Department of Transportation Lacks the Authority to Require States to Set Greenhouse Gas Reduction Targets for Highways

A federal district court in Texas has concluded that the Department of Transportation (DOT) exceeded its statutory authority when it adopted a rule establishing a greenhouse gas (GHG) performance measure for federally funded highways. Under the rule, states were required to measure highway-related greenhouse gas emission, set targets for GHG emission reductions, and track progress toward such targets. The state of Texas objected to the rule and filed suit.

This rule has a long history. The DOT first adopted a GHG performance measure for highways in 2016, at the end of the Obama Administration. The Trump Administration rescinded this rule in 2018, concluding the DOT lacked authority to adopt a GHG-based performance measure under the relevant statute and was bad policy. After President Biden took office, the DOT reversed course again, proposing a revised GHG highway performance measure in 2022 and finalizing the rule in 2023.

Once the rule was promulgated, Texas promptly filed suit, arguing that the rule exceeded the scope of DOT’s statutory authority, is arbitrary and capricious, and violates the federal government’s spending power. Last month, Judge Wesley Hendrix sided with Texas, solely on statutory interpretation grounds.

Judge Hendrix summarizes his opinion in Texas v. USDOT as follows:

A federal administrative agency cannot act without congressional authorization. Here, the Federal Highway Administration created a rule requiring the states to measure, report, and set declining targets for the amount of carbon dioxide emitted by vehicles using the interstate and national-highway systems. For authority, the agency relied on 23 U.S.C. § 150(c)(3), which permits it to create measures to assess pavement conditions, bridge conditions, and “the performance of the Interstate System . . . [and] the National Highway System.” Texas sued, alleging that the agency lacked authority to enact the rule. Given the statutory text’s plain language and context, the Court agrees. The relevant definitions and related performance measures make clear that “performance of the Interstate/National Highway Systems” focuses on the infrastructure’s effectiveness in facilitating travel, commerce, and national defense—not environmental outputs of vehicles using the systems. Moreover, the DOT’s expansive interpretation is undermined by the fact that adopting it would render other statutory provisions superfluous. Additionally, Section 150(c)(3)’s performance measures only exist to carry out Section 119′s National Highway Performance Program, which also distinguishes between the highway system’s performance and environmental impact. Thus, the Court concludes that the rule was unauthorized.

While Texas sought to buttress its arguments with the Major Questions Doctrine, the court saw no need to do anything more than conduct a traditional statutory analysis, albeit one that relies upon the foundational premise that agencies only have that authority affirmatively delegate to them (a premise I have encouraged; e.g. here and here). As Judge Hendrix explained in a footnote: “because the statutory language itself makes clear that the DOT lacked authorization to promulgate the 2023 Rule, the Court need not resolve whether the issue presented constitutes a ‘major question.’”

Texas also argued that insofar as the Department of Transportation sought to impose unrelated conditions on the receipt of highway money, it could raise constitutional concerns (an issue I discussed in this article with Nathaniel Stewart), but again Judge Hendrix saw need to reach that issue.

Judge Hendrix also ordered a nationwide vacatur of the Department of Transportation’s rule, as he was required to due under Fifth Circuit precedent. As I have noted before, I think this is an improper reading of the Administrative Procedure Act, but Fifth Circuit precedent is more binding on a federal district court in Texas than is my opinion. Rather than saying anything about how the Department of Transportation should act elsewhere, Judge Hendrix should have simply held that the DOT’s regulation is unenforceable against Texas and allow DOT to determine whether it wants to acquiesce elsewhere.

I assume DOT will appeal.

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