Since the early days of the Trump Administration, our blog has regularly covered the Administration’s various attempts at regulatory reform. An appellate decision last week on a National Highway Traffic Safety Administration (NHTSA) rule signaled an end to administrative stays based on mere agency averments that it intends to reconsider a notice-and-comment rulemaking. Instead, the agency must use the notice-and-comment process to revisit the rule. Absent these processes, the regulation goes into effect.

In Natural Resources Defense Council (NRDC) v. NHTSA, Docket Nos. 17-2780 and 17-2806, the Second Circuit rejected an attempt by the NHTSA to indefinitely delay a previously published rule increasing civil penalties as directed by Congress in the Federal Civil Penalties Inflation Adjustment Act Improvement Act of 2015 (the “Improvements Act”), Bipartisan Budget Act of 2015, Pub. L. 114‐74, § 701, 129 Stat. 584, 599 (2015) (codified at 28 U.S.C. § 2461 note). The delayed rule – published in the Federal Register on December 28, 2016 – required that civil penalties for violations of corporate average fuel economy (CAFE) standards be increased as was required by the Improvements Act. The delayed rule was one among many stayed shortly after President Trump took office.

NRDC v. NHTSA touches upon various key principles in administrative law:

  • Statutes trump executive whims. Congress passed the Improvements Act to address the recurring issue of stagnant civil monetary penalties, a problem Congress had tried (and failed) to address for over three decades. The Second Circuit found that the history of the Improvements Act – including the Federal Civil Penalties Inflation Adjustment Act of 1990 (requiring the president to “submit a report on civil monetary penalty inflation adjustment to specified Senate and House Committees” to facilitate Congress taking future action) and Debt Collection Improvement Act of 1996 (requiring the agencies themselves to adjust penalties, but limiting the initial adjustment to ten percent of the then-current penalty) showed “increasing intervention on the part of Congress regarding civil penalties. The evolution of this regulatory regime provided “a powerful indication…that Congress did not authorize NHTSA” to suspend its prior rule.
  • The Federal Administrative Procedure Act (APA) requires that regulatory reform generally happen through usual order. The APA governs the promulgation and review of administrative rulemakings. A basic principle of administrative law – embodied in the APA – is that “an agency issuing a legislative rule is itself bound by the rule until that rule is amended or revoked.” To the court, suspending rules is the same as revoking them and the agency provided no demonstration of good cause as to why the usual process could not be followed.
  • The principle “Look Mom, But All the Other Kids Do It” is rejected by courts just like it is at home. NHTSA argued that other agencies’ attempts to delay rule implementation pending reconsideration supported its choice to do so. The Second Circuit – following the D.C. Circuit’s recent decision in Clean Air Council, flatly disagreed. “[A] decision to reconsider a rule does not simultaneously convey authority to indefinitely delay the existing rule pending that reconsideration.”