Opinion ID: 480337
Heading Depth: 2
Heading Rank: 2

Heading: Mileage Accumulation Limits

Text: 25 Evidence in the record demonstrates that an automobile's fuel economy generally improves as it accumulates mileage. During an initial break in period, fuel economy improves steadily as a result of reduced friction; this effect is retained until the vehicle accumulates 20,000-30,000 miles. In 1975, the principal source of fuel economy data was from vehicles tested at an average of around 4,000 miles. In 1976, when the EPA promulgated fuel economy testing regulations pursuant to the EPCA, as a cost-saving measure, it included in the CAFE database fuel economy data vehicles, to be tested between 4,000 and 10,000 miles. Although in the rulemaking under review the EPA concluded that allowing vehicles to be tested at the higher mileage accumulation levels effectively eases the CAFE standards that manufacturers must meet. Final Rule, 50 Fed.Reg. at 27,180, it decided to implement only prospectively, an adjustment formula that would lower CAFE ratings for vehicles tested at high accumulated mileages. The EPA determined that the difference between the measured fuel economy of vehicles tested at 4,000 and 6,200 miles was relatively small and not worth adjusting. But it did deem necessary a prospective adjustment to account for the difference between vehicles with 6,200 and 10,000 miles in order to compensate for the most serious cases of bias resulting from higher mileage accumulation. Id. at 27,181. 26 In the Final Rule, the EPA stated it was not making negative CAFE adjustments for the inappropriately high test results resulting from high mileage vehicles used in the past because 27 the adjustment is necessarily sensitive to each manufacturer's test fleets and could have severe impacts not anticipated by each manufacturer when testing was conducted. 28 Id. at 27,181. Previously, in its Notice of Proposed Rulemaking, the EPA had given another reason for denying retroactive effect to the high mileage adjustment: 29 [W]hile the change in the accumulated mileage limitation was not intended to provide CAFE benefits, retroactively removing any CAFE gains from this change would, in effect, penalize manufacturers for taking advantage of a cost-saving measure that EPA had specifically allowed. Also, manufacturers would not be treated equitably if no CAFE adjustment were provided [as a result of netting all positive and negative adjustments] since only the domestic manufacturers have obtained significant CAFE gains by testing vehicles at higher mileages. 30 48 Fed.Reg. at 56,532. Neither reason withstands scrutiny. 31 The prophecy that adjustments would vary from manufacturer to manufacturer is irrelevant. Indeed in the same rulemaking, the EPA concluded that it would be technically inaccurate to make industry-wide adjustments because it overcompensated some manufacturers while undercompensating others. 50 Fed.Reg. at 27,175-76. Similarly, the EPA's concern about unfairly withholding positive adjustments from foreign manufacturers, who have not artificially inflated their CAFE ratings, is answered by its decision to make manufacturer-specific adjustments. 32 The EPA's final argument that a retroactive debit would be unfair and unanticipated is also unpersuasive. The manufacturers were clearly aware of the possibility, and in fact strongly supported the premise, that if past procedures are shown to have distorted the comparability of CAFE ratings, adjustments should be made, in whichever direction they point. The EPA allowed manufacturers to use vehicles with high mileage accumulation levels as a cost-saving measure. Instead of requiring new and different vehicles for each test, the EPA permitted manufacturers to reuse some vehicles for testing purposes. This change in procedure, like others promulgated by the EPA since 1975 to make the testing process easier, had the unintended consequence of distorting fuel economy measurements. The appropriate regulatory response to the discovery of such a test procedure defect, is the application of a corresponding CAFE adjustment. This is true in the case of excessive accumulated mileage limits no less than in the case of improper distance measurements, inadequate inertia weight categories and other problems corrected in the rule under review, see supra note 5. The CAFE adjustment formula, applied either retroactively or prospectively, does not--in a true sense--penalize anyone. The mere fact that manufacturers did not know in advance that data from their high mileage accumulation vehicles would be adjusted to compensate for the improved fuel economy results they unexpectedly produced does not make it unfair to do so. The manufacturers retain the cost-saving, but lose the artificial and accidental CAFE windfall. 17 33 In addition to these reasons for not making retroactive negative adjustments, EPA noted that it did not have sufficient evidence to conclude that the use of vehicles with high mileage accumulation levels was actually a departure from MY 1975 procedures. 50 Fed.Reg. at 27,180. It argues that if high mileage accumulation vehicles were used in developing the MY 1975 baseline, then any use of such vehicles in the CAFE data bases for subsequent years would not constitute a change in testing procedures requiring adjustment. 34 Data from three different types of vehicles were used in establishing the MY 1975 14 m.p.g. baseline: emissions certification vehicles, subject to a 4,000 ± 250 miles limit; running change vehicles, subject to no regulatory mileage limitation; 18 and fuel economy data vehicles, tested pursuant to a then-voluntary labelling program, and subject to a 10,000 mile limitation. The record is incomplete on the question of how many vehicles were tested at what mileage levels in MY 1975. Available evidence suggests that in MY 1975, 80% of the vehicles tested had accumulated fewer than 4,250 miles. 19 We, like the EPA, know of no direct evidence regarding how many vehicles were tested with over 6,200 accumulated miles that year; but even after a documented upward trend in the average accumulated mileage of domestic manufacturers' test fleets, current CAFE data comes from test vehicles 90% of which have accumulated fewer than 6,200 miles. Id. 35 The record evidence thus strongly suggests that the 1975 baseline was arrived at by using primarily vehicles under 6,200 miles, although some higher mileage vehicles were used. 20 The EPA admits that the increasing use of high mileage vehicles has erode[d] the accuracy of CAFE estimates. 50 Fed.Reg. at 27,181. Indeed, this erosion is the basis for EPA's pronouncement that [m]aintaining the stringency of CAFE standard definitely requires the enforcement of a mileage accumulation limit, id. at 27,180. We cannot see why the fact that a small percentage of vehicles may have been tested at high mileage levels for MY 1975, without substantial impact on the 14 m.p.g. baseline, supports a decision to ignore all high mileage testing in the past 10 years of whatever dimensions or however greatly it may have perverted the comparability of results with MY 1975. It is, after all, the average mileage of cars comprising the MY 1975 database that affects comparability of results with later years, not whether a few high mileage vehicles were included. If, as the EPA recognized in its prospective rule, average mileage accumulation since 1975 has steadily increased, id. at 27,181, then significant departures in testing procedures have occurred, and must be recognized. 21 36 Ultimately, we find no reasonable basis for the EPA's decision to apply CAFE adjustments for high mileage accumulation only prospectively, and remand for reconsideration by the EPA of an appropriate retroactive adjustment to take account of the substantial post-1975 use of high mileage vehicles. 22