The National Highway Traffic Safety Administration (NHTSA) recently finalized a rule that significantly reduces the penalties that automakers pay for violating the corporate average fuel economy (CAFE) standards. In reducing the penalty, NHTSA rolled back an adjustment that had been made to the penalty under the Inflation Act, a statute requiring agencies to adjust civil monetary penalties to account for decades of inflation. We submitted an amicus brief in the Court of Appeals for the Second Circuit focusing on NHTSA’s faulty economic justifications for the rule, arguing that this repeal was unlawful.
First, our brief rebuts NHTSA’s determination that the Inflation Act does not apply to the CAFE penalty, explaining that the CAFE penalty works similarly to other civil penalties throughout federal law, which are routinely adjusted under the Inflation Act. Second, our brief argues that NHTSA’s alternative determination to repeal the adjustment because it found a “negative economic impact” inappropriately ignores all of the costs of reducing the CAFE penalty—including over $100 billion in additional fuel costs for U.S. consumers and approximately $25 billion in climate and public-health costs resulting from increased greenhouse gas emissions. Finally, we explain that NHTSA’s failure to meaningfully consider the rule’s significant environmental harms also violates the National Environmental Policy Act.