Volume 1 of 2

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

CENTER FOR BIOLOGICAL DIVERSITY, 

Petitioner,

v.  No. 06-71891

NATIONAL HIGHWAY TRAFFIC

SAFETY ADMINISTRATION,

Respondent. 

PEOPLE OF THE STATE OF 

CALIFORNIA EX REL. BILL LOCKYER,

ATTORNEY GENERAL; STATE OF

CONNECTICUT; STATE OF MAINE;

COMMONWEALTH OF

MASSACHUSETTS; STATE OF NEW

JERSEY; STATE OF NEW MEXICO;

STATE OF NEW YORK; STATE OF

O No. 06-72317 REGON; STATE OF RHODE ISLAND;

STATE OF VERMONT; DISTRICT OF  TRAN No.

COLUMBIA; CITY OF NEW YORK, Reg. 17,566

Petitioners,

v.

NATIONAL HIGHWAY TRAFFIC

SAFETY ADMINISTRATION, an agency

within the UNITED STATES

DEPARTMENT OF TRANSPORTATION,

Respondents. 

14831
STATE OF MINNESOTA, 

Petitioner,

v. No. 06-72641

NATIONAL HIGHWAY TRAFFIC  TRAN No.

SAFETY ADMINISTRATION, an agency Energy Policy Act

within the UNITED STATES

DEPARTMENT OF TRANSPORTATION,

Respondent. 

SIERRA CLUB; PUBLIC CITIZEN, INC., 

Petitioners,

v.  No. 06-72694

DEPARTMENT OF TRANSPORTATION,

Respondent. 

ENVIRONMENTAL DEFENSE, 

Petitioner,

v.  No. 06-73807

DEPARTMENT OF TRANSPORTATION,

Respondent. 

NATURAL RESOURCES DEFENSE 

No. 06-73826 COUNCIL, INC.,

Petitioner, TRAN No.  NHTSA 2006-

v. 24306

DEPARTMENT OF TRANSPORTATION,

OPINION Respondent. 

14832 CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA
On Petition for Review of an Order of the

Dept. of Transportation, NTSB

Argued and Submitted

May 14, 2007—San Francisco, California

Filed November 15, 2007

Before: Betty B. Fletcher, Eugene E. Siler, Jr.,* and

Michael Daly Hawkins, Circuit Judges.

Opinion by Judge B. Fletcher;

Partial Concurrence and Partial Dissent by Judge Siler

*The Honorable Eugene E. Siler, Jr., Senior United States Circuit Judge

for the Sixth Circuit, sitting by designation. 

CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA 14833
COUNSEL

Patrick Gallagher, Sierra Club; Sean H. Donahue (argued),

Environmental Defense; Aaron Colangelo, David Doniger,

Margaret Renner, Natural Resources Defense Council for

Public Interest petitioner-appellants on Energy Policy Conservation Act Issues. 

Deborah A. Sivas, Holly D. Gordon, Stanford Law School

Environmental Law Clinic; Kassia R. Siegel, Brendan R.

CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA 14837
Cummings, Center for Biological Diversity for Public Interest

petitioner-appellants on National Environmental Policy Act

Issues. 

Edmund Brown, Jr., Thomas Greene, Theodora Berger, Ken

Alex, Susan S. Fiering (argued), Office of the Attorney General of California; Richard Blumenthal, Kimberly Massicotte,

Jose Suarez, Office of the Attorney General of Connecticut;

G. Steven Rowe, Gerald D. Reid, Office of the Attorney General of Maine; Thomas F. Reilly, William L. Pardee, Matthew

Brock, Office of the Attorney General of Massachusetts; Stuart Rabner, Howard Geduldig, Lisa J. Morelli, Office of the

Attorney General of New Jersey; Patricia A. Madrid, Stephen

R. Farris, Office of the Attorney General of New Mexico;

Eliot Spitzer, Caitlin Halligan, Jared Snyder, Office of the

Attorney General of New York; Hardy Myers, Philip

Schradle, Richard M. Whitman, Office of the Attorney General of Oregon; Patrick C. Lynch, Tricia K. Jedele, Office of

the Attorney General of Rhode Island; William H. Sorrell,

Kevin O. Leske, Office of the Attorney General of Vermont;

Eugene A. Adams, Todd S. Kim, Donna M. Murasky, Office

of the Attorney General for the District of Columbia; Michael

A. Cardozo, Susan M. Kath, Scott Pasternack, Tracy Triplett,

Corporation Counsel for the City of New York; Mike Hatch,

Ronald Gitek, Office of the Attorney General of Minnesota

for petitioner-appellants in Consolidated Cases Nos. 06-72317

and 06-72641. 

Rosalind A. Knapp, Paul M. Geier, Peter J. Plocki, Anthony

M. Cooke, Lloyd S. Guerci, Katherine C. Gehringer, Timothy

H. Goodman, David W. Case, National Highway Traffic

Safety Administration, Department of Transportation; Peter

D. Keisler, Matthew J. McKeown, Office of the U.S. Attorney

General; Ronald M. Spritzer, Environment and Natural

Resources Division; Douglas N. Letter, H. Thomas Byron

(argued), U.S. Department of Justice, Civil Division for the

respondent-appellees. 

14838 CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA
OPINION

B. FLETCHER, Circuit Judge: 

Eleven states, the District of Columbia, the City of New

York, and four public interest organizations petition for

review of a rule issued by the National Highway Traffic

Safety Administration (NHTSA) entitled “Average Fuel

Economy Standards for Light Trucks, Model Years 2008-

2011,” 71 Fed. Reg. 17,566 (Apr. 6, 2006) (“Final Rule”)

(codified at 49 C.F.R. pt. 533). Pursuant to the Energy Policy

and Conservation Act of 1975 (EPCA), 49 U.S.C. §§ 32901-

32919 (2007), the Final Rule sets 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 sets new CAFE standards using its

traditional method, fleet-wide average (Unreformed CAFE).

For MY 2011 and beyond, the Final Rule creates a new CAFE

structure that sets varying fuel economy targets depending on

vehicle size and requires manufacturers to meet different fuel

economy levels depending on their vehicle fleet mix

(Reformed CAFE). 

Petitioners challenge the Final Rule under the EPCA and

the National Environmental Policy Act of 1969 (NEPA), 42

U.S.C. §§ 4321-4347 (2007).1 First, they argue that the Final

Rule is arbitrary, capricious, and contrary to the EPCA

because (a) the agency’s cost-benefit analysis does not set the

1Petitioners also argued in their opening briefs that the EPCA does not

preempt California’s Clean Air Act motor vehicle greenhouse gas emissions standards. They raised this argument in response to NHTSA’s assertion in the preamble of the Final Rule that the EPCA preempts state laws

and regulations regarding fuel economy standards. See 71 Fed. Reg. at

17,654-70. We do not address this issue since the parties agreed in their

response briefs and at oral argument that the preemption discussion in the

preamble of the Final Rule is not final agency action and thus not currently reviewable. 

CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA 14839
CAFE standard at the “maximum feasible” level and fails to

give due consideration to the need of the nation to conserve

energy; (b) its calculation of the costs and benefits of alternative fuel economy standards assigns zero value to the benefit

of carbon dioxide (CO2) emissions reduction; (c) its calculation of costs and benefits of alternative fuel economy standards fails to evaluate properly the benefit of vehicle weight

reduction; (d) Reformed CAFE standards will depend on

manufacturer fleet mix and not guarantee a minimum average

fuel economy or “backstop”; (e) the transition period during

which manufacturers may choose to comply with either Unreformed or Reformed CAFE is contrary to the “maximum feasible” requirement and unnecessary; (f) it perpetuates the

“SUV loophole,” which allows SUVs, minivans, and pickup

trucks to satisfy a lower fuel economy standard than cars; and

(g) it excludes most vehicles rated between 8,500 and 10,000

pounds gross vehicle weight (comprised mostly of large

pickup trucks) from any fuel economy regulation, even

though these vehicles satisfy the statutory criteria for regulation. 

Second, Petitioners argue that NHTSA’s Environmental

Assessment is inadequate under NEPA because it fails to take

a “hard look” at the greenhouse gas implications of its rulemaking and fails to analyze a reasonable range of alternatives

or examine the rule’s cumulative impact. Petitioners also

argue that NEPA requires NHTSA to prepare an Environmental Impact Statement. 

NHTSA argues that the Final Rule is not arbitrary and

capricious or contrary to the EPCA, the Environmental

Assessment’s evaluation of the environmental consequences

of its action is adequate, and an Environmental Impact Statement is not required. 

We have jurisdiction under 49 U.S.C. § 32909(a) to review

the Final Rule issued by NHTSA. We hold that the Final Rule

is arbitrary and capricious, contrary to the EPCA in its failure

14840 CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA
to monetize the value of carbon emissions, failure to set a

backstop, failure to close the SUV loophole, and failure to set

fuel economy standards for all vehicles in the 8,500 to 10,000

gross vehicle weight rating (“GVWR”) class. We also hold

that the Environmental Assessment was inadequate and that

Petitioners have raised a substantial question as to whether the

Final Rule may have a significant impact on the environment.

Therefore, we remand to NHTSA to promulgate new standards as expeditiously as possible and to prepare a full Environmental Impact Statement.

I. FACTUAL AND PROCEDURAL BACKGROUND

A. CAFE Regulation Under the Energy Policy and

Conservation Act 

In the aftermath of the energy crisis created by the 1973

Mideast oil embargo, Congress enacted the Energy Policy and

Conservation Act of 1975, Pub. L. No. 94-163, 89 Stat. 871,

901-16. See H.R. Rep. No. 94-340 at 1-3 (1975), as reprinted

in 1975 U.S.C.C.A.N. 1762, 1763-65. 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 habits and expectations.” Id. at 1763. The goals of the EPCA are to “decrease

dependence on foreign imports, enhance national security,

achieve the efficient utilization of scarce resources, and guarantee the availability of domestic energy supplies at prices

consumers can afford.” S. Rep. No. 94-516 (1975) (Conf.

Rep.), as reprinted in 1975 U.S.C.C.A.N. 1956, 1957. These

goals are more pressing today than they were thirty years ago:

since 1975, American consumption of oil has risen from 16.3

million barrels per day to over 20 million barrels per day, and

the percentage of U.S. oil that is imported has risen from 35.8

to 56 percent. NRDC Cmt. at 11;2see also 71 Fed. Reg. at

17,644. 

2Natural Resources Defense Council-Comments, NHTSA Docket No.

2005-22223-1705 (Nov. 23, 2005). 

CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA 14841
In furtherance of the goal of energy conservation, Title V

of the EPCA establishes automobile fuel economy standards.

An “average fuel economy standard” (often referred to as a

CAFE standard) is “a performance standard specifying a

minimum level of average fuel economy applicable to a manufacturer in a model year.” 49 U.S.C. § 32901(a)(6) (2007).

Only “automobiles” are subject to fuel economy regulation,

and passenger automobiles must meet a statutory standard of

27.5 mpg, 49 U.S.C. § 32902(b),3 whereas non-passenger

automobiles must meet standards set by the Secretary of

Transportation, id. § 32902(a). Congress directs the Secretary

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.” Id. § 32902(a).4

Under this subsection, the Secretary is authorized to “prescribe separate standards for different classes of automobiles.”

Id. Congress also provides that “[w]hen deciding maximum

feasible average fuel economy under this section, the Secretary of Transportation5

 shall consider 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). 

3The Secretary of Transportation may prescribe regulations amending

the standard for passenger automobiles “to a level that the Secretary

decides is the maximum feasible average fuel economy level for that

model year.” 49 U.S.C. § 32902(c) (2007). 

4

“Non-passenger automobiles. At least 18 months before the beginning of each model year, the Secretary of Transportation shall prescribe

by regulation average fuel economy standards for automobiles (except

passenger automobiles) manufactured by a manufacturer in that model

year. Each standard shall be the maximum feasible average fuel economy

level that the Secretary decides the manufacturers can achieve in that

model year. The Secretary may prescribe separate standards for different

classes of automobiles.” Id. § 32902(a). 

5The Secretary of Transportation delegated authority to promulgate

average fuel economy regulation to NHTSA. See 49 C.F.R. § 1.50(f)

(2007). 

14842 CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA
Under the EPCA’s definitional scheme, vehicles not manufactured primarily for highway use and vehicles rated at

10,000 lbs. gross vehicle weight or more are excluded from

fuel economy regulation altogether because they are not “automobiles.”6

 An “automobile” is defined as:

a 4-wheeled vehicle that is propelled by fuel, or by

alternative fuel, manufactured primarily for use on

public streets, roads, and highways . . . , and rated at

— 

(A) not more than 6,000 pounds gross vehicle

weight;7 or 

(B) more than 6,000, but less than 10,000, pounds

gross vehicle weight, if the Secretary decides by regulation that— 

(i) an average fuel economy standard under this

chapter for the vehicle is feasible; and 

(ii) an average fuel economy standard under this

chapter for the vehicle will result in significant

energy conservation or the vehicle is substantially

used for the same purposes as a vehicle rated at not

more than 6,000 pounds gross vehicle weight. 

49 U.S.C. § 32901(a)(3). Although NHTSA has the authority

to regulate the fuel economy of vehicles up to 10,000 lbs.

GVWR, see id. § 32901(a)(3)(B), the agency has excluded

vehicles exceeding 8,500 lbs. (other than medium-duty pas6For example, the Hummer H1 is more than 10,000 lbs. GVWR and

thus not subject to CAFE regulation. UCS Cmt. at 33 n.14 (Union of Concerned Scientists-Comments, NHTSA Docket No. 2005-22223-1978

(Nov. 25, 2005)). 

7A “GVWR” is “the value specified by the manufacturer as the loaded

weight of a single vehicle.” 49 C.F.R. § 523.2 (2007). 

CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA 14843
senger vehicles manufactured during MY 2011 or thereafter)

from its definition of “automobile,” see 49 C.F.R. § 523.3(b).

The CAFE standards NHTSA sets for non-passenger automobiles or “light trucks,” as referred to by the agency in its

regulations,8 are lower than the standards for passenger automobiles. Compare 49 C.F.R. § 533.5(a) (2007) with 49 C.F.R.

§ 531.5(a) (2007). A “passenger automobile” is defined as:

an automobile that the Secretary decides by regulation is manufactured primarily for transporting not

more than 10 individuals, but does not include an

automobile capable of off-highway operation that the

Secretary decides by regulation— 

(A) has a significant feature (except 4-wheel drive)

designed for off-highway operation; and 

(B) is a 4-wheel drive automobile or is rated at

more than 6,000 pounds gross vehicle weight. 

49 U.S.C. § 32901(a)(16). 

The Final Rule sets CAFE standards for “light trucks,”

defined by NHTSA to include many SUVs, vans, and pickup

trucks, for MYs 2008-2011. See 71 Fed. Reg. at 17,568; 49

C.F.R. § 533.5(a), (g), (h). A “light truck” is:

an automobile other than a passenger automobile

which is either designed for off-highway operation,

as described in paragraph (b) of this section,9 or

8

See, e.g., 49 C.F.R. § 523.5. 

9

49 C.F.R. § 523.5(b) provides: 

An automobile capable of off-highway operation is an

automobile— 

(1)(i) That has 4-wheel drive; or 

14844 CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA
designed to perform at least one of the following

functions: (1) Transport more than 10 persons; (2)

Provide temporary living quarters; (3) Transport

property on an open bed; (4) Provide greater cargocarrying than passenger-carrying volume; or (5) Permit expanded use of the automobile for cargocarrying purposes or other nonpassenger-carrying

purposes through [removable or foldable, stowable

seats to create a flat floor]. 

49 C.F.R. § 523.5(a) (2007). 

For MYs 1996 to 2004, Congress froze the light truck

CAFE standard at 20.7 mpg. See 71 Fed. Reg. at 17,568.

After the legislative restrictions were lifted, NHTSA set new

light truck CAFE standards in April 2003: 21.0 mpg for MY

2005, 21.6 mpg for MY 2006, and 22.2 mpg for MY 2007.

Light Truck Average Fuel Economy Standards Model Years

2005-2007, 68 Fed. Reg. 16,868, 16,871 (Apr. 7, 2003) (codified at 49 C.F.R. pt. 533). 

In response to a request from Congress, the National Academy of Sciences (NAS) published in 2002 a report entitled

“Effectiveness and Impact of Corporate Average Fuel Economy (CAFE) Standards.”

10 The NAS committee made several

(ii) Is rated at more than 6,000 pounds gross vehicle weight;

and 

(2) That has at least four of the following characteristics

[affecting off-road capability relating to approach angle,

breakover angle, departure angle, running clearance, and front

and rear axle clearances]. 

10U.S. DOT/NHTSA-Report, Effectiveness and Impact of Corporate

Average Fuel Economy (CAFE) Standards, NHTSA Docket No. 2005-

22223-14 (Aug. 31, 2005) (Committee on the Effectiveness and Impact of

Corporate Average Fuel Economy (CAFE) Standards, National Research

Council (2002)) (hereinafter “NAS Report”). 

CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA 14845
findings and recommendations. It found that from 1970 to

1982, CAFE standards helped contribute to a 50 percent

increase in fuel economy for new light trucks. Id. at 14. In the

subsequent decades, however, light trucks became more popular since domestic manufacturers faced less competition in

the light truck category and could generate greater profits. Id.

at 18-19. The “less stringent CAFE standards for trucks . . .

provide[d] incentives for manufacturers to invest in minivans

and SUVs and to promote them to consumers in place of large

cars and station wagons.” Id. at 18. When the CAFE regulations were originally promulgated in the 1970s, “light truck

sales accounted for about 20 percent of the new vehicle market,” but now they account for about half. Id. at 88. This shift

has had a “pronounced” effect on overall fuel economy. Id. at

19. As the market share of light trucks has increased, the

overall average fuel economy of the new light duty vehicle

fleet (light trucks and passenger automobiles) has declined

“from a peak of 25.9 MPG in 1987 to 24.0 MPG in 2000.” Id.

Vehicle miles traveled (VMT) by light trucks has also been

growing more rapidly than passenger automobile travel. Id.

The NAS committee found that the CAFE program has

increased fuel economy, but that certain aspects of the program “have not functioned as intended,” including “[t]he distinction between a car for personal use and a truck for work

use/cargo transport,” which “has been stretched well beyond

the original purpose.” Id. at 3. The committee also found that

technologies exist to “significantly reduce fuel consumption,”

for cars and light trucks and that raising CAFE standards

would reduce fuel consumption. Id. at 3-4. Significantly, the

committee found that of the many reasons for improving fuel

economy, “[t]he most important . . . is concern about the

accumulation in the atmosphere of so-called greenhouse

gases, principally carbon dioxide. Continued increases in carbon dioxide emissions are likely to further global warming.”

Id. at 2. In addition, the committee found “externalities of

about $0.30/gal of gasoline associated with the combined

impacts of fuel consumption on greenhouse gas emissions and

14846 CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA
on world oil market conditions”

11 that “are not necessarily

taken into account when consumers purchase new vehicles.”

Id. at 4. 

B. National Environmental Policy Act

NEPA requires a federal agency “to the fullest extent possible,” to prepare “a detailed statement on . . . the environmental impact” of “major Federal actions significantly affecting

the quality of the human environment.” 42 U.S.C.

§ 4332(2)(C)(i) (2007); see also 40 C.F.R. § 1500.2 (2007).

The purpose of NEPA is twofold: “ ‘ensure[ ] that the agency

. . . will have available, and will carefully consider, detailed

information concerning significant environmental impacts[,

and] guarantee[ ] that the relevant information will be made

available to the larger [public] audience.’ ” Idaho Sporting

Cong. v. Thomas, 137 F.3d 1146, 1149 (9th Cir. 1998) (quoting Robertson v. Methow Valley Citizens Council, 490 U.S.

332, 349 (1989)); see also 40 C.F.R. § 1500.1(b) (stating that

environmental information must be provided “before decisions are made and before actions are taken.”). “NEPA

expresses a Congressional determination that procrastination

on environmental concerns is no longer acceptable.” Found.

for N. Am. Wild Sheep v. U.S. Dep’t of Agric., 681 F.2d 1172,

1181 (9th Cir. 1982). NEPA “is our basic national charter for

protection of the environment.” 40 C.F.R. § 1500.1(a). 

If there is a substantial question whether an action “may

have a significant effect” on the environment, then the agency

must prepare an Environmental Impact Statement (EIS). See,

e.g., Blue Mountains Biodiversity Project v. Blackwood, 161

F.3d 1208, 1212 (9th Cir. 1998) (internal quotation marks

omitted). An EIS should contain a discussion of significant

environmental impacts and alternatives to the proposed

11The committee identified the environmental cost of carbon emissions

as $50/tonne carbon (tC), or $0.12 of this $0.30/gal figure. NAS Report

at 85. 

CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA 14847
action. See 40 C.F.R. §§ 1502.1, 1502.14, 1508.7. As a preliminary step, an agency may prepare an Environmental

Assessment (EA) in order to determine whether a proposed

action may “significantly affect[ ]” the environment and

thereby trigger the requirement to prepare an EIS. See 40

C.F.R. § 1508.9(a)(1) (2007). An EA is “a concise public document” that “[b]riefly provide[s] sufficient evidence and analysis for determining whether to prepare an environmental

impact statement or a finding of no significant impact.”

12 Id.

An EA “[s]hall include brief discussions of the need for the

proposal, of alternatives as required by sec. 102(2)(E), of the

environmental impacts of the proposed action and alternatives, and a listing of agencies and persons consulted.” Id.

§ 1508.9(b). 

Whether an action may “significantly affect” the environment requires consideration of “context” and “intensity.” Id.

§ 1508.27; see also Nat’l Parks & Conservation Ass’n v. Babbitt, 241 F.3d 722, 731 (9th Cir. 2001). “Context . . . delimits

the scope of the agency’s action, including the interests affected.” Nat’l. Parks & Conservation Ass’n, 241 F.3d at 731.

Intensity refers to the “severity of impact,” which includes

both beneficial and adverse impacts, “[t]he degree to which

the proposed action affects public health or safety,” “[t]he

degree to which the effects on the quality of the human environment are likely to be highly controversial,” “[t]he degree

to which the possible effects on the human environment are

highly uncertain or involve unique or unknown risks,” and

“[w]hether the action is related to other actions with individually insignificant but cumulatively significant impacts.” 40

C.F.R. § 1508.27(b)(2), (4), (5), (7). 

12A “finding of no significant impact” is known as a “FONSI.” 

14848 CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA
C. NHTSA’s Proposed Rulemaking and Draft

Environmental Assessment 

On December 29, 2003, NHTSA published an advance

notice of proposed rulemaking (ANPRM) that solicited comments on several proposed regulatory changes intended to

increase fuel economy, including a proposal to modernize the

light truck/car distinction and a proposal to increase the

GVWR limit on vehicles subject to CAFE standards. 68 Fed.

Reg. 74,908 (Dec. 29, 2003). NHTSA acknowledged that its

regulations define passenger and non-passenger vehicles “by

the type of use to which they were generally put in the mid1970s,” id. at 74,909, and that “[t]he markets for, and designs

of, cars and light trucks have changed substantially,” with

“some light trucks . . . used primarily to transport passengers,”

id. at 74,913. NHTSA noted that in its original NPRM promulgated in December 1976, it concluded that “Congress

intended that passenger automobiles be defined as those used

primarily for the transport of individuals and that all other

vehicles would fall within the category of non-passenger automobiles.” Id. at 74,926. NHTSA did not present any specific

proposals for reforming the CAFE program, but it presented

two options for including vehicles under 10,000 lbs. GVWR

in the program: (1) regulating medium-duty passenger vehicles (MDPVs),13 which are vehicles between 8,500 and

13NHTSA proposed adopting the Environmental Protection Agency’s

(EPA) definition of MDPVs (used in setting emissions standards): 

Medium-duty passenger vehicle (MDPV) means any heavyduty vehicle (as defined in this subpart) with a gross vehicle

weight rating (GVWR) of less than 10,000 pounds that is

designed primarily for the transportation of persons. The MDPV

definition does not include any vehicle which: 

(1) Is an “incomplete truck” as defined in this subpart; or 

(2) Has a seating capacity of more than 12 persons; or 

(3) Is designed for more than 9 persons in seating rearward of

the driver’s seat; or 

(4) Is equipped with an open cargo area (for example, a pickup truck box or bed) of 72.0 inches in interior length or more. A

covered box not readily accessible from the passenger compartCENTER FOR BIOLOGICAL DIVERSITY v. NHTSA 14849
10,000 lbs. GVWR designed primarily for the transportation

of persons, and (2) regulating all vehicles between 8,500 and

10,000 lbs. GVWR. Id. at 74,930. 

On August 30, 2005, NHTSA issued proposed CAFE standards for light trucks MYs 2008-2011 of 22.5 mpg for MY

2008, 23.1 mpg for MY 2009, and 23.5 mpg for MY 2010.14

70 Fed. Reg. 51,414, 51,424 (Aug. 30, 2005). NHTSA determined that these were the “maximum feasible” standards

using a marginal cost-benefit analysis. See id. For MY 2011

and beyond, NHTSA proposed to adopt a “Reformed CAFE”

system, which would set different CAFE standards for vehicles based on size, measured by the vehicle’s footprint (the

product of multiplying wheelbase by track width). Id. at

51,414, 51,429-41. NHTSA proposed six footprint categories

(a step function), id. at 51,430, and it proposed a transition

period (MY 2008-2010) to Reformed CAFE, during which

manufacturers could choose to comply with either Reformed

or Unreformed CAFE. NHTSA also proposed not to change

the criteria by which vehicles are classified as passenger automobiles or light trucks, id. at 51,422, and it proposed to regulate only MDPVs within the 8,500 to 10,000 lb. vehicle class

as light trucks, id. at 51,455-56. 

NHTSA issued a Draft Environmental Assessment in

August 2005. The Draft EA integrated much of the text from

the Final EA that accompanied NHTSA’s light truck rulemaking for MYs 2005-2007 released in April 2003. See Draft

ment will be considered an open cargo area for purposes of this

definition. 

40 C.F.R. § 86.1803-01. EPA defines “heavy-duty vehicle” as “any motor

vehicle rated at more than 8,500 pounds GVWR or that has a vehicle curb

weight of more than 6,000 pounds or that has a basic vehicle frontal area

in excess of 45 square feet.” Id.

14NHTSA requires manufacturers to meet these average fuel economy

standards on a fleet-wide basis. 

14850 CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA
Environmental Assessment, NHTSA Proposed Corporate

Average Fuel Economy (CAFE) Standards 9 (Aug. 2005)

(Draft EA). The Draft EA analyzed three alternatives to the

proposed rule. Alternative A (“No Action”) would extend the

MY 2007 standard of 22.2 mpg through MY 2011. Alternative B would be Unreformed CAFE in MY 2008-2010 and

Reformed CAFE in MY 2011. Alternative C would be

Reformed CAFE set at equalized cost with Unreformed

CAFE in MY 2008-2010 and Reformed CAFE in MY 2011.

Id. 

The Draft EA noted that “CO

2

 . . . has started to be viewed

as an issue of concern for its global climate change potential.”

Id. at 18. With regard to biological resources, the Draft EA

stated, “emissions of criteria pollutants and greenhouse gases

could result in ozone layer depletion and promote climate

change that could affect species and ecosystems.” Id. at 19.

The projected lifetime fuel savings for MY 2008-2011 light

trucks under Alternatives B and C would “rang[e] from 1.3%

to 1.7% of their fuel compared to the baseline, corresponding

to 4.7-6.0 billion gallons.” Id. at 25. The estimated lifetime

emissions of CO

2

 ranged from 1,341.4 million metric tons

(mmt) under baseline to 1,306.4 and 1,304.0 mmt under

Alternatives B and C, respectively. Id. at 29. The Draft EA

concluded that the proposed standards would “result in

reduced emissions of CO

2

, the predominant greenhouse gas

emitted by motor vehicles,” “reductions in contamination of

water resources,” and “minor reductions in impacts to biological resources.” Id. at 30-31. In addition, “the cumulative

effects estimated to result from both the 2005-2007 and 2008-

2011 light truck rulemakings over the lifetimes of the vehicles

they would affect are projected to be very small.” Id. at 34.

NHTSA received over 45,000 comments on the NPRM and

Draft EA from states, consumer and environmental organizations, automobile manufacturers and associations, members of

Congress, and private individuals. See 71 Fed. Reg. at

17,577. Manufacturers argued that reliance on a cost-benefit

CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA 14851
analysis might not “adequately account for the capabilities of

the industry.” Id. They also generally opposed subjecting

vehicles greater than 8,500 lbs. GVWR to CAFE regulation,

arguing that those vehicles are used in a different manner than

lighter vehicles and that their regulation would not result in

significant fuel savings. Id. at 17,577-78. The states and environmental and consumer organizations generally argued that:

• The need of the nation to conserve energy and national

security require more stringent standards, and such standards are feasible and practicable. E.g., NRDC Cmt. at 4-

5; Environmental Defense Cmt. at 1-7;15 Public Citizen

Cmt. at 1-2.16 For example, the Alliance to Save Energy—

American Council for an Energy-Efficient Economy

(ACEEE) argued that “[t]he 10 billion gallons of fuel that

NHTSA claims will be saved through the new standards

over the three-decade life of model year 2008-2011 vehicles amount to less than one month’s supply of gasoline

for U.S. light-duty vehicles. These savings are also insufficient to offset the expected growth in gasoline usage for

even the four-year period covered by the rule.” ACEEE

Cmt. at 1.17

• NHTSA’s use of marginal cost-benefit analysis unlawfully

overemphasizes cost at the expense of technological feasability and energy conservation and is not “technologyforcing,” as EPCA intended. E.g., NRDC Cmt. at 14-16;

Environmental Defense Cmt. at 4-5; Public Citizen Cmt.

at 1-2.

• Even if NHTSA’s cost-benefit analysis is permissible, the

15Environmental Defense-Comments, NHTSA Docket No. 2005-22223-

1805 (Nov. 22, 2005). 

16Public Citizen-Comments, NHTSA Docket No. 2005-22223-2188

(Dec. 13, 2005). 

17American Council for an Energy-Efficient Economy-Comments,

NHTSA Docket No. 2005-22223-1711 (Nov. 23, 2005). 

14852 CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA
“maximum feasible” standard cannot be determined properly without taking environmental impacts into account,

and the failure to monetize certain benefits such as greenhouse gas (GHG) emissions underestimates benefits of

stricter standards. E.g., CBD Cmt. at 1-4;18 NRDC Cmt. at

8 (suggesting specific figures and sources for the value per

ton of CO

2

 emissions avoided, from $8/ton to $26.50/ton);

Environmental Defense Cmt. at 5-6; Environmental

Defense Cmt. Re: Carbon Costs at 1-3 (citing new studies

from the United Kingdom that value carbon at $96-

174/ton carbon).19

• Reformed CAFE “rewards fuel economy laggards while

penalizing industry leaders,” Sierra Club Cmt. at 4,20 and,

like Unreformed CAFE, promotes the manufacture of

larger, less fuel-efficient vehicles. E.g., App. G to NRDC

18Center for Biological Diversity-Comments and Attachments A

through E, NHTSA Docket No. 2005-22223-1638 (Nov. 22, 2005).

Among other things, the Center for Biological Diversity argued, “An estimate of the true costs of the carbon emissions is one of the most important

inputs into the NHTSA’s algorithm for determining the maximum feasible

average fuel economy level. Estimates of the monetary benefits . . . [are]

readily available. . . . Excluding a monetization of the greenhouse gas

emissions from the NHTSA’s light truck fuel economy rulemaking on the

basis that the future costs of global warming are uncertain is arbitrary and

capricious. . . . The NHTSA cannot dismiss these costs as ‘uncertain’

while simultaneously relying upon the uncertain projections of claimed

economic hardship recited by the automobile industry for an estimate of

the cost of increasing fuel economy.” Id. at 3-4. 

19Environmental Defense-Comments, NHTSA Docket No. 2005-22223-

2249 (Mar. 13, 2006); Environmental Defense-Report-The Social Costs of

Carbon Review: Methodological Approaches for Using SCC Estimates in

Policy Assessment, NHTSA Docket No. 2005-22223-2251 (Mar. 13,

2006) (Paul Watkiss, et al., The Social Cost of Carbon (SCC) Review—

Methodological Approaches for Using SCC Estimates in Policy Assessment, Final Report (Nov. 2005)). 

20Sierra Club, U.S. Public Interest Research Group, and National Environmental Trust-Comments, NHTSA Docket No. 2005-22223-1636 (Nov.

22, 2005). 

CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA 14853
Cmt. at 3-4;21 States Cmt. at 5;22 Environmental Defense

Cmt. at 12-13.23

• NHTSA’s analysis of the adverse safety effects of vehicle

weight reduction is flawed and confounds size and weight.

E.g., Sierra Club Cmt. at 8-10; App. C to Environmental

Defense Cmt. at 1-4; Public Citizen Cmt. at 12-19; App.

B to Public Citizen Cmt. at 1-16.

• Since the Reformed CAFE standard for a particular manufacturer depends on its fleet mix, NHTSA should include

a “backstop” or guarantee that average fuel economy

levels will not fall below the “maximum feasible” level.

E.g., NRDC Cmt. at 24-25; ACEEE Cmt. at 5; see also

App. E to NRDC Cmt. at 6-12 (analysis of gaming scenarios and upsizing trends); Environmental Defense Cmt. at

13-14 (same); App. G. to Environmental Defense Cmt. at

1-14 (same).

• The transition period (MY 2008-2010) to Reformed CAFE

is unnecessary and undercuts fuel economy savings. E.g.,

NRDC Cmt. at 27-28; ACEEE Cmt. at 2; Environmental

Defense Cmt. at 8-9; UCS Cmt. at 9.

21Natural Resources Defense Council-Appendices E-I, NHTSA Docket

No. 2005-22223-1710 (Nov. 23, 2005). 

22California Department of Justice-Comments, NHTSA Docket No.

2005-22223-1637 (Nov. 22, 2005) (Comments of the Attorneys General

of the States of California, Massachusetts, New York, Connecticut, New

Jersey, Maine, Oregon, Vermont and the Corporation Counsel for the City

of New York). 

23Environmental Defense noted: “From 1988 to 2003, the average

wheelbase of the combined car and truck fleet grew at an average rate of

0.3% per year. Continuing this trend would result in a 0.14 mpg drop for

the MY2011 light truck fuel economy requirement . . . , and if the trend

continued through MY2030, a lost oil savings of 227,000 barrels per day

year—or 30% of the oil savings that would be achieved from the proposed

MY08-11 standards in that year.” Environmental Defense Cmt. at 13. 

14854 CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA
• All Class 2b trucks between 8,500-10,000 lbs. GVWR

should be regulated because fuel economy standards for

them are feasible, would result in significant energy conservation, and they are used for substantially the same purposes as vehicles 6,000 lbs. or less. Environmental

Defense Cmt. at 9-11; App. F to Environmental Defense

Cmt. at 1-2; and Polk Study.24

• Higher fuel economy standards would help domestic automakers remain competitive in the long term and protect

U.S. jobs. App. D to NRDC Cmt. at 22.25 The California

Energy Resources Conservation and Development Commission commented that “[u]pgrading CAFE requirements

could enhance jobs in the United States, especially in the

automobile manufacturing sector. . . . Increasing lighttruck CAFE to 26.9 mpg in 2010 and 31 mpg in 2015

(with corresponding changes for passenger cars) would

increase net jobs up to 346,000.” California Energy Commission Cmt. at 9-10.26

• NHTSA’s draft EA is inadequate and fails to consider the

proposed rule’s impact on climate change. States Cmt. at

1-11; CBD Cmt. at 5-12. 

See also 71 Fed. Reg. at 17,578-79 (summarizing comments).

Commenters also submitted to NHTSA numerous scientific

reports and studies regarding the relationship between climate

change and greenhouse gas emissions and the expected

impacts on the environment.27 Emissions from light trucks

24Environmental Defense-Attachment 5-Pickup Truck Usage Study,

NHTSA Docket No. 2005-22223-1703 (Nov. 23, 2005) (R. L. Polk & Co.,

Pickup Truck Usage Study). 

25Natural Resources Defense Council-Appendix D, NHTSA Docket No.

2005-22223-1709 (Nov. 22, 2005). 

26Joseph F. Desmond-Comments, NHTSA Docket No. 2005-22223-

1557 (Nov. 21, 2005). 

27See generally Attachment A to CBD Cmt. (Global Warming and Its

Impacts); Attachment B to CBD Cmt. (Albritton, D.L., et al., Technical

CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA 14855
make up about eight percent of annual U.S. greenhouse gas

emissions. Final EA at 22 (citing EPA, EPA-430-R-05-003,

Inventory of U.S. Greenhouse Gas Emissions and Sinks:

1990-2004 (Draft 2006). The transportation sectors account

for about 31 percent of human-generated CO2 emissions in the

U.S. economy. NAS Report at 14. “Overall, U.S. light-duty

vehicles [passenger cars and light trucks] produce about 5

percent of the entire world’s greenhouse gases.” Id. at 20. The

NAS committee concluded, “Since the United States produces

about 25 percent of the world’s greenhouse gases, fuel economy improvements could have a significant impact on the rate

of CO

2

 accumulation in the atmosphere.” Id. at 14. 

The Intergovernmental Panel on Climate Change (IPCC)’s

“Third Assessment Report,” published in 2001, presented the

consensus view of hundreds of scientists on key issues relating to climate change. The IPCC concluded that “CO

2

 concentrations increasing over [the] 21st century [are] virtually

certain to be mainly due to fossil-fuel emissions,” and that

“[s]tabilization of atmospheric CO2 concentrations at 450,

650, or 1,000 ppm would require global anthropogenic CO2

emissions to drop below year 1990 levels, within a few decSummary, Climate Change 2001: The Scientific Basis. Contribution of

Working Group I to the Third Assessment Report of the Intergovernmental panel on Climate Change (IPCC) (2001)); Attachment F to CBD Cmt.

(Epstein, P.R. and E. Mills (eds.), Climate Change Futures: Health, Ecological and Economic Dimensions (2005)); Attachment G to CBD Cmt.

(Intergovernmental Panel on Climate Change (IPCC), Climate Change

2001: Synthesis Report (Summary for Policymakers) (2001)); Attachment

L to CBD Cmt. (Overpeck, J.T., et al., “Arctic System on Trajectory to

New, Seasonally Ice-free State,” EOS (2005)); Attachment M to CBD

Cmt. (Parmesan, C. and H. Galbraith, Pew Center on Global Climate

Change, Observed Impacts of Global Climate Change in the U.S. (Sept.

2004)); Attachment O to CBD Cmt. (Thomas, C.D., et al., “Extinction

Risk from Climate Change,” 427 Nature 145 (Jan. 8, 2004)); Attachment

P to CBD Cmt. (World Health Organization, The World Health Report

2002 (2002)); Attachment Q to CBD Cmt. (Arctic Climate Impact Assessment, Impacts of a Warming Arctic: Highlights (2004)). 

14856 CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA
ades, about a century, or about 2 centuries, respectively, and

continue to decrease steadily thereafter to a small fraction of

current emissions.”

28 Id. The average earth surface temperature has increased by about 0.6 degree Celsius since the late

19th century, see Technical Summary of IPCC Working

Group I Report at 26; snow and ice cover have decreased

about 10 percent since the late 1960s, id. at 30; and global

average sea level has risen between 10 to 20 cm during the

20th century, id. at 31. The IPCC also developed a range of

emissions scenarios as its basis for predicting the environmental effect of increased emissions. Id. at 62-63.29

More recent evidence shows that there have already been

severe impacts in the Arctic due to warming, including sea ice

decline. See Attachments J, L, & Q to CBD Cmt. Global

warming has already affected plants, animals, and ecosystems

around the world. See, e.g., Attachment M to CBD Cmt. at

15-16. Some scientists predict that “on the basis of mid-range

climate-warming scenarios for 2050, that 15-37% of species

in our sample of regions and taxa will be ‘committed to

extinction.’ ” Attachment O to CBD Cmt (Thomas, Extinction

Risk from Climate Change, 427 Nature at 145). In addition,

there will be serious consequences for human health, including the spread of infectious and respiratory diseases, if world28“The atmospheric concentration of CO2

 has increased from 280 ppm

in 1750 to 367 ppm in 1999 . . . . Today’s CO2 concentration has not been

exceeded during the past 420,000 years and likely not during the past 20

million years. The rate of increase over the past century is unprecedented,

at least during the past 20,000 years.” Technical Summary of IPCC Working Group I Report at 39. 

29The draft of the IPCC Fourth Assessment Report, “Climate Change

2007,” was published recently (containing reports of the Working Groups

and Technical Summaries) (available at http://www.ipcc.ch). “The summary . . . said that efforts to rein in the billions of tons of annual releases

of carbon dioxide and other heat-trapping gases would have to begin soon

to limit risks of large changes in the climate and their impact on humans

and nature.” Andrew C. Revkin, Climate Panel Sees Need for New Steps

on Emissions, N. Y. Times, Apr. 27, 2007, at A20. 

CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA 14857
wide emissions continue on current trajectories. See, e.g.,

Attachment F to CBD Cmt. at 32-64. Sea level rise and

increased ocean temperatures are also associated with increasing weather variability and heightened intensity of storms

such as hurricanes. Id. at 21-24. Past projections have underestimated sea level rise. See id. at 20. Several studies also

show that climate change may be non-linear, meaning that

there are positive feedback mechanisms that may push global

warming past a dangerous threshold (the “tipping point”). Id.

at 26-27; see also Technical Summary of IPCC Working

Group I Report at 46-53; Attachment F to CBD Cmt. at 26-

27; IPCC Report at 14-16; States Cmt. 9. 

D. The Final Rule: CAFE Standards for Light Trucks

MYs 2008-2011 

NHTSA issued the Final Rule on April 6, 2006. 71 Fed.

Reg. at 17,566. NHTSA set the CAFE standards for MY

2008-2010 (Unreformed CAFE) at the same levels as proposed in the NPRM.30 Unreformed CAFE sets a fleet-wide

average fuel economy standard “with particular regard to the

‘least capable manufacturer with a significant share of the

market.’ ” 71 Fed. Reg. at 17,580. NHTSA has reformed the

structure of the CAFE program for light trucks, effective MY

2011 (Reformed CAFE). Under Reformed CAFE, fuel economy standards are based on a truck’s footprint, with larger

footprint trucks subject to a lower standard and smaller footprint trucks subject to higher standards.31 71 Fed. Reg. at

17,566. Instead of six footprint categories (a step function) as

proposed in the NPRM, Reformed CAFE would be based on

30MY 2008: 22.5 mpg; MY 2009: 23.1 mpg; MY 2010: 23.5 mpg. 

31The NPRM proposed a step function for Reformed CAFE, with six

different footprint categories. The Final Rule establishes target fuel economy levels for each value of vehicle footprint, referred to as a “continuous

function.” 71 Fed. Reg. at 17,587. A continuous function reduces the

incentive to enlarge the footprints of light trucks in order to shift them into

a higher bracket with a lower fuel economy standard. See id. at 17,609. 

14858 CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA
a continuous function, meaning a separate fuel economy target for each vehicle of a different footprint. See id. at 17,595-

96. “A particular manufacturer’s compliance obligation for a

model year will be calculated as the harmonic average of the

fuel economy targets for the manufacturer’s vehicles,

weighted by the distribution of manufacturer’s production

volumes among the footprint increments.” Id. at 17,566. A

manufacturer’s CAFE compliance obligation will vary with

its fleet mix. A manufacturer that produces more large footprint light trucks will have a lower required CAFE standard

than one that produces more small footprint light trucks.32

During MYs 2008-2010, manufacturers may choose to

comply with Unreformed CAFE or Reformed CAFE. See id.

at 17,593-94. 

NHTSA used the manufacturers’ preexisting product plans

as the baseline for its analyses of technical and economic feasibility under both Unreformed and Reformed CAFE. Id. at

17,579. NHTSA made adjustments to the product plans by

applying additional technologies in a “cost-minimizing fashion,”33 id. at 17,582, and stopping at the point where marginal

costs equaled marginal benefits, id. at 17,597. NHTSA considered the cost of new technologies and the benefits of fuel

savings over the lifetime of the vehicle as the costs and benefits of higher fuel economy standards. Id. at 17,585-87,

17,622-23. NHTSA monetized some externalities such as

emission of criteria pollutants during gasoline refining and

distribution and crash and noise costs associated with driving.

See Final Regulatory Impact Analysis, Corporate Average

Fuel Economy and CAFE Reform for MY 2008-2011 Light

Trucks at VIII-60, VIII-74-80 (March 2006) (FRIA). However, NHTSA did not monetize the benefit of reducing carbon

32See 71 Fed. Reg. at 17,608-09 (description of Reformed CAFE formula). 

33This means adding technologies “in order of lower to higher costs.”

71 Fed. Reg. at 17,582; see also FRIA at VI-13. 

CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA 14859
dioxide emissions, which it recognized was the “the main

greenhouse gas emitted as a result of refining, distribution,

and use of transportation fuels.” FRIA at VIII-61 to 62.34

NHTSA acknowledged the estimates suggested in the scientific literature, see 71 Fed. Reg. at 17,638; FRIA at VIII-63,

but concluded:

[T]he value of reducing emissions of CO2 and other

greenhouse gases [is] too uncertain to support their

explicit valuation and inclusion among the savings in

environmental externalities from reducing gasoline

production and use. There is extremely wide variation in published estimates of damage costs from

greenhouse gas emissions, costs for controlling or

avoiding their emissions, and costs of sequestering

emissions that do occur, the three major sources for

developing estimates of economic benefits from

reducing emissions of greenhouse gases. 

71 Fed. Reg. at 17,638; see also FRIA at VIII-64 to 65. 

In its cost-benefit analysis, NHTSA also excluded weight

reduction for vehicles between 4,000 and 5,000 lbs. curb

weight as a potential measure that manufacturers could use to

increase fuel economy. 71 Fed. Reg. at 17,627. NHTSA

accepted the possibility of weight reduction for vehicles over

5,000 lbs. curb weight as a cost-effective technology35 that

34NHTSA recognized that “[c]arbon dioxide emissions account for more

than 97% of total greenhouse gas emissions from the refining and use of

transportation fuels.” FRIA at VIII-62 n.83. 

35Petitioners presented a study “based on real-world examples suggest[-

ing] that the cost per pound of weight reduced through the use of high

strength steel and advanced engineering techniques has been as low as, or

lower than, 31 cents per pound reduced. This means that for a large light

truck with curb weight of 4000 pounds, the cost of material substitution

per percentage fuel economy improvement would be roughly $20, ranking

it among the most cost-effective fuel economy improvement options available.” Environmental Defense Cmt. at 4. 

14860 CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA
would not reduce overall safety. Id. NHTSA relied on a study

by Dr. Charles Kahane36 for this 5,000 lb. figure:

[T]he net safety effect of removing 100 pounds from

a light truck is zero for light trucks with a curb

weight greater than 3,900 lbs. However, given the

significant statistical uncertainty around that figure,

we assumed a confidence bound of approximately

1,000 lbs. and used 5,000 lbs. as the threshold for

considering weight reduction. 

Id. (footnotes omitted). By “net safety effect,” NHTSA means

that 3,900 lbs. is the breakeven point: “the point where the

total effect of reducing all vehicles heavier than the breakeven

weight by an equal amount is zero.” Id. at 17,628. In the

FRIA, NHTSA explained that it chose the approximately

1,000 lb. confidence bound based on additional empirical

work found in Kahane’s study:

Kahane estimated a crossover weight37 of 5,085 lbs.

if manufacturers changed both weight and footprint,

and the interval estimated ranged from 4,224 lbs. to

6,121 lbs[.], i.e., an interval +/-1000 lbs[.] around the

point estimate. Although the crossover weight differs

from the point of zero net impact, they would both

tend to have similar sampling errors. We applied this

interval to the 3,900 lbs. point of zero net impact

(which is based on the assumption that footprint is

held constant); therefore, the agency felt it would be

36U.S. DOT/NHTSA-Report: Vehicle Weight, Fatality Risk and Crash

Compatibility of Model Year 1991-99 Passenger Cars and Light Trucks,

NHTSA Docket No. 2005-22223-17 (Aug. 31, 2005) (Kahane, C.J., DOT

HS 809 662 (Oct. 2003)) (henceforth “Kahane Study”). 

37“Crossover weight” is “the weight at which a reduction in weight

would produce a zero effect on safety. Each and every light truck weighing more than the crossover weight would experience a net benefit from

reduced weight. All those below the crossover weight would experience

a net loss in safety.” FRIA at V-15 n.41. 

CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA 14861
prudent to limit weight reductions to those vehicles

above 5,000 lbs. curb weight. 

FRIA at V-15 (internal citation omitted). 

NHTSA rejected the idea of a “backstop” under Reformed

CAFE. 71 Fed. Reg. at 17,592; id. at 17,617. NHTSA stated

that a backstop, or a required fuel economy level applicable

to a manufacturer if its required level under Reformed CAFE

fell below a certain minimum, “would essentially be the same

as an Unreformed CAFE standard.” Id. at 17,592. NHTSA

argued that “EPCA permits the agency to consider consumer

demand and the resulting market shifts in setting fuel economy standards,” id. at 17,593, and that a backstop “would

essentially limit the ability of manufacturers to respond to

market shifts arising from changes in consumer demand. If

consumer demand shifted towards larger vehicles, a manufacturer potentially could be faced with a situation in which it

must choose between limiting its production of the demanded

vehicles, and failing to comply with the CAFE light truck

standard.” Id. 

Finally, NHTSA declined to change the regulatory definition of cars and light trucks to close the SUV loophole and

refused to regulate vehicles between 8,500 and 10,000 lbs.

GWVR, other than MDPVs. See id. at 17,574. 

II. STANDARD OF REVIEW

The Administrative Procedure Act (APA), 5 U.S.C. §§ 701-

706 (2007), provides that agency action must be set aside by

the reviewing court if it is “ ‘arbitrary, capricious, an abuse of

discretion, or otherwise not in accordance with law.’ ” Competitive Enter. Inst. v. NHTSA (CEI III), 45 F.3d 481, 484

(D.C. Cir. 1995) (quoting 5 U.S.C. § 706(2)(A)) (applying the

APA to review a rulemaking under the EPCA). The scope of

review is narrow, but “the agency must examine the relevant

data and articulate a satisfactory explanation for its action

14862 CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA
including a ‘rational connection between the facts found and

the choice made.’ ” Motor Vehicle Mfrs. Ass’n v. State Farm

Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983) (citation omitted).

An agency rule would normally be arbitrary and capricious if:

the agency has relied on factors which Congress has

not intended it to consider, entirely failed to consider

an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it

could not be ascribed to a difference in view or the

product of agency expertise. 

Id. The reviewing court “ ‘may not supply a reasoned basis

for the agency’s action that the agency itself has not given.’ ”

Id. (quoting SEC v. Chenery Corp., 332 U.S. 194, 196

(1947)). 

If Congress has spoken directly to the “precise question at

issue,” then we must give effect to Congress’s “unambiguously expressed intent.” Chevron U.S.A., Inc. v. NRDC, 467

U.S. 837, 842-43 (1984). However, “if the statute is silent or

ambiguous with respect to the specific issue, the question for

the court is whether the agency’s answer is based on a permissible construction of the statute.” Id. at 843. We “must reject

administrative constructions which are contrary to clear congressional intent.” Id. at 843 n.9. 

NHTSA’s compliance with NEPA is reviewed under an

arbitrary and capricious standard pursuant to the APA. See,

e.g., Nat’l Parks & Conservation Ass’n, 241 F.3d at 730. With

respect to NEPA documents, the agency must take a “hard

look” at the impacts of its action by providing “ ‘a reasonably

thorough discussion of the significant aspects of the probable

environmental consequences.’ ” Thomas, 137 F.3d at 1149

(quoting Or. Nat. Res. Council v. Lowe, 109 F.3d 521, 526

(9th Cir. 1997)). We must determine whether the EA

“ ‘foster[s] both informed decision-making and informed pubCENTER FOR BIOLOGICAL DIVERSITY v. NHTSA 14863
lic participation.’ ” Native Ecosystems Council v. U.S. Forest

Serv., 418 F.3d 953, 960 (9th Cir. 2005) (quoting California

v. Block, 690 F.2d 753, 761 (9th Cir. 1982)). 

III. DISCUSSION

A. Energy Policy and Conservation Act Issues

1. NHTSA’s use of marginal cost-benefit analysis to

determine “maximum feasible average fuel

economy level” 

[1] With respect to non-passenger automobiles (i.e., light

trucks), the fuel economy standard “shall be the maximum

feasible average fuel economy level that the Secretary decides

the manufacturers can achieve in that model year.” 49 U.S.C.

§ 32902(a). “Maximum feasible” is not defined in the EPCA.

However, the EPCA provides that “[w]hen deciding maximum feasible average fuel economy under this section, the

Secretary of Transportation shall consider 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).

Petitioners argue that the meaning of “maximum feasible”

is plain, and that NHTSA’s decision to maximize economic

benefits is contrary to the plain language of the EPCA

because “feasible” means “ ‘capable of being done,’ ” not

economically optimal. But even if “feasible” means “ ‘capable of being done,’ ” technological feasibility, economic practicability, the effect of other motor vehicle standards, and the

need of the nation to conserve energy must be considered in

determining the “maximum feasible” standard. American Textile Manufacturers Institue v. Donovan does not support Petitioners’ interpretation of “feasible.” 452 U.S. 490 (1981). In

that case, no other language in the statute modified the phrase

at issue: “to the extent feasible.” Id., 452 U.S. at 508-11.

Here, “maximum feasible” standards are to be determined in

14864 CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA
light of technological feasibility, economic practicability, the

effect of other motor vehicle standards, and the need of the

nation to conserve energy.38

[2] The EPCA clearly requires the agency to consider these

four factors, but it gives NHTSA discretion to decide how to

balance the statutory factors—as long as NHTSA’s balancing

does not undermine the fundamental purpose of the EPCA:

energy conservation. In Center for Auto Safety v. NHTSA, the

D.C. Circuit considered whether NHTSA gave “impermissible weight to shifts in consumer demand” in setting the MY

1985 and 1986 standards for light trucks. 793 F.2d 1322, 1338

(D.C. Cir. 1986). Petitioners in that case challenged NHTSA’s

rule that revised the standards downward. Id. at 1323-24. The

court held that since Congress had not directly spoken to the

issue of consumer demand, the court must determine whether

the agency’s interpretation represented a “ ‘reasonable accommodation of conflicting policies that were committed to the

agency’s care by the statute.’ ” Id. at 1338 (quoting Chevron,

467 U.S. at 845). The court reasoned that:

Congress intended energy conservation to be a long

term effort that would continue through temporary

improvements in energy availability. Thus, it would

clearly be impermissible for NHTSA to rely on consumer demand to such an extent that it ignored the

overarching goal of fuel conservation. At the other

38Petitioners also cite an earlier NHTSA rulemaking, for light trucks

MYs 1992-1994, to support their interpretation of “feasible.” In that rulemaking, the agency stated that it “has in the past interpreted ‘feasible’ to

refer to whether something is capable of being done.” 55 Fed. Reg. 3608,

3616 (Feb. 2, 1990). But NHTSA further explained, “a standard set at the

maximum feasible average fuel economy level must: (1) Be capable of

being done and (2) be at the highest level that is capable of being done,

taking account of what manufacturers are able to do in light of technological feasibility, economic practicability, how other Federal motor vehicle

standards affect average fuel economy, and the need of the nation to conserve energy.” Id. (emphasis added). 

CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA 14865
extreme, a standard with harsh economic consequences for the auto industry also would represent an

unreasonable balancing of EPCA’s policies. 

Id. at 1340 (footnote omitted). The court concluded that

NHTSA’s consideration of consumer demand was permissible

because Congress did not speak to the precise issue, and “it

specifically delegated the process of setting light truck fuel

economy standards with broad guidelines concerning the factors that the agency must consider. NHTSA has remained

within the reasonable range permitted by those factors.” Id. at

1341; see also Pub. Citizen v. NHTSA, 848 F.2d 256, 265

(D.C. Cir. 1988) (R. Ginsburg, J.). 

In Public Citizen, the petitioners challenged the NHTSA’s

lowering of the fuel economy standard for passenger cars for

MY 1986. 848 F.2d at 259. They argued that NHTSA’s determination that the statutory 27.5 mpg standard was not economically practicable improperly elevated consumer demand

and market forces, subordinated the statute’s technologyforcing design, and ignored the need of the nation to conserve

energy. Id. at 264. The court held that NHTSA’s “consideration of the likelihood of economic hardship within its assessment of ‘economic practicability[ ]’ must be accorded due

weight.” Id. at 264-65. Based on economic analyses supplied

by other governmental agencies, “NHTSA concluded that the

industry-wide economic effects of the higher CAFE standard

would be severe,” id. at 265, “including sales losses well into

the hundreds of thousands, and job losses well into the tens

of thousands,” id. at 264; see also 49 Fed. Reg. 41,250,

41,252 (Oct. 22, 1984). 

Petitioners cite Public Citizen for the proposition that consideration of “economic practicability” allows lowering fuel

economy standards only if a higher standard would cause substantial economic hardship to a manufacturer with a substantial share of the market. But that is not precisely what Public

Citizen held. Rather, that court concluded that given the

14866 CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA
extensive evidence in the record showing that severe economic hardship would result from a higher standard,

NHTSA’s decision to lower the standard under those circumstances was not devoid of rational support. Pub. Citizen, 848

F.2d at 265. 

The Public Citizen court held that NHTSA’s balancing of

the statutory factors in 49 U.S.C. § 32902(f) was reasonable

given that the possible energy savings from the higher standard did not outweigh the severe economic costs, id. at 265,

since “the maximum potential increase in annual fuel consumption attributable to th[e] rule would amount to less than

0.1 percent of current consumption,” id. at 268. The court

observed, “NHTSA found the maximum yearly impact of the

lower (26.0 mpg) standard on U.S. gasoline consumption to

be 210 million gallons, 0.3% of annual U.S. gasoline consumption and 0.09% of annual U.S. petroleum consumption.

That savings, NHTSA stated, was not commensurate with

‘potential sales losses to the industry in the hundreds of thousands, job losses in the tens of thousands, or the unreasonable

restriction of consumer choices.’ ” Pub. Citizen, 848 F.2d at

260-61 (citation omitted). In sum, Congress did not “offer[ ]

a more precise balancing formula for the agency to apply to

the four . . . factors,” and “[i]n the absence of a sharper congressional delineation,” the court could not conclude that,

under the circumstances presented there, NHTSA’s decision

was not a reasonable accommodation of conflicting statutory

policies. Id. at 265. 

In this rulemaking, NHTSA does not set forth its interpretation of the four factors in 49 U.S.C. § 32902(f). It simply

states that in determining the “maximum feasible” fuel economy level, NHTSA “assesses what is technologically feasible

for manufacturers to achieve without leading to adverse economic consequences, such as a significant loss of jobs or the

unreasonable elimination of consumer choice.” 70 Fed. Reg.

at 51,425; 71 Fed. Reg. at 17,585 (citing Pub. Citizen, 848

F.2d at 264). NHTSA “balance[s]” the four factors in

CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA 14867
§ 32902(f), “along with other factors such as safety,” in determining the CAFE standards. 71 Fed. Reg. at 17,588, 17,655.

In earlier rulemakings, NHTSA interpreted “technological

feasibility” to mean “whether particular methods of improving fuel economy will be available for commercial application

in the model year for which a standard is being established,”

“economic practicability” to mean “whether the implementation of projected fuel economy improvements is within the

economic capability of the industry,” “effect of other Federal

motor vehicle standards on fuel economy” to mean “an analysis of the unavoidable adverse effects on fuel economy of

compliance with emission, safety, noise, or damageability

standards,” and “the need of the Nation to conserve energy”

to mean “the consumer cost, national balance of payments,

environmental, and foreign policy implications39 of our need

for large quantities of petroleum, especially imported petroleum.” 42 Fed. Reg. 63,184, 63,188 (Dec. 15, 1977) (emphasis

added); see also Ctr. for Auto Safety, 793 F.2d at 1325 n.12.

NHTSA “recognize[s] that [it] in the past has expressed its

belief that the statutory consideration of economic practicability differs from, but does not preclude consideration of, cost/

benefit analysis.” 70 Fed. Reg. at 51,435. In its final rule

establishing passenger automobile CAFE standards for MYs

1981-1984, NHTSA stated, “not equating cost-benefit considerations with economic practicability is consistent with the

goal of achieving maximum feasible fuel economy by allowing economically and technologically possible standards

which will improve fuel economy but which an analysis, subject to many practical limitations, might indicate are not costbeneficial.” See 42 Fed. Reg. 33,534, 33,536 (1977). The

agency further opined, “A cost-benefit analysis would be useful in considering [economic practicability], but sole reliance

39See, e.g., App. A to NRDC Cmt. at 4-12 (Natural Resources Defense

Council-Appendix A, NHTSA Docket No. 2005-22223-1706 (Nov. 23,

2005) (issue paper examining how oil dependence affects the American

economy and national security)). 

14868 CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA
on such an analysis would be contrary to the mandate of the

Act.”

40 Id. at 33,537. In this rulemaking, however, NHTSA

states that “the cost/benefit analyses conducted today . . . are

substantially more robust than those conducted in decades

past and provide a more substantial basis for consideration of

economic practicability.” 70 Fed. Reg. at 51,435. 

[3] We agree with NHTSA that “EPCA neither requires nor

prohibits the setting of standards at the level at which net benefits are maximized.” Id. at 51,435. The statute is silent on the

precise question of whether a marginal cost-benefit analysis

may be used. See Chevron, 467 U.S. at 843. Public Citizen

and Center for Auto Safety persuade us that NHTSA has discretion to balance the oft-conflicting factors in 49 U.S.C.

§ 32902(f) when determining “maximum feasible” CAFE

standards under 49 U.S.C. § 32902(a). 

To be clear, we reject only Petitioners’ contention that

EPCA prohibits NHTSA’s use of marginal cost-benefit analysis to set CAFE standards. Whatever method it uses, NHTSA

cannot set fuel economy standards that are contrary to Congress’s purpose in enacting the EPCA—energy conservation.

We must still review whether NHTSA’s balancing of the statutory factors is arbitrary and capricious. Additionally, the persuasiveness of the analysis in Public Citizen and Center for

Auto Safety is limited by the fact that they were decided two

decades ago, when scientific knowledge of climate change

and its causes were not as advanced as they are today.41 The

40One of the Petitioners noted that “[w]hile previous standards have utilized cost-benefit analysis as part of the regulatory impact analysis after

the standard was set, the proposed reforms put the cost-benefit analysis

front and center.” App. G to NRDC Cmt. at 3. 

41See Massachusetts v. EPA, 127 S. Ct. 1438, 1447-49, 1455 (2007)

(describing how “the scientific understanding of climate change [has]

progressed” since the 1970s and discussing the evidence showing that

“[t]he harms associated with climate change are serious and well recognized.”); see generally Attachment A to CBD Cmt. (Global Warming and

CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA 14869
need of the nation to conserve energy is even more pressing

today than it was at the time of EPCA’s enactment. See, e.g.,

NRDC Cmt. at 4, 11 (“When fuel economy legislation was

first enacted, America consumed 16.3 million barrels of oil

per day and 35.8 percent of U.S. oil came from imports. In the

nearly 30 years since then, oil consumption has risen to over

20 million barrels per day and 56 percent of U.S. oil is

imported. If fuel economy standards are not strengthened,

these trends are only expected to get worse, with transportation oil use driving 80 percent of U.S. oil demand growth

through 2025 and imports rising to 68 percent of U.S. oil

demand. The light duty vehicle fleet currently consumes 8.3

million barrels per day, and in the absence of stronger standards, that is projected to grow to 12.45 million barrels by

Its Impacts); Attachment B to CBD Cmt. (Albritton, D.L., et al., Technical

Summary, Climate Change 2001: The Scientific Basis. Contribution of

Working Group I to the Third Assessment Report of the Intergovernmental panel on Climate Change (IPCC) (2001)); Attachment F to CBD Cmt.

(Epstein, P.R. and E. Mills (eds.), Climate Change Futures: Health, Ecological and Economic Dimensions (2005)); Attachment G to CBD Cmt.

(Intergovernmental Panel on Climate Change (IPCC), Climate Change

2001: Synthesis Report (Summary for Policymakers) (2001)); Attachment

J to CBD Cmt. (National Snow and Ice Data Center, Sea Ice Decline

Intensifies (2005)); Attachment L to CBD Cmt. (Overpeck, J.T., et al.,

“Arctic System on Trajectory to New, Seasonally Ice-free State,” EOS

(2005)); Attachment M to CBD Cmt. (Parmesan, C. and H. Galbraith, Pew

Center on Global Climate Change, Observed Impacts of Global Climate

Change in the U.S. (Sept. 2004)); Attachment O to CBD Cmt. (Thomas,

C.D., et al., “Extinction Risk from Climate Change,” 427 Nature 145 (Jan.

8, 2004)); Attachment P to CBD Cmt. (World Health Organization, The

World Health Report 2002 (2002)); Attachment Q to CBD Cmt. (Arctic

Climate Impact Assessment, Impacts of a Warming Arctic: Highlights

(2004)) Apps. A-B to NRDC Cmt.; Scoping Uncertainty in the Social Cost

of Carbon, Final Project Report, NHTSA Docket No. 2005-22223-2250

(Mar. 13, 2006) (Thomas E. Downing, et al., Social Cost of Carbon: A

Closer Look at Uncertainty (July 2005)); Environmental Defense-ReportThe Social Cost of Carbon Review: Methodological Approaches for Using

SCC Estimates in Policy Assessment; (Paul Watkiss, et al., The Social

Cost of Carbon (SCC) Review—Methodological Approaches for Using

SCC Estimates in Policy Assessment, Final Report (Nov. 2005)). 

14870 CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA
2025.”); NAS Report at 13-14, 20. What was a reasonable

balancing of competing statutory priorities twenty years ago

may not be a reasonable balancing of those priorities today.42

2. Failure to monetize benefits of greenhouse gas

emissions reduction 

[4] Even if NHTSA may use a cost-benefit analysis to

determine the “maximum feasible” fuel economy standard, it

cannot put a thumb on the scale by undervaluing the benefits

and overvaluing the costs of more stringent standards.

NHTSA fails to include in its analysis the benefit of carbon

emissions reduction in either quantitative or qualitative form.

It did, however, include an analysis of the employment and

sales impacts of more stringent standards on manufacturers.

See 71 Fed. Reg. at 17,590-91. 

To determine the “maximum feasible” CAFE standards,

NHTSA began with the fuel economy baselines for each of

the seven largest manufacturers—that is, “the fuel economy

levels that manufacturers were planning to achieve in those

42Public Citizen is also factually distinguishable. The Public Citizen

court based its conclusion that NHTSA’s balancing was reasonable on the

evidence in the record showing that (a) severe economic consequences

would result from a higher standard and (b) the potential fuel savings from

a higher standard would be minor in comparison. Pub. Citizen, 848 F.2d

at 265. Neither of those things are true here. First, NHTSA has provided

no evidence that the auto industry would suffer severe economic consequences as a result of higher CAFE standards for light trucks MYs 2008-

2011. Second, Petitioners calculated that “standards increasing steadily to

an equivalent level of 26 mpg in 2011 would save 940,000 barrels per day

of oil by 2020 and achieve a cumulative reduction of 304 million metric

carbon equivalent tons (mmtC) by that date, more than double the

amounts offered by NHTSA’s current proposal.” Environmental Defense

Cmt. at 2 (emphasis added); see also App. A to NRDC Cmt. at 4 (arguing

that the U.S. uses over 20 million barrels of oil per day and that a higher

CAFE standard that would save 940,000 barrels per day would amount to

4.7% of U.S. consumption per day). This is far higher than the 0.09% figure in Public Citizen. 

CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA 14871
years.” Id. at 17,581. NHTSA then “add[ed] fuel saving technologies to each manufacturer’s fleet until the incremental

cost of improving its fuel economy further just equal[ed] the

incremental value of fuel savings and other benefits from

doing so.” Id. at 17,596. The standard is further adjusted

“until industry-wide net benefits are maximized. Maximization occurs when the incremental change in industry-wide

compliance costs from adjusting it further would be exactly

offset by the resulting incremental change in benefits.” Id.

NHTSA claims that this “cost-benefit analysis carefully considers and weighs all of the benefits of improved fuel savings,” and that “there is no compelling evidence that the

unmonetized benefits would alter our assessment of the level

of the standard for MY 2011.” Id. at 17,592. 

[5] Under this methodology, the values that NHTSA

assigns to benefits are critical. Yet, NHTSA assigned no value

to the most significant benefit of more stringent CAFE standards: reduction in carbon emissions. Petitioners strongly

urged NHTSA to include this value in its analysis, and they

cited peer-reviewed scientific literature in support. NRDC

cited figures for the benefit of carbon emissions reduction

ranging from $8 to $26.50 per ton CO2, based on values

assigned by the California Public Utilities Commission, the

Idaho Power Company, and the European Union (EU) carbon

trading program.43 NRDC Cmt. at 8. NRDC also cited a study

published by the National Commission on Energy Policy,

which “found that measures mitigating climate change emissions have estimated benefits of $3-19 per ton of carbon dioxide equivalent. The Commission recommends a price of $7

per ton beginning in 2010 and then rising 5 percent each

year.” Id. at 23 (footnote omitted). Environmental Defense

and the Union of Concerned Scientists recommended a minimum value of $50 per ton carbon (or $13.60 per ton CO2

),

43The EU has established carbon emission limits for industrial emitters,

thereby creating a market price for carbon emission allowances. NRDC

Cmt. at 8; see, e.g., http://www.pointcarbon.com. 

14872 CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA
which reflects a mean marginal damage cost developed in 28

peer-reviewed studies.44 Environmental Defense Cmt. at 6,

A-4;45 UCS Cmt. at 16. Valuing carbon emissions at $50 per

ton carbon translates into approximately $0.15 per gallon of

gasoline saved. UCS Cmt. at 16. The NAS committee, on

which NHTSA relies for other aspects of its analysis, also valued the benefit of carbon emissions reduction at $50 per ton

carbon. NAS Report at 85. 

NHTSA acknowledged that “[c]onserving energy, espe44Environmental Defense also submitted an additional comment letter

after the comment period closed noting a recent study from the Social Cost

of Carbon project sponsored by the U.K. Department for Environment,

Food and Rural Affairs. Environmental Defense Cmt. Re: Carbon Costs

at 1-3. The study found that “ ‘[a] lower benchmark of 35 £/tC [about $60

per ton of carbon] is reasonable for a global decision context committed

to reducing the threat of dangerous climate change and includes a modest

level of aversion to extreme risks, relatively low discount rates and equity

weighting.’ ” Id. at 1-2; see Social Cost of Carbon Review. The report

concluded, “ ‘we believe that a value of £55/tC in 2000 [about $95/tC],

but rising more sharply than the current guidance (i.e. at a higher rate than

the current £1/tC per year), would seem to capture the evidence using a

pragmatic approach.’ ” Id. at 2. Environmental Defense concluded: 

These results support monetizing the carbon benefits of the light

truck fuel economy rule using values in the range of $96 to $174

per ton of carbon [$26 to $47 per ton of CO2] (at current

exchange rates) . . . . These values translate into shadow values

of 30 to 54 cents per gallon . . . . Calculating the benefits of these

savings at the new values consistent with the SCC study recommendations would yield present value benefits of $54 billion by

2020 . . . and $82 billion by 2030 . . . calculated using a 3% discount rate. On an annual basis, benefits would grow from $1.1

billion in 2011 to $5.9 billion in 2030. [¶] These benefits are substantial in relation to the costs estimated by NHTSA for its proposal. Yet [they] were entirely omitted from NHTSA’s

calculations . . . . 

Id. at 3. 

45Citing R.S.J. Tol, The Marginal Damage Costs of Carbon Dioxide

Emissions: An Estimate of the Uncertainties, 33 Energy Pol’y 2064, 2074

(2005). 

CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA 14873
cially reducing the nation’s dependence on petroleum, benefits the U.S. in several ways. [It] has benefits for economic

growth and the environment, as well as other benefits, such as

reducing pollution and improving security of energy supply.”

71 Fed. Reg. at 17,644. NHTSA also acknowledged the comments it received that recommended values for the benefit of

carbon emissions reduction; however, the agency refused to

place a value on this benefit. See id. at 17,638.46 NHTSA

stated:

The agency continues to view the value of reducing emissions of CO2

 and other greenhouse gases as

too uncertain to support their explicit valuation and

inclusion among the savings in environmental externalities from reducing gasoline production and use.

There is extremely wide variation in published estimates of damage costs from greenhouse gas emissions, costs for controlling or avoiding their

emissions, and costs of sequestering emissions that

do occur, the three major sources for developing

estimates of economic benefits from reducing emissions of greenhouse gases. Moreover, . . . commenters did not reliably demonstrate that the

unmonetized benefits, which include CO2, and costs,

taken together, would alter the agency’s assessment

of the level of the standard for MY 2011. Thus, the

agency determined the stringency of that standard on

the basis of monetized net benefits. 

Id.; see also FRIA, at VIII-64 to 65.47

46NHTSA erroneously states that Environmental Defense expressed its

recommended value as $50 per ton CO2, rather than $50 per ton carbon.

See 71 Fed. Reg. at 17,638. Fifty dollars per ton carbon is equivalent to

$13.60 per ton CO2, which is within the range that NRDC suggested. See

id.

47In the Final Rule, NHTSA did not exclude the value of carbon reduction from its analysis on the ground that it now asserts on appeal: “EPCA

14874 CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA
[6] NHTSA’s reasoning is arbitrary and capricious for several reasons. First, while the record shows that there is a range

of values, the value of carbon emissions reduction is certainly

not zero. NHTSA conceded as much during oral argument

when, in response to questioning, counsel for NHTSA admitted that the range of values begins at $3 per ton carbon.

NHTSA insisted at argument that it placed no value on carbon

emissions reduction rather than zero value. We fail to see the

difference. The value of carbon emissions reduction is

nowhere accounted for in the agency’s analysis, whether

quantitatively or qualitatively. This position also contradicts

NHTSA’s own explanation in the Final Rule that “the agency

determined the stringency of [the MY 2011] standard on the

basis of monetized net benefits.” 71 Fed. Reg. at 17,638

(emphasis added).48 By presenting a scientifically-supported

range of values that does not begin at zero, Petitioners have

shown that it is possible to monetize the benefit of carbon

emissions reduction. 

[7] Second, NHTSA gave no reasons why it believed the

range of values presented to it was “extremely wide”; in fact,

several commenters and the NAS committee recommended

the same value: $50 per ton carbon. The NAS committee

selected the value of $50 per ton carbon although it acknowledged the wide range of values in the literature and the potendoes not compel NHTSA to set CAFE levels with reference to carbon

dioxide emissions specifically, or environmental effects generally.”

NHTSA Br. at 47. We “may only sustain an agency’s action on the

grounds actually considered by the agency.” Nw. Envt’l Defense Ctr. v.

Bonneville Power Admin., 477 F.3d 668, 686 (9th Cir. 2007). In any case,

this argument has no merit because it misses the point. NHTSA’s chosen

methodology for setting CAFE standards is a cost-benefit analysis that

purports to take the relevant costs and benefits into account. 

48Moreover, we note that guidance from the Office of Management and

Budget provides that agencies are to monetize costs and benefits whenever

possible. Office of Mgmt. & Budget, Office of the President, OMB Circular A-4, at 27 (2003). 

CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA 14875
tial controversy in selecting a particular value. NAS Report at

85. NHTSA argues that the problem was not simply “the ultimate value to be assigned, but the wide variation in published

estimates of the three major underlying costs of carbon dioxide emissions—the cost of damages caused by such emissions, the costs of avoiding or controlling such emissions, and

the costs of sequestering resulting emissions.” NHTSA Br. at

49. But NHTSA fails to explain why those three “underlying

costs” are relevant to the question of how carbon emissions

should be valued. We are convinced by Petitioners’ response:

To monetize the benefits of reducing CO2 emissions

from automobiles, NHTSA did not need to calculate

the “costs of sequestering emissions.” Carbon capture and sequestration, though a feasible means of

reducing emissions from large stationary sources

such as coal-fired power plants, was not within the

range of actions at issue in this automobile fuel

economy rulemaking. Nor were “costs for controlling or avoiding [CO2

] emissions” a genuine methodological barrier here: NHTSA already performed an

elaborate analysis of the costs of mandating

increases in fuel economy. For purposes of this rulemaking, that was the relevant category of control

costs. 

EPCA Reply Br. at 10-11.49 In sum, there is no evidence to

support NHTSA’s conclusion that the appropriate course was

not to monetize or quantify the value of carbon emissions

reduction at all. 

Citizens for Clean Air v. EPA, 959 F.2d 839 (9th Cir.

49Since Petitioners filed three sets of opening and reply briefs, the briefs

addressing EPCA issues are referred to as “EPCA Br.” or “EPCA Reply

Br.,” the brief addressing NEPA issues is referred to as “NEPA Br.” or

“NEPA Reply Br.,” and the brief filed by the governmental entities is

referred to as “States’ Br.” or “States’ Reply Br.” 

14876 CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA
1992), which NHTSA cites to support its contention that

agencies may decline to adopt a “particular monetary value”

when the “costs and benefits are too uncertain,” NHTSA Br.

at 48, is inapposite. In Citizens for Clean Air, petitioners filed

for administrative review of a state agency’s grant of a permit

for construction of a solid waste incinerator. Citizens for

Clean Air, 959 F.2d at 841. EPA denied the petitions, and this

court held that the decision of the EPA not to consider recycling as a possible “best available control technology” under

the Clean Air Act was not arbitrary or capricious. Id. at 841-

42. The EPA noted in its proposed rule that “it was ‘unable

to reliably quantify the emission reductions attributable to

materials separation when a[ ] [waste incinerator] is equipped

with highly efficient at-the-stack air pollution control

devices.’ ” Id. at 844 (citation omitted). Petitioners submitted

“no hard evidence” that recycling would reduce air pollution

when the waste incinerators are already equipped with “stateof-the-art pollution control equipment” (e.g., scrubbers). Id. at

847-48. In addition, the Clean Air Act required “that the proposed technology [i.e., recycling] be the best available control

technology, and in the absence of anything specific or quantifiable in support . . . we conclude that EPA’s decision not to

consider recycling in permitting Spokane’s incinerator was

not arbitrary or capricious.” Id. at 848. The petitioners in Citizens for Clean Air had to satisfy such a high statutory threshold (“best available control technology”), and they could not

satisfy that threshold without hard evidence. By contrast, Petitioners here provided substantial evidence of the value of carbon emissions reduction, and they do not have to satisfy a

high statutory threshold. 

CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA 14877
Volume 2 of 2

CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA 14879
[8] Third, NHTSA’s reasoning is arbitrary and capricious

because it has monetized other uncertain benefits, such as the

reduction of criteria pollutants, crash, noise, and congestion

costs, see FRIA at VIII-73 to 80, and “the value of increased

energy security,” 71 Fed. Reg. at 17,592. Dr. Michael Wang

of the Center for Transportation Research at Argonne

National Laboratory stated in his peer review of the CAFE

compliance and effect model50 used by NHTSA in its rulemaking that the wide range of dollar values per ton of CO2

“is

not a good reason that CO[2] dollar values are not included

. . . . The same can be said [of] dollar values for criteria pollutants. Yet, monetary values for criteria pollutant emissions are

included in the model.” Wang Cmt. at 6.51

Fourth, NHTSA’s conclusion that commenters did not “reliably demonstrate” that monetizing the value of carbon

50Known as the “Volpe model.” 

51U.S. DOT/NHTSA-Dr. Michael Wang-Individual Report (Comments), NHTSA Docket No. 2005-22223-7 (Aug. 30, 2005). 

CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA 14881
reduction would have affected the stringency of the CAFE

standard “ ‘runs counter to the evidence’ ” before it. NRDC v.

U.S. Forest Serv., 421 F.3d 797, 806 (9th Cir. 2005) (citation

omitted). The Union of Concerned Scientists concluded that

“including [a $50/tC value] in the determination of costefficient fuel economy could increase the 2011 targets by an

average of 0.4-1.1 mpg.” UCS Cmt. at 16. Given that the

CAFE standards set by NHTSA increase only 1.5 mpg from

MY 2008 to 2011,52 an additional 0.4 to 1.1 mpg increase by

MY 2011 is significant. In addition, Environmental Defense

“calculate[d] the benefits of the cumulative reductions at $50/

tC and 3% discount rate at $19.7 billion by 2020 and $28.4

billion by 2030 (current dollars).” Environmental Defense

Cmt. at 6. 

We agree with Petitioners that the values they suggest, 10-

22 cents per gallon of gasoline in NHTSA’s estimation, would

not be a small benefit. Under NHTSA’s own calculation that

Reformed CAFE will save 2.8 billion gallons of gasoline for

MY 2011 light trucks, see 71 Fed. Reg. at 17,619, 10-22 cents

a gallon of carbon benefits “would yield hundreds of millions

of dollars in benefits even after discounting—benefits that by

themselves would be substantial in relation to the net benefits

that NHTSA calculated for the rule.” EPCA Reply Br. at 12

(citing 71 Fed. Reg. at 17,623 (showing net benefits of $461

million for MY 2011 under Reformed CAFE)). NHTSA simply did not “ ‘examine the relevant data and articulate a satisfactory explanation for its action including a rational

connection between the facts found and the choice made.’ ”

Motor Vehicle Mfrs. Ass’n, 463 U.S. at 43 (quoting Burlington Truck Lines v. United States, 371 U.S. 156, 168 (1962)).

Finally, there is no merit to NHTSA’s unfounded assertion

52Since Reformed CAFE does not have pre-set corporate minimums but

will depend on manufacturers’ fleet mix, the MY 2011 figure is based on

NHTSA’s estimate of the average CAFE level that will be required of

manufacturers for MY 2011. See 71 Fed. Reg. at 17,568. 

14882 CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA
that if it had accounted for the benefit of carbon emissions

reduction, it would have had to account for the adverse safety

effects of downweighting, and the two would have balanced

out, resulting in no change to the final CAFE standards. No

evidence supports this assertion. The assertion is also based

on the controversial assumption that higher fuel economy

standards for light trucks causes adverse safety effects from

downweighting. 

[9] Thus, NHTSA’s decision not to monetize the benefit of

carbon emissions reduction was arbitrary and capricious, and

we remand to NHTSA for it to include a monetized value for

this benefit in its analysis of the proper CAFE standards. 

3. Vehicle safety analysis

Petitioners argue that NHTSA acted arbitrarily and capriciously when it omitted weight reduction for vehicles between

4,000 and 5,000 lbs. curb weight53 as a cost-effective measure

manufacturers could use to increase fuel economy. The NAS

committee found that weight reduction for vehicles greater

than 4,000 lbs. curb weight would result in a safety benefit:

“total fatalities in a hypothetical fleet of relatively modern

passenger vehicles would be reduced by about 0.26 percent if

all pickups and SUVs weighing more than 4,000 lbs. were

replaced with pickups and SUVs weighing 3,500 to 4,000 lbs.”

54

53“Curb weight” generally means the unloaded vehicle weight. See 40

C.F.R. § 86.082-2 (2007). 

54The adverse safety effects of downweighting touted by NHTSA only

applies to smaller vehicles such as passenger cars, not light trucks: 

If an increase in fuel economy is effected by a system that

encourages either downweighting or the production and sale of

more small cars, some additional traffic fatalities would be

expected. However, the actual effects would be uncertain, and

any adverse safety impact could be minimized, or even reserved,

if weight and size reductions were limited to heavier vehicles

(particularly those over 4,000 lb). Larger vehicles would then be

CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA 14883
NAS Report at 72. The NAS committee also noted that such

weight reduction would improve safety in part because it

improves “crash compatibility,” or the variance in vehicle

weights between large and small vehicles. Id. at 5.55

The study by Dr. Charles Kahane, cited by the NAS committee and NHTSA, did not find a safety benefit resulting

from reducing the weight of light trucks between 4,000 to

5,000 lbs., but it found that “[o]verall, light trucks weighing

3,870 pounds or more are involved in fatal crashes that result

in a total of 14,705 fatalities per year. A 100-pound reduction

would not significantly change those fatalities.” Kahane Study

at 161.56

less damaging (aggressive) in crashes with all other vehicles and

thus pose less risk to other drivers on the road. 

NAS Report at 5 (emphasis added); see also id. at 27, 72. The only dispute

here is whether NHTSA should have included weight reduction as a costeffective technology for light trucks weighing between 4,000 and 5,000

lbs. curb weight. 

55The NAS committee majority’s findings regarding the adverse safety

effects of downweighting was disputed by two dissenting members of the

committee, who argued that “[t]he relationship between fuel economy and

highway safety is complex, ambiguous, poorly understood, and not measurable by any known means at the present time. . . . The conclusions of

the majority of the committee . . . are overly simplistic and at least partially incorrect.” NAS Report at 117. The dissenters stated, “[t]he bottom

line is that if the weights of passenger cars and light trucks are reduced

proportionally, Kahane’s study predicts that the net effect on highway

fatalities in collisions among all highway users is approximately zero.

Given the history of the debate on this subject, this is a startling result.”

Id. at 120-21. 

56Kahane explains that “the ‘fatality increase per 100-pound reduction’

does not mean the effect of literally removing 100 pounds from a specific

[light truck or van]. It is the average increase in the fatality rates of 1991-

99 models weighing W-100 pounds relative to other 1991-99 models

weighing W pounds, given drivers of the same age/gender and equal values on the other factors.” Kahane Study at viii. 

14884 CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA
In the Final Rule, NHTSA applied a “confidence bound” of

approximately 1,000 lbs. to the 3,900 figure, “given the significant statistical uncertainty around that figure,” and “used

5,000 lbs. as the threshold for considering weight reduction.”

71 Fed. Reg. at 17,627. The source of the 1,000 lbs. confidence bound is “additional empirical work found in Kahane’s

study” dealing with the crossover weight. FRIA, at V-15.

NHTSA recognized that the crossover weight and the point of

zero net impact (3,900 lbs.) differ, but it concluded that “they

would both tend to have similar sampling errors.” Id.

Petitioners argue that NHTSA’s selection of a 1,000 lbs.

confidence bound is arbitrary and capricious because

Kahane’s 4,000 lbs. figure already accounts for uncertainty,

and the confidence bound is taken from a different part of

Kahane’s study. They also argue that NHTSA arbitrarily

excluded from its uncertainty analysis “the benefits of reducing crash incompatibility resulting from weight reductions in

the 3,900-5,000 pound class, and whether these might offset

any statistically uncertain safety costs.” EPCA Reply Br. at

15. 

[10] Petitioners’ arguments have some merit, and we

believe this is a close question. However, we conclude that

NHTSA’s explanation for using the confidence interval for

the crossover weight—that both the crossover weight and the

point of zero net impact would have similar sampling errors—

does not “rel[y] on factors which Congress has not intended

it to consider, entirely fail[ ] to consider an important aspect

of the problem, . . . [or] run[ ] counter to the evidence before

the agency, [and is not] so implausible that it could not be

ascribed to a difference in view or the product of agency

expertise.” Motor Vehicle Mfrs. Ass’n, 463 U.S. at 43. Petitioners have not sufficiently established the deficiencies in

NHTSA’s reasoning. 

CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA 14885
4. Backstop for Reformed CAFE

Under Reformed CAFE, a manufacturer’s required CAFE

level would depend on its fleet mix. See 71 Fed. Reg. at

17,587-88, 17,595-96.57 Reformed CAFE (setting individual

fuel economy targets for vehicles of every footprint size) plus

a backstop (overall fleet-wide average) would prevent manufacturers from upsizing their vehicles or producing too many

large footprint vehicles, if the backstop were set high enough.

Under Unreformed CAFE, manufacturers had to meet only a

fleet-wide average, which means that they could increase the

number of small vehicles (with higher fuel economy) they

produced in order to balance out the larger vehicles (with

lower fuel economy) and achieve the required CAFE standard. NHTSA argues that Reformed CAFE will alleviate the

problem of downweighting because there will no longer be a

large gap between the CAFE targets for passenger cars and

light trucks. See 71 Fed. Reg. at 17,620 (“Reformed CAFE,

as adopted today, links the level of the average fuel economy

targets to the size of footprint so that there is an incentive to

reduce weight only to the extent one can do so while also preserving size.”). 

Petitioners generally agree that Reformed CAFE, with its

progressive fuel economy targets based on vehicle footprint,

is an improvement over Unreformed CAFE. However, they

argue that Reformed CAFE must include a “backstop” so that

the “minimum level of average fuel economy applicable to a

manufacturer in a model year” would not be determined

57“The required level of CAFE for a particular manufacturer for a given

model year is calculated using the target-setting function for that model

year in conjunction with that manufacturer’s actual total production and its

production at each footprint value for that model year. The manufacturer’s

required CAFE level is calculated by dividing its total production for the

model year by the sum of the values obtained by dividing the manufacturer’s production of each vehicle model included in its fleet by the fuel

economy target for that model.” 71 Fed. Reg. at 17,587; see also id. at

17,608-09. 

14886 CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA
solely by the manufacturer’s fleet mix. See 49 U.S.C.

§ 32901(a)(6). They argue that the statutory language—

“maximum feasible average fuel economy level,” id.

§ 32902(a) (emphasis added), “minimum level of average fuel

economy applicable to a manufacturer in a model year,” id.

§ 32902(a)(6) (emphasis added)—and the statutory structure

contemplate a fixed minimum CAFE standard for light trucks.

NHTSA argues that a backstop would unduly limit consumer choice and perpetuate the problems with Unreformed

CAFE. See 71 Fed. Reg. at 17,592-93. It argues that the statutory requirement that there be a “minimum” level of average

fuel economy applicable to a manufacturer does not necessarily mean a fixed minimum and is consistent with a minimum

standard applicable to a manufacturer based on that manufacturer’s fleet mix. 

[11] Neither the EPCA’s language nor structure explicitly

requires NHTSA to adopt a backstop.58 The issue is whether

it was arbitrary or capricious in not adopting a backstop.

Under Reformed CAFE, manufacturers would still be

required to meet a minimum average fuel economy level—

there would simply be no corporate minimum average fuel

economy level. That is, each vehicle of a particular footprint

would be required to meet a minimum average fuel economy

level, but there would be no fleet-wide minimum. See 71 Fed.

Reg. at 17,608-09. The corporate or fleet-wide minimum

would depend entirely on the number of vehicles of each footprint that the manufacturer decided to produce. See id.

58The legislative history that Petitioners cite concerning NHTSA’s consideration of fleet mix in establishing CAFE standards does not help them.

That history reveals that Congress considered and rejected a penaltywaiver provision that would have excused manufacturers from fuel economy standards if consumer preference caused their non-compliance. This

legislative history argument was rejected by the D.C. Circuit in Center for

Auto Safety, and we agree with the D.C. Circuit’s analysis on that issue.

793 F.2d at 1339-40. 

CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA 14887
[12] Although Congress has not directly spoken on this

issue, it has directed the agency to set the average fuel economy level for light trucks at the “maximum feasible” level, 49

U.S.C. § 32902(a), considering technological feasibility, economic practicability, the need of the nation to conserve

energy, and the effect of other motor vehicle standards of the

government, id. § 32902(f). NHTSA did not consider these

factors in deciding whether to adopt a backstop. See 71 Fed.

Reg. at 17,592-93. Instead, the agency explained:

The intent of the CAFE program is not to preclude

future mix shifts and design changes in response to

consumer demand. A backstop would likely have

this influence. . . . Such a system would be in opposition to congressional intent to establish a regulatory system that does not unduly limit consumer

choice. 

71 Fed. Reg. at 17,617. NHTSA may consider consumer

demand, but “it would clearly be impermissible for NHTSA

to rely on consumer demand to such an extent that it ignored

the overarching goal of fuel conservation.” Ctr. for Auto

Safety, 793 F.2d at 1340. We believe that NHTSA has committed this error here. Although EPCA is not intended to “unduly limit[ ] consumer choice,” H.R. Rep. No. 94-340, at 87

(1975), as reprinted in 1975 U.S.C.C.A.N. 1762, 1849,

energy conservation is the fundamental purpose of the statute

and an explicit statutory factor that NHTSA “shall” consider,

see 49 U.S.C. § 32902(f). “An agency may not ignore factors

Congress explicitly required be taken into account.” Earth

Island Inst. v. Hogarth, 494 F.3d 757, 765 (9th Cir. 2007)

(citation omitted). NHTSA did not adequately consider the

“need of the nation to conserve energy,” as it was required to

do under 49 U.S.C. § 32902(f), and it has not argued that a

backstop would be technologically infeasible or economically

impracticable. See 71 Fed. Reg. at 17,592-93, 17,617-18. 

[13] We do agree with NHTSA that the continuous function of Reformed CAFE will likely reduce the incentive to

14888 CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA
upsize because there will no longer be only two categories of

CAFE standards (light trucks and passenger cars). See 71 Fed.

Reg. at 17,621. But, Petitioners raise well-founded concerns

(given the historical trend) that a floating fleet-mix-based

standard would continue to permit upsizing—which is not just

a function of consumer demand, but also a function of manufacturers’ own design and marketing decisions. We remand to

NHTSA for it to reconsider under the proper standard whether

to adopt a backstop based on the factors in 49 U.S.C.

§ 32902(f). 

5. Transition period

The Final Rule permits manufacturers to choose to comply

with Unreformed CAFE or Reformed CAFE in MYs 2008-

2010. 71 Fed. Reg. at 17,593-95, 17,639. Beginning in MY

2011, manufacturers must comply with Reformed CAFE.

Petitioners argue that the transition period offered by NHTSA

to manufacturers is impermissible under EPCA since NHTSA

must prescribe a single maximum feasible average fuel economy level. They argue that NHTSA has “[i]n effect . . .

granted an automatic exemption to manufacturers unwilling to

meet the Reformed CAFE standards between 2008 and 2010,”

and that this is impermissible because the statute grants

exemptions only on an individual basis and if the manufacturer meets certain statutory criteria. EPCA Br. at 43-44 (citing 49 U.S.C. § 32902(d)). 

[14] We conclude that the transition period is not prohibited by EPCA, and NHTSA’s decision to allow it is not arbitrary or capricious. First, NHTSA has not granted an

“exemption” to manufacturers during the transition period,

because manufacturers are still required to comply with the

CAFE program—they just have a choice as to which standard

with which to comply. 

[15] Second, and more importantly, NHTSA has provided

a reasoned explanation for the transition period: it “will miniCENTER FOR BIOLOGICAL DIVERSITY v. NHTSA 14889
mize the potential for unintended compliance burdens that

may be experienced by a manufacturer as the result of shifting

to a new regulatory structure,” it is “critical given that this is

the first comprehensive reform of the light truck CAFE program since its inception,” and “the structure of the Reformed

CAFE might require some manufacturers to revise their compliance strategies,” since it “minimizes the ability of manufacturers to offset the low fuel economy performance of larger

vehicles by increasing the production of smaller vehicles with

higher fuel economies. Manufacturers that relied on such a

compliance strategy in the past might need to revise their

product plans in order to comply with the Reformed CAFE

standard.” 71 Fed. Reg. at 17,593. NHTSA also noted that

“[m]anufacturers develop product plans for their fleets at least

5 years in advance, plans which incorporate consideration of

CAFE compliance.” Id. at 17,594. 

6. Changing the definition of passenger and nonpassenger automobiles in order to close the SUV

loophole 

Petitioners challenge NHTSA’s decision not to reform the

SUV loophole. They argue that this decision is arbitrary and

capricious because it runs counter to the evidence showing

that the majority of SUVs, minivans, and pickup trucks function solely or primarily as passenger vehicles, and because

NHTSA has not provided a reasoned explanation for why the

transition to Reformed CAFE could not be accomplished at

the same time as a revision in the definitions. 

The EPCA defines “passenger automobile” as “an automobile that the Secretary decides by regulation is manufactured

primarily for transporting not more than 10 individuals,”

excluding “an automobile capable of off-highway operation

that the Secretary decides . . . has a significant feature except

4-wheel drive) designed for off-highway operation” and is 4-

wheel drive or more than 6,000 lbs. GVWR. 49 U.S.C.

§ 32901(a)(16). “Non-passenger automobiles” are thus

14890 CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA
defined by exclusion. NHTSA defines an automobile other

than a passenger automobile as a “light truck,” a term not

used in the statute. 49 C.F.R. § 523.5 (2007). Under 49 U.S.C.

§ 32901(a)(16), the Secretary has discretion to decide what

constitutes a “passenger automobile” within the confines of

the listed criteria. 

NHTSA initially sought input on ways to revise the regulatory distinction because the passenger automobile/light truck

distinction had become obsolete: “The application of the regulation to the current vehicle fleet (designed with the regulatory distinctions in mind) less clearly differentiates between

passenger cars and light trucks than it did in the 1970s.” 68

Fed. Reg. at 74,927 (ANPRM). However, in the NPRM,

NHTSA decided not to:

chang[e] those classification regulations at this time

in part because [NHTSA] believe[s] an orderly transition to Reformed CAFE could not be accomplished

if [NHTSA] simultaneously change[s] which vehicles are included in the light truck program and

because, as applied in MY 2011, Reformed CAFE is

likely to reduce the incentive to produce vehicles

classified as light trucks instead of as passenger cars.

70 Fed. Reg. at 51,422. Ultimately, NHTSA did not change

the light truck definition other than by expanding the flat floor

provision to include vehicles with folding seats, if the vehicles

have at least three rows of designated seating. See 49 C.F.R.

§ 523.5(a)(5); 71 Fed. Reg. at 17,650-52. 

[16] We conclude that NHTSA’s decision not to otherwise

revise the passenger automobile/light truck definitions is arbitrary and capricious. First, NHTSA has not provided a reasoned explanation of why an orderly transition to Reformed

CAFE could not be accomplished at the same time that the

passenger automobile/light truck definitions are revised. 

CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA 14891
Second, NHTSA asserts that it reasonably decided to look

to the purpose for which a vehicle is manufactured instead of

consumers’ use of a vehicle because it is a more objective

way of differentiating between passenger and non-passenger

automobiles. But this overlooks the fact that many light trucks

today are manufactured primarily for transporting passengers,

as NHTSA itself has acknowledged: “Many vehicles produced today, while smaller than many other passenger cars,

qualify as light trucks because they have been designed so

that their seats can be easily removed and their cargo carrying

capacity significantly enhanced.” 68 Fed. Reg. at 74,927

(emphasis added); see also 71 Fed. Reg. at 17,621 n.102

(“NAS Report . . . noted that [the passenger automobile/light

truck fuel economy] gap created an incentive to design vehicles as light trucks instead of cars.”). Today’s design differences, which capitalize on the lower light truck CAFE

standard, are the very reason that NHTSA sought input on

ways to revise the regulatory distinction “in light of the current and emerging motor vehicle fleet.” See 68 Fed. Reg. at

74,927. 

In addition, NHTSA’s new focus on the purpose for which

automobiles are manufactured conflicts with its earlier assertion that “Congress intended that passenger automobiles be

defined as those used primarily for the transport of individuals.” Id. at 74,926 (emphasis added); see also id. at 74,913

(“The market suggests that while some light trucks may be

used primarily to transport passengers, their ‘peak use or

value’ capability (towing boats, hauling heavy loads, etc.)

may be a critical factor in the purchase decision.” (emphasis

added)). 

[17] Third, NHTSA’s decision runs counter to the evidence

showing that SUVs, vans, and pickup trucks are manufactured

primarily for the purpose of transporting passengers and are

generally not used for off-highway operation. The NAS committee found that:

14892 CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA
The less stringent CAFE standards for trucks did

provide incentives for manufacturers to invest in

minivans and SUVs and to promote them to consumers in place of large cars and station wagons. . . . By

shifting their product development and investment

focus to trucks, they created more desirable trucks

with more carlike features: quiet, luxurious interiors

with leather upholstery, top-of-the-line audio systems, extra rows of seats, and extra doors. 

NAS Report at 18 (emphasis added); see also id. at 23 (noting

the exploding demand for light trucks such as minivans and

“four-door SUVs and pickup trucks with passenger-friendly

features such as extra rows of seats”). Consumers use light

trucks primarily for passenger-carrying purposes in large part

because that is precisely the purpose for which manufacturers

have manufactured and marketed them. See, e.g., App. A to

Public Citizen Cmt. (Kathleen Kerwin, “You Call This the

Family Car? Pickups with Roomy Cabs Become a Status

Accessory,” Business Week, Apr. 26, 1999.). A pickup truck

usage study conducted by R.L. Polk & Co.59 showed that 73%

of light pickup users use their trucks to carry passengers on

a daily or weekly basis, 68% use them for personal trips on

a daily or weekly basis, 58% use them for commuting on a

daily or weekly basis, 59% never use them for towing, and

69% never use them for driving off-road. Polk Study at 11.

Seventy-three percent of medium pickup users use them for

carrying passengers on a daily or weekly basis, 65% use them

for commuting on a daily or weekly basis (61% daily), and

64% never use them for driving off-road. Polk Study at 12.

Even among heavy pickup users, 76% use them for carrying

passengers on a daily or weekly basis, and 52% never use

them for driving off-road. Polk Study at 13.60 The NAS Committee further found:

59R.L. Polk & Co. is a major automotive market intelligence company.

60In addition, pickup owners consider better fuel economy to be the

most important improvement, valuing it nearly as much as all other potential improvements (e.g., greater horsepower, better off-road capability,

carrying heavier loads) combined. Polk Study at 16. 

CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA 14893
When CAFE regulations were originally formulated,

different standards were set for passenger vehicles

and for work/cargo vehicles . . . . because [work/

cargo vehicles] needed extra power, different gearing, and less aerodynamic body configurations to

carry out their utilitarian, load-carrying functions.

. . . [But this] working definition distinction between

a car for personal use and a truck for work use/cargo

transport[ ] has broken down, initially with

minivans, and more recently with sport utility vehicles and other “cross-over” vehicles that may be

designed for peak use but which are actually used

almost exclusively for personal transport. . . . The

car/truck distinction has been stretched well beyond

its original purpose. 

NAS Report at 88 (internal quotation marks and citation omitted). One of the changes the NAS committee recommended

to alleviate this problem was to “tighten” the definition of a

light truck, a step the EPA has already taken for emissions

standards purposes. Id. We agree with Petitioners that

NHTSA’s decision not to do the same was arbitrary and capricious, especially in light of EPCA’s overarching goal of

energy conservation. Thus, we remand to NHTSA to revise its

regulatory definitions of passenger automobile and light truck

or provide a valid reason for not doing so. 

7. Exclusion of 8,500-10,000 lb. pickup trucks from

CAFE regulation 

Petitioners argue that NHTSA’s decision not to regulate the

fuel economy of vehicles between 8,500 and 10,000 lbs.

GVWR (generally referred to as Class 2b trucks),61 other than

61Trucks are subdivided into a number of classes based on GVWR.

Class 1 trucks are those 6,000 lbs. GVWR or less. Generally, this includes

minivans, small pickup trucks, and small to medium SUVs. Class 2a

trucks are those between 6,001 lbs. and 8,500 lbs. GVWR, which include

14894 CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA
MDPVs, is arbitrary and capricious because fuel economy

standards for these vehicles are feasible and will result in significant energy conservation. See 49 U.S.C. § 32901(a)(3).

We agree. 

All 4-wheeled, fuel- and alternative fuel-propelled vehicles

manufactured for use on roads and highways that are 6,000

lbs. gross vehicle weight or less are automobiles. See 49

U.S.C. § 32901(a)(3)(A). Vehicles more than 6,000 but less

than 10,000 lbs. gross vehicle weight are “automobile[s]” for

the purpose of fuel economy regulation “if the Secretary

decides by regulation that—(i) an average fuel economy standard under this chapter for the vehicle is feasible; and (ii) an

average fuel economy standard . . . for the vehicle will result

in significant energy conservation or the vehicle is substantially used for the same purposes as a vehicle rated at not

more than 6,000 pounds gross vehicle weight.” Id.

§ 32901(a)(3)(B). Since 1978, NHTSA has defined vehicles

8,500 lbs. GVWR or less as automobiles. See 49 C.F.R.

§ 523.3(b)(2)(iii). 

The ANPRM presented two options under which the fuel

economy of vehicles with a GWVR of up to 10,000 lbs. could

be regulated. See 68 Fed. Reg. at 74,930. One option was to

include MDPVs, vehicles with a GVWR of greater than 8,500

but less than 10,000 lbs. that are designed primarily for the

transportation of persons. NHTSA explained that “[t]his definition would essentially make SUVs between 8,500 and

10,000 lbs. GVWR subject to CAFE, while continuing to

exclude most medium- and heavy-duty pickups and most

medium- and heavy-duty cargo vans that are primarily used

vans, full-size pickups such as the F-150 and Chevrolet Silverado 1500,

and medium to large SUVs. Class 2b trucks are those 8,501 to 10,000 lbs.

GVWR, which include some large vans, heavy duty pickups (e.g., F-250,

Silverado 2500, Ford Excursion, GMC Yukon XL, and Hummer H2), and

large SUVs. See UCS Cmt. at 33 & n.13. 

CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA 14895
for agricultural and commercial purposes.” Id. Another option

was to make all vehicles between 8,500 and 10,000 lbs.

GVWR subject to CAFE standards. Id. NHTSA invited comments on these and any other proposals to regulate vehicles

between 8,500 and 10,000 lbs. GVWR. Id. The NPRM discussed the inclusion of MDPVs, but it did not address the proposal to regulate all vehicles between 8,500 and 10,000 lbs.

GVWR. See 70 Fed. Reg. at 51,455-56. 

The Final Rule incorporates MDPVs into the definition of

“automobile” such that these vehicles would be regulated as

light trucks beginning in MY 2011. 49 C.F.R. § 523.3(b)(3);

71 Fed. Reg. at 17,648. NHTSA declined to regulate other

vehicles between 8,500 and 10,000 lbs. because unlike

MDPVs, they:

are not subject to EPA testing that provides the data

necessary to determine compliance with the CAFE

program. Inclusion of the heavier-rated-non-MDPVs

would increase the test burden for manufacturers.

These vehicles would be subject to a whole new testing regime. Moreover, because these vehicles are not

subject to comparable testing requirements, there is

not sufficient data to estimate a fuel economy baseline. Without a reliable baseline, the agency is

unable to determine fuel economy targets that would

result in required fuel economy levels that are economically practicable and technologically feasible. 

71 Fed. Reg. at 17,650. 

[18] We conclude that this is not a reasoned explanation for

excluding Class 2b trucks from CAFE regulation. First, Petitioners presented compelling evidence that setting fuel economy standards for Class 2b trucks is feasible. For example, a

Department of Energy research planning study included estimates:

14896 CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA
based on detailed simulation modeling of both the

city and highway driving cycles working from a

baseline Class 2b truck; baseline estimates were 21.1

mpg city, 15.4 mpg highway, and 13.6 mpg combined. . . . [The study] identified technology options

capable of yielding substantial improvements,

including 50% higher fuel economy with technologies available over a 7-year horizon and, with use of

hybrid engines in diesel versions of the vehicles, a

near doubling of the fuel economy of a baseline gasoline Class 2b pickup would be a feasible “stretch

goal.” 

App. F to Environmental Defense Cmt. at 1. An Argonne

National Laboratory study identified numerous technological

improvements that could be applied to Class 2b trucks,

including “aerodynamic improvements,” “lower tire rolling

resistance,” “improved transmissions,” “turbocharging for

diesel engines,” “other engine refinements,” “integrated

starter-generator,” and “hybrid-electric powertrains.” Id.

Another study, published by the American Council for an

Energy-Efficient Economy, found that the potential fuel economy improvement was “37% . . . over a baseline full-size

pickup.” Id. at 2. Overall, while Class 2b trucks are “designed

with heavier frames and higher capacities, and therefore

larger powertrains and other components, [they] (primarily

heavy-duty pickups) entail substantially the same engineering

as vehicles under 8500 lbs GVWR, and in many cases share

components.” Id. at 1; see also UCS Cmt. at 34. 

Second, Petitioners presented substantial evidence that setting CAFE standards for Class 2b trucks would result in significant energy conservation and that these vehicles are

substantially used for the same purposes as a vehicle 6,000

lbs. GVWR or less.62 Class 2b trucks constitute the majority

62Only one factor or the other is required, along with feasibility, for the

Secretary to designate as an “automobile” a 6,000 to 10,000 lbs. GVWR

vehicle. 49 U.S.C. § 32901(a)(3)(B)(ii). 

CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA 14897
of vehicles in the 8,500 to 10,000 lb. GVWR class. See

ACEEE Cmt. to ANPRM at 10 (“[P]ickups constitute about

85% of vehicles in the 8,500-10,000 lb. weight range.”).63 One

of the Petitioners argued: 

EPA estimates sales of class 2b trucks at 931,000 per

year. Given higher per vehicle oil consumption, we

estimate that 2b trucks consume 13% of overall

demand from trucks under 10,000 pounds GVWR.

. . . 

If class 2b trucks were to improve their fuel economy by 4% per year . . . over MY 2008-2011, it

would save 47,000 barrels of gasoline and diesel fuel

per day by 2020 and reduce GHG emissions by a

cumulative 16 mmtC over that time frame. Even at

comparable fuel economy improvements to those

NHTSA proposes for the largest class 2a trucks regulated under the Reformed system—roughly 2% per

year, the country would save 24,000 barrels of gasoline and diesel fuel per day by 2020. These amounts

are significant: A 24,000 barrel per day (bpd) saving

would be equivalent to $700 million of annual savings at a relatively modest shadow price of $1.90/

gallon. This far exceeds the $100 million threshold

for a ‘significant energy action’ under [Executive

Order] 13211. 

Environmental Defense Cmt. at 10; see also UCS Cmt. at 34

(estimating that “[i]f these vehicles had been held to the same

fuel economy standard as other light-duty trucks, the total fuel

consumption by trucks under 10,000 lbs GVWR would be

approximately 890 million gallons less in 2005, for a savings

of nearly 60,000 barrels of oil per day. This corresponds to

about 18% of Class 2b fuel use.”). 

63American Council for an Energy-Efficient Economy (ACEEE) Cmt.,

NHTSA Docket No. 2003-16128-1156 (Apr. 27, 2004). 

14898 CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA
The evidence also shows that Class 2b trucks are “substantially used for the same purposes” as vehicles not more than

6,000 lbs. GVWR. The Polk Study showed that 76% of heavy

pickup truck owners use them for carrying passengers on a

daily or weekly basis, 57% use them for personal trips on a

daily or weekly basis, 49% use them for commuting on a

daily basis, and 52% never use them for driving off-road. Polk

Study at 13; see also Environmental Defense Cmt. at 10 (citing a 2002 vehicle inventory and use survey conducted by the

U.S. Census Bureau for the argument that “[i]n the intervening decades [since NHTSA revised its definition of ‘automobile’ to include Class 2a trucks but exclude Class 2b trucks],

trucks of all sizes have increasingly shifted from commercial

uses to personal uses.”).64

NHTSA did not address any of this evidence in the Final

Rule, and it does not argue that setting CAFE standards for

Class 2b trucks would not be feasible,65 that it would not

result in significant energy conservation, or that Class 2b

trucks are not substantially used for the same purposes as

smaller trucks. See 71 Fed. Reg. at 17,649-50; NHTSA Br. at

77-81. Instead, NHTSA makes the bold assertion that “the

agency is not obliged to justify exclusion of such very large

vehicles, as the statute has already excluded them, subject to

64NHTSA’s original rationale for expanding the definition of “automobile” to include Class 2a trucks but continuing to exclude Class 2b trucks

from CAFE regulation was the prediction that consumers would not use

them for personal use. 43 Fed. Reg. 11995, 11997 (Mar. 23, 1978). The

agency indicated that it would reconsider its decision if this prediction

proved false: “[T]he agency does not expect any circumvention of this

type to be as prevalent as the shift in GVWR’s across the previous 6000

pound dividing line. . . . [V]ehicles rated much above 7000 pounds are

equipped with heavy duty suspensions and other components which make

then unattractive for personal uses. . . . [I]f the agency’s projection in this

regard proves to be incorrect, the light truck category could be further

expanded to avoid circumvention of the fuel economy standards.” Id.

65NHTSA misdirects much of its attention to the argument that regulating MDPVs is “more feasible.” NHTSA Br. at 80 (emphasis in original).

CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA 14899
NHTSA’s discretionary decision to include such vehicles.”

NHTSA Br. at 79 (emphasis in original). This is clearly

wrong. The statute gives NHTSA some discretion in deciding

whether the 49 U.S.C. § 32901(a)(3) factors are met for Class

2b trucks, but if these factors are satisfied, then they are “automobiles” for which NHTSA must set fuel economy standards.66

NHTSA asserts that without EPA testing data, it cannot set

CAFE standards for Class 2b trucks. 71 Fed. Reg. at 17,650.

But EPA already subjects most Class 2b trucks to the city and

highway fuel economy tests (i.e., city and highway chassis

dynamometer testing) that NHTSA asserts are needed for it to

determine CAFE standards. See 40 C.F.R. § 86.101 (2007)

(applying test procedures to gasoline-fueled trucks above

8,500 lbs. GVWR (“Otto-cycle complete heavy-duty vehicles”)). NHTSA does not dispute this fact. 

Moreover, NHTSA has given no explanation of why it

would be infeasible to set standards for Class 2b trucks without EPA’s tests. Instead, NHTSA’s position is merely that

imposing one set of tests “minimize[s]” the “test burden to

manufacturers.” See 71 Fed. Reg. at 17,649. This concern has

no relevance to any of the statutory factors under 49 U.S.C.

§ 32901(a)(3)(B). 

Finally, NHTSA’s reasoning is arbitrary because it decided

that it is feasible to set CAFE standards for MDPVs even

though they are not currently subject to EPA testing. See id.

66We also reject NHTSA’s assertion that Petitioners “invert the relevant

question the agency sought to answer” since the agency was only concerned with the feasibility of regulating MDPVs, not other vehicles in the

8,500 to 10,000 lb. weight class. NHTSA Br. at 79. As discussed above,

the agency specifically sought comments on whether it should regulate all

vehicles between 8,500 and 10,000 lbs. GVWR, see 68 Fed. Reg. at

74,930, and Petitioners presented evidence on precisely that question, see,

e.g., Environmental Defense Cmt. at 9-11; UCS Cmt. at 33-35; Public Citizen Cmt. at 18-19; Polk Study. 

14900 CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA
(“MDPVs are not currently required to undergo chassis dynamometer testing.”). EPA will begin phasing in city chassis

dynamometer testing for MDPVs in MY 2008, but MDPVs

are exempted from highway chassis dynamometer testing. Id.

Yet, having “determined that this additional testing will not be

burdensome for the manufacturers,” NHTSA required highway tests as a result of including MDPVs in its “automobile”

definition. Id.

[19] In sum, NHTSA’s decision not to set average fuel

economy standards for all vehicles between 8,500 and 10,000

lbs. GVWR is arbitrary and capricious. That Class 2b trucks

have never been regulated by NHTSA is not a reason for not

regulating them now. We remand to NHTSA to revisit this

issue and promulgate average fuel economy standards for

these vehicles, or to provide a validly reasoned basis for continuing to exclude them from the regulation. 

B. National Environmental Policy Act

1. The EPCA does not limit NHTSA’s NEPA

obligations

NHTSA argues both that it has broad discretion to balance

the factors of 49 U.S.C. § 32902(f) in setting fuel economy

standards and that the EPCA constrains it from considering

more stringent alternatives in the EA. NHTSA can’t have it

both ways. Its hands are not tied, as demonstrated by its discretionary, substantive decisions to, among other things, value

the benefit of carbon emissions reduction at zero, 71 Fed.

Reg. at 17,638, peg its Unreformed CAFE standard to the

least capable manufacturer with a substantial share of the

market, id. at 17,568, apply technologies only until marginal

cost equals marginal benefit,67 id. at 17,589, 17,597, reject

67As opposed to, for example, setting total costs equal to total benefits,

as suggested by some commenters. See 71 Fed. Reg. at 17,591 (rejecting

the Union of Concerned Scientists’ break-even approach). 

CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA 14901
weight reduction as a cost-effective technology for vehicles

between 4,000 and 5,000 lbs. curb weight, id. at 17,627, and

not adopt a backstop, id. at 17,593. 

NHTSA relies on Department of Transportation v. Public

Citizen, 541 U.S. 752 (2004), for its contention that it did not

have to consider the effect of its rule on climate change. Public Citizen is inapposite. 

In Public Citizen, the Supreme Court held that the Federal

Motor Carrier Safety Administration (FMCSA) did not need

to consider the environmental effects of cross-border operations of motor carriers in its EA, since it had no ability to prevent those operations. 541 U.S. at 770. The Court reasoned,

“where an agency has no ability to prevent a certain effect due

to its limited statutory authority over the relevant actions, the

agency cannot be considered a legally relevant ‘cause’ of the

effect.” Id. The “critical feature” of the case was the fact that

“FMCSA has no ability to countermand the President’s lifting

of the moratorium or otherwise categorically to exclude Mexican motor carriers from operating within the United States.”

Id. at 766. “FMCSA has only limited discretion regarding

motor vehicle carrier registration: It must grant registration to

all domestic or foreign motor carriers that are ‘willing and

able to comply with’ the applicable safety, fitness, and

financial-responsibility requirements. FMCSA has no statutory authority to impose or enforce emissions controls or to

establish environmental requirements unrelated to motor carrier safety.” Id. at 758-59 (emphasis added) (citation omitted).

Moreover, neither of the purposes of NEPA—informing the

public and ensuring agency consideration of the environmental impacts of its actions—would be served. Knowledge of the

environmental impacts would not affect FMCSA decisionmaking since FMCSA “simply lacks the power to act on

whatever information might be contained in the EIS.” Id. at

768. 

Here, in contrast, NHTSA clearly has statutory authority to

impose or enforce fuel economy standards, 49 U.S.C.

14902 CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA
§ 32902(a), (c), and it could have, in exercising its discretion,

set higher standards if an EIS contained evidence that so warranted. See also Sierra Club v. Mainella, 459 F. Supp. 2d 76,

105 (D.D.C. 2006) (“The holding in Public Citizen extends

only to those situations where an agency has ‘no ability’

because of lack of ‘statutory authority’ to address the impact.

[National Park Service], in contrast, is only constrained by its

own regulation from considering impacts on the Preserve

from adjacent surface activities.” (emphasis in original)).

Although NEPA does not demand substantive environmental

outcomes, Public Citizen, 541 U.S. at 756, NHTSA possesses

the power to act on whatever information might be contained

in an EIS. This court has recognized that “NEPA’s legislative

history reflects Congress’s concern that agencies might

attempt to avoid any compliance with NEPA by narrowly

construing other statutory directives to create a conflict with

NEPA. Section 102(2) of NEPA therefore requires government agencies to comply ‘to the fullest extent possible.’ ”

Forelaws on Board v. Johnson, 743 F.2d 677, 683 (9th Cir.

1985); id. at 685 (holding that the Bonneville Power Administration interpreted its statutory authority too narrowly and

“[g]iven BPA’s statutory duty both to conserve energy use

and to preserve fish and wildlife, and the multitude of alternative proposals suggested by government agencies and citizen

groups, the failure to prepare an EIS demonstrating that the

agency has considered all significant alternatives violates both

NEPA and the APA.” (citations omitted)). 

Moreover, the CAFE standard will affect the level of the

nation’s greenhouse gas emissions and impact global warming. See Ctr. for Auto Safety, 793 F.2d at 1334-35 (“If setting

a higher standard cannot result in vehicles with increased fuel

efficiency, then the entire regulatory scheme is pointless.”);

NAS Report at 3 (“The CAFE program has clearly contributed to increased fuel economy of the nation’s light-duty

vehicle fleet during the past 22 years.”). NHTSA does not dispute that light trucks account for a significant percentage of

the U.S. transportation sector, that the U.S. transportation secCENTER FOR BIOLOGICAL DIVERSITY v. NHTSA 14903
tor accounts for about six percent of the world’s greenhouse

gases, and that “fuel economy improvements could have a

significant impact on the rate of CO2 accumulation in the

atmosphere,” which would affect climate change. NAS

Report at 14; cf. Massachusetts, 127 S. Ct. at 1457 (“EPA

does not dispute the existence of a causal connection between

man-made greenhouse gas emissions and global warming. At

a minimum, therefore, EPA’s refusal to regulate such emissions ‘contributes’ to Massachusetts’ injuries.”).68

[20] In sum, the EPCA does not limit NHTSA’s duty under

NEPA to assess the environmental impacts, including the

impact on climate change, of its rule. EPCA’s goal of energy

conservation and NEPA’s goals of “help[ing] public officials

make decisions that are based on understanding of environ68The Supreme Court’s recent decision in National Association of Home

Builders v. Defenders of Wildlife, 127 S. Ct. 2518 (2007), is not relevant

for several reasons. First, NEPA analysis is entirely distinct from analysis

under the Endangered Species Act. See id. at 2535. Petitioners do not

interpret NEPA as “add[ing] another entirely separate prerequisite to th[e]

list,” id. at 2537, of statutory factors in 49 U.S.C. § 32902(f). NEPA

imposes the obligation on every agency to evaluate the environmental

impacts of its major actions so that there can be informed agency and public decisionmaking. See 40 C.F.R. § 1500.1. Second, unlike the EPA,

NHTSA has not taken the position that its actions in setting CAFE standards involve no judgment or discretion. NHTSA asks this court to defer

to its discretionary choices (based on its expert judgment) on every issue

Petitioners raise under the EPCA. Third, there is no doubt that the fuel

economy standards set by NHTSA will have a direct effect on greenhouse

gas emissions from light trucks—and that NHTSA is thus a “legally relevant cause.” See Massachusetts, 127 S. Ct. at 1457-58 (“[R]educing

domestic automobile emissions is hardly a tentative step. Even leaving

aside the other greenhouse gases, the United States transportation sector

emits an enormous quantity of carbon dioxide into the atmosphere . . .

more than 6% of worldwide carbon dioxide emissions. . . . To put this in

perspective: Considering just emissions from the transportation sector, . . .

the United States would still rank as the third-largest emitter of carbon

dioxide in the world . . . . Judged by any standard, U.S. motor-vehicle

emissions make a meaningful contribution to greenhouse gas concentrations and hence, . . . to global warming.”). 

14904 CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA
mental consequences, and take actions that protect, restore,

and enhance the environment,” 40 C.F.R. § 1500.1(c), and

“insur[ing] that environmental information is available to

public officials and citizens before decisions are made and

before actions are taken,” id. § 1500.1(b), are complementary.

NEPA prohibits uninformed agency action. Robertson v.

Methow Valley Citizens Council, 490 U.S. 332, 351 (1989).

“The procedures included in § 102 of NEPA are not ends in

themselves. They are intended to be ‘action forcing.’ The

unequivocal intent of NEPA is to require agencies to consider

and give effect to the environmental goals set forth in the Act,

not just to file detailed impact studies which will fill governmental archives.” Envtl. Def. Fund, Inc. v. Corps of Eng’rs of

the U.S. Army, 470 F.2d 289, 298 (8th Cir. 1972) (citation

omitted). 

2. Sufficiency of the Environmental Assessment

We examine the EA with two purposes in mind: to determine whether it has adequately considered and elaborated the

possible consequences of the proposed agency action when

concluding that it will have no significant impact on the environment, and whether its determination that no EIS is required

is a reasonable conclusion. 

Even though an EA need not “conform to all the requirements of an EIS,” it must be “sufficient to establish the reasonableness of th[e] decision” not to prepare an EIS. Found.

for N. Am. Wild Sheep, 681 F.2d at 1178 n.29 (1982);69 see

69NHTSA’s reliance on Foundation for North American Wild Sheep is

misplaced because in that case—as here—the agency’s EA “failed to

address certain crucial factors, consideration of which was essential to a

truly informed decision whether or not to prepare an EIS.” 681 F.2d at

1178. The EA failed to consider crucial factors relating to the effect of

reconstruction and use of a road that passed directly through an area occupied by Desert Bighorn Sheep, which are sensitive to encroachment on

their territory. The EA’s insufficiency forced the court to “speculate,”

CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA 14905
also 40 C.F.R. § 1508.9(a)(1). An EA “[s]hall include brief

discussions of the need for the proposal . . . [and] the environmental impacts of the proposed action and alternatives.” 40

C.F.R. § 1508.9(b). An EA “must in some circumstances

include an analysis of the cumulative impacts of a project. . . .

An EA may be deficient if it fails to include a cumulative

impact analysis . . . .” Native Ecosystems Council v. Dombeck,

304 F.3d 886, 895 (9th Cir. 2002); see also Klamath-Siskiyou

Wildlands Ctr. v. Bureau of Land Mgmt., 387 F.3d 989, 993-

94 (9th Cir. 2004); Kern v. U.S. Bureau of Land Mgmt., 284

F.3d 1062, 1076-78 (9th Cir. 2002). 

a. Cumulative impacts of greenhouse gas emissions

on climate change and the environment 

A cumulative impact is defined as “the impact on the environment which results from the incremental impact of the

action when added to other past, present, and reasonably foreseeable future actions regardless of what agency . . . or person

undertakes such other actions. Cumulative impacts can result

from individually minor but collectively significant actions

taking place over a period of time.” 40 C.F.R. § 1508.7. In

Klamath-Siskiyou Wildlands Center, this court held that: 

Cumulative impacts of multiple projects can be significant in different ways. The most obvious way is

that the greater total magnitude of the environmental

effects . . . may demonstrate by itself that the environmental impact will be significant. Sometimes the

total impact from a set of actions may be greater than

the sum of the parts. 

even though “the very purpose of NEPA’s requirement that an EIS be prepared for all actions that may significantly affect the environment is to

obviate the need for such speculation by insuring that available data is

gathered and analyzed prior to the implementation of the proposed

action.” Id. at 1179. 

14906 CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA
387 F.3d at 994. 

The EA catalogues the total tonnage of CO2 emissions for

light trucks for MYs 2005-2011. Final EA at 35-39. Table 4-

5 of the Final EA lists the amount of fuel consumption and

emissions of criteria pollutants and CO2 emissions. Id. at 35.

For example, it shows that under Unreformed CAFE, the lifetime CO

2

 emissions for light trucks MY 2005-2011 would be

4,979 million metric tons (mmt). Id. Under Reformed CAFE,

including MDPVs in MY 2011, CO2 emissions would be

4,966 million metric tons. Id. NHTSA estimated that:

together with the previous action raising MY 2005-

07 light truck CAFE standards, the various alternatives for the current action will reduce lifetime carbon dioxide (CO2

) emissions from MY 2005-11 light

trucks by 122 to 196 million metric tons, or by 2.4

to 3.8 percent from their level if neither action had

been taken. . . . MY 2008-11 light truck CAFE standards are projected to result in cumulative reductions

from the previous and current actions ranging from

0.2 to 0.3 percent of U.S. greenhouse gas emissions

over the lifetimes of MY 2005-11 light trucks. 

Id. at 36-37 (emphasis added). 

[21] We conclude that the EA’s cumulative impacts analysis is inadequate. While the EA quantifies the expected

amount of CO

2

 emitted from light trucks MYs 2005-2011, it

does not evaluate the “incremental impact” that these emissions will have on climate change or on the environment more

generally in light of other past, present, and reasonably foreseeable actions such as other light truck and passenger automobile CAFE standards.70 The EA does not discuss the actual

70There are also some inconsistencies. Petitioners point out, for example, that the EA does not explain how the lifetime emissions of MY 2011

vehicles (697 mmt) could be less than MY 2010 (700 mmt) for the baseline alternative, see Final EA at 29, given that fuel economy is held constant and vehicle miles traveled (VMT) are expected to increase each year,

id. at 8, 34. 

CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA 14907
environmental effects resulting from those emissions or place

those emissions in context of other CAFE rulemakings. This

is a similar deficiency as that found in the Bureau of Land

Management’s EA in Klamath-Siskiyou Wildlands Center,

where this court held that the BLM’s cumulative impacts

analysis was inadequate because “[a] calculation of the total

number of acres to be harvested in the watershed is a necessary component of a cumulative effects analysis, but it is not

a sufficient description of the actual environmental effects

that can be expected from logging those acres” and “stating

the total miles of roads to be constructed is similar to merely

stating the sum of the acres to be harvested—it is not a

description of the actual environmental effects.” 387 F.3d at

995. 

NHTSA does not dispute that the CAFE standard will have

an effect on global warming due to an increase in greenhouse

gas emissions. The new rule will not actually result in a

decrease in carbon emissions, but potentially only a decrease

in the rate of growth of carbon emissions. NHTSA concedes

that “the new CAFE standards will not entirely offset the projected effect of increases in the number of light trucks.”

NHTSA Br. at 92. However, NHTSA contends that Congress

is “the cause of that shortfall,” not the agency, since it “is

Congress’s decision in EPCA to require that CAFE standards

be technologically feasible and economically practicable.” Id.

NHTSA concludes from this that it has no obligation to assess

the cumulative impact of its rule on climate change. 

This argument is without merit for the reasons already discussed. NHTSA has the power to change the CAFE standards

based on information contained in an EIS. We agree with

Petitioners that “[b]y allowing particular fuel economy levels,

which NHTSA argues translate directly into particular tailpipe

emissions, NHTSA’s regulations are the proximate cause of

those emissions just as EPA Clean Air Act rules permitting

particular smokestack emissions are the proximate cause of

those air pollutants and are unquestionably subject to NEPA’s

14908 CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA
cumulative impacts requirements.” NEPA Gray Br. at 22; cf.

Massachusetts, 127 S. Ct. at 1455-58. Thus, the fact that “climate change is largely a global phenomenon that includes

actions that are outside of [the agency’s] control . . . does not

release the agency from the duty of assessing the effects of its

actions on global warming within the context of other actions

that also affect global warming.” States’ Gray Br. at 15

(emphasis added). The cumulative impacts regulation specifically provides that the agency must assess the “impact of the

action when added to other past, present, and reasonably foreseeable future actions regardless of what agency (Federal or

non-Federal) or person undertakes such other actions.” 40

C.F.R. § 1508.7; see also Res. Ltd., Inc. v. Robertson, 35 F.3d

1300, 1306 (9th Cir. 1994) (“The Forest Service says that

cumulative impacts from non-Federal actions need not be analyzed because the Federal government cannot control them.

That interpretation is inconsistent with 40 C.F.R. § 1508.7,

which specifically requires such analysis.”). 

[22] The impact of greenhouse gas emissions on climate

change is precisely the kind of cumulative impacts analysis

that NEPA requires agencies to conduct. Any given rule setting a CAFE standard might have an “individually minor”

effect on the environment, but these rules are “collectively

significant actions taking place over a period of time.” 40

C.F.R. § 1508.7; see also Native Ecosystems Council, 304

F.3d at 897 (holding that the Forest Service’s road density

standard amendments must be subject to cumulative impacts

analysis because otherwise, “the Forest Service will be free to

amend road density standards throughout the forest piecemeal, without ever having to evaluate the amendments’ cumulative environmental impacts.”); City of Los Angeles v.

NHTSA, 912 F.2d 478, 501 (D.C. Cir. 1990) (Wald, C.J., dissenting) (“[W]e cannot afford to ignore even modest contributions to global warming. If global warming is the result of the

cumulative contributions of myriad sources, any one modest

in itself, is there not a danger of losing the forest by closing

our eyes to the felling of the individual trees?”), overruled on

CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA 14909
other grounds by Fla. Audubon Soc. v. Bentsen, 94 F.3d 658

(D.C. Cir. 1996). Thus, NHTSA must provide the necessary

contextual information about the cumulative and incremental

environmental impacts of the Final Rule in light of other

CAFE rulemakings and other past, present, and reasonably

foreseeable future actions, regardless of what agency or person undertakes such other actions. 

b. Reasonable alternatives

[23] NHTSA must “[r]igorously explore and objectively

evaluate all reasonable alternatives.” 40 C.F.R. § 1502.14(a).

The alternatives section is the “heart” of an EIS. Id.

§ 1502.14; Ilio’ulaokalani Coalition v. Rumsfeld, 464 F.3d

1083, 1095 (9th Cir. 2006); NRDC v. U.S. Forest Serv., 421

F.3d 797, 813 (9th Cir. 2005). Although “an agency’s obligation to consider alternatives under an EA is a lesser one than

under an EIS,” Native Ecosystems Council v. U.S. Forest

Serv., 428 F.3d 1233, 1246, 1245 (9th Cir. 2005), “NEPA

requires that alternatives . . . be given full and meaningful

consideration,” whether the agency prepares an EA or an EIS,

id. at 1245 (alteration in original; internal quotation marks

omitted). The agency must “provide sufficient evidence and

analysis for determining whether to prepare an environmental

impact statement or a finding of no significant impact.” 40

C.F.R. § 1508.9. 

In the EA, NHTSA considered a very narrow range of

alternatives. All the alternatives evaluated were derived from

NHTSA’s cost-benefit analysis. 71 Fed. Reg. at 17,672 n.265

(“The evaluated alternatives represent standards set under the

traditional Unreformed CAFE process and under the marginal

cost-benefit analysis previously described.”). The alternatives

presented in the EA are as follows: 

• Alternative A (“Baseline”): MY 2007 standard of 22.2

mpg for MYs 2008-2011.

14910 CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA
• Alternative B: Unreformed CAFE for MYs 2008-201071

and Reformed CAFE for MY 2011 with fuel economy targets set using continuous function. MPDVs included in

MY 2011 only.

• Alternative C: Reformed CAFE for MYs 2008-2011 with

fuel economy targets set using continuous function.

Impacts are shown including MDPVs for MY 2011 only

and excluding MDPVs altogether.

• Alternative D: Reformed CAFE as described in NPRM,

with fuel economy targets set using step function (six footprint categories). Entirely excludes MDPVs.

• Alternative E: Reformed CAFE described in NPRM, with

revised fuel economy targets for each of its six footprint

categories. Impacts are shown including MDPVs for MY

2011 only and excluding MDPVs altogether. 

Final EA at vii, 8-15. The alternative NHTSA ultimately

chose is a mix between Alternatives B and C: NHTSA

adopted Reformed CAFE beginning in MY 2011 and Unreformed CAFE for MYs 2008-2010, but it allowed a transition

period to Reformed CAFE in MY 2011, so manufacturers

may choose to continue to follow Unreformed CAFE in MYs

2008-2010. The adopted alternative includes MDPVs for MY

2011 only. 

These alternatives are hardly different from the option that

NHTSA ultimately adopted. The EA states that “Alternatives

C and E are projected to result in the largest reductions in fuel

consumption, energy use, and environmental effects among

these alternatives,” id. at vii, but Alternative C is close to

what NHTSA adopted (the only difference being no transition

period), and Alternative E barely results in less CO2 emissions

7122.5 mpg for MY 2008, 23.1 mpg for MY 2009, and 23.5 mpg for

MY 2010. 

CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA 14911
than Alternative C. See id. at x (change from baseline for

Alternative C and Alternative E with MDPVs in MY 2011 are

the same (-73 mmt), and change in baseline without MDPVs

is -70 mmt for Alternative C and -71 mmt for Alternative E).

The entire range of alternatives considered in the EA ranged

from “22.2 to 22.7 mpg for MY 2008, 22.2 to 23.3 mpg for

MY 2009, and 22.2 to 23.6 mpg for MY 2010.” Id. at 16. The

estimated lifetime fuel and energy use by MY 2008-2011

light trucks under the alternatives ranged from a 1.8 to 2.6

percent decrease from “baseline,” id. at 27-28, and the estimated lifetime emissions of CO

2

 ranged from 2,767 to 2,840

mmt, id. at 29, which is extremely small compared to the

overall volume of emissions.72

NHTSA acknowledged that “the range of impacts from the

considered alternatives is very narrow and minimal.” 71 Fed.

Reg. at 17,672. However, the agency justified its choice of

range and refusal to consider other alternatives on the ground

that “standards more stringent than those represented by the

alternatives would not satisfy the statutory requirement to

establish standards . . . that are both technologically feasible

and economically practicable . . . . NEPA’s requirements must

be applied in light of the constraints placed on the agency by

EPCA.” Final EA at viii. Once again, NHTSA falls back on

its contention that it had no discretion to consider setting

higher CAFE standards. As before, we conclude that this

argument is flawed. 

NHTSA also erroneously contends that Petitioners have not

identified any specific alternative the agency should have considered. To the contrary, Environmental Defense submitted a

detailed appendix to its comment titled, “Revised BenefitCost Analysis for Calculating Optimal CAFE Targets.” See

72See U.S. E.P.A., Inventory of U.S. Greenhouse Gas Emissions and

Sinks: 1990-2004, at 2-1 (Apr. 15, 2006) (stating that “[i]n 2004, total

U.S. greenhouse gas emissions were 7,074.4 tetragrams of carbon dioxide

equivalents (Tg CO2 Eq.).”). 

14912 CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA
Environmental Defense Cmt. App. A.73 In this document,

Environmental Defense performed a marginal cost-benefit

analysis, using a variety of different assumptions and inputs.

Table A-1 set forth 28 different possible CAFE standards for

MY 2011 (including NHTSA’s figure). On the basis of its calculations, it recommended a final rule that would increase

CAFE standards at a rate of 4% per year and achieve a standard of 26 mpg by MY 2011. Environmental Defense Cmt.,

Letter from Kevin Mills, Director, Clean Car Program, Environmental Defense, to Jacqueline Glassman, Acting Administrator, NHTSA (Nov. 22, 2005). 

We also disagree with NHTSA that Petitioners’ suggested

alternatives would not be reasonably related to the project’s

purpose. The purpose of the Final Rule is to set CAFE standards for light trucks for MYs 2008-2011. 71 Fed. Reg. at

17,566. NHTSA itself describes the scope of the EA as “analyz[ing] the environmental impacts associated with various

alternatives to the existing CAFE program.” Final EA at 4.

Since EPCA’s overarching goal is energy conservation, consideration of more stringent fuel economy standards that

would conserve more energy is clearly reasonably related to

the purpose of the CAFE standards. Energy conservation and

environmental protection are not coextensive, but they often

overlap. The Supreme Court has recently recognized as much.

See Massachusetts, 127 S. Ct. at 1462 (“[T]hat DOT sets

mileage standards in no way licenses EPA to shirk its environmental responsibilities. EPA has been charged with protecting the public’s ‘health’ and ‘welfare,’ 42 U.S.C.

§ 7521(a)(1), a statutory obligation wholly independent of

DOT’s mandate to promote energy efficiency. The two obligations may overlap, but there is no reason to think the two

agencies cannot both administer their obligations and yet

avoid inconsistency.” (citation omitted)). 

73This document is a revision of Environmental Defense’s June 2005

analysis of optimal light truck fuel economy improvement rates titled,

“Cost-Effective Targets for a 2008+ Light Truck CAFE Rule.” See Environmental Defense Cmt. App. A at A-1. 

CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA 14913
3. NHTSA must prepare an Environmental Impact

Statement

[24] An agency must prepare an EIS “if ‘substantial questions are raised as to whether a project . . . may cause significant degradation of some human environmental factor.’ ”

Idaho Sporting Cong. v. Thomas, 137 F.3d 1146, 1149 (9th

Cir. 1998). Petitioners “need not show that significant effects

will in fact occur,” but only that there are “substantial questions whether a project may have a significant effect.” Id. at

1150 (internal quotation marks omitted); see also Blue Mountains Biodiversity Project v. Blackwood, 161 F.3d 1205, 1212

(9th Cir. 1998); Nat’l Parks & Conservation Ass’n v. Babbit,

241 F.3d 722, 730 (9th Cir. 2001). “If an agency decides not

to prepare an EIS, it must supply a ‘convincing statement of

reasons’ to explain why a project’s impacts are insignificant.

‘The statement of reasons is crucial to determining whether

the agency took a ‘hard look’ at the potential environmental

impact of a project.’ ” Blue Mountains Biodiversity Project,

161 F.3d at 1212 (quoting Save the Yaak Comm. v. Block, 840

F.2d 714, 717 (9th Cir. 1988)); see also Nat’l Parks & Conservation Ass’n, 241 F.3d at 730. 

“Whether there may be a significant effect on the environment requires consideration of two broad factors: ‘context and

intensity.’ ” Nat’l Parks & Conservation Ass’n, 241 F.3d at

731 (quoting 40 C.F.R. § 1508.27). A number of factors

should be considered in evaluating intensity, including, “[t]he

degree to which the proposed action affects public health or

safety,” “[t]he degree to which the effects on the quality of the

human environment are likely to be highly controversial,”

“[t]he degree to which the possible effects on the human environment are highly uncertain or involve unique or unknown

risks,” “[t]he degree to which the action may establish a precedent for future actions with significant effects or represents

a decision in principle about a future consideration,”

“[w]hether the action is related to other actions with individually insignificant but cumulatively significant impacts,” and

14914 CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA
“[t]he degree to which the action may adversely affect an

endangered or threatened species or its habitat.” 40 C.F.R.

§ 1508.27(b)(2), (4), (5), (6), (7), (9). An action may be “significant” if one of these factors is met. Ocean Advocates v.

U.S. Army Corps of Eng’rs, 361 F.3d 1108, 1125 (9th Cir.

2004); see also Nat’l Parks & Conservation Ass’n, 241 F.3d

at 731 (either degree of uncertainty or controversy “may be

sufficient to require preparation of an EIS in appropriate circumstances.”). 

[25] NHTSA’s finding of no significant impact (FONSI)

stated that the agency determined that its Final Rule “will not

have a significant effect on the human environment. This

finding of no significant impact is based on the attached Final

Environmental Assessment (EA). . . .” Finding of No Significant Environmental Impact for Model Year 2008-2011 Light

Truck Fuel Economy Standards, NHTSA Docket No. 2006-

24309-3 (Mar. 28, 2006). In the Final EA, NHTSA explained

that compared to the “baseline” alternative of extending the

MY 2007 light truck CAFE standard through MYs 2008-

2011, its evaluated alternatives would have a minor beneficial

impact on various environmental resources. Final EA at 26-

33, 39-42. NHTSA concluded that “the final rule would produce, compared to U.S. emissions of CO2

, a small decrease in

emissions of CO

2

, the primary component of greenhouse gas

emissions, under the selected alternative. Accordingly, the

agency determined that the action we are adopting today will

not have a significant impact on the environment.” 71 Fed.

Reg. at 17,673 (citing Final EA at 32). 

Petitioners argue that the evidence raises a substantial question as to whether the Final Rule may have a significant

impact on the environment and that NHTSA failed to provide

a convincing statement of reasons for why a small decrease

(rather than a larger decrease) in the growth of CO2 emissions

would not have a significant impact on the environment. Petitioners note that NHTSA has never evaluated the impacts of

carbon emissions from light trucks or other vehicles, much

CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA 14915
less the effect of any reduction or increase in those emissions

on climate change. Petitioners presented evidence that continued increase in greenhouse gas emissions may change the climate in a sudden and non-linear way. Without some analysis,

it would be “impossible for NHTSA to know . . . whether a

change in GHG emissions of 0.2% or 1% or 5% or 10% . . .

will be a significant step toward averting the ‘tipping point’ ”

and irreversible adverse climate change. States’ Gray Br. at 6.

NHTSA argues that its “conclusion that a 0.2 percent

decrease in carbon dioxide emissions will not have a significant impact upon the environment is self-evidently reasonable

and consistent” with City of Los Angeles v. NHTSA, 912 F.2d

478 (D.C. Cir. 1990), and Public Citizen v. NHTSA, 848 F.2d

256 (D.C. Cir. 1988). NHTSA Br. at 111. NHTSA also argues

that the impact of the rule on global warming is too speculative to warrant NEPA analysis. 

We conclude that NHTSA’s FONSI is arbitrary and capricious and the agency must prepare an EIS because the evidence raises a substantial question as to whether the Final

Rule may have a significant impact on the environment. See

Idaho Sporting Congress, 137 F.3d at 1149 (holding that an

EIS must be prepared “if substantial questions are raised as to

whether a project . . . may cause significant degradation of

some human environmental factor” (alteration in original;

internal quotation marks omitted)). Moreover, NHTSA has

failed to provide a convincing statement of reasons for its

finding of insignificance. See, e.g., Blue Mountains Biodiversity Project, 161 F.3d at 1212; Nat’l Parks & Conservation

Ass’n, 241 F.3d at 730. 

Petitioners have raised a “substantial question” as to

whether the CAFE standards for light trucks MYs 2008-2011

“may cause significant degradation of some human environmental factor,” particularly in light of the compelling scientific evidence concerning “positive feedback mechanisms” in

14916 CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA
the atmosphere.74 Among the evidence Petitioners presented

to the agency was the following:

• The IPCC Third Assessment Report, which discusses the history of anthropogenic interference

with the climate system, the projected increase in

climate variability and extreme weather events,

and the projected effects on various ecological

systems. See IPCC Third Assessment Report at

2-33. The IPCC found: 

Changes in climate could increase the risk of

abrupt and non-linear changes in many ecosystems, which would affect their function, biodiversity, and productivity. The greater the

magnitude and rate of the change, the greater the

risk of adverse impacts. For example: 

Changes in disturbance regimes and shifts in

the location of suitable climatically defined habitats may lead to abrupt breakdown of terrestrial

and marine ecosystems with significant changes

in composition and function and increased risk of

extinctions. 

Sustained increases in water temperatures of as

little as 1°C, alone or in combination with any of

several stresses . . . can lead to corals ejecting

their algae (coral bleaching) and the eventual

death of some corals. . . . 

Inertia is a widespread inherent characteristic of

the interacting climate, ecological, and socioeconomic systems. Thus some impacts of anthro74Petitioners did not waive this “tipping” argument, as NHTSA argues.

Evidence concerning “tipping” was presented to the agency during the

comment period and is in the administrative record. 

CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA 14917
pogenic climate change may be slow to become

apparent, and some could be irreversible if climate change is not limited in both rate and magnitude before associated thresholds, whose

positions may be poorly known, are crossed.

IPCC Third Assessment Report at 16 (emphasis

added); see also id. at 15 (Table SPM-2 shows

“[e]xamples of climate variability and extreme

climate events and examples of their impacts.”).

• The IPCC Working Group I Technical Summary

provided: “The possibility for rapid and irreversible changes in the climate system exists, but

there is a large degree of uncertainty about the

mechanisms involved and hence also about the

likelihood or time-scales of such transitions. The

climate system involves many processes and

feedbacks that interact in complex non-linear

ways. This interaction can give rise to thresholds

in the climate system that can be crossed if the

system is perturbed sufficiently.” Technical Summary of IPCC Working Group I Report at 53

(emphasis added); see also id. at 46-53 (discussion of positive feedback mechanism).

• “The American Meterological Society, the American Geophysical Union, and the American Association for Advancement of Science, among

many, many other scientific organizations have

all concluded that the evidence of human induced

warming is compelling. . . . In an April 2004 article, leading NASA and Department of Energy

scientists stated that emissions of carbon dioxide

and other heat-trapping gases have warmed the

oceans and led to an energy imbalance that is

causing and will continue to cause, significant

warming, increasing the urgency of reducing CO2

14918 CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA
emissions.” States’ Cmt. at 9 (citing essay that

reviewed 928 peer-reviewed scientific papers). 

• The Climate Change Futures Report published by

the Center for Health and the Global Environment at Harvard Medical School, which analyzed

in detail climate change scenarios that “will

affect the health of humans as well as the ecosystems and species on which we depend.” Climate Change Futures Report at 5; see generally

id. at 32-90 (case studies involving infectious and

respiratory diseases, extreme weather events, and

natural and managed systems). 

Finally, Petitioners have satisfied several of the “intensity”

factors listed in 40 C.F.R. § 1508.27(b) for determining “significant effect.” For example, the Final Rule clearly may have

an “individually insignificant but cumulatively significant”

impact with respect to global warming. Evidence that Petitioners submitted in the record also shows that global warming will have an effect on public health and safety. Climate

Change Futures Report at 6-90. Petitioners do not claim (nor

do they have to show) that NHTSA’s Final Rule would be the

sole cause of global warming, and that is NHTSA’s only

response on this point. 

Petitioners have also satisfied the “controversy” factor. See

40 C.F.R. § 1508.27(b)(4); see Blue Mountains Biodiversity

Project, 161 F.3d at 1212 (“ ‘controversial’ is ‘a substantial

dispute [about] the size, nature, or effect of the major Federal

action rather than the existence of opposition to a use.’ ”

(alteration in original)). NHTSA received over 45,000 individual submissions on its proposal. See 71 Fed. Reg. at

17,577; see also Nat’l Parks & Conservation Ass’n, 241 F.3d

at 736 (four-hundred and fifty comments, 85% of which

opposed the agency’s preferred alternative was “more than

sufficient to meet the ‘outpouring of public protest’ discussed

in [prior case law]. More important, to the extent the comCENTER FOR BIOLOGICAL DIVERSITY v. NHTSA 14919
ments urged that the EA’s analysis was incomplete, . . . they

cast substantial doubt on the adequacy of the Parks Service’s

methodology and data.” (footnote and citation omitted)). We

reject NHTSA’s argument that “petitioners’ controversy does

not concern the ‘size, nature, or effect’ of the new CAFE standards, but rather the desire of some commenters for different

regulations that they have not described in any detail.”

NHTSA Br. at 117. The entire dispute between Petitioners

and NHTSA centers on the stringency of the MY 2008-2011

light truck CAFE standards—their “size” or “effect.”

75

In light of the evidence in the record, it is hardly “selfevident” that a 0.2 percent decrease in carbon emissions (as

opposed to a greater decrease) is not significant. NHTSA’s

conclusion that a small reduction (0.2% compared to baseline)

in the growth of carbon emissions would not have a significant impact on the environment was unaccompanied by any

analysis or supporting data, either in the Final Rule or the EA.

See, e.g., 71 Fed. Reg. at 17,673; Final EA at 32. 

[26] Nowhere does the EA provide a “statement of reasons” for a finding of no significant impact, much less a “convincing statement of reasons.” For example, the EA discusses

the amount of CO

2

 emissions expected from the Rule, but

does not discuss the potential impact of such emissions on climate change. In the “Affected Environment” section of the

EA, NHTSA states that “[i]ncreasing concentrations of greenhouse gases are likely to accelerate the rate of climate

change.” Final EA at 22. The agency notes that “[t]he transportation sector is a significant source of greenhouse gas

(GHG) emissions, accounting for approximately 28 percent of

all greenhouse gas emissions in the United States.” Id. From

this, NHTSA jumps to the conclusion that “[c]oupled with the

75Wetlands Action Network v. U.S. Army Corps of Engineers, 222 F.3d

1105, 1122 (9th Cir. 2000), cited by NHTSA, is not on point, because petitioners there wanted the Corps to build a saltwater marsh instead of a

freshwater marsh. 

14920 CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA
effects resulting from the 2003 light truck rule, the effects

resulting from the agency’s current action are expected to

lessen the GHG impacts discussed above.” Id.

Table 3-2 of the EA, which shows the potential health

effects of criteria air pollutants, is similarly devoid of meaningful analysis or a statement of reasons why the effects

would be insignificant. The potential health effect for CO2 is

described: “Increase in greenhouse gases can lead to climate

change. Hot temperatures can lead to cardiovascular problems, heat exhaustion, and some respiratory problems. There

may be an increased risk of infectious diseases due to

increased temperatures. Heat can also increase the concentration of ground-level ozone.” Id. at 20. 

[27] Nor is there any analysis or statement of reasons in the

section of the EA that discusses environmental impacts. The

EA states that reduction in fuel production and consumption

would reduce “contamination of water resources,” acid rain,

risk of oil spills and contamination, and “lead to minor reductions in impacts to biological resources . . . includ[ing] habitat

encroachment and destruction, air and water pollution, greenhouse gases, and oil contamination from petroleum refining

and distribution.” Id. at 32-33; see also id. at 39 (Table 4-7

compares the impacts under the baseline CAFE standard of

22.2 mpg and the analyzed alternatives. It cursorily summarizes the impacts as “slower rate of growth in fuel consumption for light trucks,” “reduction of GHG emissions,” and

“minor benefit [to water and biological resources] from reductions in energy consumption, GHG emissions and extremely

small changes in criteria pollutant emissions.”); id. at 32-33

(citing no supporting data for its conclusions regarding

impacts on water and biological resources). 

[28] NHTSA’s EA “shunted aside [significant questions]

with merely conclusory statements,” failed to “directly

address[ ]” “substantial questions,” and most importantly,

“provide[d] no foundation” for the important inference

CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA 14921
NHTSA draws between a decrease in the rate of carbon emissions growth and its finding of no significant impact. Found.

for N. Am. Wild Sheep, 681 F.2d at 1179. NHTSA makes

“vague and conclusory statements” unaccompanied by “supporting data,” and the EA “do[es] not constitute a ‘hard look’

at the environmental consequences of the action as required

by NEPA.” Great Basin Mine Watch v. Hankins, 456 F.3d

955, 973 (9th Cir. 2006). Thus, the FONSI is arbitrary and

capricious. See Klamath-Siskiyou Wildlands Center, 387 F.3d

at 994 (“[T]he problem with the entire table is that it does not

provide any objective quantification of the impacts. Instead,

the reader is informed only that a particular environmental

factor will be ‘unchanged,’ ‘improved,’ or ‘degraded’ and

whether that change will be ‘minor’ or ‘major.’ The reader is

not told what data the conclusion was based on, or why objective data cannot be provided.”). 

The only reason NHTSA provided for why the environmental impact of the Final Rule would be insignificant is that

it results in a decreased rate of growth of GHG emissions

compared to the light truck CAFE standard for MY 2007. But

simply because the Final Rule may be an improvement over

the MY 2007 CAFE standard does not necessarily mean that

it will not have a “significant effect” on the environment.

NHTSA has not explained why its rule will not have a significant effect.76

76We are not persuaded by NHTSA’s argument that City of Los Angeles

v. NHTSA supports its position. In that case, state and local governmental

entities and environmental groups brought separate challenges to

NHTSA’s decision not to prepare an EIS covering its CAFE standards for

MYs 1987-1988 and 1989. 912 F.2d at 482. Pursuant to 15 U.S.C.

§ 2002(a)(1), (4), NHTSA lowered the passenger car standard from the

statutory 27.5 mpg to 26.0 mpg for MYs 1987-88 and 26.5 mpg for MY

1989. Id. With respect to MYs 1987-88, the court held that city and state

petitioners had standing to sue under NEPA on air pollution grounds, but

it rejected their challenge on the merits. The court held that NRDC had

standing to challenge the MY 1989 on global warming grounds, but it did

not disturb NHTSA’s conclusion that an EIS was not required. Chief

14922 CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA
In light of the emergent consensus on global warming,

Chief Judge Wald’s reasoning in her dissent in City of Los

Angeles is not only prescient but persuasive:

While NHTSA did the calculations necessary to

determine how much extra carbon dioxide would be

emitted, it failed completely to discuss in any detail

the global warming phenomenon itself, or to explain

the benchmark for its determination of insignificance

in relation to that environmental danger. Had the

emissions been slightly over one percent, would that

have been significant? Without some articulated

criteria for significance in terms of contribution to

global warming that is grounded in the record and

available scientific evidence, NHTSA’s bald conclusion that the mere magnitude of the percentage

increase is enough to alleviate its burden of conducting a more thorough investigation cannot carry the

day. 

Judge Wald dissented on the court’s merits ruling and would have held

that NHTSA acted arbitrarily in concluding that the 1989 CAFE standard

would not have a significant impact on global warming and would have

remanded to NHTSA. Id.

Then-Judge Ruth Bader Ginsburg joined in Judge D. Ginsburg’s opinion on NRDC’s NEPA challenge, and she provided two reasons for her

concurrence: “(1) NRDC’s apparent acceptance of NHTSA’s finding that

the 1.0 mpg CAFE rollback at issue would yield a ‘maximum theoretical

increase of less than one percent in greenhouse gases,’ . . . and (2)

NRDC’s failure even to allege that such an increase ‘would produce any

marginal effect on the probability, the severity, or the imminence’ of the

global warming disaster petitioners project.” Id. at 504 (citation omitted).

These reasons do not apply here. Petitioners have provided substantial evidence that even a small increase in greenhouse gases could cause abrupt

and severe climate changes. Cf. Massachusetts, 127 S. Ct. at 1458 (“[T]he

rise in sea levels associated with global warming has already harmed and

will continue to harm Massachusetts. The risk of catastrophic harm,

though remote, is nevertheless real. That risk would be reduced to some

extent if petitioners received the relief they seek.”). 

CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA 14923
912 F.2d at 500. 

[29] Petitioners have raised a substantial question of

whether the Final Rule may significantly affect the environment. NHTSA acknowledges that carbon emissions contribute

to global warming, and it does not dispute the scientific evidence that Petitioners presented concerning the significant

effect of incremental increases in greenhouses gases. NHTSA

has not provided a “statement of reasons why potential effects

are insignificant,” much less a “convincing statement of reasons.” See Blue Mountains Biodiversity Project, 161 F.3d at

1211 (emphasis added) (internal quotation marks omitted). It

asserts simply that the insignificance of the effects is “selfevident[ ].” In order that the public and the agency be fully

advised, we remand and order the agency to prepare a full

EIS.

IV. CONCLUSION

NHTSA’s failure to monetize the value of carbon emissions

in its determination of the MY 2008-2011 light truck CAFE

standards, failure to set a backstop, failure to revise the passenger automobile/light truck classifications, and failure to set

fuel economy standards for all vehicles in the 8,500 to 10,000

lb. GVWR class, was arbitrary and capricious and contrary to

the EPCA. We therefore remand to NHTSA to promulgate

new standards consistent with this opinion as expeditiously as

possible and for the earliest model year practicable. 

We also hold that the EA was inadequate and Petitioners

have raised a substantial question as to whether the Final

Action may have a significant impact on the environment.

Thus, we remand to NHTSA for the preparation of a full EIS.

REVERSED AND REMANDED.

14924 CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA
SILER, Circuit Judge, concurring in part and dissenting in

part: 

I concur in the conclusions by the majority on all points,

with the exception of its conclusion in Section III.A.4. I

would not find that the NHTSA acted arbitrarily or capriciously in failing to adopt a backstop for a minimum level of

average fuel economy. The majority admits that the EPCA

does not require NHTSA to adopt a backstop. We must realize that the arbitrary or capricious standard is one that grants

an agency a significant amount of deference. Its failure to

adopt this backstop was not an act which ignored factors that

Congress required to be taken into account. Under those circumstances, when the EPCA did not require the adoption of

a backstop, I would not find that NHTSA acted arbitrarily or

capriciously by failing to do so. 

CENTER FOR BIOLOGICAL DIVERSITY v. NHTSA 14925