Light Truck Average Fuel Economy Standards; Model Years 1996-1997

SUMMARY: This final rule establishes the average fuel economy standard

for light trucks manufactured in model years (MY) 1996-97. The issuance

of the standard is required by Title V of the Motor Vehicle Information

and Cost Savings Act. The (combined) standard for all light trucks

manufactured by a manufacturer is 20.7 mpg for both MY 1996 and MY

1997. The agency also refers interested parties to an Advance Notice of

Proposed Rulemaking (ANPRM), addressing light truck CAFE standards for

MYs 1998-2006, published in today's Federal Register.

DATES: The amendment is effective May 6, 1994. The standard applies to

the 1996 and 1997 model years. Petitions for reconsideration must be

submitted within 30 days of publication.

ADDRESSES: Petitions for reconsideration should be submitted 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, 400 Seventh

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

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Background

II. Summary of Decision

III. Manufacturer Capabilities for MYs 1996-97

A. Manufacturer Projections

B. Possible Additional Actions to Improve MYs 1996-97 CAFE

C. Manufacturer-Specific CAFE Capabilities

IV. Other Federal Standards

A. Safety Standards

B. Revised Emissions Standards

C. Test Weight for Light Trucks over 6,000 Pounds GVWR

D. Phase-out of Chlorofluorocarbons

V. Domestic/Import Fleet Distinction

VI. The Need of the Nation to Conserve Energy

VII. Determining the Maximum Feasible Average Fuel Economy Level

A. Interpretation of ``Feasible''

B. Industry-wide Considerations

C. Petroleum Consumption

D. The MYs 1996-97 Standard

VIII. Rulemaking Analyses and Notices

A. Economic Impacts

B. National Environmental Policy Act

C. Regulatory Flexibility Act

D. Executive Order 12612 (Federalism)

E. Civil Justice Reform

F. Department of Energy Review

I. Background

In December 1975, during the aftermath of the energy crisis created

by the oil embargo of 1973-74, Congress enacted the Energy Policy and

Conservation Act. Congress included a provision in that Act

establishing an automotive fuel economy regulatory program. That

provision added a new title, title V, ``Improving Automotive

Efficiency,'' to the Motor Vehicle Information and Cost Saving Act (the

Act). Title V provides for the establishment of average fuel economy

standards for cars and light trucks.

Section 502(b) of the Act requires the Secretary of Transportation

to issue light truck fuel economy standards for each model year.

Standards are required to be set at least 18 months prior to the

beginning of the model year. The Act provides that the fuel economy

standards are to be set at the maximum feasible average fuel economy

level. In determining maximum feasible average fuel economy level, the

Secretary is required under section 502(e) of the Act to consider four

factors: technological feasibility; economic practicability; the effect

of other Federal motor vehicle standards on fuel economy; and the need

of the nation to conserve energy. (Responsibility for the automotive

fuel economy program was delegated by the Secretary of Transportation

to the Administrator of NHTSA (41 FR 25015, June 22, 1976)).

On October 8, 1991, NHTSA published in the Federal Register (56 FR

50694) a questionnaire concerning fuel economy standards for MYs 1995-

1997. The comments received in response to the questionnaire are

available in Docket No. 91-50.

After analyzing the responses to the questionnaire and reviewing

other available data, NHTSA published a notice of proposed rulemaking

(NPRM) proposing average fuel economy standards for light trucks for

MYs 1995-97. 57 FR 61377 (December 24, 1992). The agency proposed to

select the standards from within a range of 20.5-21.0 mpg for MY 1995,

and 20.5-21.5 mpg for MYs 1996 and 1997. These ranges were based on the

agency's tentative evaluation of manufacturer capabilities.

In response to the December 24, 1992 NPRM, the agency received

comments from General Motors (GM), Ford, Chrysler, the American

Automobile Manufacturers Association (AAMA, formerly the Motor Vehicle

Manufacturers Association), Rover Group, the National Automobile

Dealers Association, and about 50 organizations concerned about the

continuing availability to consumers of a full range of light trucks,

including, among others, the Coalition for Vehicle Choice, Consumer

Alert, and the Competitive Enterprise Institute (CEI). The issues

raised by the commenters are addressed below.

On April 7, 1993, the agency published a final rule establishing a

20.6 mpg combined average fuel economy standard for light trucks

manufactured in MY 1995 (58 FR 18019). The limited time then available

to promulgate a final rule for MY 1995 precluded a thorough

consideration of the issues related to light truck CAFE standards for

MYs 1996-97. Therefore, NHTSA announced that it would reach a decision

later with respect to the light truck standard for those model years.

Subsequent to publication of the final rule establishing the CAFE

standard for MY 1995, NHTSA received another comment from Ford, in

which the manufacturer revised some of the risks and opportunities it

believed it faced in MYs 1996-97. This resulted in revised CAFE

projections for those years. The Department also received a letter from

the Energy Conservation Coalition (ECC) recommending that light truck

CAFE for those years be sharply increased. ECC's letter was signed by

ECC, itself, as well as the Environmental & Energy Study Institute,

Public Citizen, Sierra Club, American Council for an Energy-Efficient

Economy, Center for Auto Safety, and U.S. Public Interest Research

Group.

II. Summary of Decision

Based on its analysis, the agency is establishing a combined

average fuel economy standard for MYs 1996 and 1997 at 20.7 mpg. The

agency notes that the relatively short leadtime for MYs 1996-97

precludes significant technological changes beyond that which

manufacturers have already planned. Given the continuing need to

conserve energy, as discussed elsewhere in this notice, and the

increasing ratio of light truck to passenger car sales, NHTSA desires

to insure that feasible light truck CAFE improvements will continue to

be made. To achieve this goal, the agency has published an ANPRM in

today's Federal Register addressing light truck CAFE standards for MYs

1998-2006.

NHTSA is eliminating the requirement that captive imports and other

light trucks be required to meet CAFE standards separately. Beginning

in MY 1996, there will be a combined standard that will apply to each

manufacturer's light truck fleet in its entirety.

III. Manufacturer Capabilities for MYs 1996-97

In evaluating manufacturers' fuel economy capabilities for MYs

1996-97, the agency has analyzed manufacturers' current projections and

underlying product plans and has considered what, if any, additional

actions the manufacturers could take to improve their fuel economy. A

more detailed discussion of these issues is contained in the agency's

Regulatory Evaluation, which is being placed in the docket for this

notice. Some of the information included in the Regulatory Evaluation,

including the details of manufacturers' future product plans, has been

determined by the agency to be confidential business information whose

release could cause competitive harm. The public version of the

Regulatory Evaluation omits the confidential information.

A. Manufacturer Projections

1. General Motors

As discussed in the NPRM, General Motors (GM) projected in December

1991 that it could achieve a light truck CAFE level of 20.7 mpg for MYs

1996-97. In its February 1993 comment on the NPRM, GM revised its

projection slightly downward, to 20.5 mpg. By comparison, in a mid-

model year report submitted in July 1992, GM projected a MY 1992 CAFE

of 20.2 mpg. In its mid-model year report submitted in July 1993, it

projected a MY 1993 CAFE of 19.8 mpg.

GM stated in its February 1993 comment that the light truck CAFE

standard for MYs 1996-97 ``should be set no higher than 20.5 mpg, and

even that may be too high.''

2. Ford

Ford projected in January 1992 that it could achieve a light truck

CAFE level of 21.6 mpg for MY 1996, and 21.5 mpg for MY 1997. These

projections were revised by Ford in a May 1993 letter updating its

comment to the NPRM, which stated that, after re-evaluating the risks

and opportunities it faced in those model years, it could achieve a

light truck CAFE level of 21.1 mpg in MY 1996 and 21.6 mpg in MY 1997.

Ford stated that the risk factors could reduce its CAFE level for MY

1996 to as low as 20.8 mpg, and for MY 1997 to 21.0 mpg. By comparison,

in its final model year data submitted to the Environmental Protection

Agency (EPA), Ford reported a MY 1992 CAFE of 20.3 mpg. In its mid-

model year report submitted to NHTSA in July 1993, that company

projected a MY 1993 CAFE of 20.7 mpg.

Ford recommended in its comment on the NPRM that the agency

establish the MY 1996 standard at the same level as the MY 1994

standard, 20.5 mpg. It commented that the agency could raise the MY

1997 standard to a level no higher than 21.0 mpg.

3. Chrysler

Chrysler projected in December 1991 that it could achieve a light

truck CAFE level of 21.0 mpg for MYs 1996-97. In its January 1993

comment on the NPRM, Chrysler revised its projection slightly downward,

to 20.8 mpg for MY 1996 and 20.9 mpg for MY 1997. By way of comparison,

Chrysler achieved a CAFE level of 21.2 mpg for MY 1992 according to its

final model year data as reported to the EPA, and projected a CAFE

level of 21.0 mpg for MY 1993 in its July 1993 mid-model year report to

NHTSA.

Chrysler commented that it supports a standard of 20.5 mpg for MYs

1996-97 because it does not anticipate any major improvements in light

truck fuel economy through new technological applications.

4. Other Manufacturers

Most light truck manufacturers other than GM, Ford and Chrysler

only compete in the small vehicle portion of the light truck market and

are therefore expected to achieve CAFE levels well above those three

companies. By way of example, in their mid-model year reports for 1993,

Toyota projected a light truck CAFE of 21.8 mpg, Isuzu 21.8 mpg, Mazda

23.6 mpg, Mitsubishi 21.2 mpg, Subaru 29.1 mpg, Suzuki 28.9 mpg, and

Volkswagen 21.0 mpg.

In the NPRM, NHTSA noted that two companies, Range Rover and PAS,

projected MY 1992 light truck CAFE levels that are well below those of

the large domestic manufacturers. In their mid-model year reports for

MY 1992, Range Rover projected a CAFE level of 16.3 mpg and PAS 18.6

mpg. The agency notes that in their mid-model year reports for MY 1993,

Range Rover projected a CAFE level of 15.4 mpg and PAS 18.5 mpg. Both

of these companies sell a small number of light trucks in the U.S., on

the order of about 5,000 vehicles or less. PAS modifies GM light

trucks.

One other company which has a CAFE capability below that of the

large domestic manufacturers is UMC, a small domestic producer of

delivery vans. That company projects selling 950 light trucks in MY

1993, with a CAFE of 18.8 mpg.

B. Possible Additional Actions To Improve MYs 1996-97 CAFE

The agency analyzed the additional actions which manufacturers may

be able to take to improve their CAFE levels above those that they

currently project for MYs 1996-97. These actions may be divided into

two categories: further technological changes and product restrictions.

1. Further Technological Changes

The ability to improve CAFE by further technological changes to

product plans is dependent on the availability of fuel efficiency

enhancing technologies that manufacturers are able to apply within the

available time.

The agency's Regulatory Evaluation discusses the fuel efficiency

enhancing technologies which are expected to be available by MYs 1996-

97. However, for MYs 1996-97, limited leadtime is a significant

constraint on the increased use of these technologies. NHTSA recognizes

that the leadtime necessary to implement significant improvements in

engines, transmissions, aerodynamics and rolling resistance is

typically at least three years. Also, as the agency discussed in

establishing its final rule for MYs 1993-94, once a new design is

established and tested as feasible for production, the leadtime

necessary to design tools and test components is typically 30 to 36

months. Some potential major changes may take even longer. Leadtimes

for new vehicles are usually at least three years. Further, light

trucks have a long model life, i.e., 8-10 years or more. If a

manufacturer must make a major model change ahead of its normal

schedule, this change may have a significant, unprogrammed financial

impact. NHTSA notes that AAMA stated in its comment that the above

leadtimes, which the agency cited in the NPRM, are more typical for

passenger cars and that truck leadtimes are even longer.

Given the leadtime constraint, the agency does not believe that

manufacturers can achieve significant improvements in their projected

MYs 1996-97 CAFE levels by additional technological actions.

2. Product Restrictions

As an alternative to technological improvements, manufacturers

could improve their CAFE by restricting their product offerings, e.g.,

limiting or deleting production of particular larger light truck models

and larger displacement engines. Such product restrictions, if made

necessary by selection of a CAFE standard that is above manufacturers'

capabilities, could result in adverse economic impacts on the industry

and the economy as a whole.

To develop an independent indicator of the potential impacts of a

standard that could be met only by product restrictions, the agency

estimated the loss of production associated with sufficient production

restrictions by GM to raise its CAFE by 0.5 mpg. To estimate this

effect, the agency eliminated production of GM's least fuel efficient

models until the desired improvement in CAFE was achieved. NHTSA stated

in the NPRM that this approach tends to yield the maximum possible

negative impacts, because it does not include the possibility of

consumers accepting a smaller truck or engine, or switching to vehicles

over 8500 pounds GVWR. Also, it ignores the possibility of additional

technological improvements to these truck fleets, or compliance through

the use of credits earned in other model years.

For MY 1996, the NHTSA analysis indicates that to increase its CAFE

by 0.5 mpg by restricting sales, GM could suffer a sales loss of up to

151,000 units of its projected light truck production for that year.

The potential job losses under this scenario in manufacturer and

supplier industries could total roughly 25,000. For MY 1997, a similar

increase in CAFE of 0.5 mpg could cause GM a sales loss of up to

142,000 units, with a concurrent potential loss to the industry of

nearly 24,000 jobs.

GM commented that it takes issue with NHTSA's statement that its

analysis of job losses is necessarily an upper bound. That company

stated that it could be that a manufacturer's product restrictions

would not be done by eliminating the least fuel efficient vehicles

first from its CAFE fleet, but a manufacturer could instead choose to

restrict products based not only on their fuel efficiency but also

their profit contributions. GM stated that this strategy could lead to

larger lost sales and jobs.

Given the considerations discussed above, NHTSA concludes that

significant product restrictions should not be considered as part of

manufacturers' capabilities to improve their MYs 1996-97 CAFE levels.

C. Manufacturer-Specific CAFE Capabilities

As discussed later in this notice, NHTSA takes ``industrywide

considerations'' into account in setting fuel economy standards. In

carrying this out, the agency has traditionally focused on the least

capable manufacturer with a substantial share of light truck sales. For

MYs 1996-97, the agency has determined that GM is the least capable

manufacturer with a substantial share of sales.

1. GM

As indicated above, GM currently projects its MYs 1996-97 light

truck CAFE level at 20.5 mpg. It has also identified certain risks

related to technology and mix which it says could reduce its CAFE level

by as much as 0.5 mpg in MY 1996 and 0.3 mpg in MY 1997. As discussed

in the Regulatory Evaluation, however, the agency has analyzed these

potential risks and believes that they are unlikely to have as large an

effect as GM believes. In addition, GM has identified an additional

product action it is considering which could also reduce its CAFE.

However, NHTSA believes the issues of whether GM will actually take the

product action, and if so, what the fleet penetration would be for MYs

1996-97, are too speculative to justify an adjustment to GM's CAFE

capability. NHTSA notes that it is not identifying the product action

because it is confidential business information.

After carefully evaluating GM's product plan, NHTSA believes that

company is capable of achieving a light truck CAFE of 20.7 mpg in both

MYs 1996 and 1997. The factors explaining the difference between GM's

projection and the agency's estimate of its capability are discussed

below.

First, as discussed in the NPRM, GM projects that a much larger

portion of its MYs 1996-97 fleet will have four-wheel drive (4WD) than

it has had in recent years, or than its competitors are projecting. The

agency stated in the NPRM that it is not aware of any reason to expect

that the 4WD market will continue to increase. NHTSA also stated that

it believes there are alternatives to 4WD, including traction control.

GM commented that it believes its forecast of MYs 1996-97 4WD

penetration is realistic, stating that competitors' actions in the 4WD

segments, the use of all-wheel drive configurations and market data for

future years support its projections. GM also argued that traction

control is not an alternative to 4WD trucks since it has little benefit

for off-road applications.

The agency continues to believe that it is unlikely that the 4WD

market share will increase appreciably for the fleet in general, or for

GM in particular, over the timeframe between now and MYs 1996-97. Since

the mid-1980's, the 4WD share of total light truck sales for each model

year has consistently been within the range of 32-35 percent. No data

have been presented to the agency which demonstrate that this share

will significantly change by MYs 1996-97. The agency notes that, while

it agrees that traction control isn't an alternative to 4WD for off-

road applications, it would be a reasonable alternative for on-road use

for many consumers. No evidence has been presented to the agency which

shows that there will be increased need or demand for more 4WD or off-

road vehicles.

As discussed in the Regulatory Evaluation, since NHTSA believes

that GM's MYs 1996 and 1997 product plans overstate the percentage of

4WD vehicles that it will sell, the agency has adjusted that company's

CAFE projections to reflect what it believes is a more realistic share.

In making this adjustment, the agency assumed that GM's 4WD percentage

for MYs 1996-97 will be the same as for MY 1993, the model year in

which GM had its highest 4WD share ever. NHTSA also refined the

analysis presented in the Preliminary Regulatory Impact Analysis (PRIA)

to more accurately reflect the particular vehicles that GM is likely to

sell more of and less of. With this adjustment, and assuming that the

4WD share of GM's light truck fleet for MYs 1996-97 is consistent with

both that company's and its competitors' historical levels, its CAFE

would be more than 0.1 mpg higher in MY 1996, although it would be less

than half that amount higher in MY 1997.

NHTSA stated in the NPRM that the GM fleet leads the other

manufacturers in every engine performance calculation carried out by

the agency and that GM's performance levels are detrimental to its fuel

economy performance. The agency indicated, for example, that if GM's

light truck fleet for MY 1995 were closer to the values achieved by

other manufacturers for the various performance measurements, GM's CAFE

values in that model year might be improved by between 0.3 and 0.4 mpg.

GM commented that it disagrees with the agency's assessment in the

NPRM that GM's CAFE could be boosted 0.4 mpg by lowering engine

performance. That company stated that it believes that NHTSA's

performance adjustment was based on an incorrect sales weighted

analysis of GM's performance levels compared to its competitors. GM

stated that a manufacturer's average performance level, like many other

vehicle attributes such as average weight or engine displacement, is a

function of the mix it sells. That company stated that when its mix is

compared to its competitors' mix, GM's performance levels do not appear

to be out of line with other manufacturers.

As discussed in the Regulatory Evaluation, the agency has evaluated

GM's comment concerning comparative performance levels. NHTSA has also

reviewed revised MYs 1996-97 fleet projections submitted by GM and

Ford, which resulted in reduced fleet average values for almost all

performance measures. In light of these adjustments, NHTSA has

concluded that the performance level of the GM fleet is only slightly

greater than its competitors and that GM can make a small improvement

in its MYs 1996-97 light truck CAFE by bringing its performance levels

more in line with its competitors. The value of a CAFE adjustment if GM

were to reach comparable levels of performance would be nearly 0.2 mpg

in both MYs 1996 and 1997.

NHTSA believes that there are few other opportunities available to

GM to make small improvements in its MYs 1996-97 light truck CAFE.

There is little time left before the start of the MY 1996 production

in, roughly, July 1995. It is unlikely that GM can make any significant

technological change to its products to increase its average fuel

economy in this period, and the agency is unable to discern any

technology plans for MY 1997 that might be pulled ahead for earlier

introduction in MY 1996. The additional leadtime before MY 1997

production begins may allow for some minor technological improvements.

The agency estimates that these could increase GM's CAFE by up to 0.1

mpg in MY 1997.

GM faces certain technological risks during MYs 1996-97 that could

lower its CAFE in those model years. Based on its evaluation of

information submitted by GM, NHTSA estimates that these risks could

decrease GM's MYs 1996-97 CAFE by more than 0.1 mpg in each year.

By adjusting GM's MYs 1996 and 1997 product plans to reflect all of

the factors stated above, NHTSA has concluded that GM is capable of

achieving a CAFE of 20.7 mpg in both model years.

2. Ford

As indicated above, Ford currently projects its MY 1996 light truck

CAFE level at 21.1 mpg, and its MY 1997 light truck CAFE level at 21.6

mpg. It has also identified certain volume sales and technological

risks which it says could reduce its CAFE level by as much as 0.3 mpg

in MY 1996 and 0.6 mpg in MY 1997. Ford has also identified several

opportunities which could slightly increase its CAFE.

As discussed in the Regulatory Evaluation, NHTSA has evaluated the

risks and opportunities identified by Ford, as well as other means that

may be available to Ford to improve its CAFE. The agency believes that

Ford overstates the risks that can reasonably be expected to occur in

both years. NHTSA expects the risks that negatively affect Ford's CAFE

to be offset by sufficient opportunities to result in a capability of

21.2 mpg in MY 1996 and 21.6 mpg in MY 1997.

3. Chrysler

As indicated above, Chrysler currently projects its MY 1996 light

truck CAFE level at 20.8 mpg, and its MY 1997 light truck CAFE level at

20.9 mpg. After evaluating Chrysler's product plan, NHTSA has concluded

that Chrysler can achieve CAFE levels of at least 20.8 mpg in MY 1996

and 21.0 mpg in MY 1997. The agency believes that the additional

leadtime available before MY 1997 vehicles begin production may allow

Chrysler to make technological refinements or improvements, or to move

certain planned improvements forward to MY 1997. This could increase

Chrysler's MY 1997 CAFE by up to 0.1 mpg, thus allowing the company to

attain a CAFE level of 21.0 mpg.

While NHTSA has focused its analysis on GM, the least capable

manufacturer with a substantial share of sales, the agency does not

believe that company's capability is significantly below that of

Chrysler, although it is well below that of Ford. As indicated above,

the agency believes that Ford has the capability to achieve a MY 1996

CAFE of 21.2 mpg and a MY 1997 CAFE of 21.6 mpg, and that Chrysler can

achieve a MY 1996 CAFE of 20.8 mpg and a MY 1997 CAFE of 21.0 mpg. The

agency believes that the ability of Ford and Chrysler to improve their

CAFE levels above their projections is small.

The agency must, therefore, disagree, with the comment received

from ECC that argued that CAFE levels of 23 mpg in MY 1996 and 24 mpg

in MY 1997 would be within the capability of manufacturers. The ECC

cited a study of fuel economy by the National Academy of Sciences

(NAS). The study, which was jointly commissioned by NHTSA and the

Federal Highway Administration in 1991, stated that a 22 mpg CAFE

standard would be within manufacturers' capabilities. ECC also cited

``best-in-class'' analysis performed by the EPA, purportedly showing

that light trucks could achieve a 24.3 mpg CAFE level.

ECC failed to address the agency's discussion of the limitations of

the NAS study in the NPRM (see 57 FR 61384), which noted that the

methodology used by the NAS in its study ``has little relevance as a

reference value for this rulemaking.'' The figure used by the NAS in

reaching its conclusion that a 22 mpg level was possible in MY 1996 was

intended to represent the entire light truck fleet, and not the

capability of one or two manufacturers with a significant share of the

market. As NHTSA has noted, individual large manufacturers may have

light truck fleets with a mix toward larger, less fuel efficient trucks

that have the effect of lowering their overall CAFE. In addition, the

model mix used in the study was derived from EPA preliminary data for

MY 1990, and did not bear a close relationship to the actual mix

produced in MY 1991, much less the projected mix for MY 1996. Nor did

the study include large vans and utility vehicles, which are a

significant segment of the light truck market, and have lower fuel

economy levels. The agency stated in the NPRM that it could not use the

NAS study as a blueprint for setting CAFE standards, and ECC did not

rebut the agency's statement.

The best-in-class analysis does not take into account sales or

popularity in the market. Most vehicles that get best-in-class fuel

economy ratings have the poorest sales in their class as well. NHTSA

cannot force consumers to buy best-in-class light trucks, which often

suffer from the disadvantage that they do not possess the power, room,

or other attributes that light truck purchasers find desirable. Nor,

given the very short leadtime between now and MYs 1996-97, would

manufacturers have the chance to redesign their light trucks to more

closely be capable of achieving best-in-class fuel economy levels.

Based on its own analysis and in light of the lack of evidence

presented by ECC, the agency rejects that commenter's argument that

CAFE levels of 23 mpg in MY 1996 and 24 mpg in MY 1997 would be within

manufacturers' capabilities.

IV. Other Federal Standards

In determining the maximum feasible fuel economy level, the agency

must take into consideration the potential effects of other Federal

standards. The following section discusses other government

regulations, both in process and recently completed, that may have an

impact on fuel economy capability.

A. Safety Standards

As discussed in the Regulatory Evaluation, NHTSA has evaluated

several safety rulemakings for their potential impacts on light truck

fuel economy in MYs 1996-97. These include revisions to FMVSS Nos. 208,

Occupant Crash Protection; 214, Side Impact Protection; 216, Roof Crush

Resistance; 108, Lamps, Reflective Devices and Associated Equipment;

and 201, Occupant Protection in Interior Impacts. In addition, the

agency is considering whether to propose a safety standard to improve

rollover protection.

1. FMVSS 208

On March 26, 1991, NHTSA published (56 FR 12472) a final rule

requiring automatic restraints on trucks with a gross vehicle weight

rating of 8500 pounds or less and an unloaded vehicle weight of 5500

pounds or less. These requirements phase in at the following rate for

each manufacturer: 20 percent of light trucks manufactured from

September 1, 1994 to August 31, 1995; 50 percent of light trucks

manufactured from September 1, 1995 to August 31, 1996; 90 percent of

light trucks manufactured from September 1, 1996 to August 31, 1997;

and all light trucks manufactured on or after September 1, 1997. Thus,

the requirement will affect 50 percent of MY 1996 light trucks and 90

percent of MY 1997 light trucks. Although light truck manufacturers may

comply, as passenger car manufacturers have in the past, with the

automatic restraint requirements by using automatic belts or air bags,

NHTSA expects that essentially all light truck manufacturers will

comply by using air bags.

To encourage the use of more innovative automatic restraint systems

(primarily air bags) in light trucks, during the first four years of

the phase-in (i.e., through MY 1998) manufacturers may count each light

truck equipped with such a restraint system for the driver's position,

and a dynamically tested manual safety belt for the right-front

passenger's position, as a vehicle complying with the automatic

restraint requirements. Beginning with MY 1999, however, all light

trucks are required to provide automatic restraints for both the driver

and right-front passenger positions.

Title II of the Intermodal Surface Transportation Efficiency Act of

1991 required NHTSA to amend its automatic restraint requirements to

mandate that 80 percent of MY 1998, and all MY 1999 light trucks be

equipped with driver and passenger-side air bags. On September 2, 1993,

NHTSA published a final rule in the Federal Register (58 FR 46551) to

implement this requirement. Since NHTSA expects that essentially all

manufacturers will rely on air bags for compliance with the light truck

automatic restraints requirements, this provision should have a

negligible substantive impact, and will not affect MYs 1996-97 fuel

economy capabilities.

In the Final Regulatory Impact Analysis for the 1991 light truck

automatic restrain rulemaking, which is available in the public docket

at NHTSA, the agency estimated weight increases per vehicle ranging

from 15.3 pounds for a driver's-side air bag to 35.7 pounds for both

driver and right-front passenger air bags (including ``secondary

weight,'' i.e., weight added for supporting structure, etc.). Using

these figures, NHTSA estimated that fuel economy could be reduced by

about 0.05 to 0.11 mpg.

The automatic restraint weight estimates provided by the

manufacturers in their responses to the Request for Comments, and the

NPRM for this rulemaking were generally consistent with those

previously developed by the agency. NHTSA calculates that the

manufacturers' estimates translate into fuel economy penalties of 0.07-

0.12 mpg for MY 1996 and 0.11-0.14 mpg for MY 1997. These weight

effects are reflected in the manufacturers' fuel economy projections,

so there is no need for NHTSA to add an explicit adjustment to their

projections to consider the impact of this standard.

2. FMVSS 214

On June 14, 1991, NHTSA published (56 FR 27427) a final rule

extending the ``quasi-static'' test requirements of FMVSS 214 to

trucks, multipurpose vehicles, and buses with a GVWR of 10,000 pounds

or less. On July 13, 1992, NHTSA published (57 FR 30917) a final rule

establishing a brief phase-in for the requirements of this rule.

Manufacturers must meet the requirements for all of their light trucks

as of September 1, 1994. The ``quasi-static'' requirements have the

effect of requiring each side door to be designed to mitigate occupant

injuries in side impacts. It measures performance in terms of the

ability of each door to resist a piston pressing a rigid steel cylinder

against it. Manufacturers generally comply with the standard by

reinforcing the side doors with metal beams or rods.

In the Regulatory Evaluation accompanying the rule, NHTSA estimated

that the requirements of FMVSS 214 would result in an average weight

increase of 24.8 to 26.7 pounds (including secondary weight). This

weight increase could result in a fuel economy degradation of 0.1 mpg.

The weight estimates provided by the manufacturers for quasi-static

side impact protection translate, according to NHTSA calculations, into

fuel economy penalties of approximately 0.04-0.07 mpg for each model

year, MYs 1996 and 1997. These weight effects are included in the

manufacturers' fuel economy projections, so there is no need for NHTSA

to add an explicit adjustment to their projections to consider the

impact of this standard.

The agency is also considering other regulatory requirements to

protect light truck occupants in side impacts. The agency addressed a

number of possible requirements in an ANPRM published on August 19,

1988 (53 FR 31716). In addition, on June 5, 1992, pursuant to the

Intermodal Surface Transportation Efficiency Act of 1991, NHTSA

published (57 FR 24009) an ANPRM concerning whether passenger car

dynamic side impact protection requirements should be extended to light

trucks. Since any additional requirements in this area would take

effect after MY 1997, there will be no impact on MYs 1996-97 fuel

economy capabilities.

3. FMVSS 216

On April 17, 1991, NHTSA published a final rule (56 FR 15510)

amending FMVSS 216, Roof Crush Resistance, to extend its requirements

to light trucks with GVWRs of 6,000 pounds or less. Previously, the

standard applied only to passenger cars. The effective date of the rule

is September 1, 1994.

FMVSS 216 is intended to reduce deaths and injuries due to the

crushing of the roof into the passenger compartment in rollover

crashes. This standard established strength requirements for the

forward portion of the roof to increase the resistance of the roof to

intrusion and crush.

The agency believes that this requirement will have a negligible

impact on light truck manufacturers' MYs 1996-97 fuel economy

capabilities. Most light trucks already meet the standard. NHTSA

calculates that the manufacturers' weight impact estimates translate

into fuel economy penalties of about 0.003-0.030 mpg for MYs 1996-97.

These weight effects are included in the manufacturers' fuel economy

projections.

4. FMVSS 108

On April 19, 1991, NHTSA published (56 FR 16015) a final rule

requiring new light trucks to be equipped with center high-mounted

stoplamps (CHMSLs). The effective date was September 1, 1993. With an

estimated weight effect of about one pound, this rule has a negligible

CAFE effect.

5. FMVSS 201

On February 8, 1993, NHTSA published (58 FR 7506) a notice

proposing to amend FMVSS 201 to require passenger cars and light trucks

to meet a new in-vehicle component test to provide protection when an

occupant's head impacts upper interior components (such as A-pillars

and side rails) during a crash. The estimated weight effect for light

trucks for this proposed requirement averages six to nine pounds per

vehicle, for a fuel economy effect of 0.03 mpg. Currently, it is still

indeterminate as to whether the proposed requirement will affect light

trucks in MYs 1996-97. At this time, therefore, the agency cannot take

potential fuel economy effects into consideration when establishing

fuel economy standards for MYs 1996-97.

6. Rollover Prevention

The Intermodal Surface Transportation Efficiency Act of 1991

required NHTSA to publish an ANPRM or NPRM by May 31, 1992 to provide

``protection against unreasonable risk of rollovers of passenger cars,

multipurpose passenger vehicles, and trucks with a gross vehicle weight

rating of 8,500 pounds or less and an unloaded vehicle weight of 5,500

pounds or less.'' On January 3, 1992, NHTSA published (57 FR 242) an

ANPRM announcing that the agency is considering whether to propose a

safety standard to reduce the casualties associated with rollovers of

passenger cars, pickup trucks, vans, and utility vehicles. In addition,

on September 29, 1992, NHTSA published a notice (57 FR 44721)

announcing the availability of a document describing the agency's

planned rulemaking effort, data analyses, and physical research to

address the problem of rollover crashes and resulting injuries and

fatalities.

Since NHTSA has not yet proposed any requirements in this area, it

will not have an impact on MYs 1996-97 CAFE capabilities.

B. Revised Emissions Standards

The Clean Air Act Amendments of 1990 (CAAA) impose more stringent

exhaust emissions standards on light trucks. Standards are also

becoming tighter in California. Under the CAAA, new standards for light

trucks with GVWRs up to 6,000 pounds have begun phasing-in. The phase-

in provides for compliance by 40 percent for MY 1994, 80 percent for MY

1995, and 100 percent for MY 1996 and afterwards. For light trucks over

6,000 pounds GVWR, more stringent standards begin to take effect in MY

1996. Fifty percent of these vehicles must comply with the new

standards in MY 1996; all light trucks over 6,000 pounds GVWR must meet

the new standards for MY 1997 and later.

Current standards for exhaust emissions will tighten substantially

under the CAAA. Over the ``full useful life'' of a vehicle, emissions

standards will be 0.80 grams/mile for total hydrocarbons, and will

range (depending on vehicle and test weight) from 0.31 to 0.56 grams/

mile for non-methane hydrocarbons, from 4.2 to 7.3 grams/mile for

carbon monoxide, from 0.6 to 1.53 grams/mile for oxides of nitrogen,

and from 0.10 to 0.12 grams/mile for particulate matter.

The CAAA also require EPA to establish standards for carbon

monoxide emissions at 20 degrees Fahrenheit, which came into effect in

the current model year. Further, for all gasoline-fueled motor

vehicles, the CAAA require EPA to promulgate regulations covering

evaporative emissions (1) during operation (``running losses'') and (2)

over two or more days of non-use.

In their questionnaire responses, none of the auto companies

provided substantial detail on the possible impacts of these standards

on MY 1996-97 light truck fuel economy capabilities. GM stated, ``The

total impact of the Clean Air Act Tier I and the California emissions

standards on truck fuel economy is unknown at this time. * * * Although

not quantified, preliminary indications are that there will be some

lost opportunities to improve fuel economy when redesigning our

powertrains to comply with these standards.''

Ford stated that, ``[M]ost troublesome is the effect of compliance

with the amended Clean Air Act. We project that compliance has reduced

the average truck fuel economy by 0.3 mpg after inclusion of technology

which has an offsetting effect * * * and it negates other technology

benefits.''

NHTSA indicated in the NPRM and PRIA that it believes the net

impact on CAFE capabilities due to changes in emissions requirements is

likely to be minimal. Some of the new requirements will lead to fuel

savings, while others may lead to fuel economy losses. Benefits will be

obtained from enhanced evaporative controls and the ``low temperature''

carbon monoxide standards because manufacturers will sharpen their

fuel-control systems, using techniques such as sequential port fuel

injection. Slight fuel economy losses may result from tighter

hydrocarbon and nitrous oxides emissions standards, particularly for

larger engines.

In their comments on the NPRM, the manufacturers did not provide

data indicating that new emissions requirements would have a

significant effect on MYs 1996-97 CAFE capabilities. GM stated the

following:

The impact of tighter Federal emissions standards enacted by the

1990 Clean Air Act Amendments is not expected to have a direct fuel

economy impact related to engine efficiency. However, there will be

weight increases on some engines if dual catalytic converters are

required.

* * * California TLEV emissions standards will most likely

impact fuel economy. However, these impacts * * * have not yet been

reflected in GM's CAFE forecasts.

* * * Tighter evaporative emission standards requiring larger

canisters and adding purge controls will add weight to the vehicle

and impact fuel economy.

In its comment, Ford stated:

Ford believes that NHTSA's list of other Federal standards that

might have an impact on light truck fuel economy during MYs 1995-97

is insufficient. A more comprehensive list would include Potential

Revisions to the Federal Test Procedure (FTP) such as higher speeds

and accelerations and electric dynamometer true road load

calibration, IM240 Short Test Requirements, Onboard Diagnostics,

Cold CO Testing, Enhanced Evaporative Testing Requirements, Section

177 States, [and] Fuels or Fuel Additives such as reformulated

gasoline and MMT.

At this point, Ford has not allocated resources to collectively

assess the fuel economy implications, of required emission control

system calibration strategies and hardware, that may be associated

with the above requirements. However, it is reasonable to believe

that several of these potential requirements will have a significant

impact on light truck fuel economy.

NHTSA believes that the actual and potential Federal standards

identified by Ford will not have any significant impact on MYs 1996-97

light truck fuel economy capabilities. The agency's specific analysis

of the impacts of each of these standards is presented in the

Regulatory Evaluation. A summary of the agency's analysis follows:

1. Potential Revisions to the Federal Test Procedure

EPA has not to date proposed any revisions to the FTP, so no impact

is expected for MYs 1996-97.

2. IM240 Short Test Requirements

EPA has issued new inspection and maintenance test procedures to

help ensure that vehicle emission controls function properly in real-

world use, and has proposed a new Certification Short Test procedure.

It has also issued a rule, effective for MY 1996, outlining new

Certification Short Test procedures to ensure that properly maintained

passenger cars and light trucks have no elements of design that would

cause ``pattern failure'' in inspection and maintenance programs.

However, EPA's analyses have not indicated that there would be any

impact on manufacturers' fuel economy capabilities as a result of these

rulemakings.

3. Onboard Diagnostics

EPA has issued a final rule on onboard diagnostics that applies to

MY 1994 and later passenger cars and light trucks, but EPA believes

that this will not affect fuel economy. There may even be some actual

fuel economy benefits due to earlier identification of malfunctioning

emissions control equipment.

4. Cold CO Testing

EPA has issued new low temperature carbon monoxide testing

requirements which will apply to all MY 1996 and later model year

passenger cars and light trucks, but EPA believes that the requirements

will not result in any fuel economy loss and may actually result in a

slight fuel economy benefit.

5. Enhanced Evaporative Testing Requirements

EPA has recently issued enhanced evaporative emissions standards.

Any negative impact on fuel economy (due to increased weights of

upgraded evaporative emissions control system) would be very slight.

EPA estimates that larger evaporative canisters, vapor lines, and purge

valves will add an average of 2.9 pounds to the weight of a light duty

truck. Using NHTSA's secondary weight multiplier of 1.7, this would

mean a total increase of 4.9 pounds, which would reduce fuel economy by

approximately 0.017 mpg. However, this requirement only applies to 20

percent of MY 1996 vehicles and 40 percent of MY 1997 vehicles, so the

total respective fuel economy penalties would not be greater than 0.003

mpg and 0.007 mpg. EPA, however, expects offsetting fuel economy

benefits, which it has not yet quantified.

6. Section 177 States

The term ``Section 177 States'' refers to states which voluntarily

adopt the more stringent California emissions standards. At this time,

Massachusetts, Maine, Maryland, New York, and other Northeastern and

Mid-Atlantic states have either passed legislation to adopt the

California emissions standards during the mid-1990s, or are considering

enacting such legislation. However, there are ongoing legal challenges

to adoption of the California emissions standards. NHTSA has not

received any data showing any impact on MYs 1996-97 light truck fuel

economy capabilities as a result of states other than California

adopting the California emissions standards.

7. Fuels or Fuel Additives Such as Reformulated Gasoline and MMT

EPA has not proposed any changes in the current certification test

fuel, so NHTSA does not expect any fuel economy impact for MYs 1996-97

light trucks.

NHTSA has not made any adjustments to the manufacturers' CAFE

projections to account for any impacts of changing emissions standards

during MYs 1996-97. The agency notes that Ford appears to be the only

manufacturer that explicitly included a potential fuel economy loss (an

average of 0.3 mpg) in its MYs 1996-97 CAFE projection. Since Ford is

not the ``least capable'' manufacturer and NHTSA is not basing the

selection of the MYs 1996-97 light truck CAFE standard primarily on

Ford's capability, it is unnecessary to resolve whether Ford's

capability should be adjusted upward because of Ford's inclusion of

this estimated fuel economy loss in its projection.

C. Test Weight for Light Trucks Over 6,000 Pounds GVWR

The CAAA require that, beginning with MY 1996, many light trucks

over 6,000 pounds GVWR be tested, for emissions purposes, at the

average of curb weight and GVWR. This requirement applies to one-half

the ``over 6,000 pound'' fleet in MY 1996 and all of this fleet in MY

1997. Previously, test weights were determined based on ``loaded

vehicle weight,'' (LVW) which is defined as curb weight plus 300

pounds. Loaded vehicle weight has been the sole basis used to calculate

``equivalent test weight,'' which is the weight used for dynamometer

testing. EPA has defined the average of vehicle curb weight and GVWR to

be ``adjusted loaded vehicle weight'' (ALVW) (see 56 FR 25739), which

will be used as the basis for determining equivalent test weight for

emission testing of the ``over 6,000 pound'' test fleet described

above. ALVW is higher than the LVW, and if light trucks are tested at

ALVW, there will be a loss in the estimated fuel economy.

The CAAA do not require fuel economy testing to be performed at

ALVW. However, because exhaust emissions testing must be done at ALVW

for light trucks over 6,000 pounds GVWR, use of a different test weight

system for fuel economy could require manufacturers and EPA (when

conducting confirmatory tests) to test each of these trucks twice: once

at its ``equivalent test weight'' based on LVW for fuel economy

purposes and once based on ALVW for exhaust emissions purposes. Another

approach would be for EPA to mandate that trucks over 6,000 pounds GVWR

be fuel economy tested at ALVW and for NHTSA to consider any resulting

deleterious fuel economy effect in establishing CAFE standards for the

affected model years. A third approach would be to have a manufacturer-

specific test procedure adjustment to account for the proportion of its

fleet affected by this requirement.

Domestic auto manufacturers have pointed out that testing at the

higher weights would have a negative fuel economy impact. Using MY 1992

data, GM claimed a potential impact in MY 1997 of at least 0.5 mpg.

Ford estimated a possible loss in MY 1997 of 0.2-0.3 mpg. Chrysler did

not give a specific number but agreed that fuel economy would be

lowered. Import manufacturers are unlikely to have any significant

penalty from this test procedure change because they produce few, if

any, light trucks with a GVWR exceeding 6,000 pounds.

In a letter dated February 18, 1992, EPA stated that NHTSA should

set CAFE standards with the heavier test weight in mind and stated that

dual testing would entail increased expenses. EPA also noted that EPCA

requires integrated fuel economy and emissions testing, although this

requirement is limited by the language ``to the extent practicable.''

After the EPA letter was sent, MVMA (now AAMA) indicated to EPA

that requiring the heavier test weight would also increase testing

expenses, by forcing separate fuel economy tests for light trucks above

and below 6,000 pounds GVWR. In addition, MVMA raised concerns that

changing the basis for determining fuel economy on only a portion of

the light truck fleet (i.e., those above 6,000 pounds GVWR) would cause

consumer confusion and affect the competitiveness of manufacturers with

a higher proportion of the sales of the heavier light trucks.

In the NPRM, NHTSA requested comments on the appropriate means of

handling this issue in the context of setting the MY 1995-97 light

truck fuel economy standards. The agency stated that if EPA mandates

fuel economy testing at ALVW, NHTSA would account for the impacts of

this testing in establishing light truck fuel economy standards.

In January 7, 1993 letters to AAMA and AIAM, EPA stated,

Manufacturers should be aware of the NHTSA proposed rule on

light truck average fuel economy standards * * * Included in the

proposal is a request for comments on the consequences of performing

fuel economy testing for heavy light-duty trucks under two different

equivalent test weight approaches. The EPA will consider all

relevant comments made during the NHTSA proposal comment period when

developing an EPA guidance document or rulemaking on this subject.

* * * The EPA plans to defer to NHTSA's policy decisions on

issues such as the competitiveness effects of the alternatives. Once

NHTSA determines the desirable CAFE solution and puts it into place,

the EPA will follow with conforming amendments to either its

regulations or policy as required.

In commenting on the NPRM, GM, Ford, Chrysler, AAMA and Rover Group

all supported the continuation of fuel economy testing at LVW. AAMA's

comment was typical, ``Retention of the LVW criteria will avoid

needless test and CAFE data base complexities, avoid added customer

confusion when comparing fuel economy labels and avoid creation of

unrealistic competitive fuel economy rating differences.''

After considering the comments on the new emissions test procedure

requirements, NHTSA has concluded that the simplest and most equitable

procedure for both manufacturers and the Federal government is to

continue fuel economy certification using LVW values for all classes of

vehicles. NHTSA has informed EPA of its decision and, in a March 4,

1993 letter to NHTSA, EPA agreed to abide by NHTSA's decision and

stated that it would undertake ``the regulatory and guidance revisions

needed to allow dual testing.''

D. Phase-Out of Chlorofluorocarbons

Under terms of the international Montreal Protocol, the United

States and other industrialized nations have agreed to halt production

of chlorofluorocarbons (CFCs) by the year 2000. In February 1992,

President Bush announced that the United States would phase out

production by the end of 1995.

Both Ford and General Motors identified weight penalties for

eliminating the use of CFCs in their vehicles' air conditioning systems

of seven pounds or less for each MY 1995-97. NHTSA estimated that these

weight additions could result in an average fuel economy penalty of

0.02 mpg. These weight effects are included in the manufacturers' fuel

economy projections.

V. Domestic/Import Fleet Distinction

In the NPRM, NHTSA proposed to eliminate the requirement that

captive imports and other light trucks be required to meet light truck

CAFE standards separately. This requirement has been in effect since MY

1980 (see 42 FR 63184, Federal Register, December 15, 1977). At the

time the agency introduced these separate categories, it believed that

the division would prevent light truck CAFE standards from acting as an

incentive for the domestic manufacturers to increase the numbers of

captive import vehicles in their fleets.

Over the past decade, however, the captive import sector of the

fleet has become insignificant. Whereas in 1980, captive imports

accounted for 14.7 percent of the overall light truck market, in 1992

they made up less than 0.5 percent of that market. GM and Ford no

longer have any captive import light trucks. Chrysler's captive import

fleet consisted, for MY 1993, of only about 6,000 vehicles (compact

pickups produced in Japan by Mitsubishi). Given the changes in market

conditions, NHTSA tentatively concluded in the NPRM that there is no

need or reason to continue to maintain the separate categories. While

the Act specifies a similar two-fleet rule for passenger automobiles,

it does not require the agency to provide similar treatment to light

trucks.

In their comments to the NPRM, the domestic manufacturers and the

AAMA supported elimination of the captive import category. The agency

did not receive any other comments that addressed the issue.

For the reasons discussed above and in the NPRM, and in light of

the comments, beginning in MY 1996, the agency will no longer require

light trucks to meet the CAFE standard separately, based on whether

they are captive imports. A new Table IV is being added to the

regulatory text, which indicates a single CAFE standard for all light

trucks without category distinctions.

Since CAFE credits cannot ordinarily be applied across classes of

light trucks, the agency proposed a method of accommodating the 3-year

carryforward and carryback of credits for light trucks after the

elimination of the two-fleet requirement. Only Chrysler commented on

the proposal, stating that it agreed with the agency. No other comments

addressed the issue.

The manner in which NHTSA will allow CAFE credits to be carried

forward or backward once the captive import and other fleets are

combined is the same as that used by the agency during the transition

from 2WD and 4WD standards for MYs 1980-81 to optional combined

standards for MY 1982 and later (45 FR 83233, December 18, 1990), as

well as the subsequent termination of any 2WD/4WD option in favor of a

single combined standard for all configurations in MY 1992 (55 FR

12487, April 4, 1990). For MY's 1993-95, a manufacturer's captive

import and other light truck credits can be applied to offset

shortfalls in the combined fleet incurred up to three model years later

(i.e., MYs 1996-98). If, on the other hand, a manufacturer wished to

use credits earned in the three years after elimination of the two-

fleet requirement to offset a shortfall incurred between MY 1993 and MY

1995, the manufacturer would have to separate its MYs 1996-98 CAFE

credits into ``captive import'' and ``other'' components based on each

fraction of the fleet's share of total production.

NHTSA notes that it does not foresee any manufacturer making use of

carryforward or carryback credits for captive imports, however. As

mentioned above, in the relevant years, only Chrysler has had even a

minimal number of captive imports, and it has not needed to use any

credits during that time. Nor does the agency expect any manufacturer

to establish a captive import fleet in the MY 1996-98 timeframe.

VI. The Need of the Nation To Conserve Energy

The United States imported 15 percent of its oil needs in 1955. The

import share reached 36.8 percent in 1975, the year EPCA was passed,

and peaked at 46.4 percent in 1977, at a cost of $91 billion (stated in

1992 dollars). Although the share declined to below 30 percent in the

mid-1980's, lately the United States has again become increasingly

dependent on imported oil. Over 40 percent of the country's petroleum

needs have been imported in every year since 1988. In 1992, imports

totaled 43.6 percent. Sharply lower oil prices in the past decade,

however, cut the value of oil imports to $50.5 billion in 1992.

Similarly, the percentage of imported oil purchased from OPEC

sources, which peaked at 70 percent in 1977, and declined to a low of

36 percent in 1985, has been steadily rising since then, and has been

over 50 percent every year since 1989.

The average cost of crude oil imports jumped from $4.08 per barrel

in 1973 to $12.52 in 1974 as a result of the oil embargo against

selected countries, including the United States, by Arab members of

OPEC. Additional increases in the cost of oil occurred in 1979-80, due

to unrest in Iran (which eliminated a substantial portion of that

country's oil output), and in 1980-81, when the outbreak of the Iran-

Iraq war reduced supply from the area. In 1981, the United States

adopted a policy of reliance on market forces and decontrolled the

price of oil. Since 1981, prices have fallen as conservation efforts

continue. In 1990-91, petroleum prices were affected by the conflict in

the Persian Gulf. In the beginning of 1992, the continued worldwide

economic recession and high levels of crude oil production by OPEC

member countries together held down oil prices. The average refiner

acquisition cost of imported crude oil in 1992 was $17.75 per barrel,

which was 4.2 percent below the average 1991 level (in 1992 dollars).

The current energy situation and emerging trends point to the

continued importance of oil conservation. The United States now imports

a higher percentage of its oil needs than it did during 1975, the year

EPCA was passed, and the percentage of its oil supplied by OPEC is

similar to that of 1975. Oil continues to account for over 40 percent

of all energy used in the United States, and 97 percent of the energy

consumed in the transportation sector. Despite legislation such as the

Clean Air Act Amendments of 1990 and California's strict ``clean fuel''

and emissions standards, gasoline will likely remain the predominant

fuel in the transportation sector. Domestic oil production has declined

steadily since reaching a peak of 10.6 million barrels per day in 1985

and dropping to 9.0 million barrels per day in 1992. Domestic

production is expected to continue declining by roughly 200,000 barrels

per day each year through the year 2000. While the United States is

currently the world's second largest oil producer, it contains only

about three percent of the world's known oil reserves. Persian Gulf

countries contain 63 percent of known world reserves, and former

communist countries contain 9 percent.

Long-term projections of petroleum prices, supply, and demand are

now influenced by a wide range of uncertainties associated with

sweeping economic and political changes in the former U.S.S.R. and in

Eastern Europe, environmental issues, and the role of Middle East

countries in determining the world's future oil supplies and prices,

and future energy demands in populous developing countries. The

Department of Energy projects that oil prices will be between $14 and

$30 (1992 dollars) per barrel in the year 2000, and will rise to

between $19 and $39 per barrel by 2010. DOE projects a continuing

decline in domestic oil production to between 3.54 and 6.73 million

barrels per day in 2010, with imports rising to between 52 percent and

72 percent of total use.

The level of petroleum imports is only one aspect of the total

energy conservation picture. Under EPCA and NEPA, for example, national

security, energy independence, resource conservation, and environmental

protection must all be considered.

In March 1987, the Department of Energy submitted a report to the

President entitled ``Energy Security.'' NHTSA believes that the

following quotation from that report continues to represent a useful

summary of the national security and energy independence aspects of the

current energy situation:

Although dependence on insecure oil supplies is * * * projected

to grow, energy security depends in part on the ability of importing

nations to respond to oil supply disruptions; and this is improving.

The decontrol of oil prices in the United States, as well as similar

moves in other countries, has made economies more adaptable to

changing situations. Furthermore, the large strategic oil reserves

that have been established in the United States (and to a lesser

extent, in other major oil-importing nations) will make it possible

to respond far more effectively to any future disruptions than has

been the case in the past.

The current world energy situation and the outlook for the

future include both opportunities and risks. The oil price drop of

1986 showed how consumers can be helped by a more competitive oil

market. If adequate supplies of oil and other energy resources

continue to be available at reasonable prices, this will provide a

boost to a world economy. At the same time, the projected increase

in reliance on relatively few oil suppliers implies certain risks

for the United States and the free world. These risks can be

summarized as follows: If a small group of leading oil producers can

dominate the world's energy markets, this could result in

artificially high prices (or just sharp upward and downward price

swings), which would necessitate difficult economic adjustments and

cause hardships to all consumers.

Revolutions, regional wars, or aggression from outside powers

could disrupt a large volume of oil supplies from the Persian Gulf,

inflicting severe damage on the economies of the United States and

allied nations. Oil price increases precipitated by the 1978-79

Iranian revolution contributed to the largest recession since the

1930's. Similar or larger events in the future could have far-

reaching economic, geopolitical, or even military implications.

Based on the above, NHTSA concludes that there is a continuing need

for the nation to conserve energy.

The increase in market share of light trucks points to the need for

enhanced fuel economy for this class of vehicle. Light trucks are less

fuel efficient and are driven more miles over their lifetime than

passenger automobiles. Currently, more than half of the energy in the

transportation sector is used by light-duty vehicles (automobiles and

light trucks). Light trucks have steadily increased their share of

petroleum use in the transportation sector. In 1973, light trucks

accounted for approximately 12 percent of transportation petroleum use,

a figure which increased to roughly 20 percent by 1991.

Light trucks meeting the MYs 1996-97 standard will be more fuel-

efficient than the average vehicle in the current light truck fleet in

service, thus making a positive contribution to petroleum conservation.

VII. Determining the Maximum Feasible Average Fuel Economy Level

As discussed above, section 502(b) requires that light truck fuel

economy standards be set at the maximum feasible average fuel economy

level. In making this determination, the agency must consider the four

factors of section 502(e): technological feasibility, economic

practicability, the effect of other Federal motor vehicle standards on

fuel economy, and the need of the nation to conserve energy.

A. Interpretation of ``Feasible''

Based on definitions and judicial interpretations of similar

language in other statutes, the agency has in the past interpreted

``feasible'' to refer to whether something is capable of being done.

The agency has thus concluded in the past that a standard set at the

maximum feasible average fuel economy level must: (1) Be capable of

being done and (2) be at the highest level that is capable of being

done, taking account of what manufacturers are able to do in light of

technological feasibility, economic practicability, how other Federal

motor vehicle standards affect average fuel economy, and the need of

the nation to conserve energy.

B. Industry-wide Considerations

The statute does not expressly state whether the concept of

feasibility is to be determined on a manufacturer-by-manufacturer basis

or on an industry-wide basis. Legislative history may be used as an

indication of congressional intent in resolving ambiguities in

statutory language. The agency believes that the below-quoted language

provides guidance on the meaning of ``maximum feasible average fuel

economy level.''

The Conference Report to the 1975 Act (S. Rep. No. 94-516, 94th

Cong., 1st Sess. 154-55 (1975)) states:

Such determination [of maximum feasible average fuel economy

level] should take industry-wide considerations into account. For

example, a determination of maximum feasible average fuel economy

should not be keyed to the single manufacturer which might have the

most difficulty achieving a given level of average fuel economy.

Rather, the Secretary must weigh the benefits to the nation of a

higher average fuel economy standard against the difficulties of

individual manufacturers. Such difficulties, however, should be

given appropriate weight in setting the standard in light of the

small number of domestic manufacturers that currently exist and the

possible implications for the national economy and for reduced

competition association [sic] with a severe strain on any

manufacturer * * *.

It is clear from the Conference Report that Congress did not intend

that standards simply be set at the level of the least capable

manufacturer. Rather, NHTSA must take industry-wide considerations into

account in determining the maximum feasible average fuel economy level.

NHTSA has traditionally set light truck standards at a level that

can be achieved by manufacturers whose vehicles constitute a

substantial share of the market. The agency did set the MY 1982 light

truck fuel economy standards at a level which it recognized might be

above the maximum feasible fuel economy capability of Chrysler, based

on the conclusion that the energy benefits associated with the higher

standard would outweigh the harm to Chrysler. 45 FR 20871, 20876, March

31, 1980. However, as the agency noted in deciding not to set the MYs

1983-85 light truck standards above Ford's level of capability,

Chrysler had only 10-15 percent of the light truck domestic sales,

while Ford had about 35 percent. 45 FR 81593, 81599, December 11, 1980.

C. Petroleum Consumption

The energy savings that could result from the MYs 1996-97 standard

can be illustrated by considering the potential effects of a standard

set at different levels. Since Ford and Chrysler project CAFE levels

for both MY 1996 and 1997 above 20.7 mpg, a standard set at 20.7 mpg

would not likely have any effect on those companies. Since GM currently

projects a CAFE level of 20.5 mpg for both model years, a standard set

at 20.7 mpg, the level NHTSA has determined to be GM's capability,

would encourage it to achieve a higher CAFE level. If a 20.7 mpg

standard resulted in GM achieving a CAFE level 0.2 mpg above its

current projection, there would be a savings of 102 million gallons of

gasoline over the lifetime of GM's fleet for each model year. (This

assumes GM would sell the same number of light trucks in MY 1996 and MY

1997 as it did in MY 1993.)

The potential savings associated with a MY 1996-97 standard above

20.7 mpg are highly uncertain. Assume, for example, that a standard

could be set at 21.2 mpg, 0.5 mpg above GM's capability for both model

years and 0.4 mpg above Chrysler's capability for MY 1996 and 0.2 mpg

above its capability for MY 1997. Since Ford projects CAFE levels of

21.1 mpg and 21.6 mpg for MY 1996-97, such standards would likely have

little or no impact on that company. GM and Chrysler could likely meet

the levels of the standards only by restricting the sales of their

large light trucks. If this occurred, consumers might tend to keep

their older, less-fuel efficient light trucks in service longer. Also,

consumers might purchase still larger trucks that are not subject to

CAFE standards. Therefore, the agency believes that any additional

energy savings associated with alternative higher fuel economy

standards above 20.7 mpg (the level the agency has determined to be

GM's capability) would be uncertain and speculative.

D. The MYs 1996-97 Standard

Based on its analysis described above and on manufacturers'

projections, the agency concludes that the major domestic manufacturers

can achieve the light truck fuel economy levels listed in the following

table:

------------------------------------------------------------------------

Approximate CAFE (mpg)

market share -------------

Manufacturer (percent,

based on MY MY MY

1993) 1996 1997

------------------------------------------------------------------------

GM........................................ 30 20.7 20.7

Ford...................................... 31 21.2 21.6

Chrysler.................................. 23 20.8 21.0

------------------------------------------------------------------------

As indicated above, most light truck manufacturers other than GM,

Ford and Chrysler only compete in the small vehicle portion of the

light truck market and are therefore expected to achieve CAFE levels

well above those companies. Only three light truck manufacturers, Range

Rover, PAS and UMC, are expected to have fuel economy levels lower than

the major domestic manufacturers. Since these companies have an

extremely small market share, NHTSA concludes that setting a standard

based on their capabilities would be inconsistent with a determination

of maximum feasibility that takes industry-wide considerations into

account, as required by statute.

As indicated above, NHTSA has concluded that GM is the least

capable manufacturer with a substantial share of sales for MYs 1996-97.

NHTSA also concludes that 20.7 mpg is the maximum feasible standard for

both MYs 1996 and 1997. For the reasons discussed below, this level

balances the potential petroleum savings associated with a higher

standard against the difficulties of manufacturers facing a potentially

higher standard.

The agency believes that a 20.7 mpg light truck CAFE standard for

MYs 1996-97 will make a positive contribution to petroleum conservation

by encouraging GM, which has a large market share, to achieve a higher

CAFE level than it currently projects while remaining within its fuel

economy capability. The agency notes that a 20.7 mpg standard is 0.2

mpg higher than GM's current MYs 1996-97 CAFE projection.

A 20.7 mpg standard will not unduly restrict consumer choice or

have adverse economic impacts on the large domestic manufacturers. The

current product plans of Ford and Chrysler indicate that they expect to

achieve MYs 1996-97 CAFE levels that are above 20.7 mpg. Therefore,

they will not have to make any changes in their product plans to

achieve the level of the standard.

While GM's current product plan shows expected MYs 1996-97 CAFEs of

20.5 mpg in each model year, NHTSA's analysis indicates that company

can achieve a CAFE of 20.7 mpg in both years. As discussed above, this

conclusion is based on the following assumptions: (1) The 4WD share of

the market will not significantly increase between now and MYs 1996-97,

(2) GM will make successful efforts to maintain market share of certain

vehicles, (3) GM can make minor changes in the performance levels of

its vehicles to bring them more in line with its competitors, and (4)

GM can make small improvements by increasing the penetration of some

engine and transmission technology improvements that are not projected

for full implementation. All of these actions are very minor and, the

agency believes, within GM's capability.

NHTSA believes that a higher standard than 20.7 mpg for MYs 1996-97

could result in serious economic difficulties for GM. While GM can

achieve 20.7 mpg CAFE without significant product restrictions, such

restrictions could be required to achieve a CAFE higher than 20.7 mpg.

Given leadtime constraints, NHTSA believes that the first potential

fuel-efficiency actions that GM or any other manufacturer would

consider in response to a higher standard would consist of marketing

actions. For the reasons discussed in other notices, however, the

agency does not believe that marketing actions can be relied upon to

significantly improve a manufacturer's CAFE. See, e.g., MY 1993-94

light truck CAFE final rule (56 FR 13775, April 4, 1991). If such

marketing actions were unsuccessful in whole or in part, GM would

likely have to engage in significant product restrictions to achieve

the level of a higher CAFE standard. Such product restrictions could

result in adverse economic consequences for GM, its employees and the

economy as a whole and limit consumer choice, especially with regard to

the load-carrying needs of light truck purchasers.

As indicated above, while NHTSA has concluded that GM is the least

capable manufacturer with a substantial share of sales, the agency

believes that GM's capability is not significantly below that of

Chrysler. GM and Chrysler, combined, sell over 50 percent of all new

light trucks each model year. Therefore, even if the agency were to set

a standard above GM's capability, the standard could not be much above

20.7 mpg and still remain within the capability of the majority of the

industry.

NHTSA believes that the 20.7 mpg standard balances the potentially

serious adverse economic consequences for GM that could result from a

higher standard with the potential for increased petroleum savings. The

agency concludes, in view of the statutory requirement to consider

specified factors, that the relatively small and uncertain energy

savings associated with setting a standard above GM's capability would

not justify the potential harm to that company and the economy as a

whole.

Consumer Alert and CEI requested that NHTSA consider the safety

effects of its decision. Those commenters stated that the agency should

not in any way avoid analyzing the potential safety consequences of a

decision to increase the CAFE standards for light trucks. Consumer

Alert and CEI cited the record of NHTSA's rulemaking concerning the MY

1990 passenger car CAFE standard, although they recognized that the

safety consequences of a decision to raise the CAFE standard for light

trucks may differ somewhat.

In the context of passenger car CAFE standards, NHTSA has

recognized that CAFE standards could adversely affect safety to the

extent that they result in significant reductions in car size and/or

weight. This issue was discussed at length in the agency's notice

terminating rulemaking on the MY 1990 passenger car CAFE standard (see

58 FR 6939, February 3, 1993).

An analysis of the extent to which significantly higher light truck

CAFE standards could affect safety is more complex than for passenger

car standards, since purchasers would have many more options for

substitution (e.g., different kinds of light trucks, trucks with a high

enough GVWR that they are not subject to CAFE standards, etc.) The

agency notes that since light trucks are generally significantly larger

and heavier than passenger cars, any safety effects of a particular

weight reduction would likely be smaller than for cars.

While NHTSA recognizes that significantly higher light truck CAFE

standards could adversely affect safety, to the extent that they

resulted in significant reductions in light truck size and/or weight,

the available evidence indicates that MYs 1996-97 standard of 20.7 mpg

will not have any impact on safety. NHTSA notes that, in setting the

light truck CAFE standards for recent model years, the agency did not

include in its analyses of manufacturer capabilities any product plan

actions that would significantly affect the weight, size or cost of the

vehicles the manufacturers planned to offer. The agency also notes that

the average equivalent test weight of light trucks has increased from

3,805 pounds in MY 1984 to 4,169 pounds in MY 1992. Therefore, NHTSA

believes that CAFE standards during this period have not had any

measurable effect on light truck weight or size.

The agency also notes that the levels of the light truck CAFE

standards have not varied significantly for more than a decade. The

light truck CAFE standards for MY 1987-89 and MY 1994 were set at 20.5

mpg, and, as far back as MY 1984, the standard was 20.0 mpg.

NHTSA therefore believes that the size and weight of current and

planned light trucks are not significantly different from what would

have occurred in the absence of CAFE standards. As discussed above,

Ford and Chrysler will exceed the level of the 20.7 mpg standard for

MYs 1996-97 without making any changes in their product plans. While GM

will need to make some changes in its product plan to achieve a CAFE of

20.7 mpg, the agency does not believe that it is necessary, or likely,

for that company to take actions that would have any adverse effect on

safety, in order to achieve that CAFE level.

As indicated above, in determining that GM can achieve MYs 1996-97

CAFE levels of 20.7 mpg, NHTSA adjusted GM's projected CAFE level of

20.5 mpg based on several factors. First, the agency adjusted it upward

to reflect more realistic mix assumptions with respect to 4WD market

share and maintaining market share of certain more fuel-efficient

vehicles. Since this adjustment simply reflects the agency's judgment

of what GM is likely to be able to sell, based on historical

experience, the adjustment does not induce or compel any actions with

safety implications.

NHTSA also concluded that GM can improve its projected MYs 1996-97

CAFE by a slight reduction in vehicle performance. This would involve

changes in such things as axle ratios. The agency believes that a

slight reduction in performance would not have any adverse safety

consequences.

Finally, the agency concluded that GM could improve its MYs 1996-97

CAFE by increasing the penetration of some engine and transmission

technology improvements that are not projected for full implementation.

This action would not result in reduced vehicle weight.

Since the 20.7 mpg light truck CAFE standard for MYs 1996-97 will

not lead to significant reductions in light truck size or weight, or

shifts toward less safe vehicles, the agency concludes that it is not

likely to have any impact on safety.

VIII. Rulemaking Analyses and Notices

A. Economic Impacts

The agency has considered the economic implications of the standard

for MYs 1996-97 and determined that it is significant within the

meaning of Executive Order 12866, and significant within the meaning of

the Department's regulatory procedures. This rulemaking was reviewed

under Executive Order 12866. The agency's detailed analysis of the

economic effects is set forth in a Regulatory Evaluation, copies of

which are available from the Docket Section. The contents of that

analysis are generally described above.

B. National Environmental Policy Act

The agency has analyzed the environmental impacts of the MY 1996-97

light truck average fuel economy standard in accordance with the

National Environmental Policy Act, 42 U.S.C. 4321 et seq. Copies of the

Environmental Assessment are available from the Docket Section. The

agency has concluded that no significant environmental impact will

result from this rulemaking action.

C. Regulatory Flexibility Act

Pursuant to the Regulatory Flexibility Act, the agency has

considered the impact 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. No light truck

manufacturer subject to the standard will be classified as a ``small

business'' under the Regulatory Flexibility Act. In the case of other

small businesses, small organizations, and small governmental units

which purchase light trucks, the standard will not affect the

availability of the full range of light trucks or have a significant

effect on the overall cost of purchasing and operating light trucks.

D. Executive Order 12612 (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 MYs 1996-97 standard will not have sufficient Federalism

implications to warrant the preparation of a Federalism Assessment.

E. Civil Justice Reform

This final rule will not have any retroactive effect. Under section

509(a) of the Motor Vehicle Information and Cost Savings Act (the Cost

Savings Act; 15 U.S.C. 2009(a)), whenever a Federal motor vehicle fuel

economy standard is in effect, a state may not adopt or enforce any law

or regulation relating to fuel economy standards or average fuel

economy standards applicable to vehicles covered by the Federal

standard. Under section 509(b) of the Cost Savings Act (15 U.S.C.

2009(b)) a state may not require fuel economy labels on vehicles

covered by section 506 of the Cost Savings Act (15 U.S.C. 2006) which

are not identical to the Federal standard. Section 509 does not apply

to vehicles procured for the State's use. Section 504 of the Cost

Savings 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.

F. Department of Energy Review

In accordance with section 502(j) of the Act, NHTSA submitted a

pre-publication copy of this rule to the Department of Energy for

review. The Department made no unaccomodated comments.

List of Subjects in 49 CFR Part 533

Energy conservation, Motor vehicles.

PART 533--[AMENDED]

In consideration of the foregoing, 49 CFR part 533 is amended as

follows:

1. The authority citation for part 533 continues to read as

follows:

Authority: 15 U.S.C. 2002; delegation of authority at 49 CFR

1.50.

2. Section 533.5(a) is amended by adding Table IV immediately

following Table III to read as follows:

Sec. 533.5 Requirements.

* * * * *

Table IV

------------------------------------------------------------------------

Model year Standard

------------------------------------------------------------------------

1996....................................................... 20.7

1997....................................................... 20.7

------------------------------------------------------------------------

* * * * *

Issued: March 31, 1994.

Christopher A. Hart,

Deputy Administrator.

[FR Doc. 94-8133 Filed 3-31-94; 4:00 pm]

BILLING CODE 4910-59-P