Passenger Automobile Average Fuel Economy Standards

DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Part 531

[Docket No. NHTSA-98-4853]

RIN 2127-AG95

Passenger Automobile Average Fuel Economy Standards

AGENCY: National Highway Traffic Safety Administration (NHTSA),

Department of Transportation (DOT).

ACTION: Final rule.

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SUMMARY: This rule amends the passenger automobile fuel economy

regulation by providing a procedure by which a vehicle manufacturer may

notify NHTSA of the model year in which it elects to consider

production of components and automobile assembly in Mexico as domestic

value added. This domestic value added is used to determine if a

passenger automobile should be assigned to the manufacturer's import or

domestic fleet for computation of the fleet average fuel economy. The

amendment implements a provision of the North American Free Trade

Agreement Implementation Act of 1993.

EFFECTIVE DATE: This amendment is effective July 19, 1999.

ADDRESS: Petitions for reconsideration should refer to the docket

number set forth above and be submitted to Docket Management Section,

Pl-403, 400 7th Street, SW, Washington, DC 20590.

FOR FURTHER INFORMATION CONTACT: Ms. Henrietta L. Spinner, Office of

Planning and Consumer Programs, NHTSA, 400 7th Street, SW, Washington,

DC 20590. Telephone: (202) 366-4802.

SUPPLEMENTARY INFORMATION:

Background

The Corporate Average Fuel Economy (CAFE) law, codified as Chapter

329 of title 49, United States Code, provides that the Administrator of

the Environmental Protection Agency (EPA) calculates the CAFE of each

automobile manufacturer (49 U.S.C. 32904(a)). Section 32904(b) provides

that passenger automobiles manufactured by a manufacturer are to be

divided into two fleets, according to whether or not they are

manufactured domestically. Each manufacturer's domestic and non-

domestic fleet is required to comply separately with the passenger

automobile CAFE standard. An automobile is considered to be

manufactured domestically if at least 75 percent of the cost to the

manufacturer is attributable to value added in the United States and

Canada.

The North American Free Trade Agreement Implementation Act of 1993,

Pub. L. 103-182, amended Section 32904(b) to provide that the value

added to a passenger automobile in Mexico is considered to be domestic

value. As amended, paragraph 32904(b)(3)(A) provides that

[A] passenger car is deemed to be manufactured domestically in a

model year, as provided in subparagraph (B) of this paragraph, if at

least 75 percent of the cost to the manufacturer is attributable to

value added in the United States, Canada, or Mexico, unless the

assembly of the vehicle is completed in Canada or Mexico and the

automobile is imported into the United States more than 30 days

after the end of the model year.

The effect of the amendment is that value added in Mexico is

considered on the same terms as value added in Canada or the United

States. However, the transition to treating Mexican value as domestic

value was not to be immediate. Subparagraph (B) of paragraph

32904(b)(3) sets forth specific conditions to govern the transition,

and specifies different dates for manufacturers, according to whether

or when they began to assemble passenger automobiles in Mexico.

Under subparagraph 32904(b)(3)(B)(i), a manufacturer that began to

assemble automobiles in Mexico before model year 1992 can elect to have

its Mexican production considered domestic beginning with a model year

that begins after the date of its election in the period from January

1, 1997, through January 1, 2004.

A manufacturer that began assembling automobiles in Mexico after

model year 1991 is required to count the value added in Mexico as

domestic value beginning with the model year that begins after January

1, 1994, or the model year in which the manufacturer begins to assemble

automobiles in Mexico, whichever is later (subparagraph (B)(ii)).

A manufacturer that does not assemble automobiles in Mexico may

elect under subparagraph (B)(iii) to have the value of Mexican

components treated as domestic value for purposes of automobiles

manufactured in a model year beginning after the date of its election

in the period from January 1, 1997, through January 1, 2004.

A manufacturer that does not assemble automobiles in either the

United States, Canada, or Mexico is required to count the value of any

Mexican components as domestic value, beginning with the model year

that begins after January 1, 1994 (subparagraph (B)(iv)).

A manufacturer covered by either subparagraph (B)(i) or (B)(iii)

that does not make an election within the specified period must

consider any value added in Mexico as domestic value beginning with the

model year that begins after January 1, 2004 (subparagraph (B)(v)).

Subparagraph 32904(b)(3)(C) provides that the Secretary of

Transportation ``shall prescribe reasonable procedures'' for those

manufacturers that can elect the model year for which the value added

in Mexico is to be treated as domestic value. Insofar as the

calculation of CAFE levels is the

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responsibility of the EPA Administrator, the procedures issued by the

Secretary must be in the form of directions to the EPA Administrator.

EPA has amended its regulations at 40 CFR 600.511-80 to incorporate the

provisions of the NAFTA Implementation Act (59 FR 33914; July 1, 1994).

In anticipation of implementing regulations being issued by the

Secretary of Transportation, subsection (b)(5) of 40 CFR 600.511-80

provides that any model year elections by a manufacturer are to be made

in accordance with the regulations issued by the Secretary.

Insofar as 49 U.S.C. 32904(b)(3) does not limit a manufacturer's

discretion to elect any model year in the period from January 1, 1997,

through January 1, 2004, NHTSA concludes that the implementing

procedures need only specify the method in which a manufacturer gives

notice of its election and provide a minimum notice period before the

beginning of the model year elected. Accordingly, this rule amends

section 531.6 of title 49 CFR to provide that any manufacturer making a

model-year election under subparagraphs (B)(i) and (B)(iii) of 49

U.S.C. 32904(b)(3) shall notify the EPA and NHTSA Administrators of its

election not later than 60 days before the beginning of the model year

to which the election applies.

Final Rule

This amendment is published as a final rule, without prior notice

and opportunity to comment. The NAFTA Implementation Act required that

the agency issue procedures to allow manufacturers to elect certain

options by January 1, 1997. The regulations contained in this final

rule are ministerial in nature and simply implement the express

provisions of the NAFTA Implementation Act. Accordingly, the agency

finds, for good cause, that notice and comment are unnecessary and

issues the amendment as a final rule. 5 U.S.C. 53(b)(3)(B).

Impact Analyses

A. Executive Order 12866 and DOT Regulatory Policies and Procedures

This rule was not reviewed under Executive Order 12866 (Regulatory

Planning and Review). NHTSA has considered the economic implications of

the rule and determined that it is not significant within the meaning

of the DOT Regulatory Policies and Procedures. Today's amendment will

not affect manufacturer or supplier costs.

B. Regulatory Flexibility Act

Pursuant to the Regulatory Flexibility Act, the agency has

considered the impact this rule would 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. Although certain

small businesses, such as parts suppliers, and some vehicle

manufacturers are affected by the regulation, the effect on them is

negligible.

C. National Environmental Policy Act

The agency has analyzed the environmental impacts of the rule in

accordance with the National Environmental Policy Act, 42 U.S.C. 4321

et seq., and has concluded that it will not have a significant effect

on the quality of the human environment.

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 rule does not have sufficient Federalism implications to

warrant the preparation of a Federalism Assessment.

E. Paperwork Reduction Act

This final rule includes new ``collections of information,'' as

that term is defined by the Office of Management and Budget (OMB). The

rule contains information collections that are subject to review by OMB

under the Paperwork Reduction Act of 1995 (Pub. L. 104-13). The title,

description, and respondent description of the information collections

are shown below with an estimate of the annual burden. Included in the

estimate is the time for reviewing regulations, searching existing data

sources, gathering and maintaining the data, and completing and

reviewing the collection of information.

Title: 49 CFR part 531--Passenger Automobile Average Fuel Economy

Standards.

Need for Information: This information is needed to determine the

domestic and non-domestic automobile fleets for CAFE computation

purposes. The NAFTA Implementation Act's provision for the treatment of

Mexican content permits certain manufacturers to elect the model year

for which Mexican content in their automobiles will be treated as

domestic content.

Proposed Use of Information: The information would advise the EPA

Administrator that a manufacturer has made an election as to the model

year in which it will consider Mexican content to be domestic content,

thereby enabling the EPA Administrator to identify the manufacturer's

domestic and non-domestic automobile fleets.

Frequency: The agency estimates that manufacturers will report this

information once as they prepare to consider Mexican content as

domestic content.

Burden Estimate: The agency estimates that a manufacturer may

encounter a total burden of five to seven hours to prepare a letter

stating that it is electing to count the Mexican content in its

passenger automobile fleet as domestic content. Seventeen manufacturers

are eligible to make this election. Accordingly, the agency estimates

the total burden hours to be 85 to 119.

Respondents: There are 20 manufacturers, but only 17 are eligible

to make an election. The other three manufacturers produce only light

trucks, and light truck fleets are not divided into domestic and non-

domestic fleets for CAFE purposes.

Form(s): Not applicable.

Average burden hours per respondent: The agency estimates that a

manufacturer may experience a total burden of five to seven hours to

prepare a letter stating its intent to include Mexican content as

domestic content in its passenger automobile fleet.

Average burden cost per respondent: The agency estimates that a

manufacturer may incur a cost of $200 to $300 to comply with this

requirement. This cost includes the salary of its personnel to review

this requirement, to examine its passenger automobile fleet content

data, and to prepare and send the letter advising EPA and NHTSA

Administrators of the manufacturer's election.

Individuals and organizations may submit comments on the

information collection requirements by June 18, 1999. The reporting and

recordkeeping requirements associated with this final rule will be

submitted to OMB for approval in accordance with the Paperwork

Reduction Act (Pub. L. 104-13). The agency believes that the amendment

made by this rule will result in a minimal increase in the paperwork

burden for vehicle manufacturers and suppliers.

F. Civil Justice Reform

This rule will not have any retroactive effect and does not preempt

any State law. The rule does not require submission of a petition for

reconsideration or other administrative proceedings before parties may

file suit in court.

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G. Notice and Comment

NHTSA finds that prior notice and opportunity for comment are

unnecessary under 5 U.S.C. 553(b)(3)(B) because this action requires

only that manufacturers provide notice of elections they are making

with regard to the inclusion of value added in Mexico. It does not

affect a manufacturer's ability to make an election or the timing its

election. In view of the negligible impacts of the rule, the agency

finds there is good cause to issue the rule without prior notice and

opportunity for comment.

List of Subjects in 49 CFR Part 531

Energy conservation, Fuel economy, Gasoline, Imports, Labeling,

Motor vehicles, Reporting and recordkeeping requirements.

In consideration of the foregoing, 49 CFR part 531 is amended as

follows:

PART 531--PASSENGER AUTOMOBILE AVERAGE FUEL ECONOMY STANDARDS

1. The authority citation for Part 531 is revised to read as

follows:

Authority: 49 U.S.C. 32902, 49 U.S.C. 32904; Delegation of

authority at 49 CFR 1.50.

2. Section 531.6(b) is added to read as follows:

Sec. 531.6 Measurement and calculation procedures.

* * * * *

(b) A manufacturer that is eligible to elect a model year in which

to include value added in Mexico as domestic value, under subparagraphs

(B)(i) and (B)(iii) of 49 U.S.C. 32904(b)(3), shall notify the

Administrators of the Environmental Protection Agency and the National

Highway Traffic Safety Administration of its election not later than 60

days before it begins production of automobiles for the model year. If

an eligible manufacturer does not elect a model year before January 1,

2004, any value added in Mexico will be considered domestic value for

automobiles manufactured in the next model year beginning after January

1, 2004, and in subsequent model years.

Issued on: May 10, 1999.

L. Robert Shelton,

Associate Administrator for Safety Performance Standards.

[FR Doc. 99-12607 Filed 5-18-99; 8:45 am]

BILLING CODE 4910-59-P