## Facts

- The Energy Policy and Conservation Act (EPCA) set a 27.5 mpg Corporate Average Fuel Economy (CAFE) standard for passenger cars for model years 1985 and later, while authorizing NHTSA to adjust the standard to the “maximum feasible” level based on specified feasibility and energy-conservation factors.
- NHTSA previously lowered the model year 1989 passenger-car CAFE standard from 27.5 mpg to 26.5 mpg, citing a record suggesting that retaining 27.5 mpg could have adverse safety effects if manufacturers downsized vehicles to comply.
- For model year 1990, NHTSA left the passenger-car CAFE standard at the statutory 27.5 mpg after notice-and-comment rulemaking.
- The administrative record reflected that, in general, larger vehicles provide greater crash protection than smaller vehicles, and that higher CAFE targets may increase incentives to produce smaller, lighter vehicles.
- In maintaining 27.5 mpg for model year 1990, NHTSA suggested compliance could be achieved without substantial downsizing and referenced improvements in safety technology, but did not clearly explain whether such technology would offset size-related safety disadvantages or how safety risks were weighed against fuel savings.
- Competitive Enterprise Institute and Consumer Alert petitioned for review, alleging the model year 1990 decision was arbitrary and capricious because NHTSA failed to address safety implications.

## Issues

1. Whether the petitioners had Article III standing based on alleged increased safety risks from maintaining the 27.5 mpg model year 1990 CAFE standard.
2. Whether NHTSA’s refusal to lower the model year 1990 passenger-car CAFE standard was arbitrary and capricious for failing to provide a reasoned explanation addressing safety tradeoffs reflected in the record.

## Decision

- The court held the petitioners had standing because the alleged increased risk from a shift toward smaller, less safe vehicles constituted an injury in fact that was plausibly traceable to the rule and potentially redressable on remand.
- The court granted the petition in part and remanded the model year 1990 CAFE decision to NHTSA.
- The court concluded NHTSA failed to provide an adequate, reasoned explanation for maintaining 27.5 mpg in light of evidence suggesting a fuel-economy/safety tradeoff, including likely effects on vehicle size mix.
- The court did not set a CAFE level or hold that 27.5 mpg was unlawful; it required NHTSA to directly confront and explain its treatment of safety considerations on the record.

## Legal Principles

- Under the APA’s arbitrary-and-capricious standard, an agency must consider relevant factors, examine important aspects of the problem, and articulate a rational connection between the record and its decision.
- When the record indicates a substantial tradeoff created by an agency’s action, the agency must address that tradeoff with a clear and reasoned explanation rather than leaving the balancing implicit.
- Even if a statute does not expressly list safety as a decision factor, safety may become a relevant consideration where it is closely tied to statutory feasibility determinations and the agency’s own approach and record make safety effects central to the decision.
- An agency may rely on claims that regulated entities can comply without triggering adverse secondary effects (e.g., downsizing) or that technological changes mitigate harms, but it must support those claims with reasoned analysis and record-based explanation.

## Conclusion

The D.C. Circuit held that organizations challenging the model year 1990 CAFE standard had standing and that NHTSA acted arbitrarily and capriciously by failing to adequately explain how it accounted for safety consequences associated with potential vehicle downsizing; the court remanded for further consideration and a reasoned explanation.


Competitive Enter. Inst. v. Nat'l Highway Traffic Safety Admin., 956 F.2d 321 (D.C. Cir. 1992)