Petitions and Plans for Relief Under the Automobile Fuel Efficiency Act of 1980

DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Part 526

[Docket No. 93-25; Notice 2]

RIN 2127-AE65

Petitions and Plans for Relief Under the Automobile Fuel

Efficiency Act of 1980

AGENCY: National Highway Traffic Safety Administration (NHTSA),

Department of Transportation (DOT).

ACTION: Final rule.

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SUMMARY: This rule addresses the agency regulations setting forth

content requirements for petitions to be submitted by automobile

manufacturers to obtain relief from certain aspects of the Corporate

Average Fuel Economy (CAFE) program. NHTSA is rescinding those portions

of the regulations that are no longer needed, and updating certain

others.

DATES: The amendments made by this rule are effective June 16, 1994.

Petitions for reconsideration should be submitted by June 16, 1994.

addresses: Submit petitions for reconsideration to: Administrator,

National Highway Traffic Safety Administration, 400 Seventh Street SW.,

Washington, DC 20590.

FOR FURTHER INFORMATION CONTACT: Mr. Orron Kee, Office of Market

Incentives, National Highway Traffic Safety Administration, room 5313,

400 Seventh Street SW., Washington, DC 20590, (202) 366-0846.

SUPPLEMENTARY INFORMATION:

I. History

In 1972, Congress enacted the Motor Vehicle Information & Cost

Saving Act (``the Act'') (15 U.S.C. 1901, et seq.). Title V, Improving

Automotive Efficiency (15 U.S.C. 2001-13) was added to the Act in 1975.

Title V established the CAFE program.

The Act specifies that, in general, each manufacturer's

domestically manufactured (i.e., those with at least 75 percent U.S. or

Canadian content) and imported passenger automobiles must comply

separately with CAFE standards. This provision was originally enacted

to discourage domestic auto manufacturers from merely importing

increasing numbers of fuel efficient, foreign produced cars to comply

with standards.

In 1980, Congress determined that the original provision regarding

domestic content could have two undesired effects. First, it could

discourage foreign manufacturers that wished to begin U.S. production.

Second, it could discourage manufacturers that wished to transfer a

non-domestic automobile to their domestic fleets by gradually

increasing the domestic content of the automobile. In response to these

and other concerns, Congress passed the Automobile Fuel Efficiency Act

(AFEA), amending Title V of the Act by adding a number of provisions

intended to facilitate compliance with the CAFE standards.

To address the first situation, Congress adopted a provision, found

in section 503(b)(3) of the Act, applicable to foreign manufacturers

that began U.S. production either (1) after December 22, 1975 and

before May 1, 1980 or (2) on or after May 1, 1980 and for at least one

model year ending on or before December 31, 1985. Such manufacturers

could be exempted from the Act's requirements that their fleets be

separated into domestic and non-domestic subfleets for CAFE compliance

purposes if they submitted, and NHTSA approved, a petition

demonstrating that granting the exemption would not adversely affect

employment in the U.S. automobile industry.

To address the second situation, Congress added section 503(b)(4)

to the Act. It applies to a manufacturer that wishes to convert a

vehicle from non-domestic to domestic status over a period of several

model years, and to begin including the vehicle in its domestic fleet

from the very beginning of the conversion period. There is no model

year limitation on exercising this provision. To obtain exemption from

the domestic content provision under section 503(b)(4), a petitioner

must show that (among other things) it would achieve at least 75

percent domestic content within four model years.

The AFEA also made a number of other amendments to the Act. It

added section 502(k) to the Act to authorize special relief for

manufacturers that were unable to comply with one or more of the 4-

wheel drive (4WD) light truck fuel economy standards in MYs 1982-85.

Finally, the AFEA added section 502(l) to the Act to authorize

special relief for manufacturers that fell short of a fuel economy

standard in one year, but expected to exceed a fuel economy standard in

a future model year. Section 502(l) provides that the credits that a

manufacturer expects to earn for a future model year can be made

available up to three years in advance of that year in order to offset

civil penalties which would otherwise be assessed for a shortfall in

one of those three years, provided that the manufacturer submits (and

the agency approves) a plan for earning the necessary credits in the

future, and that the manufacturer actually earns the credits.

On July 29, 1982, the agency published a final rule establishing

part 526 setting forth requirements for the contents of petitions to

obtain the various types of relief authorized by the AFEA's amendments

to the Act. (47 FR 32721). The principal provisions of part 526 are:

Section 526.2, specifying requirements relating to

section 503(b)(3) (commencement of U.S. production);

Section 526.3, specifying requirements relating to

503(b)(4) (transfer of models from non-domestic to domestic fleet);

Section 526.4, specifying requirements relating to

section 502(k) (adjustment of CAFE standards for 4-wheel drive light

trucks); and

Section 526.5, specifying requirements relating to

section 502(l) (offsetting compliance shortfall with future credits).

On May 20, 1993, the agency published a NPRM (58 FR 29378)

proposing to rescind those sections of the implementing regulation that

were no longer required because the passage of time rendered them

obsolete, and to amend certain language in the regulation that was

inconsistent (e.g., different ways of referring to the same statutory

text).

Since NHTSA did not receive any comments in response to the NPRM,

it is adopting the amendments as proposed. This final rule rescinds

certain parts of the implementing regulation, and makes the other minor

changes that are fully described below.

II. Changes to Part 526

A. Rescission of Sec. 526.4, Relating to the Adjustment of Fuel Economy

Standards for 4-Wheel Drive Light Trucks

Section 526.4 describes the procedures for manufacturers to

petition for relief from light truck CAFE standards applicable to 4WD

light trucks for MYs 1982-85. This procedure implements section 502(k)

of the Act.

To be granted the relief provided by section 502(k) with respect to

one or more of those model years, a manufacturer must demonstrate that

it cannot meet the fuel economy standard for that year without

suffering a severe economic impact, such as plant closures or layoffs.

Although the timing of the petition is not expressly specified, the use

of the subjunctive mood regarding the finding to be made by the agency

indicates that the petition had to be filed before the start of the

model year for which the relief was requested. No petitions were filed

under this section for these long past model years.

Accordingly, NHTSA believes that section 502(k) and its

implementing regulatory provision in Sec. 526.4 are moot. The agency is

therefore rescinding this provision.

B. Deletion of Final Sentence of Sec. 526.5(a) Relating to Separation

of Light Truck Fleets Into 2-Wheel and 4-Wheel Drive Fleets

Section 526.5 specifies the content of manufacturers' plans for

earning CAFE credits in future years to offset current year penalties.

The provision implements section 502(l) of the Act. As noted above,

under section 502(l), a manufacturer may avoid violating the Act and

paying a civil penalty for falling short of a standard in one model

year if the manufacturer submits to the agency a plan showing that it

reasonably anticipates earning enough credits during the next three

model years to offset the shortfall.

A portion of Sec. 526.5 has become moot. The last sentence in

Sec. 526.5(a) provides that the information specified in Sec. 526.4(e)

is to be submitted in connection with any contemplated transfer of CAFE

credit between classes of light trucks. As noted above, all of

Sec. 526.4 is being rescinded by this notice. Accordingly, the agency

is also deleting the last sentence of Sec. 526.5(a). The meaning of

Sec. 526.5(a) will remain unchanged.

C. Redesignation of Citations to AFEA

Although the regulatory relief provisions of the AFEA were added by

the AFEA to the Act, part 526 does not uniformly cite the Act. For

example, the part references the relevant sections of the AFEA whenever

it discusses petitions and plans specified by the AFEA, but references

the Act in other places. The lack of consistency in the citations is a

potential source of confusion and inconvenience to the public.

Therefore, the agency is converting all references in part 526 to the

AFEA into references to the corresponding sections of the Act.

D. Change to Title of 49 CFR 526.3

The title of Sec. 526.3 is being changed from ``Transfer of vehicle

from foreign to U.S. production'' to ``Transfer of vehicle from non-

domestic to domestic fleet.'' Section 526.3 implements section

503(b)(4) of the Act, which allows manufacturers to average certain

non-domestic models with their domestic fleets if (1) these models have

not been previously domestically manufactured, (2) these models have at

least 50 percent domestic content, and (3) the manufacturer will raise

the domestic content of these models to a minimum of 75 percent within

four model years. Section 503(b)(4) of the Act says nothing about

actually ``transferring'' a vehicle from foreign to domestic

``production''. A vehicle assembled in the U.S. or Canada, but

containing less than 75 percent domestic content, could be eligible

under this provision. Additionally, there is no reference to any

specific country as a production site. The change in the title of

Sec. 526.3 will therefore reflect more accurately the language of the

Act.

E. Change in Text of 49 CFR 526.3(a)

Section 503(b)(4)(A)(ii) of the Act states that at least 50 percent

of the cost to the manufacturer of each automobile covered by the

manufacturer's petition regarding transfer from non-domestic fleet to

domestic fleet should be attributable to ``value added in the United

States or Canada.'' By adding the words ``or Canadian'' to the phrase

``those with 50 to 75 percent U.S. value added,'' the text of

Sec. 526.3(a) will accurately reflect the meaning of the Act.

Additionally, for the sake of clarification, the wording of

Sec. 526.3(a) will read ``those with at least 50 percent, but less than

75 percent.''

III. Regulatory Analysis

A. Executive Order 12866, Regulatory Planning and Review, and DOT

Regulatory Policies and Procedures

This notice was not reviewed under Executive Order 12866. The

agency has considered the economic implications of these amendments and

determined that these amendments are not significant within the meaning

of the DOT Regulatory Policies and Procedure. No regulatory evaluation

was prepared by the agency because the amendments to the regulation

will not have any economic effects. The primary effect of the

amendments will be to remove from the Code of Federal Regulations

content requirements for a type of petition that can no longer by

submitted to the agency.

B. Regulatory Flexibility Act

In accordance with the Regulatory Flexibility Act, the agency has

considered the impact that this rulemaking will have on small entities.

I certify that this action will not have a significant economic impact

on a substantial number of small entities. Therefore, a regulatory

flexibility analysis is not required for this action. As noted above,

these amendments will not have any economic effects. In the case of

small businesses, small organizations, and small governmental units

which purchase automobiles and light trucks, these amendments will not

affect the availability of fuel efficient automobiles or light trucks

or have any significant effect on the overall cost of purchasing and

operating an automobile or light truck.

C. Impact of Federalism

This action has been analyzed in accordance with the principles and

criteria contained in Executive Order 12612, and it has been determined

that the action does not have sufficient Federalism implications to

warrant the preparation of a Federalism Assessment.

D. Executive Order 12778 (Civil Justice Reform)

This rule does not have any retroactive effect. Under section

509(a) of the Act (15 U.S.C. 2009(a)), whenever a Federal motor vehicle

fuel economy standard is in effect, a state may not adopt or maintain

separate fuel economy standards applicable to vehicles covered by the

Federal standard. Section 504 of the Act (15 U.S.C. 2004) sets forth a

procedure for judicial review of final rules establishing, amending or

revoking Federal average fuel economy standards. That section does not

require submission of a petition for reconsideration or other

administrative proceedings before parties may file suit in court.

E. Environmental Impacts

The agency has analyzed the environmental impacts of the amendments

to part 526 in accordance with the National Environmental Policy Act,

42 U.S.C. 4321 et seq. The agency has concluded that they will not have

a significant effect on the quality of the human environment.

List of Subjects in 49 CFR Part 526

Energy conservation, Motor vehicles.

PART 526--[AMENDED]

In consideration of the foregoing, 49 CFR part 526 is amended to

read as follows:

1. The authority citation for part 526 is revised to read as

follows:

Authority: 15 U.S.C. 2002 and 2003; delegation of authority at

49 CFR 1.50.

2. Section 526.1(b) and (c) are revised to read as follows:

Sec. 526.1 General provisions.

* * * * *

(b) Address. Each petition and plan submitted under the applicable

provisions of sections 502 and 503 of the Motor Vehicle Information and

Cost Savings Act must be addressed to the Administrator, National

Highway Traffic Safety Administration, 400 Seventh Street, SW.,

Washington DC 20590.

(c) Authority and scope of relief. Each petition or plan must

specify the specific provision of the Motor Vehicle Information and

Cost Savings Act under which relief is being sought. The petition or

plan must also specify the model years for which relief is being

sought.

3. The introductory text of Sec. 526.2 is revised to read as

follows:

Sec. 526.2 U.S. production by foreign manufacturer.

Each petition filed under section 503(b)(3) of the Motor Vehicle

Information and Cost Savings Act must contain the following

information:

* * * * *

4. The heading, introductory text and introductory text of

paragraph (a) of Sec. 526.3 are revised to read as follows:

Sec. 526.3 Transfer of vehicle from non-domestic to domestic fleet.

Each plan submitted under section 503(b)(4) of the Motor Vehicle

Information and Cost Savings Act must contain the following

information:

(a) For each model year for which relief is sought in the plan and

for each model type of automobile sought to be included by the

submitter in its domestic fleet under the plan (i.e., those with at

least 50 percent but less than 75 percent U.S. or Canadian value

added), provide the following information:

* * * * *

Sec. 526.4 [Removed and Reserved]

5. Section 526.4 is removed and reserved.

6. The introductory text and paragraph (a) of Sec. 526.5 is revised

to read as follows:

Sec. 526.5 Earning offsetting monetary credits in future years.

Each plan submitted under section 502(l) of the Motor Vehicle

Information and Cost Savings Act must contain the following

information:

(a) Projected average fuel economy and production levels for the

class of automobiles which may fail to comply with a fuel economy

standard and for any other classes of automobiles from which credits

may be transferred, for the current model year and for each model year

thereafter ending with the last year covered by the plan.

* * * * *

Issued: May 11, 1994.

Christopher A. Hart,

Deputy Administrator.

[FR Doc. 94-11918 Filed 5-16-94; 8:45 am]

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