Minimum Driving Range for Dual Fueled Electric Passenger Automobiles

DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Part 538

[Docket No. NHTSA-98-3429]

RIN 2127-AF37

Minimum Driving Range for Dual Fueled Electric Passenger

Automobiles

AGENCY: National Highway Traffic Safety Administration (NHTSA),

Department of Transportation (DOT).

ACTION: Final rule.

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SUMMARY: This rule establishes a minimum driving range of 7.5 miles for

dual fueled electric passenger automobiles, otherwise known as hybrid

electric vehicles (HEVs), when operating on the EPA urban cycle and a

minimum driving range of 10.2 miles on the EPA highway cycle. The

purpose of establishing the range is to meet statutory requirements

intended to encourage the production of HEVs. An HEV which meets the

range would qualify to have its fuel economy calculated according to a

special procedure that would facilitate the efforts of its manufacturer

to comply with the corporate average fuel economy standards.

DATES: This final rule is effective February 1, 1999. Petitions for

reconsideration must be submitted by January 16, 1999.

ADDRESSES: Petitions for reconsideration should be submitted to the

Administrator, National Highway Traffic Safety Administration, 400

Seventh Street, SW., Washington, DC 20590.

FOR FURTHER INFORMATION CONTACT: Mr. P.L. Moore, Motor Vehicle

Requirements Division, Office of Market Incentives, National Highway

Traffic Safety Administration, 400 Seventh Street SW, Washington, DC

20590, (202) 366-5222.

SUPPLEMENTARY INFORMATION:

I. Background

A. Alternative Motor Fuels Act of 1988

Section 6 of the Alternative Motor Fuels Act of 1988 amended the

fuel economy provisions of the Motor Vehicle Information and Cost

Savings Act (Cost Savings Act) by adding a new section 513,

``Manufacturing Incentives for Automobiles.'' Section 513 contained

incentives for the manufacture of vehicles designed to operate on

alcohol or natural gas, including dual fuel vehicles, i.e., vehicles

capable of operating on one of those alternative fuels and either

gasoline or diesel fuel.

Section 513 provided that dual fuel vehicles meeting specified

criteria qualify for special treatment in the calculation of their fuel

economy for purposes of the corporate average fuel economy (CAFE)

standards. The fuel economy of a qualifying vehicle is calculated in a

manner that results in a relatively high fuel economy value, thus

encouraging its production as a way of facilitating a manufacturer's

compliance with the CAFE standards. One of the qualifying criteria for

passenger automobiles was to meet a minimum driving range, which was to

be established by NHTSA.

NHTSA was required to establish two minimum driving ranges, one for

``dual energy'' (alcohol/gasoline or diesel fuel) passenger automobiles

when operating on alcohol, and the other for ``natural gas dual

energy'' (natural gas/gasoline or diesel fuel) passenger automobiles

when operating on natural gas. In establishing the driving ranges,

NHTSA was to consider the purposes of the Alternative Motor Fuels Act,

consumer acceptability, economic practicability, technology,

environmental impact, safety, driveability, performance, and any other

factors deemed relevant.

The Alternative Motor Fuels Act and its legislative history made it

clear that the driving ranges were to be low enough to encourage the

production of dual fuel passenger automobiles, yet not so low that

motorists would be discouraged by a low driving range from actually

fueling their vehicles with the alternative fuels.

B. Energy Policy Act of 1992

The Energy Policy Act of 1992 amended section 513 of the Cost

Savings Act to expand the scope of the alternative fuels it promotes.

The amended section provided incentives for the production of vehicles

using, in addition to alcohol and natural gas, liquified petroleum gas,

hydrogen, coal derived liquid fuels, fuels (other than alcohol) derived

from biological materials, electricity (including electricity from

solar energy), and any fuel NHTSA determines, by rule, is substantially

not petroleum and would yield substantial energy security benefits and

substantial environmental benefits.

Section 513 continued to provide incentives for the production of

dual fuel vehicles, i.e., vehicles that operate on one of a now

expanded list of alternative fuels, including electricity, and on

gasoline or diesel fuel. NHTSA notes that some statutory terminology

was changed by the 1992 amendments. Among other things, the terms

``dual energy'' and ``natural gas dual energy'' were dropped, and the

terms ``alternative fueled automobile,'' ``dedicated automobile,'' and

``dual fueled automobile'' were added.

Section 513 also continued to require dual fueled passenger

automobiles to meet specified criteria, including meeting a minimum

driving range, in order to qualify for the special treatment in the

calculation of their fuel economy for purposes of the CAFE standards.

The 1992 amendments necessitate amending Part 538. The agency must

establish a minimum driving range for the expanded scope of dual fueled

vehicles. Minimum driving range standards for all dual energy passenger

automobiles except electric vehicles were established by a final rule

issued on March 21, 1996. (61 FR 14507)

On July 5, 1994, the Cost Savings Act was revised and codified

``without substantive change.'' The provisions formerly found in

section 513 of the Cost Savings Act are now at 49 U.S.C. 32901, 32905,

and 32906. In setting the minimum driving range for dual energy

electric passenger automobiles, NHTSA is required by 49 U.S.C.

32901(c)(3) to consider the purposes set forth in section 3 of the

Alternative Motor Fuels Act of 1988 as amended by the 1992 Energy

Policy Act:

(1) To encourage the development and widespread use of methanol,

ethanol, natural gas, other gaseous fuels, and electricity as

transportation fuels by consumers; and

(2) To promote the production of alternatively fueled motor

vehicles.

Section 32901(c)(3) also requires that the agency consider consumer

acceptability, economic practicability, technology, environmental

impact, safety, drivability, performance, and other relevant factors in

setting a minimum driving range.

C. Regulatory Background

To aid the agency in relating the data on driving range for dual

fueled electric vehicles to the unique characteristics of dual fueled

passenger automobiles, NHTSA published a Request for Comments in the

Federal Register (59 FR 48589) on September 22, 1994. In that document,

the agency posed a number of questions on the use of dual fueled

electric passenger automobiles relating to the determination of a

driving range that would serve the purposes of the Alternative Motor

Fuels Act and the Energy Policy Act.

NHTSA published a notice of proposed rulemaking (NPRM) on January

3, 1997 (62 FR 375). Based on

[[Page 66065]]

NHTSA's review of comments in response to the Request for Comments, a

review of current literature, studies of current industry capabilities,

an assessment of the available technology, and existing statutory

requirements, the agency proposed to set the minimum driving range for

HEVs, even though operating solely on electricity, at 17.7 miles--the

range required to complete one EPA urban/highway cycle under the

current Federal Test Procedure (FTP).

The NPRM stated the agency's view that setting a minimum driving

range at 17.7 miles would ensure that HEVs will have sufficient driving

range to meet the needs of consumers while also encouraging HEV

development. NHTSA tentatively concluded that a 17.7 mile minimum range

would not be so stringent as to foreclose the development of vehicles

relying on new technologies or entry into the market without unduly

large expenditures of capital resources. The proposed range was

considered to be sufficient to meet the needs of many vehicle users.

The agency also noted that setting the minimum driving range at 17.7

miles would allow the use of EPA test procedures, where one complete

highway and urban cycle consists of 17.7 miles.

The NPRM also indicated that the proposed minimum driving range

contemplated operation of the vehicle solely on electric power when

some hybrid designs under consideration are full-time hybrids. In these

vehicles, electric and internal combustion engines are designed to

complement each other and may not have sufficient power alone to

adequately propel the vehicle. NHTSA also observed that other designs

in which the vehicle may be operated on electric power alone may not

have sufficient range to meet the proposed 17.7 mile minimum range. The

agency tentatively concluded that calculation of the fuel economy of a

dual fueled automobile under Section 513 of the Cost Savings Act (now

49 U.S.C. 32905) requires that the vehicle be operated solely on the

alternative fuel and, as set forth in 49 U.S.C. 32904(c), have its

energy consumption measured through use of the EPA combined urban and

highway cycle. In the NPRM, NHTSA indicated its tentative view that

this statutory requirement compelled a minimum driving range specifying

electric-only operation for a distance equivalent to one EPA cycle.

D. Hybrid Electric Vehicle Driving Range Requirements

NHTSA received comments regarding driving range proposed in the

NPRM from Toyota, Mercedes Benz, the American Automobile Manufacturers

Association (AAMA) and Jeffrey J. Ronning. In addition, the agency

received comments from the Department of Energy (DOE) in response to a

draft NPRM which NHTSA had forwarded to DOE for review.

Toyota expressed opposition to the proposed 17.7 mile electric-only

minimum driving range. The company stated that such a range will limit

the development of HEVs by forcing increased battery volume. This

increased battery volume, in Toyota's view, would drive up costs and

make HEVs less attractive to consumers. Toyota also indicated that the

proposed range would force an emphasis on the employment of batteries

and electricity in comparison to other configurations in which fuel

powered engines and batteries are used together. Toyota further

suggested that the minimum driving range should be set at zero in order

to promote the maximum development of new technologies.

The American Automobile Manufacturers Association (AAMA) also

suggested that the minimum driving range for HEVs be set at zero

because any other driving range would serve as a disincentive for the

development of HEVs. The AAMA submission argued that the use of an

electric-only mode of operation for measuring driving range would

provide an advantage to vehicles capable of driving on electricity

only. As some hybrid designs would not have this capability but may

also be able to recharge their batteries from an external source, AAMA

contends that a driving range greater than zero would unnecessarily

restrict development of hybrids that would otherwise be eligible for

CAFE incentives. AAMA further suggested that if NHTSA concludes that it

must set a driving range greater than zero, that HEVs with an all

electric range should be required to meet only 7.5 miles on the urban

cycle and 10.2 miles on the highway cycle in two separate tests with

charging allowed prior to each test. For vehicles that do not have the

capability to complete this suggested test cycle on electric power,

AAMA suggested that an alternative test procedure for measuring range

be developed.

Mercedes-Benz also opposed the proposed 17.7 mile minimum driving

range. In its comments, Mercedes advocated that no minimum driving

range be set in the final rule and that doing otherwise would limit the

ability of manufacturers to introduce promising designs and

configurations. Mercedes also agreed with the agency's view that

section 32905 requires that alternative fueled vehicles be operated

solely on an alternative fuel to calculate fuel economy and that 49

U.S.C. Sec. 32904(c) requires the use of a combined urban and highway

cycle that is 55% urban and 45% highway. The company argued, however,

that the selection of the 17.7 mile EPA cycle ignores the provisions in

Sec. 32904(c) allowing fuel economy calculations to be based on

procedures giving comparable results to the EPA cycle. In Mercedes'

view, a fuel economy test comparable to the existing EPA cycle which

does not require a vehicle to travel 17.7 miles could be developed.

Therefore, Mercedes contended that the agency's determination that a

17.7 mile driving range must be used to measure fuel economy was

incorrect. Mercedes also argued that the agency's preliminary finding

that the 17.7 mile range was appropriate for meeting consumer needs and

expectations is unsupported by any facts.

Mr. Jeffrey J. Ronning, an engineer with experience in the

development of automotive electric propulsion systems, supported the

proposed 17.7 mile range. Mr. Ronning indicated that the proposed range

would foster development of ``electric dominant hybrids'' as opposed to

``combustion dominant hybrids.'' Mr. Ronning described ``electric

dominant hybrids'' as vehicles with a battery range of about 70 miles,

which use 1/6th of the petroleum of a conventional vehicle and operate

with zero emissions in urban and local use. Such vehicles, Mr. Ronning

argues, are superior in terms of energy independence, environmental

benefits and technological feasibility.

The Department of Energy (DOE) submitted comments generally

applicable to driving range. DOE noted that it has not specified a

minimum driving range in its HEV development programs. In DOE's view,

electric and conventional power sources employed in HEVs are intended

to complement each other and are often not sized to propel the vehicle

alone. Batteries pose specific difficulties in that they are heavy and

take up large amounts of space. Many HEV designs, according to DOE, use

smaller batteries that are ill suited to the task of providing

propulsion. DOE cautioned that setting a minimum driving range at too

high a level will force the use of larger batteries and limit the

development of alternative technologies.

DOE suggested that, if the legislative scheme made such an option

possible, NHTSA should establish a sliding scale that would set the

minimum driving range in inverse proportion to the fuel economy of an

HEV when compared to

[[Page 66066]]

that of conventional vehicles. Under this scheme, an HEV with fuel

economy three times greater than a conventional vehicle achieving 26.5

mpg would only be required to have a range of 5 miles on electric power

alone. HEVs with fuel economy equivalent to conventional vehicles would

be required to have a range of 35 miles. In DOE's view, such a sliding

scale would reward those designs that achieved the highest fuel economy

while ensuring that maximum flexibility be provided to HEV developers.

DOE also urged NHTSA to consider data showing that a range of 10

miles would satisfy 77 percent of daily vehicle trips in setting a

driving range. Thus, according to DOE, a modest driving range would

satisfy consumer needs.

DOE further suggested that NHTSA consider an alternative test

procedure to the EPA cycle and suggested that the draft Society of

Automotive Engineers (SAE) Hybrid Vehicle Test Procedure (SAE J1711) be

used as a guide to developing such a test. The use of the electric-only

mode of operation for specifying driving range and measuring fuel

economy, in DOE's view, operates on the assumption that an HEV must

``be charged from the grid'' or derive its electrical energy from a

source other than its conventional petroleum fuel engine to qualify for

the incentives contained in Chapter 329. DOE believes that HEVs may not

have this capability and also may be designed so that the operator may

not have control over the mode of operation. Therefore, DOE stated, a

fuel economy test using a single mode of operation may be wholly

inappropriate for HEVs.

II. Analysis of Comments

Hybrid electric vehicle technology is still in its infancy.

Developers of these vehicles are pursuing a variety of configurations,

including vehicles which use both conventional and alternative fuels

simultaneously. A number of HEV designs include vehicles in which the

alternative fuel used (electricity) is generated solely by the

petroleum fueled engine incorporated into the vehicle. These hybrid

designs are not intended to rely on the alternative fuel to propel the

vehicle for an appreciable distance or under all anticipated driving

conditions. Instead, the alternative fuel propulsion system is designed

to either supplement the conventional fuel powerplant or to work in

conjunction with that powerplant when demand for energy is relatively

high.

Two commenters, DOE and AAMA, indicated that the selection of an

electric-only mode of operation for determining driving range is

inconsistent with current developments in HEV technology. DOE noted

that HEVs may not even provide operators with the option of selecting a

particular power source. Instead, the vehicle itself will determine

when to use its conventional or electric propulsion system. AAMA argued

that a dual fueled automobile that uses electricity as one of its fuels

should not be restricted by the requirement that it be capable of

operating only on electricity in order to qualify for CAFE incentives.

The comments of DOE and AAMA raise the issue of whether an HEV that

uses electricity and petroleum fuel simultaneously can qualify for CAFE

incentives under the Cost Savings Act and the subsequent EPACT

amendments. Section 32901(a)(2) defines an alternative fuel vehicle as

either a dedicated vehicle or a dual fueled vehicle. Dedicated vehicles

are defined in Section 32901(a)(7) as automobiles that operate only on

an alternative fuel. Dual fueled vehicles are defined in Section

32901(a)(8) as follows:

(8) ``dual fueled automobile'' means an automobile that--

(A) is capable of operating on alternative fuel and on gasoline

or diesel fuel;

(B) provides equal or superior energy efficiency, as calculated

for the applicable model year during fuel economy testing for the

United States Government, when operating on alternative fuel as when

operating on gasoline or diesel fuel;

(C) for model years 1993-1995 for an automobile capable of

operating on a mixture of an alternative fuel and gasoline or diesel

fuel and if the Administrator of the Environmental Protection Agency

decides to extend the application of this subclause, for an

additional period ending not later than the end of the last model

year to which section 32905(b) and (d) of this title applies,

provides equal or superior energy efficiency, as calculated for the

applicable model year during fuel economy testing for the

Government, when operating on a mixture of alternative fuel and

gasoline or diesel fuel containing exactly 50 percent gasoline or

diesel fuel as when operating on gasoline or diesel fuel; and

(D) for a passenger automobile, meets or exceeds the minimum

driving range prescribed under subsection (c) of this section.

Examination of this Section compels the conclusion that Congress

intended that, for the purposes of Chapter 329's incentive program,

dual fueled vehicles are, with one limited exception, vehicles

operating either on an alternative fuel or a petroleum fuel but not on

a mixture of the two. Subsection (A) describes a vehicle that operates

on a petroleum or alternative fuel but not a mixture of both.

Subsection (B) limits dual fuel vehicles to those vehicles that offer

equal or superior energy efficiency when operating on an alternative

fuel, thereby indicating that the two modes of operation are exclusive.

Subsection (C) indicates that vehicles operating on a mixture of

alternative fuel and gasoline or diesel fuel may only be considered as

dual fueled automobiles for the 1993-1995 model years (unless extended

by the Administrator of the Environmental Protection Agency to the 2004

model year) when such vehicles offer equal or superior energy

efficiency when operating on a 50/50 mix of alternative fuel and diesel

fuel or gasoline. Therefore, the statutory text of Section 32901(A)(8)

indicates that Congress did not intend to make incentives available for

dual fueled vehicles operating on a mix of fuels except under the

limited circumstances enunciated in 32901(a)(8)(C). As the period set

by Congress in which such vehicles could be considered as dual fueled

vehicles has expired and the EPA has not extended this period by

regulation, NHTSA concludes that under Chapter 329 a dual fueled

vehicle is one that is capable of operating on either an alternative

fuel or gasoline or diesel fuel but not a mixture of both

simultaneously.

HEVs that are not capable of operating on electric power alone

cannot, under Chapter 329, be said to be dual fueled vehicles.

Similarly, HEVs capable of operation in an electric-only mode but

incapable of recharging their batteries from an external source are not

dual fueled automobiles; a vehicle which is entirely dependent on a

petroleum fuel for its motive power, regardless of whether electricity

is used in the powertrain, is powered by petroleum. NHTSA concludes,

therefore, that in order to qualify as a dual fueled vehicle under

Chapter 329 an HEV must be capable of electric-only operation and must

have the capability to recharge its batteries from an external source.

Sections 32901(c) and 32905 of Chapter 329 require the Secretary of

Transportation to establish a minimum driving range for dual fueled

passenger automobiles when operating on an alternative fuel. NHTSA does

not agree with those commenters who suggest that the minimum driving

range for HEV's, when operating on electricity alone, be set at zero.

If the agency were to establish a minimum driving range of zero miles

for HEV's, as some commenters suggest, such a driving range would be

inconsistent with the Congressional command that a minimum driving

range be established. While the EPACT amendments expressly relieved

electric powered dual

[[Page 66067]]

fueled passenger automobiles from the 200 mile minimum range

requirement imposed on other dual fuel passenger automobiles, Congress

did not eliminate the range requirement altogether. Setting a minimum

driving range of zero miles would result in a range requirement having

no practical effect. Furthermore, as discussed in the NPRM, an HEV must

be capable of some meaningful operation in the electric-only mode to

allow measurement of its fuel economy when operating on that

alternative fuel.

Mercedes argued against NHTSA's tentative conclusion that the

proposed 17.7 mile range was compelled by sections 32904(c) and 32905.

While agreeing that a combined urban/highway cycle must be used to

determine the fuel economy of an HEV, Mercedes stated that section

32904(c) does not require the use of the established EPA test cycle.

Noting that section 32904(c) enables the Administrator of the EPA to

use an alternative procedure or procedures ``that give comparable

results,'' Mercedes suggests that manufacturers propose an alternative

procedure that gives such comparable results so that HEVs need not have

an electric-only range sufficient to complete one EPA driving cycle.

The agency agrees with Mercedes' contention that section 32904(c)

authorizes the use of a fuel economy test other than the established

EPA test cycle if such an alternative test provides comparable results.

If such an alternative test existed, it might well be used to measure

the fuel economy of HEVs. However, despite the suggestions made by DOE

and Mercedes, the agency has determined that there is no test that is

as yet sufficiently developed to measure the fuel economy of HEV's and

provide comparable results to the existing EPA test. The (SAE) Hybrid

Vehicle Test Procedure (SAE J1711) has been under development for

several years and remains in draft form. The SAE procedure, as it

presently exists, relies on the current EPA urban and highway cycles

and proposes an electric-only mode of operation as one test option. As

Chapter 329 requires that HEVs must be dual fueled vehicles capable of

operation in an electric-only mode to qualify for CAFE incentives, use

of the SAE procedure would not eliminate the need for a passsenger

automobile to travel a minimum distance--equivalent to one EPA urban

cycle and one EPA highway cycle or both--to determine its electric-only

fuel economy.

Mercedes also suggests that in the event that HEVs are unable to

complete the EPA driving cycle that manufacturers be afforded the

opportunity to propose an alternative procedure that gives comparable

results. NHTSA concludes that any test procedure for measuring HEV fuel

economy must be uniform and applicable to all manufacturers. The SAE

test, which is being developed but is not yet final, is an example of a

uniform industry standard. Such a test might possess the uniformity

required to serve as a standard for all vehicles in a certain class.

The SAE test or any other industry developed test would not, however,

necessarily be appropriate for measuring fuel economy for the purposes

of the CAFE incentive program. Lastly, section 32904(c) directs that

fuel economy testing be conducted by the EPA Administrator rather than

the prospective beneficiaries of the incentive program.

The lack of an acceptable test procedure for determining electric-

only fuel economy precludes consideration of the sliding scale minimum

driving range suggested by DOE. Regardless of whether NHTSA has the

authority to set the minimum driving range for HEVs along a range of

values determined by the vehicle's measured fuel economy, the lowest

minimum range suggested by DOE, 5 miles, would not be sufficient to

allow fuel economy testing in the electric-only mode of operation.

NHTSA has concluded that the lack of any available test procedure

other than the existing EPA urban/highway test requires that the

minimum driving range for HEV's be set at a distance that will allow

use of this test. In its comments, AAMA suggested that if a range other

than zero miles is set, an HEV with an electric-only range should be

required to have a range equivalent to 7.5 miles while traveling on the

EPA urban cycle and 10.2 miles while traveling on the EPA highway

cycle, with charging allowed prior to each test. NHTSA concurs with

this view. Setting the minimum driving range at 7.5 miles, or one EPA

urban cycle, for urban driving and 10.2 miles, or one EPA highway

cycle, for highway driving, while allowing the vehicle to recharge

prior to attempting each test, will allow manufacturers maximum

flexibility in developing HEV's while satisfying the considerations set

forth in section 32901(c)(3).

In the agency's view, setting a minimum driving range at 7.5 miles

for urban use and 10.2 miles for highway use will provide incentives

for manufacturers to develop HEVs while ensuring that these vehicles

will meet the basic needs of consumers. According to the 1990 National

Personal Transportation Survey (NPTS), a 6 to 10 mile range would be

adequate for 77% of daily vehicle trips and 32% of daily vehicle miles

traveled. Therefore, even with a range of 10.2 miles or 7.5 miles when

operating on electricity alone, an HEV would be adequate for most of

the daily vehicle trips taken by consumers.

III. Final Rule

The agency is modifying its earlier proposal to establish a minimum

driving range of 17.7 miles for HEVs when operating on electricity

alone. A review of the comments submitted in response to that proposal

indicates that HEV technology has not yet reached a point where

vehicles can attain driving ranges even remotely comparable to those

attainable by other alternative fuel vehicles. The agency is, however,

rejecting the arguments of those commenters seeking to have the minimum

driving range set at zero miles.

NHTSA notes that HEV's currently in development and in production

outside the United States often use electric and internal combustion

power either simultaneously or alone depending on specific needs at

certain points while the vehicle is being driven. In these HEVs, the

driver does not control when a particular power source is used nor is

the vehicle intended to be operated on one power source alone for

extended periods during normal operation.

The incentives contained in Chapter 329 to encourage the

development of dual fuel vehicles are not applicable to these HEVs. The

language and structure of the incentive provisions in Chapter 329 make

it clear that the incentive program was intended to foster the

development of vehicles that may operate on petroleum or an alternative

fuel depending on the mode selected by the operator. There is no

indication in the legislative history of the Alternative Motor Fuels

Act that Congress at any time considered applying the Act to a vehicle

that operates on petroleum at all times rather than being able to

operate on the alternate fuel alone.

While HEVs, regardless of their configuration, appear to further

many of the goals of the incentive program, the absence of provisions

applicable to HEV's under the existing statutory scheme obliges NHTSA

to restrict the availability of those incentives to vehicles that are

capable of operating independently on electric power that is not

generated by an on-board petroleum fueled engine. As the incentive

program requires that the vehicle's fuel economy while operating on an

alternative fuel must be measured by use of the EPA test procedure or

its equivalent, any vehicle

[[Page 66068]]

qualifying for the incentive program must be capable of having its fuel

economy measured while operating on an alternative fuel. NHTSA has

concluded that at this time there is no fuel economy test available for

measuring the fuel economy of HEV's while operating on electricity

alone other than the existing EPA test cycle. Completion of this cycle

normally requires that a vehicle travel two circuits totaling 17.7

miles--7.5 miles in an urban portion and 10.2 miles in the highway

portion.

In the January 3, 1997, NPRM, the agency proposed that the minimum

driving range for HEVs be set at 17.7 miles--the equivalent of one

urban and one highway cycle. NHTSA has concluded, based on the comments

submitted in response to the NPRM and the state of HEV development at

this time, that this 17.7 mile range requirement is too stringent.

Accordingly the agency has concluded that the driving range be set at

the absolute minimum possible under existing test procedures by

specifying a range that allows HEVs to be fully charged prior to

completion of one EPA urban or highway cycle. Therefore, the minimum

driving range established by this final rule is 7.5 miles while

traveling on the EPA urban cycle and 10.2 miles while traveling on the

EPA highway cycle, with charging allowed prior to each test.

This final rule also establishes a petition process by which

manufacturers may apply for exemption from the minimum range

requirement. These provisions remain unchanged from those contained in

the agency's earlier proposal.

IV. Regulatory Impacts

A. Executive Order 12866 and DOT Regulatory Policies and Procedures

This notice has not been reviewed under Executive Order 12866.

NHTSA has considered the impact of this rulemaking action and has

determined that the action is not ``significant'' under the Department

of Transportation's regulatory policies and procedures. In this final

rule, the agency is setting the minimum driving range for all dual

fueled electric passenger vehicles at one EPA urban cycle after

recharging and one EPA highway cycle after recharging. None of these

changes will result in an additional burden on manufacturers. They do

not impose any mandatory requirements but implement statutory

incentives to encourage the manufacture of alternative fuel vehicles.

For these reasons, NHTSA believes that any impacts on manufacturers are

so minimal as not to warrant preparation of a full regulatory

evaluation.

B. Regulatory Flexibility Act

The Regulatory Flexibility Act of 1980 (Public Law 96-354) requires

each agency to evaluate the potential effects of a final rule on small

businesses. Establishment of a minimum driving range for HEVs affects

motor vehicle manufacturers, few of which are small entities. The Small

Business Administration (SBA) has set size standards for determining if

a business within a specific industrial classification is a small

business. The Standard Industrial Classification code used by the SBA

for Motor Vehicles and Passenger Car Bodies (3711) defines a small

manufacturer as one having 1,000 employees or less.

Very few single stage manufacturers of motor vehicles within the

United States have 1,000 or fewer employees. Those that do are not

likely to have sufficient resources to design, develop, produce and

market an HEV. For this reason, NHTSA believes that this final rule

would not have a significant impact on any small business. Moreover,

production of passenger automobiles with the minimum ranges that are

established by this regulation would be voluntarily undertaken in order

to achieve beneficial CAFE treatment of those vehicles. Therefore, no

significant costs are imposed on any manufacturers or other small

entities.

C. National Environmental Policy Act.

The agency has also analyzed this rule for the purpose of the

National Environmental Policy Act, and determined that it would not

have any significant impact on the quality of the human environment.

The minimum driving range established for HEVs in this rule is set at

the lowest level possible to accommodate the present state of HEV

technology and the existing statutory framework. It is anticipated that

this may encourage continued development of HEVs. HEVs are, however,

not being produced or imported at this time and it is not possible to

determine the degree to which the establishment of the minimum driving

range in this final rule will have on future production of HEVs.

D. Paperwork Reduction Act

The procedures in this final rule for passenger automobile

manufacturers to petition for lower driving ranges are considered to be

information collection requirements as that term is defined by the

Office of Management and Budget (OMB) in 5 CFR part 1320. The

information collection requirements for part 538 will be submitted to

the OMB, pursuant to the Paperwork Reduction Act (44 U.S.C. 3501 et

seq.).

E. Executive Order 12612 (Federalism) and Unfunded Mandates Act

NHTSA has analyzed this final rule in accordance with the

principles and criteria contained in E.O. 12612, and has determined

that this rule would not have significant federalism implications to

warrant the preparation of a Federalism Assessment.

In issuing this final rule establishing a minimum driving range for

HEVs, the agency notes, for the purposes of the Unfunded Mandates Act,

that this rule facilitates the granting of incentives to manufacturers

choosing to produce qualified HEVs. The rule does not impose any costs.

F. Civil Justice Reform

This final rule does not have any retroactive effect. Under 49

U.S.C. 30103, whenever a Federal motor vehicle safety standard is in

effect, a State may not adopt or maintain a safety standard applicable

to the same aspect of performance which is not identical to the Federal

standard, except to the extent that the state requirement imposes a

higher level of performance and applies only to vehicles procured for

the State's use. 49 U.S.C. 30161 sets forth a procedure for judicial

review of final rules establishing, amending or revoking Federal motor

vehicle safety standards. That section does not require submission of a

petition for reconsideration or other administrative proceedings before

parties may file suit in court.

List of Subjects in 49 CFR Part 538

Administrative practice and procedure, Fuel economy, Motor

vehicles, Reporting and recordkeeping requirements.

For the reasons set forth in the preamble, amend part 538 of title

49 of the Code of Federal Regulations as follows:

PART 538--MANUFACTURING INCENTIVES FOR ALTERNATIVE FUEL VEHICLES

1. The authority citation for part 538 continues to read:

Authority: 49 U.S.C. 32901, 32905, and 32906; delegation of

authority at 49 CFR 1.50.

2. Amend Sec. 538.5 by adding paragraph (b) to read as follows:

Sec. 538.5 Minimum driving range.

* * * * *

[[Page 66069]]

(b) The minimum driving range that a passenger automobile using

electricity as an alternative fuel must have in order to be treated as

a dual fueled automobile pursuant to 49 U.S.C. 32901(c) is 7.5 miles on

its nominal storage capacity of electricity when operated on the EPA

urban test cycle and 10.2 miles on its nominal storage capacity of

electricity when operated on the EPA highway test cycle.

3. Revise Sec. 538.6 to read as follows:

Sec. 538.6 Measurement of driving range.

The driving range of a passenger automobile model type not using

electricity as an alternative fuel is determined by multiplying the

combined EPA urban/highway fuel economy rating when operating on the

alternative fuel, by the nominal usable fuel tank capacity (in

gallons), of the fuel tank containing the alternative fuel. The

combined EPA urban/highway fuel economy rating is the value determined

by the procedures established by the Administrator of the EPA under 49

U.S.C. 32904 and set forth in 40 CFR part 600. The driving range of a

passenger automobile model type using electricity as an alternative

fuel is determined by operating the vehicle in the electric-only mode

of operation through the EPA urban cycle on its nominal storage

capacity of electricity and the EPA highway cycle on its nominal

storage capacity of electricity. Passenger automobile types using

electricity as an alternative fuel that have completed the EPA urban

cycle after recharging and the EPA highway cycle after recharging shall

be deemed to have met the minimum range requirement.

4. Add Sec. 538.7 to read as follows:

Sec. 538.7 Petitions for reduction of minimum driving range.

(a) A manufacturer of a model type of passenger automobile capable

of operating on both electricity and either gasoline or diesel fuel may

petition for a reduced minimum driving range for that model type in

accordance with paragraphs (b) and (c) of this section.

(b) Each petition shall:

(1) Be addressed to: Administrator, National Highway Traffic Safety

Administration, 400 Seventh Street SW, Washington, DC 20590.

(2) Be submitted not later than the beginning of the first model

year in which the petitioner seeks to have the model type treated as an

electric dual fueled automobile.

(3) Be written in the English language.

(4) State the full name, address, and title of the official

responsible for preparing the petition, and the name and address of the

petitioner.

(5) Set forth in full data, views, and arguments of the petitioner,

including the information and data specified in paragraph (c) of this

section, and the calculations and analyses used to develop that

information and data. No documents may be incorporated by reference in

a petition unless the documents are submitted with the petition.

(6) Specify and segregate any part of the information and data

submitted under this section that the petitioner wishes to have

withheld from public disclosure in accordance with part 512 of this

chapter.

(c) Each petitioner shall include the following information in its

petition:

(1) Identification of the model type or types for which a lower

driving range is sought under this section.

(2) For each model type identified in accordance with paragraph

(c)(1) of this section:

(i) The driving range sought for that model type.

(ii) The number of years for which that driving range is sought.

(iii) A description of the model type, including car line

designation, engine displacement and type, electric storage capacity,

transmission type, and average fuel economy when operating on:

(A) Electricity; and

(B) Gasoline or diesel fuel.

(iv) An explanation of why the petitioner cannot modify the model

type so as to meet the generally applicable minimum range, including

the steps taken by the petitioner to improve the minimum range of the

vehicle, as well as additional steps that are technologically feasible,

but have not been taken. The costs to the petitioner of taking these

additional steps shall be included.

(3) A discussion of why granting the petition would be consistent

with the following factors:

(i) The purposes of 49 U.S.C. chapter 329, including encouraging

the development and widespread use of electricity as a transportation

fuel by consumers, and the production of passenger automobiles capable

of being operated on both electricity and gasoline/diesel fuel;

(ii) Consumer acceptability;

(iii) Economic practicability;

(iv) Technology;

(v) Environmental impact;

(vi) Safety;

(vii) Driveability; and

(viii) Performance.

(d) If a petition is found not to contain the information required

by this section, the petitioner is informed about the areas of

insufficiency and advised that the petition will not receive further

consideration until the required information is received.

(e) The Administrator may request the petitioner to provide

information in addition to that required by this section.

(f) The Administrator publishes in the Federal Register a notice of

receipt for each petition containing the information required by this

section. Any interested person may submit written comments regarding

the petition.

(g) In reaching a determination on a petition submitted under this

section, the Administrator takes into account:

(1) The purposes of 49 U.S.C. chapter 329, including encouraging

the development and widespread use of alternative fuels as

transportation fuels by consumers, and the production of alternative

fuel powered motor vehicles;

(2) Consumer acceptability;

(3) Economic practicability;

(4) Technology;

(5) Environmental impact;

(6) Safety;

(7) Driveability; and

(8) Performance.

(h) If the Administrator grants the petition, the petitioner is

notified in writing, specifying the reduced minimum driving range, and

specifying the model years for which the reduced driving range applies.

The Administrator also publishes a notice of the grant of the petition

in the Federal Register and the reasons for the grant.

(i) If the Administrator denies the petition, the petitioner is

notified in writing. The Administrator also publishes a notice of the

denial of the petition in the Federal Register and the reasons for the

denial.

Issued on: November 24, 1998.

Ricardo Martinez,

Administrator.

[FR Doc. 98-31779 Filed 11-30-98; 8:45 am]

BILLING CODE 4910-59-P