U.S. Federal Highway Administration Enacts GHG Performance Rule for On-Road Emissions on the National Highway System

The U.S. Federal Highway Administration's ("FHWA") new rule establishing a performance-based method for measuring greenhouse gas ("GHG") emissions that are associated with transportation on the National Highway System ("NHS") took effect on January 8, 2024. The rule creates a framework for State Departments of Transportation ("State DOTs") and metropolitan planning organizations ("MPOs") to measure and track GHG emissions based on the percent changes in on-road tailpipe carbon dioxide ("CO₂") emissions on the NHS relative to the reference year of 2022. MPOs are the policy boards of organizations that are created and designated to carry out the metropolitan transportation planning process for certain urbanized areas.

Under the rule, State DOTs and MPOs that have NHS routes within their jurisdictions are required to measure and track GHG emissions, which is referred to as the GHG measure. To calculate the GHG measure, the rule creates a "GHG metric," which is defined as the calculation of tailpipe CO₂ emissions on the NHS for a given year computed in million metric tons and rounded to the nearest hundredth. While State DOTs are required to use the GHG metric in calculating the GHG measure, MPOs are granted more flexibility in how they calculate the GHG measure. In addition, the rule requires State DOTs and MPOs to establish two- and four-year targets for reducing GHG emissions from on-road sources, respectively, and report on their progress in meeting those targets.

State DOTs must report those targets to the FHWA by February 1, 2024, and MPOs must report within 180 days after the respective State DOT establishes its targets. State DOTs are required to establish and report subsequent targets no later than October 1, 2026. 

Note, however, that the rule does not mandate what those emissions targets must be; rather, it just requires that State DOTs and MPOs establish declining emissions targets over time. The rule also does not impose any penalties for failing to meet emissions targets. The rule is a notable departure from the traditional U.S. Environmental Protection Agency ("EPA") regulatory regime that has regulated mobile source emissions, such as by setting emission standards for on-road and nonroad vehicles and engines.  

The rule is already subject to challenge. In February 2024, a number of House and Senate lawmakers introduced a bicameral Congressional Review Act Joint Resolution of Disapproval to nullify the FHWA rule, calling it a "misguided regulation" that "is another case of gross federal overreach …” In addition, a coalition of 21 Republican-led states as well as Texas filed separate suits to enjoin the implementation of the rule and to challenge FHWA's authority to promulgate it. The coalition of states' principal argument is that the FHWA does not have the statutory authority to regulate GHG emissions and that the rule violates the major questions doctrine—a doctrine that the Supreme Court relied on in its landmark decision West Virginia v. EPA, holding that EPA could not curb GHG emissions from existing power plants through generation shifting because it did not have clear authorization from Congress. 

In the coalition of states case, the federal government has requested that the federal court dismiss the case on the grounds that Congress did in fact authorize FHWA to establish "measures for states to use to assess" "the performance of the interstate system" and "the performance of the national highway system." The federal government also called into question whether the states have standing to challenge the rule, pointing out that only 13 of the 21 states submitted documentation of the alleged harm from the rule.  

In addition, construction trade groups recently filed an amicus brief in support of Texas's lawsuit and contend that FHWA's rule threatens transportation improvements by imposing unplanned administrative costs on State DOTs and MPOs. 

These challenges to FHWA's new rule should be closely monitored, as they have the potential to define the lengths that the federal government can go to regulate GHG emissions, particularly from mobile sources.