The federal district court for the Western District of Kentucky ruled that the FHWA rule exceeded the agency’s statutory authority and was arbitrary and capricious. The court said it did not matter whether the statute authorized the FHWA Administrator’s reading of "performance" to include environmental performance because there was a “more fundamental problem” regarding whether FHWA could set “performance targets.” The court concluded that the statute gave states the authority to set “performance targets” and did not authorize the FHWA Administrator to “appropriat[e] that target-setting authority by defining performance measure”—which FHWA does have authority to establish—“in a way that dictates the choice of targets given states by Congress.” The court therefore held that FHWA “may not create a performance measure that forces states to set declining targets in CO2 tailpipe emissions on the National Highway System.” The court also found that even assuming FHWA had statutory authority to set environmental performance standards, the regulation was arbitrary and capricious because there was no rational connection between the facts and the two justifications for the regulation (reduction of carbon dioxide emissions and information collection). The court issued only declaratory relief but invited the parties to submit additional briefing on the propriety of injunctive relief, noting that the type of additional relief that might be necessary was unclear, particularly given the Northern District of Texas’s vacatur of the rule.

Challenge to the National Highway System regulation requiring states to establish declining targets for carbon dioxide emissions from on-road mobile sources.

Kentucky v. Federal Highway Administration

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Kentucky Federal Court Said Federal Highway Administration Exceeded Its Authority in Regulation Requiring States to Set Declining Carbon Dioxide Emissions Targets for Highway Systems

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Kentucky Federal Court Said Federal Highway Administration Exceeded Its Authority in Regulation Requiring States to Set Declining Carbon Dioxide Emissions Targets for Highway Systems

Target

Policy instrument

Risk

Impacted group

Renewable energy

Fossil fuel

Greenhouse gas

Economic sector

Finance