Petition for Review of Agency Rulemaking The petitioners ask this Court to vacate a final rule published by the National Highway Traffic Safety Administration (“NHTSA”) on July 26, 2019, which reversed the agency’s 2016 increase to the base rate of the Corporate Average Fuel Economy (“CAFE”) penalty. They argue that NHTSA erroneously concluded that the Federal Civil Penalties Inflation Adjustment Act Improvements Act (the “Improvements Act”) is inapplicable to the CAFE penalty because it is not a “civil monetary penalty” as that term is defined by statute. They also contend that NHTSA improperly reconsidered the merits of the CAFE penalty increase by evaluating its economic effects. We hold that (1) the CAFE penalty is a civil monetary penalty under the Improvements Act and (2) NHTSA’s reconsideration of the economic effects of its initial rule was untimely and therefore unauthorized. We therefore GRANT the petitions for review and VACATE the rule. WILLIAM NARDINI, C.J. During the oil crisis of the 1970s, Congress created a system of fuel economy standards for automobiles to boost fuel efficiency and drive down American dependence on foreign energy supplies. To promote those Corporate Average Fuel Economy (“CAFE”) standards, Congress exposed automobile manufacturers to penalties if their annual fleets fell short of the mark. Congress first set the penalty at $5 for every tenth of a mile per gallon (“mpg”) below the standard, multiplied by the number of cars in a manufacturer’s fleet, subject to certain offsets. Inflation, however, can take the bite out of fines. In recognition of this basic economic phenomenon, Congress enacted laws in 1990, 1996, and 2015 to identify civil monetary penalties that were losing ground to inflation and to periodically update them to catch up with the Consumer Price Index. After the first act, the National Highway Traffic Safety Administration (“NHTSA”) and the Office of Management and Budget (“OMB”) identified the CAFE penalty as among those to be adjusted. Following the 1996 law, NHTSA engaged in rulemaking that increased the CAFE penalty rate from $5 to $5.50, and then, following the 2015 law, to $14. NHTSA shifted gears, however, starting in 2017. First, it indefinitely delayed implementation of the increase to $14. Acting on a petition for review, this Court held that the delay violated NHTSA’s statutory authority and that the increase was therefore in effect for the 2019 model year.1 In 2019, following our decision, NHTSA issued a final rule that rolled back the penalty to $5.50 on the theory that the inflation-adjustment laws do not apply to the CAFE penalty in the first place, and that even if they did, an increase would be unwarranted as a matter of economic policy. Following this latest move by NHTSA, we are presented with petitions for review that require us to answer two questions of statutory construction: (1) whether the penalty for violating the CAFE standards is a “civil monetary penalty” as defined in these inflation-adjustment laws; and, if so, (2) whether these laws authorized NHTSA to reconsider, in 2019, the 2016 catch-up inflation adjustment based on its economic effects. We hold that the CAFE penalty is a “civil monetary penalty” and that NHTSA’s reversal of the catch-up adjustment was untimely. Accordingly, we grant the petitions for review and vacate NHTSA’s final rule reversing the CAFE penalty increase. I. Background In 1975, Congress enacted the Energy Policy and Conservation Act (“EPCA”), which, among other things, created the CAFE standards.2 Congress delegated authority to administer these standards to the Secretary of Transportation,3 who then, in turn, delegated that authority to NHTSA.4 For each model year, NHTSA establishes the CAFE standards as separate “fuel economy targets for different categories of vehicles, measured in miles per gallon.”5 If a manufacturer fails to meet the model year target for a given category of vehicles, it is subject to a penalty assessed by multiplying the base penalty rate — which Congress initially pegged at $56 — by the amount the manufacturer falls short, as measured by each tenth of an mpg that the manufacturer’s fleet-wide average mpg is below the standard, multiplied by the number of vehicles in that fleet.7 A manufacturer can reduce its shortfall in compliance by applying “credits,” which may be earned when a fleet’s average mpg exceeds the CAFE standard for a given model year or purchased from another manufacturer.8 EPCA authorizes NHTSA to make discretionary increases to the base penalty rate if it finds that certain factors have been met,9 but NHTSA has never acted under this authority. In 1990, Congress passed the Federal Civil Penalties Inflation Adjustment Act (“Inflation Adjustment Act”) to study whether inflation had diminished the efficacy of “civil monetary penalties,” which Congress defined as penalties that are (a) either “for a specific monetary amount” or having “a maximum amount” and (b) “assessed or enforced by an agency pursuant to Federal law.”10 This law effectively mandated a research exercise, requiring the executive branch to submit annual reports to Congress about existing civil monetary penalties.11 In July 1991, OMB submitted a compilation of civil monetary penalties reported by 41 federal agencies. In that list, NHTSA identified the CAFE penalty as fitting the statutory definition of civil monetary penalty.12 Congress amended the Inflation Adjustment Act in 1996 to mandate inflation-related adjustments to “civil monetary penalties,” as defined by the Inflation Adjustment Act.13 It directed agencies to adjust each of their civil monetary penalties for inflation within six months and to continue doing so “at least once every four years thereafter.”14 Importantly, however, the initial adjustment was capped at 10 percent of the penalty’s base amount.15 In 1997, pursuant to this amendment, NHTSA increased the base rate for the CAFE penalty from $5 to $5.50 — the maximum permitted adjustment.16 In doing so, NHTSA concluded (as it had in 1991) that the CAFE penalty was a civil monetary penalty under the Inflation Adjustment Act. NHTSA did not make further increases to the base penalty rate under this authority, because the statute’s rounding procedure effectively precluded them.17 In 2015, Congress further amended the Inflation Adjustment Act through the enactment of the Federal Civil Penalties Inflation Adjustment Act Improvements Act (the “Improvements Act”), which required new inflation adjustments and eliminated the provisions that had prevented certain increases.18 Like its predecessors, the Improvements Act added language referencing “civil monetary penalties,” leaving the definition in the Inflation Adjustment Act unaltered.19 The Improvements Act’s method for calculating inflation adjustments, however, differed from the previous method in two key ways. First, it replaced the requirement that agencies calculate inflation adjustments based on the year in which the penalty was last adjusted with a requirement that adjustments be calculated based on the year that the penalty “was established…or last adjusted other than pursuant to the Inflation Adjustment Act.”20 Second, it changed the rounding rules. Instead of rounding increases to the nearest $10 figure, it now rounded to the nearest $1.21 The Improvements Act required that all federal agencies responsible for administering civil monetary penalties make an initial “catch-up” inflation adjustment to those penalties by July 1, 2016, and annual inflation adjustments thereafter.22 Agencies were instructed to calculate the catch-up adjustment by multiplying each civil monetary penalty amount by the “percentage…by which the Consumer Price Index for the month of October, 2015 exceed[ed] 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 [the Inflation Adjustment Act].”23 The Improvements Act capped the initial adjustment at 150 percent of the existing penalty.24 Though an agency was permitted to apply a lower catch-up adjustment than otherwise called for by the Improvements Act, it could do so only if (1) the head of the agency found that increasing the penalty by the otherwise required amount would create a “negative economic impact” or result in “social costs” that “outweigh[ed] the benefits” of the required increase, and (2) OMB concurred in those findings.25 OMB required that agencies making such findings submit notice to OMB “no later than May 2, 2016.”26 On July 5, 2016, pursuant to the Improvements Act, NHTSA published an interim final rule increasing the base rate of the CAFE penalty from $5.50 to $14, following the statutory formula for the catch-up adjustment.27 The interim final rule provided that the new rate would take effect on August 4, 2016.28 On December 28, 2016, NHTSA issued a revised final rule that confirmed the increase to $14.29 In response to requests from industry organizations, however, “NHTSA determined that it would not apply the new penalty rates retroactively and would instead delay the implementation of the [higher] penalty rate until model year 2019.”30 Following the change in administrations, NHTSA temporarily delayed implementation of the new base penalty rate several times before extending the delay indefinitely.31 The agency issued a final rule (the “Suspension Rule”) announcing that it intended to reconsider the penalty increase and soliciting public comments on what an appropriate adjustment might be.32 A group of states and environmental organizations sought review of that delay in this Court.33 In an opinion issued on June 29, 2018, we vacated the Suspension Rule, holding that NHTSA had “exceeded its statutory authority in indefinitely delaying” the rule increasing the base penalty rate to $14 for the 2019 model year.34 The penalty increase rule, we stated, was “now in force.”35 NHTSA responded not by implementing the new rate, but instead by reconsidering whether the Improvements Act applied to the CAFE penalty at all.36 On July 26, 2019, it issued a final rule (the “2019 Final Rule”) reversing the inflation adjustment to the CAFE penalty from $14 back to $5.50 based on its conclusion that the CAFE penalty is not a “civil monetary penalty” within the Improvements Act’s definition.37 Even if the Improvements Act applied, NHTSA added, the “negative economic impact” that any increase in the CAFE penalty would create was sufficient to support reversing the increase.38 In an informal letter, OMB concurred with NHTSA’s conclusion that the Improvements Act did not apply to the CAFE penalty.39 A group of states and the District of Columbia (the “States”) and two non-governmental organizations, the Natural Resources Defense Council and the Sierra Club (the “NGOs”), filed timely petitions for review of the 2019 Final Rule. We consolidated the cases, and the Alliance for Automotive Innovation intervened based on the interests of its members. II. Discussion This Court reviews an agency’s final action under the Administrative Procedure Act.40 We will “hold unlawful and set aside” any agency action that is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law”; that is “in excess of statutory…authority”; or that is “without observance of procedure required by law.”41 The States and NGOs argue that NHTSA’s reversal of the 2016 penalty increase is unlawful because the CAFE penalty is a civil monetary penalty under the Improvements Act, and because the Act did not permit agencies to reconsider the effects of their inflation adjustments once certain statutory time frames had passed.42 We examine each contention in turn. A. The CAFE penalty is a “civil monetary penalty.” We begin, as in all “statutory interpretation disputes,…[with] a careful examination of the ordinary meaning and structure of the law itself.”43 To assess “ordinary meaning,” we consider the commonly understood meaning of the statute’s words “at the time Congress enacted the statute,”44 and “with a view to their place in the overall statutory scheme.”45 If the meaning is unambiguous, that is the end of our inquiry. “[O]nly when a statute’s text is ambiguous [may] we turn to other tools of statutory interpretation to help clarify the ambiguity.”46 In this case, the phrase of critical importance is “civil monetary penalty,” as used in the Improvements Act. If the CAFE penalty is not a “civil monetary penalty,” then NHTSA is correct that the Improvements Act did not mandate the increase to a $14 base penalty rate. If, on the other hand, the CAFE penalty is a “civil monetary penalty,” then NHTSA was required to apply the Improvements Act and adjust the penalty rate accordingly (unless, of course, one of the Act’s exceptions apply). As a preliminary matter, we agree with NHTSA that we did not decide whether the CAFE penalty is a “civil monetary penalty” in NRDC v. NHTSA, for the simple reason that the question was not presented to us for decision. Our pronouncements in that case about the mandatory nature of the timing in the Improvements Act assumed, without deciding, that the Act applied to the CAFE penalty.47 Because we “have not [previously] decided that the statutory language at issue in this case…is unambiguous,” this question is not water under the bridge.48 The statutory definition of “civil monetary penalty” is our starting point: (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….49 EPCA, in turn, defines the CAFE penalty as follows: (b) Penalty for manufacturer violations of fuel economy standards. — Except as provided in subsection (c) of this section, a manufacturer that violates a standard prescribed for a model year under section 32902 of this title is liable to the Government for a civil penalty of $5 multiplied by each.1 of a mile a gallon by which the applicable average fuel economy standard under that section exceeds the average fuel economy — (1) calculated under section 32904(a)(1)(A) or (B) of this title for automobiles to which the standard applies manufactured by the manufacturer during the model year; (2) multiplied by the number of those automobiles; and (3) reduced by the credits available to the manufacturer under section 32903 of this title for the model year.50 It is undisputed that the CAFE penalty is “assessed and enforced by an agency” (NHTSA) “pursuant to Federal law” (EPCA), as required by subsection (2)(B) of the Improvements Act, and that the CAFE penalty is “assessed or enforced pursuant to an administrative proceeding or a civil action in the Federal courts,” as required by subsection (2)(C).51 The inquiry therefore turns on whether the CAFE penalty is “for a specific monetary amount” under subsection (2)(A).52 We conclude that it is. As relevant here, the base rate used to calculate the CAFE penalty is very specific, and it is framed in terms of a particular monetary amount: It is a fixed dollar figure, which Congress originally established at $5 when it enacted EPCA, and which NHTSA later increased by rulemaking to $5.50 and later to $14. Although the dollar figure has been updated twice, it has always been clearly identified and has never been ambiguous. Moreover, the base rate is just that — a fixed dollar rate that is used as a multiplier to determine the overall penalty to be assessed against a noncompliant manufacturer. The fact that the CAFE penalty’s base rate is what NHTSA describes as “an input in a formula”53 does not exclude it from the Improvements Act’s definition of a “civil monetary penalty.” A penalty can be “specific” if it is based on a rate with an identified dollar amount; and the use of a rate necessarily implies that the rate will be multiplied by something. This interpretation comports with how other agencies have consistently construed the Improvements Act to apply to civil monetary penalties that are calculated using formulas, including by multiplying a particular dollar amount by some other ascertainable figure, such as the number of violations, days in violation, or units in violation.54 Thus, even assuming that NHTSA is correct that the CAFE penalty should be conceptualized as the total amount for which a manufacturer is liable after conducting all the calculations set forth in §32912(b), that final amount is still based on a fixed-dollar multiplier and is therefore “for a specific monetary amount.” That manufacturers can lower a penalty amount by applying credits does not change our assessment. Under EPCA, credits are not a means of paying a penalty, but are themselves a method of complying with the CAFE standard. The statute states that “[c]ompliance is determined after considering credits available to the manufacturer under section 32902 of this title.”55 In §32912(b), overcompliance with the CAFE standards (which a manufacturer may earn or purchase from another manufacturer) is netted out against undercompliance, yielding what is effectively a total net violation. It is this total net violation that is multiplied by the CAFE base penalty rate to yield the aggregate penalty. Credits are therefore just one more input in the CAFE penalty formula, not unlike the number of vehicles in a manufacturer’s fleet or a manufacturer’s mpg shortfall. Accordingly, this credit system does not push the CAFE penalty beyond the Improvements Act’s reach. Context provides additional support for our reading.56 The statutory purpose of the Improvements Act is to adjust civil monetary penalties to keep pace with inflation.57 Whether a statute describes a penalty as a standalone dollar figure or as a dollar amount to be multiplied by other factors, that penalty will lose value over time as inflation creeps up.58 And regardless of whether the dollar figure is to be multiplied by the number of violations, days of violation, or some other increment of noncompliance, it remains equally vulnerable to inflation — and therefore equally suited to indexing for inflation. For these reasons, the CAFE penalty is a “civil monetary penalty” under the Improvements Act.59 NHTSA argues that to the extent there is ambiguity as to whether the CAFE penalty constitutes a “civil monetary penalty,” we should resolve it in favor of the agency’s 2019 Final Rule, giving deference to the agency’s interpretation under Chevron or, at least, Skidmore.60 Because we have found no ambiguity in the statute, neither form of agency deference is implicated. But even if we agreed with NHTSA that the meaning of “civil monetary penalty” was ambiguous when the Inflation Adjustment Act was passed, any ambiguity would have been resolved when Congress enacted the Improvements Act, which re-used the phrase “civil monetary penalty” without alteration after NHTSA had consistently applied it to the CAFE penalty.61 As the Supreme Court has instructed, “[w]hen administrative…interpretations have settled the meaning of an existing statutory provision, repetition of the same language in a new statute indicates, as a general matter, the intent to incorporate its administrative…interpretations as well.”62 Justice Frankfurter once said that “if a word is obviously transplanted from another legal source, whether the common law or other legislation, it brings the old soil with it.”63 It’s also fair to say that when Congress plants the same seed in the same soil, it can expect the same plant to grow. By the time Congress enacted the Improvements Act in 2015, the term “civil monetary penalty” had a settled legal meaning — both in terms of its statutory definition generally and its application to the CAFE penalty specifically. The term was originally used in the Inflation Adjustment Act of 1990, which adopted the definition currently in use.64 In its report to OMB following Congress’s enactment of the Inflation Adjustment Act, NHTSA identified the CAFE penalty as a “civil monetary penalty.”65 Congress then reused that phrase — subject to the same definition — in the 1996 amendments that required agencies to increase their “civil monetary penalties” to account for inflation.66 Most importantly, in 1997, NHTSA promulgated a final rule that increased the base rate for the CAFE penalty from $5 to $5.50 based on its application of the 1996 amendments.67 Thus, when Congress used the phrase “civil monetary penalties” for the third time, in the 2015 Improvements Act, the term had already received a particular administrative construction — that it encompassed the CAFE penalty, despite its use of a formula, including multipliers and a credit offset.68 By the time of the 2015 enactment, any arguable question over whether the CAFE penalty was a “civil monetary penalty” covered by the Improvements Act had been settled in the affirmative.69 Finally, our conclusion that the CAFE penalty is a “civil monetary penalty” does not conflict with EPCA. NHTSA and the intervenor, Alliance for Automotive Innovation, argue that the Improvements Act does not apply to the CAFE penalty because its directive to increase civil monetary penalties conflicts with the limitations on penalty increases in EPCA. But as we have previously recognized, “[n]othing in EPCA contradicts or undermines th[e] mandate” in the Improvements Act to increase civil monetary penalties.70 EPCA merely authorizes discretionary increases to the CAFE penalty base rate under certain conditions.71 The penalty-increase provisions of the Improvements Act and EPCA “are capable of co-existence,” and it is therefore our “duty” to interpret the provisions in a manner that renders “each…effective.”72 B. The Improvements Act did not authorize NHTSA to reconsider the economic effects of its rule outside the timeline specified by Congress. Having concluded that the Improvements Act mandates an inflation adjustment to the CAFE penalty, we now consider whether — in 2019 — NHTSA was permitted to reconsider the economic effects of the increase it had already promulgated in 2016. We reject NHTSA’s argument that, at the time it issued the 2019 Final Rule, it was permitted to reverse the penalty increase on the grounds that the increase would create a “negative economic impact.”73 The Improvements Act outlined a “highly circumscribed schedule for…penalty increases.”74 NHTSA maintains that although the Improvements Act includes a deadline for the publication of an interim final rule, “nothing in the statute imposes a deadline on any final rule following further comments or consideration in that interim final rule-making.”75 It is true that the Act permitted agencies to “adjust the amount of a civil monetary penalty by less than the otherwise required amount [for the initial catch-up adjustment]…after publishing a notice of proposed rulemaking and providing an opportunity for comment,” so long as the agency met certain requirements.76 But this provision did not give the agency an unlimited amount of time to reconsider its initial catch-up adjustment. The time-sensitive nature of the final rule is clear in the full context of the Improvements Act, which requires not only an interim final rule increasing each penalty by “no[] later than July 1, 2016,” but also additional increases to each penalty by “no[] later than January 15 of every year thereafter.”77 In other words, the annual increases starting in 2017 would necessarily build on the initial catch-up adjustment. Thus, even if we agreed with NHTSA that the Improvements Act permitted reconsideration of the catch-up increase following its publication of an interim final rule, the window for that reconsideration was narrow and limited to the year 2016 — or more precisely, two weeks into the next year, before the next required increase due by January 15, 2017. As in NRDC v. NHTSA, we cannot here “read the Improvements Act to permit the very kind of indefinite delay that it was enacted to end.”78 We need not reach the merits of NHTSA’s conclusions regarding negative economic impact because it was not authorized to undertake this reconsideration at the time it did so.79 III. Conclusion In sum, we hold as follows: 1. The CAFE penalty established pursuant to EPCA, 49 U.S.C. §32912(b), is for a “specific monetary amount” and thus constitutes a “civil monetary penalty” for purposes of the Improvements Act, 28 U.S.C. §2461 note sec. 3. NHTSA did not act in accordance with law when it reached the contrary conclusion in its 2019 Final Rule and reversed its initial catch-up inflation adjustment. 2. The Improvements Act provided a limited window of time for NHTSA to reduce the initial catch-up inflation adjustment to the CAFE penalty based on a conclusion that the increase would have a negative economic impact, pursuant to 28 U.S.C. §2461 note sec. 4(c). By 2019, that window had closed, and NHTSA acted in excess of its statutory authority when it reconsidered and reversed its prior increase of the CAFE penalty from $5.50 to $14, based on an assessment of economic consequences. We therefore grant the petitions for review and vacate the 2019 Final Rule. As we have stated before: The Civil Penalties Rule, 81 Fed. Reg. 95,489, 95,489-92 (Dec. 28, 2016), raising the CAFE base penalty rate to $14, is now in force.80
