New York v. National Highway Traffic Safety Administration

Filing Year For Action

The Second Circuit Court of Appeals vacated the National Highway Traffic Safety Administration’s (NHTSA’s) reversal of a 2016 increase to the penalty for violations of fuel economy standards. In 2016, NHTSA increased the penalty pursuant to Federal Civil Penalties Inflation Adjustment Act Improvements Act (the Improvements Act) from $5.50 to $14 for every tenth of a mile per gallon below the applicable standard, multiplied by the number of cars in a manufacturer’s fleet. In 2019, NHTSA reversed the increase based on its conclusion that the Improvements Act did not apply to the fuel economy penalty and that, even if the Act did apply, the penalty’s “negative economic impact” was sufficient to support reversal. The Second Circuit rejected both rationales. First, the Second Circuit held that the penalty was a “civil monetary penalty” under the Improvements Act. NHTSA therefore was required to adjust the penalty rate in accordance with the Improvements Act’s requirements. Second, the court held that reconsideration and reversal of the increase based on economic consequences was untimely and therefore beyond NHTSA’s authority.