Passenger Automobile Average Fuel Economy Standards; Proposed Decision to Grant Exemption

DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Part 531

[NHTSA-99-6676]

Passenger Automobile Average Fuel Economy Standards; Proposed

Decision to Grant Exemption

AGENCY: National Highway Traffic Safety Administration (NHTSA),

Department of Transportation (DOT).

ACTION: Proposed decision.

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SUMMARY: This proposed decision responds to a petition filed by

DeTomaso Automobiles, Ltd. (DeTomaso) requesting that it be exempted

from the generally applicable average fuel economy standard of 27.5

miles per gallon (mpg) for model years 2000 and 2001, and that, for

DeTomaso, lower alternative standards be established. In this document,

NHTSA proposes that the requested exemption be granted to DeTomaso and

that alternative standards of 22.0 mpg be established for MY's 2000 and

2001.

DATES: Comments on this proposed decision must be received on or before

January 31, 2000.

ADDRESSES: Comments on this proposal must refer to the docket number

and notice number in the heading of this notice and be submitted,

preferably in ten copies, to: Docket Section, Room 5109, National

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

Washington, DC 20590. Docket hours are 9:30 a.m. to 4 p.m., Monday

through Friday.

FOR FURTHER INFORMATION CONTACT: Mr. Sanjay Patel, Office of Planning

and Consumer Programs, NHTSA, 400 Seventh Street, S.W., Washington, DC

20590. Mr. Patel's telephone number is: (202) 366-0307.

SUPPLEMENTARY INFORMATION:

Statutory Background

Pursuant to 49 U.S.C. section 32902(d), NHTSA may exempt a low

volume manufacturer of passenger automobiles from the generally

applicable average fuel economy standards if NHTSA concludes that those

standards are more stringent than the maximum feasible average fuel

economy for that manufacturer and if NHTSA establishes an alternative

standard for that manufacturer at its maximum feasible level. Under the

statute, a low volume manufacturer is one that manufactured (worldwide)

fewer than 10,000 passenger automobiles in the second model year before

the model year for which the exemption is sought (the affected model

year) and that will manufacture fewer than 10,000 passenger automobiles

in the affected model year. In determining the maximum feasible average

fuel economy, the agency is required under 49 U.S.C. 32902(f) to

consider:

(1) Technological feasibility.

(2) Economic practicability.

(3) The effect of other Federal motor vehicle standards on fuel

economy, and

(4) The need of the United States to conserve energy.

The statute permits NHTSA to establish alternative average fuel

economy standards applicable to exempted low volume manufacturers in

one of three ways: (1) a separate standard for each exempted

manufacturer; (2) a separate average fuel economy standard applicable

to each class of exempted automobiles (classes would be based on

design, size, price, or other factors); or (3) a single standard for

all exempted manufacturers.

Background Information on DeTomaso

DeTomaso Automobiles, Ltd. is a Delaware Corporation under common

ownership with DeT. Auto Srl., an Italian corporation that produces

DeTomaso automobiles in Italy and distributes them worldwide. These

DeTomaso automobiles are produced under a license granted by DeTomaso

Modena SpA., an Italian corporation owned by Alejandro DeTomaso. DeT

Auto Srl. and DeTomaso Automobiles Ltd. produce fewer than 10,000 cars

worldwide each year and are not owned by, or under common control with,

any other auto company.

The DeTomaso marque has always provided high performance through

technology and weight reduction. DeTomaso vehicles were last exported

to the United States in the late 1970's. The number of vehicles

imported annually at that time was quite small. DeTomaso traditionally

produces fewer than 2000 vehicles each year.

For the 2000 and 2001 model years, DeTomaso's product-line for the

U.S. market consists of the DeTomaso Mangusta, a two-seat convertible

sports car powered by a 4.6 liter Ford V-8. This model will be the only

vehicle imported by DeTomaso and the company projects that it will

import 300 vehicles for MY 2000 and 500 vehicles for MY 2001. These

projected sales volumes are consistent with its status as a low volume

importer.

The DeTomaso Petition

NHTSA's regulations on low volume exemptions from CAFE standards

state that petitions for exemption are submitted ``not later than 24

months before the beginning of the affected model year, unless good

cause for later submission is shown.'' (49 CFR 525.6(b).)

NHTSA received a joint petition from DeTomaso Automobiles Ltd.

(DeTomaso) on June 20, 1998, seeking exemption from the passenger

automobile fuel economy standards for MYs 2000-2001. This joint

petition was filed less than 24 months before the beginning of MYs 2000

and 2001 and was therefore untimely under 49 C.F.R. 526.6(b). DeTomaso

indicates that its decision to enter the U.S. market for MY

[[Page 73477]]

2000 was not made until early 1999 after it reached an agreement with

Ford that allowed DeTomaso to use a U.S. built and certified powerplant

and drivetrain in the Mangusta.

Under the circumstances, NHTSA concludes that DeTomaso took

reasonable measures to submit a petition in as timely a manner as

possible. The agency notes that DeTomaso's ability to enter the U.S.

market apparently hinged on obtaining a U.S. powerplant for the

Mangusta. This, according to DeTomaso, was not possible or feasible

until it reached an agreement with Ford to provide the required engine.

Therefore, the agency has determined that good cause exists for the

late submission of the petition.

Methodology Used to Project Maximum Feasible Average Fuel Economy

Level for DeTomaso

Baseline Fuel Economy

To project the level of fuel economy which could be achieved by

DeTomaso in the 2000 and 2001 model years, NHTSA considered whether

there were technical or other improvements that would be feasible for

these vehicles, and whether the company currently plans to incorporate

such improvements in the vehicles. The agency reviewed the

technological feasibility of any changes and their economic

practicability.

NHTSA interprets ``technological feasibility'' as meaning that

technology which would be available to DeTomaso for use on its 2000 and

2001 model year automobiles, and which would improve the fuel economy

of those automobiles. The areas examined for technologically feasible

improvements were weight reduction, aerodynamic improvements, engine

improvements, drive line improvements, and reduced rolling resistance.

The agency interprets ``economic practicability'' as meaning the

financial capability of the manufacturer to improve its average fuel

economy by incorporating technologically feasible changes to its 2000

and 2001 model year automobiles. In assuming that capability, the

agency has always considered market demand as an implicit part of the

concept of economic practicability. Consumers need not purchase what

they do not want.

In accordance with the concerns of economic practicability, NHTSA

has considered only those improvements which would be compatible with

the basic design concepts of DeTomaso automobiles. Since NHTSA assumes

that DeTomaso will continue to build high performance cars, design

changes that would remove items traditionally offered on these cars

were not considered. Such changes to the basic design would be

economically impracticable since they might well significantly reduce

the demand for these automobiles, thereby reducing sales and causing

significant economic injury to the low volume manufacturer.

Technology for Fuel Economy Improvement

The nature of DeTomaso vehicles generally do not result in high

fuel economy values. Also, DeTomaso lags in having the latest

developments in fuel efficiency technology because suppliers generally

provide components and technology to small manufacturers only after

supplying large manufacturers.

DeTomaso states that the requested alternative fuel economy values

represent the best possible CAFE that DeTomaso can achieve for the 2000

and 2001 model years. For MYs 2000 and 2001, DeTomaso stated that the

fuel economy value of 22.0 mpg represents the best possible CAFE that

it can achieve. DeTomaso has produced small lightweight innovative

sports vehicles for more than 40 years. Performance is achieved through

obtaining maximum output per unit of engine displacement and the use of

lightweight aerodynamic body designs. The vehicle's compact dimensions

provide efficient performance coupled with a strong and relatively

light-weight aerodynamic body construction.

The current DeTomaso Mangusta engine, the Ford Cobra 4.6 litre V-8

is a relatively new design. The engine uses four valves per cylinder to

obtain both maximum output and efficiency and relies on a sophisticated

engine management system and fuel injection to increase efficiency and

reduce emissions. The engine provides a high power/torque package that

is a very efficient balance of fuel economy versus engine power.

Because of DeTomaso's financial constraints and its limited

resources, the manufacturer must use an engine and transmission that is

produced by Ford. Therefore, DeTomaso's ability to obtain further fuel

economy improvements from engine and drivetrain modifications is quite

limited. The Mangusta chassis/body configuration is small, aerodynamic

and lightweight, so further fuel economy improvements through changes

to the chassis and body also appear to be limited.

Model Mix

DeTomaso is a small vehicle manufacturer that produces a modest

range of high performance exotic sport vehicles. There is little

opportunity to improve fuel economy by changing model mix since

DeTomaso will make only one basic model in each model year.

Effect of Other Federal Motor Vehicle Standards

The new, stringent California emission standards and the similarly

stringent Federal Clean Air Act Amendments will apply to DeTomaso in

MYs 2000 and 2001. DeTomaso will likely achieve lower fuel economy due

to compliance with these standards. In addition, a portion of its

limited engineering resources will have to be expended to comply with

these more stringent emissions standards including, but not limited to,

evaporative emission standards.

Federal motor vehicle safety standards (FMVSS) and regulations also

have an adverse effect on the fuel economy of DeTomaso vehicles. These

standards include 49 CFR Part 581 (energy absorbing bumpers), FMVSS 202

(head restraints), FMVSS 207(seating systems), FMVSS 208 (occupant

crash protection), FMVSS 214 (side door strength), and FMVSS 216 (roof

crush resistance). These standards tend to reduce achievable fuel

economy values, since they result in increased vehicle weight.

DeTomaso is a small company and engineering resources are limited.

Priority must be given to meeting mandatory standards to remain in the

marketplace.

The Need of the United States to Conserve Energy

The agency recognizes there is a need to conserve energy, to

promote energy security, and to improve balance of payments. However,

as stated above, NHTSA has tentatively determined that it is not

technologically feasible or economically practicable for DeTomaso to

achieve an average fuel economy in MYs 2000 and 2001 above the levels

set forth in this proposed decision. Granting an exemption to DeTomaso

and setting an alternative standard at that level would result in only

a negligible increase in fuel consumption and would not affect the need

of the United States to conserve energy. In fact, there would not be

any increase since DeTomaso cannot attain those generally applicable

standards. Nevertheless, the agency estimates that the additional fuel

consumed by operating the MYs 2000 and 2001 fleets of DeTomaso vehicles

at the CAFE of 22.0 mpg (compared to an hypothetical 27.5 mpg fleet) is

25,803 barrels of fuel. This value averages about 3.54 barrels/

[[Page 73478]]

day over the 20-year period that these vehicles will be an active part

of the fleet. Obviously, this is insignificant compared to the fuel

used daily by the entire motor vehicle fleet which amounts to 4.81

million barrels per day for passenger cars in the United States in

1994.

Maximum Feasible Average Fuel Economy for DeTomaso

The agency has tentatively concluded that it would not be

technologically feasible and economically practicable for DeTomaso to

improve the fuel economy of its MY 2000 and 2001 fleet above an average

of 22.0 mpg for MY 2000 and MY 2001. Federal automobile standards would

not adversely affect achievable fuel economy beyond the amount already

factored into DeTomaso' projections, and that the national effort to

conserve energy would not be affected by granting the requested

exemption and establishing an alternative standard.

Consequently, the agency tentatively concludes that the maximum

feasible average fuel economy for DeTomaso is 22.0 for MYs 2000 and

2001.

Chapter 329 permits NHTSA to establish an alternative average fuel

economy standard applicable to exempted manufacturers in one of three

ways:(1) A separate standard may be established for each exempted

manufacturer; (2) classes, based on design, size, price or other

factors, may be established for the automobiles of exempted

manufacturers, with a separate fuel economy standard applicable to each

class; or (3) a single standard may be established for all exempted

manufacturers. The agency tentatively concludes that it would be

appropriate to establish a separate standard for DeTomaso.

While the agency has the option of establishing a single standard

for all exempted manufacturers, we note that previous exemptions have

been granted to manufacturers of high-performance cars, luxury cars and

specialized vehicles for the transportation of persons with physical

impairments. The agency's experience in establishing exemptions

indicates that selection of a single standard would be inappropriate.

Such a standard would have little impact on energy conservation while

doing little to ease the burdens faced by small manufacturers who

cannot meet the fuel economy standards applicable to larger

manufacturers. Similarly, the agency is not proposing to establish

alternative standards based on different classes of vehicles. Again,

the agency's experience has been that vehicles manufactured by low

volume manufacturers may differ widely in size, price, design or other

factors. Based on the information available at this time, we do not

believe it would be appropriate to establish class-based alternative

standards.

Regulatory Impact Analyses

NHTSA has analyzed this proposal and determined that neither

Executive Order 12866 nor the Department of Transportation's regulatory

policies and procedures apply. Under Executive Order 12866, the

proposal would not establish a ``rule,'' which is defined in the

Executive Order as ``an agency statement of general applicability and

future effect.'' The proposed exemption is not generally applicable,

since it would apply only to DeTomaso Automobiles Ltd., as discussed in

this notice. Under DOT regulatory policies and procedures, the proposed

exemption would not be a ``significant regulation.'' If the Executive

Order and the Departmental policies and procedures were applicable, the

agency would have determined that this proposed action is neither major

nor significant. The principal impact of this proposal is that the

exempted company would not be required to pay civil penalties if its

maximum feasible average fuel economy were achieved, and purchasers of

those vehicles would not have to bear the burden of those civil

penalties in the form of higher prices. Since this proposal sets an

alternative standard at the level determined to be the maximum feasible

levels for DeTomaso for MYs 2000 and 2001, no fuel would be saved by

establishing a higher alternative standard. NHTSA finds in the Section

on ``The Need of the United States to Conserve Energy'' that because of

the small size of the DeTomaso fleet, that incremental usage of

gasoline by DeTomaso's customers would not affect the United States's

need to conserve gasoline. There would not be any impacts for the

public at large.

The agency has also considered the environmental implications of

this proposed exemption in accordance with the Environmental Policy Act

and determined that this proposed exemption if adopted, would not

significantly affect the human environment. Regardless of the fuel

economy of the exempted vehicles, they must pass the emissions

standards which measure the amount of emissions per mile traveled.

Thus, the quality of the air is not affected by the proposed exemptions

and alternative standards. Further, since the exempted passenger

automobiles cannot achieve better fuel economy than is proposed herein,

granting these proposed exemptions would not affect the amount of fuel

used.

Interested persons are invited to submit comments on the proposed

decision. It is requested but not required that 10 copies be submitted.

All comments must not exceed 15 pages in length (49 CFR 553.21).

Necessary attachments may be appended to these submissions without

regard to the 15 page limit. This limitation is intended to encourage

commenters to detail their primary arguments in a concise fashion.

If a commenter wishes to submit certain information under a claim

of confidentiality, three copies of the complete submission, including

purportedly confidential business information, should be submitted to

the Chief Counsel, NHTSA, at the street address given above, and seven

copies from which the purportedly confidential business information has

been deleted, should be submitted to the Docket Section. A request for

confidentiality should be accompanied by a cover letter setting forth

the information specified in the agency's confidential business

information regulation. 49 CFR part 512.

All comments received before the close of business on the comment

closing indicated above for the proposal will be considered, and will

be available for examination in the docket at the above address both

before and after that date. To the extent possible, comments filed

under the closing date will also be considered. Comments received too

late for consideration in regard to the final rule will be considered

as suggestions for further rulemaking action. Comments on the proposal

will be available for inspection in the docket. NHTSA will continue to

file relevant information as it becomes available in the docket after

the closing date, and it is recommended that interested persons

continue to examine the docket for new material.

Those persons desiring to be notified upon receipt of their

comments in the rules docket should enclose a self-addressed, stamped

postcard in the envelope with their comments. Upon receiving the

comments, the docket supervisor will return the postcard by mail.

List of Subjects in 49 CFR part 531

Energy conservation, Gasoline, Imports, Motor vehicles.

In consideration of the foregoing, 49 CFR part 531 would be amended

to read as follows:

[[Page 73479]]

PART 531--[AMENDED]

1. The authority citation for part 531 would be revised to read as

follows:

Authority: 49 U.S.C. 32902, delegation of authority at 49 CFR

1.50.

2. In section 531.5, the introductory test of paragraph (b) is

republished for the convenience of the reader and paragraph (b)(13)

would be revised to read as follows:

Sec. 531.5 Fuel economy standards.

* * * * *

(b) The following manufacturers shall comply with the standards

indicated below for the specified model years:

* * * * *

(13) DeTomaso Cars Ltd.

Average Fuel Economy Standard

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

(Miles per

Model year gallon)

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2000....................................................... 22.0

2001....................................................... 22.0

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Issued on: December 23, 1999.

Stephen R. Kratzke,

Acting Associate Administrator for Safety Performance Standards.

[FR Doc. 99-33803 Filed 12-29-99; 8:45 am]

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