable timetable for penalty increases that enable manufacturers to adjust their compliance plans as appropriate. Because the CAFE statute provides for at least 18 months leadtime for more stringent standards, it would not be appropriate for any penalty increases to be imposed before Model Year 2019. Any subsequent penalty increases should be announced at least 18 months prior to the effective date of each increase. 5. NHTSA Should Defer Assessing Any CAFE Penalties Until the Issues Raised by This Petition Are Fully Resolved. Because of the unique nature of the CAFE program, the Alliance and Global Automakers urge NHTSA to refrain from assessing any CAFE penalties for Model Year 2014, 2015 or 2016 until the concerns outlined in this petition are fully resolved. While the IFR specified that the adjustment for CAFE penalties will take effect on August 4, 2016, there will be unnecessary confusion should NHTSA proceed with imposing CAFE penalties during the pendency of this petition. As there is no statutory imperative specifying a schedule for resolving CAFE penalties, a modest suspension of activity on open CAFE penalty cases while the issues raised by this petition are resolved would help avoid that confusion, or any unnecessary proceedings under the refund provisions of Section 32903(h) of the CAFE statute. 26 81 Fed. Reg. 41453, 41454 (June 27, 2016). JA0042 Conclusion The Alliance and Global Automakers respectfully request NHTSA to act promptly to withdraw the IFR and reissue a new IFR that applies the inflation adjustment to the base year of 2007. If NHTSA is unable to agree that 2007 is the base year for which the CAFE penalty was reset, we urge NHTSA to withdraw the IFR and undertake a notice-and-comment rulemaking to consider an appropriate civil penalty adjustment for the CAFE program, taking into account the unique interplay between the stringency of the CAFE standard and the civil penalty levels. Any such penalty increase should 1) not apply to open model years; 2) impose a smaller increase for the first penalty adjustment (either the adjustment applicable to the 2007 baseline or such other smaller increase as NHTSA determines by rulemaking); and 3) provide overall consistency with the goals and directives of the CAFE statute. We appreciate NHTSA's consideration of this very important request. Representatives of both the Alliance and Global Automakers are available to meet with NHTSA to discuss this petition in more detail. Sincerely, Chris Nevers Julia Rege Vice President of Energy and Environment Director, Environment and Energy Affairs Alliance of Automobile Manufacturers Association of Global Automakers Cc: Thomas Healy, NHTSA James Tamm, NHTSA Ryan Harrington, DOT Kevin Green, DOT JA0043 Jaguar Land Rover North America, LLC 555 MacArthur Blvd. Mahwah, NJ 07430 August 3, 2016 The Honorable Mark Rosekind, Ph.D. Administrator National Highway Traffic Safety Administration 1200 New Jersey Avenue, S.E. West Building, Fourth Floor Washington, D.C. 20590 RE: Petition for Partial Reconsideration of the Interim Final Rule on Civil Penalties, NHTSA Docket 2016-0075, 81 Fed. Reg. 43524, July 5, 2016 Dear Dr. Rosekind: Jaguar Land Rover North America is petitioning for reconsideration of the Interim Final Rule (IFR) published on July 5, 2016 which adjusts the civil penalty structure of the Corporate Average Fuel Economy (CAFE) program. The published IFR would have a significant adverse economic impact on automobile manufacturers and should be amended to a more reasonable inflation adjustment. On August 1, 2016, The Alliance of Automobile Manufacturers (Alliance) filed a petition for reconsideration of the IFR which Jaguar Land Rover North America strongly supports. As a member of the Alliance, Jaguar Land Rover North America requests that NHTSA withdraw the July 5 IFR and consider the important recommendations made by industry and echoed in this letter. Jaguar Land Rover North America supported the Model Year 2017-2025 GHG/fuel economy program which was developed by NHTSA and EPA. As agreed and finalized in 2012, this comprehensive program provides manufacturers with the long- term certainty required in order to deliver the changes and improvements needed to reach the future standards. NHTSA's IFR to raise the CAFE fine structure by two and half times fundamentally changes the dynamics of how companies may make investment decisions within the Model Year 2017-2025 program. 1 JA0044 Bracketed Information is Redacted Confidential Business Information NHTSA has historically set fuel economy standards by providing automobile manufacturers with no less than 18 months of lead time. Application of the new CAFE fine calculation with immediate and even retroactive impact on recent/current Model Years is not consistent with the 18 month lead time requirement. Adverse Economic Impact on Jaguar Land Rover North America The IFR from July 5 also overlooks the dramatic economic impact of this change on the entire auto industry. The increase proposed in the IFR would unexpectedly impose fuel economy fines for open Model Years at a rate two and half times the historic $5.50 calculation. This means that companies face paying more in fines for Model Years in which the vehicles have already been sold, are on sale now, or will soon be for sale (and which it is impossible to make additional technology investments in order to avoid a fine). Furthermore, the Alliance has used NHTSA's own modeling tools to determine that the prospective costs to industry from the new fine structure are exponentially larger than initial estimates and thus reconsideration. Jaguar Land Rover North America has paid CAFE fines in recent Model Years. These fines are the partial result of our unique vehicle fleet, relative size of our U.S. sales, and the performance value proposition that our customers prefer. Our company would be adversely impacted by the dramatically higher fine calculation published in the IFR. Model Year 2015 Model Year 2016 Projected CAFE penalty [ ] [ ] calculated on $5.50 structure Projected CAFE penalty calculated on $14.00 [ ] [ ] structure Recommendations for Creating a More Reasonable Inflation Adjustment As outlined in the petition filed by the Alliance of Automobile Manufacturers, Jaguar Land Rover North America urges NHTSA to consider the following recommendations in order to accomplish a more reasonable inflation adjustment to the CAFE penalty structure: 1. The Baseline Year for the Inflation Adjustment Should be 2007 When Congress adopted the Energy Independence and Security Act in 2007, the structure of the civil penalty program was considered and a proposal to alter the fine amount was rejected. Furthermore, Congress modified the penalty provision to authorize the use of the civil penalty revenue to support NHTSA's CAFE rulemaking and support research and development of advanced technology vehicles. 2 JA0045 2. The Baseline Year for the Inflation Adjustment Should be 2007 When Congress adopted the Energy Independence and Security Act in 2007, the structure of the civil penalty program was considered and a proposal to alter the fine amount was rejected. Furthermore, Congress modified the penalty provision to authorize the use of the civil penalty revenue to support NHTSA's CAFE rulemaking and support research and development of advanced technology vehicles. 3. If NHTSA Does Not Concur that 2007 is the Proper Baseline year, then the Final Rule Should Impose a Smaller Increase for the First Penalty Adjustment The Improvements Act which is driving broader inflation adjustments across the Federal government provides agency heads with discretion to adjust the civil penalty amount by less than the formula in order to avoid negative economic impact. As the cost to industry from this fine increase in the IFR is approximately $1 billion when industry used NHTSA's own modeling tools, it is appropriate for the agency to use its discretion to set a more reasonable first penalty adjustment that avoids unreasonable economic impact. 4. The Final Rule Should Clarify that the Penalty Increase Will Not Apply to Open Model Years Automobile manufacturers are currently closing out Model Year 2015 for compliance purposes and Model Year 2016 vehicles are on sale now. Model Year 2017 vehicles will soon go on sale. Application of a dramatically higher fine calculation to these open Model Years would be unfair as manufactures have no ability to make changes to the vehicles and thus mitigate a CAFE fine. Furthermore, it is important to recognize that the Federal Motor Carrier Safety Administration has already determined not to apply its increased penalties to open matters. NHTSA should follow this example set by another part of the U.S. Department of Transportation. 5. The Final Rule Should Apply the Improvements Act in a Manner that is Consistent with the CAFE Statute As the historic CAFE statute provides for at least 18 months lead time prior to setting more stringent standards, it would not be appropriate for any penalty increases to be imposed before Model Year 2019. Higher penalties for noncompliance have the effect of making the overall program more stringent and thus the 18 month requirement should be used prior to setting the effective date of each increase. 4 JA0046 6. NHTSA Should Defer Assessing Any CAFE Penalties Until the Issues Raised by Industry Are Fully Resolved As automakers are in the midst of a number of open Model Years, NHTSA should refrain from assessing any CAFE penalties until the concerns raised by industry are fully resolved. Jaguar Land Rover North America respectfully requests that NHTSA begin development of a new regulatory process to make more reasonable inflation adjustments to the fine structure of the CAFE program. We look look forward to working with you on this very important issue. Sincerely, Joe Eberhardt President & CEO Jaguar Land Rover North America 4 JA0047 September 12, 2016 The Honorable Mark Rosekind, Ph.D. Administrator National Highway Traffic Safety Administration 1200 New Jersey Avenue, S.E. West Building, Fourth Floor Washington, D.C. 20590 Dear Dr. Rosekind: RE: Petition for Partial Reconsideration of the Interim Final Rule on Civil Penalties, NHTSA Docket 2016-0075, 81 Fed. Reg. 43524, July 5, 2016 This letter supplements our petition of August 1, 2016, in which we sought partial reconsideration of the agency's Interim Final Rule of July 5, 2016 with respect to the adjustment in the civil penalties under the Corporate Average Fuel Economy (CAFE) program and the CAFE standards at 49 C.F.R. Parts 531 and 533. One of the bases of our petition was that the last time the CAFE civil penalty was "established or adjusted" was 2007, when Congress adopted the Energy Independence and Security Act (EISA) 1 and considered (but rejected) a change to the penalty amount while making other changes to penalty provisions of the statute. Therefore, we explained, 2007 should have been the baseline year for the adjusted penalties, and not 1975. After our petition was filed, the Federal Aviation Administration (FAA) published a correction to its civil penalty adjustment Interim Final Rule. 2 In the correction notice (which was itself a new Interim Final Rule), the FAA explained that it was correcting its rule to reflect a different baseline year from which the adjustment would be calculated for violations of the hazardous materials training regulations. FAA explained that it had originally selected 2005 for the base year, because that was the year in which Congress initially established a $450 penalty for violations of those requirements. However, when the Pipeline and Hazardous Materials Safety Administration (PHMSA) issued its Interim Final Rule adjusting its civil penalties for violations of the same hazardous materials training regulations, PHMSA selected 2012 as the baseline year, and calculated the inflation adjustments from 2012 rather than 2005. 3 FAA's Interim Final Rule states that it is correcting its base year for the hazardous materials training regulations to 2012 in order to harmonize with PHMSA's selection of that base year, in deference to PHMSA's lead role in hazardous materials regulation within the 1 Pub.L. 110-140. 2 See 81 Fed. Reg. 51079 (August 3, 2016). 3 See 81 Fed. Reg. 42266 (June 29, 2016). JA0048 Department of Transportation. In doing so, FAA explained that PHMSA "read technical amendments made to Section 5123(a)(3) in 2012 [as part of MAP-21] to be adjusting the minimum penalty back down from a 2009 PHMSA inflation adjustment. It therefore concluded that 2012 was the year the minimum penalty was established or adjusted." 4 To put this in context, here is the language of the PHMSA statute after enactment of the 2005 Act 5 initially establishing the $450 minimum penalty for a hazardous materials training violation: 49 U.S.C. 5123(a)(3): "(3) If the violation is related to training, paragraph (1) shall be applied by substituting "$450" for $250"." In 2009, PHMSA adjusted the $450 by rulemaking for inflation under the old inflation adjustment law, resulting in a new penalty of $495. 6 In 2012, Congress enacted MAP-21 7, which included an amendment to Section 5123(a)(3). Here is the text of the MAP-21 amendment that PHMSA decided was a reset of the $450 penalty: SEC. 33010. CIVIL PENALTIES. Section 5123 is amended— (1) in subsection (a)— (A) in paragraph (1)— (i) by striking ''at least $250 but''; and (ii) ''$50,000'' and inserting ''$75,000''; (B) in paragraph (2), by striking ''$100,000'' and inserting ''$175,000''; and (C) by amending paragraph (3) to read as follows: ''(3) If the violation is related to training, a person described in paragraph (1) shall be liable for a civil penalty of at least $450.''; * * * [remainder of amendment omitted]. PHMSA interpreted this 2012 technical amendment as a Congressional re-establishment of the $450 baseline penalty, and concluded that it should use 2012 as the baseline year for the inflation adjustment under the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015. In August, FAA deferred to PHMSA, characterizing PHMSA's interpretation as "reasonable." 8 4 81 Fed. Reg. at 51079. (Internal citations omitted.) 5 Pub. L. 109-59, popularly known as SAFETEA-LU. 6 See 74 Fed. Reg. 68701 (December 29, 2009). 7 Pub. L. 112-141. 8 See 81 Fed. Reg. at 51079. JA0049 The Alliance and Global Automakers respectfully submit that the significant restructuring of the CAFE program that occurred in 2007 in EISA effected a far more substantial change to the overall CAFE regulatory scheme than the MAP-21 amendments effected for the PHMSA program. During the deliberations of EISA, Congress considered, but rejected, a proposal to increase the CAFE penalties to $10.00/0.1 mpg of shortfall 9, and instead ratified the penalty at $5.00/0.1 mpg while at the same time amending the civil penalty section of the CAFE statute 10 to provide authority for the use of CAFE civil penalty revenue for specific purposes. Thus, Congress specifically and substantively addressed the CAFE civil penalties in 2007 when EISA was enacted, and affirmatively decided to retain the $5.00/0.1 mpg civil penalty for CAFE shortfalls. The Alliance and Global Automakers urge NHTSA to reconsider the Interim Final Rule, and issue a new Interim Final Rule that corrects the baseline year for calculating the inflation adjustment under the Improvements Act from 1975 to 2007. Thank you for your consideration. Sincerely, Chris Nevers Julia Rege Vice President of Energy and Environment Director, Environment & Energy Alliance of Automobile Manufacturers Association of Global Automakers Cc: Thomas Healy, NHTSA James Tamm, NHTSA Ryan Harrington, DOT Kevin Green, DOT 9 See Discussion Draft of June 1, 2007, published in the Hearing Record of the Committee on Energy and Commerce entitled Legislative Hearing on Discussion Draft Concerning Alternative Fuels, Infrastructure and Vehicles, June 7, 2007, Serial Number 110-53. 10 49 U.S.C. 32912. JA0050 Federal Register/Val. 81, No. 249/Wednesday, December 28, 2016/Rules and Regulations 9 5489 [FR Doc. 2016-31215 Filed 12-27-16; 8:45am) compliance with standards in another monetary penalties administered by the BILLING CODE 6500-50-P yecrr or purchased from anoth er Agency, including those prescribed by manufacturer. If a manufacturer does the CAFE program. In accordance with not have credits to apply, and does not the Act and OMB guidance, the updated DEPARTMENT OF TRANSPORTATION apply sufficient fuel economy- penalty rate increased from $5.50 per improving technologies to their vehicles ten th of a mile per gallon (mpg) to $14 National Highway Traffic Safety to meet their fleet-wide standards, then per tenth of an mpg.5 NHTSA stated in Administration that manufacturer is liable for civil implementation guidance that it issued pen alties.3 following the TFR that the Agency 49 CFR Part 578 Congress has prescribed the formula intended to apply the $14 rate to any for calculating a civil penalty for penalties assessed on and after August (Docket No. NHTSA-2016-0136] violation of a CAFE standard. That 4, 2016, beginning with penalties RIN 2127-AL82 formula multiplies the penalty rate applicable to violations for MY 2015, times the number of tenths-of-a-mile- and also applying to any violations from Civil Penalties per-gallon by which a non-compliant prior model years that resulted from AGENCY: National Highway Traffic fleet falls short of an applicable CAFE recalculation of a manufacturer's Safety Administration (NHTSA), standard, times the number of vehicles previous CAFE levels.s Department of Transportation (DOT). in that non-compliant fleet. 4 For many II. Industry Petition for yecrrs, the penalty rate has been $5.50 ACTION: Final rule; response to petition Reconsideration for reconsideration; response to petition per tenth-of-a-mile-per-gallon. As an The Auto Alliance and Global for rulemaking. illustration, assume that Manufacturer A produced 1,000,000 light trucks in Automakers jointly petitioned NHTSA SUMMARY: On July 5, 2016, NHTSA model year 2010. Assume further that A for reconsideration of the interim final published an interim final rule updating has a light truck standard of 20 mpg for rule with regard to the inflation the maximum civil penalty amounts for MY 2010, and an achieved light truck adjustment for CAFE non-compliance violations of statutes and regulations average fuel economy level of 19.7 mpg penalties (hereafter, the Alliance and administered by NHTSA, pursuant to in that model year. If A has no credits Global petition wm be referred to as the the Federal Civil Penalties Inflation to apply, then A's assessed civil penalty "Industry Petition") on August 1, 2016. Adjustment Act Improvements Act of undler this historical penalty rate would The Industry Petitiion asked that NHTSA 2015. This decision responds to a be: not apply the penalty increase to non- petition for partial reconsideration of compliances associated with "model $5.50 (penalty rate) X 3 (tenths of an that interim final rule. After carefully mpg) x 1,000,000 (vehicles in years that have already been compl eted considering the issues raised, the or for which a company's compliance Manufacturer A's light truck fleet) = Agency grants some aspects of the plan has already been set." Specifically, $16,500,000 due for A's light truck petition, and denies other aspects. This the Industry Petition stated that: fleet for MY 2010. decision amends the relevant regulatory To date, few manufacturers have Our most significant concern with the IFR text accordingly. This decision also actually paid civil penalties, and the is that it would apply retroactively to the responds to a petition for rulemaking on amounts of CAFE penalties paid 2014 and 2015 Model Years (which have a similar topic. been completed for all manufacturers billt for generally have been relatively low. which the compliance files are not all DATES: Effective date: This rule is Additionally, since the introduction of closed), to the 2016 Model Year (which is effective January 27,2017. credit trading and transfers for MY 2011 complete for many manufacturers) and to the FOR FURTHER INFORMATION CONT ACT: Ms. and after, many manufacturers have 2017 and 2018 Model Years (for which Rebecca Yoon, Office of the Chief taken advantage of those flexibilities manufacturers have already set compliance Counsel, NHTSA, telephone (202) 366- rather than paying civil penalties for plans based on guidance from NHTSA, 2992, facsimile (202) 366-3820, 1200 non-compliance. including the [historical penalty amounts of $5.50 per tenth of an mpg]). Applying the New Jersey Avenue SE., Washington, The Federal Civil Penalties Inflation increased civil penalties in this manner is DC 20590. Adjustment Act Improvements Act profoundly unfajr to manufacturers, does not SUPPLEMENTARY INFORMATION: (November 2, 2015) (the "Act") improve the effectiveness of this penalty, and prescribed an inflation adjustment for does nothing to further the policies I. Background on CAFE Penalties and many civil monetary penalties, underlying the CAFE statute. Interim Final Rule including CAFE's civil penalty rate. In Industry Petition at 3. The National Highway Traffic Safety that Act, Congress generally required In the alternative, the Industry Administration (NHTSA) administers Federal agencies that administer civil Petition requested that if NHTSA Corporate Average Fuel Economy monetary penalties to make an initial decided to apply the penalty increase to (CAFE) standards under 49 U.S.C. 32901 "catch-up" adjustment for inflation MYs 2014-2018, the Agency should et seq. Vehicle manufacturers that through an interim final rule by July 1, recalculate the adjusted penalty rate produce passenger cars and light trucks 2016, and then to make subsequent for sale in the United States ar·e subject annual adjustments for inflation (see 5 NHTSA's explanation of its process, including to these standards,1 and are subject to Pub. L. 114- 74, Sec. 701). NHTSA reUance on OMB guidance for calculating the initial civil penalties for failure to meet the developed an interim final rule (IFR) adjustment required by the Act, is set forth in the interim final rule at 81 FR 43524-26 (Jul. 5, 2016). standards. 2 Manufacturers generally implementing the Agency's The interim final rule al.so discusses the "rounding meet the standards by applying responsibilities under that Act, and that rule" under the prior version of the Federal Civil technology to their vehicles to improve IFR published in the Federal Register Penalties Inflation Adjustment Act, which their fleet-wide fuel economy, but may on July 5, 2016. The NHTSA IFR prevented NHTSA from raising the $5.50 rate after 1997. also apply credits earned from over- included adjustments for all civil e Memorandum, "Implementation of the Federal Civil Penalties Inflation Adjustment Act 1 49 u.s.c. 32911(b). 3 Civil penalties are remitted to the U.S. Treasury. Improvement Act of 2015 for the Corporate Average 2 49 u.s.c. 3291 2(b). 4 49 u.s.c. 32912(b). Fuel Economy (CAFE) Program," July 18, 2016. JA0051 9 5490 Fed er a l Regist er/Val. 81, No. 249/Wednesday, December 28, 2016/Rules and Regulations using 2007 as the "base year" for penalty rate to violations of CAFE believes that Congress would not have calculating the inflation adjustment. As standards in model years prior to the intended retroactive application of an another alternative, the Industry enactment of the Act would not result inflation adjustment to overcome this Petition sought a finding that in additional fuel savings, and thus core substantive purpose and intent of immediately increasing the penalty to would seem to impose retroactive EPCA. This analysis compels the $14 would cause a "negative economic punishment without accomplishing conclusion that applying an increased impact," thereby requiring a smaller Congress' specific intent in establishing penalty rate to MYs 2014 and 2015 initial penalty increase. See Public Law the dvil penalty provision of the Energy would not be appropriate, nor would 114- 74, Sec. 701(c) (providing for an Policy and Conservation Act ("EPCA"). applying it to MY 2016, which was exception to the otherwise-applicable Model years typically begin prior to underway by November 2, 2015 and penalty increase, if the Agency finds their respective calendar year. By over halfway complete by July 5, 2016.9 through a rulemaking proceeding that November 2, 2015 (the date of the increase would cause a "negative enactment of the civil penalties B. Model Years 2017 and 2018 economic impact," a term that the adjustment Act), nearly all The Industry Petition asserts that statute does not define).7 manufacturers subject to the CAFE manufacturers have set their product standards had completed both model and compliance plans for MY 2017 and III. Petition for Rulemaking To Raise 2018 based on the CAFE penalty Civil Penalty Rate years 2014 and 2015, and no further vehicles in those model years were provisions in place prior to July 2016, The Center for Biological Diversity being produced in significant numbers. and that it is too late at this juncture to (CBD) petitioned NHTSA on October 1, This argument is even stronger make significant changes to those plans 2015, just over a month prior to passage considering that all manufacturers and avoid non-compliances (for the of the Act, to conduct a rulemaking to would have completed these model manufacturers already intending not to raise the civil penalty rate for CAFE years prior to July 5, 2016, the date of comply). The Agency determined above standard violations under NHTSA's the IFR. If all the vehicles for a model that it is not appropriate to apply an then-existing statutory authority. The year have already been produced, then increased penalty rate to CAFE non- CBD petition stated correctly that ther e is no way for their manufacturers compliance in past model years, i.e., NHTSA had n ot adjusted the $5.50 civil to raise the fuel economy level of those MY 2016 and before, which could not penalty rate for inflation since 1997, and vehicles in order to avoid higher penalty be changed in response to a higher requested that the Agency follow the rates for non-compliance. penalty rate. The next question procedure laid out at 49 U.S.C. 32912(c) In the specific context of EPCA as presented by the Industry Petition is to undertake a rulemaking to raise the amended, the purpose of civil penalties how to address future model years' amount to the maximum then allowed for non-compliance is to encourage vehicles whose fuel economy levels by Congress, $10 per tenth-of-an-mpg. A manufacturers to comply with the CAFE cannot be changed at this juncture. month later, Congress changed the standards. See 49 CFR 578.2 (section For immediate future model years statutory landscape by enacting the addressing penalties states that a (i.e., 2017 and 2018), the theoretical Federal Civil Penalties Inflation "purpose of this part is to effectuate the possibility exists that manufacturers Adjustment Act Improvements Act of remedial impact of civil penalties and to could respond to a higher penalty rate 2015. foster compliance with the law"); see by increasing their fleet fuel economy generally, 49 U.S.C. 32911-32912; and thus achieving CAFE compliance or IV. NHTSA Response to Petitions mitigating their non-compliance. United States v. General Motors, 385 Having carefully considered the F.Supp. 598, 604 (D.D.C. 1974), vacated However, because of industry design, issues raised by the petitioners, NHTSA on other grounds, 527 F.2d 8 53 (D.C. development, and production cycles, will grant the Industry Petition in part Cir. 1975) ("The policy ofthe Act with vehicle designs (including drivetrains, and deny it in part. Beginning with regard to civil penalties is clearly to wh ich are where many fuel economy model year 2(11 9, NHTSA will apply the discourage noncompliance"). Assuming improvements are made) are often fixed full penalty prescribed by the Federal that higher civil penalty rates are years in advance, making adjustments to Civil Penalties Inflation Adjustment intended, in the particular context of fleet fuel economy difficult without a Improvements Act of 2015. NHTSA is CAFE, to provide greater incentives for lead time of multiple years. required by the Act to continue manufacturers to comply with Here, the Industry Petitioners assert adjusting the civil penalty for inflation applicable standards, then raising that their plans for what technology to each year, so the penalty rate applicable penalty rates for model years already put on which MYs 2017 and 2018 to MY 2019 and after fleets will be $14 completed and thus unchangeable vehicles are, at the point the IFR was per tenth-of-an-mpg, plus any would be not only retroactive, 8 but issued, fixed and inalterable. NHTSA adjustment(s) for inflation that occur incapable of serving the purpose of takes manufacturers' product cycles into between now and a violation's causing greater compliance with CAFE account when NH1'SA sets fuel assessment. The Agency concludes that standards. Based on the governing economy standards. For example, this decision also effectively addresses statutory framework and the specific the issue raised by the CBD Petition. "'The decision not to a pply the increased CAFE regulatory scheme, NHTSA penalties retroactively is similar to the approach The discussion below presents the taken by various other federal agencies in Agency's analysis and conclusion. • Retroactivity is not favored in the law. The implementing the Federal Civil Penalties Inflation Supreme Court has stated that "congressional Ad justment Act Improvements Act of 2015. See, A. Model Years 2014-2016 enactments. . . will not be construed to have e.g., Department of justice, Interim final rule with NHTSA agrees with the Industry rP.trn::.r;tivA Affer:t nniP.SS thAir l:.ngu:tgA rP.:quirAS this request for comments: Civil Monetary Penalties result." Landgrafv. US! Film Products, 511 U.S. Inflation Adjustment, 81 FR 42491 (june 30, 2016) Petitioners that applying the $14 civil 244, 280 (1994), citing Bowen v. Georgetown (applying increased penalties only to violations University Hospital, 488 U.S. 204, 208 (1988). after November 2, 2015, the date of the Act's 7 Because the Agency is granting the Industry NHTSA believes that in the specific context of the enactment); Federal AvLation Administration, Petition's request to apply inflation-adjusted CAFE program and the statutes that govern it, Interim Final Rule: Revisions to Civil Penalty penalties only to MY 2019 and after, the Agency Congress could not have intended to impose higher Inflation Adjustment Tables, 81 FR 43463 ()Illy 5, need not address !the Industry Petition's alternative civil penalty rates for time periods when they 2016) (applying increased penalties only to requests. would not incentivize increased fuel economy. violations after August 1, 2016). JA0052 Federal Regist er/Val. 81, No. 249/Wednesday, December 28, 2016/Rules and Regulations 9 5491 because NHTSA recognizes that lower- or higher-fuel-economy models, In summary, NHTSA partially grants manufacturers' product and compliance which could help them to reduce or the Industry Petition for plans are difficult to alter significantly avoi d CAFE non-compliance penalties. Reconsideration insofar as it seeks for years ahead of a given model year,lo However, in this particular instance, implementation of the civil penalties the Agency includes product cadence in compelling such a result through the ad justment only to MY 2019 and after, its assessment of CAFE standards, by immediate application of higher penalty and denies the Industry Petition in all limiting application of technology in its rates to product design decisions that otiher respects. analytical model to years in which have already been made and cannot be This action also effectively responds vehicles are refreshed or redesigned. chan ged would be contrary to a to the petition forrulemaking from CBD NHTSA believes that this approach fundamental congressional purpose of to increase the civiil penalty rate as facilitates continued fuel economy the CAFE program. The Energy permitted by EPCA/EISA. The civil improvements over the longer term by Independence and Security Act (EISA) penalty rate beginning in MY 2019 will accounting for the fact that amendments of 2007 required that fuel be substantially higher than the CBD manufacturers will seek to make economy standards be attribute-based, petition requested, and NHTSA believes improvements when and where they are demonstrating congressional intent that that the increased penalty will most cost-effective. the CAFE program be responsive to accomplish CBD's goal of encouraging In an analogous context, EPCA consumer demand. See 49 U.S.C. manufacturers to apply more fuel-saving provides that when DOT amends a fuel 32902(b)(3). Applying higher civil technologies to their vehicles in those economy standard to make it more penalty rates in a way that would force future model years. To the extent that stringent, that new standard must be manufacturers to disregard consumer the CBD Petition requests an earlier promulgated "at least 18 months before demand (e.g., by restricting the penalty rate increase, it is denied for the the beginning of the model year to availability of vehicles that consumers reasons set forth in this decision. which the amendment applies." 49 want) would be inconsistent with that U.S.C. 32902(a)(2). The 18 months' V. Regulatory Notices and Analyses fundamental statutory command. notice requirement for increases in fuel Providing some lead time, as here, A. Executive Order 12866, Executive economy standards represents a mitigates that concern. Order 13563, and DOT Regulatory congressional acknowledgement of the In order to reconcile competing Policies and Procedures importance of advance notice to vehicle statutory objectives in the unique manufacturers to allow them the lead NHTSA has considered the impact of context of multi-year vehicle product this rulemaking action under Executive time necessary to adjust their product cycles, NHTSA will grant the Industry plans, designs, and compliance plans to 0Fder 12866, Executive Order 13563, Petition insofar as it seeks to apply the and the Department of Transportation's address changes in fuel economy penalty increase only for model years standards. Similarly here, affording regulatory policies and procedures. This 2019 and after. For CAFE standard non- rulemaking document was not reviewed manufacturers lead time to adjust their compliances that occur(ed) for model under Executive Order 12866 or products and compliance plans helps years 2014-2018, NHTSA intends to them to account for such an increase in Executive OrciP.r 13563, ancl has been the civil penalty amount. In this unique assess civil penalties at the rate of $5.50 determined not to be "significant" case, the 18-month lead time for per tenth of an mpg. Beginning with under the Department of increases in the stringency of fuel model year 2019, NHTSA will apply the Transportation's regulatory policies and economy standards provides a full penalty prescribed by the Federal procedures and the policies of the Office reasonable proxy for appropriate Civil Penalties Inflation Adjustment of Management and Budget. advance notice of the application of Improvements Act of 2015. NHTSA is required by the Act to continue B. Regulatory Flexibility Act substantially increased-here nearly tripled-civil penalties. adjusting the civil penalty for inflation NHTSA has also considered the Given that NHTSA issued the IFR in each year, so the penalty rate applicable impacts of this rule under the July 2016, 18 months from that date to MY-2019-and-after fleets will be $14 Regulatory Flexibility Act. I certify that would be January 2018, which would per tenth-of-an-mpg, plus any this rule will not have a significant encompass MY 2017 for most adjustment(s) for inflation that occur impact on a substantial number of small manufacturers and models and part of between now and then. See Public Law entities. The following provides the MY 2018. Based on the Industry 114-74, Sec. 701(b)(2). factual basis for this certification under Petition, comments, and agency NHTSA believes this approach 5 U.S.C. 605(b). The amendments only expertise, NHTSA believes that, in this appropriately harmonizes the two affect manufacturers of motor vehicles. instance, applying the adjusted congressional directives of adjusting Low-volume manufacturers can petition penalties only for MY 2019 and after civi l penalties to account for inflation NHTSA for an alternate CAFE standard provides a reasonable amount of lead and maintaining attribute-based, under 49 CFR part 525, which lessens time for manufacturers to adjust their consumer-demand-focused standards, the impacts of this rulemaking on small plans and products to take into account applied in the context of the businesses by allowing them to avoid the substantial change in penalty level. presumption against retroactive liability for potential penalties under 49 For future model years for which the application of statutes. See, e.g., Bowen CFR 578.6(h)(2). Small organizations vehicles to be produced and their v. Georgetown Univ. Hosp., 488 U.S. and governmental jurisdictions will not technologies are essentially fixed (i.e., 204, 208. This decision increases civil be significantly affected as the price of MYs 2017-2018), it is conceivable that penalties starting with the model year motor vehicles and equipment ought not some rnanufacturers rnighl be able Lu that manufacturers, in this particular change as the result of this rule. change production volumes of certain instance, are reasonably able to design and produce vehicles in response to the C. Executive Order 13132 (Federalism) 10Qne of the Industry Petitioners, the Alliance, increased penalties. See Industry Executive Order 13132 requires submitted supplemental materials describing the NHTSA to develop an accountable activities and events that make up product cycles, Petition at 4-6 (seeking application of which support this point. See Docket No. NHTSA- the adjusted civil penalties only to MY process to ensure " meaningful and 2016- 0136. 2019 and after). timely input by State and local officials JA0053 95492 Federa l Register/Val. 81, No. 249/Wednesday, December 28, 2016/Rules and Regulations in the development of regulatory G. Privacy Act [ssued on: December 21, 2016. policies that have federalism Please note that anyone is able to Mark R. Rosekind, implications." "Policies that have search the electronic form of all Administrator. federalism implications" is defined in comments received into any of our IF'R Doc. 2016- 31136 Filed 12- 27- 16; 8:45 ami the Executive Order to include dockets by the name of the individual BILLING CODE 4910-59-P regulations that have "substantial direct submitting the comment (or signing the effects on the States, on the relationship comment, if submitted on behalf of an between the national government and association, business, labor union, etc.). DEPARTMENT OF COMMERCE the States, or on the distribution of You may review DOT's complete power and responsibilities among the Privacy Act statement in the Federal National Oceanic and Atmospheric various levels of government." Under Register published on April 11, 2000 Administration Executive Order 13132, the agency may (65 FR 19477-78) or you may visit not issue a regulation with Federalism h ttps://www.transportation .gov/privacy. 50 CFR Part 648 implications, that imposes substantial direct compliance costs, and that is not List of Subjects in 49 CFR Part 578 RIN 0648-XF074 required by statute, unless the Federal Fuel economy, Motor vehicles, Fisheries of the Northeastern United government provides the funds Penalties. necessary to pay the direct compliance States; Northeast Multispecies In consideration of the foregoing, 49 Fis hery; Possession and Trip Limit costs incurred by State and local CFR part 578 is amended as set forth Modifications for the Common Pool governments, or the agency consults below. with State and local governments early Fishery in the process of developing the PART 578-CIVIL AND CRIMINAL AGENCY: National Marine Fisheries proposed regulation. PENALTIES Service (NMFS), National Oceanic .and This rule will not have substantial Atmospheric Administration (NOAA), direct effects on the States, on the • 1. The authority citation for 49 CFR Commerce. relationship between the national part 578 is revised to read as follows: ACTION: Temporary rule; inseason government and the States, or on the Authority: Pub. L. 101-410, Pub. L. 104- adjustment. distribution of power and 134, Pub. L. 109- 59, Pub. L. 114,.--74, Pub L. responsibilities among the various 114- 94, 49 U.S.C. 32902 and 32912; SUMMARY: This action increases the levels of government, as specified in delegation of authority at 49 CFR 1.81, 1.95. possession and trip limits for Southern Executive Order 13132. The reason is • 2. Section 578.6 is amended by New England/Mid-Atla_ntic yellowtail that this rule applies to motor vehicle revising paragraph (h) to read as flounder and reduces the possession manufacturers. Thus, the requirements follows: and trip limits for Georges Bank cod in of Section 6 of the Executive Order do place for Northeast multispecies not apply. §578.6 Civil penalties for violations of common pool vessels for the remainder specified provisions of Title 49 of the United of Lhe 2016 fishing yew:. The Regional D. Unfunded Mandates Reform Act of States Code. 1995 (UMRA) Administrator is authorized to adjust * * * * * possession and trip limits for common The Unfunded Mandates Reform Act (h) Automobile fuel economy. (1) A pool vessels to facilitate harvesting, or of 1995, Public Law 104-4, requires person that violates 49 U.S.C. 32911(a) prevent exceeding, the pertinent agencies to prepare a written assessment is liable to the United States common pool quotas during the fishing of the cost, benefits, and other effects of Government for a civil penalty of not year. Increasing the possession and trip proposed or final rules that include a more than $40,000 for each violation. A limits on Southern New England/Mid- Federal mandate likely to result in the separate violation occurs for each day Atlantic yellowtail flounder is inten ded expenditure by State, local, or tribal the violation continues. to provide additional fishing governments, in the aggregate, or by the (2) Except as provided in 49 U.S.C. 32912(c), beginning with model year opportunities and help allow the private sector, of more than $100 common pool fishery to catch its million annually. Because NHTSA does 2019, a manufacturer that violates a standard prescribed for a model year allowable quota for the stock, while not believe that this rule will red ucing the possession and trip limits necessarily have a $100 million effect, undler 49 U.S.C. 32902 is liable to the United States Government for a civil for Georges Bank cod is necessary to no Unfunded Mandates assessment will be prepared. penalty of $14, plus any adjustments for prevent overharvest of the common pool quota for that stock. inflation that occurred or may occur (for E. Executive Order 12778 (Civil Justice DATES: The action increasing the model years before model year 2019, the Reform) civil penalty is $5.50), multiplied by possession and trip limits for Southern This rule does not have a ret roactive each .1 of a mile a gallon by which the New England/Mid-Atlantic yellowtail or preemptive effect. Judicial review of applicable average fuel economy flounder is effective December 22, 2016, this rule may be obtained pursuant to 5 standard under that section exceeds the through April30, 2017. The action U.S.C. 702. That section does not aver age fuel economy- decreasing the possession and trip (i) Calculated under 49 U.S.C. limits for Georges Bank cod is effective require that a petition for reconsideration be filed prior to seeking 32904(a)(1)(A) or (B) for automobiles to Jan uary 1, 2017, through April30, 2017. judicial review. which the standard applies produced by FOR FURTHER INFORMATION CONTACT: Kyle lhe JllcUlufa~;lurtJr during lhe model ytJar; Molton, Fishery Management Specialist, F. Paperwork Reduction Act (ii) Multiplied by the number of those 978-281-9236. In accordance with the Paperwork automobiles; and SUPPLEMENTARY INFORMATION: The Reduction Act of 1980, we stat e that (iii) Reduced by the credits available regulations at 50 CFR 648.86(o) there are no requirements for to the manufacturer under 49 U.S.C. authorize the Regional Administrat or to information collection associated with 32903 for the model year. ad just the possession and trip limits for this rulemaking action. * * * * * common pool vessels in order to JA0054 Memorandum for the Heads of Executive Departments and Agencies Page 1 of 3 Skip to content White House Logo Share • Economy • National Security • Budget • Immigration • The Opioid Crisis Memorandum for the Heads of Executive Departments and Agencies Issued on: January 20, 2017 • Share: • • • All News FROM: Reince Priebus, Assistant to the President and Chief of Staff SUBJECT: Regulatory Freeze Pending Review The President has asked me to communicate to each of you his plan for managing the Federal regulatory process at the outset of his Administration. In order to ensure that the President's appointees or designees have the opportunity to review any new or pending regulations, I ask on behalf of the President that you immediately take the following steps: 1. Subject to any exceptions the Director or Acting Director of the Office of Management and Budget (the "OMB Director") allows for emergency situations or other urgent circumstances relating to health, safety, financial, or national security matters, or otherwise, send no regulation to the Office of the Federal Register (the "OFR") until a department or agency head appointed or designated by the President after noon on January 20, 2017, reviews and approves the regulation. The department or agency head may delegate this power of review and approval to any other person so appointed or designated by the President, consistent with applicable law. 2. With respect to regulations that have been sent to the OFR but not published in the Federal Register, immediately withdraw them from the OFR for review and approval as described in paragraph 1, subject to the exceptions described in paragraph 1. This withdrawal must be conducted consistent with OFR procedures. 3. With respect to regulations that have been published in the OFR but have not taken effect, as permitted by applicable law, temporarily postpone their effective date for 60 days from the date of this memorandum, subject to the exceptions described in paragraph 1, for the purpose of reviewing questions of fact, law, and policy they raise. Where appropriate and as permitted by applicable law, you should consider proposing for notice and comment a rule to delay the effective date for regulations beyond that 60-day period. In cases where the effective date has been delayed in order to review questions of fact, law, or policy, you should consider potentially proposing further notice-and-comment rulemaking. Following the delay in effective date 1. for those regulations that raise no substantial questions of law or policy, no further action needs to be taken; and 2. for those regulations that raise substantial questions of law or policy, agencies should notify the OMB Director and take further appropriate action in consultation with the OMB Director. 4. Exclude from the actions requested in paragraphs 1 through 3 any regulations subject to statutory or judicial deadlines and identify such exclusions to the OMB Director as soon as possible. 5. Notify the OMB Director promptly of any regulations that, in your view, should be excluded from the directives in paragraphs 1 through 3 because those regulations affect critical health, safety, financial, or national security matters, or for some other reason. The OMB Director will review any such notifications and determine whether such exclusion is appropriate under the circumstances. 6. Continue in all circumstances to comply with any applicable Executive Orders concerning regulatory management. As used in this memorandum, "regulation" has the meaning given to "regulatory action" in section 3(e) of Executive Order 12866, and also includes any "guidance document" as defined in section 3(g) thereof as it existed when Executive Order 13422 was in effect. That is, the requirements of this memorandum apply to "any substantive action by an agency (normally published in the Federal Register) that promulgates or is expected to lead to the promulgation of a final rule or regulation, including notices of inquiry, advance notices of proposed rulemaking, and notices of proposed rulemaking," and also covers any agency statement of general applicability and future effect "that sets forth a policy on a statutory, regulatory, or technical issue or an interpretation of a statutory or regulatory issue." This regulatory review will be implemented by the OMB Director. Communications regarding any matters pertaining to this review should be addressed to the OMB Director. The OMB Director is authorized and directed to publish this memorandum in the Federal Register. REINCE PRIEBUS JA0055 https://www.whitehouse.gov/presidential-actions/memorandum-heads-executive-departme... 2/14/2018 8694 Feder al Register /Val. 82, No. 18/Monday, January 30, 2017 /Rules and Regulations Inbound EMS CFR part 578 published at 81 FR 95489, 74, Pub L. 114-94, 49 U.S.C. 32902 and Inbound EMS 2 December 28, 2016 is delayed until 32912; delegation of authority at 49 CFR Inbound Air Parcel Post (at non-UPU rates) March 28, 2017. 1.81, 1.95. Royal Maj] Gr oup Inbound Air Parcel Post FOR FURTHER INFORMATION CONTACT: For Agreement [ssued on: January 25, 2017. Inbound Competitive Multi-Service legal issues, contact Rebecca Schade, Jack Danielson, Agreements with Foreign Postal Office of Chief Counsel, at (202) 366- Acting Deputy Administrator. Operators 299.2. For non-legal issues, contact John [FR Doc. 2017-01957 Filed 1-25-17; 4:15pm] Inbound Com petitive Multi-Service Finneran, Office of Vehicle Safety BILLING CODE 491o-59--P AgrP.P.men ts w ith FnrP.ign Pnst;,l Compliance, at (202) 366- 5289. Operators 1 SUPPLEMENTARY INFORMATION: In Special Services* accordance with the memorandum of January 20, 2017, from the Assistant to DEPARTMENT OF COMMERCE Address Enhancement Services Greeting Cards, Gift Cards, and Stationery the President and Chief of Staff, entitled National Oceanic and Atmospheric International An cillary Services " Regulatory Freeze Pending Review," 1 International Money Transfer Service- Administration this action temporarily delays for 60 Outbound days the effective date of the rule International Money Transfer Service- 50 CFR Part 622 entitled "Civil Penalties," published in Inbound the Federal Register on December 28, (Docket No. 160815740-6740-01) Premium Forwarding Service Shipping and Mailing Supplies 2016, at 81 FR 95489. That rule RIN 0648-BG28 Post Office Box Service responded to a petition for Competitive Ancillary Services reconsideration from the Alliance of Fisheries of the Caribbean, Gulf of Automobile Manufacturers and the Mexico, and South Atlantic; Shrimp Nonpostal Services* Association of Global Automakers by Fishery of the Gulf of Mexico; Revision Advertising delaying, until model year 2019, the Licensing of Intellectual Property other than of Bycatch Reduction Device Testing implementation of inflationary Manual Officially Licensed Retail Products (OLRP) adjustments to the Corporate Average Mail Service Promotion Fuel Economy (CAFE) civil penalty rate. AGENCY: National Marine Fisheries Officially Licensed Retail Products (OLRP) These inflationary adjustments are Service, National Oceanic and Passport Photo Service required by Congress as part of the Atmospheric Administration (NOAA), Photocopying Service Federal Civil Penalties Inflation Commerce. Rental, Leasing, Licensing or other Non-Sale Adjustment Improvements Act of 2015. ACTION: Stay of final rule. Disposition of Tangible Property To the extent that 5 U.S.C. 553 is Training Facilities and Related Services applicable, this action is exempt from SUMMARY: In accordance with a January USPS Electronic Postmark (EPM) Program notice and comment because it 20, 2017 memo from the White House, Market Tests* constitutes a rule of procedure under 5 we the National Marine Fisheries Customized Delivery U.S.C. 553(b)(3)(A). Alternatively, Service (NMFS) are staying the final Global eCornmerce Marketplace (GeM) NHTSA's implementation of this action rule we published on December 27, without opportunity for public 2016 in order to delay its effective date. Stacy L. Ruble, comment, effective immediately upon DATES: Effective January 30, 2017, the Secretary. publication today in the Federal final rule that published December 27, IFR Doc. 2017-01898 Filed 1-27-17; 8:45am) Register, is justified based on the good 2016, at 81 FR 95056, is stayed until BILLING CODE n1o-FW- P cause exceptions in 5 U.S.C. March 21, 2017. 553(b)(3)(B) and 553(d)(3). Seeking FOR FURTHER INFORMATION CONTACT: public comment is impracticable, Susan Gerhart, NMFS Southeast DEPARTMENT OF TRANSPORTATION unnecessary, and contrary to the public Regional Office, telephone: 727- 824- interest. The temporary 60-day delay in 5305, email: susan .gerhart@noaa.gov. National Highway Traffic Safety effective date is necessary to give SUPPLEMENTARY INFORMATION: On Administration Department officials the opportunity for December 27, 2016, NMFS published further review and consideration of new this final rule making administrative 49 CFR Part 578 regulations, consistent with the revisions to the Bycatch Reduction (Docket No. NHTSA- 2016-0136) Assistant to the President's Device Testing Manual. The revisions memorandum of January 20, 2017. were made in accordance with the RIN 2127- AL82 Given the imminence of the effective framework procedures for adjusting date, seeking prior public comment on management measures of the Fishery Civil Penalties this temporary delay would h ave been Management Plan for the Shrimp AGENCY: National Highway Traffic impractical, as well as contrary to the Fishery of the Gulf of Mexico. These Safety Administration (NHTSA), public interest in the orderly changes to management measures do Department of Transportation (DOT). promulgation and implementation of not add to or change any existing ACTION: Final rule; delay of effective regulations. The imminence of effective Federal regulations. Therefore, no date. date is also good cause for making this codified text is associated with these action effective immediately upon changes to management measures. SUMMARY: This action temporarily publication. On January 20, 2017, the White House delays for 60 days the effective date of Authority: Pub. L. 101-410, Pub. L. issued a memo instructing Federal the rule entitled "Civil Penalties," 104-134,Pub. L. 109-59,Pub.L. 114- agencies to temporarily postpone the published in the Federal Register on effective date for 60 days after January 1 Available at https://www.whitehouse.gov/the- December 28, 2016. 20, 2017, of any r egulations or guidance press-office/2017/01/20/memorandum-heads- DATES: Effective January 25, 2017. The executive-departments-and-agencies (last accessed documents that have published in the effective date of the rule amending 49 Jan. 24, 2017). Federal Register but not yet taken effect, JA0056 Projected Fuel Economy Performance Report NHTSA is providing projected fuel economy values for manufacturers and fleets as a supplement to other reporting provided through the CAFE Public Information Center 1 which contains only EPA verified final model year data. The data in this report are projected values based on each manufacturer's Pre- and Mid-Model Year Reports (required by 49 CFR 537) and have not been validated or verified by NHTSA or EPA. For further questions, please contact the NHTSA CAFE Enforcement team by email at CAFE@dot.gov. Table 1: Manufacturer Projected Fuel Economy Values MY 2016 2 MY 2017 3 Manufacturer Fleet CAFE Standard Production CAFE Standard BMW IP 34.0 36.2 286,507 36.3 38.5 BMW LT 28.8 29.9 99,995 30.0 30.6 Daimler IP 34.4 35.5 222,131 33.3 36.9 Daimler LT 27.3 29.5 110,279 26.5 29.9 Fiat Chrysler DP 31.6 35.6 593,642 30.3 37.4 Fiat Chrysler IP 31.1 37.4 62,457 32.1 40.0 Fiat Chrysler LT 26.5 29.0 1,373,479 27.1 29.7 Ford DP 36.0 36.5 973,289 36.3 38.5 Ford IP 30.8 38.0 1,152 81.5 40.8 Ford LT 25.7 27.2 1,124,932 27.7 28.2 GM DP 34.5 36.2 1,082,664 36.6 38.1 GM IP 38.7 39.9 138,090 25.0 27.6 GM LT 25.0 27.0 1,378,136 25.0 27.0 Honda DP 41.9 37.3 960,847 41.9 39.0 Honda IP 45.3 40.3 95,179 45.5 41.6 Honda LT 30.9 30.4 725,187 32.3 31.0 Hyundai IP 38.3 36.8 569,941 38.3 36.8 Hyundai LT 26.3 30.5 18,339 26.3 30.5 Jaguar Land Rover IP 27.3 34.3 16,435 31.6 36.8 Jaguar Land Rover LT 24.9 29.8 95,323 27.8 30.5 Kia IP 36.2 37.1 537,478 36.3 36.8 Kia LT 26.7 29.6 139,045 26.7 29.3 Mazda DP 50.2 40.9 600 43.3 39.8 Mazda IP 41.8 37.2 346,364 39.0 38.9 1 http://www.nhtsa.gov/link/CAFE_PIC/CAFE_PIC_Home.htm 2 MY 2016 Mid-Model Fuel Economy Performance Data 3 MY 2017 Pre-Model Fuel Economy Performance Data JA0057 MY 2016 MY 2017 Manufacturer Fleet CAFE Standard Production CAFE Standard Mazda LT 34.3 31.4 142,146 33.4 31.8 Mitsubishi IP 36.2 38.9 26,499 44.4 42.4 Mitsubishi LT 33.9 32.9 31,683 34.6 34.2 Nissan DP 42.0 37.2 703,960 40.8 39.2 Nissan IP 38.0 36.9 230,169 36.7 39.0 Nissan LT 30.7 30.2 381,893 28.7 30.0 Subaru IP 38.2 37.9 138,600 38.3 39.7 Subaru LT 36.4 32.4 286,644 36.8 33.6 Tesla DP 320.4 32.1 43,161 367.4 35.0 Toyota DP 37.2 36.4 402,641 38.2 38.5 Toyota IP 41.2 37.9 897,281 42.2 40.0 Toyota LT 26.7 29.3 930,036 29.0 29.9 Volkswagen DP 38.7 36.2 54,960 36.1 38.4 Volkswagen IP 32.1 38.1 343,072 32.6 38.3 Volkswagen LT 27.8 30.6 98,977 27.1 29.6 Volvo IP 35.3 35.9 32,468 35.7 37.3 Volvo LT 29.7 29.6 58,187 31.0 30.1 Table 2: Total U.S. Fleet Projected Fuel Economy Values MY 2016 MY 2017 Fleet CAFE Standard Production CAFE Standard DP 37.2 36.5 4,815,764 38.5 38.5 IP 37.6 37.3 3,943,823 32.8 34.5 LT 27.2 28.8 6,994,281 28.0 29.3 Total 32.1 32.8 15,753,868 31.8 33.0 JA0058 15302 Federal Register /Val. 82, No. 58/Tuesday, March 28, 2017/Rules and Regulations (q) The Iowa Department of Natural Register on December 28, 2016 was the effective date of that rule for 90 Resources submitted for program approval a temporarily delayed for 60 days. This ad ditional days. That rule responded to revision to rules 567-22.100,567- 22.101, action temporarily delays the effective a petition for recon sideration from the 567-22.103, 567- 22.105, 567-22.1 06, 567- date of that rule for 90 additional days. Alliance of Automobile Manufacturers 22.108, and added 567.30.4(2) on December 16, 2015. This revision to the Iowa program DATES: As of March 27,2017, the and the Association of Global is approved effective on November 8, 2016. effective date of the rule amending 49 Allltomakers by deM aying, until model CFR part 578 published at 81 FR 95489, year 2019, the implementation of * * * * * [FR Doc. 2017-06008 Filed 3-27-17; 8:45am) December 28, 2016, delayed at 82 FR inflationary adjustments to the 8694, January 30, 2017, is further Corporate Average Fuel Economy BILLING CODE 6560-SQ-P delayed until June 26, 2017. (CAFE) civil penalty rate. These FOR FURTHER INFORMATION CONTACT: For inflationary adjustments are required by legal issues, contact Michael Congress as part of the Federal Civil DEPARTMENT OF TRANSPORTATION Penalties Inflation Adjustment Act Kuppersmith, Office of Chief Counsel, at National Highway Traffic Safety (202) 366-5263. For non-legal issues, Improvements Act of 2015. The Administration contact John Finneran, Office of Vehicle additional 90-day delay in effective date Safety Compliance, at (202) 366-5289. is necessary to temporarily preserve the 49 CFR Part 578 status quo while Department officials SUPPLEMENTARY INFORMATION: Pursuant continue to review and consider the [Docket No. NHTSA-2016-0136] to a document published on January 30, final rule and related laws. To the extent 201 7 (82 FR 8694), the effective date of that 5 U.S.C. 553 is applicable, this RIN 2127-AL82 the r ule entitled "Civil Penalties," action is exempt from notice and published in the Federal Register on comment because it constitutes a rule of Civil Penalties December 28, 2016, at 81 FR 95489, was procedure under 5 U.S.C. 553(b)(3)(A). AGENCY: National Highway Traffic temporarily delayed for 60 days in accordance with the memorandum of Authority: Pub. L. 101-410, Pub. L. 104- Safety Administration (NHTSA), 134, Pub. L. 109-59, Pub. L. 114-74, Pub L. Department of Transportation (DOT). January 20, 2017, from the Assistant to 114- 94, 49 U.S.C. 32902 and 32912; the President and Chief of Staff, entitled ACTION: Final rule; delay of effective delegation of authority at 49 CFR 1.81, 1.95. "Regulatory Freeze Pending Review." 1. date. The present action temporarily delays [ssued on: March 23, 2017. SUMMARY: Pursuant to a notice Jack Danielson, 1 Available at https:llwww.whitelwuse.gov/the- published on January 30, 2017, the Acting Deputy Administmtor. press-office/2017/01 /20/memorondum-heods- effective date of the rule entitled "Civil executive-departments-and-agencies (last accessed [FR Doc. 2017-06119 Filed 3-27-17; 8:45am) Penalties," published in the Fe deral Mar. 13, 2017). BILLING CODE 491o-59-P JA0059 CAFE Public Information Center Reports Summary of CAFE Civil Penalties Collected Updated As Of: May-09-2017 01:29 PM General Notes Manufacturers that do not meet the applicable standards in a given model year can pay a civil penalty. Manufacturers listed in this report either paid a civil penalty for their associated fleet's entire shortfall in the given model year or satisfied part of the shortfall with a civil penalty payment and executed a compliance flexibility for the remainder. Manufacturer Fleet Model Year Amount($) Date Collected ASTON MARTIN IP 1985 2,550.00 Jul-87 AUTOKRAFT DP 1993 2,590.00 Aug-95 BMW (1) IP 2006 5,056,012.50 Aug-07 IP 2006 -4,599,375.00 Mar-17 IP 2005 2,795,496.00 Aug-06 IP 2004 13,711,357.00 Feb-06 IP 2003 8,861,776.00 Nov-05 LT 2003 1,676,752.00 Dec-05 IP 2002 14,066,123.50 Aug-03 LT 2002 273,405.00 Aug-06 IP 2001 27,985,925.00 Oct-02 LT 2001 1,497,991.00 Oct-05 Nov 7, 2017 - 9:54 AM www.nhtsa.gov/cafe_pic.html Page 1 JA0060 CAFE Public Information Center Reports Summary of CAFE Civil Penalties Collected Updated As Of: May-09-2017 01:29 PM Manufacturer Fleet Model Year Amount($) Date Collected BMW (1) IP 2000 26,408,646.00 Jun-01 LT 2000 971,696.00 Jun-01 IP 1999 13,147,249.50 Aug-00 IP 1998 13,851,569.00 Dec-99 IP 1997 11,834,910.00 Nov-98 IP 1996 289,840.00 Nov-98 IP 1995 13,136,530.00 Dec-96 IP 1994 10,140,120.00 Dec-96 IP 1993 7,427,160.00 Sep-95 IP 1992 12,888,750.00 May-94 IP 1991 11,249,230.00 Jun-92 IP 1990 14,878,160.00 Jul-91 IP 1989 14,923,580.00 Jul-90 IP 1988 16,411,380.00 Aug-89 IP 1987 1,088,895.00 Jun-89 Nov 7, 2017 - 9:54 AM www.nhtsa.gov/cafe_pic.html Page 2 JA0061 CAFE Public Information Center Reports Summary of CAFE Civil Penalties Collected Updated As Of: May-09-2017 01:29 PM Manufacturer Fleet Model Year Amount($) Date Collected CALLAWAY (2) DP 1990 -20,400.00 Dec-94 DP 1990 20,400.00 Jan-92 CHRYSLER IP 2008 90,640.00 Dec-09 CONSULIER DP 1992 50.00 Jan-95 DP 1991 50.00 Jan-95 DP 1990 50.00 Jan-95 DAIMLER LT 2011 16,316,960.00 Mar-13 IP 2010 11,838,365.00 Nov-11 IP 2009 2,935,988.00 Nov-10 IP 2008 6,870,435.00 Dec-09 DAIMLERCHRYSLER IP 2007 28,947,776.00 Dec-08 IP 2007 357,576.00 Jan-09 IP 2006 30,257,920.00 Oct-07 IP 2005 16,895,472.00 Dec-06 IP 2004 8,537,364.00 Dec-05 Nov 7, 2017 - 9:54 AM www.nhtsa.gov/cafe_pic.html Page 3 JA0062 CAFE Public Information Center Reports Summary of CAFE Civil Penalties Collected Updated As Of: May-09-2017 01:29 PM Manufacturer Fleet Model Year Amount($) Date Collected DAIMLERCHRYSLER IP 2000 18,959,292.00 Sep-02 IP 1999 8,141,430.00 Dec-00 FERRARI IP 2008 885,225.00 Nov-09 IP 2007 1,126,158.00 Oct-08 IP 2006 842,160.00 Aug-07 FERRARI MASERATI IP 2005 2,426,413.00 May-06 IP 2004 1,511,125.00 Sep-05 IP 2003 1,139,710.00 Jul-04 FIAT (3) IP 2011 1,984,400.00 Feb-13 IP 2010 1,583,081.50 Dec-11 IP 2009 1,470,392.00 Nov-10 IP 2008 44,814.00 Dec-09 IP 2002 1,344,222.00 May-03 IP 2001 817,443.00 Sep-02 IP 2000 686,521.00 Dec-01 Nov 7, 2017 - 9:54 AM www.nhtsa.gov/cafe_pic.html Page 4 JA0063 CAFE Public Information Center Reports Summary of CAFE Civil Penalties Collected Updated As Of: May-09-2017 01:29 PM Manufacturer Fleet Model Year Amount($) Date Collected FIAT (3) IP 1999 1,066,395.00 Apr-01 IP 1998 527,450.00 Apr-99 IP 1997 542,340.00 Oct-98 IP 1996 194,480.00 Oct-98 IP 1995 801,220.00 Jul-97 IP 1994 387,375.00 Dec-95 IP 1993 194,220.00 Jul-94 IP 1992 -2,250.00 Aug-94 IP 1992 466,750.00 May-93 IP 1991 416,385.00 Aug-94 IP 1991 796,575.00 May-93 IP 1990 705,220.00 May-93 IP 1989 670,120.00 Jul-92 IP 1988 897,260.00 Jul-92 IP 1987 279,350.00 Jul-92 Nov 7, 2017 - 9:54 AM www.nhtsa.gov/cafe_pic.html Page 5 JA0064 CAFE Public Information Center Reports Summary of CAFE Civil Penalties Collected Updated As Of: May-09-2017 01:29 PM Manufacturer Fleet Model Year Amount($) Date Collected JAGUAR IP 1989 6,311,895.00 Jul-91 IP 1988 5,582,070.00 Mar-90 IP 1987 5,320,135.00 Jun-89 IP 1986 8,040,550.00 Feb-89 IP 1985 8,799,010.00 Jul-87 IP 1984 5,958,020.00 Dec-85 IP 1983 57,970.00 Dec-85 JAGUAR LAND LT 2013 14,110,470.00 Oct-14 ROVER LT 2012 9,819,001.50 Mar-13 LT 2011 14,439,425.00 Dec-13 LT 2010 7,847,136.00 Dec-11 LT 2009 3,254,900.00 Oct-10 LOTUS (4) IP 2002 36,850.00 Jun-03 IP 2002 -36,850.00 Jun-07 IP 2001 35,744.50 Jun-03 Nov 7, 2017 - 9:54 AM www.nhtsa.gov/cafe_pic.html Page 6 JA0065 CAFE Public Information Center Reports Summary of CAFE Civil Penalties Collected Updated As Of: May-09-2017 01:29 PM Manufacturer Fleet Model Year Amount($) Date Collected LOTUS (4) IP 2000 43,758.00 Apr-02 IP 1999 51,909.00 Dec-01 IP 1998 34,782.00 Jun-00 IP 1997 36,890.00 May-99 MASERATI (5) IP 2008 1,302,559.50 Oct-09 IP 2007 1,208,768.00 Oct-08 IP 2006 1,407,367.00 Aug-07 IP 1991 1,600.00 Dec-94 IP 1982 120,000.00 Jan-91 MERCEDES BENZ IP 1998 1,683,525.00 Jul-99 IP 1998 168,352.50 May-00 IP 1997 11,731,035.00 Nov-98 IP 1996 6,825,610.00 Nov-98 IP 1995 7,498,995.00 Dec-94 IP 1995 6,525,085.00 Dec-96 Nov 7, 2017 - 9:54 AM www.nhtsa.gov/cafe_pic.html Page 7 JA0066 CAFE Public Information Center Reports Summary of CAFE Civil Penalties Collected Updated As Of: May-09-2017 01:29 PM Manufacturer Fleet Model Year Amount($) Date Collected MERCEDES BENZ IP 1994 11,254,080.00 Dec-94 IP 1993 13,531,590.00 Dec-94 IP 1992 18,122,440.00 Dec-94 IP 1991 19,169,540.00 Dec-92 IP 1990 17,556,105.00 Sep-91 IP 1989 20,415,045.00 Apr-90 IP 1988 18,295,455.00 Dec-89 IP 1987 20,526,490.00 Jun-89 IP 1986 20,214,700.00 Dec-88 IP 1985 5,509,400.00 Dec-88 PANOZ DP 1998 11,192.50 Aug-00 DP 1997 7,400.00 Aug-00 DP 1995 1,395.00 Aug-97 DP 1994 3,850.00 Aug-97 DP 1993 3,080.00 Jul-94 Nov 7, 2017 - 9:54 AM www.nhtsa.gov/cafe_pic.html Page 8 JA0067 CAFE Public Information Center Reports Summary of CAFE Civil Penalties Collected Updated As Of: May-09-2017 01:29 PM Manufacturer Fleet Model Year Amount($) Date Collected PAS DP 1989 294,500.00 Feb-92 PEUGEOT IP 1993 910.00 Oct-94 IP 1992 58,375.00 Sep-93 IP 1991 192,660.00 Dec-92 IP 1990 72,500.00 Mar-92 IP 1989 487,800.00 Jul-90 IP 1988 482,280.00 Mar-90 IP 1987 767,600.00 Jun-89 IP 1986 793,080.00 Feb-89 PORSCHE IP 2011 2,081,442.00 Feb-13 LT 2011 956,241.00 Feb-13 IP 2010 1,121,373.00 Nov-11 LT 2010 656,370.00 Nov-11 IP 2009 0.00 Oct-10 LT 2009 1,487,145.00 Oct-13 Nov 7, 2017 - 9:54 AM www.nhtsa.gov/cafe_pic.html Page 9 JA0068 CAFE Public Information Center Reports Summary of CAFE Civil Penalties Collected Updated As Of: May-09-2017 01:29 PM Manufacturer Fleet Model Year Amount($) Date Collected PORSCHE IP 2008 1,143,994.50 Dec-09 LT 2008 2,584,587.50 Dec-09 IP 2007 1,237,500.00 Jul-08 IP 2006 1,589,346.00 Aug-07 LT 2006 3,010,518.50 Aug-07 IP 2005 2,238,082.00 Aug-06 LT 2005 1,977,250.00 Aug-06 IP 2004 3,225,453.00 Jun-05 LT 2004 3,171,564.00 Jun-05 IP 2003 3,348,609.00 Dec-04 LT 2003 189,634.50 Dec-04 IP 2002 4,357,782.00 Mar-04 IP 2001 4,997,190.00 Aug-02 IP 2000 3,720,816.00 Jun-01 IP 1999 4,884,627.00 Jul-00 Nov 7, 2017 - 9:54 AM www.nhtsa.gov/cafe_pic.html Page 10 JA0069 CAFE Public Information Center Reports Summary of CAFE Civil Penalties Collected Updated As Of: May-09-2017 01:29 PM Manufacturer Fleet Model Year Amount($) Date Collected PORSCHE IP 1998 1,613,865.00 Mar-00 IP 1997 2,525,820.00 Nov-98 IP 1996 2,127,600.00 Nov-98 IP 1995 1,949,520.00 Dec-96 IP 1994 804,600.00 Dec-96 IP 1993 668,500.00 Oct-94 IP 1992 781,575.00 Feb-94 IP 1991 1,871,470.00 Feb-94 IP 1990 2,033,770.00 Jul-91 IP 1989 1,875,125.00 May-90 IP 1988 1,048,905.00 May-90 IP 1987 948,480.00 Jun-89 IP 1986 823,440.00 Feb-89 IP 1985 1,253,580.00 Jul-87 ROVER LT 1998 3,849,037.50 Apr-00 Nov 7, 2017 - 9:54 AM www.nhtsa.gov/cafe_pic.html Page 11 JA0070 CAFE Public Information Center Reports Summary of CAFE Civil Penalties Collected Updated As Of: May-09-2017 01:29 PM Manufacturer Fleet Model Year Amount($) Date Collected ROVER LT 1997 68.00 Jan-99 LT 1997 4,195,032.00 Nov-98 LT 1996 4,329,850.00 Nov-98 LT 1995 4,499,078.00 Jan-97 LT 1994 1,734,915.00 Jan-97 LT 1993 1,094,660.00 Jan-95 LT 1992 607,620.00 Oct-93 LT 1991 520,520.00 Oct-93 LT 1990 656,370.00 May-91 LT 1989 778,140.00 May-91 LT 1988 553,980.00 Jul-89 LT 1987 272,955.00 Jun-89 SALEEN DP 2006 12,584.00 Mar-08 DP 2005 14,157.00 Mar-08 DP 2004 6,204.00 Mar-08 Nov 7, 2017 - 9:54 AM www.nhtsa.gov/cafe_pic.html Page 12 JA0071 CAFE Public Information Center Reports Summary of CAFE Civil Penalties Collected Updated As Of: May-09-2017 01:29 PM Manufacturer Fleet Model Year Amount($) Date Collected SALEEN DP 2003 8,937.50 Mar-08 SPYKER IP 2005 3,157.00 May-06 STERLING IP 1991 254,840.00 Dec-93 IP 1990 162,000.00 Jul-93 IP 1989 588,195.00 Jul-93 IP 1988 1,248,120.00 Aug-89 IP 1987 2,056,625.00 Aug-89 SUN INTERN. IP 1986 45.00 May-89 VECTOR DP 1993 870.00 Jul-94 DP 1992 1,740.00 May-94 DP 1991 1,740.00 Jul-93 VOLKSWAGEN LT 2007 4,508,163.00 Aug-08 LT 2006 1,007,572.50 Sep-07 LT 2005 1,136,668.50 Aug-06 LT 2004 3,474,372.00 Oct-05 Nov 7, 2017 - 9:54 AM www.nhtsa.gov/cafe_pic.html Page 13 JA0072 CAFE Public Information Center Reports Summary of CAFE Civil Penalties Collected Updated As Of: May-09-2017 01:29 PM Manufacturer Fleet Model Year Amount($) Date Collected VOLKSWAGEN LT 2001 173,118.00 Aug-02 LT 2000 276,309.00 Aug-01 LT 1999 224,840.00 Feb-01 LT 1997 176,220.00 Apr-99 VOLVO IP 2014 1,454,288.00 Dec-15 LT 2014 835,499.50 Dec-15 IP 2013 4,627,920.00 Dec-14 LT 2013 298,573.00 Feb-15 IP 2012 4,609,000.00 May-14 LT 2012 534,380.00 May-14 IP 2011 2,143,394.00 Feb-13 LT 2011 2,091,408.00 Feb-13 LT 2010 757,086.00 Jan-12 IP 1997 5,162,135.00 Nov-98 IP 1996 5,534,550.00 Nov-98 Nov 7, 2017 - 9:54 AM www.nhtsa.gov/cafe_pic.html Page 14 JA0073 CAFE Public Information Center Reports Summary of CAFE Civil Penalties Collected Updated As Of: May-09-2017 01:29 PM Manufacturer Fleet Model Year Amount($) Date Collected VOLVO IP 1995 6,375,675.00 Dec-96 IP 1994 7,173,630.00 Dec-96 IP 1993 5,764,800.00 Jun-94 IP 1992 5,361,515.00 Apr-94 IP 1991 7,768,420.00 Dec-92 IP 1990 12,244,440.00 Jun-91 IP 1989 1,036,115.00 Jul-90 Footnotes 1 BMW paid $5,056,012.50 for its model year 2006 shortfall. On 03/07/2017 a partial refund of $4,599,375.00 was paid to BMW. 2 Callaway Cars paid $20,400.00 for its model year 1990 shortfall. On 12/1/1994 a refund of $20,400.00 was paid to GM on behalf of Callaway Cars. 3 Fiat IP fleet fines were modified for model years 1991 and 1992. 4 Lotus paid $36,850.00 for model year 2002 shortfall. On 06/07/2007 a refund of $36,850.00 was paid to Lotus. 5 Maserati Automobiles of America, Inc. paid a modified penalty for model years 1982, 1983, 1986, 1987, 1989 and 1990 in 16 quarterly payments of $7,500.00 starting in January 1991. Nov 7, 2017 - 9:54 AM www.nhtsa.gov/cafe_pic.html Page 15 JA0074 Federal Register /Vol. 82, No. 122 /Tuesday, June 27, 2017 I Rules and Regulations 29009 Pollutant Air quality control region Nitrogen Particulate Sulfur Carbon Ozone matter oxides dioxide monoxide Champlain Valley Interstate ............................................................. II Ill Ill Ill Ill Vermont Intrastate ........................................................................... II Ill Ill Ill Ill § 52.2373 [Removed and Reserved] contaminants, and defining a method commitment to address these • 4. Section 52.2373 is removed and for determining the amount of PSD requirements for PSD. reserved. increments available to a new or (7) 2010 Sulfur Dioxide NAAQS: The modified major source. On November 110(a)(2) infrastructure SIP submitted § 52.2374 [Am ended] 21, 2016, the State of Vermont on November 2, 2015, is conditionally • 5. Section 52.2374 is amended by supplemented this submittal with a approved for Clean Air Act sections removing and reserving paragraph (a). commitment to address these 110(a)(2)(C), (D)(i)(II), and (J) only as it • 6. Section 52.2376 is added to read as requirements for PSD. relates to the aspect of the PSD program (4) 2008 Lead NAAQS: The 110(a)(2) pertaining to adding NOx and VOC as follows: infrastructure SIP submitted on July 29, precursor pollutants to ozone in § 52.2376 Identification of plan-conditional 2014, is conditionally approved for defining a "significant" increase in approvals. Clean Air Act sections 110(a)(2)(C), actual emissions from a source of air (a) Conditional approvals. (1) 1997 (D)(i)(II), and Ol only as it relates to the contaminants, and defining a method fine particulate (PM2.sl National aspect of the PSD progran1 pertaining to for determining the amount of PSD Ambient Air Quality Standards adding NOx and VOC as precursor increments available to a new or (NAAQS): The 110(a)(2) infrastructure pollutants to ozone in defining a modified major source. On November SIP submitted on February 18, 2009, is "significant" increase in actual 21, 2016, the State of Vermont conditionally approved for Clean Air emissions from a source of ah supplemented this submittal with a Act sections 110(a)(2)(C), (D)(i)(II), and contaminants, and defining a method commitment to address these (J) only as it relates to the aspect of the for determining the amount of PSD requirements for PSD. PSD program pertaining to adding NOx increments available to a new or (b) [Reserved] and VOC as precursor pollutants to modified major source. On November ozone in defining a "significant" § 52.2382 [Amended] 21, 2016, the State of Vermont increase in actual emissions from a supplemented this submittal with a • 7. In§ 52.2382: source of air contaminants, and defining commitment to address these • a. Remove paragraphs (a)(l), (2), (4), a method for determining the amount of requirements for PSD. and (5). PSD increments available to a new or (5) 2008 Ozone NAAQS: The 110(a)(2) • lb. Redesignate paragraph (a)(3) as modified major source. On November infrastructure SIP submitted on paragraph (a)(1). 21, 2016, the State of Vermont November 2, 2015, is conditionally • c. Add reserved paragraph (a)(2). supplemented this submittal with a approved for Clean Air Act sections IFR Doc. 2017-13055 Filed 6-26-17; 8:45 ami commitment to address these 110 (a)(2)(C), (D)(i)(II), and 0) only as it BILLING CODE 6560-SG-P requirements for PSD. relates to the aspect of the PSD program (2) 1997 Ozone (NAAQS): The pertaining to adding NOx and VOC as 110(a)(2) infrastructure SIP submitted precursor pollutants to ozone in DEPARTMENT OF TRANSPORTATION on February 18, 2009, is conditionally defining a "significant" increase in approved for Clean Air Act sections actual emissions from a source of air National Highway Traffic Safety 110(a)(2)(C), (D)(i)(IT), and (J) only as it contaminants, and defining a method Administration relates to the aspect of the PSD program for determining the amount ofPSD pertaining to adding NOx and VOC as incr ements available to a new or 49 CFR Part 578 precursor pollutants to ozone in modified major source. On November [Docket No. NHTSA-2016-0136] defining a "significant" increase in 21, 2016, the State of Vermont actual emissions from a source of air supplemented this submittal with a RIN 2127- AL82 contaminants, and defining a method commitment to address these for determining the amount of PSD requirements for PSD. Civil Penalties increments available to a new or (6) 2010 Nitrogen Dioxide NAAQS: AGENCY: National Highway Traffic modified major source. On November The 110(a)(2) infrastructure SIP Safety Administration (NHTSA), 21, 2016, the State of Vermont submitted on November 2, 2015, is Department of Transportation (DOT). supplemented this submittal with a conditionally approved for Clean Air ACTION: Final rule; delay of effective comrnilrnenllo Clddre:;s U1ese Act sections 110(a)(2)(C), (D)(i)(II), and date. requirements for PSD. (Jl only as it relates to the aspect of the (3) 2006 PM2.5 NAAQS: The 110(a)(2) PSD program pertaining to adding NOx SUMMARY: Pursuant to notices publii.shed infrastructure SIP submitted on May 21, and VOC as precursor pollutants to on January 30, 2017 and March 28, 2010, is conditionally approved for ozone in defining a "significant" 2017, the effective date of the rule Clean Air Act sections 110(a)(2)(C), increase in actual emissions from a entitled "Civil Penalties," published in (D)(i)(II), and UJ only as it relates to the source of air contaminants, and defining the Federal Register on December 28, aspect of the PSD program pertaining to a method for determining the amount of 2016, at 81 FR 95489, was temporarily adding NOx and VOC as precursor PSD increments available to a new or delayed until June 26, 2017 (82 FR 8694; pollutants to ozone in defining a modified major source. On November 82 FR 15302). This action temporarily "significant" increase in actual 21, 2016, the State of Vermont delays the effective date of that rule for emissions from a source of air supplemented this submittal with a 14 additional days. JA0075 29010 Federal Register /Vol. 82, No. 122 /Tuesday, June 27, 2017 I Rules and Regulations DATES: As of June 23,2017, the effective Atmospheric Administration (NOAA), Duration," the first sentence is corrected date of the rul e amending 49 CFR part Commerce. to read as follows: 578 published at 81 FR 95489, ACTION: Final rule; correction. "The specified activity may occur December 28, 2016, delayed at 82 FR from July 1 through February 28, 8694, January 30,2017, further delayed SUMMARY: This document contains annually, for the effective period of the at 82 FR 15302, March 28, 2017, is corrections to the DATES sectjon and the regulations (June 29, 2017 through June further delayed until July 10, 2017. preamble to the final regulations 28, 2022)." FOR FURTHER INFORMATION CONTACT: published on June 15, 2017, that 5. On page 27442, in the first column, establish a framework for authorizing the next to the last sentence is corrected Michael Kuppersmith, Office of Chief the take of marine mammals incidental and the last sentence is removed. The Counsel, (202) 366- 5263. to the commercial fireworks displays in corrected sentence reads as follows: SUPPLEMENTARY INFORMATION: Pursuant the Monterey Bay National Marine "Finally, the MBNMS has informed to notices published on January 30, Sanctuary for a five-year period, 2017- 2017 and March 28, 2017, the effective NMFS that it does not require 30 days 2022. This action is necessary to correct to prepare for impnementation of the date of the rule entitled "Civil an error in the effective dates of the final Penalties," p u blished in the Fe deral regulations and requests that this final regulations. rule take effect on or before June 29, Register on December 28, 2016, at 81 FR DATES: Effective from June 29, 2017, 2017." 95489, was temporarily delayed until through June 28, 2022. June 26, 2017 (82 FR 8694; 82 FR • 6. On page 27442, in the second FOR FURTHER INFORMATION CONTACT: column,§ 217.12 is corrected to read as 15302). The present action temporarily Laura McCue, Office of Protected follows: delays the effective date of that rule for Resources, NMFS, (301) 427- 8401. 14 additional days. That rule responded § 217.12 [Corrected] SUPPLEMENTARY INFORMATION: to a petition for reconsideration from Regulations in this subpart are the Alliance of Automobile Background effective from June 29, 2017, through Manufacturers and the Association of NMFS published a final rule on June June 28, 2022. Global Automakers by delaying, until 15,2017 (82 FR 27434) to establish a model year 2019, the implementation of Dated: June 20, 2017. framework for authorizing the take of inflationary adjustments to the marine mammals incidental to the Samuel D. Rauch III, Corporate Average Fuel Economy commercial fireworks displays at the Deputy Assistant Administrator for (CAFE) civil penalty rate made pursuant Monterey Bay National Marine Regulatory Programs, National Marine to the Federal Civil Penalties Inflation Fisheries Service. Sanctuary (Sanctuary) for a five-year Adjustment Act Improvements Act of period, 2017- 2022. NMFS refers the [FR Doc. 2017- 13249 Filed 6- 26-17; 8:45am] 2015. The additional 14-day delay in reader to the June 15, 2017, Federal BILLING CODE 3510-22-P effective date is necessary to Register notice (82 FR 27434) for temporarily preserve the status quo background information concerning the wh ile Department officials continue to final regulations. The information in the DEPARTMENT OF COMMERCE review and consider the final rule and notice of final rulemaking is not related laws. To the extent that 5 U.S.C. National Oceanic and Atmospheric repeated here. Administration 553 is applicable, this action is exempt from notice and comment because it Need for Correction constitutes a rule of procedure under 5 As published, the DATES section, the 50 CFR Part 635 U.S.C. 553(b)(3)(A). preamble to the final regulations, and [Docket No. 120627194-3657-02] Authority: Pub. L. 101- 410, Pub. L. 104- the regulatory text incorrectly specified RIN 0648-XF416 134, Pub. L. 109-59, Pub. L. 114-74, Pub L. the dates of validity for the regulations. 114-94, 49 U.S.C. 32902 and 32912; We hereby correct those errors; the only Atlantic Highly Migratory Species; delegation of authority at 49 CFR 1 .81, 1.95. changes are to the dates of validity for North Atlantic Swordfish Fishery the regulations. Jack Danielson, 1. On page 27434, in the third AGENCY: National Marine Fisheries Acting Deputy Administrator. column, the DATES section is corrected Service (NMFS), National Oceanic and [FR Doc. 2017- 13315 Filed 6- 23-17; 8:45am] to read as follows: Atmospheric Administration (NOAA), BILLING CODE 4910-59-P DATES: Effective from June 29, 2017, Commerce. through June 28, 2022. ACTION: Temporary rule; Swordfish 2. On page 27434, in the third General Commercial permit retention DEPARTMENT OF COMMERCE column, under the heading, "Purpose limit inseason adjustment for the and Need for this Regulatory Action," Northwest Atlantic, Gulf of Mexico, and National Oceanic and Atmospheric the last sentence is corrected to read as U.S. Caribbean regions. Administration follows: "The regulations implemented by this SUMMARY; NMfS is adjusting the 50 CFR Part 217 final rule are valid from June 29, 2017, Swordfish (SWO) General Commercial through June 28, 2022." permit retention limits for the RIN 0648-BGSO 3. On page 27435, in the third Northwest Atlantic, Gulf of Mexico, and Taking and Importing Marine column, under the heading, "Summary U.S. Caribbean regions for July through Mammals; Taking Marine Mammals of Request," the last sentence is December of the 2017 fishing year, Incidental to Commercial Fireworks corrected to read as follows: unless otherwise later noticed. The Displays at Monterey Bay Nat ional "The instant regulations are valid for SWO General Commercial permit Marine Sanctuary; Correction five years from June 29, 2017, through retention limit in each of these regions June 28, 2022." is increased from the regulatory default AGENCY: National Marine Fisheries 4. On page 27436, in the first column, limits (either two or three fish) to siix Service (NMFS), National Oceanic and undler the heading, ""Dates and swordfish per vessel per trip. The SWO JA0076 Federal Register/Vol. 82, No. 132/Wednesday, July 12, 2017 /Rules and Regulations 32139 Review) defines a "significant approved this document on July 5, 2017, exceeding an applicable Corporate regulatory action," which requires for publication. Average Fuel Economy (CAFE) standard review by the Office of Management and was among the penalties adjusted for Budget, as "any regulatory action that is List of Subjects in 38 CFR Part 74 inflation in the interim final rule. In likely to result in a rule that may: (1) Administrative practice and accordance with the Inflation Have an annual effect on the economy procedures, Privacy, Reporting and Adjustment Act and guidance on of $100 million or more or adversely recordkeeping requirements, Small calculating the infllationary adjustment affect in a material way the economy, a business, Veteran, Veteran-owned small mandated by the Act issued by the sector of the economy, productivity, business, Verification. Office of Management and Budget, competition, jobs, the environment, Dated: July 7, 2017. NHTSA increased the civil penalty for public health or safety, or State, local, Michael Shores, failing to meet an applicable CAFE or tribal governments or communities; Director, Regulation Policy 5- Management, standard from $5.50 per tenth of a mile (2) Create a serious inconsistency or Office ofthe Secretary, Department of per gallon (mpg) to $14 per tenth of an otherwise interfere with an action taken Veterans Affairs. mpg. or planned by another agency; (3) The Auto Alliance and Global Materially alter the budgetary impact of PART 74- VETERANS SMALL A1lltomakers jointly petitioned NHTSA entitlements, grants, user fees, or loan BUSINESS REGULATIONS for reconsideration of the interim final programs or the rights and obligations of rule regarding the inflationary recipients thereof; or (4) Raise novel Accordingly, the interim rule ad justment of CAFE non-compliance legal or policy issues arising out of legal amending 38 CFR part 74 which was penalties (hereafter, the Alliance and mandates, the President's priorities, or published at 82 FR 11154 on February Global petition wm be referred to as the the principles set forth in this Executive 21, 2017, is adopted as final without " Industry Petition")1 on August 1, Order." change. 2016. The Industry Petition argued that [FR Doc. 2017-14600 Filed 7-11-17; 8:45am) NHTSA used the wrong base year to The economic, interagency, budgetary, legal, and policy BILLING CODE 832()-()1- P calculate the inflationary adjustment to implications of this regulatory action the CAFE civil penalty and raised have been examined and it has been concerns about applying the adjusted DEPARTMENT OF TRANSPORTATION civil penalty retroactively. The Industry determined not to be a significant regulatory action under Executive Order National Highway Traffic Safety Petition also argued that in the event 12866. Administration that NHTSA chose not to adopt the base year suggested in the petition, NHTSA Unfunded Mandates should seek comment on whether 49 CFR Part 578 The Unfunded Mandates Reform Act NHTSA should adopt a lower penalty of 1995 requires, at 2 U.S.C. 1532, that [Docket No. NHTSA-2016-Q136] level than the one in the interim final agencies prepare an assessment of RIN 2127-AL82 rule based on "negative economic anticipated costs and benefits before impacts," as permitted by the Inflat ion issuing any rule that may result in the Civil Penalties Adjustment Act. expenditure by state, local, and tribal On December 28, 2016, NHTSA AGENCY: National Highway Traffic published a final rule in response to the governments, in the aggregate, or by the Safety Administration (NHTSA), private sector, of $100 million or more Industry Petition.2 To address concerns Department of Transportation (DOT). raised in the Industry Petition about (adjusted annually for inflation) in any given year. This final rule has no such ACTION: Final rule; delay of effective applying the adjusted penalty effect on state, local, and tribal date. retroactively, NHTSA delayed governments, or on the private sector. application of the $14 per tenth of an SUMMARY: NHTSA is delaying the mpg penalty until the 2019 model year, Paperwork Reduction Act effective date of the final rule entitled which begins in October 2018 for most "Civil Penalties," published in the manufacturers. The final rule did not This document contains no provisions Federal Register on December 28, 2016, constituting a collection of information ad dress the other points raised in th e because NHTSA is reconsidering the Industry Petition. under the Paperwork Reduction Act of appropriate level for CAFE civil 1995 (44 u.s.c. 3501-3521). The December 28, 2016 final rule is penalties. not yet effective and would currently Catalog of Federal Domestic Assistance DATES: As ofJuly 7, 2017, the effective become effective on July 10, 2017.3 date of the final rule published in the NHTSA is now reconsidering the final This final rule affects the verification rule because the final rule did not give guidelines of veteran-owned small Federal Register on December 28, 2016, at 81 FR 95489, is delayed indefinitely adequate consideration to all of the businesses, for which there is no Catalog relevant issues, including the potential of Federal Domestic Assistance program pending reconsideration. economic consequences of increasing number. FOR FURTHER INFORMATION CONTACT: Rebecca Schade, Office of Chief CAFE penalties by potentially $1 billion Signing Authority CoUlnsel, at (202) 366-2992. per year, as estimated in the Industry Petition. Thus, in a separate document The Secretary of Veterans Affairs, or SUPPLEMENTARY INFORMATION: On July 5, designee, approved this document and 2016, NHTSA published an interim 1 Jaguar Land Rover North America, LLC al so authorized the undersigned to sign and final rule updating the maximum civil file d a petition for reconsideration in response to submit the document to the Office of the penalty amounts for violations of the July 5, 2016 interim final rule raising the same Federal Register for publication statutes and regulations administered by concerns as those raised! in the Industry Petition. Both petitions can be found in Docket No. NHTSA- electronically as an official document of NHTSA, pursuant to the Federal Civil 2016-0075, accessible via www.regulations.gov. the Department of Veterans Affairs. Gina Penalties Inflation Adjustment Act z 81 FR 95489. S. Farrisee, Deputy Chief of Staff, Improvements Act of 2015 (Inflation 3 82 FR 8694 Uan. 30, 2017); 82 FR 15302 (Mar. Department of Veterans Affairs, Adjustment Act). The penalty for 28. 2017); 82 FR 29009 (June 27, 2017). JA0077 32140 Federal Register/Vol. 82, No. 132/Wednesday, July 12, 2017 /Rules and Regulations published in this Federal Regiister, DEPARTMENT OF TRANSPORTATION Docket: For access to the docket t o NHTSA is seeking comment on whether read background documents or $14 per tenth of an mpg is the National Highway Traffic Safety comments received, go to http:!I appropriate penalty level for civil Administration www.regulations.gov or the street penalties for violations of CAFE address listed above. NHTSA will standards given the requirements of the 49 CFR Part 578 continue to file relevant information in Inflation Adjustment Act and the Energy [Docket No. NHTSA- 2017--0059] the Docket as it becomes available. Policy and Conservation Act (EPCA) of Privacy Act: In accordance with 5 1975, which authorizes civil penalties Civil Penalties U.S.C. 553(c), DOT solicits comments for violations of CAFE standards.4 AGENCY: National Highway Traffic from the public to better inform its Because NHTSA is reconsidering the Safety Administration (NHTSA), rulemaking process. DOT posts these final rule, NHTSA is delaying the comments, without edit, including any Department of Transportation (DOT). personal information the commenter effective date pending reconsideration. ACTION: Reconsideration of final rule; provides, to http://www.regulations.gov, There is good cause to implement this request for comments. as described in the system of records delay without notice and comment notice (DOT/ALL-14 FDMS), which can SUMMARY: NHTSA seeks comment on under 5 U.S.C. 553(b)(B) and 553(d)(3) be reviewed at https:/1 because those procedures are whether and how to amend the civil penalty rate for violations of Corporate www.transportation.gov/privacy. impracticable, unnecessary, and Average Fuel Economy (CAFE) Anyone is able to search the electronic contrary to the public interest in these standards. NHTSA initially raised the for m of all comments received into any circumstances, where the effective date civi l penalty rate for CAFE standard of DOT's dockets by the name of the of the rule is imminent. Moreover, the violations for inflation in 2016, but individual submitting the comment (or agency is, through a separate document, upon further consideration, NHTSA signing the comment, if submitted on already seeking out public comments on believes that obtaining additional public behalf of an association, business, labor the underlying issues, which may be inpu t on how to proceed with CAFE union, etc.). extensive, and additional time will be civil penalties in the future will be FOR FURTHER INFORMATION CONTACT: required to thoughtfully consider and helpful. Therefore, NHTSA is issuing Thomas Healy, Office of the Chief address those comments before deciding this document to seek public comment Counsel, NHTSA, telephone (202) 366- on the appropriate course of regulatory as i1t sua sponte reconsiders its final rule 2992, facsimile (202) 366-3820, 1200 action. A delay in the effective date is regarding the appropriate inflationary New Jersey Avenue SE., Washington, therefore consistent with NHTSA's adjustment for CAFE civil penalties. DC 20590. statutory authority to administer the DATES: Comments: Comments must be SUPPLEMENTARY INFORMATION: CAFE standards program and its received by October 10, 2017. See the inherent authority to do so efficiently SUPPLEMENTARY INFORMATION section I. Statutory and Regulatory Background and in the public interest. In addition, below for more information on NHT.SA sets 1 and enforces 2 CAFE no party will b e harmed by the delay in submitting comments. standards for the United States, and in the effective date of the rule. On the ADDRESSES: You may submit comments doing so, assesses civil penalties against contrary, the rule does not increase to the docket number identified in the vehicle manufacturers who fall short of CAFE penalties before Model Year 2019, heading of this document by any of the their compliance obligations and are and therefore, the delay will not affect following methods: unable to make up the shortfall with the civil penalty amounts assessed • Federal eRulemaking Portal: Go to credits.3 The amount of the civil penalty against any manufacturer for violating a http:/!www.regulations.gov. Follow the was originally set by statute in 1975, CAFE standard prior to the 2019 model online instructions for submitting and for most of the duration of the year at the earliest, i.e., until sometime comments. CAFE program, has been $5.50 per each in 2020. Therefore, the increased • Mail: Docket Management Facility, tenth of a mile per gallon that a M-30, U.S. Department of manufacturer's fleet average CAFE level penalty rate set forth in the rule would Transportation, West Building, Ground not be applied for current violations, so falls short of its compliance obligation, Floor, Room W12-140, 1200 New Jersey multiplied by the number of vehicles in there is no immediate, concrete impact Avenue SE., Washington, DC 20590. from the delay. • Hand Delivery or Courier: U.S. the fleet 4 that has t he shortfall. The Department of Transportation, West basic equation for calculating a Authority: Pu b. L. 101-410, Pub. L. 104- Bui1ding, Ground Floor, Room W12- manufacturer's civil penalty amount is 134, Pub. L. 109-59, Pub. L. 114-74, Pub L. 140, 1200 New Jersey Avenue SE., as follows: 114- 94, 49 U.S.C. 32902 and 32912; delegation of au thority at 49 CFR 1.81, 1.95. Washington, DC, between 9 a.m. and 5 p.m. Eastern time, Monday tlhrough ' 49 u.s.c. 32902. Jack Danielson, 2 49 U.S.C. 32911, 32912. Friday, except Federal holidays. 3 r:rnnils mAy hA e ithAr MrnRrl (fnr rw~>r· Aclin1; D1:1puty Aclminislrutor. • Fax: 202-493-2251. compliance by a given manufacturer's fleet, in a [FR Doc. 2017-14526 Filed 7-7-17; 11:15 am) Regardless of how you submit your given model year) or purchased (in which case, BILLING CODE 491Q-59-P comments, you must include the docket another manufacturer earned the credits by over· number identified in the heading of this complying and chose to sell that surplus). 49 U.S.C. 32903; 49 CFR part 538. document. Note that all comments 4 A m:.nuf:tr::l urP.r m:.y h:~ve up tn thrP.A fleA IS nf received, including any personal vehicles, for CAFE compliance purposes, in any information provided, will be posted given model year-a domestic passenger car fleet, without change to http:!! an imported passenger car fleet, and a light truck www.regulations.gov. Please see the fleet. Each fleet belonging to each manufacturer has its own compliance obligation, with the potential • NHTSA incorporates the discussiOilS in the " Privacy Act" heading below. for either over-compliance or under·compliance. document seeking comment on the appropriate You may call the Docket Management There is no overarching CAFE requirement for a CAFE civil penalties level by reference. Facility at 202-366-9324. manufacturer's total production. JA0078 Federal Register/Vol. 82, No. 132/Wednesday, July 12, 2017 /Rules and Regulations 32141 (penalty rate, in $) x (amount of deleterious impact" may only be made $14.12 NHTSA also indicated in that shortfall, in tenths of an mpg) x (# if NHTSA determines that it is likely document that the new maximum of vehicles in manufacturer's non- that the increase in the penalty (A) will penalty rate that the Secretary is compliant fleet) = $ due as penalty not cause a significant increase in permitted to establish for such for non-compliant fleet. unemployment in a State or a region of violations is $25. To date, automakers have paid more a State, (B) adversely affect competition, or (C) cause a significant increase in In response to the changes to the than $890 million in penalties relating CAFE provisions promulgated in the to the CAFE standards.5 Additionally, automobile imports. Nowhere does since the introduction of credit trading EPCA define "substantial" or interim final rule, the Auto Alliance and and transfers in MY 2011, some "significant" in the context of this Global Automakers jointly petitioned manufacturers have turned to acquiring provision. The rulemaking process to NHTSA for reconsideration (the credits from competitors rather than raise penalties includes specifically Industry Petition).n The Industry paying civil penalties for non- soliciting comments from the Federal Petition raised concerns with compliance, and it is likely that this Trade Commission, among others, and retroactivity (applying the penalty involves significant expenditures. In requires a public hearing following a increase associated with model years light of the fact that CAFE standards are comment period of at least 45 days. that have already been completed or for set to rise at a significant rate over the NHTSA has never adjusted the CAFE which a company's compliance plan next several years, and since NHTSA's civil penalty using this EPCA provision. had already been '' set"); which "base Projected Fuel Economy Performance If NHTSA seeks to compromise or year" NHTSA should use for calculating Report 6 indicates that many remit penalties for a given the adjusted penalty rate; and whether manufacturers are falling behind the manufacturer, a rulemaking is not an immediate increase in the penalty standards for model year 2016 and necessary, but the amount of a penalty rate to $14 would cause a "negative increasingly so for model year 2017, it may be compromised or remitted only economic impact." is likely that many manufacturers will to the extent (1) necessary to prevent a face the possibility of paying larger manufacturer's insolvency or In response to the Industry Petition, CAFE penalties over the next several bankruptcy, (2) the manufacturer shows NHTSA issued a final rule published on years than at present. that the violation was caused by an act December 28, 2016. 14 NHTSA agreed NHTSA has long had authority under of God, a strike, or a fire, or (3) the that raising the penalty rate for model the Energy Policy and Conservation Act Federal Trade Commission certifies that years already fully complete would be (EPCA) of 1975, Public Law 94-163, a reduction in the penalty is necessary inappropriate, given how courts section 508, 89 Stat. 912 (1975), to raise to prevent a substantial lessening of generally disfavor the retroactive the amount of the penalty for CAFE competition. As with raising penalties, application of statutes. NHTSA also shortfalls if it can make certain NHTSA has never previously attempted agreed that raising the rate for model findings/ as well as the authority to to undertake this process. years for which product changes were compromise and remit such penalties The Center for Biological Diversity infeasible due to lack of lead time, did under certain circumstances. a If NIITSA petitioned NHTSA on October 1, 2015, not seem consistent with Congress' were to raise penalties for CAFE to conduct rulemaking to raise the intent that the CAFE program be shortfalls, the higher amount would amount of the penalty to $10, the responsive to consumer demand. apply to any manufacturer who owed maximum possible under EPCA at that time. 9 A month later, while NHTSA was NHTSA therefore stated that it would them; the authority to compromise and not apply the inflation-adjusted penalty remit penalties, however, is limited and considering that petition, Congress enacted the Federal Civil Penalties rat e of $14 until model year 2019, as on a case-by-case basis. that seemed to be the first year in which For both raising penalties and Inflation Adjustment Act Improvements compromising them under EPCA, Act of 2015 (Inflation Adjustment product changes could be made in NHTSA's burden is considerable. If Act),1 0 which applied to all civil response to the higher penalty rate. NHTSA seeks to raise CAFE penalties penalties administered by federal NHTSA further stated that its December under EPCA, NHTSA may only do so if agencies, as discussed in the prior final rule responded to the CBD pet ition it concludes through rulemaking that Federal Register documents cited for rulemaking. The December 28, 2016 the increase in the penalty both (1) will above. OMB guidance directed NHTSA final rule is not yet effective, and, in a result in, or substantially furth er, and other federal agencies to follow a separate document published in this substantial energy conservation for specific formula to adjust its civil Federal Register, NHTSA is delaying automobiles in model years in which penalties, pursuant to the Act's the effective date of the rule pending the increased penalty may be imposed, requirements, including the penalty for reconsideration to allow for public and (2) will not have a substantial CAFE shortfalls, pursuant to the comment on this issue.t 5 deleterious impact on the economy of Inflation Adjustment Act.tt the United States, a State, or a region of On July 5, 2016, NHTSA published an " 81 FR 43524 (July 5, 2016). This interim final the State. A finding of "no substantial interim final rule, adopting inflation rule also updated the maximum civil penalty adjusnnents for penalties w1der its amounts for violations of all statutes and 5 The highest CAFE penalty paid to date for a administration, following the formula in regulations ad ministered by NHTSA, and was not shortfall in a single fleet was $30,257,920, paid by the Act. One of these adjustments limited solely to penalties administered for CAFE OaimlerChrysler for its imported passenger car fleet included raising the penalty rate for vio lations. in MY 2006. Since MY 2012, only Jaguar Land t J jaguar Land Rover North America, LLC also Rover and Volvo have paid civil penalties. See CAFE non-compliance from $5.50 to filed a petition for reconsideration in response to https://one.nhtsa.gov/cofe_pic/CAFE_PIC_Fines_ UVE.html. the july 5, 2016 interim final rule raising the same • A copy of this petition is available in the 6 Available at h ttps:llone.nhtsa.gov/CAFE PIC/ rulemaking docket. concerns as those raisedl in the Industry Petition. M1' %202016%20and%202017%20Projected% Both petitions can be found in docket listed on this 10Public Law 114-74, Sec. 701. 20Fuel%20Economy% 11 This OMB guidance is available at https:/1 document accessible via www.regulotions.gov. 14 81 FR 95489 (Dec. 28, 2016). 20Performonce%20Report%20Finol.pdf www.whitehouse.govlsites/whitehouse.gov/files/ 7 49 u.s.c. 3291 2. omblmemoronda/2016/m-16-06.pdf (last accessed 15 82 FR 8694 (Jan. 3 0, 201 7); 82 FR 15302 (Mar. 8 49 u.s.c. 3291 3. May 22, 2017). 28. 2017); 82 FR 29009 (June 27, 2017). JA0079 32142 Federal Register/Val. 82, No. 132/Wednesday, July 12, 2017 /Rules and Regulations II. NHTSA's Reconsideration of Final determined that it was appropriate to consider in raising CAFE penalty rates Rule and Request for Comment on How use a different base year than the 1975 under that section interact with To Adjust CAFE Civil Penalties base year used to calculate the NHTSA's obligations under the Inflation CAFE penalties arc straightforward to adjustment in the interim final rule, that Adjustment Act. NHTSA therefore seeks administer, but determining the decision could have a significant impact comment on the following: appropriate amount of inflation on the future CAFE penalties level. • If NHTSA were to consider adjustment is more complicated than After further consideration of these potential "negative economic impacts" originally understood. As CAFE issll!es, and because the July 5, 2016 associated with raising the CAFE standard stringency continues to interim final rule did not provide an penalty rate, what impacts, specifically, increase, the nation's increased opportunity for interested parties to should NHTSA evaluate, why are those abundance of fuel resources has reduced provide input fully, NHTSA has impacts relevant and not others, and fuel prices and is causing consumers to determined that it should seek public what magnitude of impacts should be make purchasing decisions based on comment on whether and how NHTSA regarded as constituting " negative factors other than fuel economy, the should consider the issues raised above economic impacts"? potential effects of higher penalties for in seeking to implement the Inflation • Do commenters have information shortfalls may be more widely felt. In Adjustment Act as it pertains to CAFE that could be useful to NHTSA in fact, NHTSA's data indicates that many penalties. evaluating "negative economic impacts" automakers are projected to fa[} behind Both exceptions to the Inflation that they would be willing to provide? the standards for model years 2016 and Adjustment Act require the agency to • "Negative econ omic impact" a lso 2017. Moreover, as explained earlier, assess the economic effects of increasing potentially requires the agency to once NHTSA settles on an amount for the penalty amount. Relevant, therefore, consider impacts that are similar to CAFE penalties, that becomes the to both exceptions is information those considered in cost-benefit amount applicable to all shortfalls, and concerning the costs and benefits of analysis. For example: NHTSA has no leeway to compromise increased penalties. In general, the o If there are increased prices due to or remit penalties for manufacturers agency expects that increasing the level increased penalties, what effect may who feel that their compliance of the CAFE penalty rate will lead to that have on sales, including transfer of circumstances are dire, unless they are both increased penalties being paid and sales from new vehicles to used actually facing bankruptcy. The increased compliance with CAFE vehicles? consequences of this decision, therefore, standards, which would result in greater o If any impact on sales exists, would are considerable and fairly permanent. fuel savings and other benefits. We there be any adverse safety, fuel NHTSA is therefore sua sponte request comment on any information economy, or environmental impacts if reconsidering the December 28, 2016 related to these costs and benefits, consumers remain in older vehicles, final rule. including: which are less likely to have advanced The Inflation Adjustment Act • What would be the aggregate safety and environmental features, or provides an exception to give federal increased cost of applying a higher fine may be less fuel efficient than new agencies the ability to adjust the "catch- rate? To what extent would this be model year vehicles? Would rising up" amount of a civil monetary penalty based on increased fines versus increase prices have a disproportionate impact by less than the required amount. In compliance? on rural and disadvantaged order to make such an adjustment, the • What would be the effect on penalty communities, including with respect to head of the agency must determine payments of applying a higher fine rate? safety, fuel economy, and through notice and comment • What would be the effect on the average price of passenger cars and light environmental benefits? rulemaking that either (1) increasing the o If prices are affected by raising the penalty by the otherwise required trucks sold in the U.S? • How much additional fuel would be penalties, would this restrict consumer amount will have a "negative economic choice? impact," or (2) the social costs of saved by raising the CAFE penalty rate any amount between $5.50 per tenth of o If the prices of new model year increasing the penalty by the otherwise vehicles rise as a result of higher CAFE required amormt outweigh the benefits. a mile per gallon and $14 per tenth of a mile per gallon, and based on current penalties, would there be an impact on The Director of the Office of the price of older model year vehicles, Management and Budget must agree projections of fuel prices, what would be the monetized benefit to consumers, and what economic impact might there with either conclusion by an agency be as a result?; before an agency can act upon such a if any, as compared to additional costs to consumers associated with higher o If increased penalties increase the conclusion.16 The term "negative costs of vehicles, would that lead to any economic impact" is not defined in the penalties? • What would be the environmental secondary economic impacts on the Inflation Adjustment Act, though OMB's nation, on a state or group of states, or guidance noted that it expected a impacts of this fuel savings? • Are there any other costs or benefits on a region within a state or group of concurrence that a penalty increase states, if as a result consumers spend would have a "negative economic the agency should consider? • Do cornmenler:; have dalit less money on other desired goods and impact" to be "rare." 1 ? services?; Additionally, the OMB guidance suggesting whether societal costs directed agencies to calculate the initial outweigh societal benefits? o If penalties rise, could that create "catch-up adjustment" based on either In acting under the "negative disincentives for automakers to build the year the penalty was originally economic impact" exception, two certain types of vehicles with lower fuel slightly different overarching questions e~,;onumy, such as vehides spedally established by Congress, or last adjusted (by Congress or by the agency), also present themselves: First, whether designed to accommodate Americans whichever is later.te If NHTSA the "impact" resulting from raising the with disabilities? And if, as a result of CAFE penalty rate leads to a "negative higher CAFE penalties, the prices of JG See Section 701(c), Public Law 114-74. economic impact," and second, whether such vehicles rise or the availability of 17 QMB Guidance, at 3. and how the EPCA requirements in 49 such vehicles falls, what might be the '" /d. U.S.C. 32912 for what NHTSA must impact on consumers of such vehicles? JA0080 Federal Register/Vol. 82, No. 132/Wednesday, July 12, 2017 /Rules and Regulations 32143 • Do commenters believe that the commenters' belief? That is, could it be NHTSA expects that its inflationary EPCA considerations for raising CAFE argued that Congress, as a whole, ad justment will provide lead time i n penalty rates under 49 U.S.C. 32912 are explicitly considered and rejie cted a advance of assessing a new CAFE relevant to the catch-up adjustment change to the specific civil penalty penalty level. 20 As NHTSA explained in required by the Inflation Adjustment dollar amount in the statute ($5.00) and the December 28, 2016 Federal Register Act? Why or why not? instead ratified the penalty while at the document, absent lead time, increasing • Do commenters believe that the same time amending the penalty the civil penalties for falling short of EPCA considerations for "substantial provision to authorize the use of civil CAFE standards would not lead to an deleterious impact" are relevant to a penalty revenue to support NHTSA's increase in fuel economy. Most determination of "negative economic CAFE rulemaking and to support manufacturers could not alter their impact"? If so, do commenters believe research and development of the compliance plans in response to the that those considerations must be advanced technology vehicles? 19 Under increase in civil penalties for several accounted for in determining negative such an interpretation, Congress may model years, and therefore raising the economic impact, or simply that they have re-"established" the CAFE penalty penalty rate without lead time would are informational, and what is the legal in 2007, meaning that it coul d be used seem to impose retroactive punishment basis for that belief? as the base year to apply the inflation without generating any additional fuel • If the EPCA considerations are adjustment multiplier. If so, what would savings. Neither of these outcomes relevant, how should they be applied in the economic consequences of such a seems consistent with Congress' intent this instance? change in base year be? either in EPCA or in the Inflation • Do commenters have data In the event that NHTSA decides that suggesting what levels of "substantial Adjustment Act. it should adopt a CAFE civil penalty energy conservation," as envisioned by level other than $14, how much lead IV. Public Participation EPCA, would outweigh any "substantial time (in model years) should NHTSA deleterious impact" of raising penalties? NHTSA requests comment on all provide to manufacturers to allow them aspects of this document. This section Why or why not? to adjust their production to the new • Assuming the factors under 32912 describes how you can participate in are relevant, can commenters provide penalty level? What is the factual and this process. specific, documented information legal basis to support such lead time if NHTSA determines to adopt a different How do Tprepare and submit (including references to the sources penalty level? comments? relied on) with regard to the following: o Would there be any potential III. CAFE Penalty During To ensure that your comments are effects on employment nationally, on Reconsideration correctly filed in the Docket, please specific states or groups of states, or include the Docket Number NHTSA- within regions of a state or groups of Since NHTSA is reconsidering its December 28, 2016 final rule, including 2017-0073 in your comments. Your states, which could result from raising comments must not be more than 15 the CAFE penalty rate any amount whether $14 per tenth of a mile per gallon is the appropriate inflationary- pages Iong.21 NHTSA established this between $5.50 per tenth of a mile per limit to encourage you to write your gallon and $14 per tenth of a mile per adjusted penalty level, NHTSA is delaying the effective date ofthe final primary comments in a concise fash ion. gallon? However, you may attach necessary o Would rising penalties affect rule pending reconsideration in a separate document also published in additional documents to your employment on specific sectors of the comments, and there is no limit on the economy? this Federal Register. During o Are there any potential effects on reconsideration, the applicable civil length of the attachments. If you are competition within the automotive penalty rate is $5.50 per tent h of a mile submitting comments electronically as a sector and the market shares of per gallon, which was the civil penalty PDF (Adobe) file, NHTSA asks that the individual aut omakers that could result rate prior to NHTSA's inflationary documents be submitted using the from raising the CAFE penalty rate any adjustment. Since $5.50 is also the Optical Character Recognition (OCR) amount between $5.50 per tenth of a penalty rate that applies under the process, thus allowing NHTSA to search mile per gallon and $14 per ten th of a December 28, 2016 final rule until and copy certain portions of your mile per gallon? Model Year 2019, NHTSA expects that submissions. 22 Please note that o Are there any potential effects on delaying the final rule pending pursuant to the Data Quality Act, in automobile imports that could result reconsideration will not affect the actual order for substantive data to be relied on from raising the CAFE penalty rate any payment of CAFE penalties that would and used by NHTSA, it must meet the an1ount between $5.50 per tenth of a have otherwise applied prior to Model information quality standards set forth mile per gallon and $14 per tenth of a Year 2019. in the OMB and DOT Data Quality Act mile per gallon? guidelines. Accorcllingly, NHTSA Finally, regarding whether NHTSA '" In a September 16, 2016 letter to NHTSA encourages you to consult the used the appropriate base year to supp·lamanting their August 1, 2016 petition for guidelines in preparing your comments. reconsideration of the July 5, 2016 interim final rule DOT's guidelines may be accessed at calculate the adjustment in the interim adjusting the CAFE penalties, the petitioners argued final rule, should NHTSA instead use that Congress had considered increasing the CAFE https:I /www.transportation .gov/ the passage of EISA in 2007 as the "base penalty and instead ultimately ratified the existing regulations/dot-information- year" for calculating the catch-up one. As support for this argument, the petitioners dissemination-quality-guidelines. citP.tl:-t s:nhcnmmiiiP.A rlisr.ussinn rlr:.ft nf JnnA 1. adjustment? Do commenters believe that 2007, published in the record of a hearing before Congress, as a whole, "adjusted" or re- the Subcommittee on Energy and Air Quality of the ZOThe appropriate lead time is one of the issues "established" the CAFE penalty amount House Committee on Energy and Commerce on which NHTSA is seeking public comment. entitled "Legislative Hearing on Discussion Draft z 1 See 49 CFR 553.21. in EISA within the meaning of the Concerning Alternative Fuels, Infrastructure and z2 Optical character recognition (OCR) is the Inflation Adjustment Act when Vehicles," June 7, 2007, Serial Number 110-53, process of converting an image of text, such as a Congress amended the penalty available at https:/lwww.gpo.gov/fdsys/pkg/CHR C- scanned paper document or electronic fax file, into provision? What is the basis for 11 Ohhrg42440/ pdf!CHRC-1 1Ohhrg42440.pdf. computer-editable text. JA0081 32144 Fe deral Register/Val. 82, No. 132/Wednesday, July 12, 2017 /Rules and Regulations Tips for Preparing Your Comments consider comments received after that motor vehicles and equipment ought not When submitting comments, please date. If a comment is received too late change as the result of this rule. remember to: for us to practicably consider as part of C. Executive Order 13132 (Federalism) • Identify ilie rulemaking by docket this action, NHTSA will consider that number and other identifying comment as an informal suggestion for Executive Order 13132 requires information (subject heading, Federal a future rulemaking action. NHTSA to develop an accountable Register date and page number). How can I read the comments submitted process to ensure " meaningful and • Explain why you agree or disagree, by other people? timely input by State and local officials suggest alternatives, and substitute in the development of regulatory language for your requested changes. You may read the materials placed in policies that have federalism • Describe any assumptions and the docket for this document (e.g., the implications." "Policies that have provide any technical information and/ comments submitted in response to this federalism implications" is defined in or data that you used. document by other interested persons) the Executive Order to include • If you estimate potential costs or at any time by going to http:!I regulations that have "substantial direct burdens, explain how you arrived at www.regulations.gov and foiJowing the effects on the States, on the relationship your estimate in sufficient detail to online instructions for accessing the between the nation al government and allow for it to be reproduced. dockets. You may also read the the States, or on the distribution of • Provide specific examples to materials at the DOT Docket power and responsibilities among the illustrate your concerns, and suggest Management Facility by going to the various levels of government." Under alternatives. street address given above under Executive Order 13132, the agency may • Explain your views as clearly as ADDRESSES. not issue a regulation with Federalism possible, avoiding the use of profanity V. Regulatory Notices and Analyses implications, that imposes substant ial or personal threats. direct compliance costs, and that is not • Make sure to submit your A. Executive Order 12866, Executive required by statute, unless the Federal comments by the comment period Order 13563, and DOT Regulato1y government provides the funds deadline identified in the DATES section Policies and Procedures necessary to pay the direct compliance above. NHTSA has considered the impact of costs incurred by State and local How can I be sure that my comments this rulemaking action under Executive governments, or the agency consults were received? Order 12866, Executive Order 13563, with State and local governments early and the Department of Transportation's in the process of developing the If you submit your comments by mail and wish Docket Management to notify regulatory policies and procedures. This proposed regulation. you upon its receipt of your comments, rulemaking document was not reviewed This rule will not have substantial enclose a self-addressed, stamped und!er Executive Order 12866 or direct effects on the States, on the postcard in the envelope containing Executive Order 13563. This action is relationship between the national your comments. Upon receiving your limited to seeking comment on an government and the States, or on the adjustment of a civil penalty under a distribution of power and comments, Docket Management will responsibilities among the various return the postcard by mail. statute that NHTSA enforces, and has been determined not to be "significant" levels of government, as specified in How do I submit confidential business und!er the Department of Executive Order 13132. The reason is information? Transportation's regulatory policies and that this rule applies to motor vehicle If you wish to submit any information procedures and the policies of the Office manufacturers. Thus, the requirements under a claim of confidentiality, you of Management and Budget. Because of Section 6 of the Executive Order do should submit three copies of your this rulemaking seeks comment on the not apply. complete submission, including the penalty amounts enacted under the IFR D. Unfunded Mandates Reform Act of information you claim to be confidential and does not change the number of 1995 (UMRA) business information, to the Chief entities that are subject to civil Counsel, NHTSA, at the address given penalties, the impacts are anticipated to The Unfunded Mandates Reform Act above under FOR FURTHER INFORMATION be non-significant. of 1995, Public Law 104-4, requires CONTACT. When you send a comment agencies to prepare a written assessment B. Regulatory Flexibility Act of the cost, benefits, and other effects of containing confidential business information, you should include a cover NHTSA has also considered the proposed or final rules that include a letter setting forth the information impacts of this rule under the Federal mandate likely to result in the specified in NHTSA's confidential Regulatory Flexibility Act. I certify that expenditure by Sta te, local, or tribal business information regulation.23 this rule will not have a significant governments, in the aggregate, or by the In addition, you should submit a copy impact on a substantial number of small private sector, of more than $100 from which you have deleted the entities. The following provides the million annually. Because NHTSA does claimed confidential business factual basis for this certification under not believe that this rule will information to the Docket by one ofthe 5 U.S.C. 605(b). The amendments only necessarily have a $100 million effect, methods set forth above. affect manufacturers of motor vehicles. no Unfunded Mandates assessment will Low-volume manufacturers can petition be prepared. Will NHTSA consider late comments? NHTSA for an alternate CAFE standard E. Executive Order 12778 (Civil Justice NHTSA will consider all comments und!er 49 CFR part 525, which lessens Reform) received before midnight Eastern the impacts of this rulemaking on small Standard Time on the comment closing businesses by allowing them to avoid This rule does not have a retroactive date indicated above under DATES. To liability for potential penalties under 49 or preemptive effect. Judicial review of the extent practicable, NHTSA will also CFR 578.6(h)(2). Small organizations this rule may be obtained pursuant to 5 and governmental jurisdictions will not U.S.C. 702. That section does not 23 49 CFR part 512. be significantly affected as the price of require that a petition for JA0082 Federal Register/Vol. 82, No. 132/Wednesday, July 12, 2017 /Rules and Regulations 32145 reconsideration be filed prior to seeking Atmospheric Administration (NOAA), extends from Maine to North Carolina judicial review. Commerce. from the coast out to the end of the F. Paperwork Reduction Act ACTION: Final rule. continental shelf. The Councils manage the fishery as two management units, In accordance with the Paperwork SUMMARY: This action approves and with the Northern Fishery Management Reduction Act of 1980, NHTSA states implements regulations submitted by Area (NFMA) covering the Gulf of that there are no requirements for the New England and Mid-Atlantic Maine (GOM) and northern part of information collection associated with Fishery Management Councils in Framework Adjustment 10 to the Georges Bank, and the Southern Fishery this rulemaking action. Monkfish Fishery Management Plan. Management Area (SFMA) extending G. Privacy Act from the southern flank of Georges Bank This action sets monkfish specifications Please note that anyone is able to for fishing years 2017-2019 (May 1, through Southern New England and into search the electronic form of all 2017 through April 30, 2020). It also the Mid-Atlantic Bight to North comments received into any of DOT's increases current days-at-sea allocations Carolina. dockets by the name of the ind ividual and trip limits. This action is intended The monkfish fishery is primarily submitting the comment (or signing the to allow the fishery to more effectively managed by landing limits and a yearly comment, if submitted on behalf of an harvest its optimum yield. allocation of monkfish days-at-sea association, business, labor union, etc.). DATES: This rule is effective July 12, (DAS) calculated to enable vessels You may review DOT's complete 2017. participating in the fishery to catch, but Privacy Act statement in the Fe deral ADDRESSES: Copies of Framework not exceed, the target total allowable Register published on AprillJl, 2000 (65 FR 19477-78) or you may visit Adjustment 10 and the accompanying landings (TAL) for each management https:!!www.tmnsportation.gov/privacy. environmental assessment (EA) are area. The catch limits are calculated to available on request from: John K. maximize yield in the fishery over the Jack Danielson, Bullard, Regional Administrator, lo!11g term. Based on a yearly evaluation Acting Deputy Administrator. National Marine Fisheries Service, 55 of the monkfish fishery, the Councils [FR Doc. 2017-14525 Filed 7-7-17; 11:15 am) Great Republic Drive, Gloucester, MA may revise existing management BILLING CODE 4910-59-P 01930. Framework 10 and the EA are measures through the framework also accessible via the Internet at: provisions of the FMP to better achieve https:/1 the goals and objectives of the FMP and DEPARTMENT OF COMMERCE www.greateratlantic.fisheries.noaa.gov/ achieve optimum yield, as required by sustainable/species/monkfish/ the Magnuson-Stevens Fishery National Oceanic and Atmospheric index.iltml. These documents are also Conservation and Management Act Administration accessible via the Federal eRulemaking (Magnuson-Stevens Act). Portal: http:!!www.regulations.gov. 50 CFR Part 648 FOR FURTHER INFORMATION CONTACT: The monkfish fishery has not fully William Whitmore, Fishery Policy harvested its quota since 2011. The [Docket Number 170314267-7566-02] Analyst, (978) 281- 9182. fishery underharvested its available RIN 0648-BG48 quota in the last three years (Table 1). SUPPLEMENTARY INFORMATION: The Councils developed Framework 10 Fisheries of the Northeastern United Background to enhance the operational efficiency of States; Monkfish; Framework The New England and the Mid- existing management measures in an Adjustment 1 0 Atlantic Fishery Management Councils effort to better achieve optimum yield. AGENCY: National Marine Fisheries jointly manage t he Monkfish Fishery Service (NMFS), National Oceanic and Management Plan (FMP). The fishery TABLE 1- MONKFISH lANDINGS COMPARISON FOR FISHING YEARS 2013- 2015 Target TAL Average Management area (mt) for fishing 2013 Landings 2014 Landings 2015 Landings percent (%) of years (mt) (mt) (mt) TAL landed 2013-2015 2013-2015 NFMA .................................................................................... 5,854 3,596 3,403 4,080 63 SFMA • • • • •• 0 • • • • •• - • •• • • •• • • •• • •• • • •• • • •• • • 0 • • 0 •• ••• • • • •• • • • • •••••• • • • •• • • •• • ••• ~ •• • • •• • • 8,925 5,088 5,415 4,733 57 Approved Measures the NFMA and 23,204 mt for the SFMA. Although the biological reference 1. Establish Specifications for Fishing The acceptable biological catch (ABC) points are unchanged, this action Years 2017- 2019 for each area, which equals the annual increases monkfish total allowable catch limit (ACL), is 7,592 mt for the landings (TAL), or quotas, for the next This action retains the biological NFMA and 12,316 mt for the SFMA. three fishing years (Table 2). The T ALs reference points previously established Additional background information on are derived after reducing an assumed in Framework 8 (79 FR 41919; July 8, these specifications is available in the amount of discards and a management 2014). The overfishing limit (OFL) for proposed rule (82 FR 21498; May 9, uncertainty buffer from the ABC. fishing years 2017-2019 (May 1, 2017 2017), and is not repeated here. through April 30, 2020) is 17,805 mt for JA0083 Case 17-2780, Document 1-2, 09/07/2017, 2119940, Page1 of 6 Case No. __________ UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT NATURAL RESOURCES DEFENSE COUNCIL, INC.; SIERRA CLUB; and CENTER FOR BIOLOGICAL DIVERSITY, Petitioners, v. NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION; JACK DANIELSON, in his capacity as Acting Deputy Administrator of the National Highway Traffic Safety Administration; the UNITED STATES DEPARTMENT OF TRANSPORTATION; and ELAINE CHAO, in her capacity as Secretary of the United States Department of Transportation Respondents. PETITION FOR REVIEW of a final rule of the National Highway Traffic Safety Administration Ian Fein Joanne Spalding Irene Gutierrez Alejandra Núñez Michael Wall Sierra Club Natural Resources Defense Council 2101 Webster Street, Suite 1300 111 Sutter St., 20th Floor Oakland, CA 94612 San Francisco, CA 94104 (415) 997-5725 (415) 875-6100 joanne.spalding@sierraclub.org ifein@nrdc.org alejandra.nunez@sierraclub.org igutierrez@nrdc.org Counsel for Sierra Club mwall@nrdc.org Vera Pardee Counsel for Natural Resources Center for Biological Diversity Defense Council 1212 Broadway, Suite 800 Oakland, CA 94612 (415) 632-5317 Dated: September 7, 2017 vpardee@biologicaldiversity.org Counsel for Center for Biological Diversity JA0084 Case 17-2780, Document 1-2, 09/07/2017, 2119940, Page2 of 6 PETITION FOR REVIEW Pursuant to 49 U.S.C. § 32909, 5 U.S.C. § 702 et seq., and Rule 15 of the Federal Rules of Appellate Procedure, the Natural Resources Defense Council, Sierra Club, and Center for Biological Diversity hereby petition this Court to review and set aside a final rule of the National Highway Traffic Safety Administration indefinitely delaying the effective date of an earlier final rule that increased the civil penalty rate for violations of Corporate Average Fuel Economy standards. The challenged rule was published in the Federal Register at 82 Fed. Reg. 32,139 (July 12, 2017). A copy of the challenged final rule is attached as Exhibit A to this petition. Dated: September 7, 2017 Respectfully submitted, /s/ Ian Fein Ian Fein Irene Gutierrez Michael Wall Natural Resources Defense Council 111 Sutter St., 21st Floor San Francisco, CA 94104 (415) 875-6100 ifein@nrdc.org igutierrez@nrdc.org mwall@nrdc.org Counsel for Petitioner Natural Resources Defense Council JA0085 Case 17-2780, Document 1-2, 09/07/2017, 2119940, Page3 of 6 Joanne Spalding Alejandra Núñez Sierra Club 2101 Webster Street, Suite 1300 Oakland, CA 94612 (415) 997-5725 joanne.spalding@sierraclub.org alejandra.nunez@sierraclub.org Counsel for Petitioner Sierra Club Vera Pardee Center for Biological Diversity 1212 Broadway, Suite 800 Oakland, CA 94612 (415) 632-5317 vpardee@biologicaldiversity.org Counsel for Petitioner Center for Biological Diversity 2 JA0086 Case 17-2780, Document 1-2, 09/07/2017, 2119940, Page4 of 6 FEDERAL RULE 26.1 CORPORATE DISCLOSURE STATEMENT Petitioners Natural Resources Defense Council, Inc. (NRDC), Sierra Club, and Center for Biological Diversity are non-profit organizations with no parent corporation and no outstanding stock shares or other securities in the hands of the public. NRDC, Sierra Club, and Center for Biological Diversity do not have any parent, subsidiary, or affiliate that has issued stock shares or other securities to the public. No publicly held corporation owns any stock in NRDC, Sierra Club, or Center for Biological Diversity. Dated: September 7, 2017 Respectfully submitted, /s/ Ian Fein Ian Fein Irene Gutierrez Michael Wall Natural Resources Defense Council 111 Sutter St., 21st Floor San Francisco, CA 94104 (415) 875-6100 ifein@nrdc.org igutierrez@nrdc.org mwall@nrdc.org Counsel for Petitioner Natural Resources Defense Council JA0087 Case 17-2780, Document 1-2, 09/07/2017, 2119940, Page5 of 6 Joanne Spalding Alejandra Núñez Sierra Club 2101 Webster Street, Suite 1300 Oakland, CA 94612 (415) 997-5725 joanne.spalding@sierraclub.org alejandra.nunez@sierraclub.org Counsel for Petitioner Sierra Club Vera Pardee Center for Biological Diversity 1212 Broadway, Suite 800 Oakland, CA 94612 (415) 632-5317 vpardee@biologicaldiversity.org Counsel for Petitioner Center for Biological Diversity 2 JA0088 Case 17-2780, Document 1-2, 09/07/2017, 2119940, Page6 of 6 CERTIFICATE OF SERVICE I hereby certify that I caused the foregoing Petition for Review, the exhibit thereto, and the Federal Rule 26.1 Corporate Disclosure Statement to be served by certified mail upon the following: Office of the Chief Counsel National Highway Traffic Safety Administration 1200 New Jersey Avenue, SE Washington, DC 20590 Acting Deputy Administrator Jack Danielson National Highway Traffic Safety Administration 1200 New Jersey Avenue, SE Washington, DC 20590 Office of the General Counsel U.S. Department of Transportation 1200 New Jersey Avenue, SE Washington, DC 20590 Secretary Elaine Chao U.S. Department of Transportation 1200 New Jersey Avenue, SE Washington, DC 20590 Jefferson Sessions III United States Attorney General U.S. Department of Justice 950 Pennsylvania Avenue, NW Washington, DC 20530 Dated: September 7, 2017 /s/ Ian Fein Ian Fein JA0089 Case 17-2806, Document 1-2, 09/08/2017, 2121276, Page1 of 4 Case No. _________________ UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT STATE OF NEW YORK, STATE OF CALIFORNIA, STATE OF VERMONT, STATE OF MARYLAND and COMMONWEALTH OF PENNSYLVANIA, Petitioners, v. NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION; JACK DANIELSON, in his capacity as Acting Deputy Administrator of the National Highway Traffic Safety Administration; and ELAINE L. CHAO, in her capacity as Secretary of the United States Department of Transportation, Respondents. PETITION FOR REVIEW OF A FINAL RULE OF THE NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION ERIC T. SCHNEIDERMAN XAVIER BECERRA Attorney General of the Attorney General of the State of New York State of California MONICA WAGNER DAVID ZAFT (Admission Pending) Deputy Chief Deputy Attorney General Environmental Protection Bureau Office of the Attorney General 120 Broadway 300 S. Spring St., Suite 1702 New York, New York 10271 Los Angeles, California 90013 Tel: (212) 416-6351 Tel: (213) 897-2607 Email: Monica.Wagner@ag.ny.gov Email: David.Zaft@doj.ca.gov Additional Counsel Listed on Signature Page JA0090 Case 17-2806, Document 1-2, 09/08/2017, 2121276, Page2 of 4 PETITION FOR REVIEW Pursuant to the Energy Policy and Conservation Act, 49 U.S.C. § 32909, Section 702 of the Administrative Procedure Act, 5 U.S.C. § 702, and Rule 15 of the Federal Rules of Appellate Procedure, the States of New York, California, Vermont and Maryland, and the Commonwealth of Pennsylvania hereby petition this Court to review and set aside a final action taken by Respondents to indefinitely delay the effective date of a final rule increasing the civil penalty rate for violations of the Corporate Average Fuel Economy standards. The rule challenged herein is titled "Civil Penalties … Final rule; delay of effective date" and was published in the Federal Register at 82 Fed. Reg. 32139-40 (July 12, 2017). A copy of the challenged final rule is attached as Exhibit A to this Petition. 1 JA0091 Case 17-2806, Document 1-2, 09/08/2017, 2121276, Page3 of 4 Dated: September 8, 2017 Respectfully submitted, ERIC T. SCHNEIDERMAN XAVIER BECERRA Attorney General of the Attorney General of the State of New York State of California DAVID A. ZONANA By: /s/ Monica Wagner (Admission Pending) MONICA WAGNER Supervising Deputy Attorney General Deputy Chief Environmental Protection Bureau By: /s/ David Zaft 120 Broadway DAVID ZAFT (Admission Pending) New York, New York 10271 Deputy Attorney General Tel: (212) 416-6351 Office of the Attorney General Email: Monica.Wagner@ag.ny.gov 300 S. Spring St., Suite 1702 Los Angeles, California 90013 Attorneys for Petitioner State of Tel: (213) 897-2607 New York Email: David.Zaft@doj.ca.gov David.Zonana@doj.ca.gov THOMAS J. DONOVAN, JR. Attorneys for Petitioner State of Attorney General of the California State of Vermont By: /s/ Kyle H. Landis-Marinello JOSH SHAPIRO KYLE H. LANDIS-MARINELLO Attorney General of the Assistant Attorney General Commonwealth of Pennsylvania Office of the Attorney General 109 State Street By: /s/ Jonathan Scott Goldman Montpelier, Vermont 05609-1001 JONATHAN SCOTT GOLDMAN Tel: (802) 828-3186 (Admission Pending) Email: Kyle.Landis-Marinello Executive Deputy Attorney General @vermont.gov Office of the Attorney General Strawberry Square, 15th Floor Attorneys for Petitioner State of Harrisburg, Pennsylvania 17120 Vermont Tel: (717) 787-8058 Email: JGoldman@attorneygeneral.gov Attorneys for Petitioner Commonwealth of Pennsylvania 2 JA0092 Case 17-2806, Document 1-2, 09/08/2017, 2121276, Page4 of 4 BRIAN E. FROSH Attorney General of the State of Maryland By: /s/ Steven M. Sullivan STEVEN M. SULLIVAN (Admission Pending) Solicitor General Office of the Attorney General 200 St. Paul Place Baltimore, MD 21202 Tel: (410) 576-6427 Email: SSullivan@oag.state.md.us Attorneys for Petitioner State of Maryland 3 JA0093 CERTIFICATE OF SERVICE I hereby certify that I electronically filed the foregoing with the Clerk of the Court for the United States Court of Appeals for the Second Circuit by using the appellate CM/ECF system on March 6, 2018. I certify that all participants in the case are registered CM/ECF users and that service will be accomplished by the appellate CM/ECF system. /s/ Ian Fein Ian Fein

BRIEF, on behalf of Petitioner Center for Biological Diversity, Natural Resources Defense Council and Sierra Club in 17-2780, FILED. Service date 03/06/2018 by CM/ECF.[2250939] [17-2780, 17-2806] [Entered: 03/06/2018 11:05 PM]

Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page1 of 59 17-2780(L) 17-2806 (Con) IN THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT NATURAL RESOURCES DEFENSE COUNCIL, SIERRA CLUB, CENTER FOR BIOLOGICAL DIVERSITY, STATE OF CALIFORNIA, STATE OF MARYLAND, STATE OF NEW YORK, STATE OF PENNSYLVANIA, STATE OF VERMONT, Petitioners, v. NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION, JACK DANIELSON, in his capacity as Acting Deputy Administrator of the National Highway Traffic Safety Administration, UNITED STATES DEPARTMENT OF TRANSPORTATION, ELAINE CHAO, in her capacity as Secretary of the United States Department of Transportation, Respondents, (caption continued on inside cover) On Petition for Review of a Rule of the National Highway Traffic Safety Administration OPENING BRIEF OF ENVIRONMENTAL PETITIONERS NATURAL RESOURCES DEFENSE COUNCIL, SIERRA CLUB, AND CENTER FOR BIOLOGICAL DIVERSITY Ian Fein Irene Gutierrez Michael E. Wall Natural Resources Defense Council 111 Sutter Street, 21st Floor San Francisco, CA 94104 (415) 875-6100 Counsel for Petitioner Natural (additional counsel on inside cover) Resources Defense Council Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page2 of 59 ASSOCIATION OF GLOBAL AUTOMAKERS, ALLIANCE OF AUTOMOBILE MANUFACTURERS, INC., Intervenors. Alejandra Núñez Vera Pardee Joanne Spalding Howard Crystal Sierra Club Center for Biological Diversity 2101 Webster Street, Suite 1300 1212 Broadway, Suite 800 Oakland, CA 94612 Oakland, CA 94612 (415) 997-5725 (415) 632-5317 Counsel for Petitioner Counsel for Petitioner Sierra Club Center for Biological Diversity Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page3 of 59 CORPORATE DISCLOSURE STATEMENT Petitioners Natural Resources Defense Council, Inc. (NRDC), Sierra Club, and Center for Biological Diversity are non-profit organizations with no parent corporations and no outstanding stock shares or other securities in the hands of the public. NRDC, Sierra Club, and Center for Biological Diversity do not have any parent, subsidiary, or affiliate that has issued stock shares or other securities to the public. No publicly held corporation owns any stock in NRDC, Sierra Club, or Center for Biological Diversity. Dated: March 6, 2018 /s/ Ian Fein Ian Fein i Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page4 of 59 TABLE OF CONTENTS CORPORATE DISCLOSURE STATEMENT............................................. i TABLE OF AUTHORITIES ...................................................................... iv INTRODUCTION ....................................................................................... 1 STATEMENT OF JURISDICTION ........................................................... 4 STATEMENT OF THE ISSUES PRESENTED ....................................... 5 STATEMENT OF THE CASE ................................................................... 6 Fuel-Economy Standards Reduce Vehicles' Energy Consumption. 6 Civil Penalties Deter Violation of the Fuel-Economy Standards ... 8 Congress Directs the Agency to Increase the Outdated Penalties. 9 The Agency Unlawfully Suspends the Penalty Increase, Without Notice and Comment ........................................................ 13 SUMMARY OF THE ARGUMENT ......................................................... 15 STANDARD OF REVIEW........................................................................ 17 ARGUMENT ............................................................................................. 18 I. The Court Has Authority to Vacate the Unlawful Suspension..... 18 A. The petition for review is timely and venue is proper.......... 18 B. Environmental Petitioners have standing ............................ 23 II. The Suspension Is Unlawful for at Least Three Reasons ............. 29 A. The agency lacked authority for the suspension .................. 29 B. The agency violated the APA by suspending the final rule without notice and comment ................................................. 33 C. The suspension is arbitrary and capricious .......................... 41 ii Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page5 of 59 CONCLUSION ......................................................................................... 46 CERTIFICATE OF COMPLIANCE CERTIFICATE OF SERVICE ADDENDUM 15 U.S.C. § 2004 (1988) .......................................................... Add001 15 U.S.C. § 2008 (1988) .......................................................... Add005 28 U.S.C. § 2461 note ............................................................. Add009 49 U.S.C. § 32909 ................................................................... Add014 Declaration of Luke Tonachel ................................................ Add016 Declaration of Gina Trujillo ................................................... Add025 Declaration of Kassia Siegel .................................................. Add027 Declaration of Andrew Linhardt ........................................... Add036 Declaration of Kathleen Woodfield ........................................ Add042 Declaration of Faviola Munguia ............................................ Add047 Declaration of Janet Dietzkamei ........................................... Add052 Declaration of James Blomquist ............................................ Add059 Declaration of Diana Hume ................................................... Add063 iii Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page6 of 59 TABLE OF AUTHORITIES Cases Am. Petroleum Inst. v. EPA, 862 F.3d 50 (D.C. Cir. 2017) ................................................................. 44 Baur v. Veneman, 352 F.3d 625 (2d Cir. 2003) ................................................................... 26 Becerra v. U.S. Dep't of Interior, 276 F. Supp. 3d 953 (N.D. Cal. 2017) ............................................... 3, 39 California v. BLM (California I), 277 F. Supp. 3d 1106 (N.D. Cal. 2017) ....................................... 3, 44, 45 California v. BLM (California II), No. 17-cv-07186-WHO, 2018 WL 1014644 (N.D. Cal. Feb. 22, 2018) ............................................................... passim Carpenters Indus. Council v. Zinke, 854 F.3d 1 (D.C. Cir. 2017) ................................................................... 27 Clean Air Council v. Pruitt, 862 F.3d 1 (D.C. Cir. 2017) ........................................................... passim Ctr. for Biological Diversity v. NHTSA, 538 F.3d 1172 (9th Cir. 2008) ......................................................... 18, 23 Encino Motorcars, LLC v. Navarro, 136 S. Ct. 2117 (2016) ................................................................... passim Envtl. Def. Fund, Inc. v. EPA, 716 F.2d 915 (D.C. Cir. 1983).......................................................... 37, 40 Estate of Cowart v. Nicklos Drilling Co., 505 U.S. 469 (1992) ............................................................................... 18 iv Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page7 of 59 Fourco Glass Co. v. Transmirra Prod. Corp., 353 U.S. 222 (1957) ............................................................................... 21 Friends of the Earth v. Laidlaw Envtl. Servs., 528 U.S. 167 (2000) ............................................................. 23, 24, 28, 29 FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120 (2000) ............................................................................... 20 Hertz Corp. v. Friend, 559 U.S. 77 (2010) ................................................................................. 22 In re Idaho Conservation League, 811 F.3d 502 (D.C. Cir. 2016)................................................................ 28 LaFleur v. Whitman, 300 F.3d 256 (2d Cir. 2002) ............................................................. 25, 26 Mack Trucks, Inc. v. EPA, 682 F.3d 87 (D.C. Cir. 2012). .......................................................... 35, 40 Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (1983) ........................................................................... 41, 44 N.C. Growers' Ass'n, Inc. v. United Farm Workers, 702 F.3d 755 (4th Cir. 2012) ................................................. 4, 16, 34, 36 N.Y. Pub. Interest Research Grp. v. Whitman (NYPIRG), 321 F.3d 316 (2d Cir. 2003) ............................................................. 17, 25 Nat'l Nutritional Foods Ass'n v. Kennedy, 572 F.2d 377 (2d Cir. 1978) ............................................................. 36, 40 Nat'l Venture Capital Ass'n v. Duke, No. 17-cv-1912-JEB, 2017 WL 5990122 (D.D.C. Dec. 1, 2017) ................................................................... 3, 35, 37 v Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page8 of 59 NRDC v. Abraham, 355 F.3d 179 (2d Cir. 2004) ........................................................... passim NRDC v. EPA, 683 F.2d 752 (3d Cir. 1982) ........................................................... passim NRDC v. Reilly, 976 F.2d 36 (D.C. Cir. 1992) ........................................................... 31, 32 Open Communities All. v. Carson, No. 17-cv-2192-BAH, 2017 WL 6558502 (D.D.C. Dec. 23, 2017) ............................................................................. 3 Paulsen v. Daniels, 413 F.3d 999 (9th Cir. 2005) ................................................................. 38 Pub. Citizen v. Steed, 733 F.2d 93 (D.C. Cir. 1984) ......................................................... passim Pub. Citizen, Inc. v. NHTSA, 489 F.3d 1279 (D.C. Cir. 2007) ............................................................. 19 Sidney Coal Co. v. Soc. Sec. Admin., 427 F.3d 336 (6th Cir. 2005) ........................................................... 22, 23 Sierra Club v. Pruitt, 17-cv-06293-JSW, ECF 72 (N.D. Cal. Feb. 16, 2018)....................... 3, 32 Time Warner Cable Inc. v. FCC, 729 F.3d 137 (2d Cir. 2013) ................................................................... 34 United Airlines, Inc. v. Brien, 588 F.3d 158 (2d Cir. 2009) ................................................................... 22 United States v. Kwai Fun Wong, 135 S. Ct. 1625 (2015) ........................................................................... 22 vi Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page9 of 59 TABLE OF AUTHORITIES (cont'd) Statutes Pub. L. No. 94-163, 89 Stat. 871 (1975) ..................................... 6, 9, 19, 20 Pub. L. No. 95-619, 92 Stat. 3206 (1978) ................................................. 20 Pub. L. No. 103-272, 108 Stat. 745 (1994) ............................................... 21 Pub. L. No. 110-140, 121 Stat. 1492 (2007) ............................................... 7 Pub. L. No. 114-74, 129 Stat. 584 (2015) ................................................. 10 5 United States Code § 551 ....................................................................................................... 34 § 553 ............................................................................................... passim § 706. ................................................................................................ 18, 33 15 United States Code § 2004 (1988) .......................................................................................... 20 § 2008 (1988) .......................................................................................... 20 28 United States Code § 2461 note sec. 2. .................................................................................... 10, 28, 32, 45 sec. 4 ..................................................................................... 10, 11, 16, 32 sec. 5 ....................................................................................................... 11 42 United States Code § 6201 ....................................................................................................... 6 § 6306 ..................................................................................................... 19 49 United States Code §§ 32901-32919 .................................................................................. 6, 31 § 32901. .............................................................................................. 7, 19 § 32902 ............................................................................................... 7, 19 § 32903 ..................................................................................................... 7 § 32909 ........................................................................................... passim § 32912 ........................................................................................... 8, 9, 19 vii Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page10 of 59 TABLE OF AUTHORITIES (cont'd) Regulations 49 Code of Federal Regulations § 1.95(a). ................................................................................................... 8 § 553.29 .................................................................................................. 19 § 578.6(h)(2). .......................................................................................... 11 Other Authorities 62 Fed. Reg. 5167 (Feb. 4, 1997) ................................................................ 9 77 Fed. Reg. 62,624 (Oct. 15, 2012) ................................................ 7, 24-26 Fed. Highway Admin., Transportation Air Quality: Selected Facts and Figures 6-8 (2016), https://www.fhwa.dot.gov/environment/ air_quality/publications/fact_book/factbook2016.pdf........................... 25 Heinzerling, Lisa, The Legal Problems (So Far) of Trump's Deregulatory Binge, Harv. L. & Pol'y Rev. (forthcoming) (manuscript at 7-14), https://ssrn.com/abstract=3049004 ....................................................... 32 viii Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page11 of 59 INTRODUCTION This case is straightforward and controlled by basic principles of administrative law. The Administrative Procedure Act (APA) requires, at a minimum, that an agency identify statutory authority for its actions; that it follow the procedures Congress requires; and that it explain the reasons for its decisions. The National Highway Traffic Safety Administration (the agency or NHTSA) did none of these when it indefinitely suspended, without notice and comment, a final rule that increased the civil penalties for violating fuel-economy standards. The Court should vacate the unlawful suspension because it contravenes these basic principles and this Court's clear precedent. The fuel-economy program underlying this case prescribes the fuel efficiency of vehicles sold in the United States and is an important pillar of the country's energy conservation laws. The agency enforces the program with civil penalties that are intended to deter automakers from violating the fuel-economy standards. But as of 2015, the penalties had remained virtually unchanged for decades, and inflation had eroded their deterrent effect. Congress that same year required agencies to increase their penalties for inflation, and mandated that such increases take effect not later than August 2016. Consistent with this command, 1 Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page12 of 59 the agency prescribed a final rule in 2016 that nearly tripled the fuel- economy penalties to account for some four decades of inflation. After a change in administration, however, the agency in 2017 indefinitely suspended the penalty increase. The agency did so without identifying statutory authority for the suspension, without providing notice and an opportunity to comment, and without explaining why the suspension was warranted. Each of these omissions provides independent grounds to vacate the unlawful suspension. This Court's decision in NRDC v. Abraham, 355 F.3d 179 (2d Cir. 2004), is dispositive. Like the present case, Abraham involved an agency's attempt, at the start of a new presidential administration, to suspend the effective date of an energy efficiency rule prescribed by the prior administration. Id. at 189-90. Applying "well-established" principles of administrative law, this Court rejected the agency's assertion, also made here, that such action was within its "inherent power," as well as its further claim that the imminent effective date of the rule provided "good cause" to suspend it without notice and comment. Id. at 202-06. This Court vacated the unlawful suspension and reinstated the energy efficiency rule as of its original effective date. 2 Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page13 of 59 The same outcome is mandated here. The agency has done precisely what this Court forbade in Abraham. It did so shortly after the D.C. Circuit vacated another agency's attempt to suspend a final rule based on non-existent "inherent authority." Clean Air Council v. Pruitt, 862 F.3d 1, 9 (D.C. Cir. 2017). And other courts, in the months since, have issued an unbroken string of decisions rejecting agencies' similar attempts to suspend or delay final rules without statutory authority, without following required procedures, or without providing a reasoned justification for the suspension. See Becerra v. U.S. Dep't of Interior, 276 F. Supp. 3d 953 (N.D. Cal. 2017); California v. BLM (California I), 277 F. Supp. 3d 1106 (N.D. Cal. 2017); Nat'l Venture Capital Ass'n v. Duke, No. 17-cv-1912-JEB, 2017 WL 5990122 (D.D.C. Dec. 1, 2017); Open Communities All. v. Carson, No. 17-cv-2192-BAH, 2017 WL 6558502 (D.D.C. Dec. 23, 2017); Sierra Club v. Pruitt, 17-cv-06293-JSW, ECF 72 (N.D. Cal. Feb. 16, 2018); California v. BLM (California II), No. 17-cv- 07186-WHO, 2018 WL 1014644 (N.D. Cal. Feb. 22, 2018). As these and other cases demonstrate, a new administration's desire to reconsider its predecessor's actions does not give license to ignore fundamental principles of administrative law. Rather, "[t]he Administrative Procedure Act requires that the pivot from one 3 Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page14 of 59 administration's priorities to those of the next be accomplished with at least some fidelity to law and legal process." N.C. Growers' Ass'n, Inc. v. United Farm Workers, 702 F.3d 755, 772 (4th Cir. 2012) (Wilkinson, J., concurring) (striking down agency's suspension of final rule without adequate notice and comment). The agency flouted those basic requirements here. Its unlawful suspension should be vacated. STATEMENT OF JURISDICTION Petitioners Natural Resources Defense Council (NRDC), Sierra Club, and Center for Biological Diversity (collectively, Environmental Petitioners) challenge the agency's final rule that indefinitely suspended the increase to civil penalties for violating fuel-economy standards. JA77-781 [hereinafter Suspension Rule]. This Court has jurisdiction to review the Suspension Rule under the Energy Policy and Conservation Act of 1975 (Energy Conservation Act), 49 U.S.C. § 32909(a). See Abraham, 355 F.3d at 192-94 (court of appeals had jurisdiction to review agency's delays of a final rule under Energy Conservation Act). 1This brief cites materials in the Joint Appendix as JA__, and materials included in the Addendum at the end of this brief as Add__. 4 Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page15 of 59 As explained in greater detail below (see infra § I.A), venue is proper in this Court because petitioner NRDC resides in this Circuit, 49 U.S.C. § 32909(a); Add26 (Trujillo Decl. ¶ 3), and the petition for review is timely because it was filed on September 7, 2017, JA84, which is "not later than 59 days after the [Suspension Rule was] prescribed," 49 U.S.C. § 32909(b); see Abraham, 355 F.3d at 196 & n.8 ("prescribe" is synonymous with "publication in the Federal Register" for purposes of filing a petition for review under the Energy Conservation Act). Environmental Petitioners also have standing to challenge the Suspension Rule for the reasons explained below (see infra § I.B). STATEMENT OF THE ISSUES PRESENTED 1. Did the agency exceed its statutory authority when it relied on purported "inherent authority" to indefinitely suspend the penalty increase and failed to abide by (or even acknowledge) the statutory deadlines that Congress mandated for prompt and recurring increases? 2. Did the agency violate the APA by failing to provide the public with advance notice and an opportunity to comment before it indefinitely suspended the penalty increase? 3. Is the Suspension Rule arbitrary and capricious where the agency provided no reasoned explanation to justify suspending the 5 Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page16 of 59 penalty increase instead of leaving it in effect while the agency reconsiders it? STATEMENT OF THE CASE Environmental Petitioners ask this Court to review and set aside the Suspension Rule prescribed by the National Highway Traffic Safety Administration. 82 Fed. Reg. 32,139 (July 12, 2017); JA77-78. The Suspension Rule, which was signed by the agency's then-Acting Deputy Administrator, JA78, indefinitely suspended an important final rule that increased the penalties for violating fuel-economy standards. Fuel-Economy Standards Reduce Vehicles' Energy Consumption In 1975, Congress enacted the Energy Conservation Act. One purpose of the Act is to "provide for improved energy efficiency of motor vehicles." Pub. L. No. 94-163, sec. 2, 89 Stat. 871, 874 (1975) (codified at 42 U.S.C. § 6201(5)). The Act seeks to accomplish this goal by requiring that the Secretary of Transportation establish mandatory fuel-economy standards for cars and trucks. Id., sec. 301, §§ 501-512, 89 Stat. at 901- 16 (codified as amended at 49 U.S.C. §§ 32901-32919). The corporate average fuel-economy standards—often referred to as CAFE standards—specify a "minimum level of average fuel economy" applicable to automakers' fleets for each model year. 49 U.S.C. 6 Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page17 of 59 § 32901(a)(6). The standards are measured in miles per gallon and set at the "maximum feasible" levels that "the Secretary decides the manufacturers can achieve in that model year." Id. § 32902(a). Automakers generally achieve the standards by implementing fuel- saving technology to improve the fuel economy of their vehicles. JA51. If an automaker exceeds the standards by improving fuel economy beyond the level prescribed for a given model year, it can earn credits that may be used to cover shortfalls in other model years. 49 U.S.C. § 32903. Although Congress created the fuel-economy standards primarily to conserve the nation's energy supplies, automakers' compliance with the standards provides other significant public benefits as well. These include reducing emissions of air pollutants that harm human health and the environment, encouraging technology innovation, promoting the nation's energy security, and saving consumers money at the pump. See Corporate Average Fuel Economy Standards, 77 Fed. Reg. 62,624, 62,631-34, 63,002-06, 63,055-62 (Oct. 15, 2012). In 2007, Congress mandated an increase in the fuel-economy standards, requiring that the standards reach at least 35 miles per gallon by Model Year 2020. See Pub. L. No. 110-140, § 102(a)(2), 121 Stat. 1492, 1499 (2007) (codified at 49 U.S.C. § 32902(b)(2)(A)). 7 Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page18 of 59 Civil Penalties Deter Violation of the Fuel-Economy Standards Congress requires the Secretary of Transportation to enforce the fuel-economy standards by assessing civil penalties against automakers who do not comply with the standards. 49 U.S.C. § 32912. The Secretary has delegated these responsibilities to the agency. 49 C.F.R. § 1.95(a). The express purpose of the penalties is to deter non-compliance and "encourage manufacturers to comply with the [fuel-economy] standards." JA52 (citing 49 C.F.R. § 578.2). However, as the agency recognizes, automakers "will pursue the strategy … that results in the lowest overall cost to the manufacturer." JA28. So when it is cheaper for automakers to pay the penalty than to comply with the fuel-economy standards by installing fuel-saving technology in their vehicles, some automakers will choose to forego the improvements and pay the penalty instead—as they have done in the past, see JA60-74 (identifying roughly $900 million in penalties collected as of May 2017).2 2The penalty amount is also important because it directly affects the price of credits that may be available to help cover shortfalls. JA33, 38. A higher penalty thus means that more automakers will implement fuel-saving technology to comply with the standards, rather than purchasing more expensive credits (or paying penalties) instead. Id. 8 Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page19 of 59 In 1975, when Congress first created the fuel-economy penalties, it set the penalty rate at $5 per tenth of a mile per gallon. See Pub. L. No. 94-163, sec. 301, § 508(b)(1), 89 Stat. at 912 (codified as amended at 49 U.S.C. § 32912(b)). The formula for calculating an automaker's civil penalty is: (the penalty rate) times (the number of tenths of a mile per gallon by which a non-compliant fleet falls short of the applicable fuel- economy standard) times (the number of vehicles in the fleet). JA51. In 1997, the agency raised the $5 penalty rate slightly, to $5.50. See Civil Penalties, 62 Fed. Reg. 5167, 5168 (Feb. 4, 1997). Congress Directs the Agency to Increase the Outdated Penalties In October 2015, petitioner Center for Biological Diversity requested that the agency promulgate regulations to further increase the fuel-economy penalties. JA13-14 [hereinafter Environmental Petition]. The Environmental Petition relied on the Government Accountability Office's earlier findings that the outdated $5.50 penalty rate "may not provide a strong enough incentive for manufacturers to comply" with the standards, and that "stricter penalties" could "improve compliance." JA13. The petition also noted that the original $5 penalty rate from 1975 would be roughly $22 in today's dollars, as adjusted for inflation. JA14. The Environmental Petition thus suggested that 9 Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page20 of 59 increasing the civil penalties would properly "incentivize compliance" with the fuel-economy standards and thereby "promote the protection of public health, welfare, and the environment by reducing dangerous emissions and reducing our dependency on dirty fossil fuels." JA14. In November 2015, while the agency was considering the Environmental Petition, JA79, Congress enacted the Federal Civil Penalties Inflation Adjustment Act Improvements Act (Improvements Act). Pub. L. No. 114-74, § 701, 129 Stat. 584, 599 (2015) (codified at 28 U.S.C. § 2461 note).3 Congress recognized that civil penalties for violating federal laws "play[] an important role in deterring violations and furthering the policy goals embodied in such laws." 28 U.S.C. § 2461 note, sec. 2(a)(1). Congress also recognized that "inflation ha[d] weakened the deterrent effect of such penalties." Id., sec. 2(a)(3). The Improvements Act thus mandated that agencies "shall adjust" their civil penalties to account for inflation, with an initial catch-up increase in 2016, followed by mandatory further adjustments annually thereafter. Id., sec. 4. And because these inflation adjustments were 3 The full text of the Federal Civil Penalties Inflation Adjustment Act, as amended by the Improvements Act, 28 U.S.C. § 2461 note, is reproduced in the addendum at Add9-13. 10 Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page21 of 59 long overdue, Congress required agencies to act promptly: It instructed that the initial increase "shall take effect no later than August 1, 2016," and that agencies make the subsequent annual adjustments "not later than January 15 of every year thereafter." Id., sec. 4(a), (b)(1)(B). In July 2016, the agency prescribed an interim final rule pursuant to the Improvements Act, updating the various civil penalties that it administers. JA25-30. The agency found, consistent with the Environmental Petition's earlier calculation, that the original fuel- economy penalty rate of $5 would be $22 in today's dollars. JA27. The agency therefore raised the outdated $5.50 penalty rate by the Improvement Act's statutory cap of 150 percent, see 28 U.S.C. § 2461 note, sec. 5(b)(2)(C), to $14 per tenth of a mile per gallon. JA27. The interim final rule took effect one month later, in August 2016. JA25. The $14 penalty rate was codified in the Code of Federal Regulations. See 49 C.F.R. § 578.6(h)(2) (2016). Two automaker industry associations—Alliance of Automobile Manufacturers and Association of Global Automakers, now Intervenors in this litigation—petitioned the agency for partial reconsideration of the fuel-economy penalty increase. JA31 [hereinafter Industry Petition]. The associations acknowledged that the Improvements Act "obligated" 11 Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page22 of 59 the agency to increase the penalty rate. Id. But they requested that the agency not apply the updated $14 penalty rate to pre-Model Year 2019 vehicles. JA35-36. The Industry Petition asserted that, because of the time required to design and produce a fleet, automakers had already decided whether to comply with the fuel-economy standards for those earlier model years based on the $5.50 penalty rate. JA32, 35. In December 2016, the agency prescribed a final rule addressing both the Industry and Environmental Petitions. JA51-54 [hereinafter Civil Penalties Rule]. The agency concluded that, because the purpose of the fuel-economy penalty is to "encourage manufacturers to comply with the [fuel-economy] standards," it would apply the updated $14 penalty rate only to Model Year 2019-and-after fleets so that automakers had time "to design and produce vehicles in response to the increased penalties." JA52-53.4 The agency found that the Civil Penalties Rule "increases civil penalties starting with the model year that manufacturers … are reasonably able to design and produce 4 In fact, because the agency acknowledged that the Improvements Act required it "to continue adjusting the civil penalty for inflation each year," it observed that the penalty rate applicable to Model Year 2019- and-after fleets would be $14 "plus any [annual] adjustment(s) for inflation that occur between now and then." JA53. 12 Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page23 of 59 vehicles in response to the increased penalties." JA53. The agency also determined that the rule effectively addressed the Environmental Petition because "the increased penalty will accomplish [the] goal of encouraging manufacturers to apply more fuel-saving technologies to their vehicles in those future model years." Id. The Civil Penalties Rule had an effective date of January 27, 2017. JA51. The Agency Unlawfully Suspends the Penalty Increase, Without Notice and Comment On January 20, 2017, newly appointed White House Chief of Staff Reince Priebus sent a memorandum to agency heads requesting that they postpone for 60 days the effective date of final rules that had been published in the Federal Register but had not yet taken effect. JA55. The memo further suggested that, where appropriate and permitted by applicable law, agencies should consider "proposing for notice and comment" a rule to delay the effective date beyond that 60-day period. Id. The memo also instructed that agencies should not delay rules that were "subject to statutory … deadlines." Id. Pursuant to this memorandum, the agency delayed the effective date of the Civil Penalties Rule for 60 days. JA56. The agency then temporarily delayed the rule two more times, resulting in a new 13 Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page24 of 59 effective date of July 10, 2017. JA59, 75-76. Contrary to what the Priebus memo directed, however, the agency did not provide notice and an opportunity to comment on these delays, claiming instead that they were exempt from notice and comment as "rules of … procedure" under 5 U.S.C. § 553(b)(A). Id. Nor did the agency acknowledge the Improvements Act's statutory deadlines. Id. On July 12, 2017, the agency prescribed a Suspension Rule that indefinitely suspended the Civil Penalties Rule. JA77-78. Once again, the agency did not provide the public with notice and an opportunity to comment. However, instead of claiming that the indefinite suspension was exempt from those requirements as some sort of rule of procedure, the agency maintained that it had "good cause" to suspend the Civil Penalties Rule without notice and comment because the (now thrice delayed) effective date of that rule was "imminent." JA78. The agency further asserted that the indefinite suspension was "consistent with [its] statutory authority to administer the [fuel- economy] program and its inherent authority to do so efficiently." Id. However, the agency failed again to acknowledge the Improvement Act's statutory deadlines, much less explain how the indefinite suspension could be squared with those deadlines. 14 Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page25 of 59 The agency simultaneously announced that it was sua sponte reconsidering the Civil Penalties Rule in a separate action. JA78-83. The agency provided no timeline for completing its reconsideration. And based on the Suspension Rule, the agency stated that "[d]uring reconsideration, the applicable civil penalty rate is $5.50." JA81. SUMMARY OF THE ARGUMENT The agency's Suspension Rule violates three basic principles of administrative law, each of which provides independent grounds for vacating the unlawful suspension. First, the agency identified no lawful authority for the Suspension Rule. It is "well-established" that a federal agency has only those authorities conferred upon it by Congress. Abraham, 355 F.3d at 202. Thus, before an agency can suspend a final rule, it "must point to something in [the relevant statutes] that gives it authority" for the suspension. Clean Air Council, 862 F.3d at 9. The agency here did no such thing. Instead, it invoked a non- existent "inherent authority" that both this Court and the D.C. Circuit have already rejected. Id.; Abraham, 355 F.3d at 202. The agency also cited its general authority to administer the fuel-economy program, but the Energy Conservation Act nowhere authorizes suspending a final 15 Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page26 of 59 rule. And Congress separately instructed the agency here not to delay— much less suspend indefinitely—the long-overdue penalty increase, when it commanded that the increase "shall take effect not later than August 1, 2016," followed by annual inflation adjustments "not later than January 15 of every year thereafter." 28 U.S.C. § 2461 note, sec. 4(a), (b)(1)(B). The indefinite suspension is thus not only unauthorized, it is prohibited by these statutory deadlines. Second, the agency violated the APA by failing to provide notice and an opportunity to comment on the suspension. An agency that issues a legislative rule is "bound by the rule until that rule is amended or revoked" and may not alter or suspend such a rule "without notice and comment." Clean Air Council, 862 F.3d at 9. Courts have repeatedly made clear that the "good cause" exception of the APA, 5 U.S.C. § 553(b)(B), "should be narrowly construed and only reluctantly countenanced." Abraham, 355 F.3d at 204; see NRDC v. EPA, 683 F.2d 752, 764 (3d Cir. 1982); N.C. Growers Ass'n, 702 F.3d at 767. And the agency's reasons for invoking the "good cause" exception here are the same reasons this Court and others have already rejected. An agency's desire to reconsider a rule on the eve of its effective date does not 16 Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page27 of 59 provide good cause to suspend it without notice and comment. Abraham, 355 F.3d at 205; NRDC v. EPA, 683 F.2d at 765-66. Third, the Suspension Rule is arbitrary and capricious because the agency never provided a "reasoned explanation" to justify suspending the Civil Penalties Rule. Encino Motorcars, LLC v. Navarro, 136 S. Ct. 2117, 2125-27 (2016). The agency may have provided some reasons why it wished to reconsider the rule. But it never provided any reasoned explanation to justify the separate and distinct action of suspending the rule during the reconsideration. See Pub. Citizen v. Steed, 733 F.2d 93, 98-100 (D.C. Cir. 1984). The agency also failed to consider an important aspect of the problem because it ignored Congress's deadlines for the penalty increase, as well as the benefits of leaving the increase in place to deter fuel-economy violations during the reconsideration. The Suspension Rule thus "cannot carry the force of law." Encino Motorcars, 136 S. Ct. at 2125. STANDARD OF REVIEW Because 49 U.S.C. § 32909 does not specify a standard of review, the Court reviews the agency's action pursuant to the APA. See N.Y. Pub. Interest Research Grp. v. Whitman (NYPIRG), 321 F.3d 316, 324 (2d Cir. 2003); accord Ctr. for Biological Diversity v. NHTSA, 538 F.3d 17 Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page28 of 59 1172, 1193 (9th Cir. 2008). The Court must therefore "hold unlawful and set aside" the challenged suspension if it is either (1) "in excess of statutory … authority," (2) "without observance of procedure required by law," or (3) "arbitrary" and "capricious." 5 U.S.C. § 706(2)(A), (C), (D). ARGUMENT I. The Court Has Authority to Vacate the Unlawful Suspension A. The petition for review is timely and venue is proper The petition for review is timely because it was filed on September 7, 2017, JA84-86, which is "not later than 59 days after the [challenged] regulation [wa]s prescribed," 49 U.S.C. § 32909(b). The Suspension Rule was published in the Federal Register on July 12, 2017. JA77-78. As this Court has previously recognized, the term "prescribe" means "publication in the Federal Register" for "purposes of filing a challenge in the court of appeals" under the Energy Conservation Act. Abraham, 355 F.3d at 196 & n.8 (interpreting 42 U.S.C. § 6306(b)(1)). It is a "basic [principle] of statutory construction that identical terms within an Act bear the same meaning." Estate of Cowart v. Nicklos Drilling Co., 505 U.S. 469, 479 (1992). And this principle is all but conclusive where, as here, Congress used the terms in materially identical provisions of the 18 Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page29 of 59 Act. Compare Pub. L. No. 94-163, § 336(b)(1), 89 Stat. at 931 (codified as amended at 42 U.S.C. § 6306(b)(1)), with id., sec. 301, § 504(a), 89 Stat. at 908 (codified as amended at 49 U.S.C. § 32909(a)-(b)). These and other relevant provisions make clear that Congress used the term "prescribe" in this context to describe the action of developing and finalizing a rule. See, e.g., 49 U.S.C. §§ 32901(c)(1), 32902(a), 32912(c)(1) (the agency "shall prescribe by regulation" rules related to the fuel-economy program); see also Pub. Citizen, Inc. v. NHTSA, 489 F.3d 1279, 1287 (D.C. Cir. 2007) ("In ordinary English, … to 'prescribe' is to order or adopt something as a governing rule."). And "publication in the Federal Register" is the "culminating event in the rulemaking process." Abraham, 355 F.3d at 196; see 5 U.S.C. § 553(d) (referring to the "required publication … of a substantive rule"); 49 C.F.R. § 553.29 (requiring that final rules be "published in the Federal Register"). Accordingly, a deadline in the Energy Conservation Act that runs from the date a rule is "prescribed" begins on the date that the rulemaking process ended—i.e., the date the rule was "published in the Federal Register." See Abraham, 355 F.3d at 196 (where "Congress did not use the word 'publish' when setting a deadline …, it instead used the word 'prescribe,' … suggesting that the terms are interchangeable"). 19 Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page30 of 59 Indeed, subsequent enactments confirm that Congress used the terms "prescribed" and "published in the Federal Register" interchangeably in this context, and that the filing deadline in 49 U.S.C. § 32909(b) runs from the date of publication. See FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 143 (2000) (referring to the "classic judicial task of reconciling many laws enacted over time" (quoting United States v. Fausto, 484 U.S. 439, 453 (1988))). The current text of 49 U.S.C. § 32909 reflects Congress's non-substantive consolidation of two earlier judicial review provisions regarding challenges to fuel-economy rules. The first of these earlier provisions (enacted in the Energy Conservation Act) ran the 59-day filing period from the date a rule was "prescribed." Pub. L. No. 94-163, sec. 301, § 504(a), 89 Stat. at 908 (originally codified at 15 U.S.C. § 2004). The second provision (enacted three years later) ran the same 59-day period from the date a rule increasing fuel-economy penalties was "published in the Federal Register." Pub. L. No., 95-619, sec. 402, 92 Stat. 3206, 3256 (1978) (originally codified at 15 U.S.C. § 2008(e)(2)-(3)).5 5These earlier provisions, originally codified at 15 U.S.C. §§ 2004, 2008(e)(2)-(3) (1988), are reproduced in the addendum at Add1-8. 20 Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page31 of 59 Congress removed any doubt that it intended these terms to mean the same thing when it later consolidated the two judicial review provisions into 49 U.S.C. § 32909 as part of a non-substantive reorganization of its transportation statutes. See Pub. L. No. 103-272, § 1(e), 108 Stat. 745, 1070 (1994); see also 49 U.S.C. § 32909(a)(1)-(2), (b). "It will not be inferred that Congress, in revising and consolidating the laws, intended to change their effect, unless such intention is clearly expressed." Fourco Glass Co. v. Transmirra Prod. Corp., 353 U.S. 222, 227 (1957) (collecting cases). And here, Congress stated expressly that the relevant statutes were "revised, codified, and enacted … without substantive change," Pub. L. No. 103-272, § 1, 108 Stat. at 745, indicating that it understood "prescribed" and "published in the Federal Register" to have identical meanings. Interpreting "prescribed" in 49 U.S.C. § 32909(b) to mean anything other than "published in the Federal Register" would thus contravene Congress's express instruction that the consolidation and reorganization was non-substantive. Accordingly, in 49 U.S.C. § 32909(b), as with most limitations periods regarding judicial review of agency rules, "the period of limitations for challenging [the] regulations begins accruing at the time of publication in the Federal Register." United Airlines, Inc. v. Brien, 21 Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page32 of 59 588 F.3d 158, 167 (2d Cir. 2009). Moreover, the 59-day filing deadline is, also like most limitations periods, a "'quintessential claim-processing rule[]'" because Congress "provided no clear statement" indicating that it is the "rare statute of limitations that can deprive a court of jurisdiction." United States v. Kwai Fun Wong, 135 S. Ct. 1625, 1632 (2015) (quoting Henderson v. Shinseki, 562 U.S. 428, 435 (2011)). Thus, even if a petitioner missed the filing deadline in 49 U.S.C. § 32909(b) (which petitioners here clearly did not), that still would "not deprive [the] court of authority to hear [the] case." Id. Venue is also proper in this Court because NRDC "resides" and has its "principal place of business" in this Circuit. 49 U.S.C. § 32909(a); see Hertz Corp. v. Friend, 559 U.S. 77, 93 (2010); Add26 (Trujillo Decl. ¶ 3). Courts have consistently held, in the analogous context of district court suits against federal agencies, that the "residency requirement" for venue is satisfied so long as "at least one plaintiff resides in the district in which the action has been brought." Sidney Coal Co. v. Soc. Sec. Admin., 427 F.3d 336, 345-46 (6th Cir. 2005) (collecting cases and observing that this "broad interpretation" of the venue requirement "is not only the majority view—it is the only view adopted by the federal courts"). It is therefore irrelevant that NRDC's co-petitioners Center for 22 Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page33 of 59 Biological Diversity and Sierra Club do not reside or have their principal place of business in this Circuit. See Abraham, 355 F.3d at 184 (resolving petition for review under Energy Conservation Act that involved several out-of-circuit petitioners); Ctr. for Biological Diversity, 538 F.3d at 1180 (same). Any contrary rule would "result in an unnecessary multiplicity of litigation" against the federal government by requiring petitioners wishing to join in one case to file separate petitions for review in different courts instead. Sidney Coal, 427 F.3d at 345 (quoting Exxon Corp. v. FTC, 588 F.2d 895, 898 (3d Cir. 1978)). B. Environmental Petitioners have standing An organization has standing to sue on behalf of its members when: (1) the interests at stake are germane to the organization's purpose; (2) the lawsuit does not require participation of individual members; and (3) the organization's members would have standing to sue in their own right. Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 181 (2000). Environmental Petitioners satisfy this test. Each organization is committed to curbing emissions of harmful air pollutants from, and promoting energy efficiency in, the transportation sector. Id.; Add17-18 (Tonachel Decl. ¶¶ 4-5); Add26 (Trujillo Decl. ¶ 5); Add27-29 (Siegel 23 Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page34 of 59 Decl. ¶¶ 2-6); Add36-37 (Linhardt Decl. ¶¶ 3-5). Neither the claims asserted in this petition nor the relief requested require the participation of individual members. Laidlaw, 528 U.S. at 181. And as explained below, the organizations' members would have standing to challenge the Suspension Rule in their own right because they have demonstrated an "injury in fact" that is "fairly traceable" to the unlawful suspension and is "likely [to] be redressed by a favorable decision." Id. at 180-81. Injury-in-Fact: Environmental Petitioners' members are harmed by the air pollution that results from automakers' non-compliance with fuel-economy standards. When fossil fuels are burned to power cars and trucks, they result in emissions of so-called "criteria" air pollutants that harm human health. See 77 Fed. Reg. at 62,901-07. These pollutants include fine particulate matter (which can cause asthma, heart disease, and premature death) and nitrogen oxide and volatile organic compounds (which combine to make ground-level ozone that can damage lung tissue and aggravate respiratory disease and infections). 24 Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page35 of 59 Id. at 62,901-02.6 These pollutants are also emitted during the upstream production and refining of the fuel consumed by cars and trucks. Id. at 62,901. Environmental Petitioners' members are injured by these emissions because they live near busy highways and refineries and have "no choice but to breathe the air." LaFleur v. Whitman, 300 F.3d 256, 270 (2d Cir. 2002) (petitioner had standing where she lived close to source of air pollution); accord NYPIRG, 321 F.3d at 325 (same); see Add42-43 (Woodfield Decl. ¶¶ 2-5); Add47-49 (Munguia Decl. ¶¶ 2-8); Add54-57 (Dietzkamei Decl. ¶¶ 9-15); Add60 (Blomquist Decl. ¶¶ 6-7); Add63-64 (Hume Decl. ¶¶ 5-7). Air quality in these locations is "among the worst in the nation." Add54-55 (Dietzkamei Decl. ¶¶ 9-12); Add42 (Woodfield Decl. ¶ 3). Several members suffer, or have watched family members suffer, from respiratory problems associated with the relevant air pollutants. See, e.g., Add43 (Woodfield Decl. ¶ 5); Add48-49 (Munguia Decl. ¶¶ 6-7); Add54-55 (Dietzkamei Decl. ¶¶ 9-12). As the agency acknowledges, people "who live … near major roads experience 6 See also Fed. Highway Admin., Transportation Air Quality: Selected Facts and Figures 6-8 (2016), https://www.fhwa.dot.gov/environment/ air_quality/publications/fact_book/factbook2016.pdf. 25 Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page36 of 59 elevated exposure to a wide range of air pollutants, as well as higher risks for a number of adverse health effects." 77 Fed. Reg. at 62,907; see Baur v. Veneman, 352 F.3d 625, 637-40 (2d Cir. 2003) (government statements acknowledging risk of harm "weigh in favor of concluding that standing exists"). The agency also has found that emissions reductions from fuel-economy compliance would "result in significant declines in the adverse health effects that result from [this] exposure." 77 Fed. Reg. at 63,062. These members' "likely exposure to additional" air pollution from fuel-economy non-compliance is thus "certainly an 'injury-in-fact' sufficient to confer standing." LaFleur, 300 F.3d at 270.7 Causation and Redressability: Increased exposure to harmful air pollutants is fairly traceable to the unlawful suspension because the agency indefinitely suspended a final rule that was designed to improve automakers' compliance with the fuel-economy standards. JA52-53. 7 These members were also procedurally injured when the agency failed to provide notice and an opportunity to comment on the indefinite suspension. Add45 (Woodfield Decl. ¶¶ 10-11); Add50-51 (Munguia Decl. ¶¶ 14-15); Add57 (Dietzkamei Decl. ¶ 16); Add61 (Blomquist Decl. ¶ 9); Add65-66 (Hume Decl. ¶¶ 9-10). And at least one member is injured for the additional reason that the suspension's effect on fuel- economy compliance will decrease the availability of fuel-efficient cars that she would like to purchase. Add49-50 (Munguia Decl. ¶¶ 8-13). 26 Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page37 of 59 Automakers admit that they decide whether to comply with the fuel- economy standards based on the civil penalty amounts. JA33, 35. The agency's indefinite suspension of the $14 penalty increase will thus result in greater non-compliance with fuel-economy standards (and a concomitant increase in emissions of harmful air pollutants) because it reinstated an inadequate $5.50 penalty rate that does "not provide a strong enough incentive" for automakers to comply with the standards. JA13. Indeed, the agency has observed that "many manufacturers [fell] behind the standards for model year 2016 and … model year 2017," JA79; see JA57-58—years when automakers based their compliance decisions on the $5.50 rate, JA33, 35. Because the outdated $5.50 rate did not adequately deter violations of the fuel-economy standards in those model years, "[c]ommon sense and basic economics" suggest that it will not do so for upcoming model years either. Carpenters Indus. Council v. Zinke, 854 F.3d 1, 6 (D.C. Cir. 2017) (when "predicting … causal effects" for standing, "common sense can be a useful tool"). The increased exposure to harmful emissions would also likely be redressed by a favorable decision for essentially the same reasons. See id. at 6 n.1. Vacating the unlawful suspension and reinstating the $14 penalty rate would deter violations of fuel-economy standards (and thus 27 Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page38 of 59 lessen harmful emissions) because—unlike with the inadequate $5.50 rate—the resulting penalties would be comparatively more expensive for automakers than the cost of achieving the fuel-economy standards. Add20-23 (Tonachel Decl. ¶¶ 11-15) (calculating automakers' marginal cost of compliance in Model Years 2019 and 2020 at roughly $10 to $12 per tenth of a mile per gallon); see also Laidlaw, 528 U.S. at 187 ("civil penalties provide sufficient deterrence to support redressability"). Indeed, automakers admit that "increased penalties have the effect of making the [fuel-economy] standard more stringent." JA42. The agency itself also projects that "increasing the level of the [fuel-economy] penalty rate will lead to … increased compliance with [fuel-economy] standards, which would result in greater fuel savings and other benefits." JA80. And Congress mandated the penalty increase here in order to restore the "deterrent effect of civil monetary penalties and promote compliance with the law." 28 U.S.C. § 2461 note, sec. 2(b)(2); see In re Idaho Conservation League, 811 F.3d 502, 510-11 (D.C. Cir. 2016) (affirming an "incentives-based theory of standing" that was "supported by congressional and agency assessments"). Thus, vacating the unlawful Suspension Rule and reinstating the increased penalties would clearly have "a deterrent effect that ma[kes] it likely, as opposed 28 Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page39 of 59 to merely speculative, that the penalties would redress [members'] injuries by … preventing future" violations of fuel-economy standards. Laidlaw, 528 U.S. at 187. II. The Suspension Is Unlawful for at Least Three Reasons The Suspension Rule violates three basic principles of administrative law, each of which provides independent grounds for setting it aside: (A) the agency identified no lawful authority for the suspension; (B) the agency violated the APA by failing to provide notice and an opportunity to comment before suspending the penalty increase; and (C) the suspension is arbitrary and capricious because the agency never justified why it suspended the penalty increase instead of leaving it in place to deter fuel-economy violations during the reconsideration. A. The agency lacked authority for the suspension It is "well-established" that "'an agency literally has no power to act … unless and until Congress confers power upon it.'" Abraham, 355 F.3d at 202 (quoting La. Pub. Serv. Comm'n v. FCC, 476 U.S. 355, 374 (1986)). That is because an agency, as a "creature of statute," has "only those authorities conferred upon it by Congress." Id. (quoting Atl. City Elec. Co. v. FERC, 295 F.3d 1, 8 (D.C. Cir. 2002)). To suspend the effective date of a final rule, then, an agency "must point to something 29 Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page40 of 59 in the [governing statutes] or the APA that gives it authority" to do so. Clean Air Council, 862 F.3d at 9. The agency here identified no such authority. Instead, it invoked a purported "inherent authority" to suspend the Civil Penalties Rule and suggested that suspending the penalty increase was somehow "consistent with" its general statutory authority to administer the fuel- economy program. JA78. Neither of these cursory assertions can support the ultra vires suspension. See Clean Air Council, 862 F.3d at 9 ("'A reviewing court must judge the propriety of [the suspension] solely by the grounds invoked by the agency' when it acted." (quoting SEC v. Chenery Corp., 332 U.S. 194, 196 (1947)) (internal alterations omitted)). Citing this Court's decision in Abraham, the D.C. Circuit recently reaffirmed that an agency lacks "inherent authority to issue a brief stay of a final rule ... while it reconsiders it." Id. (internal quotation marks omitted). There, as here, the agency "cite[d] nothing for the proposition that it has such [inherent] authority, and for good reason: ... 'agencies may act only pursuant to authority delegated to them by Congress.'" Id. (quoting Verizon v. FCC, 740 F.3d 623, 632 (D.C. Cir. 2014)). Indeed, this Court in Abraham had already "reject[ed] the contention" that an agency has "'inherent power' to suspend a duly promulgated rule where 30 Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page41 of 59 no statute conferred such authority." Id. (citing Abraham, 355 F.3d at 202). Applying "well-established principle[s]" of administrative law, this Court deemed the agency's assertion of inherent authority in Abraham to be "puzzling." 355 F.3d at 202. The agency's continued reliance on such non-existent "inherent authority" here, JA78, more than a decade after Abraham, directly contravenes this Court's precedent. Nor does the agency's statutory authority to administer the fuel- economy program permit the indefinite suspension. The agency's authority to administer the program derives from the Energy Conservation Act, 49 U.S.C. §§ 32901-32919, which nowhere authorizes suspending a final rule. See Abraham, 355 F.3d at 202 (comparing Clean Air Act § 307(d)(7)(B), which permits staying a final rule for three months during reconsideration in limited circumstances, with Energy Conservation Act provisions that do not even provide for reconsideration, much less a stay). And an agency's general authority to administer a regulatory program cannot possibly provide the power to suspend final rules where, as here, Congress separately established deadlines for those rules to take effect. See NRDC v. Reilly, 976 F.2d 36, 40-41 (D.C. Cir. 1992) (rejecting agency's contention that its "general authority" to prescribe regulations "includes the power to stay 31 Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page42 of 59 regulations already promulgated"); Sierra Club v. Pruitt, 17-cv-06293- JSW, ECF 72, slip op. at 10-11 (N.D. Cal. Feb. 16, 2018) (agency's delay of final rule exceeded its authority in light of statutory deadlines).8 In fact, Congress instructed the agency here not to delay—much less suspend indefinitely—the long-overdue increase to the fuel- economy penalty rate. Instead, the Improvements Act commanded that the penalty increase "shall take effect not later than August 1, 2016," followed by annual adjustments "not later than January 15 of every year thereafter." 28 U.S.C. § 2461 note, sec. 4(a), (b)(1)(B) (emphasis added). Congress mandated these increases to restore the deterrent effect of penalties that had been eroded by decades of inflation. Id., sec. 2(a)(2)- (3), (b)(1)-(2). Yet, despite this "clear statutory command" for an increase by August 2016 and recurring annual adjustments every January thereafter, Reilly, 976 F.2d at 41, the agency's indefinite suspension of the penalty increase has now extended well beyond January 2018 8See also generally Lisa Heinzerling, The Legal Problems (So Far) of Trump's Deregulatory Binge, Harv. L. & Pol'y Rev. (forthcoming) (manuscript at 7-14), https://ssrn.com/abstract=3049004 (explaining how agencies under the Trump administration have failed to identify legal authority for their delay or suspension of dozens of final rules). 32 Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page43 of 59 without any adjustment to the outdated $5.50 penalty rate. The Court "cannot conclude" that an agency has "authority to stay regulations that were subject to [statutory] deadlines." Id. And because the suspension here is expressly "indefinite[]," JA77, it may result in the penalty never being adjusted for inflation. See Steed, 733 F.2d at 98 ("an 'indefinite suspension' does not differ from a revocation simply because the agency chooses to label it a suspension"). The indefinite suspension is thus not only unauthorized, it is prohibited by these statutory deadlines. In short, the agency here did not identify statutory authority for its indefinite suspension. The Suspension Rule should therefore be "set aside" as "in excess of statutory … authority." 5 U.S.C. § 706(2)(C). B. The agency violated the APA by suspending the final rule without notice and comment Even if the agency had authority to suspend the penalty increase (which it did not), the Suspension Rule is still plainly unlawful because the agency failed to provide notice and comment and thus acted "without observance of procedure required by law." 5 U.S.C. § 706(2)(D). Under the APA, an agency must provide the public with "[g]eneral notice of proposed rule making," as well as "an opportunity to participate in the rule making through submission of written data, 33 Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page44 of 59 views, or arguments." Id. § 553(b)-(c). "The important purposes of this notice and comment procedure cannot be overstated." N.C. Growers Ass'n, 702 F.3d at 763. Notice and comment "serve the need for public participation in agency decisionmaking" and "ensure the agency has all pertinent information before it when making a decision." Time Warner Cable, Inc. v. FCC, 729 F.3d 137, 168 (2d Cir. 2013) (quoting Elec. Privacy Info. Ctr. v. U.S. Dep't of Homeland Sec., 653 F.3d 1, 6 (D.C. Cir. 2011)). They also help ensure "that the agency maintains a flexible and open-minded attitude towards its own rules." N.C. Growers Ass'n, 702 F.3d at 763 (quoting Chocolate Mfrs. Ass'n v. Block, 755 F.2d 1098, 1103 (4th Cir. 1985)). The notice-and-comment requirement (as well as its important purposes) applies with no less force when an agency seeks to suspend or delay a final rule. Suspending a final rule is "tantamount to amending or revoking a rule." Clean Air Council, 862 F.3d at 6; see also Abraham, 355 F.3d at 194; Steed, 733 F.2d at 98; NRDC v. EPA, 683 F.2d at 763 n.23. And because the APA specifically provides that amending or revoking a rule requires notice and comment, 5 U.S.C. §§ 551(5), 553(b)- (c), the "indefinite postponement of [a rule's] effective date" requires them too. NRDC v. EPA, 683 F.2d at 762; id. at 763 n.23 ("To allow the 34 Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page45 of 59 indefinite postponement of a rule without compliance with the APA, when a repeal would require such compliance, would allow an agency to do indirectly what it cannot do directly."). Thus, an agency that "issu[es] a legislative rule is itself bound by the rule until that rule is amended or revoked," and it may not alter—or suspend—such a rule "without notice and comment." Clean Air Council, 862 F.3d at 9 (quoting Nat'l Family Planning & Reprod. Health Ass'n, Inc. v. Sullivan, 979 F.2d 227, 234 (D.C. Cir. 1992)); see Abraham, 355 F.3d at 204-06 (agency violated APA by delaying effective date of final rule without notice and comment); NRDC v. EPA, 683 F.2d at 761-67 (same); Nat'l Venture Capital Ass'n, 2017 WL 5990122, at *7-11 (same). The APA provides a limited exception to the notice-and-comment requirement where the agency for "good cause" finds that notice and comment is "impracticable, unnecessary, or contrary to the public interest." 5 U.S.C. § 553(b)(B). But this Court and others have repeatedly made clear that the exception "should be narrowly construed and only reluctantly countenanced." Abraham, 355 F.3d at 204 (quoting Zhang v. Slattery, 55 F.3d 732, 744 (2d Cir. 1995)); see also, e.g., Mack Trucks, Inc. v. EPA, 682 F.3d 87, 93 (D.C. Cir. 2012). 35 Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page46 of 59 The APA also requires that an agency relying on this exception "incorporate[]" the good cause finding and a "statement of reasons therefor[e] in the rules issued." 5 U.S.C. § 553(b)(B). The requirement that an agency "articulate its basis for dispensing with normal notice and comment[] is not a procedural formality." N.C. Growers Ass'n, 702 F.3d at 766. A reviewing court must examine closely the "proffered reason for an agency's deviation from public notice and comment." Id. at 767. The exception is "not an 'escape clause'"; a "true and … supportable finding of necessity or emergency must be made and published." Nat'l Nutritional Foods Ass'n v. Kennedy, 572 F.2d 377, 385 (2d Cir. 1978). Each of the justifications the agency offered for invoking the good- cause exception here has already been rejected by this and other courts. First, the agency claimed that it had good cause to withhold notice and comment because the effective date of the Civil Penalties Rule was "imminent" and it needed "additional time" to reconsider the rule. JA78. But the APA does not permit an agency to suspend a final rule without notice and comment simply because the agency decides to revisit the rule on the eve of its effective date. This Court rejected precisely the same argument in Abraham, where the agency claimed that it "wished for more time to 'review and consider[]'" an energy efficiency rule that 36 Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page47 of 59 had an "imminent" effective date. 355 F.3d at 205. The Court held that such imminence does not provide good cause to avoid notice and comment, especially where (as here) the agency itself had initially designated that effective date. Id. (the "imminence of [a] self-imposed deadline d[oes] not qualify as good cause to dispense with notice-and- comment" (citing Levesque v. Block, 723 F.2d 175, 184 (1st Cir. 1983))). The Third Circuit reached the same conclusion when another agency sought to suspend and reconsider a rule, without notice and comment, at the start of the Reagan administration. "[T]he imminence of a deadline … is not sufficient to constitute 'good cause' within the meaning of the APA," the court explained, because otherwise an agency "could simply wait until the eve of a … deadline, then raise up the 'good cause' banner and promulgate rules without following APA procedures." NRDC v. EPA, 683 F.2d at 765 & n.25. That is precisely "what happened in this case, and the agency's action therefore falls outside the scope of the good cause exception." Envtl. Def. Fund, Inc. v. EPA, 716 F.2d 915, 921 (D.C. Cir. 1983) (rejecting agency's assertion of good cause to avoid notice and comment when suspending a final rule on the eve of its effective date); see also Nat'l Venture Capital Ass'n, 2017 WL 5990122, at *7-11 (same). 37 Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page48 of 59 Second, the agency attempted to justify its failure to provide notice and comment here because, after suspending the penalty increase, it "s[ought] out public comments" as part of the separate reconsideration process. JA78. But providing "notice and comment procedures after the postponement [of a final rule] does not cure the failure to provide them before the postponement." NRDC v. EPA, 683 F.2d at 768 (emphasis added). That is, inviting comment on the "separate" and "discrete action" of reconsidering a final rule, California II, 2018 WL 1014644, at *6, "cannot replace" the requirement to solicit comments on the different question of "whether the [rule] should [have] be[en] postponed in the first place," NRDC v. EPA, 683 F.2d at 768. This Court in Abraham thus rejected as "without merit" the agency's similar argument that providing notice and comment on replacement efficiency standards either "cured or mooted the absence of notice and comment prior to the amendment of the original standards' effective date." 355 F.3d at 206 n.14. "It is antithetical to the structure and purpose of the APA for an agency to implement a rule first, and then seek comment later." Paulsen v. Daniels, 413 F.3d 999, 1005 (9th Cir. 2005). Allowing comment on the reconsideration of a final rule therefore "does not cure the failure to give the public an opportunity to 38 Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page49 of 59 weigh in with comments before[]" the rule is suspended, "as [is] required by the APA." Becerra, 276 F. Supp. 3d at 966 (emphasis added). Third, and finally, the agency also suggested that there was no "concrete impact from the delay" because the Civil Penalties Rule would "not [have] affect[ed] the civil penalty amounts assessed against any manufacturer for violating a [fuel-economy] standard prior to the 2019 model year." JA78. But when the penalties would have been assessed provides no basis to withhold notice and comment, because the Civil Penalties Rule was designed to deter automakers from violating fuel- economy standards in their current compliance decisions. JA53; see supra at 12-13. The agency itself recognized that, because of the time required to design and produce a fleet, automakers' compliance decisions "are often fixed years in advance." JA52-53. Indeed, the very premise of Intervenors' Industry Petition in 2016 was that automakers had already designed their pre-Model Year 2019 fleets, and had decided whether to comply with the fuel-economy standards "based on … the existing civil penalty amounts." JA33. The agency's indefinite suspension of the Civil Penalties Rule in 2017 thus plainly had a "concrete impact" by reinstating the inadequate $5.50 penalty rate for the model years that automakers were presently designing. And once 39 Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page50 of 59 those less efficient vehicles are designed and produced, the resulting emissions of harmful air pollutants will continue for their lifetime. Moreover, even if there were no "concrete impact from the delay," as the agency erroneously suggested, JA78, that would undermine any basis for suspending the penalty increase in the first place—much less the asserted "good cause" to circumvent notice and comment. See Abraham, 355 F.3d at 205 (good cause exception applies only where notice-and-comment procedures would pose a "threat to the public interest" or do "real harm"); Nat'l Nutritional Foods, 572 F.2d at 385 (exception requires a "supportable finding of necessity or emergency"); Mack Trucks, 682 F.3d at 93 (exception "excuses notice and comment in emergency situations, or where delay could result in serious harm" (quoting Jifry v. FAA, 370 F.3d 1174, 1179 (D.C. Cir. 2004))). "In short, there was no legitimate reason whatsoever for [the agency] to ignore the commands of the APA regarding notice and comment." Envtl. Def. Fund, 716 F.2d at 921. "[I]ndefinite postponement of the effective date of the [Civil Penalties Rule] required notice and comment," and the agency "did not have good cause for dispensing with the APA's requirements." NRDC v. EPA, 683 F.2d at 767. Because the Suspension Rule was "promulgated without complying 40 Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page51 of 59 with the APA's notice-and-comment requirements" and "failed to meet any of the exceptions to those requirements," it is an "invalid rule" that must be vacated. Abraham, 355 F.3d at 206. C. The suspension is arbitrary and capricious Finally, even if the agency had authority to suspend the penalty increase (which it did not), and even if the agency followed the required procedures (which it did not), the Suspension Rule is still unlawful for yet another reason. One of the "basic … requirements" of administrative law is that an agency "must give adequate reasons for its decisions." Encino Motorcars, 136 S. Ct. at 2125. The agency "must examine the relevant data and articulate a satisfactory explanation for its action." Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983). Where, as here, an agency fails to provide that explanation, "its action is arbitrary and capricious" and "cannot carry the force of law." Encino Motorcars, 136 S. Ct. at 2125. Consistent with these standards, when an agency wishes to deviate from a prior rule, it must provide a "reasoned explanation" for the change and "'show that there are good reasons'" for it. Id. at 2125-26 (quoting FCC v. Fox Television Stations, Inc., 556 U.S. 502, 515 (2009)). The same basic requirement also applies when an agency suspends a 41 Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page52 of 59 prior rule. See Steed, 733 F.2d at 98-99 (rejecting agency's indefinite suspension of final rule as arbitrary and capricious); see also California II, 2018 WL 1014644, at *6 ("Any suggestion … that the Suspension Rule should be reviewed with less rigor than any future revision has no merit."). Thus, an agency is "required to give a reasoned explanation" for suspending the final rule, California II, 2018 WL 1014644, at *13, and must "'cogently explain' why [the] suspension [i]s necessary," Steed, 733 F.2d at 105 (quoting State Farm, 463 U.S. at 48). The Suspension Rule is arbitrary and capricious because the agency never provided any reasons—much less "good reasons," Encino Motorcars, 136 S. Ct. at 2126—to justify its indefinite suspension of the penalty increase. To be sure, the agency identified some reasons why it wished to reconsider the Civil Penalties Rule. JA80-81. But when it "came to explaining the 'good reasons'" for the suspension, the agency "gave almost no reasons at all." Encino Motorcars, 136 S. Ct. at 2127. That is, the agency never justified the "separate" and "discrete action" of suspending the rule's effective date during the reconsideration. California II, 2018 WL 1014644, at *6. The agency's failure to separately "justify the indefinite suspension" of the penalty increase 42 Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page53 of 59 renders its Suspension Rule "arbitrary and capricious." Steed, 733 F.2d at 99-100. The D.C. Circuit's decision in Steed is directly on point. There, the court held that an agency—indeed, the very same agency as here— could not suspend a tire safety rule merely because it wished to reconsider the rule. Id. at 100-03. The court held that the agency's suspension of the rule was arbitrary and capricious because "NHTSA did not explain why the existing [rule] could not have continued while the agency" developed alternatives to the rule. Id. at 102. So too here. The agency never explained why it did not leave the Civil Penalties Rule in effect during the reconsideration. Instead, the agency simply asserted: "Because NHTSA is reconsidering the final rule, NHTSA is delaying the effective date pending reconsideration." JA78; see also JA81. This cursory and circular assertion fails to meet the "basic … requirements" of reasoned decision-making. Encino Motorcars, 136 S. Ct. at 2125. An agency "cannot use" a possible "future revision, which has yet to be passed, as a justification for the Suspension Rule." California II, 2018 WL 1014644, at *6. Because the agency has "failed to provide the requisite reasoned analysis in support 43 Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page54 of 59 of the Suspension Rule," it is "arbitrary and capricious within the meaning of the APA." Id. at *13. Indeed, the agency also "failed to consider an important aspect of the problem" because it ignored Congress's deadlines for the penalty increase. State Farm, 463 U.S. at 43. An agency that wishes to change a prior rule must show that "the new position is consistent with the law." Steed, 733 F.2d at 99 (internal quotation marks omitted); see Am. Petroleum Inst. v. EPA, 862 F.3d 50, 65-66 (D.C. Cir. 2017) (same). But the agency here never even mentioned the Improvement Act's "express statutory command" that the initial penalty increase take effect in August 2016, followed by annual adjustments every January thereafter. Steed, 733 F.2d at 105. Instead, "NHTSA's approach to fulfilling an undisputed statutory mandate [wa]s to withhold any" penalty increase —and to do so indefinitely—until it completed a reconsideration that had no end date. Id. "That is not what Congress commanded the agency to do, nor is it reasonable behavior by an agency." Id. Finally, the Suspension Rule is also arbitrary and capricious because the agency "failed to consider the benefits" of leaving the Civil Penalties Rule in place to deter fuel-economy violations during the reconsideration. California I, 277 F. Supp. 3d at 1123. Congress 44 Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page55 of 59 mandated a prompt penalty increase because decades of inflation had eroded the deterrent effect of the outdated $5.50 penalty. 28 U.S.C. § 2461 note, sec. 2(a)(3). And the agency previously recognized that the "increased penalty" in the Civil Penalties Rule "will accomplish [the] goal of encouraging manufacturers to apply more fuel-saving technologies to their vehicles." JA53. The Suspension Rule never acknowledges this important benefit of the $14 penalty, however, and instead reinstates the inadequate $5.50 penalty that does "not provide a strong enough incentive" for automakers to comply with the standards. JA13; see supra at 27; Encino Motorcars, 136 S. Ct. at 2126 (an agency's "unexplained inconsistency" is reason for finding an "arbitrary and capricious change" (internal quotation marks and alteration omitted)). The agency's "failure to consider the benefits" of leaving the penalty increase in effect thus rendered its suspension "arbitrary and capricious." California I, 277 F. Supp. 3d at 1123. In short, because the agency "did not 'cogently explain' why suspension was necessary" when the penalty increase "could have been retained" during the reconsideration, "NHTSA's 'indefinite suspension'" is "arbitrary and capricious." Steed, 733 F.2d at 105. 45 Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page56 of 59 CONCLUSION For the foregoing reasons, the Court should vacate the unlawful Suspension Rule and reinstate the Civil Penalties Rule as of its prior effective date. Dated: March 6, 2018 Respectfully submitted, /s/ Ian Fein Ian Fein Irene Gutierrez Michael E. Wall Natural Resources Defense Council 111 Sutter Street, 21st Floor San Francisco, CA 94104 (415) 875-6100 ifein@nrdc.org Counsel for Petitioner Natural Resources Defense Council Alejandra Núñez Joanne Spalding Sierra Club 2101 Webster Street, Suite 1300 Oakland, CA 94612 (415) 997-5725 alejandra.nunez@sierraclub.org Counsel for Petitioner Sierra Club 46 Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page57 of 59 Vera Pardee Howard Crystal Center for Biological Diversity 1212 Broadway, Suite 800 Oakland, CA 94612 (415) 632-5317 vpardee@biologicaldiversity.org Counsel for Petitioner Center for Biological Diversity 47 Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page58 of 59 CERTIFICATE OF COMPLIANCE Pursuant to Federal Rule of Appellate Procedure 32(g), I certify that this Opening Brief complies with the type-volume limitations of Second Circuit Rule 32.1(a)(4)(A) because it contains 9,332 words, excluding parts of the document exempted by Rule 32(f). Dated: March 6, 2018 /s/ Ian Fein Ian Fein Case 17-2780, Document 140-1, 03/06/2018, 2250939, Page59 of 59 CERTIFICATE OF SERVICE I hereby certify that I electronically filed the foregoing with the Clerk of the Court for the United States Court of Appeals for the Second Circuit by using the appellate CM/ECF system on March 6, 2018. I certify that all participants in the case are registered CM/ECF users and that service will be accomplished by the appellate CM/ECF system. /s/ Ian Fein Ian Fein Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page1 of 68 ADDENDUM Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page2 of 68 ADDENDUM TO OPENING BRIEF OF ENVIRONMENTAL PETITIONERS TABLE OF CONTENTS NRDC v. Nat'l Highway Traffic Safety Admin. No. 17-2780 (L), No. 17-2806 (Con) Description Page 15 U.S.C. § 2004 (1988) Add001 15 U.S.C. § 2008 (1988) Add005 28 U.S.C. § 2461 note Add009 49 U.S.C. § 32909 Add014 Declaration of Luke Tonachel Add016 Declaration of Gina Trujillo Add025 Declaration of Kassia Siegel Add027 Declaration of Andrew Linhardt Add036 Declaration of Kathleen Woodfield Add042 Declaration of Faviola Munguia Add047 Declaration of Janet Dietzkamei Add052 Declaration of James Blomquist Add059 Declaration of Diana Hume Add063 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page3 of 68 Page 1135 TITLE 15-COMMERCE AND TRADE § 2004 <2> The EPA Administrator shall, by rule, de- Subsec. (b)(2). Pub. L. 96-425, §§ 4<c><3>, 8<e>. substi- termine that quantity of any other fuel which tuted "base production" for "base base production" in is the equivalent of one gallon of gasoline. subpar. (A)(ii)(l) and "or any subsequent model year" <3 > Testing and calculation procedures appli- for "or 1979" in subpar. <F>. Subsec. (b)(3), (4). Pub. L. 96-425, § 4<a><l>. (b), cable to a model year, and any amendment to added pars. <3> and <4>. such procedures <other than a technical or cler- ical amendment>. shall be promulgated not less CHANGE OF NAME than 12 months prior to the model year to The name of the Committee on Interstate and For- which such procedures apply. eign Commerce of the House of Representatives was (e) Rounding off of measurements of fuel economy changed to Committee on Energy and Commerce im- For purposes of this subchapter <other than mediately prior to noon on Jan. 3, 1981, by House Res- olution 549, Ninety-sixth Congress, Mar. 25, 1980. section 2006 of this title>. any measurement of fuel economy of a model type, and any calcula- EFFECTIVE DATE OF 1984 AMENDMENT tion of average fuel economy of a manufactur- Amendment by Pub. L. 98-620 not applicable to er, shall be rounded off to the nearest one- cases pending on Nov. 8, 1984, see section 403 of Pub. tenth mile per gallon <in accordance with rules L. 98-620, set out as an Effective Date note under sec- of the EPA Administrator>. tion 1657 of Title 28, Judiciary and Judicial Procedure. (0 Consultation and coordination by Administrator EFFECTIVE DATE OF 1980 AMENDMENT with Secretary The EPA Administrator shall consult and co- Amendment by Pub. L. 96-425 effective Oct. 10, 1980, see section 9 of Pub. L. 96-425, set out as a note ordinate with the Secretary in carrying out his under section 2001 of this title. duties under this section. SECTION REFERRED TO IN OTHER SECTIONS <Pub. L. 92-513, title V, § 503, as added Pub. L. 94-163, title III, § 301, Dec. 22, 1975, 89 Stat. This section is referred to in sections 2001, 2002, 906, and amended Pub. L. 96-185, § 18, Jan. 7, 2004, 2005, 2008, 2012. 2013, 2512 of this title. 1980, 93 Stat. 1336; H. Res. 549, Mar. 25, 1980; § 2004. Judicial review Pub. L. 96-425, §§ 4<a><l>. (b), <c><2>. <3>. 8(e), Oct. 10, 1980, 94 Stat. 1822, 1824, 1825, 1829; (a) Review of rules in courts of appeals Pub. L. 98-620, title IV, § 402(18), Nov. 8, 1984, Any person who may be adversely affected by 98 Stat. 3358.> any rule prescribed under section 2001, 2002, REFERENCES IN TExT 2003, or 2006 of this title may, at any time prior Enactment of the Act, referred to in subsec. to 60 days after such rule is prescribed <or in <a><3><B>, probably means the enactment of Pub. L. the case of an amendment submitted to each 96-185, which added subsec. (a)(3), and which was ap- House of the Congress under section 2002<a><4> proved January 7, 1980. of this title, at any time prior to 60 days after CODIFICATION the expiration of the 60-day period specified in section 2002<a><5> of this title>. file a petition in The addition of subsec. <a><3> of this section by sec- the United States Court of Appeals for the Dis- tion 18 of Pub. L. 96-185 was not accomplished trict of Columbia, or for any circuit wherein through the conventional device of a direct amend- ment of section 503 of the Motor Vehicle Information such person resides or has his principal place of and Cost Savings Act [this section] by section 18 of business, for judicial review of such rule. A Pub. L. 96-185. Rather, section 18 of Pub. L. 96-185 en- copy of the petition shall be forthwith trans- acted a new par. (2) of section 13<c> of the Electric and mitted by the clerk of such court to the officer Hybrid Vehicle Research, Development, and Demon- who prescribed the rule. Such officer shall stration Act of 1976 [Pub. L. 94-4131, and part of that thereupon cause to be filed in such court the newly enacted par. <2> of section 13<c> of Pub. L. written submissions and other materials in the 94-413, in turn, added subsec. <a><3> of this section. proceeding upon which such rule was based. "This subchapter", referred to in subsecs. <b><l>. <c>. and <e>, was in the original "this part", meaning Upon the filing of such petition, the court shall former part A, "Automotive Fuel Economy", of this have jurisdiction to review the rule in accord- subchapter, which designation, the only part designa- ance with chapter 7 of title 5 and to grant ap- tion appearing in the subchapter, was struck out by propriate relief as provided in such chapter. section 8<a><3> of Pub. L. 96-425. Findings of the Secretary under section 2002<d> AMENDMENTS of this title shall be set aside by the court on review unless such finci.ings are supported by 1984-Subsec. <b><3><E><ii> to <iv>. Pub. L. 98-620 re- substantial evidence. designated cis. <iii> and <lv> as <11> and <iii>, respective- ly, and struck out former cl. <ii> which had provided (b) Additional submissions that any such proceeding had to be assigned for a If the petitioner applies to the court in a pro- hearing and completed at the earliest possible date and had to be expedited in every possible way by such ceeding under subsection <a> of this section for court and that the court had to render its decision in leave to make additional submissions, and any such proceeding within 60 days after the date of shows to the satisfaction of the court that such filing the petition for review unless the court deter- additional submissions are material and that mined that a longer period of time was necessary to there were reasonable grounds for the failure satisfy the requirements of the Constitution. to make such submissions in the administrative 1980-Subsec. <a><3>. Pub. L. 96-185 added par. (3). · proceeding, the court may order the Secretary Subsec. <b><l>. Pub. L. 96-425, § 4<c><2>. inserted "and passenger automobiles which are included within this or the EPA Administrator, as the case may be category pursuant to paragraph (3)" in subpar. <A> to provide additional opportunity to make such and "and which are not included in the domestic cate- submissions. The Secretary or the EPA Admin- gory pursuant to paragraph <3>" in subpar. <B>. istrator, as the case may be, may modify or set Add001 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page4 of 68 §2005 TITLE 15-COMMERCE AND TRADE Page 1136 aside the rule involved or prescribe a new rule mony, sit and act at such times and places, ad- by reason of the additional submissions, and minister such oaths, and require, by subpena, shall file any such modified or new rule in the the attendance and testimony of such witnesses court, together with such additional submis- and the production of such books, papers, cor- sions. The court shall thereafter review such respondence, memorandums, contracts, agree- new or modified rule. ments, or other records as the Secretary, the (c) Finality of determination; review by United States EPA Administrator, or such agents deem advis- Supreme Court able. The Secretary or the EPA Administrator may require, by general or special orders that The Judgment of the court affirming or set- anyperson- ting aside, in whole or in part, any such rule <A> file, in such form as the Secretary or shall be final, subject to review by the Supreme EPA Administrator may prescribe, reports or Court of the United States upon certiorari or answers in writing to specific questions relat- certification as provided in section 1254 of title ing to any function of the Secretary or the 28. EPA Administrator under this subchapter, (d) Remedy in addition to other remedies provided by and law <B> provide the Secretary, the EPA Admin- The remedies provided for in this section istrator, or their duly designated agents, shall be in addition to, and not in lieu of, any access to <and for the purpose of examina- other remedies provided by law. tion, the right to copy) any documentary evi- dence of such person which is relevant to any <Pub. L. 92-513, title V, § 504, as added Pub. L. function of the Secretary or the EPA Admin- 94-163, title III, § 301, Dec. 22, 1975, 89 Stat. istrator under this subchapter. 908.) Such reports and answers shall be made under SECTION REFERRED TO IN OTHER SEcriONS oath or otherwise, and shall be filed with the This section is referred to in sections 2002, 2030 of Secretary or the EPA Administrator within this title. such reasonable period as either may prescribe. (2) The district courts of the United States § 2005. Information and reports for a judicial district in the Jurisdiction of (a) Reports by mannfacturers; time; contents which an inquiry is carried on may, in the case <1> Each manufacturer shall submit a report of contumacy or refusal to obey a duly author- to the Secretary during the 30-day period pre- ized subpena or order of the Secretary, the ceding the beginning of each model year after EPA Administrator, or a duly designated agent model year 1977, and during the 30-day period of either, issued under paragraph (1), issue an beginning on the 180th day of each such model order requiring compliance with such subpena year. Each such report shall contain (A) a state- or order. Any failure to obey such an order of ment as to whether such manufacturer will the court may be treated by such court as a comply with average fuel economy standards contempt thereof. under section 2002 of this title applicable to the (3) Witnesses summoned pursuant to this sub- model year for which such report is made; <B> a section shall be paid the same fees and mileage plan which describes the steps the manufactur- that are paid witnesses in the courts of the er has taken or intends to take in order to United States. comply with such standards; and <C> such other (c) Tests, reports, etc., which may be required of man- information as the Secretary may require. ufacturers (2) Whenever a manufacturer determines that a plan submitted under paragraph (1) (1) Every manufacturer shall establish and which he stated was sufficient to insure compli- maintain such records, make such reports, con- ance with applicable average fuel economy duct such tests, and provide such items and in- standards is not sufficient to insure such com- formation as the Secretary or the EPA Admin- pliance, he shall submit a report to the Secre- istrator may, by rule, reasonably require to tary contaming a revised plan which specifies enable the Secretary or the EPA Administrator any additional measures which such manufac- to carry out their duties under this subchapter turer intends to take in order to comply with and under any rules prescribed pursuant to this such standards, and a statement as to whether subchapter. Such manufacturer shall, upon re- such revised plan is sufficient to insure such quest of a duly designated agent of the Secre- compliance. tary or the EPA Administrator who presents (3) The Secretary shall prescribe rules setting appropriate credentials, permit such agent, at forth the form and content of the reports re- reasonable times and in a reasonable manner, quired under paragraphs <1) and (2). to enter the premises of such manufacturer to (4) The provisions of this subsection shall not inspect automobiles and appropriate books, apply to any manufacturer for any model year papers, records, and documents. Such manufac- for which that manufacturer is subject to an al- turer shall make available all of such items and ternative average fuel economy standard under information in accordance with such reasonable section 2002<c> of this title. rules as the Secretary or the EPA Administra- tor may prescribe. (b) Hearings; evidence (2) The district courts of the United States (1) For the purpose of carrying out the provi- may, if a manufacturer refuses to accede to any sions of this subchapter, the Secretary or the rule or reasonable request made under para- EPA Administrator, or their duly designated graph <1>, issue an order requiring compliance agents, may hold such hearings, take such testi- with such requirement or request. Any failure Add002 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page5 of 68 Page 1137 TITLE 15-COMMERCE AND TRADE §2006 to obey such an order of the court may be al tax imposed with respect to automobile treated by such court as a contempt thereof. fuel efficiency, a statement indicating the (d) Disclosure of information to public amount of such tax, and <1 >The Secretary and the EPA Administrator <D> containing any other information au- shall each disclose any information obtained thorized or required by the EPA Administra- under this subchapter <other than section tor which relates to information described in 2003(d) of this title) to the public in accordance subparagraph <A> or <B>. with section 552 of title 5, except that informa- <2> With respect to automobiles- tion may be withheld from disclosure under <A> for which procedures established in the subsection (b)(4) of such section only if the Sec- EPA and FEA Voluntary Fuel Labeling Pro- retary or the EPA Administrator, as the case gram for Automobiles exist on December 22, may be, determines that such information, if 1975, and disclosed, would result in significant competi- <B> which are manufactured in model year tive damage. Any matter described in section 1976 and at least 90 days after December 22, 552(b)(4) [of title 51 relevant to any administra- 1975, tive or judicial proceeding under this subchap- ter may be disclosed in such proceeding. each manufacturer shall cause to be affixed, <2> Measurements and calculations under sec- and each dealer shall cause to be maintained, in tion 2003<d> of this title shall be made available a prominent place, a label indicating the fuel to the public in accordance with section 552 of economy of such automobile, in accordance title 5 without regard to subsection (b) of such with such procedures. section. <3> The form and content of the labels re- quired under paragraphs (1 > and <2), and the <Pub. L. 92-513, title V, § 505, as added Pub. L. manner in which such labels shall be affixed, 94-163, title Ill, § 301, Dec. 22, 1975, 89 Stat. shall be prescribed by the EPA Administrator 908, and amended Pub. L. 96-425, § 3<b>, Oct. by rule. The time and manner by which the 10, 1980, 94 Stat. 1822.> statement referred to in paragraph <l)(C) must CODIFICATION be included on any label may be prescribed so "This subchapter", referred to in subsecs. <b><l>, as to take into account any special circum- <c><l>, and <d><l>, was in the original, "this part", stances or characteristics. The EPA Administra- meaning former part A, "Automotive Fuel Economy", tor may permit a manufacturer to comply with of this subchapter, which designation, the only part this paragraph by permitting such manufactur- designation appearing in the subchapter, was struck er to disclose the information required under out by section 8<a><3> of Pub. L. 96-425. this subsection on the label required by section AMENDMENTS 3 of the Automobile Information Disclosure Act (15 u.s.c. 1232). 1980-Subsec. <a><4>. Fub. L. 96-425 added par. <4>. <4><A> In the case of alcohol powered automo- EFFECTIVE DATE OF 1980 AMENDMENT biles or natural gas powered automobiles, the Amendment by Pub. L. 96-425 effective Oct. 10, fuel economy of such automobiles for purposes 1980, see section 9 of Pub. L. 96-425, set out as a note of paragraph <1 ><A>(i) shall be the fuel econo- under section 2001 of this title. my for such automobiles when operated on al- cohol or natural gas, as the case may be, meas- § 2006. Labeling ured under section 2013(a) or <c> of this title, (a) Label required on automobile; contents multiplied by 0.15. <B> In the case of dual energy automobiles or <1 > Except as otherwise provided in para- natural gas dual energy automobiles, each label graph (2), each manufacturer shall cause to be required under paragraph (1) shall- affixed, and each dealer shall cause to be main- (i) indicate the fuel economy of such auto- tained, on each automobile manufactured in mobile when operated on gasoline or diesel any model year after model year 1976, in a fuel; prominent place, a label- <il) clearly identify such automobile as a <A> indicating- dual energy automobile or natural gas dual m the fuel economy of such automobile, energy automobile, as the case may be; <iD the estimated annual fuel cost associ- <iii> clearly identify the fuels on which such ated with the operation of such automobile, and automobile may be operated; and (iii) the range of fuel economy of compa- <lv> contain a statement informing the con- rable automobiles <whether or not manufac- sumer that the additional information re- tured by such manufacturer), quired by subsection (b)(3) of this section is published and distributed by the Department as determined in accordance with rules of the of Energy. EPA Administrator, <B> containing a statement that written in- (b) Booklet containing fuel economy data; distribu- formation <as described in subsection (b)(l) of tion by administrator this section> with respect to the fuel economy <1 >The EPA Administrator shall compile and of other automobiles manufactured in such prepare a simple and readily understandable model year <whether or not manufactured by booklet containing data on fuel economy of such manufacturer> is avallable from the automobiles manufactured in each model year. dealer in order to facilitate comparison Such booklet shall also contain information among the various model types, with respect to estimated annual fuel costs, and <C> containing in the case of any automo- may contain information with respect to geo- bile, the sale of which is subject to any Feder- graphical or other differences in estimated Add003 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page6 of 68 §2006 TITLE 15-COMMERCE AND TRADE Page 1138 annual fuel costs. The Administrator of the (e) Consultation by Administrator witb other agency Federal Energy Administration shall publish personnel and distribute such booklets. In carrying out his duties under this section, <2> The EPA Administrator, not later than the EPA Administrator shall consult with the July 31, 1976, shall prescribe rules requiring Federal Trade Commission, the Secretary, and dealers to make available to prospective pur- the Federal Energy Administrator. chasers information compiled by the EPA Ad- ministrator under paragraph <1). <Pub. L. 92-513, title V, § 506, as added Pub. L. <3><A> In the case of dual energy automobiles 94-163, title III, § 301, Dec. 22, 1975, 89 Stat. and natural gas dual energy automobiles, addi- 910, and amended Pub. L. 95-619, title IV, tional information shall be contained in the §§ 40l(a), 403(a), (b), Nov. 9, 1978, 92 Stat. 3254, booklet published under paragraph <1 > indicat- 3256, 3257; Pub. L. 100-494, § 8<a>. Oct. 14, 1988, ing- 102 Stat. 2452. > (i) the energy efficiency and cost of oper- REFERENCES IN TExT ation of such automobiles when operated on The Federal Trade Commission Act, referred to in gasoline or diesel fuel as compared to such subsec. <c><l>, is act Sept. 26, 1914, ch. 311, 38 Stat. automobiles when operated on alcohol or nat- 717, as amended, which is classified generally to sub- ural gas, as the case may be; and chapter I <§ 41 et seq.) of chapter 2 of this title. For (ii) the driving range of such automobiles complete classification of this Act to the Code, see sec- when operated on gasoline or diesel fuel as tion 58 of this title and Tables. compared to such automobiles when operated AMENDMENTS on alcohol or natural gas, as the case may be. 1988-Subsec. <a><4>. Pub. L. 100-494, § S<a><l>. added <B> In the case of dual energy automobiles, par. <4>. the booklet published under paragraph <1> Subsec. (b)(3). Pub. L. 100-494, § S<a><2>. added par. shall also contain- (3). (i) information regarding the miles per 1978-Subsec. <a><l><C>, <D>. Pub. L. 95-619, § 403<a>. gallon achieved by such automobiles when op- added subpar. <C> and redesignated former subpar. <C> erated on alcohol; and as <D>. Subsec. <a><3>. Pub. L. 95-619, § 403(b), provided that (ii) a statement of explanation of how the the time and manner by which the tax statement re- information made available pursuant to this quired by par. <l><C> was to be included on any label paragraph can be expected to change when could be prescribed so as to take into account any spe- such automobile is operated on mixtures of cial circumstances or characteristics. alcohol and gasoline or diesel fuel. Subsec. <c><2>. Pub. L. 95-619, § 401<a><2>. authorized taking into account provisions of par. (3) when defin- (e) Violations ing "automobile" as used in this section. (1) A violation of subsection <a> of this section Subsec. <c><3>. Pub. L. 95-619, § 401<a><l>. added par. (3). shall be treated as a violation of section 3 of the Automobile Information Disclosure Act <15 EFFEcTivE DATE OF 1988 AMENDMENT U.S.C. 1232>. For purposes of the Federal Trade Section S<b> of Pub. L. 100-494 provided that: "The Commission Act [15 U.S.C. 41 et seq.] <other amendments made by subsection <a> [amending this than sections 5(m) and (18) 4 [15 U.S.C. 45(m) section] shall not apply with respect to any model and 57al, a violation of subsection <a> of this year, as such term is defined in section 501<12) of the section shall be treated as an unfair or decep- Motor Vehicle Information and Cost Savings Act <15 tive act or practice in or affecting commerce. U.S.C. 2001<12>>. before model year 1993." (2) As used in this section, the term "dealer" EFFEcTIVE DATE OF 1978 AMENDMENT has the same meaning as such term has in sec- tion 2<e> of the Automobile Information Disclo- Section 40Hc> of Pub. L. 95-619 provided that: "The sure Act (15 U.S.C. 123l(e)) except that in ap- amendment made by subsection <a> [adding subsec. <c><3> and amending subsec. (c)(2) of this section] shall plying such term to this section, the term be effective for automobiles manufactured in model "automobile" has the same meaning as such years after model year 1979." term has in section 2001(1) of this title <taking Section 403(c) of Pub. L. 95-619 provided that: "The into account paragraph (3) of this subsection>. amendments made by this section [amending subsec. (3) As used in this section, the term "automo- <a><l><C> of this section] shall not take effect unless bile" includes any automobile with a gross vehi- and until there is in effect a Federal tax imposed with cle weight rating of 8,500 pounds or less, not- respect to automobile fuel efficiency which is enacted withstanding any lack of determination re- during the Ninety-fifth Congress." quired of the Secretary under section TRANSFER OF FuNCTIONS 200Hl><B><ii> or (iii) of this title. The Federal Energy Administration was terminated (d) Creation of warranties and functions vested by law in the Administrator thereof were transferred to the Secretary of Energy Any disclosure with respect to fuel economy (unless otherwise specifically provided) by sections or estimated annual fuel cost which is required 715Ha> and 7293 of Title 42, The Public Health and to be made under the provisions of this section Welfare. shall not create an express or implied warranty CONSTRUCTION OF 1978 AMENDMENT under State or Federal law that such fuel econ- omy will be achieved, or that such cost will not Section 401(b) of Pub. L. 95-619 provided that: "The be exceeded, under conditions of actual use. amendment made by this section [amending subsec. <c> of this section] shall not be construed to affect the authority in section 506 of the Motor Vehicle Informa- • So In original. Probably should be "18)". tion and Cost Savings Act [this section] to require Add004 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page7 of 68 Page 1139 TITLE 15-COMMERCE AND TRADE §2008 labels or other information for fuel economy for auto- regulations prescribed by the Secretary of Transporta- mobiles rated in excess of 8,500 pounds gross vehicle tion, see section 6<d> of Pub. L. 96-425, set out as a weight." note under section 2002 of this title. STUDY ON VALIDITY OF FuEL EcoNOMY ESTIMATES; REPoRT TO CONGRESS SECriON REFERRED TO IN OTHER SECTIONS Section 404 of Pub. L. 95-619 provided that, within This section Is referred to in section 2008 of this six months after Nov. 9, 1978, the Environmental Pro- title. tection Agency submit to the Congress a detailed report on the degree to which fuel economy estimates § 2008. Civil penalty required to be used in new car fuel economy labeling and in the annual fuel economy mileage gulde re- (a) Penalty for violations; credit against penalty quired under this section provide a reallstlc estimate of average fuel economy likely to be achieved by the (1) If average fuel economy calculations re- driving public. ported under section 2003(d) of this title indi- cate that any manufacturer has violated section SECriON R!:FERRED TO IN OTHER SECTIONS 2007(a)(l) or <2> of this title, then <unless fur- This section Is referred to in sections 2002, 2003, ther measurements of fuel economy, further 2004, 2007, 2009 of this title. calculations of average fuel economy, or other information indicates there is no violation of § 2007. Unlawful conduct section 2007<a><l> or <2> of this title) the Secre- (a) Designation tary shall commence a proceeding under para- Subject to subsection (b) of this section, the graph <2> of this subsection. The results of such following conduct is unlawful: further measurements, further calculations, (1) the failure of any manufacturer to and any such other information, shall be pub- comply with any average fuel economy stand- lished in the Federal Register. ard applicable to such manufacturer under <2> If, on the record after opportunity for section 2002 of this title <other than section agency hearing, the Secretary determines that 2002<b> of this title), such manufacturer has violated section (2) the failure of any manufacturer to 2007(a)(l) or <2> of this title, or that any person comply with any average fuel economy stand- has violated section 2007<a)(3) of this title, the ard applicable to such manufacturer under Secretary shall assess the penalties provided section 2002<b> of this title, or for under subsection <b> of this section. Any in- <3> the failure of any person <A> to comply terested person may participate in any proceed- with any provision of this subchapter applica- ing under this paragraph. ble to such person <other than section 2002, (b) Amount of penalty; compromise or modification 2006<a>. 2010, or 2011 of this title), or <B> to comply with any standard, rule, or order ap- <1 ><A> Any manufacturer whom the Secretary plicable to such person which is issued pursu- determines under subsection <a> of this section ant to such a provision. to have violated a provision of section 2007(a)(1) of this title with respect to any (b) Exception model year, shall be liable to the United States A manufacturer shall not be considered to for a civil penalty equal to the amount obtained have engaged in unlawful conduct, or to have by multiplying $5 by (l) the number of tenths failed to comply with any fuel economy stand- of a mile per gallon by which the average fuel ard applicable to such manufacturer under sec- economy of the passenger automobiles manu- tion 2002 of this title, if the average fuel econo- factured by such manufacturer during such my of such manufacturer, after taking into ac- model year is exceeded by the applicable aver- count the credits then available to the manu- age fuel economy standard established under facturer under section 2002(l) of this title, section 2002<a> and <c> of this title, multiplied would result in the applicable standard being by the number of passenger automobiles manu- met or exceeded. factured by such manufacturer during such model year, reduced by <iD the credits then <Pub. L. 92-513, title V, § 507, as added Pub. L. available under section 2002<Z> of this title for 94-163, title III, § 301, Dec. 22, 1975, 89 Stat. such mo<J.el year. 911, and amended Pub. L. 96-425, § 6(a), Oct. 10, <B> Any manufacturer whom the Secretary 1980, 94 Stat. 1826.> determines under subsection <a> of this section CODIFICATION to have violated section 2007<a><2> of this title "This subchapter'', referred to in subsec. <a><3>, was shall be liable to the United States for a civil in the or1glnal "this part", meaning former part A, penalty equal to the amount obtained by multi- "Automotive Fuel Economy", of this subehapter, plying $5 by (i) the number of tenths of a mile which designation, the only part designation appear- per gallon by which the applicable average fuel ing in the subchapter, was struck out by section economy standard exceeds the average fuel 8<a><3> of Pub. L. 96-425. economy of automobiles to which such stand- AMENDMENTS ard applies, and which are manufactured by 1980-Pub. L. 96-425 designated existing provisions such manufacturer during the model year in as subsec. <a>. substituted "Subject to subsection <b> of which the violation oceurs, multiplied by the this section, the" for "The", and added subsec. (b). ·number of automobiles to which such standard applies .and which are manufactured by such EI'FEcTIVE DATE OF 1980 AMENDMENT manufacturer during such model year, reduced Amendment by Pub. L. 96-425 applicable to three by <iD the credits then available under section model years preceding model year of enactment, under 2002(l) of this title for such model year. Add005 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page8 of 68 §2008 TITLE 15-COMMERCE AND TRADE Page 1140 <2> Any person whom the Secretary deter- in accordance with paragraph <4>. and the Sec- mines under subsection <a> of this section to retary subsequently determines to modify such have violated a provision of section 2007<a><3> civil penalty pursuant to paragraph <3><C> the of this title shall be liable to the United States Secretary shall direct the court to remit the ap- for a civil penalty of not more than $10,000 for propriate amount of such penalty to such man- each violation. Each day of a continuing viola- ufacturer. tion shall constitute a separate violation for <6> A claim of the United States for a civil purposes of this paragraph. penalty assessed against a manufacturer under <3> The amount of such civil penalty shall be subsection (b)(l) of this section shall, in the assessed by the Secretary by written notice. case of the bankruptey or insolvency of such The Secretary shall have the discretion to com- manufacturer, be subordinate to any claim of a promise, modify, or remit, with or without con- creditor of such manufacturer which arises ditions, any civil penalty assessed under this from an extension of credit before the date on subsection against any person, except that any which the judgment in any collection action civil penalty assessed for a violation of section under this section becomes final <without 2007<a><l> or <2> of this title may be so compro- regard to paragraph <4)). mised, modified, or remitted only te the extent- (c) Review of penalty by interested person <A> necessary to prevent the insolvency or <1> Any interested person may obtain review bankruptcy of such manufacturer, of a determination <A> of the Secretary pursu- <B> such manufacturer shows that the vio- ant to which a civil penalty has been assessed lation of section 2007<a><l> or (2) of this title under subsection (b) of this section, or <B> of resulted from an act of God, a strike, or a. fire, or the Federal Trade Commission under subsec- <C> the Federal Trade Commission has cer- tion (b)(4) of this section, in the United States tified that modification of such penalty is Court of Appeals for the District of Columbia, necessary to prevent a substantial lessening or for any circuit wherein such person resides of competition, as determined under para- or has his principal place of business. Such graph (4). review may be obtained by filing a notice of appeal in such court within 30 days after the The Attorney General shall collect any civil date of such determination, and by simulta- penalty for which a manufacturer is liable neously sending a copy of such notice by certi- under this subsection in a civil action under fied mail to the Secretary or the Federal Trade subsection <c><2> of this section <unless the Commission, as the case may be. The Secretary manufacturer pays such penalty to the Secre- or the Commission, as the case may be, shall tary). promptly file in such court a certified copy of (4) Not later than 30 days after a determina- the record upon which such determination was tion by the Secretary under subsection <a><2> of made. Any such determination shall be re- this section that a manufacturer has violated viewed in accordance with chapter 7 of title 5. section 2007<a><l> or (2) of this title, such man- (2) If any person fails to pay an assessment of ufacturer may apply to the Federal Trade Com- a civil penalty after it has become a final and mission for a certification under this para- unappealable order, or after the appropriate graph. If the manufacturer shows and the Fed- court of appeals has entered final judgment in eral Trade Commission determines that modifi- favor of the Secretary, the Attorney General cation of the civil penalty for which such man- ufacturer is otherwise liable is necessary to pre- shall recover the amount for which the manu- vent a substantial lessening of competition in facturer is liable in any appropriate district that segment of the automobile industry sub- court of the United States. In such action, the ject to the standard with respect to which such validity and appropriateness of the final order penalty was assessed, the Commission shall so imposing the civil penalty shall not be subject certify. The certification shall specify the maxi- to review. mum amount that such penalty may be re- (d) Prescription of additional amount by rule duced. To the maximum extent practicable, the Commission shall render a decision with re- <l><A> The Secretary shall, by rule in accord- spect to an application under this paragraph ance with the provisions of this subsection and not later than 90 days after the application is subsection <e> of this section, substitute a filed with the Commission. A proceeding under higher amount for the amount per tenth of a this paragraph shall not have the effect of de- mile per gallon which would be used to calcu- laying the manufacturer's liability under this late the civil penalty under subsection (b)(l) of section for a civil penalty for more than 90 days this section in the absence of such rule, if the after such application is filed, but any payment Secretary finds that- made before a decision of the Commission (i) the additional amount of the civil penal- under this paragraph becomes final shall be ty which may be imposed under such rule will paid to the court in which the penalty is col- result in, or substantially further, substantial lected, and shall <except as otherwise provided energy conservation for automobiles in future in paragraph (5)), be held by such court, until model years for which such higher penalty 90 days after such decision becomes final <at may be imposed; and which time it shall be paid into the general (ti) subject te subparagraph <B>. such addi- fund of the Treasury), tional amount of civil penalty will not result <5> Whenever a civil penalty has been as- in substantial deleterious impacts on the sessed and collected from a manufacturer economy of the United States or of any State under this section, and is being held by a court or region of any State. Add006 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page9 of 68 Page 1141 TITLE 15-COMMERCE AND TRADE §2008 <B> Any findings under subparagraph <A><m <D> A transcript shall be kept of any such may be made only if the Secretary finds that it public hearing made in accordance with this is likely that- section and such transcripts and written com- (i) such additional amount of civil penalty ments shall be available to the public at the will not cause a significant increase in unem- cost of reproduction. ployment in any State or region thereof; <2> If any final rule is prescribed by the Sec- (ii) such additional amount will not adverse- retary after such public comment period under ly affect competition; and subsection <d> of this section it shall be pub- <iii> such additional amount will not cause a lished in the Federal Register, together with significant increase in automobile imports. each of the findings required by subsection <d> <2> Any rule under paragraph <1> may not of this section. provide that the amount per tenth of a mile per <3><A> Any person aggrieved by any final rule gallon used to calculate the civil penalty under under subsection <d> of this section may at any subsection <b><1> of this section be less than time before the 60th day after the date such $5.00 or more than $10.00. rule is published under paragraph <2> file a pe- <3> Any rule prescribed under paragraph <1> tition with the United States Court of Appeals shall be effective for the later of- for the circuit wherein such person resides, or <A> automobile model years beginning after has his principal place of business, for judicial model year 1981, or review thereof. A copy of the petition shall be <B> automobile model years beginning at forthwith transmitted by the clerk of the court least 18 months after such rule becomes final. to the Secretary. The Secretary thereupon (e) Publication of proposed rule; hearing; evidence; shall file in the court the written submissions publication of final rule; judicial review to, and transcript of, the written and oral pro- <l><A> After the Secretary of Transportation ceedings on which the rule was based, as pro- develops a proposed rule pursuant to subsection vided in section 2112 of title 28. <d> of this section, he shall publish such pro- <B> Upon the filing of the petition referred to posed rule in the Federal Register, together in paragraph <1 >. the court shall have jurisdic- with a statement of the basis for such rule, and tion to review the rule in accordance with chap- provide copies thereof to the manufacturers. ter 7 of title 5 and to grant appropriate relief as He shall then provide a period of public com- provided in such chapter. No rule may be af- ment on such rule of at least 45 days for writ- firmed unless supported by substantial evi- ten comments thereon. A copy of any such pro- dence. posed rule shall be transmitted by the Secre- <C> The judgment of the court affirming or tary to the Federal Trade Commission and the setting aside, in whole or in part, any such rule Secretary shall request such Commission to be final, subject to review by the Supreme comment thereon within the period provided to Court of the United States upon certiorari or the public concerning such proposed rule. certification as provided in section 1254 of title <B> After such written comment period, any 28. interested person, <including the Federal Trade <4> In the case of any information which is Commission> shall be afforded an opportunity provided the Secretary or the court during the to present oral data, views, and arguments at a consideration and review of any such rule and public hearing concerning such proposal. At which is determined to be confidential by the such hearing such interested person <including Secretary pursuant to the provision of section the Federal Trade Commission> shall have an 796<d> of this title, any disclosure of such infor- opportunity to question- mation by an officer or employee of the United <1> other interested persons who make oral States or of any department or agency thereof, presentations, except in an in camera proceeding by the Secre- <ii> employees and contractors of the United tary or the court, shall be deemed a violation of States who have made written or oral presen- section 1905 of title 18. tations or who have participated in the devel- <Pub. L. 92-513, title V, § 508, as added Pub. L. opment of the proposed rule or in the consid- 94-163, title III, § 301, Dec. 22, 1975, 89 Stat. eration thereof, and 911, and amended Pub. L. 95-619, title IV, § 402, <iii> experts and consultants who have pro- Nov. 9, 1978, 92 Stat. 3255; Pub. L. 96-425, vided information to any person who makes §§ 6(c), 8(f), Oct. 10, 1980, 94 Stat. 1827, 1829.) an oral presentation and which is contained in or referred to in such presentation; AMENDMENTs with respect to disputed issues of material fact, 1980-Subsec. <al<ll. Pub. L. 96-425, § 6<c>Ul, substi- except that the Secretary may restrict ques- tuted "section 2007<a>U> or (2)" for "section 2007<1> or tioning if he determines that such questioning <2>" in two places. is duplicative or is not likely to result in a Subsec. <al<2>. Pub. L. 96-425, § 6<cl<ll, substituted timely and effective resolution of such issues. "section 2007 <al<ll or (2)" for "section 2007(1) or (2)" Any oral or documentary evidence may be re- and "section 2007(al<3>" for "section 2007(3)". ceived, but the Secretary as a matter of policy Subsec. <a><3l. Pub. L. 96-425, § 6(cl<2>. struck out shall provide for the exclusion of irrelevant, im- par. <3> which related to passenger automobile fuel material, or unduly repetitious evidence. economy credits for eligible manufacturers. <C> A rule subject to this subsection may not Subsec. <bl<ll<Al. Pub. L. 96-425, §§ 6<cl<ll, (3), S<fl, substituted "section 2007<al<ll of this title" for "sec- be issued except on consideration of the whole tion 2007<1> of this title", inserted "with respect to record supported by, and in accordance with, any model year", substituted "the amount obtained by the reliable, probative, and substantial evi- multiplying $5 by (i) the number of tenths" for "(il $5 dence. for each tenth", substituted "multiplied by the Add007 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page10 of 68 §2009 TITLE 15-COMMERCE AND TRADE Page 1142 number" for "multiplied by (ll) the total number", and CODIFICATION inserted ", reduced by (11) the credits then available under section 2002(l) of this title for such model "This subchapter", referred to in subsec. <a>. was in year". the original "this part", meaning former part A, Subsec. (b)<l)(B). Pub. L. 96-425, § 6<c><l>, <3>, sub- "Automotive Fuel Economy", of this subchapter, stituted "section 2007<a><2> of this title" for "section which designation, the only part designation appear- 2007<2> of this title", "the amount obtained by multi- ing in the subchapter, was struck out by section plying $5 by (f) the number of tenths" for "(f) $5 for 8<a><3> of Pub. L. 96-425, Oct. 10, 1980, 94 Stat. 1828. each tenth", and "multiplled by the number" for "multiplied by <11> the total number", and inserted § 2010. Use of fuel efficient passenger automobiles by ", reduced by (ll) the credits then available under sec- Federal Government tion 2002(l) of this title for such model year". Subsec. <b><2>. Pub. L. 96-425, § 6<c><l>. substituted (a) Rules "section 2007<a><3>" for "section 2007<3>". The President shall, within 120 days after De- Subsec. (b)(3), <4>. Fub. L. 96-425, § 6<c><l>, substitut- cember 22, 1975, promulgate rules which shall ed "section 2007<a><l> or <2>" for "section 2007<1> or require that all passenger automobiles acquired <2>" wherever appearing. Subsec. <d><4>. Pub. L. 96-425, § 6<c><4>. struck out by all executive agencies in each fiscal year par. (4) which required that rules prescribed under which begins after December 22, 1975, achieve a subsec. (d)<l) of this section provide that the amount fleet average fuel economy for such year not per tenth of a mile per gallon used to calculate a less than- credit under subsec. <a><3> of this section for any <1> 18 miles per gallon, or model year be equal to the amount per tenth of a mile (2) the average fuel economy standard ap- per gallon applicable to the calculation of the civil penalty for which the credit was allowed. plicable under section 2002<a> of this title for 1978-Subsecs. (d), <e>. Fub. L. 95-619 added subsecs. the model year which includes January 1 of (d) and <e>. such fiscal year, EFFEcTIVE DATE OF 1980 AMENDMENT whichever is greater. Amendment by section 6<c> of Pub. L. 96-425 appli- (b) Definitions ·cable to three model years preceding model year of en- As used in this section: actment, under regulations prescribed by the Secre- tary of Transportation, see section 6<d> of Pub. L. <l> The term "fleet average fuel economy" 96-425, set out as a note under section 2002 of this means <A> the total number of passenger title. automobiles acquired in a fiscal year to which Amendment of subsec. <b><l><A> of this section by in- this section applies by all executive agencies serting "with respect to any model year" by section <excluding passenger automobiles designed to 8(f) of Pub. L. 96-425 effective Oct. 10, 1980, see sec- perform combat related missions for the tion 9 of Pub. L. 96-425, set out as a note under section Armed Forces or designed to be used in law 2001 of this title. enforcement work or emergency rescue work), SECI'ION REFERRED TO IN OTHER SECI'IONS divided by <B> a sum of terms, each term of This section is referred to in section 2002 of this which is a fraction created by dividing- title. (i) the number of passenger automobiles so acquired of a given model type, by § 2009. State laws (ii) the fuel economy of such model type. (a) Fuel economy standards <2> The term "executive agency" has the Whenever an average fuel economy standard same meaning as such term has for purposes established under this subchapter is in effect, of section 105 of title 5. no State or political subdivision of a State shall <3> The term "acquired" means leased for a have authority to adopt or enforce any law or period of 60 continuous days or more, or pur- regulation relating to fuel economy standards chased. or average fuel economy standards applicable <Pub. L. 92-513, title V, § 510, as added Pub. L. to automobiles covered by such Federal stand- 94-163, title III, § 301, Dec. 22, 1975, 89 Stat. ard. 915.) (b) Fuel economy disclosures DELEGATION OF FuNCTIONS Whenever any requirement under section 2006 of this title is in effect with respect to any Functions of the President under this section dele- automobile, no State or poiltical subdivision of gated to the Admlnlstrator of General Services, see a State shall have authority to adopt or enforce Section l<a) of Ex. Ord. No. 11912, Apr. 13, 1976, 41 any law or regulation with respect to the disclo- F.R. 15825, set out as a note under section 6201 of Title 42, The Public Health and Welfare. sure of fuel economy of such automobile, or of fuel cost associated with the operation of such SECTION REFERRED TO IN OTHER SECI'IONS automobile, if such law or regulation is not This section is referred to in section 2007 of this identical with such requirement. title. (c) State or political subdivision automobiles § 2011. Retrofit devices Nothing in this section shall be construed to prevent any State or political subdivision there- (a) Examination of fuel economy representations of from establishing requirements with respect The Federal Trade Commission shall estab- . to fuel economy of automobiles procured for its lish a program for systematically examining own use. fuel economy representations made with re- <Pub. L. 92-513, title V, § 509, as added Pub. L. spect to retrofit devices. Whenever the Com- 94-163, title III, § 301, Dec. 22, 1975, 89 Stat. mission has reason to believe that any such rep- 914.) resentation may be inaccurate, it shall request Add008 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page11 of 68 28 U.S.C. § 2461 note Federal Civil Penalties Inflation Adjustment Pub. L. 101–410, Oct. 5, 1990, 104 Stat. 890, as amended by Pub. L. 104–134, title III, §31001(s)(1), Apr. 26, 1996, 110 Stat. 1321–373; Pub. L. 105–362, title XIII, §1301(a), Nov. 10, 1998, 112 Stat. 3293; Pub. L. 114–74, title VII, §701(b), Nov. 2, 2015, 129 Stat. 599, provided that: "Short Title "Section 1. This Act may be cited as the 'Federal Civil Penalties Inflation Adjustment Act of 1990'. "Findings and Purpose "Sec. 2. (a) Findings. The Congress finds that– "(1) the power of Federal agencies to impose civil monetary penalties for violations of Federal law and regulations plays an important role in deterring violations and furthering the policy goals embodied in such laws and regulations; "(2) the impact of many civil monetary penalties has been and is diminished due to the effect of inflation; "(3) by reducing the impact of civil monetary penalties, inflation has weakened the deterrent effect of such penalties; and "(4) the Federal Government does not maintain comprehensive, detailed accounting of the efforts of Federal agencies to assess and collect civil monetary penalties. "(b) Purpose. The purpose of this Act is to establish a mechanism that shall– "(1) allow for regular adjustment for inflation of civil monetary penalties; "(2) maintain the deterrent effect of civil monetary penalties and promote compliance with the law; and "(3) improve the collection by the Federal Government of civil monetary penalties. Add009 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page12 of 68 "Definitions "Sec. 3. For purposes of this Act, the term– "(1) 'agency' means an Executive agency as defined under section 105 of title 5, United States Code, and includes the United States Postal Service; "(2) 'civil monetary penalty' means any penalty, fine, or other sanction that– "(A)(i) is for a specific monetary amount as provided by Federal law; or "(ii) has a maximum amount provided for by Federal law; and "(B) is assessed or enforced by an agency pursuant to Federal law; and "(C) is assessed or enforced pursuant to an administrative proceeding or a civil action in the Federal courts; and "(3) 'Consumer Price Index' means the Consumer Price Index for all-urban consumers published by the Department of Labor. "Civil Monetary Penalty Inflation Adjustment Reports "Sec. 4. (a) In General. Not later than July 1, 2016, and not later than January 15 of every year thereafter, and subject to subsections (c) and (d), the head of each agency shall– "(1) in accordance with subsection (b), adjust each civil monetary penalty provided by law within the jurisdiction of the Federal agency, except for any penalty (including any addition to tax and additional amount) under the Internal Revenue Code of 1986 [26 U.S.C. 1 et seq.] or the Tariff Act of 1930 [19 U.S.C. 1202 et seq.], by the inflation adjustment described under section 5 of this Act; and "(2) publish each such adjustment in the Federal Register. "(b) Procedures for Adjustments.– Add010 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page13 of 68 "(1) Catch up adjustment. For the first adjustment made under subsection (a) after the date of enactment of the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 [Nov. 2, 2015]– "(A) the head of an agency shall adjust civil monetary penalties through an interim final rulemaking; and "(B) the adjustment shall take effect not later than August 1, 2016. "(2) Subsequent adjustments. For the second adjustment made under subsection (a) after the date of enactment of the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, and each adjustment thereafter, the head of an agency shall adjust civil monetary penalties and shall make the adjustment notwithstanding section 553 of title 5, United States Code. "(c) Exception. For the first adjustment made under subsection (a) after the date of enactment of the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, the head of an agency may adjust the amount of a civil monetary penalty by less than the otherwise required amount if– "(1) the head of the agency, after publishing a notice of proposed rulemaking and providing an opportunity for comment, determines in a final rule that– "(A) increasing the civil monetary penalty by the otherwise required amount will have a negative economic impact; or "(B) the social costs of increasing the civil monetary penalty by the otherwise required amount outweigh the benefits; and "(2) the Director of the Office of Management and Budget concurs with the determination of the head of the agency under paragraph (1). "(d) Other Adjustments Made. If a civil monetary penalty subject to a cost-of-living adjustment under this Act is, during the 12 months preceding a required cost-of-living adjustment, increased by an amount greater than the amount of the adjustment required under Add011 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page14 of 68 subsection (a), the head of the agency is not required to make the cost-of-living adjustment for that civil monetary penalty in that year. "Cost-of-Living Adjustments of Civil Monetary Penalties "Sec. 5. (a) Adjustment. The inflation adjustment under section 4 shall be determined by increasing the maximum civil monetary penalty or the range of minimum and maximum civil monetary penalties, as applicable, for each civil monetary penalty by the cost-of-living adjustment. Any increase determined under this subsection shall be rounded to the nearest multiple of $1.– "(b) Definition.– "(1) In general. Except as provided in paragraph (2), for purposes of subsection (a), the term 'cost-of-living adjustment' means the percentage (if any) for each civil monetary penalty by which– "(A) the Consumer Price Index for the month of October preceding the date of the adjustment, exceeds "(B) the Consumer Price Index for the month of October 1 year before the month of October referred to in subparagraph (A). "(2) Initial adjustment.– "(A) In general. Subject to subparagraph (C), for the first inflation adjustment under section 4 made by an agency after the date of enactment of the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 [Nov. 2, 2015], the term 'cost-of-living adjustment' means the percentage (if any) for each civil monetary penalty by which the Consumer Price Index for the month of October, 2015 exceeds the Consumer Price Index for the month of October of the calendar year during which the amount of such civil monetary penalty was established or adjusted under a provision of law other than this Act. "(B) Application of adjustment. The cost-of-living adjustment described in subparagraph (A) shall be applied to the amount of the civil monetary penalty as it was most recently established or adjusted under a provision of law other than this Act. Add012 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page15 of 68 "(C) Maximum adjustment. The amount of the increase in a civil monetary penalty under subparagraph (A) shall not exceed 150 percent of the amount of that civil monetary penalty on the date of enactment of the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015. "Sec. 6. Any increase under this Act in a civil monetary penalty shall apply only to civil monetary penalties, including those whose associated violation predated such increase, which are assessed after the date the increase takes effect. "Sec. 7. Implementation and oversight enhancements "(a) OMB Guidance. Not later than February 29, 2016, not later than December 15, 2016, and December 15 of every year thereafter, the Director of the Office of Management and Budget shall issue guidance to agencies on implementing the inflation adjustments required under this Act. "(b) Agency Financial Reports. The head of each agency shall include in the Agency Financial Report submitted under OMB Circular A– 136, or any successor thereto, information about the civil monetary penalties within the jurisdiction of the agency, including the adjustment of the civil monetary penalties by the head of the agency under this Act. "(c) GAO Review. The Comptroller General of the United States shall annually submit to Congress a report assessing the compliance of agencies with the inflation adjustments required under this Act, which may be included as part of another report submitted to Congress." Add013 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page16 of 68 Page 747 TITLE 49--TRANSPORTATION §32909 as amended, which is classified generally to subchapter tion 32902(c)(2). The clerk of the court shall send I (§41 et seq.) of chapter 2 of Title 15, Commerce and immediately a copy of the petition to the Sec- Trade. For complete classification of this Act to the retary of Transportation or the Administrator Code, see section 58 of Title 15 and Tables. of the Environmental Protection Agency, who- The date of the enactment of the Ten-in-Ten Fuel ever prescribed the regulation. The Secretary or Economy Act, referred to in subsec. (g)(1)(A)(i), (4), is the date of enactment of subtitle A (§§101-113) of title the Administrator shall file with the court a I of Pub. L. 110-140, which was approved Dec. 19, 2007. record of the proceeding in which the regulation Subsection (h) of section 32905 of this title, referred was prescribed. to in subsec. (g)(3), was redesignated (f) by Pub. L. (c) ADDITIONAL PROCEEDINGS.-(1) When re- 110-140, title I, § 109(b)(4), Dec. 19, 2007, 121 Stat. 1506. viewing a regulation under subsection (a)(1) of this section, the court, on request of the peti- AMENDMENTS tioner, may order the Secretary or the Adminis- 2007-Subsec. (g). Pub. L. 110-140 added subsec. (g). trator to receive additional submissions if the 1994-Subsec. (b)(1). Pub. L. 103-429 inserted "on the court is satisfied the additional submissions are automobile" after "maintain the label" in introduc- material and there were reasonable grounds for tory provisions. not presenting the submissions in the proceed- EFFECTIVE DATE OF 2007 AMENDMENT ing before the Secretary or Administrator. (2) The Secretary or the Administrator may Amendment by Pub. L. 110-140 effective on the date amend or set aside the regulation, or prescribe a that is 1 day after Dec. 19, 2007, see section 1601 of Pub. new regulation because of the additional sub- L. 110-140, set out as an Effective Date note under sec- tion 1824 of Title 2, The Congress. missions presented. The Secretary or Adminis- trator shall file an amended or new regulation PERIODIC REVIEW OF ACCURACY OF FUEL ECONOMY and the additional submissions with the court. LABELING PROCEDURES The court shall review a changed or new regula- Pub. L. 110-140, title I, §110, Dec. 19, 2007, 121 Stat. tion. 1506, provided that: "Beginning in December 2009, and (d) SUPREME COURT REVIEW AND ADDITIONAL not less often than every 5 years thereafter, the Admin- REMEDIES.-A judgment of a court under this istrator of the Environmental Protection Agency, in section may be reviewed only by the Supreme consultation with the Secretary of Transportation, Court under section 1254 of title 28. A remedy shall- under subsections (a)(1) and (c) of this section is "(1) reevaluate the fuel economy labeling proce- in addition to any other remedies provided by dures described in the final rule published in the Fed- law. eral Register on December 27, 2006 (71 Fed. Reg. 77,872; 40 CFR parts 86 and 600) to determine whether (Pub. L. 103-272, § l(e), July 5, 1994, 108 Stat. 1070; changes in the factors used to establish the labeling Pub. L. 103-429, § 6(38), Oct. 31, 1994, 108 Stat. procedures warrant a revision of that process; and 4382.) "(2) submit a report to the Committee on Com- merce, Science, and Transportation of the Senate and HISTORICAL AND REVISION NOTES the Committee on Energy and Commerce of the PUB. L. 103-272 House of Representatives that describes the results of the reevaluation process." Revised Section Source (U.S. Code) Source (Statutes at Large) EFFECTIVE DATE OF 1994 AMENDMENT 32909(a)(1) 15:2004(a) (1st sen- .. Oct. 20, 1972, Pub. L. 92-513, Amendment by Pub. L. 103-429 effective July 5, 1994, tence words be- 86 Stat. 947, §504; added fore 4th and after Dec. 22, 1975, Pub. L. see section 9 of Pub. L. 103-429, set out as a note under 6th commas, last 94-163, §301, 89 Stat. 908. section 321 of this title. sentence). 32909(a)(2) .. 15:2004(a) (4th sen- § 32909. Judicial review of regulations tence). 15:2008(e)(3)(A) (1st Oct. 20, 1972, Pub. L. 92-513, sentence less 86 Stat. 947, §508(e)(3); (a) FILING AND VENUE.-(1) A person that may 15th-31st words), added Nov. 9, 1978, Pub. L. be adversely affected by a regulation prescribed (B). 95-619, §402, 92 Stat. 3256. 32909(b) ......15:2004(a) (1st sen- in carrying out any of sections 32901-32904 or tence words be- 32908 of this title may apply for review of the tween 4th and 6th commas, 2d, 3d regulation by filing a petition for review in the sentences). United States Court of Appeals for the District 15:200(e)(3)(A) (1st sentence 15th-31st of Columbia Circuit or in the court of appeals of words, 2d, last the United States for the circuit in which the sentences). 32909(c) ......15:2004(b). person resides or has its principal place of busi- 32909(d) ......15:2004(c), (d). 15:2008(e)(3)(C). ness. (2) A person adversely affected by a regulation In this section, the word "regulation" is substituted prescribed under section 32912(c)(1) of this title for "rule" for consistency in the revised title and be- may apply for review of the regulation by filing cause the terms are synonymous. a petition for review in the court of appeals of In subsection (a)(1) and (2), the words "apply for re- the United States for the circuit in which the view" are added for clarity. In subsection (a)(1), the text of 15:2004(a) (last sen- person resides or has its principal place of busi- tence) is omitted because 15:2002(d) is executed and is ness. not a part of the revised title. (b) TIME FOR FILING AND JUDICIAL PROCE- In subsection (a)(2), the words "adversely affected" DURES.-The petition must be filed not later are substituted for "aggrieved", and the words "regula- than 59 days after the regulation is prescribed, tion prescribed" are substituted for "final rule", for except that a petition for review of a regulation consistency in the revised title and with other titles of the United States Code. The text of 15:2004(a) (4th sen- prescribing an amendment of a standard submit- tence) and 2008(e)(3)(B) is omitted because 5:ch. 7 ap- ted to Congress under section 32902(c)(2) of this plies unless otherwise stated. title must be filed not later than 59 days after In subsection (b), the words "a regulation prescribing the end of the 60-day period referred to in sec- an amendment of a standard submitted to Congress" Add014 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page17 of 68 §32910 TITLE 49-TRANSPORTATION Page 748 are substituted for "or in the case of an amendment information obtained under this chapter (except submitted to each House of Congress" in 15:2004(a), and information obtained under section 32904(c) of the words "the Secretary of Transportation or the Ad- ministrator of the Environmental Protection Agency, this title) under section 552 of title 5. However, whoever prescribed the regulation" are substituted for the Secretary or Administrator may withhold "the officer who prescribed the rule", for clarity. The information under section 552(b)(4) of title 5 words "a record of the proceeding in which the regula- only if the Secretary or Administrator decides tion was prescribed" are substituted for "the written that disclosure of the information would cause submissions and other materials in the proceeding upon significant competitive damage. A matter re- which such rule was based" in 15:2004(a) and "the writ- ferred to in section 552(b)(4) and relevant to an ten submissions to, and transcript of, the written and administrative or judicial proceeding under this oral proceedings on which the rule was based, as pro- chapter may be disclosed in that proceeding. A vided in section 2112 of title 28, United States Code" in 15:2008(e)(3) for consistency and to eliminate unneces- measurement or calculation under section sary words. 32904(c) of this title shall be disclosed under sec- In subsection (c)(1), the words "on request of the peti- tion 552 of title 5 without regard to section tioner" are substituted for "If the petitioner applies to 552(b). the court in a proceeding under subsection (a) of this (d) REGULATIONS.-The Administrator may section for leave to make additional submissions", and prescribe regulations to carry out duties of the the words "to receive additional submissions" are sub- Administrator under this chapter. stituted for "to provide additional opportunity to make such submissions", for clarity. (Pub. L. 103-272, §l(e), July 5, 1994, 108 Stat. 1070; In subsection (c)(2), the words "amend ... the regu- Pub. L. 103-429, §6(39), Oct. 31, 1994, 108 Stat. lation" and "amended. . . regulation" are substituted 4382.) for "modify ... the rule" and "modified ... rule", re- spectively, for consistency in the chapter and because HISTORICAL AND REVISION NOTES "regulation" is synonymous with "rule". PUB. L. 103-272 In subsection (d), the words "affirming or setting aside, in whole or in part" are omitted as surplus. The Revised Section Source (U.S. Code) Source (Statutes at Large) words "and not in lieu of" in 15:2004(d) are omitted as surplus. 32910(a) ...... 15:2005(b)(1), (3). Oct. 20, 1972, Pub. L. 92-513, 86 Stat. 947, §505(b), (d); PUB. L. 103-429 added Dec. 22, 1975, Pub. L. 94-163, §301, 89 Stat. 909. This amends 49:32909(a)(1) to correct an erroneous 32910(b) ...... 15:2005(b)(2). 32910(c) ...... 15:2005(d). cross-reference. 32910(d) ...... (no source). AMENDMENTS In subsection (a)(1), before clause (A), the words "or 1994-Subsec. (a)(1). Pub. L. 103-429 substituted "any their duly designated agents" are omitted as surplus of sections 32901-32904" for "section 32901-32904". because of 49:322(b) and section 3 of Reorganization EFFECTIVE DATE OF 1994 AMENDMENT Plan No. 3 of 1970 (eff. Dec. 2, 1970, 84 Stat. 2089). In clause (A), the words "inspect and copy records of any Amendment by Pub. L. 103-429 effective July 5, 1994, person" are substituted for "require, by general or spe- see section 9 of Pub. L. 103-429, set out as a note under cial orders, that any person ... (B) provide ... access section 321 of this title. to (and for the purpose of examination, the right to copy) any documentary evidence of such person" to § 32910. Administrative eliminate unnecessary words. The words "which is rel- evant to any functions of the Secretary or the EPA Ad- (a) GENERAL POWERS_-(1) In carrying out this ministrator under this subchapter" are omitted as cov- chapter, the Secretary of Transportation or the ered by "In carrying out this chapter". In clause (B), Administrator of the Environmental Protection the word "order" is substituted for "require, by general Agency may- or special orders", and the words "including reports or (A) inspect and copy records of any person at answers under oath" are substituted for "Such reports reasonable times; and answers shall be made under oath or otherwise", to (B) order a person to file written reports or eliminate unnecessary words. The words "in such form answers to specific questions, including re- as the Secretary or EPA Administrator may prescribe" and "shall be filed with the Secretary or the EPA Ad- ports or answers under oath; and ministrator within such reasonable period as either (C) conduct hearings, administer oaths, take may prescribe" are omitted as surplus because of sub- testimony, and subpena witnesses and records section (d) of this section and 49:322(a). The words "re- the Secretary or Administrator considers ad- lating to any function of the Secretary or the EPA Ad- visable. ministrator under this subchapter" are omitted as sur- plus. In clause (C), the words "sit and act at such times (2) A witness summoned under paragraph and places" are omitted as being included in "conduct (1)(C) of this subsection is entitled to the same hearings". The words "subpena witnesses" are sub- fee and mileage the witness would have been stituted for "require, by subpena, the attendance and paid in a court of the United States. testimony of such witnesses" to eliminate unnecessary (b) CIVIL ACTIONS To ENFORCE.-A civil action words. In subsection (b), the words "A civil action to enforce to enforce a subpena or order of the Secretary or a subpena or order of the Secretary or Administrator Administrator under subsection (a) of this sec- under subsection (a) of this section may be brought in tion may be brought in the district court of the the district court of the United States for the judicial United States for any judicial district in which district in which the proceeding by the Secretary or the proceeding by the Secretary or Adminis- Administrator was conducted" are substituted for trator is conducted. The court may punish a 15:2005(b)(2) (1st sentence) for consistency and to elimi- failure to obey an order of the court to comply nate unnecessary words. In subsection (c), the words "to the public" are omit- with the subpena or order of the Secretary or ted as surplus. The words "However, the Secretary or Administrator as a contempt of court. the Administrator may withhold information" are sub- (c) DISCLOSURE OF INFORMATION.-The Sec- stituted for "except that information may be withheld retary and the Administrator each shall disclose from disclosure" for clarity. Add015 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page18 of 68 UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT NATURAL RESOURCES DEFENSE COUNCIL, INC., et al., Petitioners, v. Case No. 17-2780 NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION, et al., Respondents. DECLARATION OF LUKE TONACHEL I, Luke Tonachel, state and declare as follows: 1. I am the Director of the Clean Vehicles and Fuels Project at the Natural Resources Defense Council (NRDC). I have been employed by NRDC for the past 13 years. I have personal knowledge of the subject matter of this declaration and, if called as a witness, could and would competently testify as to its contents. 2. I received my Bachelor of Science Degree in Mechanical Engineering from the University of Rochester and my Master of Public Policy Degree from the University of California, Berkeley. 3. I have extensive professional experience working on clean transportation policies at the state and federal level. I have provided detailed technical comments on clean and efficient vehicle regulatory policies, 1 Add016 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page19 of 68 such as the Corporate Average Fuel Economy standards, through proceedings conducted by the National Highway Traffic Safety Administration and the Environmental Protection Agency and state environmental and utility regulatory agencies. I have conducted detailed analysis of environmental and economic impacts to support comments and testimony before the agencies and have been a lead author of recent reports including Supplying Ingenuity II: U.S. Suppliers of Key Clean, Fuel-Efficient Vehicle Technologies by NRDC and the BlueGreen Alliance and the Environmental Assessment of a Full Electric Transportation Portfolio by NRDC and the Electric Power Research Institute. 4. For decades, a core part of NRDC's work has been decarbonizing and cleaning up transportation sector emissions, through strengthening fuel economy and carbon-pollution standards for passenger vehicles and heavy- duty trucks, promoting policies encouraging the adoption of electric vehicles, and advocating for cleaner fuels. Our staff relies on various tools to achieve these goals, ranging from education and advocacy at the state and federal level to litigation. 5. Ensuring strong Corporate Average Fuel Economy (CAFE) standards is an essential part of our transportation work to reduce reliance on petroleum and associated pollution. Our advocacy on CAFE standards has included participating and submitting comments in the following rulemakings: Reforming the Automobile Fuel Economy Standards Program 2 Add017 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page20 of 68 (Docket No. 2003-16128); Average Fuel Economy Standards for Light Trucks Model Years 2008-2011 (Docket No. 2006-24306); Average Fuel Economy Standards for Passenger Cars and Light Trucks, Model Years 2011-2015 (Docket No. NHTSA-2008-0089) and the accompanying environmental review process; Light-Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards for Model Years 2012-2016 (Docket No. EPA-HQ-OAR-2009-0472; NHTSA-2009-0059); and 2017 and Later Model Year Light-Duty Vehicle Greenhouse Gas Emissions and Corporate Average Fuel Economy Standards (Docket No. EPA-HQ-OAR-2010- 0799; NHTSA-2010-0131) and the accompanying environmental review process. NRDC also helped litigate Center for Biological Diversity v. National Highway Traffic Safety Administration, 538 F.3d 1172 (9th Cir. 2008), which challenged the 2006 final rule setting CAFE standards for model years 2008- 2011 and the environmental analysis accompanying the rule. 6. The National Highway Traffic Safety Administration (NHTSA) enforces compliance with its CAFE standards by imposing civil monetary penalties on manufacturers that violate the standards. 7. NHTSA uses the following formula to calculate the appropriate penalty: (the civil penalty rate) times (each tenth of a mile per gallon by which the manufacturer's fleet falls short of the applicable CAFE standard) times (the number of vehicles in the manufacturer's non-compliant fleet). 3 Add018 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page21 of 68 8. The Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 requires federal agencies to adjust their civil penalties for inflation, to maintain the deterrent effect of these penalties and promote compliance with the law. Pursuant to this requirement, NHTSA in December 2016 raised the penalty rate to $14 for Model Years 2019 and after. NHTSA had last adjusted the penalty rate to account for inflation in 1997, from $5 to $5.50. 9. Incentivizing manufacturer compliance with CAFE standards depends on a penalty structure which is strong enough to cause manufacturers to improve the fuel economy of new passenger vehicles rather than to pay a fine. 10. NHTSA's own data underscores the importance of an appropriately-designed penalty. Based on data from NHTSA's Public Information Center and its Projected Fuel Economy Performance Report, NHTSA has projected that, as CAFE standards continue to rise, more manufacturers are expected to fall short of the standards in Model Years (MY) 2016 and 2017, when the penalty rate is only $5.50. NRDC used this data to prepare Figure 1 below. Moving forward, it will become increasingly important to ensure that the penalty is strong enough to incentivize greater compliance. 4 Add019 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page22 of 68 Figure 1: CAFE Actual versus Standard History and Near-Term Projections 11. NRDC's analysis of the CAFE penalty adjustment shows that $14 per tenth of a mile provides an appropriate regulatory incentive by making it more economically attractive for manufacturers to meet the standards than to pay the penalty. We based our analysis on the outputs of NHTSA's own publicly available Compliance and Effects Modeling System1 used to assess CAFE standards (commonly referred to as "Volpe model"), and which utilizes the agency's updated set of assumptions under the Midterm Evaluation process as part of the Technical Assessment Report (TAR 2016).2 1Available at https://www.nhtsa.gov/corporate-average-fuel- economy/compliance-and-effects-modeling-system. 2Available at https://www.epa.gov/regulations-emissions-vehicles-and- engines/midterm-evaluation-light-duty-vehicle-greenhouse-gas#TAR. 5 Add020 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page23 of 68 12. Based on the results of the Volpe model runs, passenger vehicle and light truck manufacturers are estimated to achieve a fleetwide average fuel economy of 30.9 miles per gallon (mpg) in MY2016. For MY2019, the same manufacturers are estimated to achieve an industry fleetwide average of 34.7 mpg—or an increase of roughly 4 mpg compared to MY2016. For MY2020, the estimated fleetwide average is 35.4 mpg—an increase of 4.5 mpg above MY2016. 13. Using the NHTSA Volpe model, which includes the agency's updated technology cost inputs from 2016, NRDC calculated the marginal cost of compliance for improving fuel economy beyond the MY2016 levels. NRDC also confirmed the marginal costs represented by the Volpe model by conducting a quadratic regression for the fuel economy cost curve. As shown in Table 1 below, which summarizes these marginal cost results, improving efficiency by 1 mpg would cost approximately $107 per vehicle; improving efficiency by 2 mpg would cost an additional $114 above the initial $107; and so on. Table 1: Marginal Cost Results Marginal Marginal MPG Cost Cost Increase ($/MPG) ($/0.1MPG) 1 107 10.7 2 114 11.4 3 120 12.0 4 126 12.6 5 132 13.2 6 139 13.9 7 145 14.5 6 Add021 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page24 of 68 14. Thus, with a penalty rate of $14 per tenth of a mile per gallon (or $140 per mpg), it would be more economically attractive for manufacturers to improve fuel economy by 4 mpg to meet the MY2019 achieved levels (as compared to MY2016) than to pay the penalty. Conversely, with a penalty rate of $5.50 per tenth of a mile per gallon (or $55 per mpg) it would be more economically attractive to not adopt fuel economy improvements and to pay the penalty instead. The same holds true for the 4.5 mpg increase required to meet the MY2020 levels. 15. NHTSA's Volpe model further confirms that the updated penalty rate of $14 would improve compliance. Using the Volpe model, NRDC modeled two scenarios: (a) where the penalty rate remained at $5.50 ("Flat Penalty CAFE"); and (b) where the updated penalty rate of $14 applies in MY2019 and after ("Increased Penalty CAFE"). NRDC also adjusted the model to assume that manufacturers will behave in an economically rational manner and choose to pay the penalty when it is less expensive than the costs of compliance. As illustrated in Figure 2 below, NRDC found that a penalty rate of $5.50 leads to under-compliance with the CAFE standards, while the updated penalty rate of $14 incentivizes compliance. 7 Add022 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page25 of 68 Figure 2: Effects of Penalty on Full Manufacturer Penalty Response 16. Applying the $14 penalty rate not only induces manufacturer compliance, it also brings significant net benefits to consumers. One output from the Volpe model is a summary of the social costs and benefits of a particular set of inputs. NRDC used two different Volpe model runs to compare the net societal benefits of a $14 penalty rate to those of a $5.50 penalty rate. The model shows that the societal benefits of a $14 penalty rate (i.e., fuel savings, decreased refueling time, greater energy security, decreased pollution) greatly outweigh the societal costs (i.e., technology and maintenance costs, safety and congestion issues), when that penalty rate is applied to MY2019 and beyond. Table 2: Economic Impact of $14 Penalty Rate with Full Manufacturer Penalty Response (Nominal $M) (Nominal $M) 2018 2019 2020 2021 2022 2023 Social Costs 393 977 1,643 2,123 2,141 2,209 Societal 1,234 3,054 4,945 6,047 5,931 6,399 Benefits Net Benefit 841 2,077 3,303 3,924 3,789 4,190 8 Add023 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page26 of 68 17. By contrast, as shown in Table 3 below, the net benefits to society are far lower when the penalty rate is only $5.50. A penalty rate of $14 would result in $1.81 billion greater net benefits in 2019 than would a penalty rate of $5.50. Table 3: Economic Impact of Increased vs Flat Penalty (Nominal $M) 2L0llt9 2\0.20 2021 ~t.2! !21:.23 Social Costs 56 114 221 437 641 754 Societal 175 381 728 1,367 1,981 2,334 Benefits Net Benefit 119 267 507 931 1,340 1,580 18. Rolling back the CAFE penalty rate to $5.50 weakens an important deterrent for manufacturer non-compliance, disadvantages consumers by reducing the number of more fuel-efficient vehicle choices in the marketplace, and subjects the public to additional emissions of dangerous air pollutants, including greenhouse gases. The updated penalty rate of $14 sends the right signals to manufacturers, spurring them to improve the efficiency of their fleets to meet the fuel-economy standards, rather than allowing them an easy out if they fail to comply. The $14 penalty rate should be left in place. I declare under penalty of perjury that the foregoing is true and correct to the best of my knowledge and belief. Executed on October J1_, 2017, in New York, New York. Luke Tonachel 9 Add024 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page27 of 68 UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT NATURAL RESOURCES DEFENSE COUNCIL, INC., et aL, Petitioners, v. Case No. 17-2780 NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION, et al., Respondents. DECLARATION OF GINA TRUJILLO I, Gina Trujillo, state and declare as follows: 1. I am the Director of Membership at the Natural Resources Defense Council (NRDC). I have served in that role since January 1, 2015 and I have worked in NRDC's membership department for more than 23 years. I have personal knowledge of the subject matter of this declaration, and if called as a witness, could and would competently testify as to its contents. 2. My duties include supervising the maintenance of membership records and preparation of materials that NRDC distributes tp members and prospective members. Those materials describe NRDC and identify its mission. I am familiar with NRDC's mission statement and its priorities. 1 Add025 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page28 of 68 3. NRDC is a membership organization incorporated under the laws of the State of New York. It is recognized as a not-for-profit corporation under section 501(c)(3) of the United States Internal Revenue Code. NRDC's primary office is in New York City. 4. NRDC has over 500,000 members nationwide. When a person becomes a member of NRDC, that person authorizes NRDC to take legal action on his or her behalf to protect the environment and public health. 5. NRDC's mission is to "safeguard the earth- its people, its plants and animals, and the natural systems on which all life depends." Cleaning up the transportation and energy sector is a key part of carrying out this mission statement, and NRDC engages in various forms of advocacy on this front, from participating in regulatory proceedings at the state and federal level to engaging in litigation when necessary as well. I declare under penalty of perjury that the foregoing is true and correct to the best of my knowledge and belief. Exe(:!uted on September 26, 2017, in New York, New York. Gina Trujillo 2 Add026 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page29 of 68 1 DECLARATION OF KASSIA R. SIEGEL 2 I, Kassia R. Siegel, declare as follows: 3 1. I am the director of the Center for Biological Diversity's Climate Law Institute. I 4 have personal knowledge of the facts and statements contained herein and, if called as a witness, 5 could and would competently testify to them. 6 2. The Center for Biological Diversity (the "Center") is a non-profit corporation with 7 offices in California and throughout the United States. The Center works to protect wild places 8 and their inhabitants. The Center believes that the health and vigor of human societies and the 9 integrity and wildness of the natural environment are closely linked. Combining conservation 10 biology with litigation, policy advocacy, and strategic vision, the Center is working to secure a 11 future for animals and plants hovering on the brink of extinction, for the wilderness they need to 12 survive, and by extension, for the spiritual welfare of generations to come. In my role as director 13 of the Center's Climate Law Institute, I oversee all aspects of the Center's climate and air quality 14 work. 15 3. The Center works on behalf of it members, who rely upon the organization to 16 advocate for their interests in front of state, local and federal entities, including EPA and the 17 courts. The Center has approximately 61,400 members. 18 4. The Center has developed several different practice areas and programs, including 19 the Climate Law Institute, an internal institution with the primary mission of curbing global 20 warming and other air pollution, and sharply limiting its damaging effects on endangered species, 21 their habitats, and human health for all of us who depend on clean air, a safe climate, and a healthy 22 web of life. 23 5. Global warming represents the most significant and pervasive threat to biodiversity 24 worldwide, affecting both terrestrial and marine species from the tropics to the poles. Absent 25 major reductions in greenhouse gas emissions, by the middle of this century upwards of 35 percent 26 of the earth's species could be extinct or committed to extinction as a result of global warming. 27 With even moderate warming scenarios producing sufficient sea level rise to largely inundate 28 otherwise "protected" areas like the Everglades and the Northwest Hawaiian Islands, climate Declaration of Kassia R. Siegel Page 1 Add027 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page30 of 68 1 change threatens to render many other biodiversity conservation efforts futile. To prevent 2 extinctions from occurring at levels unprecedented in the last 65 million years, emissions of 3 carbon dioxide and other greenhouse gases must be reduced deeply and rapidly. Given the lag 4 time in the climate system and the likelihood that positive feedback loops will accelerate global 5 warming, leading scientists have warned that we have only a few decades, at most, to significantly 6 reduce greenhouse gas emissions if we are to avoid catastrophic effects. Deep and immediate 7 greenhouse gas reductions are required if we are to save many species which the Center is 8 currently working to protect, including but not limited to the polar bear, Pacific walrus, bearded 9 seal, ringed seal, ribbon seal, Kittlitz's murrelet, American pika, Emperor penguin, and many 10 species of corals. Leading scientists have also stated that levels of carbon dioxide, the most 11 important greenhouse gas, must be reduced to no more than 350 parts per million (ppm) and likely 12 less than that, "to preserve a planet similar to that on which civilization developed and to which 13 life on Earth is adapted" (J. Hansen et al., Target Atmospheric CO2: Where Should Humanity 14 Aim?, 2 Open Atmospheric Sci. J. 217, 218 (2008)). 15 6. One of the Climate Law Institute's top priorities is the full and immediate use of 16 the Clean Air Act to rein in greenhouse gases and other pollutants. The Clean Air Act is our 17 strongest and best existing tool for doing so, and we have long worked to enforce the Clean Air 18 Act's mandates to accomplish this goal. For example, the Center was a Plaintiff in Massachusetts 19 vs. EPA, which resulted in the landmark Supreme Court decision finding that greenhouse gases are 20 pollutants under the Clean Air Act, which ultimately led to EPA's first-ever rulemaking to reduce 21 greenhouse gas emissions from passenger cars and light trucks under section 202. That rulemaking 22 is comprised of the Endangerment and Cause or Contribute Findings for Greenhouse Gases 23 Under Section 202(a) of the Clean Air Act, 74 Fed. Reg. 66,496 (Dec. 15, 2009) ("Endangerment 24 Finding"), and the Light-Duty Vehicle Greenhouse Gas Emission Standards and Corporate 25 Average Fuel Economy Standards, 75 Fed. Reg. 25,324, 25,397 (May 7, 2010), updated twice 26 since then, the last time by EPA and the National Highway Traffic Safety Administration through 27 2025, 2017 and Later Model year Light-Duty Vehicle Greenhouse Gas Emissions and Corporate 28 Average Fuel Economy Standards, Final Rule, 77 Fed. Reg. 62624 (Oct. 15, 2012). EPA affirmed Declaration of Kassia R. Siegel Page 2 Add028 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page31 of 68 1 these latest light-duty vehicle standards in a mid-term evaluation. Final Determination on the 2 Appropriateness of the Model Year 2022-2025 Light-Duty Vehicle Greenhouse Gas Emissions 3 Standards under the Midterm Evaluation (January 2018), available at 4 https://nepis.epa.gov/Exe/ZyPDF.cgi?Dockey=P100QQ91.pdf. The Center submitted comments to 5 each of those successor light duty vehicle rules, as well as to the first medium duty/heavy duty 6 vehicle rule and its proposed successor, the Greenhouse Gas Emissions and Fuel Efficiency 7 Standards for Medium- and Heavy-Duty Engines and Vehicles, Phase 2; Proposed Rule, 80 Fed. 8 Reg. 40138 (July 13, 2015). 9 7. EPA's rulemaking to reduce greenhouse gases from passenger vehicles preceded 10 significant additional regulatory activity for greenhouse gases under other Clean Air Act 11 programs, including rulemakings that enforce the Clean Air Act's PSD permitting program and 12 best available control technology ("BACT") requirements for greenhouse gases emitted by 13 stationary sources and implementation of New Source Performance Standards for various 14 industrial facilities. E.g., Prevention of Significant Deterioration and Title V Greenhouse Gas 15 Tailoring Rule, 75 Fed. Reg. 31,514 (2010). EPA's rulemakings were upheld in 2012 in Coalition 16 for Responsible Regulation v. EPA (D.C. Cir. 2012) 684 F.3d 102, a matter in which the Center 17 submitted an amicus brief. The Supreme Court affirmed Coalition for Responsible Regulation in 18 part, upholding EPA's authority to require BACT for greenhouse gas emissions from facilities that 19 must obtain PSD permits due to their potential to emit non-greenhouse gas pollutants. See Util. 20 Air Reg. Group v. EPA, 573 U.S. __, 134 S. Ct. 2427, 2449 (2014). 21 8. We have also worked to obtain an endangerment finding and emission standards 22 for greenhouse gases from aircraft for nearly a decade. In 2007, we and others petitioned EPA to 23 issue an endangerment finding and greenhouse gas standards for aircraft under Clean Air Act 24 section 231. When EPA failed to respond, we and others sued EPA for unreasonable delay in 25 2010, and obtained a court order requiring EPA to undertake an endangerment finding for aircraft 26 in 2011. Center for Biological Diversity v. EPA, 794 F. Supp. 2d 151 (D.D.C. 2011). When EPA 27 failed to act, we notified it of our intent to sue for unreasonable delay in 2014. In 2015, EPA 28 released a proposed endangerment finding and an advance notice of proposed rulemaking for Declaration of Kassia R. Siegel Page 3 Add029 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page32 of 68 1 aircraft greenhouse gases, Proposed Finding That Greenhouse Gas Emissions from Aircraft Cause 2 or Contribute to Air Pollution That May Reasonably Be Anticipated To Endanger Public Health 3 and Welfare and Advance Notice of Proposed Rulemaking, Proposed Rule, 80 Fed. Reg. 37758 4 (July 1, 2015). When EPA failed to finalize the endangerment finding, we filed a second lawsuit in 5 April 2016 to compel EPA to act. Center for Biological Diversity v. EPA, No. 1:16-CV-00681. 6 On August 15, 2016, EPA issued the Aircraft Endangerment Finding. 7 9. We also commented on EPA's proposed rulemakings to set standards and 8 guidelines for greenhouse gas emissions from new, modified/reconstructed, and existing power 9 plants under Clean Air Act sections 111(b) and 111(d). (Center comments, EPA- EPA-HQ-OAR- 10 2011-0660-10171 [June 22, 2012]; HQ-OAR-2013-0495-10119 [May 9, 2014]; EPA-HQ-OAR- 11 2013-0602-25292 [Dec. 1, 2014].) We sought leave from this Court to intervene on behalf of EPA 12 in the ongoing litigation over both the existing and the new, modified/reconstructed final power 13 plant greenhouse gas rulemakings, and were granted that leave. West Virginia v. EPA, No. 15- 14 1363 (D.C. Cir. filed October 23, 2015); North Dakota v. EPA, No. 15-1381 (D.C. Cir. Oct. 23, 15 2015). We have since actively participated in that litigation through numerous filings. We have 16 also been involved in many other Clean Air Act administrative proceedings and legal actions 17 seeking to enforce the Act's provisions for greenhouse gases. For example, the Center and others 18 filed a lawsuit challenging an EPA rule exempting large-scale biomass-burning facilities from 19 carbon dioxide limits under the Clean Air Act. See Center for Biological Diversity v. EPA, 722 20 F.3d 401 (D.C. Cir 2013). On July 12, 2013, this Court overturned EPA's exemption for 21 "biogenic carbon dioxide," confirming that Clean Air Act limits on carbon dioxide pollution apply 22 to industrial facilities that burn biomass, including tree-burning power plants. Id. We have 23 participated in numerous other legal actions, including but not limited to Sierra Club v. EPA, 762 24 F.3d 971 (9th Cir. 2014) (challenging EPA's decision to exempt the Avenal power plant from 25 Clean Air Act requirements applicable at the time of permit issuance), and Resisting 26 Environmental Destruction on Indigenous Lands v. EPA, 716 F.3d 1155 (9th Cir. 2013) 27 (challenging errors in air permits that would allow Shell to conduct exploratory drilling in the 28 Arctic ocean). In September, 2010, we petitioned EPA to issue greenhouse gas standards for Declaration of Kassia R. Siegel Page 4 Add030 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page33 of 68 1 locomotive engines pursuant to Clean Air Act section 213(a)(5). Petition for Rulemaking Under 2 the Clean Air Act to Reduce Greenhouse Gas and Black Carbon Emissions from Locomotives 3 (Sept. 21, 2010). In December 2009, we petitioned EPA to designate greenhouse gases as criteria 4 air pollutants under Clean Air Act section 108 and to issue National Ambient Air Quality 5 Standards (NAAQS) sufficient to protect public health and welfare. Petition to Establish National 6 Pollution Limits for Greenhouse Gases Pursuant to the Clean Air Act (Dec. 2, 2009). These 7 examples are illustrative of our advocacy in this area, not exhaustive. 8 10. In addition to our work on greenhouse pollution, the Center has worked through the 9 Clean Air Act to address other pollutants that adversely impact biodiversity and human health. 10 For example, we filed suit against EPA for failing to review and revise the air quality criteria for 11 oxides of nitrogen and sulfur oxides and the NAAQS for nitrogen dioxide and sulfur dioxide. This 12 case resulted in a court-ordered settlement agreement setting forth deadlines for EPA to update 13 these critically important standards. On February 9, 2010, EPA issued updated primary NAAQS 14 for nitrogen dioxide. Primary National Ambient Air Quality Standards for Nitrogen Dioxide; 15 Final Rule, 75 Fed. Reg. 6474 (February 9, 2010). On June 22, 2010, EPA issued updated primary 16 NAAQS for sulfur dioxide. Primary National Ambient Air Quality Standard for Sulfur Dioxide; 17 Final Rule, 75 Fed. Reg. 35520 (June 22, 2010). On April 3, 2012, EPA decided not to revise the 18 40-year-old secondary NAAQS for sulfur and nitrogen oxides, despite acknowledging ongoing 19 harm to terrestrial and aquatic ecosystems from acid rain and other depositional pollution. 20 Secondary National Ambient Air Quality Standards for Oxides of Nitrogen and Sulfur, 77 Fed. 21 Reg. 20218 (April 3, 2012). We challenged the latter decision as contrary to the Clean Air Act. 22 See Ctr. for Biological Diversity v. EPA, 749 F.3d 1079 (D.C. Cir. 2014). We also filed suit in 23 2010 against EPA for failing to meet numerous deadlines for limiting dangerous particle pollution, 24 including deadlines for: (a) determining whether areas in five western states are complying with 25 existing air pollution standards, and (b) ensuring that states are implementing legally required 26 plans to meet the standards. Ctr. for Biological Diversity v. Jackson, N.D. Cal. No. CV 10-1846 27 MMC (filed April 29, 2010). This case resulted in another settlement establishing deadlines for 28 EPA to carry out these important duties. Declaration of Kassia R. Siegel Page 5 Add031 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page34 of 68 1 11. On October 1, 2015, the Center filed a petition with NHTSA requesting the agency 2 to increase civil penalties applicable to manufacturers whose vehicle fleets fail to meet the annual 3 average corporate fuel efficiency standards ("CAFE standards"). Those penalties are established 4 under the Energy Policy and Conservation Act, 39 U.S.C. § 32912(b) ("EPCA"), and apply to 5 every one-tenth of a mile per gallon that a manufacturer's average corporate fuel efficiency 6 standards falls short of the applicable CAFE standards in any model year, multiplied by the 7 number of vehicles failing to reach that standard. The Center pointed out that the penalty amount 8 of $5.50 had not been increased and noted that some automobile manufacturers elect to pay 9 penalties rather than comply with NHTSA's CAFE standards, resulting in increased emissions of 10 greenhouse gases and other pollutants. A month later, on November 2, 2015, Congress enacted 11 the Federal Civil Penalties Inflation Adjustment Act Improvement Act ("2015 Civil Penalties 12 Adjustment Act"). The 2015 Civil Penalty Act requires federal agencies to adjust civil penalties 13 applicable to violations of statutes they implement to account for inflation, with the goal of 14 "deterring violations and furthering the policy goals embodied in such laws and regulations. . .." 15 Public Law 101-74, Title VII, § 701(b), sec. 2(a)(1). 16 12. In 2016, NHTSA implemented the 2015 Civil Penalties Adjustment Act and 17 increased CAFE penalties from $5.50 to $14. NHTSA took this step by means of a memorandum 18 entitled Implementation of the Federal Civil Penalties Inflation Adjustment Act Improvement Act 19 of 2015 for the Corporate Average Fuel Economy (CAFE) Program, available at 20 https://www.nhtsa.gov/sites/nhtsa.dot.gov/files/civilpenaltyincreaseupdate.pdf (July 18, 2016) 21 ("Civil Penalty Rule"). In response to a reconsideration petition, NHTSA delayed the effective 22 date of the Civil Penalty Rule to July 10, 2017. Final rule; response to petition for 23 reconsideration; response to petition for rulemaking, 81 Fed. Reg. 95489 (Dec. 28, 2016.) But on 24 July 12, 2017, NHTSA issued a new final rule, Final Rule; delay of effective date, 82 Fed. Reg. 25 32139 ("Delay Rule"), which delayed the Civil Penalty Rule's effective date "indefinitely pending 26 reconsideration." Id. NHTSA provided neither notice nor opportunity to comment on the Delay 27 Rule. 28 Declaration of Kassia R. Siegel Page 6 Add032 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page35 of 68 1 13. NHTSA and EPA estimate that the CAFE standards save approximately 170 billion 2 gallons, or 4 billion barrels, of oil, and reduce greenhouse gas emissions by the some 2 billion 3 metric tons over the lifetime of the vehicles they covers. 77 Fed. Reg. 62627. The vehicles 4 regulated by the standards are responsible for some 60 percent of all U.S. transportation-related 5 fuel consumption and greenhouse gas emissions. Id. The ground-level ozone and particulate matter 6 emissions reductions the CAFE standards produce are critical components of the attainment of 7 primary National Ambient Air Quality Standards, significantly reducing the national inventory 8 and ambient concentrations of criteria pollutants, especially PM2.5 and ozone, id. at 62627, and 9 significantly reducing serious health issues, including premature mortality. Id. at 62629. Net 10 economic benefits from the CAFE standards are estimated to be in the range of $326 billion to 11 $451 billion. Id. at 62631. 12 14. The 2017-2025 light-duty vehicle greenhouse gas and CAFE standards are critical 13 to reducing the dangerous pollution caused by the nation's vehicle fleet. The pollutants from these 14 vehicles include oxides of nitrogen, particulate matter, ground-level ozone, and greenhouse gases, 15 all of which endanger human health and welfare and cause serious adverse health effects to the 16 public, including members of the Center. These pollutants particularly affect persons living next to 17 busy highways and freeways. Short-term exposure to emissions of nitrogen dioxide "can aggravate 18 respiratory diseases, particularly asthma, leading to respiratory symptoms (such as coughing, 19 wheezing, or difficulty breathing), hospital admissions and visits to emergency rooms"; longer- 20 term exposure "may contribute to the development of asthma and potentially increase 21 susceptibility to respiratory infections."1 Emissions of nitrogen oxides also contribute to the 22 formation of tropospheric ozone. Ozone can reduce lung function, harm lung tissue, and trigger a 23 variety of respiratory health problems in humans, and can damage "sensitive vegetation and 24 ecosystems, including forests, parks, wildlife refuges and wilderness areas."2 Exposure to 25 particulate matter can affect both the lungs and heart and cause premature death in people with 26 heart or lung disease, nonfatal heart attacks, aggravated asthma, decreased lung function, and 27 1 EPA, Basic Information about NO2, available at https://www.epa.gov/no2-pollution/basic- information-about-no2#Effects. 28 2 EPA, Ozone Basics, available at https://www.epa.gov/ozone-pollution/ozone-basics#effects. Declaration of Kassia R. Siegel Page 7 Add033 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page36 of 68 1 increased respiratory symptoms, such as irritation of the airways, coughing or difficulty 2 breathing.3 3 15. Center members suffer ill health effects directly traceable to the oxides of nitrogen, 4 particulate matter and ozone emissions from the light-duty vehicle fleet. Because low civil penalty 5 rates encourage non-compliance with CAFE standards, which can result in the nation's vehicle 6 fleet's failure to meet the stringency set by law, an indefinite delay of the adjusted penalties will 7 increase emissions of these pollutants and directly affect the health and well-being of our 8 members. Conversely, reversal of the Delay Rule will remove incentives for non-compliance, 9 reduce dangerous pollution, improve air quality and increase our members' health and well-being. 10 16. The Center's members rely on the organization to support efforts to increase fuel 11 efficiency and thereby reduce harmful pollution from vehicles, to enforce the provisions of EPCA, 12 the 2015 Civil Penalty Act, the Clean Air Act, and other laws, and to compel the light-duty vehicle 13 fleet to meet the actual stringency levels (both for CAFE standards and for greenhouse gas 14 emissions) NHTSA and EPA promulgate. 15 17. The Center's members also rely on the organization to protect their procedural and 16 informational rights. As shown above, the Center, on behalf of its members, frequently comments 17 on agency rulemakings, including many of the regulations affecting motor vehicles, and the Center 18 disseminates the information it obtains, advocates on behalf of more stringent and effective 19 standards, and seeks to enforce applicable laws and regulations to protect its members' health and 20 well-being from the negative effects of vehicle pollution. Because the Delay Rule was 21 implemented without notice and an opportunity to comment, the Center and its members were 22 deprived of the opportunity to weigh in and be heard concerning the ill effects of this rule, to 23 disseminate information about NHTSA's intended actions to its members, and to seek to change 24 the outcome. The lack of notice and comment directly injured the Center's and its members' 25 procedural and informational rights. 26 27 3 EPA, Health and Environmental Effects of Particulate Matter (PM), available at 28 https://www.epa.gov/pm-pollution/health-and-environmental-effects-particulate-matter-pm. Declaration of Kassia R. Siegel Page 8 Add034 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page37 of 68 1 18. Conversely, a reversal of the Delay Rule would require NHTSA to provide notice 2 and comment to the public and follow the applicable procedural rules if it again determined to 3 alter the effective date of the Civil Penalty Rule. Providing notice and the opportunity to comment 4 would allow the Center, on behalf of its members, and those members themselves to submit 5 comments that may influence the agency's ultimate decision and lead it to retain the 2019 6 effective date. Those actions would address both the substantive and the procedural harm caused 7 by the indefinite delay of the Civil Penalties Rule. 8 9 I declare under penalty of perjury under the laws of the United States of America that the 10 foregoing is true and correct. Executed on August 31, 2017, at Oakland, California. 11 12 13 Kassia R. Siegel 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Declaration of Kassia R. Siegel Page 9 Add035 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page38 of 68 DECLARATION OF ANDREW LINHARDT I, Andrew Linhardt, declare as follows: 1. I am the Deputy Legislative Director for Transportation at Sierra Club. I was formerly the organization's Associate Director for Legislative and Administrative Advocacy. 2. In my current role, I manage and coordinate Sierra Club's policies and efforts on behalf of its members to advocate for greater fuel efficiency for our nation's vehicle fleet. I also serve as the organization's lead lobbyist on transportation issues. While at the Sierra Club, I have worked on numerous matters involving the National Highway Traffic Safety Administration's (NHTSA) corporate average fuel (CAFE) standards and the Environmental Protection Agency's (EPA) greenhouse gas regulations for light-duty and heavy-duty vehicles. 3. The Sierra Club is a non-profit membership organization incorporated under the laws of the State of California, with its principal place of business in Oakland. The Sierra Club's mission is to explore, enjoy and protect the wild places of the Earth; to practice and promote the responsible use of the Earth's resources and ecosystems; to educate and enlist humanity to protect and restore the quality of the natural and human environment; and to use all lawful means to carry out these objectives. Add036 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page39 of 68 4. As part of carrying out this mission, for decades the Sierra Club has used the traditional tools of advocacy--organizing, lobbying, litigation, and public outreach—to push for policies that decrease air and climate pollution by reducing our nation's dependence on fossil fuels. 5. Sierra Club has a long history of involvement in vehicle regulations aimed at tackling pollution and lessening our dependence on oil as a transportation fuel. Together with other organizations, Sierra Club has in the past challenged NHTSA's CAFE standards for light-duty vehicles for failure to comply with the relevant requirements under the Energy Policy and Conservation Act. Center for Biological Diversity v. National Highway Traffic Safety Administration, 538 F.3d 1172 (9th Cir. 2008). 6. Sierra Club has long advocated for climate regulations for vehicles. In 2002, Sierra Club and other organizations filed a lawsuit against EPA requesting the agency to regulate greenhouse gases from motor vehicles. EPA settled that lawsuit and denied the petition in 2003, on the grounds that the agency lacked authority to do so. Sierra Club and numerous states and environmental organizations challenged that denial, ultimately leading to the Supreme Court's decision in Massachusetts v. EPA, which held that greenhouse gases are air pollutants subject to regulation under the Clean Air Act. 549 U.S. 497 (2007). 7. The Supreme Court's ruling resulted in EPA's issuance of a finding Add037 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page40 of 68 that six greenhouse gases endanger the public health and welfare of current and future generations, which forms the basis of the agency's greenhouse gas regulations for light-duty and heavy-duty vehicles. Endangerment and Cause or Contribute Findings for Greenhouse Gases Under Section 202(a) of the Clean Air Act, 74 Fed. Reg. 66,496 (Dec. 15, 2009). 8. In 2010, NHTSA and EPA jointly issued CAFE and greenhouse gas emission standards for light-duty vehicles. Light-Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards; Final Rule, 75 Fed. Reg. 25,324 (May 7, 2010). Sierra Club and others commented on the proposed rule and intervened in the industry's lawsuit challenging the standards. Coalition for Responsible Regulation, Inc. v. EPA, 684 F.3d 102 (D.C. Cir. 2012), rev'd on other grounds sub nom. Utility Air Regulatory Group v. EPA, 134 S. Ct. 2427 (2014). NHTSA and EPA updated these standards in 2012. 2017 and Later Model Year Light-Duty Vehicle Greenhouse Gas Emissions and Corporate Average Fuel Economy Standards, 77 Fed. Reg. 62,624 (Oct. 15, 2012). 9. In 2011, NHTSA and EPA adopted CAFE and greenhouse gas standards for heavy-duty trucks, updating these standards in 2016. Greenhouse Gas Emission Standards and Fuel Efficiency Standards for Medium- and Heavy- Duty Engines and Vehicles; Final Rule, 76 Fed. Reg. 57,106 (Sep. 15, 2011); Greenhouse Gas Emissions and Fuel Efficiency Standards for Medium- and Add038 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page41 of 68 Heavy-Duty Engines and Vehicles-Phase 2, 81 Fed. Reg. 73,478 (Oct. 25, 2016). Sierra Club and others intervened to defend those rules against industry challenges. Delta Construction Company v. EPA, 783 F.3d 1291 (D.C. Cir. 2015); Truck Trailer Manufacturers Association v. EPA, Nos. 16-1430, 16-1447 (D.C. Cir. 2017). 10. For years, Sierra Club has actively engaged in the rulemaking and litigation around EPA's National Ambient Air Quality Standards that regulate criteria air pollutants, many of which are emitted by vehicles. These conventional pollutants contribute to the formation of smog and soot, which cause respiratory and heart disease, and even premature death. See, e.g., American Lung Association v. EPA, No. 17-1172 (D.C. Cir. 2017). 11. The Energy Policy and Conservation Act authorizes NHTSA to establish civil penalties for violations of the fuel economy standards, and to raise the amount of such penalties if it makes certain findings. The amount of the CAFE civil penalty was established by statute in 1975 and, for most of the duration of the program was set at $5.50 for each tenth of a mile per gallon that a manufacturer's fleet, on average, falls short of its compliance obligation, multiplied by the number of vehicles in the fleet with this shortfall. 12. In 2015, Congress amended the Inflation Adjustment Act, directing all federal agencies to adjust their civil penalties following a formula set forth therein. Add039 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page42 of 68 To comply with the law, in July 2016 NHTSA issued an interim rule that adjusted the CAFE civil penalty from $5.50 to $14. Civil Penalties, 81 Fed. Reg. 43,524 (July 5, 2016). In response to industry's petitions for reconsideration, in December 2016 NHTSA issued a final rule that provides that the $14 penalty rate applies to model year 2019 and later vehicles. Civil Penalties, 81 Fed. Reg. 95,489 (Dec. 28, 2016). 13. On July 6, 2017, NHTSA published two notices in the Federal Register. The first notice announced that the agency is reconsidering the December rule that adjusts the CAFE civil penalties for inflation. Civil Penalties, 82 Fed. Reg. 32,140 (July 12, 2017). The second notice indefinitely delays the effective date of that rule pending its reconsideration in order to allow for public comment. Civil Penalties, 82 Fed. Reg. 32,139 (July 12, 2017). This delay, which was issued without opportunity for public comment, is the basis for this lawsuit. 14. CAFE civil penalties are a critical part of Sierra Club's advocacy to reduce pollution in the transportation sector because those penalties encourage automobile manufacturers to comply with the fuel economy standards. If Sierra Club's challenge to NHTSA's delay is successful, higher civil penalties will remain in place and influence automakers' planning for compliance with the standards. It is critical that these higher penalties are properly implemented. Add040 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page43 of 68 I declare under penalty of perjury that the foregoing is true and correct to the - best of my knowledge and belief. Executed on October ~' 2017. Andrew Linhardt Add041 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page44 of 68 UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT NATURAL RESOURCES DEFENSE COUNCIL, INC., et al., Petitioners, v. Case No. 17-2780 NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION, et al., Respondents. DECLARATION OF KATHLEEN WOODFIELD I, Kathleen Woodfield, state and declare as follows: 1. I am a member of the Natural Resources Defense Council (NRDC). I joined NRDC about 15 years ago because I was concerned about air pollution in my community. I rely on NRDC to advocate on behalf of me and the health of my community. 2. I live in San Pedro, California. I have lived within the same few blocks since 1985. San Pedro is part of the City of Los Angeles, and is adjacent to the Port of Los Angeles and the community of Wilmington. 3. San Pedro falls within the South Coast Air Basin, a region that suffers from some of the worst air quality in the nation. According to the American Lung Association, it is the most ozone-polluted region in the country. Air quality in the South Coast Air Basin violates federal and state 1 Add042 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page45 of 68 standards for ozone and particulate matter, among other pollutants. These pollutants can create and exacerbate cardiovascular and respiratory problems such as asthma. 4. The air quality in San Pedro is especially affected by emissions of pollutants caused by fuel production, transportation, and consumption. My home is only a few blocks away—or about a half-mile, as the crow flies—from Interstate 110, one of the most heavily travelled urban highways in the country. I also live close to several refineries in Wilmington: less than four miles from the Phillips 66 refinery and about six miles from the Valero and Tesoro refineries. The fuel and byproducts produced in these refineries are often stored nearby, including massive amounts of highly volatile butane at the Rancho LPG facility only two miles from my house. These products are also transported via rail and trucks through my community. 5. I am deeply concerned about the health risks I face from breathing air pollution caused by fuel consumption and production. The health impacts associated with air pollution are extensive, and more information about those impacts comes forward regularly. Older adults, like myself, are especially at risk because our bodies are less able to compensate for the effects of environmental hazards. I suffer from chronic sinusitis, an inflammation of the sinuses that can be caused by air pollution. My husband has had throat cancer and also suffered from pneumonia this past year. 2 Add043 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page46 of 68 6. Because of these health risks, I strongly support all efforts to reduce air pollution, including stringent Corporate Average Fuel Economy (CAFE) standards. I believe it is critically important to have rules in place that help keep the air as clean as possible. Increased fuel economy translates to less fuel consumed and refined—and therefore fewer emissions of dangerous air pollutants. For these reasons, I drive a hybrid Toyota Prius. 7. I understand that the National Highway Traffic Safety Administration (NHTSA) enforces the CAFE standards by assessing civil penalties for non-compliance. I believe it is critically important that the penalty be high enough to deter violations. If paying the penalty is cheaper than implementing technological improvements to comply with the CAFE standards, more automakers will choose to violate those standards. 8. I also understand that NHTSA in 2016 had increased the penalty rate for CAFE standard violations from $5.50 to $14 per tenth of a mile per gallon for Model Year 2019-and-after vehicles. However, after the change in administration, NHTSA in 2017 indefinitely delayed the effective date of that increase, and did so without providing notice or an opportunity to comment. 9. I am strongly opposed to any delay of the effective date of the penalty increase. I believe it is vitally important that auto manufactures have the proper incentives to invest in cleaner technologies as they design and produce their Model Year 2019-and-after vehicles. Any delay in the 3 Add044 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page47 of 68 penalty increase will likely cause more auto manufacturers to violate the CAFE standards, resulting in increased fuel consumption and production and emissions of dangerous air pollutants—and even worse air quality and public health in communities like my own. Relaxing fuel-economy standards or penalties for noncompliance is unconscionable, really. Wherever possible, the government should try to direct costs back to the industry itself—and not externalize the health costs on people who happen to live in vulnerable areas. 10. I am also very unhappy with NHTSA's failure to provide notice or an opportunity to comment before indefinitely delaying the effective date of the penalty increase. Had NHTSA allowed for public input on the delay, I would have expected NRDC to submit comments strongly opposing any delay. I am always looking for NRDC to be in the room, so to speak, advocating on behalf of me and the many other NRDC members whose health is negatively affected by air pollution. I also expect the California Air Resources Board, South Coast Air Quality Management District, and other public health organizations would have weighed in to oppose any delay. 11. These are public health issues—and if the government is not listening to the public, it is creating policy in a bubble. If the government is only listening to industry and looking at what is advantageous to their bottom line, the government is not taking into consideration the externalized costs and health impacts on the citizens that breathe the air. 4 Add045 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page48 of 68 I declare under penalty of perjury that the foregoing is true and correct to the best of my knowledge and belief. Executed on September /t2. 2017, in San Pedro, California. Kathleen Woodfield 5 Add046 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page49 of 68 UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT NATURAL RESOURCES DEFENSE COUNCIL, INC., eta/., Petitioners, v. Case No. 17-2780 NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION, eta/., Respondents. DECLARATION OF FA VIOLA MUNGUIA I, Faviola Munguia, state and declare as follows: 1. I am a member of the Natural Resources Defense Council (NRDC). I joined NRDC in May 2017 because I wanted to help defend our laws and prevent the Trump administration from rolling back important environmental and public health protections-issues that are very important to me. I rely on NRDC to be on the front lines advocating on these issues for me, my community, and the world. 2. I first came to the United States in 1990, when I was seven years old. My family settled in Wilmington, California, and never moved. Wilmington is a small, predominantly Latino community within the City of Los Angeles. It is adjacent to the Port of Los Angeles. 3. The air quality in Wilmington is terrible. We are surrounded by three large oil refineries-Phillips 66, Valero, and Tesoro-all within two or three 1 Add047 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page50 of 68 miles of my home. The refineries are a constant presence in our lives. Every day when you wake up and come out of your house in the morning you smell a thick, distinct chemical smell. It's not normal. It doesn't smell like air. It goes away when you leave the area, and it hits you again as soon as you return. It's a constant reminder: the smell doesn't let you forget that there's something wrong here. It's right there in your nose. And there's no way whatever we're smelling is good for us. 4. Growing up here, I thought asthma was a common thing that everyone gets eventually, like chicken pox. Half of my friends had it in middle school. I remember asking my mom when I was going to get it too. 5. When I was younger I used to be a runner. I would usually go over to Palos Verde to run, where the air is cleaner by the ocean. Any time I would run around here I wouldn't last more than a mile. My chest would start hurting all of a sudden, and my eyes would feel weird. So I stopped. I don't run around here anymore. 6. In April 2017 my dad died from pulmonary fibrosis. He never smoked in his life, and had otherwise been a very health man. He was a gardener who worked mostly outdoors, in nearby communities like Carson, Torrance, and San Pedro. So he was exposed to the air pollution every day. can't explain to you what an ugly illness pulmonary fibrosis is and how much he suffered. Although there are no definite causes, I had a gut feeling that I knew where the illness came from. I just knew. 2 Add048 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page51 of 68 7. I am terribly concerned about the health risks that I and my family continue to face from breathing the polluted air in Wilmington. My mother and three siblings live here, all within a mile of each other. As do ten of my nephews and nieces. I care a lot about them, and I worry about their future. 8. The pollution problems we experience here first-hand in Wilmington have made me learn more about the issues. As I continue to understand more about how it all works, I have come to realize that it's a much larger problem. My awareness started in my nose at our front door, and it extended out to the whole world. I'm very distraught and bothered by it. That's why I became a member of NRDC. 9. It's also why I strongly support efforts to reduce our fuel consumption. If we decrease our demand for fuel, the refineries that surround us here in Wilmington will refine less fuel and reduce their pollution of our air. 10. Our government should be doing whatever it can to promote the shift to more fuel-efficient cars. Fuel consumption by cars and trucks is a huge part of the problem. Based on what I've read, I'm sure the car companies are coming up with technology to reduce fuel consumption or replace it entirely with electric cars. But instead of acknowledging that innovation, industry is helping feed the problem by producing more gas guzzling cars. 11. When my father died, it made me realize that I want my next car to be an electric one. I don't want to buy another gasoline car. I bought my first car in 2010, and paid it off two years ago. But I'll be on the market for a car again soon and I want it to be electric. I don't want to be part of the problem anymore. 3 Add049 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page52 of 68 12. Because of all this, I strongly support strict fuel-economy standards and believe it is important that proper incentives and penalties be in place to ensure that car companies comply with those standards. 13. I am aware that the National Highway Traffic Safety Administration recently delayed a long-overdue increase to the penalties for violating fuel- economy standards. I strongly oppose this delay, which will allow car companies to more easily evade those standards. If the penalty increase does not take effect soon, it may be cheaper for car companies to pay the lower penalty than to comply with the standards. As a result, they will produce less-efficient gasoline cars that consume more fuel for decades to come. And the fuel for those cars will come from refineries like those in Wilmington, which means the delay will cause more air pollution in my community. The delay will also decrease the number of electric cars available for consumers like me that want cleaner options. 14. I am also aware that the National Highway Traffic Safety Administration delayed the penalty increase without providing notice or an opportunity to comment. If it had followed those procedures, I expect NRDC would have commented to oppose the delay forcefully on behalf of me and its other members. Had I known about it, I would have wanted to comment too. 15. The public needs to have a voice on issues like this. People like myself who live near the refineries and are most affected by the government's actions should have a word in these decisions before they are made. In fact, 4 Add050 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page53 of 68 anybody who cares about these issues should be able to weigh in. We need to have a voice. I declare under penalty of perjury that the foregoing is true and correct to the best of my knowledge and belief. Executed on October Jl. 2017, in Wilmington, California. 5 Add051 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page54 of 68 1 DECLARATION OF JANET DIETZKAMEI 2 I, Janet DietzKamei, state and declare as follows: 3 1. I am over 18 years of age and competent to give this declaration. I have personal 4 knowledge of the following facts, and if called as a witness could and would testify competently to 5 them. As to those matters which reflect an opinion, they reflect my personal opinion and judgment 6 on the matter. 7 2. I live in Fresno, California, and have lived there since 2003. I am retired from a 8 career as a Federal employee, having worked for the Air Force, the U.S. Department of the Treasury, 9 the Veterans' Administration and the United States Department of Agriculture Forest Service for 25 10 years. 11 3. I am deeply concerned and care greatly about the quality of the air in Fresno and the 12 surrounding areas. The poor air quality in my home town, my community and California's Central 13 Valley makes me severely ill, and I am keenly interested in doing all I can to improve the air I must 14 breathe. I am a member of the Center for Biological Diversity (the "Center"), and I rely upon the 15 Center to represent my interests in protecting our air quality and our environment through the 16 gathering and dissemination of information about air pollution, advocacy to remediate that pollution, 17 and enforcement of our environmental laws. I am also a member of the Central Valley Air Quality 18 Coalition ("CVAQ"), since June, 2016, I have been active with CVAQ since May, 2015, and the 19 Fresno Environmental Reporting Network ("FERN"), since December, 2015, organizations that 20 monitor and report on the pollution in our air and advocate on behalf of myself and other citizens to 21 reduce that pollution. 22 4. I am aware that the National Highway Transportation and Safety Administration 23 (NHTSA) has issued performance standards for the nation's fleet of cars and light duty trucks that 24 require these vehicles' average fuel efficiency to increase year over year. These standards are 25 known as Corporate Average Fuel Efficiency, or CAFE, rules. Increased fuel efficiency means that 26 vehicles combust less and less gasoline per mile traveled, thereby decreasing the amount of 27 dangerous pollutants they emit, including ozone-forming greenhouse gases and particulate matter. I 28 am aware that NHTSA's last rulemaking for CAFE standards for passenger vehicles and light trucks 1 Add052 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page55 of 68 1 set increasingly stringent average fuel efficiency standards for vehicles in model years through 2022, 2 with further projected, increasingly stringent efficiency standards for vehicles in model years 3 through 2025. 4 5. I am also aware that NHTSA's CAFE rules allow manufacturers to pay civil penalties 5 if their vehicle fleets do not meet the standards in any year. I understand that the penalties are 6 assessed for every one-tenth of a mile per gallon by which a manufacturer's vehicle fleet's fuel 7 efficiency falls below the CAFE standards in any year, multiplied by the number of vehicles that do 8 so. The original penalty amount of the applicable civil penalty NHTSA assesses was set in 1975 at 9 $5.00, and was later increased to $5.50. I further understand that over the years, some manufacturers 10 have paid penalties because their vehicle fleets did not comply with the CAFE standards. 11 6. I know that in November 2015, Congress enacted a law, the Federal Civil Penalties 12 Inflation Adjustment Act Improvement Act (the Act), that required federal agencies to adjust the 13 amount of civil penalties they administer to account for inflation since the date the penalties were 14 originally set, in order to ensure that penalties remain high enough to discourage non-compliance 15 with regulations the agencies set. I am aware that in 2016, NHTSA, in compliance with this Act, 16 issued a rule that increased the amount of the CAFE civil penalties to $14 and applied the increased 17 penalty to all vehicles sold in model year 2019 or thereafter. I understand that the purpose of this 18 rule, and the increase of the penalty, was to make sure that the penalty was high enough to promote 19 compliance by vehicle manufacturers with the applicable CAFE standards. 20 7. I have also learned that in July 2017, NHTSA issued another rule (the 2017 Stay 21 Rule) which delayed the imposition of the increased penalty indefinitely. NHTSA provided no notice 22 of this indefinite delay and accepted no comments before issuing this final rule. Therefore, as it 23 stands, the civil penalty is $5.50. The date when the adjusted penalty of $14 will be applied to 24 manufacturers has now been indefinitely delayed, and it is unknown whether or when it will ever be 25 applied. 26 8. I am extremely concerned about and personally injured by the 2017 Stay Rule. It is 27 my understanding that manufacturers make a decision whether to comply with CAFE standards in 28 part by weighing the costs of noncompliance – that is, the penalty amount – against the cost of 2 Add053 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page56 of 68 1 implementing technology that increases fuel efficiency. In other words, if manufacturers conclude 2 that paying penalties costs them less and forgo implementing technologies that actually increase the 3 fuel efficiency of their vehicles and thus reduce pollution, then the millions of cars and trucks they 4 produce that year will not comply with the CAFE standards then or during the vehicles' lifetimes; 5 and, as a result, the harmful air pollution these vehicles produce will not be reduced in the amount 6 that compliance with the standards would accomplish. This outcome directly harms my health and 7 has concrete, direct and frightening daily effects on my personal quality of life. 8 9. Since about 2006, or some three years after moving to Fresno, I have suffered from 9 severe asthma. I had allergies before moving to Fresno in 2003, but had never had asthma. I was 10 diagnosed with asthma after having a severe reaction to an unknown trigger pollutant. Within 5 days, 11 I was in the Emergency Room ("ER") with severe bronchitis, exceedingly sick. The consulting 12 doctor was leaning toward admitting me to hospital. I was prescribed inhalers and other asthma 13 relieving medications with the understanding that if I did not improve, I would return to the ER. 14 10. Air quality in Fresno and the San Joaquin Valley is among the worst in the nation, 15 and the many cars and trucks on the road in Fresno and in the Valley contribute enormously to the 16 problem. My house is located about 1,400 feet from the busy California Highway -180 freeway as 17 the crow flies. I have a personal monitor positioned in my back porch, a part of the Purple Air 18 Network. I must monitor, using Purple Air monitors and Air Resources Board District monitors, 19 both the particulate matter and the ozone in my area on a daily and sometimes hourly basis, and 20 when the air quality for either of these pollutants turns from good to moderate, if ozone is above 21 good, I cannot leave the house, when particulates are above good, I cannot leave the house without 22 wearing a mask, and even then I still take the risk of suffering a severe and debilitating asthma 23 attack. I also cannot leave my house any time there is smoke in the air. During the months of 24 November through February, my asthma symptoms are exacerbated by smoky air. To prevent 25 pollutants picked up while outside, from coming into our home, my husband and I take off outside 26 clothing to put on clean clothing only worn inside of the house. I have towels on my sofa and chairs 27 which can be washed after visitors sit on our furniture. No one can wear shoes inside of the house. 28 3 Add054 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page57 of 68 1 We have a 9 pound dog which lives inside of the house. When he returns from a walk, or goes out 2 for potty breaks, we wash his feet and wipe him with a damp towel. 3 11. Asthma has made me exceedingly sick. When I suffer an attack, it is difficult just to 4 breathe. A particularly severe attack occurred in the summer of 2012 when I simply went outside to 5 take my dog for a walk. Even though I wore a mask, PM2.5 particulates and ozone were in the 6 moderate level, I began having trouble breathing as I could not inhale any air. Feeling faint and 7 lightheaded, I panicked and turned around to go back home. I nearly lost consciousness right there 8 on the road. I believe that only the adrenaline produced by my panic allowed me to make it back 9 home, where I administered asthma medication and then passed out. The mask only protected me 10 from the PM2.5 particulates, not the ozone, a lesson I learned that day. The entire experience was 11 horrific. Because I never want to experience such an attack again, I now do not leave my home if 12 either the particulate matter or the ozone is not within the "good" range as indicated by real-time 13 monitoring websites. I access those sites with my computer or on the phone, and often again on my 14 phone after leaving my house to make sure the air quality has not changed. I receive alerts on my 15 phone indicating air quality has degraded to air I can not breathe. I depend upon these alerts. 16 12. When I begin having an attack, I feel a heaviness in my chest and cannot get air. 17 Often I also start coughing. I feel like a fish out of water, gasping. If I am outside and begin to feel 18 this chest pressure, shortness of breath, and/or coughing, I go into a building, a house, a car, or 19 anywhere else that is enclosed so that I am better sheltered from the polluted air. Other effects of 20 particulate matter and ozone air pollution on my health sometimes include sneezing and sniffling, 21 feeling tired, achy, suffering from headaches, and feeling as if I am about to come down with a cold 22 or flu. I also have a chronic cough when the particulate matter count increases. I love to ride my 23 bike and have been an avid outdoor person for my entire life, but now must spend most of my time 24 inside my house. Because my activity level is so severely restricted, I now also suffer from 25 unhealthy weight gain. To protect myself from pollutants, I always check air quality before going to 26 the gym to do some water aerobics. Sometimes there is an unexpected trigger, resulting in when I do 27 drive to the gym, I sometimes cannot walk from the parking lot to the gym because I begin to feel an 28 asthma attack coming on, and I must drive back home. 4 Add055 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page58 of 68 1 13. I sometimes take Interstates 580 and 680 when I travel to speak on air pollution or to 2 see family and friends, and pass by the oil refineries in Richmond and Martinez. I am aware of and 3 remember these refineries well from my childhood, as at that time they emitted a terrible smell. I 4 know that increased gasoline consumption by vehicles requires more oil refining and more 5 transportation of that oil in tankers on our highways, including the highway close to my house. I am 6 aware that the pollutants that affect me so seriously are emitted by these refineries and by the big oil 7 tankers that bring gasoline to the gas stations where I live, and I am worried about their effects on 8 my health and mobility. If the penalties for not complying with the efficiency rules are not raised 9 and manufacturers simply pay penalties rather than comply, then more oil will be needed and refined 10 and transported to the areas around my home, and more of the pollutants that harm me will be 11 emitted. 12 14. Many of my friends and acquaintances and their children who live in Fresno or 13 elsewhere in the Central Valley suffer from asthma or other severe health complications because of 14 the air pollution caused by motor vehicles. I am concerned for them as well and fear for their well- 15 being. During periods when air pollution is above moderate, many asthmatics end up in Central 16 Valley Emergency Rooms and hospitals. I do all I can possibly do to avoid becoming so ill. 17 15. As long as the 2017 Stay Rule delays the application of appropriately adjusted civil 18 penalties, manufacturers may not be incentivized to comply with the CAFE standards by 19 implementing technologies that otherwise would increase their vehicles' fuel efficiency and decrease 20 the pollution they cause. As a result, the air I must breathe will often continue to be too polluted, and 21 I will become sick or be compelled to stay shut into my house. NHTSA's 2017 Stay Rule therefore 22 causes direct and severe harm to me personally. If fuel efficiency does not increase, or increases less 23 than it would if penalties actually did deter non-compliance with CAFE standards, my health will 24 continue to suffer and get even worse, and my quality of life cannot improve. I suffer emotional 25 distress knowing that the effectiveness of CAFE rules is undercut because the imposition of effective 26 penalties is indefinitely delayed. On the other hand, if the indefinite delay is overturned and the 27 higher penalties are assessed so that they do deter non-compliance, particulate matter and ozone 28 5 Add056 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page59 of 68 1 pollution will be reduced, days when the air quality remains good will increase, my health will 2 improve and I will be able to leave my house more often. 3 16. NHTSA's finalized the 2017 Stay Rule without providing any notice or opportunity 4 to comment. This lack of notice and comment opportunity deprives me of my procedural rights to be 5 informed about forthcoming agency action so that I can talk about or rely on the Center to comment 6 on them, inform others about them, and seek to stop or alter them if they affect me or my friends and 7 neighbors negatively or if they are unlawful. I am active in learning about and disseminating 8 information about Fresno's poor air quality and its causes. When the air quality permits it, I speak 9 about the effects of air pollution on my health at local, district and state-level air quality board 10 meetings and I travel to Sacramento to speak to lawmakers on the subject. I also participate in air 11 quality improving workshops and air quality improving training on subjects such as electric vehicle 12 programs. I am currently attending workshops, participating in, and following Fresno City Plans to 13 develop strategies to reduce city vehicle usage, including promoting and improving city 14 transportation such as bus service. NHTSA's final decision to delay, indefinitely, the application of 15 higher CAFE penalties, without providing notice and an opportunity to comment, has deprived me of 16 my ability to obtain information about the agency's intended action before it takes place, and to rely 17 on the Center to submit comments in opposition. It has also deprived me of the opportunity to 18 communicate with others about this action so it might be stopped. As such, the imposition of the stay 19 without notice or comment has harmed my procedural rights as a citizen and a member of the 20 Center. 21 17. However, if the 2017 Stay Rule is overturned and NHTSA must provide notice and 22 an opportunity to comment regarding any new proposed rule concerning the implementation of the 23 civil penalty adjustment to the CAFE standards, the violation of these procedural and informational 24 rights will be effectively resolved. 25 //// 26 //// 27 //// 28 //// 6 Add057 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page60 of 68 1 2 [Remainder of page intentionally left blank] 3 4 5 I declare under penalty of perjury that the foregoing is true and correct and was executed on 6 October 5, 20 17 at Fresno, California. 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 7 Add058 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page61 of 68 DECLARATION OF JAMES T. BLOMQUIST I, James T. Blomquist declare as follows: 1. My name is James T. Blomquist. I am 66 years old and competent to give this declaration. The following information is based on my personal knowledge and experience. 2. My wife and I have lived in Los Angeles, CA since 2002. 3. Since 2011, I work at a political consulting firm, where my wife is the president. 4. I joined the Sierra Club in 1974, and with the exception of one two-month lapse, I have been a member ever since. I was living in New Jersey at the time, and I became a member of the Club because I wanted to go on hikes. Throughout the years I have been active in several chapters, where I have held a number of positions, including Northwest Representative in Seattle, Washington Representative in D.C., director of environmental programs in San Francisco, and Southern California Representative in Los Angeles. I rely on Sierra Club to represent my interests in protecting the environment through public education, organizing, lobbying, and litigation. 5. I enjoy bicycle riding, hiking, and fishing. In Los Angeles I fish on the west fork of the San Gabriel River in the San Gabriel Mountains. It is one of the few trout streams in Southern California. Add059 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page62 of 68 6. I have lived close to several multilane freeways, including California highways 134 and 2, since 1997 when I moved to Los Angeles. Vehicles on these highways emit soot and other pollutants. As a result, the air around my house is highly polluted; there is always black dust over the living surfaces, the exterior house, the driveway, and the garage. When I sweep outside my house, I must wear a large mask to prevent inhalation of this dirty air. My mask is form-fitting over my nose and mouth, and it has replaceable canisters. If I don't wear it I get a raw throat which affects my breathing. 7. I am aware of the health impacts of smog and soot on human health, especially to those with asthma, the elderly, and children. I read the Los Angeles Times and other publications that regularly discuss those impacts. I recently read in the New York Times that air pollution affects bike riders and other people living in cities. My nephew lives in Los Angeles, which is a non-attainment area for both ozone and particulate matter. He and his wife commute on bike and public transit every day. Recently we discussed that bike riders need to be aware of the harmful effects of this pollution. 8. I know that corporate average fuel economy standards for vehicles are a critical tool used by the National Highway Traffic Safety Administration (NHTSA) and the state of California to address this dangerous pollution. Vehicle standards lead to decreased gasoline use and thus to less tailpipe Add060 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page63 of 68 emissions. The law requires vehicle manufacturers to pay civil penalties for violations of those standards, but those penalties have for years been very low and several carmakers have opted for paying the penalties instead of making the needed investments to make cleaner cars. Last year, NHTSA increased those civil penalties to account for inflation, indicating that those adjusted penalties would encourage compliance with vehicle standards. 9. I am aware that Sierra Club is challenging a NHTSA regulation that delays the effective date of those higher penalties indefinitely. In doing so, NHTSA did not provide the public notice and the opportunity to comment on this decision, which prevented the Sierra Club from informing me and other members and from representing our interests in this rulemaking. If this rule is not enforced, carmakers will continue to choose to pay low penalties instead of investing in cleaner technologies, further increasing air pollution. On the other hand, if the delay is overturned, higher penalties will deter carmakers from violating the standards, which will help decrease air pollution. This will also address NHTSA's violations of my rights to comment in this proceeding. Add061 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page64 of 68 I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct. Executed in Los Angeles, CA, on October ___l_i_, 2017. ~Lr6t/41~~ Jam~ST. Blom~ Add062 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page65 of 68 DECLARATION OF DIANA HUME I, Diana Hume, declare as follows: 1. My name is Diana Hume and I am over the age of 18 and competent to give this declaration. All of the following information is based on my experience and personal knowledge. 2. I have lived in Richmond, CA for 17 years. 3. I joined the Sierra Club in 2001. I joined the Club because I believe that the organization is very effective at using different advocacy strategies to protect and preserve our environment. Sierra Club represents my interests in litigation on matters that affect me and my community, and also participates in stakeholder processes related to the development of pollution regulations on my behalf. 4. I am retired. Previously I worked for the University of California, as a policy analyst at the President's Office of General Counsel. 5. For the past 17 years, my partner and I have lived in a WWII development called Atchison Village, which is located adjacent to the Richmond Parkway and the Burlington Northern Santa Fe (BNSF) tracks. I live less than a mile from the Chevron Richmond refinery. Because of the location of our home, I am exposed to particulate matter pollution from oil cars traveling on these tracks. I am also exposed to conventional and hazardous air pollutants Add063 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page66 of 68 emitted by the Chevron refinery, which was recently allowed to introduce new equipment to process heavier crude. I am very concerned about Chevron finding a way to process dirtier crude, which I have heard is a possibility. If the Sierra Club is successful in its efforts to reduce fuel use, that will help mitigate this concern. 6. I spend a lot of time outdoors in the area where I live. I like walking, and I garden a lot in Point Richmond, so I breathe polluted air on a daily basis. I have been coughing more lately. I believe the emissions from the Chevron refinery are a major cause of this dirty air. 7. I am aware that ozone and particulate matter pollution harm human health, causing respiratory illnesses, heart attacks, and premature death. This pollution especially affects children and the elderly, like me. Asthma is actually a big problem here in Richmond. Contra Costa County is in marginal non-attainment for ozone. I am also aware that hazardous air pollutant emissions from refineries, like benzene and volatile organic compounds, cause cancer. There have in fact been several cancer cases in Atchinson Village. One woman in her 50s, who was not a smoker, recently died of lung cancer. I believe that, at least in part, all these illnesses are related to the high air pollution levels caused by the oil industry facilities that operate in this area. Add064 Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page67 of 68 8. The extent of air pollution in my community and of the illnesses caused by it has made me well aware of the importance of enacting strong regulations aimed at decreasing our oil consumption. I know that this is the key purpose of the National Highway Traffic Safety Administration's (NHTSA) fuel economy standards for vehicles. The law requires carmakers to pay penalties if their new cars do not meet the required standards; these penalties are a crucial tool for improving the fuel economy of our cars. 9. I have been told that last year NHTSA issued a regulation that establishes higher penalties for violations of the fuel economy standards for passenger cars and light duty trucks, in order to foster compliance with those standards and reduce our reliance on oil. With the change of administration, however, in July NHTSA issued a rule that delays the effective date of these higher penalties indefinitely. NHTSA issued this rule without providing the public any opportunity to comment on it. 10. I am extremely concerned that this delay will encourage automakers' non- compliance with the standards and increase our oil use. If NHTSA had provided an opportunity to comment on this rule, Sierra Club would have filed comments on my behalf opposing this delay. That is why I support Sierra Club's challenge to this delay. If Sierra Club succeeds, higher penalties will be applied as established in NHTSA's regulation from last Add065 ·I Case 17-2780, Document 140-2, 03/06/2018, 2250939, Page68 of 68 year, which will encourage carmakers to comply with the standards. I believe that enforcement of all those regulations will result in less oil being refmed in Richmond and less oil cars traveling the BNSF tracks, which will help to improve air quality in Atchison Village and the surrounding areas. I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct. Executed in Richmond, California, on October 13, 2017 DianaHume Add066

ARGUMENT NOTICE, to attorneys/parties, TRANSMITTED.[2254851] [17-2780, 17-2806] [Entered: 03/12/2018 03:58 PM]

Case 17-2780, Document 141-1, 03/12/2018, 2254851, Page1 of 1 United States Court of Appeals for the Second Circuit Thurgood Marshall U.S. Courthouse 40 Foley Square New York, NY 10007 ROBERT A. KATZMANN CATHERINE O'HAGAN WOLFE CHIEF JUDGE CLERK OF COURT Date: March 12, 2018 Agency #: NHTSA-2016-0136 Docket #: 17-2780ag Agency: DEPT.OF TRANS. - Short Title: Natural Resources Defense Coun v. National NAT.TRANSPORT.SAFETY Highway Traffic Safet BDAgency #: NHTSA-2016- 0136] Agency: DEPT.OF TRANS. - NAT.TRANSPORT.SAFETY BD NOTICE OF HEARING DATE Argument Date/Time: Thursday, April 12, 2018 at 10:00 a.m. Location: Thurgood Marshall U.S. Courthouse, 40 Foley Square, New York, NY, 10007, 17th Floor, Room 1703 Time Allotment: Natural Resources Defense Council, et al. 10 minutes State of New York, State of California, et al. 5 minutes v. National Highway Traffic Safety, et al. 5 minutes Counsel and non-incarcerated pro se litigants presenting oral argument must register with the courtroom deputy 30 minutes before argument. A motion or stipulation to withdraw with or without prejudice must be filed no later than 3 business days prior to the scheduled date of argument. The Court will consider the motion or stipulation at the time of argument, and counsel's appearance is required with counsel prepared to argue the merits of the case. If a stipulation to withdraw with prejudice is based on a final settlement of the case, the fully-executed settlement must be reported immediately to the Calendar Team, and a copy of it must be attached to the stipulation. Inquiries regarding this case may be directed to 212-857-8595. ------------------------------------------------------------------------------------------------------ Counsel must file the completed form in accordance with Local Rule 25.1 or 25.2. Pro Se parties must submit the form in paper. Name of the Attorney/Pro Se presenting argument: Firm Name (if applicable): Current Telephone Number: The above named attorney represents: () Appellant/Petitioner () Appellee-Respondent () Intervenor Date: _____________________ Signature: ________________________________ Case 17-2780, Document 141-2, 03/12/2018, 2254851, Page1 of 1 United States Court of Appeals for the Second Circuit Thurgood Marshall U.S. Courthouse 40 Foley Square New York, NY 10007 ROBERT A. CATHERINE O'HAGAN WOLFE KATZMANN CLERK OF COURT CHIEF JUDGE Date: March 12, 2018 Agency #: NHTSA−2016−0136 Docket #: 17−2780ag Agency: DEPT.OF TRANS. − Short Title: Natural Resources Defense Coun v. National Highway Traffic Safet NAT.TRANSPORT.SAFETY BDAgency #: NHTSA−2016−0136] Agency: DEPT.OF TRANS. − NAT.TRANSPORT.SAFETY BD NOTICE TO THE BAR Offsite Video Argument. At this time the Court does not provide offsite video argument. Recording of Argument. An audio recording of oral argument is available on the Court's website. In addition, a CD of an argument may be purchased for $31 per CD by written request to the Clerk. The request should include the case name, the docket number and the date or oral argument. CDs will be delivered by first class mail unless the request instructs to hold for pick−up or requests Federal Express Service, in which case a Federal Express account number and envelope must be provided. Court Reporters. Parties may arrange − at their own expense − for an official court reporter to transcribe argument from a copy of the hearing tape or to attend and transcribe the hearing directly. A party must first obtain written consent from opposing counsel − or move the Court for permission − to have the court reporter attend and transcribe the hearing and must provide the calendar clerk written notice, including the name, address and telephone number of the attending reporter and, if applicable, the reporting firm at least one week prior to the hearing date. Interpreter Services for the Hearing Impaired. Counsel requiring sign interpreters or other hearing aids must submit a written notice to the Calendar Team at least one week before oral argument. Inquiries regarding this case may be directed to.

AMICUS BRIEF, &lt;EDIT by Clerk's Office&gt;, FILED. Service date 03/12/2018 by CM/ECF. [2255073] [17-2780] [Entered: 03/12/2018 10:25 PM]

Case 17-2780, Document 144-1, 03/12/2018, 2255073, Page1 of 37 17-2780(L) 17-2806(CON) UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT NATURAL RESOURCES DEFENSE COUNCIL, SIERRA CLUB, CENTER FOR BIOLOGICAL DIVERSITY, STATE OF CALIFORNIA, STATE OF MARYLAND, STATE OF NEW YORK, STATE OF PENNSYLVANIA, STATE OF VERMONT, Petitioners, v. NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION, JACK DANIELSON, in his capacity as Acting Deputy Administrator of the National Highway Traffic Safety Administration, UNITED STATES DEPARTMENT OF TRANSPORTATION, ELAINE CHAO, in her capacity as Secretary of the United States Department of Transportation, Respondents, ASSOCIATION OF GLOBAL AUTOMAKERS, ALLIANCE OF AUTOMOBILE MANUFACTURERS, INC., Intervenors. On Petition for Review of a Rule of the National Highway Traffic Safety Administration BRIEF OF THE INSTITUTE FOR POLICY INTEGRITY AT NEW YORK UNIVERSITY SCHOOL OF LAW AS AMICUS CURIAE IN SUPPORT OF PETITIONERS Richard L. Revesz Bethany A. Davis Noll Jason Schwartz (admitted in Virginia) INSTITUTE FOR POLICY INTEGRITY 139 MacDougal Street, Third Floor New York, NY 10012 (212) 992-8932 Counsel for Amicus Curiae Institute for Policy Integrity Case 17-2780, Document 144-1, 03/12/2018, 2255073, Page2 of 37 RULE 26.1 DISCLOSURE STATEMENT The Institute for Policy Integrity ("Policy Integrity")1 is a nonpartisan, not- for-profit think tank at New York University School of Law.2 No publicly-held entity owns an interest of more than ten percent in Policy Integrity. Policy Integrity does not have any members who have issued shares or debt securities to the public. 1 Under Federal Rule of Appellate Procedure 29(a)(4)(E), the Institute for Policy Integrity states that no party's counsel authored this brief in whole or in part, and no party or party's counsel contributed money intended to fund the preparation or submission of this brief. No person—other than the amicus curiae, its members, or its counsel—contributed money intended to fund the preparation or submission of this brief. 2 This brief does not purport to represent the views of New York University School of Law, if any. i Case 17-2780, Document 144-1, 03/12/2018, 2255073, Page3 of 37 TABLE OF CONTENTS RULE 26.1 DISCLOSURE STATEMENT................................................................i TABLE OF AUTHORITIES ................................................................................... iii INTEREST OF AMICUS CURIAE .......................................................................... 1 SUMMARY OF ARGUMENT ................................................................................. 4 ARGUMENT ............................................................................................................. 6 I. NHTSA's Claim that the Suspension Rule Did No Harm Was Arbitrary and Capricious .................................................................................................... 6 A. The 2016 Civil Penalties Rule Would Have Improved Fuel Efficiency and Suspending It Caused Harm .............................................. 7 B. The Suspension Rule Caused Immediate Harm ....................................... 12 II. The Suspension Rule Did Not Preserve the Status Quo ........................