Opinion ID: 446520
Heading Depth: 1
Heading Rank: 4

Heading: cost savings act analysis

Text: 47 Once NHTSA has discharged its obligations under the Safety Act, its remaining statutory duty is to apply § 102(b)(1) of the Cost Savings Act, 15 U.S.C. § 1912(b)(1) (1982). The Insurance Company Petitioners, joined as amici curiae by former Congressmen Eckhardt and Moss, the principal sponsors of the Cost Savings Act, advance the threshold argument that the legislative history of the Cost Savings Act limits NHTSA's discretion in fashioning a no-damage bumper standard. They marshall passages from the committee reports and statements by individual legislators assertedly establishing the congressional intent that the no-damage standard be set at a level of no less than 5.0 mph. The following statements are representative: 48 [T]he chairman and the other committee members have so ably demonstrated it is their belief, and I am sure it is well founded, that the Department of Transportation is going to promulgate standards eventually which will be set in excess of 5 miles per hour. 49 118 Cong.Rec. 18,229 (1972) (Statement of Rep. Danielson). 50 It seems inconceivable to me that after already enacting a 5-mile standard with respect to safety that the Federal Government would establish a 2.5 mile standard with respect to repairability. 51 118 Cong.Rec. 18,229-30 (1972) (Statement of Rep. Eckhardt).[243 U.S.App.D.C. 132] [The Secretary] will not select a 2-mile-per-hour standard when there is a 5-mile-per-hour standard already in the law. 52 118 Cong.Rec. 18,230 (1972) (Statement of Rep. Harvey). 53 [I]n the entire span of discussion in the committee there was a consensus that we were talking of a 5 mile an hour standard. We did not feel it desirable to freeze that into the statute, but rather [wanted] to make clear our intent and acquaint the Secretary with that intent. 54 118 Cong.Rec. 18,222 (1972) (Statement of Rep. Moss). 55 This argument is luminescently invalid. Congress does not act, and cannot legally bind, through its intent and expectation as such, whether individually or collectively expressed, but only through the laws that it enacts. Thus, the only intent or expectation of Congress pertinent to our task is its intent regarding the meaning of statutory language or its expectation regarding the manner in which that language will be interpreted. It is, as the Supreme Court has often said, a bad enough idea to consult extra-statutory expressions of even that sort of intent or expectation when the law is clear on its face. See, e.g., Gulf Oil Corp. v. Copp Paving Co., 419 U.S. 186, 200-01, 95 S.Ct. 392, 401-402, 42 L.Ed.2d 378 (1974). But it is absurd--indeed, lawless--to give legal effect to such expressions that purport to relate, not to the meaning of the statute, but to the manner in which a legally unconstrained agent of the Executive will behave under it. All of the statements pressed upon us here are in the latter category. Then-Representative Moss told us all we need to know when he said, in the excerpt quoted earlier, that we did not feel it desirable to freeze [the 5.0 mph standard] into the statute. 56 It should not be thought, of course, that the expression of such noninterpretive intent and expectation by Members of Congress and their committees is a pointless exercise. As long as those particular Members and committees hold sway, the Executive agent, however unconstrained he may be in law, will disregard their intent and upset their expectation at his budgetary and programmatic peril. (As noted earlier, NHTSA Administrator Claybrook was influenced by this Congressional sentiment in favor of the 5.0 mph standard as late as 1978. See page 1340, supra.) But we decline to convert this transient political incentive into a permanent legal compulsion, enabling the past thinking of prior legislators to control current social choices through the dead hand of legislative history unrelated to statutory text. 57 Viewing NHTSA's task, therefore, as that set forth in the text of the Cost Savings Act, unmodified by unlegislated congressional expectations, it is an exercise quite familiar to economists and public policy analysts. The agency was to identify the costs and benefits of alternative standards, measure them, and select the standard which displays the greatest net benefit. This is more easily said than done, since--given the fact that the alternatives to the Part 581 standard had never been in existence--the process was as much one of prediction as of analysis. The agency proceeded in full recognition of this difficulty, seeking to minimize the number of imponderables and acknowledging the residual imprecision by expressing its estimates in the form of high-low numerical ranges, rather than with the misleading certitude of a single figure. Our discussion below makes no attempt to describe with any completeness the full process of analysis, which is summarized in the agency's 18-page Federal Register statement of the basis and purpose for the rule, Bumper Standard, 47 Fed.Reg. 21,820 (1982), and is set forth more fully in its 263-page FRIA. The reader should be aware, however, that the items of the analysis under challenge here form a very small (though not necessarily unimportant) part of a much more lengthy and complex whole.
58 NHTSA identified three different sources of cost differences among alternative bumper systems. First, more protective bumper systems, which require additional [243 U.S.App.D.C. 133] components such as energy-absorbing pistons, increase the weight of the car and thus the cost of the fuel that it will consume over its lifetime. This increase occurs not only in the primary weight of the bumper system, but also in the secondary weight of additional body and frame structural reinforcement needed to accommodate the increased primary weight. Second, more protective bumper systems cost more to manufacture and install--costs which can likewise be divided into primary (attributable to the bumper itself) and secondary (attributable to related structural reinforcement). 11 Third, and finally, that portion of the increased (primary and secondary) bumper system price which is financed imposes additional finance costs on the consumer. See FRIA at VII-12. 59 NHTSA solicited from the automobile industry confidential production cost data and weight estimates for the alternative bumper systems. Based upon those submissions, and taking into account its own assessment of expected changes in fleet composition over the next decade, id. at VII-2 to -4, it estimated that bumpers satisfying the adopted standard would result in production cost savings (over the 5.0 mph system) of $18-$35 in primary production cost, id. at VII-19 to -25, and $6-$20 in secondary production cost, id. at VII-35 to -36. It estimated that the new standard would eliminate 15-33 pounds in primary weight, id. at VII-28, and 11-33 pounds in secondary weight, id. at VII-35 to -36. Using gasoline price forecasts supplied by the Department of Energy, id. at VII-43, its own data on lifetime mileage distribution, id. at VII-44, and an estimated fuel consumption/weight ratio of 1 gallon: 1 pound over the lifetime of the car, id. at VII-40 to -42, NHTSA estimated that those weight reductions would produce fuel savings over the life of the car (reduced to present value using the Office of Management and Budget's 10 percent discount rate and standard discounting methodology, id. at III-66) of $28-$70, id. at VII-46. Finally, the agency estimated a $2-$6 per car reduction in finance charges to consumers. Id. at VII-47 to -53, -60 to -61. The sum of these production cost, fuel cost and finance cost savings produced a cost advantage of $54-$131 for the 2.5 mph system. 60 Petitioners do not challenge NHTSA's overall methodology. 12 Moreover, although [243 U.S.App.D.C. 134] there is admitted uncertainty with respect to nearly every variable, they take serious issue only with NHTSA's primary and secondary weight estimates. 13
61 Insurance Company Petitioners, repeating the argument made by the Insurance Institute for Highway Safety in its petition for reconsideration, claim that, in arriving at a 15-33 pound range of primary weight reduction on the basis of estimates by automobile manufacturers, NHTSA simply excluded from its analysis the estimates of Chrysler, Volkswagen, and Mitsubishi that weight savings would be significantly less than the agency's 15-pound minimum. Brief for Insurance Company Petitioners at 37. It is true enough that NHTSA excluded those submissions, but not without sound reasons. As noted in some detail in the agency's response to petitions for reconsideration, Chrysler's 10-pound estimate was for a Phase II bumper system. Compliance with a 2.5/2.5 Phase I standard could be expected to yield additional weight savings of 1-2 pounds. 47 Fed.Reg. 56,645. More importantly, Chrysler noted that its estimate was a minimum figure. Id. Similarly, Volkswagen indicated that its 8-pound savings estimate referred only to the savings from one particular design change; total savings were expected to be higher. Id. The exclusion of Mitsubishi's low estimate of 11-13 pounds was explained by the fact that Mitsubishi sales were relatively insignificant. Since the savings estimates were not weighted to reflect the United States sales volumes of particular cars or manufacturers, the agency deleted low and high extreme estimates submitted by manufacturers with very small sales in the United States. Thus, it excluded Mitsubishi's low estimate of 11-13 pounds but also Volvo's high estimate of 39 pounds. Id. 62 Petitioner CFAS charges that, in estimating weight reductions, NHTSA failed to consider the effect of the fuel economy test procedures of the Environmental Protection Agency (EPA). Brief for Petitioner CFAS at 30. The argument is that consumer estimation of new-car fuel economy is based upon EPA mileage ratings; and that the EPA classifies vehicles for purposes of its fuel efficiency tests according to weight classes. See 40 C.F.R. §§ 86.129-80, 600.111-80 (1983). Because vehicles in the same class, even if of different weight, will be tested as though they weigh the same, manufacturers lack the incentive to reduce a vehicle's weight unless they can achieve a weight reduction large enough to move the vehicle into the next lower class. Since the weight savings achievable under the new bumper system are small (15-33 pounds) relative to the weight class increments used by EPA (250 pounds for cars over two tons and 125 pounds for cars under two tons), manufacturers, according to CFAS, will save money by using heavier, cheaper materials and forgo the potential weight reductions. 63 It is patently false to assert that the agency failed to consider this point. See 47 Fed.Reg. 56,646. Petitioner's quarrel is with the resolution of it--and even there we think the agency not only acted within the bounds of reason but clearly has the better of the argument. It is fallacious, to begin with, to assume that consumer expectation of fuel economy is the manufacturer's only incentive to reduce weight. The agency observed that there are quite independent incentives, such as the fact that many weight-reducing changes (e.g., the removal of energy-absorbing pistons) reduce manufacturer costs. Id. Even assuming, [243 U.S.App.D.C. 135] however, that consumer expectation of fuel economy is the only incentive, that that expectation is based entirely upon EPA estimates, and that the manner of computing EPA estimates will remain unchanged (none of which assumptions we consider the agency was obliged to indulge); the petitioner's argument would still be flawed. The lumpiness of current EPA weight classes does not necessarily reduce the incentive, on average, to take advantage of small weight reductions. In designing cars, there are many small potential weight savings. The 15 to 33-pound savings offered by the new bumper standard--alone or in combination with secondary weight reductions that it makes possible--may be just enough in some cases to make it worth the manufacturer's while to implement a whole host of changes that together would be enough to move the vehicle into the next weight category. When this occurs, a far larger weight reduction is achieved than would be made possible by the bumper change itself. Thus, one might reasonably conclude that, on average, the bumper weight reduction potential would be given its full effect. 64 In addition, the agency noted that it had calculated its weight savings range from what manufacturers had told it they would in fact do, not from what they thought was theoretically possible. Id. Nothing in the record calls those intentions about future weight reductions into question. Moreover, the agency used its own studies as a check on manufacturer estimates of weight savings, id., concluding that, if anything, the 33-pound upper-range estimate was too low. 47 Fed.Reg. 21,832. We find no basis for overturning the agency's judgment on this point.
65 NHTSA found that each pound of reduced bumper weight would be accompanied by further reductions, ranging from 0.7-1.0 pounds, in the weight of basic automobile structures. Petitioners contend that this conclusion finds no support in the record, because no manufacturer promised in its submission to make secondary reductions. This is an unduly narrow view of the kind of evidence that the agency may properly rely on. NHTSA's prediction of secondary weight reductions was based upon generally recognized and accepted design theory, the incentives facing manufacturers and manufacturer comments. 47 Fed.Reg. 56,647. (As noted earlier, the premise that there are incentives to reduce weight is reasonable.) It would be a novel legal proposition to hold that such commonplace agency prediction of market behavior is arbitrary and capricious unless supported by manufacturer commitments in rulemaking submissions. Since NHTSA's reasoning was made part of the record and has a rational basis, it is sufficient to support the agency's conclusion. See National Tour Brokers Ass'n v. ICC, 671 F.2d 528, 533 (D.C.Cir.1982); Ryder Truck Lines, Inc. v. United States, 716 F.2d 1369, 1385 (11th Cir.1983), cert. denied, --- U.S. ----, 104 S.Ct. 1707, 80 L.Ed.2d 181 (1984). 66 Petitioners next argue that even if NHTSA properly concluded that reduced bumper weights would lead to some secondary weight reductions, these reductions would be realizable only over a lengthy period of time, as manufacturers gradually redesign their fleets to take advantage of potential weight savings. Thus, NHTSA's cost-benefit analysis should have allocated and discounted the projected secondary savings over several years (or longer). Instead, NHTSA treated them as available in the first year of implementation of the new standard, FRIA VII-35 to -38, XI-19, thus greatly overstating the present value of the benefits of the 2.5 mph bumper standard. 67 In its denial of petitions for reconsideration, NHTSA acknowledged that the anticipated secondary weight savings would not be fully available right away, but noted that the same could be said of primary weight reductions, since the new bumper standard would not result in the immediate disappearance of all 5.0 mph bumpers from the market. Production requirements and market pressure will constrain any move immediately to 2.5 mph bumpers only. 47 [243 U.S.App.D.C. 136] Fed.Reg. 56,647. Though inelegantly stated, the agency's position is understandable if not clear: No objection has been raised to the agency's unreal assumption (for purposes of its cost-benefit analysis) that it is dealing with a universe of vehicles entirely equipped, here and now, with the 2.5 mph bumpers that the new standard would permit--for while this assumption distorts the magnitude of the costs and benefits that the new standard will produce (in the first few years at least), it does not distort what is important here, the relative net benefit of one standard over the other. The same is true of structural design changes accompanying the new bumper, and there is no need to treat them differently. See Small Refiner Lead Phase-Down Task Force v. EPA, 705 F.2d 506, 535 (D.C.Cir.1983) (we must defer to the agency's decision on how to balance the cost and complexity of a more elaborate model against the oversimplification of a simpler model). In calling for discounting, petitioners confuse the physical state of affairs that the new standard will produce (including both the new lighter bumpers and the new lighter supporting structures), which can properly be assumed to exist at once, with the costs and benefits engendered by that state of affairs, some of which (i.e., accident costs, finance costs and fuel savings) will only accrue over time and must be discounted. The agency did discount the latter--for secondary weight reduction as for primary weight reduction--at a rate of 10 percent. FRIA at III-70. 68 Finally, petitioners claim inconsistency between NHTSA's treating secondary weight reductions as presently implemented and its failure to consider the effects of future design improvements that might reduce the weight of 5.0 mph bumpers. The two are not inconsistent. The latter involves technological speculation while the former is a known consequence of the new standard which, like the new bumpers themselves, is immediately achievable as far as technology is concerned. Moreover, NHTSA could reasonably assume that any such technological improvements would also reduce the weight of 2.5 mph bumpers and thus not affect the relative cost-benefit analysis. 47 Fed.Reg. 21,834; 47 Fed.Reg. 56,646.
69 By reducing the incidence and the severity of damage-causing accidents, protective bumper systems save repair costs and insurance costs, 14 and by reducing the incidence they save intangible costs of personal delay. 15 Petitioners raise a number of challenges to the agency's analysis of [243 U.S.App.D.C. 137] the relative benefits of alternative bumper systems. 70
71 The most satisfactory method of comparing the ability of different bumper systems to prevent or reduce damage is to examine systems that have actually been produced and used. Although there was a wealth of real-world data for comparing the Part 581 5.0 mph system with unregulated bumpers, none existed for the primary alternative--a 2.5 mph standard with uniform bumper heights. 72 NHTSA considered several methodologies for estimating the effectiveness of the 2.5 mph alternative. One was to use real-life data on the performance of MY 1973 cars equipped with 2.5 mph rear bumpers. That was rejected, primarily because the MY 1973 rear bumpers were not subject to the height-standardizing pendulum test, and thus were not comparable to the proposed 2.5 mph bumpers. 47 Fed.Reg. 21,831; FRIA at III-3 to -4. Also rejected was a method proposed in the comments of insurance companies--reliance on laboratory condition crash test results comparing the performance of three pairs of vehicles purportedly equipped with 5.0 mph and 2.5 mph bumper systems--because there was no evidence that the bumpers used in the tests had been tested or designed in accordance with the relevant bumper standards. 47 Fed.Reg. 21,83 1-32; 47 Fed.Reg. 56,647-48; FRIA at III-5 to -6. There were also questions about the generalizability of the test data. Id. at III-7 to -8. 73 The agency decided instead to use the methodology employed in its January 1979 and June 1979 assessments of the bumper standard, see Department of Transportation, NHTSA, Analysis of the Bumper Standard (Jan. 26, 1979), J.A. 1245-52 (Preliminary Assessment); Department of Transportation, NHTSA, Final Assessment of the Bumper Standard (June 1979), J.A. 979-1182 (Final Assessment), which relied on engineering estimates of the theoretical relative effectiveness of different bumper systems. The data used in that exercise were compiled by NHTSA in a convenient table form in the FRIA, VI-3, reproduced here as Table III. 74 NOTE--Some parts of this form are wider than one screen. To view 75 material that exceeds the width of this screen, use the right arrow 76 key. To return to the original screen, use the left arrow key. 77 TABLE III Estimated Reduction in Lifetime Repair Costs Per Car Assuming Unrepaired Damage Valued at 50% and 75% of Full Cost to Repair 50% Value for Unrepaired Damage --------------------------- Repaired Unrepaired Damage Reduction in Damage Lifetime Repair Costs Per Total Accident Value Percent Value Lifeti- Effectiveness Compared of of of me in to Percent of Damage Lifetime Damage Damage Reducing Unregulat- ed Speed Lifetime Per Number of Per Per Damage 4 Bumpers 3 Number (mph) of Accide- Accide- Accidents Accide- Accide- Accident 3 2.5 mph 5 mph 2.5 nts 1 nt 2 1 nt nt 2 mph ------------------------------------------------------------------------------------------------------ 0-3 14.8 $ 150 54.1 $ 75 $63 76% 85% $48 $54 3-5 12.1 225 3.8 113 32 29 68 9 21 5-7 6.6 480 0 240 32 0 40 0 13 7-10 4.4 850 0 425 37 0 6 0 2 10-15 3.6 1,750 0 875 63 0 0 0 0 15 0.5 3,700 0 1,850 20 0 0 0 0 -------- ------ Total $57 $90 2.5/5 mph System=63% (57/90) 75% Value For Unrepaired Damage --------------------------- 0-3 14.8 150 54.1 113 84 76 85 63 71 3-5 12.1 225 3.8 169 34 29 68 10 23 5-7 6.6 480 0 360 32 0 40 0 13 7-10 4.4 850 0 638 37 0 6 0 2 10-15 3.6 1,750 0 1,313 3 0 0 0 0 15 0.5 3,700 0 2,775 20 0 0 0 0 -------- ------ Total $73 $109 2.5/5 mph System=67% (73/109) 1. From page 24 of 1979 Assessment, original source is Ford data, finetuned by State Farm data.1/5 2. From page 28 of 1979 Assessment, for unregulated bumpers.1/5 3. Per accident--values need to be multiplied by the total number oflifetime damage producing accidents to attain lifetime dollar values of damage.1/5 4. From page 30 of 1979 Assessment.1/5 78 [243 U.S.App.D.C. 138] First, the agency adopted the estimates from the 1979 Final Assessment of the percentage of damage-producing accidents that occur over the lifetime of a car at each of several speed intervals (Column 1 of the Table), FRIA at VI-2, providing separate figures for accidents resulting in damage subsequently repaired (Column 2) and damage [243 U.S.App.D.C. 139] left unrepaired (Column 4). (These figures were based on Ford Motor Company studies of relative bumper effectiveness. Final Assessment at 24, J.A. 1005.) Second, for each speed interval, NHTSA estimated separately the dollar value of repaired and unrepaired damage per accident for a car equipped with unregulated (baseline) bumpers. These data, also derived from the 1979 Final Assessment, were based on an assumed relationship between repair cost and impact speed, id. at 25-26, J.A. 1006-07, and closely approximated the results of calculations based on studies relating damage to the angle of impact, id.at B-1 to -7, J.A. 1099-1105. 16 The figures are provided in Column 3 of the Table for repaired and Column 5 for unrepaired damage. Third, by multiplying the values in Columns 2 and 3, and 4 and 5, respectively, and summing the resultant products, NHTSA obtained values of the total lifetime damage per accident for each speed category (Column 6). 79 NHTSA then adopted the 1979 estimates of the relative effectiveness of the 5.0 mph and 2.5 mph bumpers as against unregulated bumpers at each speed interval. 47 Fed.Reg. 56,648-49; FRIA at VI-2. Those relative effectiveness values are defined as the percentage of damage prevented by a bumper system compared to the unregulated bumper, Final Assessment at 29, J.A. 1010, and are reported in Columns 7 and 8. By way of illustration, at a speed of 0.0-3.0 mph, a 2.5 mph bumper prevents 76 percent of the damage and a 5.0 mph bumper prevents 85 percent of the damage that would have resulted with unregulated bumpers. Finally, the agency used the effectiveness values to determine the per-accident lifetime value of all repaired and unrepaired damage prevented by the two bumper systems. FRIA at VI-5 to -10. That computation is provided in Columns 9 and 10. The result, shown on Table III under Columns 9 and 10, is that the 2.5 mph system is 63 percent as effective as 5.0 mph bumpers (assuming that the economic value of damage an owner elects not to repair is 50 percent of the estimated cost of repair) or 67 percent as effective as 5.0 mph bumpers (assuming that unrepaired damage is valued at 75 percent of the estimated repair cost) in reducing the dollar value of damage expected from unregulated bumpers. FRIA at VI-4. 80 NHTSA then applied this conclusion to updated data on per-accident costs of unregulated and 5.0 mph bumpers, 17 and the number of lifetime accidents per vehicle, 18 to derive the present value of lifetime damage prevention for different bumper systems. FRIA at VI-5 to -11. The result is a disadvantage of the 2.5 mph system relative to the 5.0 mph system of $34-$69, FRIA at VI-10. (The range is attributable to the use of ranges for the discount factor for unrepaired damage (50-75 percent of the cost of repair), the number of lifetime accidents (2.45-3.20), and the value of lifetime damage incurred by 5.0 mph bumpers ($390-$578). FRIA at VI-8 to -10.) 81 Petitioners focus their challenge not on the soundness of the above-described methodology, but on the derivation of certain of the values shown in Table III. Even if the alleged deficiencies were clearly established, we would have some difficulty in believing that they are of such significance as to render the product before us capricious. For all of them inhered in the 1979 Final Assessment and were not thought worthy of mention by many of these same petitioners who were asked for and who furnished extensive comments at that time. Indeed, their utterly invalidating effect did not impress itself upon any of the commenters in the present rulemaking, until after [243 U.S.App.D.C. 140] the final rule was issued in 1982. We have nonetheless considered each of them and find them to be without merit. 82 Amicus National Association of Independent Insurers (NAII) directs its criticism at NHTSA's computation of the frequency of accidents by speed intervals (Columns 2 and 4 of Table III). As noted above, NHTSA derived these figures from Ford Motor Company data, which in turn relied on barrier crash data for 1969-70 model year cars reported by the Insurance Institute for Highway Safety (IIHS), see Affidavit of E.J. Rohn, Addendum to Brief for Intervenor Motor Vehicle Manufacturers Association (MVMA) at 2a (Rohn Affidavit). The Ford study computed accident frequencies for speed cells of 0.0-3.0 mph, 3.0-5.0 mph, 5.0-7.0 mph, 7.0-10 mph, and over-10 mph. See Letter from E.J. Rohn to D.W. McCallum at Chart I (Sept. 19, 1974), J.A. 2413C. The agency adopted these speed cells, FRIA at VI-2, though it broke down the over-10 mph range into 10-15 mph and over-15 mph cells using State Farm data. See Final Assessment at A-4, J.A. 1076. IIHS, however, had not conducted any barrier crashes at speeds less than 5.0 mph, leading NAII to charge here that Ford had no basis for breaking down the crucial 0.0-5.0 mph cell (containing 84% of all accidents in the Ford study) into 0.0-3.0 mph and 3.0-5.0 mph subcells, and that NHTSA therefore acted arbitrarily in relying on that information in constructing its effectiveness methodology. 83 This challenge is unfounded. The engineers who conducted the Ford study had collected data on the costs of repaired and unrepaired collision damage to about 18,000 cars, which established a distribution of accidents by damage. In order to translate this distribution into a distribution of accidents by speed, they relied upon IIHS test data that established average damage values of $208 at 5.0 mph, $597 at 10 mph and $853 at 15 mph. Using conventional mathematical extrapolation techniques, the Ford engineers then fitted a cost-speed curve to those three points, from which they derived their speed-frequency distribution using the narrower speed cells. Rohn Affidavit at 1a-2a. 84 Insurance Company Petitioners reiterate and expand the charge--made earlier by IIHS in its petition for reconsideration--that some of the assumptions underlying the agency's derivation of effectiveness values (Columns 7 and 8 of Table III) are questionable. Those values had been derived from so-called effectiveness curves constructed by the agency in 1979 on the basis of several critical assumptions: (1) that no bumper system provides complete protection at any speed; (2) that at their design speed, aluminum and steel bumpers are 60 percent effective; (3) that effectiveness falls to zero at replacement speed; and (4) that the effectiveness of bumpers is described by a curve of a particular shape. Department of Transportation, NHTSA, Calculations and Supporting Material for the Preliminary Analysis of the Bumper Standard at B-1 (Feb. 26, 1979), J.A. 1218 (NHTSA Calculations). By applying these assumptions to the available data for each bumper system, 19 three points were established on a speed/effectiveness graph (corresponding to replacement speed, design speed, and 0.0 mph), through which the appropriate curve was drawn. The effectiveness values of the system for given speeds were then read right off the curve; and the effectiveness values for given speed intervals were derived by estimating the area under each curve and calculating [243 U.S.App.D.C. 141] a mean value for each incremental speed range. Id. 85 The principal challenge to this analysis made by IIHS in its petition for reconsideration was that crash test data refuted the assumption that the 5.0 mph bumper loses all its effectiveness at its replacement speed (10 mph), showing that even Standard 215 5.0 mph bumpers resulted in substantial reductions in damage in barrier impacts of 10 and 15 mph. IIHS Petition for Reconsideration at 8, J.A. 20. NHTSA responded fully to this point, noting that the IIHS tests were conducted under laboratory conditions and therefore failed to reflect certain factors in real-world collisions, that IIHS's conclusions were based on a small number of vehicles, and that there was a great deal of year-to-year scatter in the data for individual vehicle types. 47 Fed.Reg. 56,649. More importantly, NHTSA concluded that if an adjustment were made for 5.0 mph bumpers, a comparable adjustment would have to be made for 2.5 mph bumpers. Id. 86 In this appeal for the first time, Insurance Company Petitioners seek to attack not merely the use of theoretical analysis (rather than crash test data) but the integrity of the analysis, describing the agency's initial assumptions of 60 percent effectiveness at design speed and zero effectiveness at replacement speed as guesswork, and asserting that the shape of the curves drawn through the three points (as described above), being unsupported by any equation in the rulemaking record, was arbitrary in the purest sense, Brief for Insurance Company Petitioners at 35. Such an ambush at this late stage cannot be allowed. The agency's analysis accompanying its final rule asserts that the assumptions were based on engineering judgment of the agency's experts, 47 Fed.Reg. 21,831. We have no reason to disbelieve that statement, and engineering judgment is assuredly the sort of expertise that NHTSA preeminently possesses. The only real issue, then, is whether the details of the agency's engineering analysis on these narrow points were so critical to the ability to participate in the rulemaking as to cause their absence from the record to invalidate it, see Portland Cement Ass'n v. Ruckelshaus, 486 F.2d 375, 392-94 (D.C.Cir.1973), cert. denied, 417 U.S. 921, 94 S.Ct. 2628, 41 L.Ed.2d 226 (1974). It is impossible to think so, since if they were there would have been strenuous objection much before this. Both the assumption of 60 percent effectiveness at design speed and the shape of the effectiveness curves have been a part of the agency's methodology since the January 1979 Preliminary Assessment and were carried forward (with minor modifications in light of IIHS comments) to the June 1979 Final Assessment, which the insurance industry found not only acceptable, but congenial. 87 The Insurance Company Petitioners' response to this reality is disingenuous. They assert that NHTSA is incorrect to state that it first heard of problems with its effectiveness curves in the IIHS petition for reconsideration, since IIHS responded to the ... 1979 [Preliminary] Assessment within a few months of its issuance and submitted alternative curves. Reply Brief for Insurance Company Petitioners at 18-19 n. 27. The statement is true, but neglects to note that the IIHS alternative curves displayed the same alleged defects which petitioners claim invalidate NHTSA's curves--i.e., were drawn through three points, one of which represented the assumption of 60 percent effectiveness at design speed. Indeed, IIHS adopted without change the agency's effectiveness curve for 5.0 mph bumpers. Comments of IIHS, Docket No. 73-19-N.25-097, App. C at 4 (Apr. 30, 1979), J.A. 2240. Insurance Company Petitioners boldly assert that no 'engineer' would attempt to draw a curve solely on the basis of only three points, id. at 18. But NHTSA did not purport to have designed the curve solely on the basis of three points. It drew the curve through the three points, but the shape of the curve was evidently determined by the location of those points and engineering theory. NHTSA Calculations at B-1, J.A. 1218. It is interesting that some engineer did the same thing in the Ford study of distribution [243 U.S.App.D.C. 142] of accidents by speed, discussed at pages 1359, supra. 88 The dissent's response is equally unsatisfactory, consisting essentially of the assertion that late presentation of the issue must be disregarded because validity of the curves is essential to validity of the agency's conclusion. Dissent at 1388-89. It is simply not the case, however, that all of the essential postulates for an agency rule must be contained in the record. Every judgment of any consequence is constructed upon an infinitude of other judgments, of greater or lesser certitude, in a progression of logical dependency terminating in a first principle the equivalent of 1 + 1 = 2. They cannot all possibly be included in the statement of basis and purpose for a rulemaking. We do not have authority to require that all elements underlying a rule be set forth in a fashion understandable to a layman, see Vermont Yankee Nuclear Power Corp. v. Natural Resources Defense Council, Inc., 435 U.S. 519, 557, 98 S.Ct. 1197, 1218, 55 L.Ed.2d 460 (1978). And it may as well be disclosed that in scientific fields we judges ourselves are laymen, ill equipped to determine where the line falls between requisite explanation of problematic analysis and useless replication of what for the cognoscenti amounts to a textbook on basic physics. Thus, our feel for the adequacy of an analysis in such cases is necessarily governed by the reaction that it elicits from knowledgeable commenters. From the point at which it reaches common ground we can reasonably assume that no further explication is required. We will hear on appeal assertions that needful elaborations fairly requested were not provided; but we must be implacably skeptical of belated recognition at the appellate stage that elements of scientific analysis unchallenged during a contested proceeding are incomprehensible without further explanation. To credit such post-appeal pleas of inadequate information is to threaten the integrity of all rulemaking in fields beyond our own limited scientific ken. The present challenge to the effectiveness curves presents the threat in a particularly flagrant form. NHTSA specifically asked the petitioners (and other rulemaking participants) in 1979: Do the existing analyses represent the most appropriate methods of approaching a study of bumper standards at different impact speeds and levels of damage resistance? If not, what method should be used? Comments of IIHS, Docket No. 73-19-N.25-097 at 5 (Apr. 30, 1979), J.A. 2200; Comments of State Farm, Docket No. 73-19-N.25-098 at 1 (Apr. 30, 1979), J.A. 2059. Though State Farm and IIHS, among others, responded with substantial comments--see Comments of IIHS, supra, Apps. A-B, J.A. 2212-35; Comments of State Farm, supra, 1-6, J.A. 2059-64--there was not even a suggestion that the effectiveness curves represented a fundamentally invalid methodology. The dissent provides a list of reasons why petitioners might not have raised these objections during the rulemaking proceeding, Dissent at 1387-88 all of which boil down to petitioners' probable reluctance to upset favorable determinations. Even if that were the only consideration, it would be of questionable wisdom to reward their tactical decision to leave the agency in the dark--and thus encourage benighted agency action in the future. But in any event, the dissent's speculations do not explain why the proponents of the 2.5 mph standard did not raise these arguments. In fact, some commenters on the June 1979 Final Assessment (which supported the 5.0 mph standard) did object that the effectiveness ratios for 5.0 mph systems are overstated to a considerable extent, Department of Transportation, NHTSA, Commentary on Critiques of the June 1979 Bumper Standard Assessment 35 (Dec. 1979), J.A. 951 (emphasis added), but that objection was based upon the lack of correspondence with repair cost data rather than theoretical inadequacy of the effectiveness curves. 89 We conclude that the curves were considered part of the common ground of expert analysis that required no further explanation. Petitioners' objections on this score put us in mind of the Supreme Court's injunction in Vermont Yankee that[243 U.S.App.D.C. 143] administrative proceedings should not be a game or a forum to engage in unjustified obstructionism by making cryptic and obscure reference to matters that ought to be considered and then, after failing to do more to bring the matter to the agency's attention, seeking to have that agency determination vacated on the ground that the agency failed to consider matters forcefully presented. 90 435 U.S. at 553-54, 98 S.Ct. at 1217. These instructions are even more appropriate when cryptic and obscure reference to theoretical inadequacy--or in fact, even less than that, mere assertion of lack of explanation of theoretical adequacy--is first made on appeal. 91 Insurance Company Petitioners also complain that, after correcting its initial assumption about the speed at which bumpers lose all effectiveness, in response to the IIHS comments (see note 19, supra ), NHTSA did not redraw the [effectiveness] curves, yet increased from 73 to 76 percent the presumed effectiveness of 2.5 mph bumpers in the 0.0-3.0 mph speed interval. Brief for Insurance Company Petitioners at 35-36. In fact, however, the change in the 0.0-3.0 mph speed cell was not the only change in effectiveness values made by the agency between February 1979 and the publication of the Final Assessment in June of that year. The figures for 2.5 mph and 7.5 mph metal bumpers were adjusted in higher speed cells, and substantial changes were made in the effectiveness values for soft-face bumpers. Compare NHTSA Calculations at B-2, J.A. 1220 with Final Assessment at 30, 32, J.A. 1011, 1013. The logical inference is that the agency did in fact rethink and redraw its curves following IIHS's suggestion, noted above, that the zero-effectiveness point be set at twice design speed.
92 Petitioners challenge the range of $26-$50 per damage-producing accident assigned by NHTSA as the value of delay and inconvenience. In both the PRIA and the 1979 Final Assessment, the agency had used a flat figure of $26 calculated directly from estimates of the average hourly wage in the private sector, the number of occupants in the average car, the average amount of time lost on the scene of the accident and in obtaining estimates for repairs, and the cost of being without the car while it is being repaired. FRIA at III-39 to -41. (In 1979, State Farm commented that this analysis reflects a reasonable effort ... to correctly account for the variety of time and cost savings due to the impact of [the] 5 mph bumper standard. Comments of State Farm, Docket No. 73-19-N.25-098 at 5 (Apr. 30, 1979), J.A. 2063 (quoted in FRIA at III-39).) It was precisely in response to comments suggesting that some of these estimates were low that the agency decided to use a range of $26-$50 instead of a flat $26 figure. FRIA at III-41. 93 Petitioners claim that NHTSA arbitrarily rejected the only reliable evidence in the record--the survey of 1,000 consumers conducted by the Opinion Research Corporation for the Insurance Institute for Highway Safety--[which] showed that consumers place a value on such losses at $100 to $200 or more. Brief for Insurance Company Petitioners at 37 (footnote omitted). The agency rejected this survey because it concluded that many of the questions were biased or could only be answered by people with specialized knowledge--see 47 Fed.Reg. 21,835; FRIA at III-36 to -38--and because the Cost Savings Act does not contemplate accepting raw statements of preference of this type in calculating the costs and benefits of bumper systems, 47 Fed.Reg. 56,642. NHTSA rejected a second survey submitted by IIHS for similar reasons. Id. We readily affirm the agency in this regard. 94
95 If NHTSA had simply established best estimates for every component of cost and benefit, its identification of an optimal bumper standard would have required no more than addition of the estimates and [243 U.S.App.D.C. 144] comparison of the totals for each system. But in order to be realistic about uncertainty and conflicts in the data, the agency established ranges of possible values, rather than point estimates of the most likely values, for several of the key components of bumper system costs and benefits. Absolute cost and benefit figures were then converted into relative advantages (in terms of bumper system costs and benefits) using the 5.0/5.0 mph system as the baseline. The resulting product was a range of relative benefits and costs for each alternative based on the maximum possible variance obtainable from the variance in the constituent cost and benefit items. 20 The FRIA sets out the agency's figures in Tables X-5 through X-8, FRIA at X-12 to -15, and summarizes those findings in Table X-9, FRIA at X-16, which is reproduced below as Table IV. Each horizontal row of the Table corresponds to the designated combination of extreme assumptions used: e.g., the first row employs the highest value in the benefit range (advantage in the cost of bumpers over the 5.0/5.0 system), and the lowest value in the cost range (disadvantage in expected damage cost reduction relative to the 5.0/5.0 system). 96 [243 U.S.App.D.C. 145] NHTSA's first task was to determine whether the existing standard--the 5.0/5.0 system--met the requirements of the Cost Savings Act. On that issue the outcome was clear: it provided significantly fewer benefits to the public and consumers than several of the alternatives. 47 Fed.Reg. 21,82 5. Only under the fourth set of extreme assumptions--one which the agency concluded would be especially unlikely to occur in reality, id. at 21,826--did the existing [243 U.S.App.D.C. 146] standard prove superior to the alternatives. That conclusion was not independently challenged by petitioners. 97 The next step was the agency's selection of the 2.5/2.5 standard over the remaining alternatives. NHTSA rejected, for reasons not at issue, all remaining alternatives except two--the 2.5/2.5 and 5.0/2.5 systems. Id. at 21,825-26. It then compared those two directly under all examined sets of extreme assumptions, as well as under those sets of assumptions deemed by the agency most representative or most likely to occur. Id. at 21,826. The agency employed no fewer than four methods of comparison. First, it averaged the benefit and cost range end points and compared the resulting net benefits. This resulted in a $1 net advantage for the 5.0/2.5 alternative ($24 vs. $23 for the 2.5/2.5 alternative). FRIA at X-18 to -19. Second, it computed the simple arithmetic average of the net benefits associated with the four combinations of extreme assumptions. This again produced a $1 net advantage for the 5.0/2.5 bumper ($23 vs. $22 for the 2.5/2.5 alternative). Table IV, supra. Third, it recomputed the arithmetic average after excluding the values from the fourth combination of assumptions, which it had concluded was highly unlikely. 47 Fed.Reg. 21,826. That indicated substantial superiority of the 2.5/2.5 bumper system--a $9 net advantage ($42 vs. $33 for the 5.0/2.5 alternative). Table IV, supra. Fourth, it computed averages for several of the variables for which ranges had been used--e.g., a sales-weighted industry average for primary cost savings. FRIA at XI-19. That gave the 5.0/2.5 system a $4 advantage over the 2.5/2.5 system. Id. In light of these analyses, 21 NHTSA concluded that because the 2.5/2.5 bumper was markedly superior to the 5.0/2.5 alternative under the third method of comparison--which, as noted, excluded calculations based on highly unlikely assumptions--its cost-benefit analysis favored the less restrictive standard. 47 Fed.Reg. 21,826. 98 Petitioners point out that in three comparisons the 5.0/2.5 bumper was shown to be superior, albeit by only $1, $1, and $4 respectively, and they accuse the agency of blatant manipulation in rejecting, for purposes of its other comparison, the most unlikely set of extreme assumptions. It seems to us that such rejection was entirely reasonable. Averaging values from all four sets of extreme assumptions would be statistically valid only if each of the four combinations had an equal probability of occurrence. The agency explicitly found, however, that it was virtually impossible for the fourth combination--which included the lowest estimate of consumer price reductions, the highest estimate of the frequency of bumper-related accidents, and the highest values for delay and inconvenience--to occur in the real world. 47 Fed.Reg. 56,65 0. It reasoned that although each of these extreme assumptions may separately have some degree of probability, the probability that they will be accurate in combination is virtually zero. FRIA at XI-15 to -17. This finding was based on two considerations. First, although all four sets of assumptions involved extreme estimates, having only a remote possibility of occurring in combination, the agency considered the estimates in the excluded high-cost, low-benefit combination to be especially unlikely, id., a conclusion which finds ample support in the record. For example, with regard to the low-benefit $18 estimate of consumer savings attributable to the reduced purchase price of 2.5/2.5 bumpers, most companies submitted estimates at least $10 higher than the $18 figure, FRIA at XI-8 to -9, Ford and Chrysler both projected savings of $35, id. at VII-20, and NHTSA's own estimate of bumper component cost savings was $49--$14 higher than the upper-range figure based on manufacturer submissions and $31 (or 172 percent) higher than the $18 figure, id. at [243 U.S.App.D.C. 147] VII-21, -25. In addition, the agency's high-cost estimate of 3.20 average lifetime bumper accidents per vehicle, based on a submission by Allstate, was not supported by data, id. at III-15, had no independent factual basis ... in the record, id. at X-3, and indeed was used solely to test the sensitivity of the results to changes in lifetime accidents, id. at XI-7, i.e., it was never intended to be a substantive part of a real-world cost-benefit analysis. Thus, in making its calculations of the expected real-world consequences of varying bumper standards, NHTSA was fully justified in heavily discounting--or even discarding--the set of assumptions containing both this unsubstantiated high estimate of accidents and the low $18 estimate of consumer cost savings. 22 99 Second, the agency suggested that the low-benefit, high-cost estimates involve contradictory behavioral assumptions. 47 Fed.Reg. 21,825; 47 Fed.Reg. 56,650; FRIA at XI-15. The only specific inconsistency pointed to by the agency, however, is the alleged incompatibility of the high-range figures for the number of lifetime bumper accidents (3.20 per vehicle) and the valuation of unrepaired damage (75 percent of the cost of repair). NHTSA reasoned that 100 where more than three accidents per year are assumed, the valuation of unrepaired damage at 3/4 the cost of repair would be inconsistent with the probability that at least one of such accidents would in fact lead to repair, and thus to the absence of unrepaired damage, and the absence of at least some of the inconvenience value due to the absence of need for repair estimates. 101 Id. at X-4 to -4a. Like petitioners, we are utterly baffled by this reasoning. In addition to wrongly assuming that the 3.20 figure represents accidents per year (whereas in fact it represents accidents per vehicle-life), this passage seems to assume that the unrepaired damage percentages (50 to 75 percent) represent the percentage of all damage that goes unrepaired--whereas they in fact represent, for the quantum of unrepaired damage that is independently calculated (see Column 4 of Table III, supra ), the percentage of the hypothetical repair cost that represents the value of the damage to the consumer. This passage bears every evidence of having been inserted as a make-weight by someone who had not the slightest idea what he was talking about. Even so, the agency's decision on this point is adequately supported by the alternative rationale based on the confluence of independently improbable assumptions. Considering the record as a whole, we cannot say that this single error on an alternative point--blatant though it may be--renders the entire rulemaking arbitrary or capricious. 102 Thus, the agency was justified in concluding that the cost-benefit analysis favored, even if only slightly, the 2.5/2.5 bumper. NHTSA further noted, however, that even if it used the methodology urged by petitioners, it would find the 5.0/2.5 and 2.5/2.5 standards indistinguishable and would in any event select the latter because it best promotes the policies of the Cost Savings Act in ways not considered by the formal cost-benefit analysis. 47 Fed.Reg. 21,826-27. Contrary to the petitioners' contentions, we think it was permissible for the agency to consider such factors. Once it was determined on cost-benefit grounds that the 2.5/2.5 and 5.0/2.5 standards were both clearly superior to the existing standard, NHTSA had an obligation under the Cost Savings Act to choose one of these alternatives. But if--as would be the case using the cost-benefit methodology recommended by petitioners--the cost-benefit analysis showed that neither alternative was appreciably superior to the other, then it was entirely reasonable for the agency to decide on the basis [243 U.S.App.D.C. 148] of factors that promote the policy of the Cost Savings Act, even if not included within the formal cost-benefit model. 103 Petitioners also challenge the propriety of the particular extra-model factors the agency considered. The primary factor relied on by NHTSA was that the less restrictive standard would produce benefits--e.g., a reduction in automobile purchase prices--more certainly and immediately than would the 5.0/2.5 standard. 47 Fed.Reg. 21,826. Petitioners fault this reasoning on the ground that the 2.5/2.5 standard already received full credit for the immediacy of its benefits under the cost-benefit model, because reductions in accident costs, the principal benefit of the more restrictive standard, were discounted to present value. This discounting, however, took account of the cost of money, not the inherently more speculative nature of the future costs. FRIA at III-65. Thus, having already reduced the costs of anticipated accidents to present value, NHTSA could reasonably favor allowing consumers to benefit from immediate concrete price reductions rather than forcing them to spend additional money now in order to forestall accident costs that probably will, but might never, materialize. 104 NHTSA's second extra-model factor was that the wider design freedom permitted by a less restrictive standard would promote innovation, which could result in more effective bumpers at lower cost to the public than would otherwise be available, 47 Fed.Reg. 21,827. Petitioners find this to be counter-intuitive and counter to experience. Reply Brief for Insurance Company Petitioners at 27. It does not seem to us counter-intuitive, since a reduced standard would enable manufacturers to experiment with designs and materials likely, but not certain, to achieve more than 2.5 mph protection without fear of violating the law if they fell short of 5.0 mph protection. Such new designs, if successful, might then make possible the design of bumpers providing 5.0 mph or greater protection at a lower cost than was previously possible. As for prior experience, it is for the agency, not the court, to determine whether conditions in the automobile industry today (as opposed to 1966 or 1972) are incompatible with the agency's assumption that production freedom will promote innovation. Cf. State Farm, 103 S.Ct. at 2872. Furthermore, petitioners do not challenge NHTSA's more general conclusion that reduced standards would promote innovation to achieve values other than increased bumper protectiveness --for example, increased ability to accommodate consumers' automotive design preferences and the collection of data on different bumper performances. See 47 Fed.Reg. 21,827. Petitioners also question whether the record comments support the conclusion that a 2.5/2.5 standard would promote innovation better than the 5.0/2.5 alternative. The conclusion, however, was not based on record comments, but on the (indisputable) proposition that lower standards increase design freedom, which, as discussed above, NHTSA reasonably thought would promote innovation. Id. 105 A third extra-model factor considered by NHTSA was that a 2.5/2.5 standard will promote commonality, and hence achieve lower production costs than a standard with different requirements for front and rear bumpers. Petitioners attack this as resting on the ridiculous assumption that front and rear bumpers are identical. Reply Brief for Insurance Company Petitioners at 28. This misstates the agency's reasoning, which was based on commonality, not of front and rear bumpers, but of front and rear bumper components. See 47 Fed.Reg. 21,827. It seems to us not at all ridiculous, and not arbitrary or capricious, to assume that front and rear bumpers meeting the same impact standards have more components in common than bumpers required to meet differing impact standards. Petitioners have not even asserted that this plausible assumption is false. 106 Finally, NHTSA noted that the less restrictive standard would increase international harmonization. 47 Fed.Reg. 21,828-29. Petitioners assert that this is irrelevant to the requirements of the Cost Savings [243 U.S.App.D.C. 149] Act. Even that contention seems to us questionable, since harmonization produces public benefits by promoting international commerce. In any event, NHTSA did not assert that harmonization was a benefit under the Cost Savings Act. Rather, it was relying upon the Trade Agreements Act of 1979, Pub.L. No. 96-39, Title IV, § 402, 93 Stat. 144, 242-43 (1979) (codified at 19 U.S.C. § 2532 (1982)), which instructs each federal agency that is developing standards to take into consideration international standards and ..., if appropriate, base the standards on international standards. 19 U.S.C. § 2532(2)(A). NHTSA concluded that this statute was not controlling--i.e., did not require it to select the standard that best promoted harmonization, regardless of other factors--but that the 2.5/2.5 standard is far more compatible with relevant international regulations than the 5.0/2.5 alternative. 47 Fed.Reg. 21,829. We cannot say that this was an improper consideration.