In early 2006 the National Highway Traffic Safety Administration (NHTSA) issued a rule entitled “Average Fuel Economy Standards for Light Trucks, Model Years 2008-2011” (Final Rule). Pursuant to the Energy Policy and Conservation Act of 1975 (EPCA), the Final Rule set corporate average fuel economy (CAFE) standards for light trucks, defined by NHTSA to include many Sport Utility Vehicles (SUVs), minivans, and pickup trucks, for Model Years (MYs) 2008-2011. For MYs 2008-2010, the Final Rule set new CAFE standards using its traditional method, fleet-wide average (Unreformed CAFE). For MY 2011 and beyond, the Final Rule created a new CAFE structure that set varying fuel economy targets depending on vehicle size and required manufacturers to meet different fuel economy levels depending on their vehicle fleet mix (Reformed CAFE).
Eleven states and certain public interest organizations (Petitioners) challenged the Final Rule under the EPCA and the National Environmental Policy Act (NEPA). According to the Petitioners, the Final Rule was arbitrary and capricious, and it was contrary to the EPCA. Among other criticisms, the Petitioners alleged that the Final Rule failed to set the CAFE standard at the maximum feasible level, failed to consider the benefit of carbon dioxide emission reductions in the cost-benefit analysis of alternative fuel economy standards, and established Reformed CAFE standards linked to manufacturer fleet mix in a manner that would not guarantee a minimum average fuel economy or “backstop.” The Petitioners also challenged NHTSA’s failure to close the “SUV loophole” in its definition of passenger vehicles and light trucks.
