Vermont AG: Challenges NHTSA CAFE Rollback in Multi-State Suit

• Vermont Attorney General Charity Clark has joined 25 other states, counties, and cities in a lawsuit against the National Highway Traffic Safety Administration.
• The lawsuit challenges a final rule that weakens Corporate Average Fuel Economy standards for new passenger cars and light trucks.
• Plaintiffs allege NHTSA's rule is arbitrary and capricious, violating both the Administrative Procedure Act and the Energy Policy and Conservation Act.
• The challenged rule is accused of ignoring electric vehicles in its analysis and overlooking billions in lost fuel savings and climate damages.
• The coalition asserts the rule will harm consumers, the environment, and the electric vehicle industry by ending the CAFE credit trading program in 2028.

The coalition's lawsuit asserts that NHTSA's final rule is arbitrary and capricious, directly violating both the Administrative Procedure Act (APA) and the Energy Policy and Conservation Act (EPCA).

Vermont Attorney General Charity Clark has joined a significant multi-state legal action against the National Highway Traffic Safety Administration (NHTSA). This lawsuit directly challenges a final rule issued by NHTSA, which is accused of substantially weakening the Corporate Average Fuel Economy (CAFE) standards applicable to new passenger cars and light trucks.

The coalition initiating this legal challenge is extensive, comprising 26 states, counties, and cities. Among the plaintiffs are the attorneys general from California, Arizona, Colorado, Connecticut, Delaware, Hawai‘i, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New Mexico, New York, North Carolina, Oregon, Rhode Island, Washington, Wisconsin, and the District of Columbia. Additionally, the City of Chicago, the City and County of Denver, the City of New York, and the City and County of San Francisco are part of the collective legal effort.

Attorney General Clark underscored the critical role of fuel economy standards in safeguarding Vermont families from the financial burdens and environmental repercussions linked to fossil fuel dependence. She affirmed that the challenge aims to ensure the federal government adheres to its legal obligations and protects public interests. This particular lawsuit is one of several legal actions Attorney General Clark has joined or initiated challenging policies from the previous administration.

The foundational framework for federal fuel economy regulations was established in 1975 with the enactment of the Energy Policy and Conservation Act (EPCA) by Congress. This landmark legislation explicitly mandates that NHTSA develop and implement "maximum feasible" fuel economy standards for all new vehicles. In fulfilling this directive, NHTSA is required to meticulously consider a range of critical factors, including the technological feasibility of improvements, their economic practicability, and the overarching national imperative to conserve energy resources.

Historically, NHTSA's approach to setting these vital standards involved a two-step process. First, the agency would model the current performance of the existing vehicle fleet. Following this, it would meticulously evaluate potential actions that manufacturers could undertake to significantly enhance fuel efficiency across their product lines. Past rulemakings, even those conducted during the initial Trump Administration, consistently utilized a realistic baseline fleet that accurately accounted for the millions of electric vehicles already operating on U.S. roads. Standards were then developed based on how improvements to gasoline-powered vehicles could contribute to a more efficient overall fleet, reflecting the true composition of the automotive landscape.

However, the final rule now under challenge introduces a novel reinterpretation of the law, which the plaintiffs contend is improper. This new methodology compels NHTSA to disregard the substantial presence of millions of electric vehicles within the nation's existing fleet. This critical omission, according to the lawsuit, leads to a flawed and dramatically distorted analysis when attempting to ascertain the "maximum feasible" fuel economy level, thereby undermining the core intent and effectiveness of the EPCA.

The coalition's lawsuit asserts that NHTSA's final rule is arbitrary and capricious, directly violating both the Administrative Procedure Act (APA) and the Energy Policy and Conservation Act (EPCA). This alleged weakening of standards is projected to inflict significant harm upon both consumers and the environment, effectively rendering the federal fuel-economy program toothless and unable to shield consumers from escalating gas prices or the persistent instability of global oil markets.

NHTSA's analytical underpinnings for the rule are heavily criticized for being defective across several key areas. These include its assessments of vehicle affordability, sales projections, fleet turnover rates, anticipated fuel savings, and crucial considerations for vehicle safety. The agency is specifically accused of attempting to obscure a staggering nearly $220 billion in lost fuel savings that consumers would have otherwise realized under the previous, more stringent fuel economy standards.

Furthermore, the rule conspicuously fails to account for hundreds of billions of dollars in future damages that are expected to arise from climate change-driven disasters. By effectively valuing these substantial costs at zero, the rule is seen as flouting established scientific consensus. The rule also directly defies a long-standing Congressional mandate by asserting that the United States no longer needs to conserve energy, thereby treating high gasoline prices and the inherent volatility of global oil markets as acceptable conditions. A particularly impactful consequence of the final rule is the planned termination of the CAFE credit trading program in 2028, an action that is expected to severely impact electric vehicle industries, which are vital employers and significant economic contributors across the United States.

Automotive manufacturers and their legal counsel should closely monitor this multi-state lawsuit, as its outcome could determine the future stringency of federal Corporate Average Fuel Economy (CAFE) standards, directly impacting vehicle design, production, and compliance obligations for the industry.

Source: Original reporting via Attorney General Clark's office