Summary
The Fifth Circuit granted a petition for review and vacated a portion of the EPA's "Ra Rule," which established a sensitivity factor for calculating vehicle fuel economy. The court determined that petitioners representing the gasoline supply chain possessed Article III standing, as the rule predictably reduced gasoline demand and caused concrete economic injury. Additionally, the court held that the EPA violated the Administrative Procedure Act by arbitrarily selecting an unreasonably low Ra factor and inadequately responding to public comments.
Topics
Practice areas
Questions Presented
- Whether petitioners' members established Article III injury, causation, and redressability sufficient for associational standing.
- Whether EPA's adoption of an Ra factor of 0.81 was arbitrary and capricious because the agency failed to respond adequately to significant comments concerning sample size, vehicle representativeness, inclusion and exclusion of test data, and alternative manufacturer data.
- Whether vacatur was the appropriate remedy for EPA's APA violations.
Holdings
- Petitioners established associational standing because their gasoline-selling members faced a substantial risk of economic injury from reduced gasoline demand caused by the challenged Ra Rule, and vacatur would likely redress at least some of that injury.
- EPA's adoption and implementation of the 0.81 Ra factor was arbitrary and capricious because the agency failed to respond meaningfully to significant comments that, if correct, would have required a change in the rule.
- Vacatur was required for the unlawful portions of the Ra Rule.
Key quotations
“EPA’s Ra Rule is unreasonable and unreasonably explained. The Agency violated the Administrative Procedure Act (“APA”) by ignoring comments that flagged flaws in EPA’s determination of the Ra factor.” (at 688)
“The Agency failed entirely to respond to several significant points in comments which, if true, would have necessitated a change in course.” (at 706)
“The petition for review is GRANTED. The Ra Rule is VACATED to the extent that it (1) sets an Ra factor of 0.81 and (2) implements that factor by shifting the test fuel from E0 to E10 for fuel economy compliance.” (at 722)
Factual background
EPA regulates fuel-economy testing used to assess Corporate Average Fuel Economy compliance and the federal gas-guzzler tax. After the transition from E0 to E10 test fuel, EPA proposed and ultimately adopted an Ra factor of 0.81 based on testing only eleven vehicles, excluding one vehicle and including another despite commenters' objections. Petitioners representing agricultural and gasoline-supply-chain interests argued that the factor was too low, artificially increased fuel-economy stringency, and would reduce demand for gasoline.
Procedural history
EPA finalized the Ra Rule in 2024 as part of its rulemaking concerning multi-pollutant emissions standards for model years 2027 and later. Petitioners sought review of the portion of the rule setting the Ra factor at 0.81 and requiring the shift from E0 to E10 test fuel for fuel-economy compliance. The Fifth Circuit held that petitioners had associational standing and that EPA violated the APA by failing to adequately respond to significant comments, then vacated the challenged portions of the rule.
Remand instructions
The challenged portions of the Ra Rule are vacated. The opinion did not direct a separate remand procedure, but EPA must address the identified deficiencies if it proceeds with the rulemaking.