(navigation image)
Home American Libraries | Canadian Libraries | Universal Library | Community Texts | Project Gutenberg | Children's Library | Biodiversity Heritage Library | Additional Collections
Search: Advanced Search
Anonymous User (login or join us)
Upload
See other formats

Full text of "Federal motor vehicle safety standards and regulations, with amendments and interpretations"

>-UV DOCS 

ITD8.6/2: 984 
iPt.l 






J y-w 









' H-- 



4*'' 









mil*?"?":! 



It. 










■■-^ .^ 



.►r^t 









<» :% 



'<^^ :j^ 



.f.^'-fi 






,S<P- 



.^VTf' 



.. V 






:^ 







:i!^: 






Effacllv*: Novambtr 4, 1975 



curate descriptions jtnd environmental con- 
siderations, site visits sliould he iniido wlioi-e 
appropriate. 

(3) The statement should identify, as 
appropriate, population and <rrowti» ciiar- 
acteristics of tiie affected area and any 
population and prowth assumptions used to 
justify the project or pro<rraiu or to deter- 
iiiine secondary population and <:rowth 
impacts resultinfj from the proposed action 
and its alternatives (see paragraph 3c(2)). 
In discussinjr these population aspects, the 
statement should give consideration to usinp 
the rates of jrrowth in the refrion of the 
project contained in the projection compiled 
for the Water Resources Council by the 
Bureau of Economic Analysis of the Depart- 
ment of Commerce and the Economic Re- 
search Service of the Department of Apri- 
cuture (the OBERS projection). 

(4) The sources of data used to identify, 
quantifj-. or evaluate any or all environ- 
mental consequences must be expressly noted. 

b. The relationship of the proposed action 
and how it may conform to or conflict with 
adopted or proposed land use plans, policies, 
controls, and goals and objectives as have been 
promulgated by affected communities. "\Miere 
a conflict or inconsistency exists, the statement 
should describe the extent of reconciliation and 
the reasons for proceeding notwithstanding the 
absence of full reconciliation. 

c. The probable impact of the proposed 
action on the environment. (1) This requires 
assessment of the positive and negative effects 
of the proposed action as it affects both na- 
tional and international human environment. 
The attention given to different environmental 
factors will vary according to the nature, scale. 
and location of proposed actions. Among 
factors to be considered should be the poten- 
ial effect of the action on such aspects of the 
en^^ronment as those listed in Attachment 2. 
and in section r,20.5(b). supra. Primary atten- 
tion should be given in the statement to discus- 
sing those factors most evidently impacted by 
the proposed action. 

(2) Secondare- and other foreseeable ef- 
fects, as well as primary consequences for the 



onvironment, should be included in the anal- 
ysis. Secondary effects, such as the impact 
on fuel consumption, emissions, or noise 
levels of automobiles or in the use of toxic 
or scarce materials, may be more substantial 
than the |)rinuiry effects of the original ac- 
tion. 

d. Alternatives to the proposed action, in- 
cluding, where relevant, those not within the 
existing authority of the responsible preparing 
office. Section 102(2) (D) of NEPA requires 
the responsible agency to "study, develop, and 
describe appropriate alteniatives to recommend 
courses concerning alternative uses of available 
resources.." A rigorous exploration and an ob- 
jective evaluation of the environmental impacts 
of all reasonable alternative actions, particu- 
larly those that might enhance environmental 
quality or avoid some or all of the adverse 
environmental effect.s, are essential. Sufficient 
analysis of such alternatives and their environ- 
mental benefits, costs, and risks should accom- 
pany the proposed action through the review 
process in order not to foreclose prematurely 
options which might enhance environmental 
([uality or have less detrimental effects. Ex- 
amples of sucli alternatives include: the al- 
ternative of not taking action or of postponing 
action pending further study; altematives re- 
quiring actions of a significantly different 
nature which would provide similar benefits 
with different environmental impacts, e.g., low 
capital intensive improvements, mass tran.sit 
altematives to highway construction; alterna- 
tives related to different locations or designs 
or details of the proposed action which would 
present different environmental impacts. In 
each case, the analysis should l>e sufficiently 
detailed to reveal comparative evaluation of 
the enviromental benefits, costs, and risks of 
the proposed action and each rea.sonable al- 
ternative. Where an existing impact statement 
already contains such an analysis its treatment 
of alternatives may l)e incorporated, provided 
such treatment is current and relevant to the 
precise purpose of the proposed action. 

e. Any probable adverse environmental ef- 
fects which cannot Iw avoided (such as water 
or air pollution, noise, undesirable land use 



PART 520-13 



Effective: November 4, 1975 

patterns, or impacts on public parks and recrea- 
tion areas, wildlife and waterfowl refuj^es, or 
on historic sites, daniape to life systems, traffic 
congestion, threats to health, or other conse- 
quences adverse to the environmental jroals set 
out in section 101(b) of NEPA). This should 
be a brief section summarizing in one place 
those effects discussed in paragraph 3c tliat are 
adverse and unavoidable under the proposed 
action. Included for purposes of contrast 
should be a clear statement of how all adverse 
effects will be mitigated. Wliere mitigating 
steps are included in the statement, the respon- 
sible official shall see that they are carried out. 

f. The relationship between local short-term 
uses of man's environment and the maintenance 
and enhancement of long-term productivity. 
This section should contain a brief discussion 
of the extent to which the proposed action in- 
volves tradeoffs between short-term environ- 
mental gains at the expense of long-term losses, 
or \-ice versa, and a discussion of the extent to 
which the proposed action forecloses future 
options. 

g. Any irreversible and irretrievable commit- 
ments of resources that would be involved in 
the proposed action should it be implemented. 
This requires identification of unavoidable im- 
pacts and the extent to which the action irre- 
versibly curtails the range of potential uses of 
the environment. "Resources" means not only 
the labor snd materials devoted to an action 
but also the natural and cultural resources lost 
or destroyed. 

h. An indication of what other interests and 
considerations of Federal policy are thought 
to offset the adverse environmental effects of 
the proposed action identified pursuant to sub- 
paragraphs (c) and (e) of this paragraph. 
The statement should also indicate the extent 
to which these stated countervailing benefits 
could be realized by following reasonable al- 
ternatives to tlie proposed action (as identified 
in subparagraph (d) of this paragraph) that 
would avoid some or all of the adverse environ- 
mental effects. In this connection if a cost- 
benefit analysis of the proposed action has been 
prepared, it, or a summary, should be attached 



to the environmental impact statement, and ^ 
should clearly indicate the extent to which en- ■ 
vironmental costs have not been reflected in ~ 
such analysis. 

i. A discussion of problems and objections 
raised by other Federal agencies. State and 
local entities, and citizens in the review process, 
and the disposition of the issues involved and 
the reasons therefor. (This section shall be 
added to the final environmental statement at 
the end of the review process.) 

(1) The draft and final statements should 
document issues raised through consultations 
with Federal, State, and local agencies with 
jurisdiction or special expertise and with 
citizens, of actions taken in response to com- 
ments, public hearings, and other citizens 
involvement proceedings. 

(2) Any unresolved environmental issues 
and efforts to resolve them, through further 
consultations or otherwise, should be iden- 
tified in the final statement. For instance, 
where an agency comments that the state- 
ment has inadequate analysis or that the 
agency has reservations concerning the im- a 
pacts, or believes that the impacts are too ^ 
adverse for approval, either the issue should 

be resolved or the final statement should re- 
flect efforts to resolve the issue and set forth 
any action that will result. 

(3) The statement should reflect that every 
effort was made to discover and discuss all 
major points of view on the enviromnental 
effects of the proposed action and alterna- 
tives in the draft statement. However, where 
opposing professional views and responsible 
opinion have been overlooked in the draft 
statement and are raised through the com- 
menting process, the en\aronmental effects of 

' the action should be reviewed in light of 
those views. A meaningful reference should 
be made in the final statement to the ex- 
istence of any responsible opposing view not 
adequately discussed in the draft statement 
indicating responses to the issues raised. 

(4) All substantive comments received on 
the draft (or summaries of responses from 
the public which have been exceptionally 



PART 520-14 



Effective: November 4, 1975 



voluminious) should be attached to the final 
statement, whether or not such comment is 
thou<rht to merit individual discussion in the 
text of the statement. 

j. Draft statements should indicate at appro- 
priate points in the text any imderlyinjj studies, 
reports, and other information obtained and 
considered in piTparinp the statement, inolud- 
inp any cost-benefit analyses prepared. In the 
case of documents not likely to be easily acces- 
sible (such as internal studies or reports), the 
statement should indicate how such informa- 
tion may lie obtained. If such information is 
attached to the statement, care should be taken 
to insure that the statement remains an essen- 
tially self-contained instrument, capable of 
l>ein<r understood by the reader without the 
need for undue cross reference. 

4. Publicly owned parklands, recreational 
areas, wildlife and waterfowl refu<i;es and historic 
sites. The following points are to be covered: 

a. Description of "any publicly owned land 
from a public park, recreational area of wild- 
life and waterfowl refuge" or "any land from 
an liistoric site" affected or taken by the project. 
This includes its size, available activities, use, 
patronage, unique or irreplaceable qualities, 
relationship to other similarly used lands in 
the vicinity of the project, maps, plans, slides, 
photographs, and drawings showing a sufficient 
scale and detail the project. This also includes 
its impact on park, recreation, wildlife, or his- 
toric areas, and changes in vehicular or pedes- 
trian access. 

b. Statement of the "national. State or local 
significance" of the entire park, recreational 
area, refuge, or historic site "as determined by 
the Federal, State or local officials having juris- 
diction thereof." 

(1) In the absence of such a statement 
lands will be presumed to be significant. 
Any statement of "insignificance" by the 
official having jurisdiction is subject to re- 
view by the Department as to whether such 
statement is capricious. 

(2) "\^Tiere Federal lands are administered 
for multiple uses, the Federal official having 
jurisdiction over the lands shall determine 
whether the subject lands are in fact being 



used for park, recreation, wildlife, waterfowl, 
or historic purposes. 

c. Similar data, as appropriate, for alterna- 
tive designs and locations, including detailed 
cost estimates (with figures showing percentage 
differences in total project costs) and technical 
feasibility, and appropriate analyses of the al- 
ternatives, including any unique problems 
present and evidence that the cost or com- 
munity disruptions resulting from alternative 
routes reach extra-ordinary magnitudes. This 
portion of the statement should demonstrate 
compliance with the Supreme Court's statement 
in the Overton Park case, as follows: 

[The] very existence of tlie statute indicates 
that protection of parkland was to be given para- 
mount importance. The few green havens that 
are public parks were not to be lost unless there 
were truly unusual factors present in a particular 
case or the cost or community disruption result- 
ing from alternative routes reached extraordinary 
magnitudes. If the statutes are to have any 
meaning, the Secretary cannot approve the de- 
struction of parkland unless he finds that alterna- 
tive routes present unique problems. 401 U.S. 
402, 412 (1971). 

d. If there is no feasible and prudent alterna- 
tive, a description of all planning undertaken to 
minimize harm to the protected area and state- 
ment of actions taken or to be taken to imple- 
ment this planning, including measures to main- 
tain or enhance the natural beauty of the lands 
traversed. 

(1) Measures to minimize harm may in- 
clude replacement of land and facilities, pro- 
viding land or facilities, provnsions for func- 
tional replacement of the facility (see 49 
CFR 25.267). 

(2) Design measures to minimize harm; 
e.g., tunneling, cut and cover, cut and fill, 
treatment of embankments, planting, screen- 
ing, maintenance of pedestrian or bicycle 
paths and noise mitigation measures all re- 
flecting utilization of appropriate interdis- 
ciplinary design personnel. 

e. Evidence of concurrence or description of 
efforts to obtain concurrence of Federal, State 
or local officials having jurisdiction over the 



PART 520-15 



Effective: November 4, 1975 



section 4(f) property regardinfr the action 
proposed and tlie measures planned to minimize 
harm. 

f. If Federally-owned properties are in- 
volved in hi<rhway projects, the final statement 
shall include tJic action taken or an indication 
of the expected action after filinfj; a map of 
the proposed use of the land or other appro- 
priate documentation with the Secretary of the 
Department supervising the land (23 U.S.C. 
317). 

g. If land acquired with Federal grant 
money (Department of Housing and Urban 
Development open space or Bureau of Outdoor 
Recreation land and water conservation funds) 
is involved, the final statement shall include 
appropriate communications with the grantor 
agency. 

h. TGC will determine application of sec- 
tion 4(f) to public interests in lands, such as 
easements, reversions, etc. 

i. A specific finding by the Administrator 
that there is no feasible and prudent alterna- 
tive and that the proposal includes all possible 
planning to minimize harm to the "4(f) area" 
involved. 

5. Properties and sites of historic and cultural 
significance. The statement should document ac- 
tions taken to preserve and enhance districts, sites, 
buildings, structures, and objects of historical, 
architectural, archeological, or cultural signifi- 
cance affected by the action. 

a. Draft environmental statements should in- 
clude identification, through consulting the 
National Register and applying the National 
Register Criteria (36 CFR Part 800), of prop- 
erties that are included in or eligible for inclu- 
sion in the National Register of Historic Places 
that may be affected by the project. The Na- 
tional Register is published in its entirety each 
Febiniarj' in the Federal Register. Monthly 
additions and listings of eligible properties are 
published in the Federal Register the first 
Tuesday of each month. The Secretary of the 
Interior will advise, upon request, whether 
properties are eligible for the National Reg- 
ister. 



b. If application of the Advisory Council on 
Historic Preservation's (ACHP) Criteria of ^ 
Effect (36 CFR Part 800) indicates that the ^ 
project will have an effect upon a property in- 
cluded in or eligible for inclusion in the Na- 
tional Register of Historic Places, the draft 
environmental statement should document the 
effect. Evaluation of the effect should be made 

in consultation with the State Historic Preser- 
vation Officer (SHPO) and in accordance with 
the ACHP's criteria of Adverse Effect (36 
CFR Part 800). 

c. Determinations of no adverse effect should 
be documented in the draft statement with 
evidence of the application of the ACHP's 
Criteria of Adverse. Effect, the views of the 
appropriate State Historic Preservation Officer, 
and submission of the determination to the 
ACHP for review. 

d. If the project will have an adverse effect 
upon a property included in or eligible for in- 
clusion in the National Register of Historic 
Places, the final environmental statement 
should include either an executed Memorandum 
of Agreement or comments from the Council 
after consideration of the project at a meeting 

of the ACHP and an account of actions to be ^ 
taken in response to the comments of the 
ACHP. Procedures for obtaining a Memo- 
randmn of Agreement and the comments of the 
Council are found in 36 CFR Pail 800. 

e. To determine whether the project will 
have an effect on properties of State or local 
historical, architectural, archaeological, or cul- 
tural significance not included in or eligible for 
inclusion in the National Register, the respon- 
sible official should consult with the State His- 
toric Preservation Officer, with the local official 
having jurisdiction of the property, and where 
appropriate, with historical societies, museums, 
or academic institutions having expertise with 
regard to the property. Use of land from his- 
toric properties of Federal, State and local sig- 
nificance as determined by the official having 
jurisdiction th reof involves section 4(f) of 
the DOT Act and documentation should in- 
clude information necessary to consider a 4(f) 
determination (see paragraph 4). 



PART 520-16 



Effective: Model Yeors 1981-1984 



TIic Department has no basis at tliis time to 
project tiie existence of any otlier motor vehicle 
standards at a specific level. If these projections 
are proven erroneous by future events, and if tlie 
impact of tiiosc future standards would sulistan- 
tially reduce the safety inarpin provided in this 
notice, it may be necessary to reconsider the 
standards promuljjated herein. 

D. The need of the Natlot\ to eotisenie energy. 

As discussed in section II. B of this notice, this 
final consideration in establisliin<r maximum 
feasible average fuel economy levels requires the 
establishment of fuel economy standards at the 
hifrhest level consistent witli the other statutory 
considerations. 

Wlien the four statutory considerations are 
considered together, the fuel economy levels 
achievable by the four domestic manufacturers, 
as derived from the abo\e analyses, are as set 
forth in Table 2 below. These numbers are based 
on a percent emissions penalty. For the 
reasons discussed in section III.E below, includ- 
injr consideration of the emissions standards, an 
adjustment is made in that section to Table 2. 



ManufartMrer 

American Motors 

Chrysler 

Ford 

General Motors 



TABLE 2 

1981 1982 1983 1984 

22.2 22.6 23.1 24.7 
23.8 25.1 26.3 28.1 
23.4 24.5 26.1 27.0 

23.3 24.2 26.5 28.8 



E. Establishing the maximum feasible average 
fuel economy level. 

In determining maximum feasible averajre fuel 
economy, the Department cannot simply select 
the level achievable by the least capable manu- 
facturer in each model year. Instead, an analysis 
alonjr the lines of that set forth in pages 154-5 of 
the Conference Report must be carried out. 
That Report states: 

Such detennination should therefore take 
industry-wide considerations into account. For 
example, a determination of maximum feasible 
avera<re fuel economy should not l>e keyed to 
the sinple manufacturer which mifrht have the 
most difficulty achieving a priven level of aver- 
age fuel economy. Rather, the Secretary must 



»» 



weigh the benefits to the nation of a higher 
average fuel economy standard against the 
difficulties of individual automobile manufac- 
turers. Such difficulties, however, should be 
given appropriate weight in setting the stand- 
ard in light of the small number of domestic 
automobile manufacturers that cui-rently exist, 
and the possible implications for the national 
economy and for reduced competition asso- 
ciated with a severe strain on any manuf.ac- 
turer. However, it should also be noted that 
provision has been made for granting relief 
from penalties under Section 508(b) in situa- 
tions where competition will suffer significantly 
if penalties are imposed. 

It is clear from this admonition that in certain 
circumstances the standards must not be set at 
levels which every manufacturer will be able to 
achieve in every year. Rather, they should be 
set at some point above those levels. "Wliether 
and how far standards should be set above those 
levels depends on a balancing of the burdens 
placed on the manufacturers with lower achiev- 
able average fuel economy on one hand against 
the benefits of a higher standard on the other. 
This in turn requires an analysis of the impacts 
of civil penalties imposed on the manufacturers 
at a given standard level. Implicit in this anal- 
ysis is consideration of the ability of a manufac- 
turer to apply civil penalty "credits" from other 
years to reduce or eliminate a penalty and of the 
ability of the Department to compromise penal- 
ties where insolvency, bankruptcy, or substantial 
lessening of competition may occur. See section 
508 of the Act. The latter possibility is es- 
pecially significant in the case of American 
Motors, which has reported no taxable income 
over the past ten years and has suffered serious 
declines in its sales in the past year, DN-14, p. 6 
and Attachments, and whose projected maximum 
achievable fuel economy is substantially less than 
its domestic competitors. See Table 2. 

AVhen this clarifying language in the Confer- 
ence Report is applied to the projected maximum 
feasible fuel economy values for each manufac- 
turer as set forth in Table 2, it becomes clear that 
in establishing these standards the "least capable" 
manufacturer should not be the limiting con- 
straint in determining maximum feasible average 
fuel economy. From that table, it appears that 



PART 531— PRE 29 



Effective: Model Years 1981-1984 



the projected maximum feasible level for AMC 
in the years 1981-84 ranges from approximately 
one to three miles per p;allon less than that of the 
least capable of the "Bio: Three" in each of those 
years. In terms of the nation's petroleum import 
bill, the cost to consumers of setting the fuel 
economy standards at the level attainable by 
AMC as opposed to basing it on that attainable 
by the "Big Three" could be nearly half a billion 
dollars in 1983 alone. Against the benefit of 
avoiding that substantial cost through establish- 
ing higher standards, the Department must bal- 
ance the potential civil penalty liability which 
AMC could be subject to, which could be up to 
$145 per automobile sold in 1983. Further, the 
Department must consider AMC's present small 
market share of under 3 percent of the domestic 
market and its resulting relatively small impact 
on industry employment, and the possibility dis- 
cussed in the previous paragraph that any civil 
penalty liability might be mitigated by the De- 
partment. In view of these considerations, the 
Department nmst not base its determination of 
maximum feasible average fuel economy on the 
single domestic manufacturer with the lowest 
projected fuel economy capability. 

While the Department believes that the pre- 
vious paragraph correctly applies the statutory 
criteria, it may paint a misleading picture of 
AMC's ability to meet fuel economy standards. 
First, as previously discussed, the projected fuel 
economy values in Table 2 are based on a limited 
class of available fuel economy improvement 
methods. AMC could adopt additional measures 
to improve fuel economy. Second, a number of 
further measures are available to relatively small 
manufacturers such as AMC to achieve major 
improvements in average fuel economy in a short 
time period. Among these are the discontinuance 
of sale of poor fuel economy model types and the 
purchase of high efficiency engines and other 
technology from outside sources. Both of these 
options require minimal capital investment and 
are readily implementable. The Department has 
no information on AMC's precise product plans 
over the next several years, but it appears that 
some significant initiatives is planned whicii 
would result in major fuel economy improve- 
ments for that company's automotive fleet. Re- 
cently, AMC's president predicted that their 



corporate fuel economy average would achieve 
27.5 mpg by the early I980's. "Ward's Auto 
World," June 1977, p. 30, Docket Number FE- 
76-01-GR-16. AMC officers also testified that 
they expect the average fuel economy of their 
passenger automobiles to remain competitive 
with that of the other domestic manufacturers, 
and not fall significantly below that level, as the 
Table 2 numbers might indicate. Tr-II, p. 220. 
Thus, it appears that AMC's future average fuel 
economy levels may be significantly understated 
in the DOT analysis, and the resulting civil 
penalty impact correspondingly overstated. 

The Conference Report clarification of the 
"maximum feasible" requirement also has impli- 
cations for the "Big Three" manufacturers. 
Although the fuel economy improvement poten- 
tials of those three companies were found to be 
relatively close numerically, some significant fuel 
savings benefit could be achieved by setting the 
fuel economy standard at a level higher than that 
found to be achievable for the least capable of 
the three. The harm suffered by those companies 
as a result of a higher standard is measured by 
the magnitude of the civil penalties generated. i 
If the calculation of manufacturer-specific fuel ' 
economy improvements in Table 2 is correct, and 
if each manufacturer improved its average fuel 
economy up to those levels in each year, no net 
civil penalty liability would result for the "Big 
Three" if the maxinuim feasible average fuel 
economy levels were established as follows: 23.3 
mpg for 1981, 24.6 mpg for 1982, 26.1 mpg for 
1983, and 27.4 mpg for 1984. At those levels, any 
civil penalty liability for those companies in one 
of the affected years would be offset by credits 
obtained for overachievement in prior or subse- 
([uent years. The onlj' obvious adverse impact 
from adopting this approach would be possible 
bad publicity resulting from the failure to meet 
standards. In view of the fact that the Act's 
sanctions are monetary civil penalties, which can 
be offset from year to year, no major stigma 
would attach to single year noncompliance. In 
fact, the Act's unique enforcement scheme ap- 
pears to be designed to create economic incentives 
for encouraging compliance rather than harsh 
sanctions for noncompliance. Therefore, the 
Department has concluded that any harm to the 
individual manufacturers from single year non- 



PART 531— PRE 30 



EfFecHve: Model Years 1981-1984 



petroleum consumption could result in a cumula- 
tive national savings of approximately 25 billion 
dollars by the year 1095. at an assumed petroleum 
price of $13.50 per barrel. See RSP Table 6.7. 

VIII. Economic impact of the standards. 

The economic impact of these standards was 
independently evaluated in accordance with In- 
ternal Re<:ulatory Procedures by the NHTSA 
Office of Planninp: and Evaluation. This assess- 
ment utilizes the assumptions set forth in the 
RSP and exi)ands upon the analyses in that 
document. That is, the RSP shows cumulative 
impacts from 1977 for all fuel economy improve- 
ments while the Economic Impact Assessment 
i-eflects changes from MY 1980 vehicles due solely 
to improvements necessary to meet the rule. 

To summarize the Economic Impact Assess- 
ment, the total chanpe for the Domestic Auto 
Industry for model years 1981-84 (from a base 
of MY 1980 and 20 mpp) due to the rule are 
estimated as follows: 

Gasoline consumption for the average vehicle 
manufactured in MY's 1981-84 will be reduced 
!)}• approximately 1100 gallons for a total life- 
time savings of 1.2 billion barrels; consumer 
lifetime gasoline costs (at 65 cents per gallon) 
will be reduced by $640 per car, retail prices 
will increase by about 3 percent or $175 per 
car: total consumer costs (that is, retail prices, 
maintenance costs, and gasoline costs) are 
anticipated to decrease by about $450 per car 
or $20 billion nationally. The domestic indus- 
try extraordinary capital requirements are 
anticipated to increase by $3 billion, new car 
sales may decrease by about .4 percent or a 
total of 155.000 vehicles, and total industry 
employment is estimated to ri.se by 77.000 jobs 
due to extraordinary capital expenditures. 
Most of these impacts can be considered in- 
significant with the exception of the reduction 
in gasoline consumption and possibly the in- 
crease in industry capital requirements, should 
sales decline for several years due to unfore- 
seen events. 

Sensitivity analyses performed on several of 
the variables used in tlie analysis show little 
change in results. Thus, these results are good 
approximations of the impacts to be expected 
\ from the rule. 



It is recognized that the economic projections 
made in the Department's various economic 
analyses are subject to possible changes in the 
national economy and in the structure of the 
industry, which no one is presently able to pre- 
dict with perfect accuracy. 

IX. Environmental Impact. 

A detailed analysis of the environmental im- 
pacts associated with various alternative fuel 
economy standard schedules for the 1981-84 
period was conducted, consistent with the re- 
quirements of the National Environmental Policy 
Act, 42 U.S.C. 4321, et seq. The analysis con- 
cluded that the national goals of a better environ- 
ment and of energy conservation are generally 
compatible, in that measures which tend to con- 
serve energy also tend to be beneficial to the 
environment. The most obvious environmental 
benefits associated with these standards are the 
conservation of scarce resources such as petroleum 
and the various metals which presently go into 
the automobiles, and the reduction of pollution 
associated with the extraction and processing of 
those materials. Most areas of possible adverse 
environmental impacts, such as the pollution 
associated with the increased use of lightweight 
materials, are offset by reductions in pollution 
associated with the items replaced. The most 
significant possible exception to this is the still 
unresolved issue of the generation and potential 
for control of presently unregulated pollutants 
from diesel and other alternative engines. The 
Department has not based its standards on the 
use of alternative engines at this time primarily 
for that reason. However, the issue of the en- 
vironmental impacts associated with the various 
alternative engines is of major importance, and 
the EPA is pursuing the matter now. 

X. Safety impact. 

The NPRM raised a question regarding the 
impact of occupant safety of downsizing pas- 
senger automobiles as a result of the fuel economy 
standards. Depending upon the assumptions 
made, reasonable conclusions can be made that 
there will be little net safety impact or, alter- 
natively, that there will be a significant adverse 
safety impact. 



PART 531— PRE 35 



Effective: Model Years 1981-1964 



A major reason for suggesting that downsizing 
might have a significant adverse safety impact 
is the physical law of conservation of momentum, 
which indicates that when objects of different 
mass collide, the smaller object will experience 
a greater change in velocity than the larger one. 
DN-18, Att. VII, p. 4 (GM). There, in a col- 
lision between a small automobile and a large 
one, the occupants of the smaller one may collide 
with the vehicle interior with a greater velocity 
than would be the case for the occupants of the 
larger automobile, assuming that seat belts were 
not used. A further advantage which large auto- 
mobiles may have is that their additional size 
may provide for additional energy-absorbing 
crush space outside the occupant compartment, 
which may allow the energy- of a crash to be 
dissipated in a manner less injurious to the 
occupants. 

On the other hand, accident information ap- 
pears to indicate that the change of injury in 
single car crashes is not appreciably greater in a 
small car than in a large car. The reduction in 
vehicle weight and size will apparently be offset 
to a substantial degree by the reduction in the 
range of passenger automobile weights which is 
projected to occur as the larger automobiles are 
downsized. Further, smaller automobiles may 
have certain advantages in terms of accident 
avoidance which tend to offset their possible dis- 
advantages. One suoh advantage is related to the 
"target-projectile" effect. See Docket \o. FE- 
76-01-GE-7, pp. 40-2 (Mr. Stanley Hart). This 
effect results from the fact that the larger an 
automobile is in relationship to a road lane, the 
more likely it is to hit or be hit by anything else 
within that lane, and the more likely it is to veer 
outside its assigned lane because of the reduced 
margin for error. A corollary to this is the 
increased ability of a small automobile to ma- 
neuver within its lane to avoid other automobiles. 
Docket No. FE-76-01-GR-8, p. 9 (Prof. P. L. 
Yu, et al.). Furthermore, although the shielding 
effect of vehicular weight may be an indicator 
of an automobile's protective ability, that same 
weight also serves as a weapon with respect to 
other automobiles and pedestrians. Thus, addi- 
tional weight in vehicles may be a benefit to the 
occupant of that particular vehicle but a detri- 
ment to other drivers and pedestrians. 



Available technology provides the means to 
argue that the downsized automobile fleet of the 
1980's will be as safe, or safer, than the fleet of 
today. The Department has statutory responsi- 
bility under the National Traffic and Motor Ve- 
hicle Safety Act to issue motor vehicle safety 
standards that meet the need for motor vehicle 
safety. The estimates of fuel economy penalties 
due to Federal motor vehicle safety standards 
presume the existence of standards that will 
yield safety improvements which more than off- 
set any net safety impacts due to reduced vehicle 
size or weight (see RSP). 

The above conclusions should not be construed 
to mean that passenger automobiles are or will 
be as safe as possible. Among the actions that 
could be taken to improve the safety character- 
istics of future automobiles are techniques de- 
scribed in Volvo's response to the May 10, 1977, 
special order, such as the use of energj'-absorbing 
structural designs. DX-28-02, p. 11 and Attach- 
ment. These techniques could be implemented 
concurrently with the vehicle redesign which oc- 
curs as part of the downsizing process. When 
representatives of the two largest domestic manu- 
facturers were asked at the fuel economy hearing 
whether their companies planned to incorporate 
such techniques as part of the redesign process, 
they responded that they would do whatever was 
necessary to comply with applicable safety 
standards, but presumably no more. Tr-II, p. 86 
(Ford) and 187 (GM). The Department en- 
courages the various automakers to consider 
techniques such as those described by Volvo when 
present passenger automobiles are redesigned. 

XI. 1981-1984 Passenger Automobiles. 

The passenger automobiles produced during 
the 1981-84 period will differ significantly from 
those presently produced. These differences will 
result not only from the requirements of the 
Motor Vehicle Information and Cost Savings 
Act, but also from requirements in the areas of 
safety and emission control and from market and 
other forces. It is therefore appropriate to dis- 
cuss in general terms the implications of all these 
requirements for the driving public, with par- 
ticular emphasis on the energy-related changes. 



PART 531— PRE 36 



The final reason suggested by the commenters 
for denying Excalibur's petition for exemption 
was that the agency should exercise its discretion 
to deny the petition on the grounds that it is 
contrary to the general goal of energy conserva- 
tion and that an exemption would erode public 
support for the fuel economy program. This 
agency believes that the language in section 
502(c) specifying that the agency may exempt 
low volume manufacturers indicates that Con- 
gress intended this agency to apply a test of 
whether granting an exemption would be gen- 
erally consistent with the purposes of the Act. 
The main purpose of the Act is conserving 
energy. Establishing standards above the max- 
imum feasible average fuel economy for Excali- 
bur would not conserve any energy, since the 
alternative standard is based on the premise that 
it is not possible for Excalibur to achieve better 
fuel economy than its maximum feasible level. 

As to the comments stating that an exemption 
for Excalibur would endanger public support for 
the program, this agency does not agree that re- 
quiring verj' small manufacturers like Excalibur 
to comply with standards set at their maximum 
feasible level instead of the maximum feasible 
level for larger manufacturers will necessarily 
erode public support for the program. Instead, 
the agency believes that the process of exempting 



the very small manufacturers will be viewed as 
equitably adjusting the generally applicable fuel 
economy standards to the lesser capabilities of 
these manufacturers. 

For these reasons the agency has determined 
that the maximum feasible average fuel economy 
for Excalibur in the 1978 model year is 11.5 mpg. 
Therefore, this agency is exempting Excalibur 
from the generally applicable standard of 18.0 
mpg for the 1978 model year and is establishing 
an alternative standard for' Excalibur at 11.5 
mpg for the 1978 model year. 

Accordingly, 49 CFK Part 531 is amended. . . . 

AUTHORITY: Sec. 9, Pub. 89-670, 80 Stat. 
931 (49 U.S.C. 1657); sec. 301, Pub. 94-163, 89 
Stat. 901 (15 U.S.C. 2002) ; delegation of author- 
ity at 41 FR 25015, June 22, 1976. 

The program official and attorney principally 
responsible for the development of this decision 
are Douglas Pritchard and Stephen Kratzke, 
respectively. 



Issued on January 11, 1979. 



Joan Claybrook 
Administrator 



44 F.R. 3708-3709 
January 18, 1979 



PART 531-PRE 41-42 



I 



PREAMBLE TO AMENDMENT TO PART 531— AVERAGE FUEL ECONOMY STANDARDS 

FOR PASSENGER AUTOMOBILES 

(Docket No. LVM 77-02; Notice 3) 



Action: Final decision to grant exemption from 
average fuel economy standards. 

Surmn<iry : This notice exempting Rolls-Royce 
Motors Inc. (Rolls-Royce) from the generally 
applicable average fuel economy standard of 
18.0 miles per gallon (mpg) for 1978 model year 
passenger automobiles and establishing an alter- 
native standard is issued in response to a petition 
by Rolls-Royce. The alternative standard is 10.7 
mpg. 

Date: The exemption and alternative standard 
apply in the 1978 model year. 

F&r further information contact : 

Douglas Pritchard, Office of Automotive 
Fuel Economy Standards, National Highway 
Traffic Safety Administration, Washington, 
D.C. 20590 (202-755-9384). 

SupfUmentary information: 

The National Highway Traffic Safety Admin- 
istration (NHTSA) is exempting Rolls-Royce 
from the generally applicable passenger automo- 
bile average fuel economy standard for the 1978 
model year and establishing an alternative 
standard. 

This exemption is issued under the authority 
of section 502(c) of Title V of the Act. Section 
502(c) provides that a manufacturer of passenger 
automobiles that manufactures fewer than 10,000 
vehicles annually may be exempted from the gen- 
erally applicable average fuel economy standard 
if that generally applicable standard is greater 
than the low volume manufacturer's maximum 
feasiole average fuel economy and if the NHTSA 
establishes an alternative standard applicable to 
that manufacturer at the manufacturer's maxi- 
mum feasible average fuel economy. In deter- 
mining the manufacturer's maximum feasible 



average fuel economy, section 502(e) of the Act 
requires the NHTSA 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 Nation to conserve energy. 

This final rule was preceded by a notice an- 
nouncing the receipt of a petition for exemption 
from the 1978 standard (42 FR 64171 ; December 
22, 1977) and a proposed decision to grant an 
exemption to Rolls-Royce for the 1978 model year 
(43 FR 30081; July 13, 1978). Only one com- 
ment on the notice of receipt was submitted. 
That commenter urged that Rolls-Royce be 
exempted "in the name of common sense". 

Eleven comments were received in response to 
the proposed decision, all of which opposed the 
proposed exemption. These comments raised 
three main points: Congress never intended that 
Rolls-Royce receive an exemption; the agency 
had incorrectly determined the maximum feasible 
average fuel economy for Rolls-Royce; and even 
if Rolls-Royce were eligible and had a maximum 
feasible average fuel economy of less than the 
generally applicable standard of 18.0 miles per 
gallon (mpg), NHTSA should use its discretion 
to deny the Rolls-Royce petition. 

With respect to the first point, several com- 
menters stated that it was unfair for some manu- 
facturers to be forced to comply with a standard 
of 18 mpg, while others were exempted from that 
requirement. Gongi-ess determined, however, 
through section 502(c) of the Act, to authorize 
this agency to exempt low volume manufacturers 
from the generally applicable standard and estab- 
lish a standard for those manufacturers at the 
level of their maximum feasible average fuel 



PART 531-PRE 43 



economy. Congress took this action in recogni- 
tion of a variety of factors, including the limited 
engineering staff and financial resources of these 
manufacturers. Low volume manufacturers can 
be exempted from the generally applicable stand- 
ards only if they cannot comply with those 
standards, and if alternative standards are set. 

Other commenters said that the agency should 
require fuel economy improvements by all manu- 
facturers, not permit certain manufacturers to 
ignore the generally applicable fuel economy 
standards. The agency is requiring all exempted 
manufacturers to comply with an alternative 
standard set at their maximum feasible average 
fuel economy. A requirement that these manu- 
facturers achieve some higher fuel economy level 
would not save any additional fuel, since the 
alternative standard is based on the premise that 
it is not possible for a manufacturer to achieve 
a higher fuel economy level. Hence, exempting 
low volume manufacturers from the generally 
applicable standards and establishing an alterna- 
tive standard at their maximum feasible level 
does not result in any additional use of fuel. 

In this vein, one other commenter suggested 
that Congress had intended that the low volume 
exemptions only be available to manufacturers 
of moderately priced cars, and not to manufac- 
turers of very expensive cars. In this comment- 
er's view, the manufacturer of very expensive cars 
can pass on any civil penalties to its customers 
in the form of a price increase. Given the price 
of these cars, this commenter concluded that the 
increase would not cause any noticeable decrease 
in sales, while an exemption would only serve to 
keep prices down for the purchasers of these 
expensive vehicles. 

No legislative history supporting this conten- 
tion regarding Congressional intent is cited by 
the commenter or known to this agency. Congress 
did give the agency discretionary authority to 
grant or deny petitions. However, Congress did 
not direct the agency to use that discretion to 
deny exemption petitions by manufacturers of 
high-priced automobiles or to use it in any other 
particular manner. 

Other comments suggested that it was imfair 
to grant exemptions only to foreign companies, 
while requiring all domestic companies to comply 



with the generally applicable standard. Both 
domestic and foreign low volume manufacturers 
are eligible for exemptions. Indeed, the first two 
low volume manufacturere to receive exemptions 
were domestic manufacturers, Avanti and 
Checker. 

The second major objection raised by the com- 
menters concerned this agency's determination of 
the maximum feasible average fuel economy for 
Rolls-Royce. No commenters suggested that the 
consideration of technological feasibility or the 
effect of other Federal motor vehicle standards 
on fuel economy had been in error. In this con- 
nection, it should be emphasized that the time for 
improving the fuel economy of 1978 Rolls-Royces 
has passed. However, several commenters stated 
that this agency had not properly considered the 
economic practicability or the need of the Nation 
to conserve energy. 

One commenter argued that this agency had 
not considered the ability of Rolls-Royce to pay 
the civil penalty which would be assessed if 
Rolls-Royce failed to comply with the higher 
generally applicable standard. The agency agiees 
that it has confined itself under Section 502(c) 
to an analysis of the financial capabilities of the 
petitioner to improve fuel economy by using 
smaller engines, lighter components, and the like, 
and does not consider the ability to absorb any 
potential civil penalties. 

The reason for so limiting the analysis of eco- 
nomic practicability in setting alternative stand- 
ards for individual manufacturers is that the 
agency believes that Congress intended the maxi- 
mum feasible concept to result in an alternative 
set at the highest average fuel economy level a 
manufacturer could reasonably be expected to 
achieve in a given model year. If the ability to 
pay any civil penalty is considered as a' part of 
economic practicability for an individual manu- 
facturer, the resulting standard would be higher 
than the highest fuel economy level the manu- 
facturer could achieve in that model year, and 
thus would impose an unavoidable civil penalty. 
This would not conserve any additional fuel 
since it would not cause that manufacturer to 
achieve higher fuel economy and would not apply 
to other manufacturers whose fuel economy could 
exceed the fuel economy of that manufacturer. 
Accordingly, the agency does not believe that 



PART 531-PRE 44 



( 



PREAMBLE TO AN AMENDMENT TO PART 531— AVERAGE FUEL ECONOMY 
STANDARDS FOR PASSENGER AUTOMOBILES 



(Docket No. LVM 82-01; Notice 2) 



ACTION: Final Rule. 



SUMMARY: This notice grants petitions by Aston 
Martin Lagonda, Ltd. (Aston Martin), Avanti 
Motor Corporation (Avanti), Checker Motor Cor- 
poration (Checker), Excalibur Automobile Cor- 
poration (Excalibur), and Rolls-Royce Motors, Ltd. 
(Rolls-Royce), requesting that they be exempted 
from the generally applicable average fuel 
economy standards for 1981-1985 passenger 
automobiles, and that lower alternative standards 
be established for those companies. This notice, 
which was preceded by a proposal requesting 
public comments, establishes those exemptions 
and alternative standards under the authority of 
the Motor Vehicle Informaton and Cost Saving 
Act. The alternative standards are the same as 
those proposed except in the case of Checker. 
Checker has stopped production of all its 
passenger automobiles. Accordingly, its petition 
for the 1983-85 model years is treated as moot. 

DATE: These exemptions are effective for model 
years 1981-1985. 

SUPPLEMENTARY INFORMATION: The NHTSA is 
exempting Aston Martin, Avanti, Excalibur, and 
Rolls-Royce from the generally applicable average 
fuel economy standards for passenger automobiles 
manufactured in the 1981-1985 model years and 
establishing alternative standards applicable to 
those companies in those model years. Checker is 
granted exemptions and subject to alternative 
standards for the 1981 and 1982 model years. 

These exemptions are issued under the authority 
of section 502(c) of the Motor Vehicle Information 
and Cost Savings Act, as amended ("the Act") (15 
I'.S.C. 2002(c)). Section 502(c) provides that a 
nanufacturer of passenger automobiles which 
nanufacture fewer than 10,000 vehicles annually 



may be exempted from the generally applicable 
average fuel economy standard for a particular 
model year if that standard is greater than the low 
volume manufacturer's maximum feasible average 
fuel economy and if the NHTSA establishes an 
alternative standard applicable to that manufac- 
turer at the maximum feasible average fuel 
economy. In determining the manufacturer's max- 
imum feasible average fuel economy, section 502(e) 
of the Act (15 U.S.C. 2002(e)) requires the NHTSA 
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 Nation to conserve energy. 
This final rule was preceded by a notice announc- 
ing the NHTSA's proposed decision to grant an ex- 
emption to all five of these companies for all five 
model years (47 FR 20639; May 13, 1982). NHTSA 
received only one comment during the 45-day com- 
ment period. The comment was from Checker. 

Checker stated that its financial condition would 
not permit it to carry out its plans to improve fuel 
economy for its 1983-1985 model year vehicles, 
and requested lower alternative standards for each 
of those model years. On July 9, 1982, Checker 
ended production of its passenger automobiles 
with no plans to resume that production. Accord- 
ingly, NHTSA is dismissing Checker's petition for 
exemption during the 1983-1985 model years as 
moot. Exemptions and alternative standards are 
established for the 1981 and 1982 model years, the 
years in which Checker was producing automo- 
biles. No other comments were received. 

Based on its conclusions that the maximum feasi- 
ble average fuel economy levels for each of the 
petitions during the 1981-1985 model years would 
be as shown below, that other Federal motor 



I 



PART 531; PRE 59 



vehicle standards would not affect achievable fuel 
economy beyond the extent considered in this 
analysis, and that the national effort to conserve 
energy will not be affected by the granting of these 
requested exemptions, NHTSA hereby exempts 
the five petitioners from the generally applicable 
average fuel economy standards and establishes 
alternative standards for the petitioners at the 
levels shown below. 



Part 531— [Amended] 

In consideration of the foregoing, 49 CFR Part 
531 is amended by revising § 531.5 to read as 
follows: 

§ 531.5 Fuel economy standards. 

***** 

(b) The following manufacturers shall comply 
with the standards indicated below for the 
specified model years: 

(1) Avanti Motor Corporation. 

Average Fuel Economy Standard 



Model year 



Miles per 
gallon 



1978 16.1 

1979 14.5 

1980 15.8 

1981 18.2 

1982 18.2 

1983 16.9 

1984 16.9 

1985 16.9 

(2) Rolls-Royce Motors, Inc. 

Average Fuel Economy Standard 



(3) Checker Motors Corporation. 

Average Fuel Economy Standard 



Model year 



Miles per 
gallon 



1978 17.6 

1979 16.5 

1980 18.5 

1981 18.3 

1982 18.4 

(4) Aston Martin Lagonda, Inc. 

Average Fuel Economy Standard 



Model year 



Miles per 
gallon 



1979 11.5 

1980 12.1 

1981 12.2 

1982 12.2 

1983 11.3 

1984 11.3 

1985 11.4 

(5) Excalibur Automobile Corporation. 
Average Fuel Economy Standard 



Model year 



Miles per 
gallon 



1978 11.5 

1979 11.5 

1980 16.2 

1981 17.9 

1982 17.9 

1983 16.6 

1984 16.6 

1985 16.6 



Model year 



Miles per 
gallon 



1978 10.7 

1979 10.8 

1980 11.1 

1981 10.7 

1982 10.6 

1983 9.9 

1984 10.0 

1985 10.0 



Issued on December 3, 1982. 



Raymond A. Peck, Jr., 
Administrator. 
47 F.R. 55684 
December 13, 1982 



PART 531; PRE 60 



PART 531— AVERAGE FUEL ECONOMY STANDARDS 
FOR PASSENGER AUTOMOBILES 



Sec. 




531.1 


Scope. 


531.2 


Purpose. 


531.3 


Applicability. 


531.4 


Definitions. 


531.5 


Fuel economy standards. 


531.6 


Measurement and calculation procedures 



5531.1 Scope. 

This part establishes average fuel economy 
standards pursuant to section 502(a) of the Motor 
Vehicle Information and Cost Savings Act, as 
amended, for passenger automobiles. 

5531.2 Purpose. 

The purpose of this part is to increase the fuel 
economy of passenger automobiles by establishing 
minimum levels of average fuel economy for those 
vehicles. 



3531 .3 Applicability. 

This part applies to manufacturers of passenger 
automobiles. 

5531.4 Definitions. 

(a) Statutary terms. (1) The terms "average 
fuel economy," "manufacture," "manufacturer," 
and "model year" are used as defined in section 
501 of the Act. 

(2) The terms "automobile" and "passenger 
automobile" are used as defined in section 501 of 
the Act and in accordance with the determination 
in part 523 of this chapter. 

(b) Other terms. As used in this part, unless 
otherwise required by the context— 

(1) "Act" means the Motor Vehicle Informa- 
tion and Cost Savings Act, as amended by Pub. L. 
94-163. 



mobiles shall comply with the following standards 
in the model years specified: 

Average fuel economy 
standard (miles 
Model Year per gallon) 

1978 18.0 

1979 19.0 

1980 20.0 

1981 22.0 

1982 24.0 

1983 26.0 

1984 27.0 

1985 and thereafter 27.5 

(b) The following manufacturers shall comply 
with the standards indicated below for the 
specified model years: 

1(1) Avanti Motor Corporation. 

Average Fuel Economy Standard 



Model year 



Miles per 
gallon 



1978 16.1 

1979 14.5 

1980 15.8 

1981 18.2 

1982 18.2 

1983 16.9 

1984 16.9 

1985 16.9 

(2) Rolls-Royce Motors, Inc. 

Average Fuel Economy Standard 



Model year 



Miles per 
gallon 



'1 



S531.5 Fuel economy standards. 

(a) Except as provided in paragraph (b) of this 
section each manufacturer of passenger auto- 

(Rev. 12/13/82) PART 531-1 



1978 10.7 

1979 10.8 

1980 11.1 

1981 10.7 

1982 10.6 

1983 9.9 

1984 10.0 

1985 10.0 



(3) Checker Motors Corporation. 

Average Fuel Economy Standard 



Model year 



Miles per 
gallon 



1978 17.6 

1979 16.5 

1980 18.5 

1981 18.3 

1982 18.4 

(4) Aston Martin Lagonda, Inc. 

Average Fuel Economy Standard 



Model year 



Miles per 
gallon 



1979 11.5 

1980 12.1 

1981 12.2 

1982 12.2 

1983 11.3 

1984 11.3 

1985 11.4 

(5) Excalibur Automobile Corporation. 
Average Fuel Economy Standard 



Model year 



Miles per 
gallon 



1978 11.5 

1979 11.5 

1980 16.2 

1981 17.9 

1982 17.9 

1983 16.6 

1984 16.6 

1985 16.6 



(6) Reserved 

(7) Officine Alfieri Maserati, S.p.A. 

Average Fuel Economy Standard 



Model year 


Miles per 
gallon 


1978 


12.5 


1979 


12.5 


1980 


09 5 





(47 F.R. 55685-December 13, 1982. Effective: For 
model years 1981-1985)1 



S531.6 Measurement and calculation procedures. 

(a) The average fuel economy of all passenger 
automobiles that are manufactured by a manufac- 
turer in a model year shall be determined in 
accordance with procedures established by the Ad- 
ministrator of the Environmental Protection 
Agency under section 502(a) (1) of the Act and set 
forth in 40 CFR Part 600. 



42 F.R. 33534 
June 30, 1977 



(Rev. 12/13/82) 



PART 531-2 



PREAMBLE TO PART 533— AVERAGE FUEL ECONOMY STANDARD FOR NON- 
PASSENGER AUTOMOBILES 
(Docket No. FE 76-3; Notice 3) 



This notice establishes average fuel economy 
standards for nonpassenger automobiles which 
are rated at 6,000 pounds gross vehicle weight or 
less and are manufactured in model year 1979. 
Vehicles affected by these standards include 
pickup trucks, vans, and four-wheel drive, jeep- 
type vehicles which are rated within that weight 
range. The standard for four-wheel drive non- 
passenger automobiles which are jeep-type ve- 
hicles is 15.8 mpg. The standard for all other 
nonpassenger automobiles is 17.2 mpg. The pur- 
pose of these standards is to conserve gasoline 
by improving the fuel economy of the Nation's 
fleet of nonpassenger automobiles. The agency 
estimates that 102,500,000 gallons of gasoline will 
be saved annually by the 1979 nonpassenger 
automobile fleet, over 1976 levels. The decreas- 
I ing world petroleum supply and the uncertain 
availability to this Nation of existing foreign 
petroleum, combined with the importance of 
petroleum to the national economy and standard 
of living, have made these fuel economy standards 
necessary. 

Dates: These standards will apply to the 1979 
model year. 

For further information, contact : 

Stephen P. Wood 

Office of Chief Counsel 

National Highway Traffic Safety 

Administ ration 
Department of Transportation 
Washington, D.C. 20590 
(202-426-9511) 

Supplementary Information: 
\ The National Highway Traffic Safety Admin- 
istration (NHTSA) is establishing average fuel 
economy standards for nonpassenger automobiles 
manufactured in model year 1979. These stand- 
ards will appear in a new Part 533, added to 



NHTSA regulations by this action. The average 
fuel economy standards are issued pursuant to 
section 502(b) of Title V of the Motor Vehicle 
Information and Cost Savings Act, as amended. 
This final rule was preceded by a questionnaire 
last summer and a notice of proposed rulemaking 
(NPRM), 41 FR 52087, November 26, 1976. The 
rule proposed in the NPRM placed all nonpas- 
senger automobiles 6,000 pounds gross vehicle 
weight rating (GVWR) or less in a single class, 
and established an average fuel economy stand- 
ard of 18.7 mpg for that class. The NPRM 
specified that this proposed standard would be 
reduced in light of any effects of 1979 emissions 
standards and testing procedures established by 
the EPA. 

Comments to the NPRM were received by 
NHTSA and were carefully evaluated in the 
process of developing the final rule. Most of the 
comments were submitted by automobile manu- 
facturers. There were no comments received 
from consumer groups, or other public interest 
organizations. 

A number of issues were raised by the com- 
ments received in response to the NPRM. The 
resolution of several of those issues has resulted 
in changes to the final rule. The major issues 
which have been raised, and their resolution, 
along with specific changes to the final rule, are 
described in the following discussion. 

Sunwiary of changes in the rule and its ra- 
tionale. The final rule, which is still limited to 
nonpassenger automobiles 6,000 pounds GVWR 
or less, provides for two classes of nonpassenger 
automobiles, and a separate average fuel economy 
standard for nonpassenger automobiles in each 
class. The average fuel economy standard for 
four-wheel drive, jeep-type vehicles is 15.8 mpg. 
The average fuel economy standard for all other 
nonpassenger automobiles is 17.2 mpg. 



PART 533— PRE 1 



Comments received from the manufacturers 
indicated that a separate class of nonpassenger 
automobiles, with a separate average fuel econ- 
omy standard, was appropriate for four-wheel 
drive jeep-type vehicles. Therefore, the agency 
is establishing two average fuel economy stand- 
ards for nonpassenger automobiles manufactured 
in model year 1979, one for the jeep-type ve- 
hicles, and one for the remainder of nonpassenger 
automobiles. However, manufacturers of jeep- 
type vehicles will have the option of counting 
their vehicles in the special class for those ve- 
hicles, or in the general class of other nonpas- 
senger automobiles. 

As described fully in the NPRM, the proposed 
standard was based primarily on the domestic 
manufacturers' production plans for 1979. In 
brief, this approach was taken to avoid market 
shifts to heavier, less fuel economical vehicles, 
which could be be precipitated or aggravated by 
requiring manufacturers to take drastic measures 
to improve fuel economy on short notice. Also, 
the agency believes that the short leadtime before 
model year 1979 precluded major changes from 
current 1979 product plans. Both final stand- 
ards are based primarily on the manufacturer's 
product plans for 1979. The agency continues to 
believe that the approach taken in the NPRM is 
appropriate, for the reasons stated therein. 

For the general class of nonpassenger automo- 
biles that excludes four-wheel drive jeep-type 
vehicles, the domestic manufacturers indicated in 
their comments to the NPRM that an average 
fuel economy in the range of 18.7 mpg to 19.0 
mpg was attainable for model year 1979, assum- 
ing both 1976 Federal emissions standards and 
testing procedures. Chrysler projected an aver- 
age fuel economy of 16.5 mpg for 1979, assuming 
1979 Federal testing procedures and the 1979 
emissions standards; if Chrysler's estimated fuel 
economy reduction of 13 percent for emissions 
and testing procedures is taken out of the 16.5 
projection, Chrysler in effect projected an aver- 
age fuel economy of 19 mpg under 1976 emissions 
standards and testing procedures. 

As described below, the agency does not believe 
that the manufacturers' fleets of 1979 nonpassen- 
ger automobiles will experience a fuel economy 



penalty from the 1979 Federal emissions stand- 
ards. However, based on its own analysis and 
the comments received, the agency concludes that 
the change in the fuel economy testing procedures 
in model year 1979 will result in a reduction in 
measured fuel economy of 8 percent. Therefore, 
in the final rule, the proposed standard of 18.7 
mpg is lowered to 17.2 mpg. 

The standard for four-wheel drive jeep-type 
nonpassenger automobiles, like the standard for 
the balance of nonpassenger automobiles, is based 
on the projected fuel economy of the manufac- 
turers, on an industry or marketwide basis. 
American Motors Corporation (AMC), Toyota 
and Chrysler are the only manufacturers of ve- 
liicles in this subclassification of nonpassenger 
automobiles. Tlie agency's analysis of Toyota's 
fuel economy potential indicates an average fuel 
economy for Toyota approximately 15 percent 
lower than AMC. Chrysler has been achieving 
higher fuel economy than Toyota, but not as 
high as AMC. Because AMC is the major manu- 
facturer of the vehicles and is projecting the 
highest fuel economy, the standard was based on 
the fuel economy projections of AMC. AMC 
indicated in their comments that 17 mpg was an 
attainable average fuel economy for model year 
1979. Based on its consideration of AMC's 
product plans, the agency believes that AMC can 
make some additional improvement in fuel econ- 
omy by model year 1979. Therefore, the agency 
has concluded that a level of 17.2 mpg is attain- 
able for AMC under 1976 emissions standards 
and fuel economy testing procedures. By apply- 
ing the reduction in measured fuel economy re- 
sulting from changes in the testing procedures, 
the final 1979 standard for general utility, jeep- 
type vehicles is 15.8 mpg. 

A number of comments criticized NHTSA's 
consideration of technology available to improve 
fuel economy. Notwithstanding their criticisms 
all manufacturers indicated that 18.7 mpg to 19.0 
mpg, assuming 1976 Federal emissions and test- 
ing procedures, was acliievable for model year 
1979. Therefore, the agency does not believe a 
full discussion of the criticisms of its technologi- 
cal assessment is necessary at this time, but will i 
consider those criticisms in future rulemaking. 



PART 533— PRE 2 



Scope of the average juel economy standard. 
International Harvester commented that, al- 
though the preamble to the NPRM indicated 
that only vehicles 6,000 pounds or less, GVWE, 
were intended to be subject to the standard, the 
proposed standard as drafted includes in its scope 
vehicles less than 10,000 pounds GVWR. Inter- 
national Harvester bases its comment on its 
interpretation of proposed Part 523, Vehicle 
Classification, which was published in the Federal 
Register on December 20, 1976 (41 FR 55371). 

The agency believes that International Har- 
vester has misinterpreted proposed Part 523. 
Under that proposed regulation, the only vehicles 
with a GV^VR in excess of 6,000 pounds which 
would be determined to be "automobiles" within 
the meaning of Title V are vehicles which are 
manufactured primarily for use in transporting 
not more than 10 individuals, and which do not 
meet the criteria for automobiles capable of off- 
highway operation. If International Harvester's 
vehicles with a GVWR in excess of 6,000 pounds 
are not manufactured primarily for that use, 
those vehicles are not automobiles and, therefore, 
cannot be nonpassenger automobiles under the 
Vehicle Classification NPRM. If those vehicles 
are primarily manufactured for this use, but do 
not meet those criteria, the vehicles are passenger 
automobiles. 

O-ff-road vehicles. AMC contends in its com- 
ment to the NPRM that its Jeep CJ vehicle is 
not an automobile within the meaning of section 
501(1) of Title V. AMC contends that the Jeep 
CJ is designed, manufactured, and marketed 
primarily for off-highway operation. Under sec- 
tion 501(1), only vehicles which are "manufac- 
tured primarily for use on the public streets, 
roads, and highways" can be "automobiles." 
Since the Title authorizes the setting of average 
fuel economy standards only for "automobiles," 
AMC is in effect contending that its Jeep CJ 
vehicle cannot be subject to a fuel economy 
standard under the Title. 

Although AMC in its comment to the NPRM 
for nonpassenger automobiles did not indicate 
why it believes that its Jeep CJ vehicle is manu- 
factured primarily for off-road use, AMC did 
submit a fuller expression of its views on that 



subject in a comment to the Vehicle Classification 
NPRM. In addition, the Ford Motor Company 
submitted a comment to the Vehicle Classification 
NPRM which made a similar argument to the 
one made by AMC, that is, that certain vehicles, 
because of features making them capable of off- 
highway operation, are not automobiles within 
the meaning of Title V because they are not 
manufactured primarily for use on the highways. 
AMC stated that Jeeps are manufactured pri- 
marily for off-road use because they are "built 
with low and medium speed capability and 
accommodate many off-road work-performing 
equipment accessories." Ford indicated that ve- 
hicles characterized by all five of the following 
features are not manufactured primarily for use 
on the highways: (1) four-wheel drive, (2) high 
ground clearance in terms of approach, break- 
over, and departure angles, and running and axle 
clearance, (3) engine oil systems capable of op- 
eration at inclines up to a 60 percent grade, (4) 
relatively high axle ratios and heavy duty axle 
and suspension components, and (5) relatively 
high frontal area. 

NHTSA has concluded that there is no merit 
in the claims of AMC and Ford that vehicles 
with the characteristics set out above are not 
subject to fuel economy standards because their 
off-road characteristics place them outside the 
scope of Title V. The characteristics set out by 
the manufacturers are merely characteristics of 
vehicles which are capable of off-highway opera- 
tion. Neither manufacturer claimed that the 
vehicles referred to were not intended, or ex- 
pected, to spend a substantial portion of their 
operating lives on the public streets, roads, or 
highways. Therefore, NHTSA believes that 
Congress intended these vehicles to be automo- 
biles within the meaning of section 501 of Title 
V, and subject to fuel economy standards as non- 
passenger automobiles. NHTSA bases its per- 
ception of Congressional intent upon the plain 
language of section 501, the use of language 
identical to that used in other statutes where the 
vehicles referred to by Ford and AMC are clearly 
within the scope of those statutes, the legislative 
history of Title V, and the purpose for which the 
Title was enacted. 



ll 



PART 533— PRE 3 



Congress clearly intended that vehicles capable 
of off-highway operation be subject to fuel econ- 
omy standards as nonpassenger automobiles. The 
term "automobile capable of off-highway opera- 
tion" is defined in section 501(3) of Title V. 
Wliile such automobiles cannot be passenger 
automobiles, they can be subject to an average 
fuel economy standard under section 502(b) as 
"automobiles which are not passenger automo- 
biles." Thus, a manufacturer must show more 
than an off-highway capability in order to show 
that a vehicle is beyond the scope of Title V. 

In addition, a vehicle may be manufactured 
for more than one "primary" use. This inter- 
pretation of "primarily" is supported by the 
Supreme Court in Board of Governors of the 
Federal Reserve System v. Agnew 329 U.S. 441 
(1947). In Agnew, the Supreme Court had to 
decide whether a securities firm which eai-ned 
approximately two thirds of its revenue from 
brokerage, and less than one third from under- 
writing was "primarily engaged" in underwriting 
under the Banking Act of 1933. The Court be- 
lieved that "primary" does not always mean 
"first," and stated, "An activity may be primary 
... if it is substantial." 329 U.S. at 426. Thus, 
under Agnew, even if a vehicle was manufac- 
tured primarily for off-highway use, if highway 
use was a substantial use of the vehicle, it would 
be manufactured primarily for highway use also, 
and would therefore be subject to Title V. 

The phrase "manufactured primarily for use 
on the public streets, roads, and highways," 
which is found in the definition of "automobile" 
in section 501(1) of Title V, and which is the 
key to the claims of Ford and AMC, is also 
found in the definitions of "motor vehicle" in 
section 102(1) of the National Traffic and Motor 
Vehicle Safety Act of 1966 (15 U.S.C. 1391(1)) 
and section 2(15) of the Motor Vehicle Informa- 
tion and Cost Savings Act (15 U.S.C. 1901(15)). 
"Automobile" under Title V, and "motor vehicle" 
imder both the Vehicle Safety Act and the Cost 
Savings Act, do not completely overlap (for in- 
stance, "automobiles" are limited to four wheeled 
vehicles, while "motor vehicles" are not so lim- 
ited). However, with respect to a vehicle's 
identity as an on-road or an off-road vehicle, tlie 
terms "motor vehicle" and "automobile" seem to 
refer to the same vehicles. Looking at the ex- 



perience with these vehicles under the Motor 
Vehicle Safety Act and the Cost Savings Act, it 
is clear that the vehicles referred to by AMC 
and Ford ai-e on-road vehicles, with a capability 
for off-highway operation. 

After more than a decade of I'egulation under 
the Vehicle Safety Act, both Ford and AMC 
have acted consistently with the view that ve- 
hicles referred to here were "motor vehicles." 
Indeed, AMC admits that the vehicles are de- 
signed to meet the Federal safety standards ap- 
plicable to motor vehicles. Moreover, the 
legislative history of the Cost Savings Act spe- 
cifically contemplates that jeeps are subject to 
that Act. S.Rept. No. 92-413, 92d Cong., 1st 
Sess., at 20. Congress must be assumed to have 
been aware of this long, unchallenged regulatory 
practice which covered the vehicles at issue here 
when drafting the language found in section 501 
of Title V. 

NHTSA also notes that these vehicles are con- 
sidered by the Environmental Protection Agency 
(EPA) to be subject to the emissions standards, 
under the Clean Air Act, which apply only to 
vehicles "designed for transporting persons or 
property on a street or highway." 

There is nothing in the legislative histoi-y of I 
Title V which indicates that the intent of Con- 
gress was that the Title have a more narrow 
scope than that given by the NHTSA's interpre- 
tation. In its comment to the Vehicle Classifica- 
tion NPRM, Ford quotes the following passage 
from the legislative history of Title V, in sup- 
port of its claim that vehicles with all the features 
which Foi'd discussed are not manufactured 
primarily for on-road use: 

The effect of the definitional scheme of the 
bill is to exclude entirely vehicles not manu- 
factured primarily for highway use (e.g., 
agricultural and construction equipment, and 
vehicles manufactured prinmrily for off-roa/l 
rather than highway use). (Emphasis sup- 
plied by Ford.) 

The quoted language adds nothing to Ford's 
argument. Although this language gives some 
examples of the kinds of vehicles which Congiess 
intended not to be subject to fuel economy stand- 
ards under the Title, e.g., agricultural equipment 
and construction equipment, those vehicles are 



PAET 533— PRE 4 



not characterized bj' the features which are 
claimed by the manufacturers to establish that a 
vehicle was not manufactured for highway use. 
Furthermore, the languajre which Ford imder- 
scored by no means referred necessarily to the 
vehicles which Ford seeks to have excluded from 
the Title. Other vehicles, such as racing cars, 
fork-lifts, and airport fire apparatus are just 
some of the other vehicles which are not manu- 
factured primarily for on-road use. 

Indeed, if anything, the quoted language sup- 
ports NHTSA's position that its interpretation 
of the "manufactured primarily" language is 
correct, since the two examples of vehicles which 
were given have long been considered by the 
NHTSA to be off-road vehicles. Therefore, 
Congress seems to be adopting the NHTSA 
interpretation. Moreover, it should be noted that 
the quoted material referred to the definitional 
scheme as it existed in HR 7014. In that earlier 
version of Title V, there was no specific recogni- 
tion of automobiles which are capable of off-road 
operation. Tlierefore, the House report referred 
to a definitional scheme that less clearly included 
off-road vehicles than the scheme enacted into 
law. 
¥ Moreover, Ford did not discuss the legislative 

history of Title V in the Senatei. The bill orig- 
inally passed by the Senate dealing with auto- 
motive fuel economy standards was S.1883. 
Section 503(7) of S.1883 read: 

"light duty truck" means any motor vehicle 
rated at 6,000 pounds gross vehicle weight 
or less which (A) is designed primarily for 
purpose of transportation of property in- 
cluding a derivative of such a vehicle, or 
(B) has special features modifying such 
vehicle for predominant offstreet or off- 
highicay operation and use. (Emphasis 
added.) 

Hence, the vehicles AMC and Ford seek to have 
excluded from the title were specifically included 
in the original Senate bill. 

The text of S.1883 was incorporated verbatim 
into the Senate version of S.622; 41 Cong. Rec. 
S-169.57 (daily ed., September 26, 1975). The 
conference report for S.622 states that "average 
fuel economy standards shall apply to all new 
4-wheeled motor vehicles (referred to as "auto- 



mobiles") manufactured or imported into the 
United States which are rated at 6,000 pounds 
gross vehicle weight (GVW) or less" S.Rep. 
94^516, at 153. In light of the express provisions 
of the Senate bill and the broadly inclusive state- 
ment in the conference report, the agency believes 
that the legislative history supports the NHTSA 
interpretation of the scope of Title V. 

Finally, the purpose of the Title dictates that 
its provisions, especially regarding the scope of 
its applicability, be given a liberal constniction. 
Congress enacted Title V in response to the 
energy shortage and the pressing national need 
to reduce the consumption of gasoline. In light 
of the importance of energy conservation to the 
Nation's economic health and standard of living, 
NHTSA believes that Congress intended the 
Title to have broad application, and that any 
interpretation of the Title that would have the 
effect of exempting an entire class of vehicles 
from regulation under the Title must be firmly 
based in the language of the Title or its legisla- 
tive history. Neither AMC nor Ford has shown 
a clear expression of Congressional intent that 
the vehicles with the characteristics they de- 
scribed, making them suitable for off-road oper- 
ation, should be exempt from fuel economy 
standards established under the Title. Indeed, 
as has been demonstrated, the intent of Congress 
would have those vehicles subject to the Title. 

The agency realizes that the term "primarily," 
as used in the definition of passenger automobile 
in section 501(2) ("manufactured primarily for 
use in the transportation of not more than 10 
individuals") is given a different meaning than 
when it is used in section 501(1) ("manufactured 
primarily for use on the public streets, roads and 
highways"). However, the agency believes that 
Congress did not intend that the word be used 
in the same sense in those two definitional sec- 
tions. As discussed above, the use of the term 
"primarily" in the definition of "automobile" 
must be considered against a legislative backdrop 
of other statutes using the identical phrase, and 
the remedial purposes of Title V justifying a 
broad interpretation of those definitions which 
delineate the scope of its applicability. How- 
ever, the use of the term "primarily" in the 
definition of "passenger automobile" brings other 



PART 533— PRE 5 



considerations into play. First, the need to give 
the term so broad a meaning is less compelling 
when the effect is not to include a vehicle in the 
scope of the Title, but only to place a vehicle 
into one of the categories clearly within the 
scope of the Title. Second, the definition of 
"passenger automobile," unlike the definition of 
"automobile," is not identical to existing defini- 
tions in other statutes with established interpre- 
tations. Third, since all automobiles carry at 
least one passenger, interpreting primarily to 
mean "substantial" would result in no automobile 
being classified as a nonpassenger automobile. 
Since Congress clearly intended that nonpas- 
senger automobiles be considered apart from 
passenger automobiles, such an interpretation 
would defeat a clear Congressional intent. 

Captive Imports. In the NPRM, the NHTSA 
indicated its tentative intent to calculate a single 
average fuel economy figure for domestic manu- 
facturers which have captive imports by combin- 
ing the captive imports with the domestically 
produced vehicles of those manufacturers. Cap- 
tive imports are vehicles, such as the Chevrolet 
LUV and the Ford Courier pickup trucks, which 
are marketed by a domestic manufacturer but 
fabricated by a foreign manufacturer. It is 
anticipated that approximately 50,000 1979 
LUV's and 50,000 1979 Couriers will be imported 
into this country. The agency noted that there 
were some questions about the propriety of this 
inclusion, including one relating to the meaning 
of the term "control" as used in section 503(c) 
of Title V and whether General Motors and Ford 
import these vehicles within the meaning of sec- 
tion 501(9) of Title V. Comments and informa- 
tion were requested from interested parties. 

Comments were received from Chrysler, Gen- 
eral Motors and Ford supporting the inclusion 
of the captive imports, and from the Unit«d 
Auto Workers (UAW) and AMC opposing the 
inclusion. Chrysler supported the inclusion of 
the captive imports because it believed this would 
allow the manufacturer to adopt the most cost- 
effective strategy for maximizing fleet fuel econ- 
omy. General Motors supported the inclusion of 
the captive imports because it believed its owner- 
ship of 34 percent of the common stock of Isuzu 
(the producer of the LUV) plus its contractual 



control over the design, manufacture, and im- 
porting of the LUV vehicles makes General 
Motors the manufacturer under section 503(c) of 
Title V. Ford supported the inclusion of the 
captive imports because it believed Title V re- 
quires the separation of domestic and imported 
vehicles only for passenger automobiles, and be- 
cause it believes its contractual arrangements 
with Toyo-Kogyo (the producer of the Courier) 
make Ford the importer of the Courier and 
hence the manufacturer under section 501(9). 
Ford also believes its contractual control over the 
design and manufacture of the Courier consti- 
tutes sufficient control to make it the manufac- 
turer under section 503(c) of Title V. The 
UAWs opposition was based on its belief that 
the intent of the Title is to treat all imported 
and domestic vehicles separately, although it con- 
ceded that the language of the Title mandates 
this separate treatment only for passenger auto- 
mobiles. AMC objected because it believes that 
the net effect of the inclusion of the captive im- 
ports would be to discriminate against non- 
importers and stimulate foreign production at 
the expense of domestic production. 

The NHTSA has concluded that the inclusion 
of the captive imports in the model year (MY) 
1979 fleet is proper. First, it is clear that Ford 
and General Motors are the statutory manufac- 
turers of their captive imports. Under section 
503(c), the term "manufacturer" includes anyone 
who "controls" the manufacture of the vehicle. 
The NHTSA believes that control is not limited 
to majority stock ownership. Rather, control 
may consist of either the ownersliip of a large 
enough block of common stock in a producer to 
constitute effective voting control of the firm, as 
we believe is true of General Motors' ownership 
of Isuzu stock, or contractual restrictions on the 
design and manufacture of the vehicle which 
essentially eliminate the producer's freedom to 
alter the production of the vehicle, which we 
believe is true of the contracts between General 
Motors and Isuzu and between Ford and Toyo- 
Kogyo. Therefore, we believe that General 
Motors' and Ford's relationships with the Japa- 
nese producers of these vehicles is sufficient to 
make General Motors and Ford the statutory 
manufacturers of these vehicles. 



PART 533— PRE 6 



In addition, section 501(9) defines the im- 
) porter of a vehicle to be its manufacturer. The 
NHTSA believes that acceptance of delivery in 
the foreign country and assumption of full re- 
sponsibility for tlie shipment and import duties 
on the vehicles by a domestic firm, as is the case 
for Ford, is sufficient to make the domestic firm 
the importer of the vehicle, and hence its manu- 
facturer. 

Further, the NHTSA believes that separate 
treatment of domestic and imported NPA's is not 
required by the Title. Section 503(b)(1) of 
Title V requires the separate treatment of do- 
mestic and captive import vehicles for passenger 
automobiles only. Section 503(a) (2) leaves open 
the question of whether to establish administra- 
tive requirements for separate treatment of do- 
mestic and captive import nonpassenger automo- 
biles. The House report provides that procedures 
for calculating nonpassenger automobile average 
fuel economy are to be similar, although not 
necessarily identical to the procedures used for 
passenger automobiles. See H. Kept. No. 340, 
94th Cong., 1st Sess. 91 (1975). 
The provision in section 503(b)(1) for count- 
. ing most captive import passenger automobiles 
Ij together with the domestically produced pas- 
^ senger automobiles in model years 1978 and 1979 
pro%ndes the affected manufacturers with an 
opportunity to adjust to the separate treatment 
requirement. Most domestic manufacturers 
which have captive import passenger automobiles 
have comparable domestically produced passen- 
ger automobiles also. The agency believes that 
if there is to be complete separate treatment of 
captive import and domestically producetl non- 
passenger automobiles, there should be a similar 
adjustment period first. One factor in determin- 
ing the nature of such an adjustment period is 
the absence of any domestically produced non- 
passenger automobiles that are comparable to the 
captive import nonpassenger automobiles. 

The practical effect of not placing a limitation 
on counting the captive import nonpassenger 
automobiles in 1979 should be very small. The 
small, imported pickup truck market in this 
country, and Font's and General Motors' share 
of it, have been fairlj' stable over the past several 
years. The agency believes that this stability 



will continue through 1979. Therefore, the 
chances seem minimal of there being any signifi- 
cant increase in the number of captive import 
nonpassenger automobiles that could be attrib- 
uted to the absence of a limitation. However, 
since the manufacturers believe that inclusion of 
captive imports will help them market a more 
fuel economical fleet of nonpassenger automobiles, 
the agency is willing to allow inclusion for model 
year 1979. Allowing such inclusion may result 
in some small fuel economy benefits. If it can be 
demonstrated in a petition for reconsideration 
that the absence of a limitation on the inclusion 
of captive imports would have a significant effect 
on the captive import market, the agency would 
consider amending the standard. 

As to AMC's discrimination argument, it 
should be noted that while the inclusion of the 
imports may give a manufacturer importing 
nonpassenger automobiles with high fuel economy 
some added flexibility in achieving the standard, 
this flexibility is no greater than the flexibility 
that would be enjoyed by a manufacturer which 
domestically manufactures a number of nonpas- 
senger automobiles with high fuel economy. 

Finally, the agency wishes to emphasize again 
that the decision to include all captive import 
nonpassenger automobiles in the fleets of the do- 
mestic manufacturers which import them applies 
to model year 1979 only. As part of the rule- 
making to begin this summer regarding nonpas- 
senger automobile standards for after 1979, the 
agency is considering establishing a limitation 
similar to the one for captive import passenger 
automobiles in 1978 and 1979 and providing for 
completely separate treatment beginning in the 
early 1980's. In this connection, the agency will 
be gathering information regarding the desir- 
ability of this approach, and an appropriate base 
period, similar to the one specified in section 
503(b)(2)(B) of the Act, for the purpose of 
calculating the limitation. 

Classes of nonpassenger automobiles. In the 
NPRM, the agency proposed establishing a stand- 
ard for nonpassenger automobiles as a single 
class. The agency stated that it did not have 
sufficient information to assess the desirability or 
other implications of a multiple class system, nor 
had it fully assessed the potential criteria for 



PART 533— PRE 7 



diflferentiating between or among classes, or the 
eflFect that a multiple classification system would 
have on the ability of a manufacturer to balance 
vehicles with high and low fuel economy. 

Several comments discussed the classification 
issues which were raised in the NPRM. General 
Motors favored a single class for all nonpassenger 
automobiles, because such a system would allow 
a manufacturer maximum flexibility in meeting 
a standard. General Motors pointed out that a 
single class would enable the manufacturer to 
concentrate efforts for fuel economy improvement 
on its high volume products, while still being 
able to produce low volume, low fuel economy 
vehicles. General Motors indicated that a manu- 
facturer might stop producing low volume, low 
fuel economy nonpassenger automobiles if those 
nonpassenger automobiles could not be balanced 
against other, more fuel economical nonpassenger 
automobiles. AMC argued that a single classi- 
fication system favored large volume manufac- 
turers with a broad product line which could 
balance low fuel economy vehicles against high 
fuel economy veliicles. AMC also argued that 
the vehicles which it produces, four-wheel drive, 
general utility jeep-type vehicles should be placed 
in a separate class because these vehicles were 
inherently less fuel economical than nonpassenger 
automobiles in general. 

After considering these comments, as well as 
comments from International Harvester and 
Ford relating to separate classification, the 
agency has decided to establish a separate class 
for four-wheel drive, jeep-type vehicles. Because 
the agency intends that only four-wheel drive 
jeep-type vehicles, and not other four-wheel 
drive vehicles, such as some pickup trucks, be 
eligible for the separate class, the agency will 
allow only vehicles with wheelbases less than 110 
inches to be eligible for the separate class. Each 
manufacturer of jeep-type vehicles will have the 
option of including those vehicles in the separate 
class, or including those vehicles in the general 
class of nonpassenger automobiles. In this way, 
the problems of both the manufacturer with a 
broad product line and the manufacturer with a 
narrow product line can be accommodated con- 
sistent with the purposes of Title V. 



The basis for this decision is described below. 
The agency wishes to emphasize that the ap- 
proach taken to the classification issue in this 
instance will not necessarily be used in the future 
when considering other manifestations of the 
classification issue. 

Considering whether to establish a separate 
class for four-wheel drive, jeep-type vehicles 
brought into focus a problem in the analytical 
basis of the nonpassenger automobile fuel econ- 
omy program. On the one hand, section 502(b) 
clearly gives the agency the authority to estab- 
lish separate classes of nonpassenger automobiles 
with each class having a separate standard. This 
grant of authority recognizes that there are some 
vehicles which have characteristics in some way 
related to fuel economy making them either very 
fuel economical or very fuel imeconomical, which 
may justify their being subject to a special stand- 
ard. On the other hand, the fact that standards 
must be average fuel economy standards indicates 
that the manufacturers should be given some op- 
portunity to balance vehicles with differing fuel 
economies to ensure, consistent with the need to 
conserve energy, that a reasonable variety of 
vehicle types can be produced to satisfy con- 
sumer demand. 

In consideration of this problem, the agency 
made the following analysis. In the case of four- 
wheel drive, jeep-type vehicles, the agency con- 
sidered whether the vehicles were necessarily low 
performers (in terms of fuel economy) as com- 
pared to nonpassenger automobiles as a group. 
After considering the relevant comments and 
other information concerning these vehicles, the 
agency determined that these vehicles were in- 
herently low fuel performing vehicles in com- 
parison with nonpassenger automobiles in general, 
due to characteristics such as four-wheel drive 
and high drive ratios. 

After determining that the general utility ve- 
hicles had special characteristics relating to fuel 
economy which could justify a separate standard, 
the agency next considered the manufacturers of 
the vehicles to determine whether all nonpas- 
senger automobile manufacturers produce vehicles 
against which the low performing vehicles could 
be balanced. A single average fuel economy 
standard based on the performance of a variety 



PART 533— PRE 



of nonpassenger automobiles of both inherently 
high and inherently low fuel economy may not 
be feasible for a manufacturer of only the inher- 
ently low fuel economy nonpassenger automobiles. 
The manufacturer of only inherently low fuel 
economy vehicles would not be able to perform 
the balancing that was assumed in developing 
the standard, and would therefore be unable to 
meet the standard. The conference report ad- 
monishes the Administrator to weigh the benefits 
to the Nation of a given fuel economy standard 
against the difficulties of individual manufactur- 
ers in meeting the standard. In doing so, he is 
cautioned to consider the competitive and national 
economic implications of the standards that 
might severe Ij' strain any manufacturer. (S. 
Kept. No. 516, 94th Cong., 1st 8ess. 154-155 
(1975)). 

AMC is a manufacturer of four-wheel drive, 
jeep-type vehicles, which does not produce a sig- 
nificant number of high fuel economy vehicles 
against which its Jeep CJ could be balanced. 
Therefore, in light of the considerations discussed 
above, the agency deems the four-wheel drive, 
jeep-type vehicle to be an appropriate candidate 
for separate classification. 

The agency also considered the effect of a 
separate classification on Toyota, another manu- 
facturer of a general utility, jeep-type vehicle. 
Toj'ota produces mostly very high fuel economy 
nonpassenger automobiles, against which their 
Land Cruiser, which makes up approximately 17 
percent of their total nonpassenger automobile 
production, can be balanced. In addition, the 
Land Cruiser is much heavier and has substan- 
tially lower fuel economy than the AMC Jeep 
CJ. Because the Jeep CJ represents a much 
larger part of the four-wheel drive, jeep-type 
vehicle market, the maximum feasible level of 
fuel economj' would be influenced more by the 
Jeep CJ than the Land Cruiser. The agency 
believes that Toyota would be unlikely to spend 
substantial resources to improve the fuel economy 
of the Land Cruiser to the level where it could 
comply with the standard because that vehicle 
represents such a small portion of the Toyota 
fleet. Therefore, the agency believes it likely 
that Toyota would abandon the general utility, 
jeep-type vehicle market in this country rather 
than improve the fuel economy of the Land 



Cruiser, or pay a substantial civil penalty. The 
effect of Toyota's leaving the market would be 
to improve total average fuel economy of the 
nonpassenger automobile industry only slightly, 
but i-educe competition in the general utility, 
jeep-type market under 6000 G^^VR from two 
significant competitors to one. (Although 
Chrysler produces a four-wheel drive, general 
utility vehicle, Chrysler is not considered a sig- 
nificant competitive force since only 1700 of their 
vehicles were sold in model year 1976. Moreover, 
Chrysler's response to a standard for jeep-type 
vehicles is very difficult to gauge. Chrysler 
would have to improve fuel economy less than 
Toyota, but the Chrysler fleet of jeep-type ve- 
hicles is very small.) The agency believes that 
this lessening of competition should be avoided 
if possible, consistent with the need to conserve 
energy. 

Therefore, the agency has given the manufac- 
turers the option of including their four-wheel 
drive, jeep-type vehicles in the special class for 
such vehicles, or in the overall nonpassenger 
automobile class. In this way, AMC could meet 
a standard that was appropriate for its Jeep CJ, 
and Toyota would be able to balance the fuel 
economy of its Land Cruiser against the fuel 
economies of its highly fuel economical other 
nonpassenger automobiles if it chose to do so. 
By so doing, Toyota would be more likely to 
stay in the market. 

The agency wishes to point out that the anal- 
ysis leading to the decision to treat four-wheel 
drive, jeep-type vehicles as a separate class is 
closely tied to the language and purpose of Title 
V. Thus, the agency expresses no opinion as to 
whether such vehicles should be treated separately 
for other regulatory purposes, such as safety or 
emissions control. 

A final point nmst be made. Although the 
agency has determined that certain character- 
istics of four-wheel drive, jeep-type vehicles re- 
sult in those vehicles having an inherently lower 
fuel economy and therefore a lower fuel economy 
standard than more numerous nonpassenger auto- 
mobiles, such as pickup trucks and vans, the 
jeep-type vehicles will still be expected to have 
improved fuel economy. The agency believes 
that these vehicles can improve fuel economy 



PART 533— PRE 9 



through weight reduction, technological improve- 
ments, and performance reductions consistent 
with their intended use. 

RespoDsibiliiy for com.plian^e. Each manu- 
facturer is responsible for the fuel economy of 
the complete automobiles that it produces in a 
single stage. With respect to automobiles manu- 
factured by two or more manufacturers, the 
agency has issued a proposed rule that would, in 
most circumstances, place the responsibility for 
their fuel economy on the manufacturer of the 
incomplete automobile (frame and chassis struc- 
ture, power train, steering system, suspension 
system, and braking system). (Notice of Pro- 
posed Rulemaking, Manufacture of Multistage 
Automobiles, 42 FR 9040, February 14, 1977.) 
Under the contemplated scheme, such a manu- 
facturer must determine the fuel economy of the 
automobiles it manufactures and include those 
automobiles in its fleet in calculating its average 
fuel economy. The incomplete vehicle manufac- 
turer must also specify a maximum curb weight 
and a maximum frontal area with which the 
vehicle is to be completed. If the final stage 
manufacturer completes the automobile so as to 
exceed either maximum or if it sells the automo- 
bile as one manufactured in a model year subse- 
quent to the model year during which the 
incomplete vehicle manufacturer produced the 
incomplete vehicle, that final stage manufacturer 
would then become the manufacturer of the 
automobile for purposes of Title V. 

Measures to Improve Fuel Economy. In the 
NPRM, the NHTSA discussed several methods 
which could be used by manufacturers of non- 
passenger automobiles to improve the average 
fuel economy of their nonpassenger automobile 
fleets. These methods included such techniques 
as technological improvements, weight reduction, 
and performance reductions. Many comments 
directed at these discussions of fuel economy 
improvement techniques were received from 
manufacturers of nonpassenger automobiles. 
Virtually all these comments made the point that 
the NHTSA, in one way or another, had over- 
stated the potential for fuel economy improve- 
ment in nonpassenger automobiles. 

It is important to put the assessment of fuel 
economy improvement contained in the NPRM 



in the proper perspective. The NPRM proposed 
an average fuel economy standard of 18.7 mpg. 
This proposed standard was intended to be set at 
a level that all manufacturers could meet without 
substantially modifying their product plans for 
model year 1979. The 18.7 mpg standard also 
assumed that there would be no adverse fuel 
economy effects resulting from the emissions 
standard and fuel economy testing procedures 
established by the EPA for model year 1979. 
In developing the proposed standard, NHTSA 
performed an engineering analysis to determine 
the appropriate level at which to set the standard 
consistent with that intention and assumption. 
This engineering analysis, which contained the 
discussion of the fuel economy improvement 
measures that were criticized by the commenters, 
concluded that those manufacturers that did not 
indicate a planned level of fuel economy of 18.7 
mpg for model year 1979 could achieve that 
level without a substantial modification of their 
product plans (41 FR 52092). The NPRM made 
it clear that the NHTSA analysis of fuel econ- 
omy potential did not depend on manufacturers' 
employing any particular method or methods of 
fuel economy improvement. The NPRM clearly 
stated: 

The agency wishes to emphasize that the 
proposed standard is a performance standard 
and, therefore, that the raanufacturei-s would 
not be required to take any particular step 
discussed below. It is anticipated, however, 
that each manufacturer would take one or 
more of the steps and place its own unique 
emphasis on each of those steps. Thus, the 
fuel economy improvements derived from 
those steps by a particular manufacturer 
would vary from the percentage fuel econ- 
omy improvements as calculated by the 
agency. 

Thus, the discussion of methods by which fuel 
economj^ could be improved was only a general 
discussion of how some manufacturers of non- 
passenger automobiles could modify their product 
plans slightly to achieve an average fuel economy 
of 18.7 mpg by model year 1979. Although, in 
general, weight reduction, performance reduc- 
tion, technological improvements, and aerody- 
namic improvements are the basic methods to 



PART 533— PRE 10 



improve automotive fuel economy, the discussion 
in the NPRM was clearly not an exhaustive list 
of the details of fuel economy improvement pos- 
sibilities, nor a directive to manufacturers in- 
structing them on how to improve fuel economy. 
The agency anticipated that each manufacturer 
would achieve 18.7 mpg as it determined was 
best for itself. 

The comments by the manufacturers to the 
NPRM indicate that the manufacturers will be 
able to achieve an average fuel economy of at 
least 18.7 mpg, assuming no fuel economy conse- 
quences due to emissions standards and testing 
procedures. Ford and General Motors each rec- 
ommended a standard which they derived by 
reducing the proposed 18.7 mpg standard by the 
claimed effects of EPA's actions regarding emis- 
sions and testing procedures for model year 1979. 
Thus, both Ford and General Motors appear to 
assume that they will be able to achieve an aver- 
age fuel economy of at least 18.7 mpg, excluding 
the possible effects of the 1979 emissions standard 
and test procedures. An analysis of Chrysler's 
comments leads to the same apparent assumption 
that at least 18.7 mpg is achievable by 1979. 
Chrysler projected an average fuel economy 
standard for model year 1979 of 16.5 mpg, as- 
suming 1979 emissions standards and testing 
procedures. Chrysler stated that the change in 
emissions standards from 1976 to 1979 would 
result in a fuel economy loss of approximately 
5 percent, and the change in testing procedures 
would result in a measured fuel economy loss of 
8 percent. If those fuel economy losses, totalling 
13 percent, are taken out of the Chrysler projec- 
tion, their projection would be 19 mpg in 1979, 
under 1976 emissions standards and test proce- 
dures. 

Thus, although Ford, General Motors, and 
Chrysler all criticized the NHTSA analysis of 
fuel economy improvement potential, those com- 
panies did not claim that they were incapable of 
reaching at least 18.7 mpg. Indeed, they tacitly 
agreed that 18.7 mpg, under 1976 emissions 
standards and test procedures, is achievable. 
Therefore, there is no need for the XHTSA to 
change the final standard for model year 1979 
in light of those comments. The proper level of 



the standard will depend on whether changes in 
the emissions standards or testing procedures re- 
sult in reductions in fuel economy, not whether 
the NHTSA has correctly evaluated the fuel 
economy improvement potential through a par- 
ticular combination of a variety of specified 
measures. However, the agency still believes, 
based on its analysis and considering the com- 
ments, that an average fuel economy level of 
18.7 mpg, under 1976 emissions standards and 
testing procedures, is achievable without signifi- 
cant changes in product plans. 

It is important to note that many of the com- 
ments received in this area are relevant to fuel 
economy standards for model years beyond 1979. 
They will be considered in connection with the 
development of those standards. 

Effect of Federal Emissions Standards and 
Testing Procedures. EPA has established more 
stringent emission standards for model year 1979. 
EPA has also modified the testing procedures for 
measuring emissions for nonpassenger automo- 
biles in model year 1979 (December 28, 1976, 
Federal Register 56316). The test procedure 
changes establish a higher road load horsepower 
requirement for test vehicles than the previous 
year. On the basis of various studies, EPA has 
concluded that the revised road load horsepower 
requirement is a more accurate description of 
conditions which an in-use vehicle experiences. 
Aside from a small increase in NOx any effect 
that the test procedure change has on fuel econ- 
omy is a measured effect only; it has no impact 
on real, in-use fuel consumption of a vehicle. 

The standard proposed by the NHTSA was 
based on the assumption that changes made by 
the EPA in the MY 1979 emissions standard and 
testing procedures applicable to nonpassenger 
automobiles would impose no fuel economy pen- 
alty or testing effect on vehicles of the manufac- 
turers. NHTSA recognized, however, that this 
assumption was subject to some doubt, and indi- 
cated a willingness to revise the standard to ta,ke 
into account any such penalty or effect actually 
shown to exist. Comments and information on 
the existence and magnitude of these penalties 
were requested from all interested parties. 



PART 533— PRE 11 



Comments were received from General Motors, 
Ford, Chrysler, AMC and International Har- 
vester. Every manufacturer challenged the as- 
sumption that the revised EPA emissions 
standard and testing procedures would have no 
effect on average fuel economy. International 
Harvester believes the penalty due to the emis- 
sion standard will be 10-15 percent. AMC esti- 
mated the combined penalty to be greater than 
10 percent. The estimated fuel economy penalty 
due to the emission standard, including the effect 
of increased NOx emissions resulting from 
higher engine loading due to the revised test 
procedures, was 5 percent for General Motors, 
3 percent for Ford, and 7 percent for Chrysler. 
General Motors estimates the fuel economy effect 
for revised testing to be 6.2 percent. Ford esti- 
mates the testing effect to be 9 percent. Chrysler 
estimates the testing effect at 6 percent. General 
Motors, Ford and Chrysler also submitted to the 
NHTSA the data upon which these estimates 
were made. 

After a consideration of technology that will 
be available in model year 1979, and the ability 
to optimize engine calibration, and a careful 
analysis of tlie data supplied by the manufactur- 
ers, the NHTSA has concluded that the manu- 
facturers have failed to sliow that there will be 
any penalty due to the tighter emissions stand- 
ard. However, they have shown an effect of 8 
percent due to the revised testing procedures. 

Tlie change in the EPA emissions standard 
that affects fuel economy is the lowering of the 
standard for NOx from 3.1 grams per mile 
(gpm) to 2.3 gpm. It is not disputed that meet- 
ing a more stringent NOx standard can result in 
taking product actions that would cause a degra- 
dation of fuel economy from levels achieved by a 
vehicle meeting a less stringent standard. How- 
ever, it is also true that a number of product ac- 
tions related to emissions control can be taken to 
restore the lost fuel economy. For example, where 
NOx is reduced through engine recalibration, 
which can result in lost fuel economy, the re- 
calibration can be optimized to eliminate, or at 
least reduce, the fuel economy penalty. This 
optimization, or fine tuning, has occurred in the 
past as manufacturers have accumulated experi- 
ence with the engine recalibration. Also, emis- 
sions control systems improve as the manufac- 



turers gain experience with them, which can 
result in improved NOx control without a loss 
of fuel economy. Moreover, the use of existing 
emissions control systems, such as back pressure 
or proportional exhaust gas recirculation (EGR) 
systems, can be expanded for nonpassenger auto- 
mobiles. Finally, advance emission control sys- 
tems, such as three-way catalysts or electronic 
EGR, exist and could be used for nonpassenger 
automobiles, althougli the agency recognizes that 
such advanced systems may not be cost effective 
in controlling NOx to meet a standard of 2.3 
gpm. 

In light of these possibilities for achieving in- 
creased emissions control while maintaining fuel 
economy, the agency assumed that by model year 
1979 manufacturers woidd be able to meet the 2.3 
gpm NOx standard without a degradation in fuel 
economy from the level achievable when the NOx 
standard was 3.1 gpm. The NPRM solicited 
comments on this assumption of no fuel economy 
loss due to a tightened NOx standard. Although 
manufacturers submitted a significant amount of 
information on the issue, the manufacturei"s 
failed to sliow tliat a NOx standard of 2.3 gpm 
would necessarily result in a loss of fuel economy. 

General Motors tested five different vehicles to 
establish the magnitude of the fuel economy 
penalty due to the revised emission standard. 
The vehicles were tested before and after recali- 
bration to reduce NOx fi'om the level required to 
meet the 3.1 gpm NOx standard to the level re- 
quired to meet the 2.3 gpm NOx standard. The 
recalibration consisted of increased I^GR flow 
rates and/or spark retard. General Motors' test 
data is inconsistent with regard to the relation- 
ship between reduction in NOx and fuel economy. 
One vehicle met the new NOx standard as de- 
livered and was not recalibrated from the cali- 
brations used to meet the 3.1 gpm standard. Two 
vehicles of tlie same engine family showed small 
reductions in fiiel economy and one vehicle 
showed a large reduction in fuel economy. Gen- 
eral Motors averaged the data with no weighting 
to reflect sales mix and extrapolated the results 
to the percent NOx reduction for the MY 1979 
emission standard level since the arithmetic av- 
eraged NOx reductions in their test did not meet 
a level required for the 2.3 gpm standard. The 
General Motors testing methodology was unsat- 



PART 533— PRE 12 



isfactory because the sample tested did not ade- 
quately represent General Motors' fleet and no 
replicate tests and only one replicate vehicle con- 
figuration were included. Additionally, using a 
non-weighted average is improper unless the re- 
sults from one engine family are representative 
of all engine families. This was not shown to be 
the case for General Motors data, which indicated 
a wide range of results. In addition to the in- 
consistency of the test results, and the flaws in 
methodology, the other serious deficiencies in the 
General Motors test program were that it con- 
sidered no improved emission control technology, 
especially improved EGR systems, and the re- 
calibrations were not optimized. 

Ford tested five nonpassenger automobiles in 
three engine families with one replicate vehicle 
configuration in two of the engine families. Ford 
data were the best submitted by a manufacturer 
since they had replicate vehicles and repeat tests 
(from two to four of each). Again, however, 
not all vehicle configurations were represented. 
Ford's vehicle recalibration was successful in 
meeting target emission levels although one ve- 
hicle met the revised emission standard by a 
sufficient margin without recalibration. How- 
ever, the recalibrations were performed on cur- 
rent emission control systems and no mention was 
made of improved EGR systems. Also, there 
was no evidence that the calibrations were opti- 
mized. For the replicate vehicles, there was 
considerable variability in the effect of the re- 
calibrations. It was concluded that Ford data, 
like the GM data, demonstrated an inconsistent 
effect on fuel economy of meeting a NOx stand- 
ard of 2.3 gpm and demonstrated wide vehicle 
variability. It was also noted that in one case a 
recalibration to reduce XOx emissions improved 
fuel economy. This is evidence that other cali- 
brations were not optimized. Ford arrived at its 
claimed fuel economy penalty by arithmetically 
averaging the results of its tests. This is im- 
proper unless the same results are expected for 
each engine family. In addition to its test data. 
Ford supplied supplemental data on the effects 
of the tighter California emission standard on 
fuel economy. The XHTSA believes the data 
are of limited usefulness because they rely on 
existing emission control technology for the 
California fleet, which is a small portion of the 



total fleet. Needs of the California fleet may not 
justify major changes in control techniques from 
those applied to the 49-state fleet. Moreover, the 
Ford data regarding California vehicles is in- 
consistent. Ford indicated that going from an 
engineering goal to meet a NOx standard of 3.1 
gpm to a goal to meet a standard of 2.0 gpm in 
California resulted in a 10 percent reduction in 
fuel economy. However, Ford stated that the 
penalty from going from 3.1 to 2.3 for the 49- 
state fleet would result in a penalty of only 2 
percent. In light of this discrepancy, the agency 
believes that comparisons with California vehicles 
are not particularly compelling. 

Chrysler recalibrated three MY 1979 passenger 
cars from a 2.0 gpm NOx standard level to a 3.1 
gpm NOx standard level and interpolated the 
resulting fuel economy penalty for a reduction 
in NOx from 3.1 gpm to 2.3 gpm. All vehicles 
were tested twice, but no identical vehicles or 
additional configurations were included. The 
results showed considerable variability in the 
claimed effect on fuel economy of the MY 1979 
emission standard. The most serious deficiency, 
in NHTSA's opinion, is the fact that they tested 
passenger automobiles rather than nonpassenger 
automobiles. Besides the differences in attributes 
such as axle ratios between nonpassenger auto- 
mobiles and passenger automobiles, the recalibra- 
tion of model year 1977 vehicles ignores the 
improvements in the emission control systems and 
calibrations between MY 1976 and MY 1977 for 
passenger automobiles. Also, no allowance is 
made for similar improvements in nonpassenger 
automobiles emission control systems and calibra- 
tion optimization by MY 1979. Chrysler also 
supplied a comparison of 49-state and California 
fleets of nonpassenger automobiles. This com- 
parison is subject to the same criticism as for 
that of Ford. 

NHTSA performed a statistical analysis of 
the data submitted by the manufacturers to 
assess the reliability of the data for estimating 
the level of penalty they claimed. A 95 percent 
confidence interval (i.e., the range of values 
within which the true level of any penalty lies 
with a 0.95 probability) was calculated for the 
claimed fuel economy penalty for each manufac- 
turer and for the total fleet. The results of this 
analysis showed that even if the analysis consid- 



PART 533— PRE 13 



ered improvements in emissions control technol- 
ogy and optimization of recalibration, and even 
if the vehicles tested were representative of the 
manufacturers' fleets, the claims of the manufac- 
turers are not supported by the data because of 
the wide range of the confidence interval. 

In conclusion, NHTSA considers the manufac- 
turers' claims of a fuel economy penalty resulting 
from the need to reduce NOx emissions in MY 
1979 to be unsupported by their submissions. 
NHTSA considers the results of a proper recali- 
bration program more compelling than any other 
means of supporting a claim. The recalibration 
programs undertaken by the manufacturers were 
in some cases unsuccessful in reducing NOx 
emission to the levels desired. More importantly, 
the recalibrations performed neither demonstrate 
nor anticipate optimization of calibration nor 
new technology. Given the fact that the recali- 
bration programs were inconsistent and incon- 
clusive, NHTSA must rely on recognizing past 
accomplishments and on anticipating new tech- 
nology. EPA has stated in their rulemaking 
action for the MY 1979 emission standard that 
there does not have to be a fuel economy penalty 
associated with its standard if the manufacturers 
have enough lead time to optimize calibrations 
and control system designs. NHTSA agrees that 
there doesn't have to be a penalty if leadtime 
exists for recalibration optimization. Past per- 
formance indicates sufficient leadtime exists. 
However, NHTSA does not say there will be no 
penalty. Rather, the agency believes that the 
manufacturers have not demonstrated a penalty. 
The average fuel economy standard for model 
year 1979 has been set with no reduction in- 
cluded for the MY 1979 emission standard. 
However, the agency is open to submissions of 
further test data and leadtime information that 
will support the manufacturers' claims. 

Unlike the situation with the change in emis- 
sions standards, the change in testing procedures, 
which includes an increase in the roadload horse- 
power setting of approximately 30 percent, will 
definitely result in a decrease in measured fuel 
economy. Manufacturers submitted data to show 
the effect of the revised testing procedure on 
measured fuel economy. The agency performed 
an analysis of the data submitted by the manu- 
facturers. 



The agency believes that the data submitted 
by Ford are the most meaningful because of the 
large number of vehicles tested (96 vehicles) in 
550 separate tests, the testing of many identical 
vehicles, and because many of the tests were re- 
peated. This amount of data enabled the NHTSA 
to use a statistical analysis procedure to show 
that if a 95 percent confidence interval for the 
effect on fuel economy for the entire fleet of Ford 
nonpassenger automobiles was computed, tliis 
fleet average effect would have a narrow confi- 
dence interval range, and would be considered 
to be highly reliable. The General Motors data 
are considered less reliable because of the fewer 
number of vehicles tested, the fact that there 
were no tests on identical vehicles, no tests were 
duplicated, and the data are highly variable. 
Chrysler's data are considered less reliable than 
Ford's because only 2 of 3 engine families were 
tested, and there were no tests of all vehicle con- 
figurations or duplicate tests. After a careful 
analysis of these results, the NHTSA believes 
the manufacturers have demonstrated an 8 per- 
cent fuel economy effect and the average fuel 
economy standard has been reduced to reflect this 
effect. This effect reflects primarily the results of 
the Ford analysis. However, for use on an in- 
dustrywide basis, the effect demonstrated by 
Ford has been reduced slightly in light of dif- 
ferences between the Ford fleet and the industry 
fleet. For example, Ford produces a greater 
percentage of 6-cylinder engines than the industry 
average. In addition. Ford's average frontal 
area is larger than the industry average, which 
would cause a higher percentage of increase in 
road load. Both of tliese facts would result in a 
greater fuel economy effect. Also Ford produces 
a higher percentage of 4,000 pound inertia weight 
nonpassenger automobiles than the industry as a 
whole does. The percent increase in road load 
horsepower is greater for tliese lighter vehicles. 
Thus, the effect of the testing procedures on the 
industry average fuel economy would be slightly 
less than on Ford's average fuel economy. 

Although the NHTSA is applying this correc- 
tion for model year 1979, it will be revised in 
future model years if further data or analysis 
indicate that is appropriate. 



PART 533— PRE 14 



Effect of California emissions standards. Ford 
stated that the 1979 emissions standards for 
California, wliich arc more strin<rent than the 
1979 Federal standards, will result in its Cali- 
fornia fleet of nonpassengjer automobiles having 
an average fuel economy approximately 6 per- 
cent lower than its Federal fleet. Ford stated 
that the effect of the California fleet would be to 
lower the average fuel economy of its 50-state 
fleet by 0.1 mpg. Chrysler provided information 
showing that its California fleet will lower the 
average fuel economy of its 50-state fleet by 0.3 
mpg. The NHTSA recognizes that emissions 
requirements for vehicles sold in California and 
the dirt'erent mix of vehicles sold in California 
may have the efl'ect of lowering the 50-state 
average fuel economy of a manufacturer of non- 
passenger automobiles. However, neither Ford 
nor Chrysler made an adequate case for lowering 
the proposed standard liecause of the effect of 
the California vehicles. Ford, in information 
provided to the NHTSA in response to the 
agency's questionnaire circulated last summer, 
projected an average fuel economy for its non- 
passenger automobiles manufactured in model 
year 1979 in excess of 19 mpg, without consid- 
ering the effects of the 1979 Federal emissions 
standards and testing procedures. Although 
Ford's California vehicles may lower its 50-state 
average fuel economy by 0.1 mpg. Ford will still 
h& capable of achieving a level of fuel economy 
under 1976 Federal emissions standards and test- 
ing procedures that is higher than the 18.7 pro- 
posed in the NPRM. Likewise, although 
Chrysler indicated some effect of the California 
standards on its average fuel economy, Chrysler 
still projected an average fuel economy for 1979 
of 16.5 mpg, based on 1979 Federal testing pro- 
cedures and emissions standards. If the fuel 
economy penalty and testing penalty estimated 
by Chrysler for emissions and testing procedures 
of 13 percent is taken out, Chrysler in efl'ect 
projects a fuel economy of 19.0 mpg for 1979. 
Therefore, although California standards may 
make achievement of the level of 18.7 mpg, under 
1976 Federal emissions standards and testing 
procedures, more difficult, there is no showing by 
Chrysler or Ford that the California standards 
make achievement of the level of 18.7 mpg in- 
feasible. 



Comparison of proposed standard for nonpas- 
senger automobiles with standard established for 
passenger automohiles. In section 502(a)(1) of 
Title V, Congress established an average fuel 
economy standard for passenger automobiles 
manufactured in model year 1979 of 19.0 mpg. 
Congress established no standards for nonpas- 
senger automobiles. Several commenters have 
argued that the proposed average fuel economy 
standard for nonpassenger automobiles of 18.7 
mpg was too high, based on a comparison be- 
tween the proposed nonpassenger automobile 
standard and the passenger automobile standard 
established by Congress. General Motors stated 
that there was an average difference in inertia 
weight of 500 pounds between passenger auto- 
mobiles and nonpassenger automobiles and if the 
fuel economy costs of the extra 500 pounds were 
considered, the fuel economy standard for non- 
passenger automobiles should be no more than 
16.9 mpg to be consistent with the standard for 
passenger automobiles. Chrysler argued that an 
average fuel economy standard for nonpassenger 
automobiles which was only 0.3 mpg below that 
set for passenger automobiles failed to take into 
account the difference between passenger and 
nonpassenger automobiles. In particular, Chrys- 
ler stated that if the nonpassenger automobile 
standard remained at 18.7 mpg, after considering 
the effect of emissions standards and testing pro- 
cedures that will be in effect in model year 1979, 
that standard would be equivalent to a standard 
of 21 mpg calculated under the emissions stand- 
ards and testing procedures which Chrysler 
stated were used by Congress in establishing the 
passenger automobile standard of 19.0 mpg. 

The NHTSA believes that these comments do 
not contain a legitimate reason for lowering the 
proposed fuel economy standaid for nonpas- 
senger automobiles. Title V does not require, or 
even hint, that the fuel economy standard which 
the agency establishes for nonpassenger automo- 
biles must be comparable to the standard which 
Congress set for passenger automobiles. Wliat 
Title V requires is that average fuel economy 
standards established by the agency for nonpas- 
senger automobiles be set at the level of maximum 
feasible fuel economy. This is what the agency 
has done. In addition, because the agency is 
analyzing fuel economy potential on the basis of 



PART 53a— PRE 15 



data that are current now, rather than data that 
were current in 1975 when Title V was drafted, 
the agency believes that its own analysis of the 
proper level of fuel economy is deserving of 
greater weight tlian the earlier analysis of 
Congress. 

Cost and Benefit Analysis. The NPRM con- 
tained a summary of costs and benefits concern- 
ing the proposed average fuel economy standard 
for nonpassenger automobiles. Ford stated that 
the NHTSA overstated the benefits and under- 
stated the costs of the proposed standard. Spe- 
cifically, Ford stated that (1) the value of the 
gasoline saved was overstated because the price 
of gasoline assumed by NHTSA, $.65 per gallon, 
included an excise tax of $.13 per gallon, (2) the 
mileage used for calculating fuel savings should 
reflect the fact tliat annual vehicle mileage de- 
creases as the vehicle grows older, and that the 
assumed vehicle life should reflect vehicle mor- 
tality statistics rather than an average life of ten 
years, (3) performance reductions in vehicles are 
not "virtually cost free," as stated in the NPRM, 
but have increased costs to consumers through 
reduced carrying capacity and increased trip 
time, (4) the cost of meeting the standard, if the 
proposed standard of 18.7 mpg is not reduced 
because of the penalties from 1979 emissions 
standards and testing procedures, will be at least 
$100.00, rather than the $12.00 assumed by 
NHTSA, (5) the cost increase due to meeting 
the 1979 emission standards is higher than as- 
sumed by the NHTSA, and (6) the weight re- 
duction which NHTSA speculated might be 
necessary for General Motors to meet the stand- 
ard can not necessarily be achieved for the cost 
estimated by NHTSA ($10.00-15.00 variable cost 
per vehicle and $500,000 investment), and that 
there is little correlation among particular weight 
reduction, variable costs, and investment levels 
associated with different components. 

With respect to Ford's comment on the proper 
value of gasoline, it should be noted that the 
benefit and cost summary that was contained in 
the NPRM related to benefits and costs to con- 
sumers. Therefore, since consumers pay the ex- 
cise tax on gasoline, it is proper to include that 
tax in a computation of the value of saved gaso- 
line to the consumer. It is also important to 



note that the NHTSA considers $.65 per gallon 
to be a conservative estimate of the value of 
gasoline. The diminishing gasoline resources, 
and the uncertainty of the availability of pe- 
troleum for manufacturing gasoline, which led 
Congress to establish the mandatoi-y fuel econ- 
omy program, give the agency reason to believe 
that the current pump price of gasoline is not 
an adequate indicator of its true social value. 

The annual mileage figure used by the agency 
to calculate fuel savings was found in the Census 
of Transportation, 1972 Truck Inventory and 
Use Survey, published by the United States 
Bureau of the Census. Although annual vehicle 
mileage decreases with the age of the vehicle, 
assuming constant 11,000 miles per year for the 
vehicles' life does not result in an inaccurate 
evaluation of total costs. It is the consideration 
of the total costs of the standard which the 
agency must consider. 

The summary of costs and benefits of the pro- 
posed standard considered only quantifiable ex- 
penditures and savings related to the standard. 
Although Ford is correct that there may be some 
additional costs of the improved fuel economy 
in terms of reduced utility, these nonquantifiable 
costs were not contained in the summary of costs i 
and benefits. Since the final rule, like the pro- ' 
posed rule, is based upon the manufacturers' 
product plans for model year 1979, these per- 
formance costs are not expected to be great. 

Ford contended that meeting the average fuel 
economy standards would result in an average 
retail price equivalent increase of at least $100.00 
per vehicle, if the proposed standard of 18.7 mpg 
were not reduced for emissions and testing pen- 
alties. Since the final standard reflects a sub- 
stantial reduction from the proposed standard of 
8 percent, due to the change in the fuel economy 
testing procedures, the agency assumes that the 
estimated price increase of $100.00 is no longer 
applicable. Although some price increase may 
be likely to meet the final standard, there is 
nothing in the Ford comment to indicate that the 
NHTSA estimate of $24.00 per vehicle retail 
price increase ($12 cost to the manufacturer, 
with a markup of 100 percent) is an incorrect 
estimate of that increase. 



PART 533— PRE 16 



With respect to the costs of fuel economy test- 
ing and compliance with emissions requirements, 
the figures assumed were supplied to NHTSA by 
the EPA, and represent its estimate of the aver- 
age industry costs. The EPA estimate includes 
allowances for reuse of the vehicle. The Ford 
comment does not seem to recognize tliat an en- 
tirely new vehicle is not necessary to test each 
base level. Changes in recalibration and axle 
ratios can be made to veliicles, and allow some 
of the testing costs to be spread over a number 
of tests. Therefore, Ford's estimate of testing 
costs seems high. However, even assuming that 
Ford's estimates of the cost of testing are cor- 
rect, tliat higher testing cost is not a basis for 
modifying the standard, or deciding not to estab- 
lish a standard. The agency is required by sec- 
tion 502 (b) of Title V to establish an average 
fuel economy standard for nonpassenger auto- 
mobiles manufactured in model year 1979. There- 
fore, even assuming that Ford's estimate of 
testing costs represents a legitimate upper limit 
of the range of reasonable estimates of testing 
costs, the agency would not modify its decisions 
on the basis of the Ford cost figures. 



With respect to Ford's contention that there is 
little correlation between particular weight re- 
duction, variable cost, and investment level, the 
agency realized that some ways of taking weight 
out of a nonpassenger automobile are more ex- 
pensive than others. In evaluating the cost of 
weight reduction, the agency assumed that the 
manufacturer would attempt to use less expen- 
sive techniques of weight reduction. 

In light of the foregoing, Title 49, Code of 
Federal Regulations, is amended by adding a 
new Part 533, Average Fuel Economy Standards 
for Nanpa^senger Automohiles. . . . 

(Sec. 9, Pub. L. 89-670, 80 Stat. 931 (49 U.S.C. 
1657) ; Sec. 301, Pub. L. 94-163, 89 Stat. 901 (15 
U.S.C. 2002) ; delegation of authority at 41 FR 
25015, June 22, 1976.) 

Issued on March 8, 1977. 

John W. Snow 

Administrator 

National Highway Traffic 

Safety Administration 

42 F.R. 13807 

March 14, 1977 



PART 533— PRE 17-18 



^ 



PREAMBLE TO PART 533— LIGHT TRUCK FUEL ECONOMY STANDARDS 

(Docket No. FE 77-05: Notice 5) 



This notice amends the definition of "basic en- 
gine," as it appears in the light truck fuel econ- 
omy standards of the National Highway Traffic 
Safety Administration. The amendment is in- 
tended to clarify the applicability of various 
light truck fuel economy standards for the 1980 
and 1981 model years. 

Date: This amendment is effective October 10, 
1978. 

For further information contact : 
Roger Fairchild, Office of Chief Counsel, 
National Highway Traffic Safety Adminis- 
tration, 400 Seventh Street, S.W., Washing- 
ton, D.C. 20590 (202^426-2992). 

Supplementary information: On March 23, 
1978, the agency published a definition of "basic 
engine" as part of its fuel economy standards for 
1980-81 model year light trucks. See 43 F.R. 
11995, 49 CFR 533.4. That defiinition is relevant 
solely to the determination of which light trucks 
are "limited product line light trucks," and 
therefore subject to less stringent fuel economy 
standards. The latter definition was intended to 
identify the class of light trucks manufactured 
by companies which had not had experience de- 
signing and applying the advanced emission con- 
trol systems necessary to meet current and 
near-term future passenger automobile emission 
standards. Those systems will be required for 
many light trucks for the first time beginning in 
model year 1979. The agency had International 
Harvester primarily in mind, given the company's 
unique problems resulting from its limited sales 
volume, restricted product line, and the fact that 
its engines are derivatives of medium duty truck 
(above 10,000 pounds GVWR) engines. See 43 
F.R. 11998. 

The original "basic engine" definition incor- 
porates th«^ definition appearing in the Environ- 
mental Protection Agency's regulation, 40 CFR 



600.002-80(21), which defines that term as "a 
unique combination of manufacturer, engine dis- 
placement, number of cylinders, fuel system (as 
distinguished by number of carburetor barrels or 
use of fuel injection), catalyst usage, and other 
engine and emission control system characteristics 
specified by the Administrator." "Limited 
product line light truck" is in turn defined by 
NHTSA as "a light truck manufactured by a 
manufacturer whose light truck fleet is powered 
exclusively by basic engines which are not also 
used in passenger automobiles." See 49 CFR 
533.4. 

Although the EPA regulation defining "basic 
engine" does not on its face present any problem 
in NHTSA's definitional scheme, it grants EPA 
the authority to designate additional criteria to 
distinguish "basic engines". EPA has exercised 
this authority to classify otherwise identical en- 
gines used in both cars and trucks as two separate 
"basic engines," one for passenger cars, and the 
other for trucks. The effect of this administra- 
tive interpretation of the EPA regulation is 
arguably to cause virtually all light trucks to be 
"limited product line light trucks" under 
NHTSA's definitions, contrary to NHTSA's ex- 
pressed limited intent. Therefore, NHTSA is 
revising the "basic engine" definition to exclude 
the additional characteristics specified by the 
EPA Administrator in that agency's advisory 
circular. 

Since this amendment is in the nature of tech- 
nical correction and makes the regulations con- 
form to NHTSA's originally expressed intent,, 
and because of the need to immediately clarify 
any ambiguity in the regulation, it is determined 
that a notice of proposed rulemaking is unneces- 
sary and contrarj' to the public interest, within 
the meaning of 5 U.S.C. 553(b). Therefore, this 
amendment will be effective immediately. 



PART 533— PRE 19 



The National Highway Traffic Safety Admin- 
istration has determined that this document does 
not contain a significant regulation requiring a 
regulatory analysis under Executive Order 12044. 
Furthennore, this action does not require an en- 
vironmental impact statement under the National 
Environmental Policy Act (49 U.S.C. 4321 et 
seq). 

In consideration of the foregoing, 49 CFR 
Chapter V is amended. . . . 

Authority : Sec. 9, Pub. L. 89-670, 80 Stat. 931 
(49 U.S.C. 1657) ; sec. 301, Pub. L. 94-163, 89 



Stat. 901 (15 U.S.C. 2002) ; delegation of au- 
thority at 41 FR 25015, June 22, 1976. 

The principal drafter of this document is 
Roger C. Fairchild. 

Issued on October 2, 1978. 

Joan Claybrook 
Administrator 

43 F.R. 46546 
October 10, 1978 



PART 533— PRE 20 



PREAMBLE TO PART 533— LIGHT TRUCK FUEL ECONOMY STANDARDS 



(Docket No. FE 77-5; Notice 7) 



Action: Final rule. 

Summary: This notice reduces the average fuel 
economy standards applicable to two wheel drive 
light trucks manufactured in model year 1981. 
This action is taken in response to a petition 
from Chrysler Corporation providing new in- 
formation which indicates that their capability 
to improve the fud economy of those trucks is 
less than had been determined in the earlier rule- 
making. This notice also denies Chrysler's re- 
quest to reduce the fuel economy standards 
applicable to four wheel drive light trucks. The 
reduction of the two wheel drive standard is in- 
tended to produce standards which are still at 
the maximum feasible levels achievable by the 
manufacturers taking the new information into 
account. 

Dates: These standards are applicable for the 
1981 model year. 

For further infm'ma,tion contact: 

Mr. Francis J. Turpin, Office of Automotive 
Fuel Economy Standards (NRM-21), 
National Highway Traffic Safety Adminis- 
tration, 400 Seventh Street, S.W., Washing- 
ton, B.C. 20590 (202-472-6902). 

Supplementary information : 

BACKGROUND 
On March 23, 1978, in 43 FR 11995, NHTSA 
established fuel economy standards for light 
trucks manufactured in the 1980-81 model years. 
The 1981 standards were established at levels of 
18.0 mpg for two-wheel drive (4X2) light trucks 
and 15.5 mpg for four-wheel drive (4X4) light 
trucks. Vehicles subject to the standards in- 
clude pick-up trucks, vans, and utility vehicles 
with gross vehicle weight ratings (GVWR) of 
up to and including 8500 pounds. The estab- 
lishment of these standards is authorized by sec- 
tion 502(b) of the Motor Vehicle Information 



and Cost Savings Act ("the Act"), 15 U.S.C. 
2002(b). The Act requires that standards be 
established for each model year at the "maxi- 
mum feasible average fuel economy level," con- 
sidering technological feasibility, economic prac- 
ticability, the effects of other Federal motor 
vehicle standards on fuel economy, and the need 
of the Nation to conserve energy. 

The fuel economy standards were largely based 
on the plans of the manufacturers to make 
specified improvements to increase the fuel 
economy of their trucks. They were set under 
the presumption that the Environmental Protec- 
tion Agency (EPA) would approve by January 
1, 1980, the use of low friction lubricants in fuel 
economy testing under its procedures. The final 
rule provided that if approval were not given 
by that date, the standards would each be 0.5 
mpg less, i.e., 17.5 mpg for 4X2's and 15.0 mpg 
for 4X4's. This reduction in the fuel economy 
standards would be made to account for the 
manufacturers' diminished fuel economy improve- 
ment capability should they not be permitted to 
obtain credit for the benefits associated with use 
of these lubricants. 

On September 20, 1978, Chrysler requested 
that these standards be reduced to 16.5 and 14.5 
mpg for 4X2's and 4X4's respectively. Chrysler 
claimed that without such a reduction, it would 
be required to either violate the standards or 
drastically curtail its sales of larger, less fuel 
efficient trucks. After ascertaining that Chrysler 
intended this request to be treated as a formal 
petition for rulemaking under the agency's pro- 
cedures, the agency requested that specific in- 
formation supporting the petition be submitted. 
Some of this information was submitted on 
November 24, 1978, and the agency initiated rule- 
making on the petition on December 18, 1978. 
See 43 FR 58840. The notice did not propose 
any specific change in the standards. Rather, it 



PART 533— PRE 21 



mentioned the reductions by Chrysler and in- 
vited comment on issues raised by that company's 
petition. 

The agency also contacted the other vehicle 
manufacturers to determine whether they were 
having similar difficulties in working toward 
compliance with the 1981 standards. Ford 
projected being able to achieve 17.6 mpg for its 
4X2 fleet by 1981, thereby complying with the 
standard only if the lubricant-related standard 
reduction occurred. That company projected be- 
ing capable of obtaining only a 0.1 mpg benefit 
from the use of improved engine lubricants, 
rather than the 0.5 mpg projected by the agency. 
GM projected its "free market" improvement 
capability for 1981 to be only 16.2 mpg, despite 
the fact that it projected compliance with the 
18 mpg standard a year ago. The main factors 
in the lower GM capability projection are its 
changed position on the feasibility of certain 
marketing actions to improve its fuel economy 
by 0.8 mpg by 1981 and a complete (and only 
partially explained) reversal of position on its 
ability to offset the effects of changes in light 
truck emission standards. In the case of the 
4X4 standard, American Motors and Ford pro- 
ject compliance with the 15.5 mpg standard, 
while GM projected only 14.2 mpg, for the same 
reasons as in the case of the 4X2 standard. 

SUMMARY OF DECISION 

The 1981 4X2 standard is being reduced by 
0.8 mpg to 17.2 and Chrysler's request for a 
reduction of the 4X4 standard is being denied. 
The agency agrees with the arguments presented 
by Chrysler and the other companies in most 
respects, the main exception being the issue of 
whether the use of improved lubricants could 
provide a fuel economy benefit for 1981 model 
year light trucks. In that case, the impact on 
the standards of the agency's disagreement is 
contingent upon whether the EPA permits the 
use of these lubricants in fuel economy testing 
by January 1, 1980. If EPA does not approve 
the lubricants, each of the standards would be 
0.5 mpg less, i.e., the standards would be 16.7 
mpg for 4X2's and 15.0 mpg for 4X4's. 

The major differences between the basis for 
this decision and that for the prior rulemaking 
are (in order of magnitude of fuel economy 



effect for Chrysler) : reductions in expected fuel 
economy benefits from engine displacement or 
drive ratio reductions, engine efficiency improve- 
ments and weight reduction; errors in the 
agency's prior baseline or larger than anticipated 
effects of emission standards and test procedure 
changes; reduced benefits from aerodynamic and 
rolling resistance changes; changes in product 
mix; and changes in EPA fuel economy test 
procedures. Each of these areas resulted in a 
reduction in the agency's fuel economy improve- 
ment projections for Chrysler of from 0.1 mpg 
to 0.5 mpg, with the magnitude of the effect 
varying for the 4X2 and 4X4 fleets. Chrysler 
also provided information on certain fuel 
economy improvements which it plans to imple- 
ment for the 1981 model year but which were 
not included in the agency's original standard- 
setting analysis. These items have been included 
in the agency's analysis of the Chrysler peti- 
tion, and partially offset the effects of the pre- 
viously mentioned reductions in fuel economy 
improvement potential. For the other manu- 
facturers, the main factor causing their lowered 
projected capabilities is (in addition to the 
factors previously discussed) the agency's 
changed position on the effect of 1979 model / 
year emission standards. While in the 1980-81 \ 
rulemaking, the agency concluded that the more 
stringent emission standards need not reduce 
fuel economy below pre-1979 levels, the agency 
now believes that a fuel economy impact of the 
more stringent 1979 emission standards exists 
and cannot be offset by 1981. 

In deciding whether the standards should be 
reduced, the agency balanced the difficulties of 
the manufacturers in meeting the previously 
established standards against the benefits to the 
nation of compliance with the higher standards. 
In this case, it was decided that the marketing 
risks associated with meeting the higher 4X2 
standard outweighed the potential energy sav- 
ings. 

The agency's analysis of the more significant 
areas of disagreement between the Chrysler peti- 
tion and the conclusions drawn in the previous 
rulemaking to establish the 1981 standards fol- ' 
lows. In conducting this analysis, the agency 
viewed the Chrysler petition as a continuation 
of the original rulemaking. If any changes were 



PART 53&— PRE 22 



to be made in the existing standards, the peti- 
tioner would have to demonstrate to the agency's 
satisfaction that the agency had erred in its 
original analysis of the maximum feasible level 
of average fuel economy achievable within the 
leadtime available from the issuance of the origi- 
nal final rule. A complete discussion of the 
technical basis for this decision is contained in 
the agency's Rulemaking Support Paper, copies 
of which are available from the individual listexl 
as the "infonnation contact" at the beginning 
of this notice. 

EXPLANATION OF DECISION 

(a) Reducfion in engine displacement and 
drive ratios. In establishing 1980 and 1981 
standards in March 1978. the agency projected 
that the manufacturers could make reductions 
in the product of average engine displacement 
and final drive ratio (CID x N/V) of approxi- 
mately 10 percent, in addition to an amount 
made possible as vehicle weight is reduced (keep- 
ing vehicle performance relatively constant). In 
Chrysler's case, such a change was estimated to 
amoimt to a 16 percent reduction in CID x N/V, 
producing a fuel economy gain of about 1.1 mpg 
for 4X2's. In the case of 4X4's, a 16.4 percent 
reduction was projected, for a 0.92 mpg benefit 
in fuel economy. These reductions were greater 
than those projected by Chrysler in the last rule- 
making by a large amount, but the agency con- 
cluded that there was no reason to believe that 
Chrjsler could not achieve performance levels 
commensurate with those of the other manufac- 
turers. See Rulemaking Support Paper Supple- 
ment (RSPS) for the 1980-81 rulemaking, page 
III-163-6. 

In its petition and related submissions, 
Chrjsler has provided information from which 
the agency calculated Chrysler's planned re- 
ductions in CID X N/V for model year 1981. 
These reductions appear to closelj' approximate 
the reductions projected by the agency in the 
last rulemaking (within about 1 percent). How- 
ever, the agency's previous projections of CID 
X N/V levels for Chrysler in 1981 and Chry- 
sler's current planned levels are not directly 
comparable, since Chrysler's planned values in- 
clude the effect of rerating about 10 percent 
of its truck fleet (principally those with the 



highest CID and axle ratios) over the 8500- 
pound GVWR dividing line, an effect not con- 
sidered in the 1980-81 rulemaking. Therefore, 
the agency attempted to determine whether 
Chrysler's planned reductions in CID x N/V 
for 1981 were in fact the maximum feasible re- 
ductions, as required by the Act. In the 1980-81 
rulemaking, the extent to which reductions in 
engine displacement or drive ratios could be 
implemented! were determined to be limited by 
(a) minimum truck performance criteria (e.g., 
ability to pull a load up a steep grade), (b) emis- 
sion problems with extremely low performance 
levels, (c) technical factors, which may produce 
diminishing fuel economy returns beyond some 
level of CID x N/V reductions, and (d) market 
acceptability of trucks with lower acceleration 
characteristics, notwithstanding the ability of the 
truck to meet minimum functional requirements. 
See, e.g., DN-82. Att. II (GM). 

A comparison of Chrysler's planned 1981 levels 
to those of the other manufacturers indicates 
that GM and Ford project CID x N/V levels 
approximately o percent lower than Chrysler for 
both 4X2's and 4X4's, even though Chrysler's 
trucks are lighter than their competitors'. The 
Center for Auto Safety argues that Chrysler 
should be able to offset this discrepancy between 
their perfonnance levels and their competitors. 
DN-90, p. 6.' The agency asked Chrysler why 
such reductions could not be made, and Chrysler 
responded that, according to their marketing ex- 
perts, severe marketing problems would be en- 
countered at lower CID x N/V levels than those 
planned. DN-190. For each manufacturer, the 
CID X N/V product is governed by the avail- 
able engines, transmissions (e.g., overdrive) and 
axle ratios. Given the mix of engines produced 
by Chrysler, the agency believes that they face 
a greater marketing risk from performance re- 
duction than do their competitors. The Chrysler 



' The abbreviation "DX" followed by a number refers 
to the (locket nunihor of material in NHTSA docket 
FE-77-05-N06. This docket is located in Room 5108 
of the Nasslf Building, 400 .Seventh Street, S.W., Wash- 
ington, D.C., and is open to the public during normal 
business hours. References to the materials in the 
docket and other materials are intended as an aid to 
persons dealing with the voluminous materials In this 
rulemaking, and may not be exhaustive. 



PART 533— PRE 23 



fleet is powered by 360, 318, and 225 cubic inch 
engines. Given the very large gap between the 
318 and the 225, Chrysler's ability to shift con- 
sumers to the 225 from the 318, the key to any 
performance reduction, faces them with the verj- 
distinct possibility of losing customers to com- 
petitors with a more complete range of engines 
or, to competitors with engines smaller than their 
318 but larger than their 225. 

Although the agency (or anyone else for that 
matter) cannot quantify with certainty the mag- 
nitude of the marketing risk faced by Chrysler 
in attempting to make CID x N/V reductions 
greater than those it now plans, the agency is 
particularly concerned about the potential im- 
pacts on Chrysler's economic position of taking 
such marketing actions. At a time when its 
competitors are earning record profits, Chrysler 
has faced steady financial losses. Further, 
Chrysler's truck sales (particularly vans and 
other two-wheel drive light trucks) have Ijeen 
one of its more profitable operations, and erosion 
of its competitive position in that market seg- 
ment could be especially harmful to that com- 
pany. While GM and Ford face marketing risks 
in reducing the average CID x N/V of their 
truck fleets, the impacts of an erroneous market- 
ing judgment by those companies on their long 
term financial viability is certainly far less than 
in the case of Chrysler. Therefore, the agency 
has adopted Chrysler's planned reductions in 
CID X N/V for its two-wheel drive fleet for 
this rulemaking. 

The case for Chrysler's 4X4 fleet is somewhat 
different; however, Chrysler's own projection of 
its CID X N/V reductions for 1981 indicate that 
it expected to encounter a shift in its engine 
offerings (either through its own marketing 
efforts or through other changes in customer pre- 
ference) resulting in an increase in the sales of 
its largest engine at the expense of its inter- 
mediate displacement engine. The agency recog- 
nizes that this projection was made prior to 
recent gasoline shortages, which has resulted in 
a serious drop in the demand for large trucks 
and engines. Now, the agency doubts that 
Chrysler could effectuate this adverse mix shift 
without encountering sales resistance, even if the 
promotion of the sale of fuel inefficient trucks 
were consistent with the law. Faced with tlie 



current trend in the automobile and light truck 
market, the agency cannot accept Chrysler's un- 
suppoited projection of an engine mix shift 
toward larger displacement engines. By holding 
its engine mix constant for 4X4 's (which may 
prove to be a conservative assumption) and by 
making minor axle ratio reductions consistent 
with those planned by the larger manufacturers, 
Chrysler sliould be able to make fuel economy 
improvements beyond those it projected in its 
petition and equivalent to those projected by the 
agency in the original 1980-81 nilemaking. 

Chrysler also objected to the agency's pro- 
jected benefit from a given level of CID x N/V 
reduction. DN-93, p. 12. Chrysler projected a 
lesser benefit for these reductions, based on an 
analysis of specific axle ratio changes or engine 
substitutions. The agency attempted to resolve 
this issue through a variety of methods, includ- 
ing an assessment of the effect of different axle 
ratios and engines on Chrysler's current fleet. 
These analyses indicate that the higher benefit 
for CID X N/V reductions projected by NHTSA 
in the original lulemaking on the 1980-81 stand- 
ards is valid or even conservative. EPA's 
analysis showed a higher benefit for engine dis- 
placement reductions than did NHTSA's but a 
lower benefit for axle ratio reductions. The 
agency did not rely on EPA's analysis of the 
effect of N/V reductions on fuel economy, since 
that analysis was based solely on passenger car 
data (reflecting generally lower N/V values). 
DN-169. GM information also supports the 
agency's conclusion on this point. DN-81, p. 4. 
Therefore, the agency has used the same rela- 
tionship between CID x N/V reductions and 
fuel economy improvements for the analysis of 
the Chrysler petition that it used in the original 
rulemaking. However, because of the lower 
CID X N/V reductions now projected, the agency 
is reducing its projected fuel economy gain for 
Chrysler in this area by 0.4 mpg for 4X2's and is 
retaining its projection for 4X4's, for the reasons 
mentioned above. 

The agency has also reduced its projection for 
fuel economy gains from CID x N/V reductions 
in the case of AM's 4X4 fleet (the bulk of that 
company's production). In the 1980-81 rule- 
making, the agency projected that AM could 
improve its fuel economy by 0.7 mpg through 



PART 533— PRE 24 



making reductions in the same range of relative 
magnitude as the other manufacturers, but AM 
now indicates that it plans no reductions. Al- 
though AM indicated in August 1977 that it 
planned to make CID x N/V reductions of 
approximately the magnitude projected by the 
agency in the last rulemaking, it now indicates 
that such reductions should be made over the 
course of 3 to 4 years, to permit truck purchasers 
to become acclimated to the resulting decrease in 
vehicle acceleration capability. Even accepting 
AM's argimient for the need of a phase-in period, 
making no CID x N/V reductions between 1979 
and 1981 could not be justified as the maximum 
feasible fuel economy improvement on their part. 
If AM makes only "half the CID x N/V reduc- 
tions the agency projected (and AM previously 
planned) in the 1980-81 rulemaking, it could still 
comply with the existing 4X4 standard for 1981. 
AM in fact expects to be able to comply with 
that standard. AM's zero CID x N/V reduction 
estimate is also well out of line with the esti- 
mates of the rest of the manufacturers. There- 
fore, the agency concludes that AM can make 
fuel economy improvements of at least 0.3 mpg 
through reducing average engine displacement 
or drive ratios for its 4X4 light trucks, enough 
to permit it to reach the current standard for 
1981. 

(b) Engine efficiency improveinents. In pre- 
vious rulemakings, the agency has, for analytical 
purposes, considered the related areas of efficiency 
improvements (i.e.. mechanical improvements), 
optimization of engine calibrations (i.e., those 
controlling spark advance, exhaust gas recircu- 
lation rate, air-to-fuel ratio) and improvements 
in emission control systems as a single class of 
technological improvements. In the case of 
Chrysler in the last rulemaking proceeding, the 
agency projected that through a combination 
of the.se measures, any adverse impacts associated 
with more stringent emission standards for 1979 
could be offset, and a net improvement of 2.4 
percent for 4X2's and 1.4 percent for 4X4's 
could result. This conclusion was based upon 
earlier development testing of 1979 vehicles 
which showed a 3 percent emission standard re- 
lated fuel economy penalty and Chrj-sler's own 
projection that it could achieve fuel economy 
gains of 5.4 and 4.4 percent for 4X2's and 



4X4's respectively through a combination of 
engine efficiency improvements. Prior to the 
proposal of the 1981 standards in December 1977, 
Chrysler had provided even more optimistic pro- 
jections of engine efficiency improvements, which 
the agency relied upon in proposing standards. 
See 43 FR 12001. Chrysler's most recent esti- 
mates indicate that it is continuing to pursue 
the same engine efficiency improvements iden- 
tified in the last rulemaking proceeding, but is 
not obtaining the expected benefits because of 
unanticipated development problems with the 
various individual changes. 

Much of Chrysler's currently projected engine 
improvement is categorized as undefined task, 
i.e., no specific means are identified for achiev- 
ing the projected gain. The agency is adopting 
Chrysler's revised estimate of engine efficiency 
improvements, since it appears to reflect the maxi- 
mum feasible gains in fuel economy. 

The agency is also revising downward its esti- 
mates of feasible engine efficiency improvements 
for the other manufacturers. In the previous 
rulemaking, NHTSA projected that American 
Motors (AM) and Ford could offset the effect 
of more stringent emission standards through a 
combination of engine efficiency improvements, 
changes to emission control systems and calibra- 
tion optimization, and that GM could offset the 
penalty and obtain a net improvement of 2 per- 
cent for both 4X2's and 4X4's. The projection 
for GM was based on their submission in the 
prior rulemaking, and was confirmed by GM on 
two separate occasions, most recently in December 
1978. DX-29, p. 3. GM now claims that it was 
necessary to incorporate the above-mentioned 
improvements to achieve MY 1979 emissions 
certification and that a penalty still exists. The 
projection for AM was based upon their sub- 
mission in the original rulemaking which stated 
that their estimate of the maximum engine 
efficiency improvements available would be 4 to 
5.5 percent for their 4X4's. AM claims that they 
never intended to imply that the improvement 
could be obtained by 1981, only that it could 
eventually be achieved. In the case of Ford, 
that company's submission in the last rulemaking 
showed through "engine mapping" analyses that 
the emission penalty could be reduced to approxi- 
mately 1 percent with optimal engine calibra- 



PART 533— PRE 25 



tions (which may require electronic controls) 
and that certain additional engine efficiency im- 
provements were possible. See 43 FR 12001. 
The agency found that electronic controls might 
not be feasible for light trucks by MY 1981 due 
to inadequate leadtime to implement the full 
development and production of the required soft- 
ware. 

In its January 17, 1979, submission on the 
Chrysler petition, GM indicated that the agency 
should revise its position on the question of en- 
gine efficiency/optimization changes. DX-82, 
p. 2. GM subsequently clarified their position, 
indicating that they were revising their earlier 
statements that the emission standards penalty 
could be offset. DN-207. GM indicated that the 
change in position was due to the fact that their 
1979 trucks suffered more than they had antici- 
pated due to the change in emission standards. 
However, GM had already obtained data on their 
1979 truck fleet at the time they confirmed their 
original position on this question in December 

1978. The agency also notes that GM apparently 
had significant difficulty certifying their 1979 
truck fleet for emission compliance, and "last- 
minute" changes to those trucks were required 
to permit certification. Ford stated that its 
engine calibrations are much closer to optimal 
than in previous years when emission standards 
changed, due to improvements in Ford's technical 
capability, but that approximately 1 percent 
fuel economy improvement is projected by 1981 
due to calibration optimization. DN-91, p. 7. 

Based on this information, the agency is pro- 
jecting that GM can achieve a 2 percent fuel 
economy improvement (from its 1979 levels) due 
to calibration improvements, engine efficiency 
improvements, and improvements in emission 
control systems. This improvement is based on 
the fact that other manufacturers are project- 
ing fuel economy improvements for engine im- 
provement programs like the ones GM is engag- 
ing in (see Rulemaking Support Paper (RSP), 
section III. A), the difficulties GM had in cer- 
tifying their trucks for emission purposes in 

1979, and the historical trend for improved en- 
gine efficiency after the first year in which emis- 
sion standards are made more stringent (see, 
e,g., Chrysler's comment on this point, DN-93, 
p. 5). In the case of Ford, the agency is adopt- 



ing a 0.2 mpg improvement based on the above 
Ford reference and other confidential informa- 
tion. These results are 0.3 to 0.4 mpg lower 
than the projections in the 1980-81 rulemaking 
for both GM and Ford. The agency is also 
adopting Chrysler's reduced estimate of engine 
efficiency improvements, reducing their fuel 
economy improvement capability by 0.2 to 0.3 
mpg. In the case of AM, the agency is eliminat- 
ing the previously projected .5 percent improve- 
ment in fuel economy due to engine modifications 
(resulting in a 0.7 mpg decrease in average fuel 
economy). Although the agency is still of the 
view that a substantial potential for engine 
efficiency improvements exists for AM's engines, 
it is not clear that AM possesses the technical 
capability to implement these improvements by 
1981. Wliile the larger domestic manufacturers 
have either already implemented improvements 
in this category or plan to do so by 1981, AM's 
technical resources to make these improvements 
are quite small in comparison to GM, Ford, and 
even Chrysler. It should also be noted that 
giving AM the benefit of the doubt on this ques- 
tion has no effect on the level established for 
the 1981 4X4 standard, since AM projects being 
able to meet the current standard. 

(c) Weight reduction. In the 1980-81 rule- 
making, the agency projected that the light truck 
manufacturers could reduce the weights of their 
vehicles by amounts ranging from approximately 
225 to 450 pounds. These conclusions were based 
upon the agency's own analysis of light-weight 
material substitution opportunities available to 
the vehicle manufacturers, responses to special 
orders issued to numerous suppliers of vehicle 
components and materials, and the manufac- 
turers' own weight reduction plans. 

Based on their responses to the notice on the 
Chrysler petition, it appears that the manufac- 
turers are currently projecting slightly less 
weight reduction than did the agency in the 
1980-81 rulemaking. Chrysler submitted infor- 
mation explaining why it had reduced its weight 
reduction projections from those provided in the 
earlier rulemaking. AM has effected weight 
reduction since the existing standards were estab- 
lished. This has improved the fuel economy of 
their 4X4 fleet as reflected in the MY 79 data. 
Beyond MY 79, the new EPA procedures, i.e.. 



PART 533— PRE 26 



new test weights and new truckline definition, 
offset the weight reduction benefits expected be- 
tween MY 79-81, according to AM. Conse- 
quently, AM expects no fuel economy benefit 
from weight reduction between 1979 and 1981 
for its 4X4 fleet (all its commercially available 
trucks). Ford projects test weight reduction 
of under 150 pounds by 1981, despite the fact 
that it will be introducing a new pickup truck 
in 1980. GM provided information on its new 
1981 model year pickup truck, but the agency is 
unable to determine the exact magnitude of the 
weight reduction achieved. GM did provide 
information on the fuel economy improvement 
the new truck could be expected to achieve, but 
that improvement was due to several factors in 
addition to lower weight. 

The agency is projecting reduced benefits for 
weight reduction for Chrysler. In the case of 
Chrysler's 4X2 fleet, the largest part of the re- 
duction is due to the change in the agency's 
regression equation. In particular, the agency 
has determined that, for purposes of predicting 
fuel economy for light trucks, revisions should 
be made to the regression equation used by the 
agency to determine the effect on fuel economy 
of changes in axle or gear ratios, engine dis- 
placement, and weight. The new regression 
equation is based on more extensive fuel economy 
data for light trucks, which became available 
for the first time in 1979. It predicts lesser 
benefits for a given degree of weight reduction 
than did the previously used equation, and 
greater benefits for axle ratio and/or engine 
displacement reductions. In addition, the new 
equation includes a factor for changes in aero- 
dynamic/rolling resistance characteristics. The 
inclusion of this factor makes the new equation 
more consistent with current fuel economy test 
procedures, which base certain dynamometer set- 
tings on these characteristics, while the previous 
procedures relied solely on vehicle weight. In 
this analysis of the Chrj'sler petition, the new 
equation's reduced benefit for weight reduction 
has been used, accounting for a portion of the 
reduction in standard established in this notice. 
A further description of the new regression 
equation is contained in the agency's Rulemak- 
ing Support Paper on this proceeding. The final 
projected weight reduction benefit for 4X2's 



agrees with the benefit projected by Chrysler 
when adjusted for changes in EPA test proce- 
dures. 

In the case of 4X4's, the situation for Chrysler 
is essentially the same as in the 4X2 case. The 
projected weight reduction is slightly less than 
estimated by the agency in the 80-81 rulemak- 
ing; however, the benefits are reduced signifi- 
cantly (by 0.3 mpg) primarily because of changes 
in the agency's regression equation. 

For both GM and Ford, the agency is project- 
ing reduced fuel economy benefits (of about 0.3 
mpg) from weight reduction for MY 1981, com- 
pared to the last rulemaking. While Ford and 
GM are reducing weight to levels approximating 
those projected by the agency in the original 
rulemaking, the use of the agency's new regres- 
sion equation results in reduced fuel economy 
benefits. In addition, refinements to the weight 
simulation used by EPA for fuel economy test- 
ing are now expected to reduce previously pro- 
jected improvements in measured fuel economy 
(naturally, on-the-road improvements are un- 
affected). Although these refinements make test- 
ing more accurate, their effect on measured fuel 
economy must be accounted for. The agency 
has also adopted AM's weight reduction plan, 
reducing their fuel economy improvement capa- 
bility by 0.3 mpg. 

(d) Possible errors in NHTSA baseline or 
larger than anticipated effects of changes to 
emission standards and test procedures. When 
the original 1980-81 standards were established, 
the agency lacked substantial fuel economy data 
for light trucks in the 6001-8500 pound GVWR 
range. The reason for the absence of these data 
was that those trucks were not yet tested for 
emissions by EPA in a manner which yields fuel 
economy data. Therefore, the agency used avail- 
able data (primarily for trucks imder 6000 
pounds GVWR) and its regression equation to 
project fuel economy data for the entire 0-8500 
pound GVIVR fleet. This extrapolation per- 
mitted the agency to develop a starting point 
or "baseline" from which to project future fuel 
economy improvements for standard-setting pur- 
poses. A more complete description of this 
methodology is contained in Section II of the 
Rulemaking Support Paper for this petition. 



PART 533— PRE 27 



The agency now has EPA-approved MY 1979 
fuel economy data for light trucks in the 6001- 
8500 pound GVWR range. Using this data, the 
agency has attempted to determine the accuracy 
of the baseline used to set the existing stand- 
ards. The first step in that process was to 
account for known changes that occurred be- 
tween MY 1977 and MY 1979. Thus, the final 
NHTSA model year 1977 baseline fuel economy 
for each manufacturer (see RSP-S, Page III- 
19) must be reduced by 3 percent, the agency's 
estimate of the fuel economy penalty due to the 
stricter MY 1979 emission standards. Also, 
those baselines must then be increased by the 
known improvements which have been made since 
MY 1977. Finally, an adjustment must be made 
for differences between the 1977 and 1979 pro- 
duction mixes of the manufacturers. As a 
result, given no other changes, the adjusted final 
MY 1977 baseline should be identical to the MY 
1979 baseline derived from the MY 1979 certifi- 
cation data. This is, however, not the case. 

The 1977 and 1979 baselines, when adjusted as 
described above, are not consistent for a com- 
bination of reasons. One factor is that the 
trucks in the 6001-8500 pound GVAVR range 
(for which fuel economy data were extrapolated 
from the under-6000 pound GV^VR fleet) are 
inherently somewhat different from the lighter 
trucks and that the agency's extrapolation pro- 
cedure therefore produced small errors. Another 
factor is that changes in the 1979 emissions 
standards and test procedures produced effects on 
individual manufacturers' fleets which were 
slightly different in magnitude than the agency- 
predicted effects. Another factor is random 
error, due to variation in results produced by the 
fuel economy test procedures and the relatively 
small number (statistically speaking) of actual 
tests conducted for 1979. 

The agency has decided to use the 1979 cer- 
tification data to construct a baseline to deter- 
mine the fuel economy benefits that will be 
achieved through the manufacturers implement- 
ing the balance of their fuel economy improve- 
ments for MY 1981. This decision was based on 
the availability of actual fuel economy data in- 
stead of the partially estimated data used in the 
last rulemaking and on the shift in agency 
position on the question of whether the emissions 



standards penalty would be completely offset by 
MY 1981. In the 1980-81 rulemaking, the agency 
used a baseline that did not include such a 
penalty and assumed that any emission standards- 
related penalty encountered subsequent to MY 
1977 could be overcome by MY 1981. The 
agency now believes that the penalty will not 
be overcome totally by the 1981 model year. 
Therefore, the agency is using the new 1979 
baseline which reflects that penalty. 

The effect of switching t« the 1979 baseline 
is to alter the baselines for the manufacturers. 
In the case of AM's 4X4 fleet, the use of the 
1979 baseline increases the agency's projection 
of that company's ability to improve fuel econ- 
omy by 0.2 mpg. In the case of Chrysler's 
4X2 fleet and GM's 4X4 fleet, the effect on fuel 
economy of this decision is negligible. In all 
other cases, the decision to use the 1979 base- 
line for this analysis reduces the agency's fuel 
economy estimates. This effect is in the range 
of a 0.3 to 0.4 mpg decrease in fuel economy 
for Chrysler's 4X4 fleet and GM's 4X2 fleet, and 
approximately a full mpg decrease for both 
Ford's 4X2 and 4X4 fleet. 

(e) Aerodynamic and rolling resistance reduc- 
tions. The agency projected a 0.35 mpg fuel 
economy improvement for Chrysler's 4x4 trucks 
in 1981 due to improvements in aerodynamic 
characteristics and the use of radial tires. This 
improvement was based on Chrysler's own esti- 
mate submitted in the 1980-81 rulemaking. In 
its petition, Chrysler claims that this improve- 
ment is no longer attainable. Chrysler is of 
the view that the physical improvements can 
be made, but that the changes will not be re- 
flected on current EPA test procedures. These 
improvements would show up on the EPA test 
only if Chrysler could use the optional "coast- 
down" procedure for determining dynamometer 
roadload horsepower. The coast -down procedure 
would be used by Chi-ysler if its 4X4 trucks 
could achieve aerodynamic and rolling resistance 
characteristics superior to the tabulated values 
established by EPA. 

Chrysler indicates that many of the 4x4's sold 
will be equipped with off-road tires and that the 
EPA will require testing with such tires. Unless 
radial tires are used on the test, the improve- 
ments attributable to both aerodynamics and 



PART 533— PRE 28 



reduced rolling resistance do not show up, ac- 
cording to Chrysler. However, the agency notes 
that Chrysler's largest competitors project being 
able to sell a high enough percentage of radial 
tires on their 4X4 light trucks to permit all 4X4 
fuel economy test vehicles to employ radial tires. 
Recognizing that the use of radial tires on ve- 
hicles intended for off-road use may involve 
some compromises in vehicle utility, the agency 
nevertheless concludes that Chrysler's difficulties 
in promoting the sale of radial tires on 4X4 
trucks should be no greater than their larger 
competitors and that the fuel economy benefits 
warrant such sale. Therefore, the agency pro- 
jects that Chrysler can sell enough radial tires 
on its 4X4 trucks in 1981 to obtain the fuel 
econom}' benefit it and the agency projected in 
the 1980-81 rulemaking for aerodynamic and 
rolling resistance improvements. 

(f) Mix shifts. The Center for Auto Safety 
has argued that Chrysler could use marketing 
strategies to shift its sales mix toward more 
eflScient vehicles, and thereby improve its aver- 
age fuel economy. DX-90, p. 7. The Center 
concludes that such a shift is consistent with the 
law and with the trend toward greater use of 
trucks for personal (i.e., non-commercial) rea- 
sons. The Automobile Owner's Action Council 
conducted a survey of Chrysler's truck adver- 
tising and concluded that the advertising was 
oriented toward the sale of powerful trucks and 
toward the sale of trucks as "toys" and as car 
substitutes. DX-106, p. 3 and attachment. The 
agency agrees that basing fuel economy stand- 
ards on the maximum feasible use of marketing 
measures to promote the sale of fuel efficient 
vehicles is entirely consistent with the law, at 
least to the extent such shifts can be accom- 
plished without causing major reductions in 
sales. 

In the case of Chrysler's 4X2 trucks, the orig- 
inal 1981 standard-setting analysis was based 
on an apparent adverse mix shift from the 1976 
.sales mix used in the NPRM, to the projected 
1979 mix supplied by Chrysler, in early 1978. 
(An adverse mix shift is one which reduces fuel 
economy.) The effect of this as,sumption was 
to reduce Chrysler's projected average fuel 
economy by 0.2 mpg. In its petition, Chrysler 
provided sales mix information which the agency 



concludes reflects a further adverse mix shift 
between 1976 and 1979 having a fuel economy 
effect of about the same magnitude. 

The agency is using Chrysler's latest mix pro- 
jection for 1979 as the basis for the revised 1981 
standard. This has the effect of reducing Chrys- 
ler's projected capability to increase fuel econ- 
omy of 4X2's by 0.2 mpg. 

The adverse mix shift impact is not neces- 
sarily like shifting from a large vehicle to a 
small vehicle. The impact here results in part 
because more Chrysler trucks are being sold with 
options like air conditioners, step bumpers, etc. 
These come in a package with a large engine, 
i.e., the 360 rather than the 318 or the 318 
rather than the 225. Although Chrysler did 
eliminate the two largest engines it had avail- 
able, the 400 and the 440, the net result of all 
these changes is a slight reduction in fuel econ- 
omy. It is important to note that the relative 
proportion of Chrysler tracks sold with various 
accessories is still below the general level of 
accessory sales by the industry. Manufacturers' 
limits on sales of options such as step bumpers 
do not help fuel efficiency to a great extent be- 
cause the resultant weight reductions and attend- 
ant fuel economy benefits are relatively small. 
The major option is air conditioning, and its 
control in a fleet where air conditioning is not 
as prevalent as it is in the fleets of other manu- 
facturers might tend to drive customers to the 
competition. As noted in section (a) of this 
notice, the agency is very reluctant to place 
Chrysler in a position where it might be com- 
pelled to face major marketing risks in order 
to comply witli the light truck fuel economy 
standards. 

(g) Revision to EPA''s '■'■car line^^ defnition for 
light trucks. Under EPA's fuel economy test 
procedures, test vehicles must be equipped with 
all optional equipment which is expected to 
appear on more than 33 percent of the trucks 
within that "car line." A car line was pre- 
viously defined by EPA very broadly, with all 
vans constituting a single car line, for example. 
Thus, many vehicles equipped with options in 
production were not represented in fuel econ- 
omy testing by test vehicles having those op- 
tions. For the 1980 model year, EPA proposes 



PART 533— PRE 29 



to revise the definition of "car line" to narrow 
that definition to better assure that vehicles are 
tested with the options they will have when sold. 
The proposal is supported by this agency. 
Chrysler argues that this change will result in 
reduced fuel economy caused by additional 
equipment being applied to more of its fleet, 
thereby reducing average fuel economy. 

In the original 1980-81 rulemaking, the agency 
rejected the manufacturers' arguments claiming 
that this penalty was unavoidable and perma- 
nent, on the ground that the manufacturers 
could reallocate their offerings (i.e., sell more 
options on car lines which already exceed the 33 
percent criterion and restrict options on the 
other car lines to less than 33 percent) to offset 
this penalty. In this rulemaking, this conclu- 
sion was universally disputed. Industry sales 
data indicate that a long-term trend toward 
higher sales of optional equipment is continuing, 
making option restriction quite difficult. Ford 
claimed to know of no method to restrict the 
option sales, and indicated that attempting to 
restrict those sales might even produce an ad- 
verse fuel economy impact. DN-91, p. 11. 
Ford provided a breakdown of its option sales 
by truck line, which showed that the vast ma- 
jority of the newly created truck lines would 
be tested at higher weights than the previous 
truck lines. EPA conceded that due to the op- 
tion equipment sales trends, option restriction 
was not a viable alternative for counteracting 
the effect of the new definition. DN-169, p. 2. 
The "penalty" appears to be as much a symptom 
of the trend toward higher sales of optional 
equipment as it is a result of changes in EPA's 
regulations, and is, therefore, permanent.^ Thus, 
the agency is adopting the manufacturers' pro- 
jected impacts of the 1980 test procedure change. 



' The EPA procedures change would not actually re- 
duce fuel economy. It would correct the error caused by 
using data from vehicles tested without options to 
represent trucks that actually are sold with options. 
This causes a decrease in measured fuel economy, not 
on-the-road fuel economy, since the new procedure will 
apply data with options to more of the manufacturer's 
product line. Increasing the number of production ve- 
hicles equipped with options naturally decreases both 
on-the-road and measured fuel economy. Both effects 
must be considered in the agency's analysis. 



(h) Lubricants. In the 1980-81 rulemaking, 
the Agency projected that a fuel economy im- 
provement of 3 percent is achievable through 
the use of improved lubricants (i.e., friction 
modified, lower viscosity, synthetic base, or some 
combination of these methods). Two percent 
of this improvement was attributed to the use 
of advanced crankcase lubricants, such as ver- 
sions of the recently marketed ARCO Graphite, 
Exxon Uniflo, Mobil, and other similar lubri- 
cants. The remaining 1 percent of the im- 
provement was attributed to changes in rear axle 
lubricants. However, the use of the improved 
crankcase lubricants is not currently permitted 
by EPA in that agency's fuel economy testing. 
That agency has indicated that, before approval 
is granted for the use of these lubricants in fuel 
economy testing, it must have evidence indi- 
cating that consumers will actually purchase and 
use these oils in the replacement market. The 
type of eWdence EPA seeks includes information 
showing that the selling price of the new oils 
will be competitive with regular lubricants, that 
the oils will have widespread availability in the 
marketplace, and that a generic definition of 
the oils is developed, so that the vehicle manu- 
facturers can specify in owner's manuals that 
the new oils must be used. 

The basis for the agency's conclusion as to 
the magnitude of the fuel economy benefit re- 
sulting from use of the improved crankcase 
lubricants is set forth in the preamble to the 
final rule in the 1980-81 rulemaking. 43 FR 
12004-5. Data submitted by Exxon, ARCO, and 
Mobil Oil companies tended to support an im- 
provement figure in the 4 to 5 percent range. 
More limited data from the vehicle manufac- 
turers generally tended to support fuel economy 
improvements of 1 to 3 percent. Data from 
Mobil and GM tended to support a fuel econ- 
omy improvement in the range of 1 percent for 
improved axle lubricants. Ford's data tended 
to support a fuel economy improvement in the 
range of 1 percent for manual transmission lu- 
bricants. All told, the agency concluded that 
an improvement of 2 percent for crankcase oils 
and 1 percent for axle/transmission lubricants 
is reasonable. However, to encourage further 
testing of these lubricants and to avoid the neces- 
sity of attempting to predict how EPA would 



PART 533— PRE 30 



ultimately decide the approval question discussed 
in the previous paragraph, the 1981 standards 
were established at alternate levels, contingent 
on this approval. 

Only limited additional information was sub- 
mitted on the lubricants issue in this proceed- 
ing. Chrysler's recommendation tliat the lubri- 
cant improvement be deleted from NHTSA's 
analysis was based on Chrysler's conclusion that 
EPA would not approve the use of the lubricants 
(DN-10. P. 2) and tests of four cars using the 
Exxon oil. which showed fuel economy benefit 
from that oil declining with increasing vehicle 
mileage. DN-13, Att.L. All Chrysler's earlier 
data showed an improvement for the advanced 
oils of about 1 to 3 percent. Ford echoed the 
concern over the likelihood of EPA approval 
of the lubricants, and noted that its own test 
program showed only 0.5 percent improvement 
for these lubricants (DN-91, p. 8), down from 
the 12 percent projected in the 1980-81 rule- 
making. GM has apparently not changed its 
plan to delay use of friction modified oils until 
after 1981, and continues to rely on lower oil 
viscosity to improve fuel economy. Problems 
were reported by GM in the areas of increased 
oil consumption and catalyst deterioration, due 
to the use of low viscosity lubricants. DN-82, 
p. 3. 

The oil companies expressed a range of 
opinions on this issue, but no additional data. 
Texaco noted that the percent fuel economy im- 
provement achievable with the new lubricants 
will vary depending on the friction character- 
istics of the oil currently used by the vehicle 
manufacturer, and asserted that their currently 
sold crankcase oil provides just as good fuel 
economy as at least one of the advanced lubri- 
cants, in on-the-road testing. DN 25. Chevron 
stated that the agency's projected 2 percent bene- 
fit for new crankcase oils is "on the high side," 
and projected a leaser benefit of 1 to 1.5 percent. 
Chevron also found a 1 percent fuel economy 
benefit for axle lubricants, but anticipated that 
these lubricants would not be widely available 
by 1981. Cities Service measured a 2.6 percent 
benefit for their advanced crankcase oil, but also 
noted that the benefit obtained depends on the 
ba.se oil used. That company also indicated that 
it would begin marketing their advanced oil by 



1980, and predicted that the necessary approval 
criteria for fuel economy testing could be met 
by the January 1, 1980, deadline. DN-149. Sun 
Oil Company projected an improvement of 2-3 
percent for the crankca.se oils (DN-150), while 
Shell's testing of other company's products led 
it to estimate a 0-2 percent improvement. DN- 
176. Shell predicted that the EPA approval 
process and all necessary oil company certifica- 
tion of the oils would not be completed prior to 
1982. ARCO reaffirmed its prior statements to 
the agency, that "significant improvements" in 
fuel economy are possible with these oils. DN- 
151. 

Against this background (including the more 
voluminous information submitted as part of the 
1980-81 rulemaking), the agency has concluded 
that the estimated fuel economy benefit for im- 
proved lubricants should not be revised. The 
vast majority of data submitted by the oil com- 
panies support the 2 percent crankcase oil im- 
provement or a greater improvement. Most of 
the data submitted by the manufacturers prior 
to the consideration of Chrysler's petition tended 
to support that figure. Limited additional sup- 
port for the axle lubricant improvement pro- 
jected was received from the oil companies, as 
well. Recent information submitted by the ve- 
hicle manufacturers (principally Chrysler and 
Ford) is relatively limited. The decision to 
maintain the original lubricant projection is also 
supported by a contract study performed for 
NHTSA bv the Coordinating Research Council. 
See DN-187. 

With respect to the question of whether all 
necessary criteria for EPA approval of the 
lubricants can be satisfied, NHTSA notes that 
progress is being made toward ultimate approval, 
and it is premature to speculate that the process 
cannot be completed in a timely manner. In 
the NPRM on the Chrysler petition, the agency 
stated that it was strongly inclined to wait until 
the January 1, 1980, deadline for EPA approval 
of these lubricants for fuel economy testing 
rather than concluding that use of the lubricants 
will not be approved and removing the lubricant 
projection from its standard setting analysis 
now. See 43 FR 58841. The manufacturers 
should base their fuel economy planning on the 
assumption that the standards for 1981 will be 



PART 533— PRE 31 



in effect at the levels which reflect the inclusion 
of lubricants; those are the standards in effect 
with the publication of this rule, and those 
standards will remain in effect unless EPA's 
approval is not granted. 

(i) Other reductions. Another problem which 
Chrysler argues has reduced its 4X2 fuel economy 
improvement capability relates to reduced auto- 
matic transmission parasitic losses. The use of 
a light duty, more efficient transmission to ac- 
complish this improvement was not included in 
the agency's projections which formed the basis 
for the original 1981 standard, but was included 
in Chrysler's petition. Although Chrysler was 
apparently confident that this item could be 
applied by the 1981 model year at the time it 
filed its petition, it no longer is sure of success. 
On April 9, 1979, Chrysler, citing manufacturing 
and durability problems encountered in testing 
of the more eflScient transmission, stated : 

Presently, there is approximately a 50 per- 
cent probability that we will be successful 
in meeting the production date. If we are 
successful, we are confident the estimated 
improvement will be realized on the fleet. 

DN-188, p. 2. In its December 6, 1978, submis- 
sion Chrysler had projected a 1981 introduction 
of this technology, producing a 0.16 mpg fuel 
economy benefit. 

The contradictory information places the 
agency in a difficult position to determine maxi- 
mum feasible fuel economy improvements. Here, 
as elsewhere, Chrysler has reported development 
problems of one sort or another. However, the 
substantiation of those problems is often sketchy. 
Nevertheless, the current substantial uncertainty 
about the prospects for success leads the agency 
to be conservative. Therefore, the agency is not 
including this transmission improvement in pro- 
jecting Chrysler's capability for MY 1981. 

The agency has deleted its projection in the 
1980-81 rulemaking that AM could employ a 
new, 4X4 transfer case in its fleet. This deletion 
lowers the agency's projection of AM's fuel 
economy improvement capability for 1981 by 
0.2 mpg. NHTSA has deleted this item because 
of uncertainty as to whether the resulting gain 
from the use of a new transfer case would show 
up on fuel economy tests. 



The agency's projection of Ford's fuel econ- 
omy improvement capability has decreased by 
about .2 mpg for 4X2's and .5 mpg for 4X4 's due 
to our changed assessment of Ford's ability to 
make improvements to automatic transmissions. 
All of the 4X2 reduction and about half of the 
4X4 reduction is due to the elimination of the 
projected use of lock-up torque converters by 
1981. The agency projected that the leadtime 
was adequate to accomplish this improvement by 
the 1981 model year, but Ford indicates that it 
plans to implement lockup torque converters 
after that date. The remainder of the 4X4 re- 
duction is due to changes in Ford's planned 
usage of overdrive automatic transmissions in 
that portion of its fleet. 

Selecting the Stamdards 
On the basis of the above-described informa- 
tion from AM, Chrysler, Ford and GM, the 
agency has reassessed their fuel economy im- 
provement potential for the 1981 model year as 
follows : 

AM 25.6 15.5 

Chrysler 17.2 15.5 

Ford 17.4' 15.5 

GM 17.2 15.8 

The agency has not reassessed the capabilities 
of the other manufacturers (e.g., Nissan, Toyo 
Kogyo, Volkswagen, etc.) since only Toyota 
commented on the proposal. The absence of 
comments from most foi-eign manufacturers has 
been typical of all of the agency's other fuel 
economy rulemaking and results from those 
manufacturer's capabilities being well above the 
standard. The same is true in this rulemaking. 
See 43 FR 12012. 

The values in the above table reflect the 
agency's judgment of the maximum levels of 
average fuel economy that the major domestic 
manufacturers can achieve without having to 
undertake measures involving substantial mar- 
keting risk. As indicated below, the agency 
concluded in this case that the additional diffi- 
culties involved with these measures would out- 



' Ford's own projection is 17.6 mpg, with minimal 
benefits from lubricant. 



PART 533— PRE 32 



weigh the slight additional fuel economy im- 
provements they would make possible. 

The agency also notes that there are often 
substantial uncertainties present in any rule- 
making like the present one in which the govern- 
ment must project future capabilities in an in- 
dustry to develop and implement technological 
innovations. For example, the agency projec- 
tions of technological improvements 'or MY 81 
include undefined spark ignition engine improve- 
ments for Chrysler and GM, benefits from im- 
proved manual transmissions for GM although 
they project none, and greater benefits from the 
use of automatic overdrive transmissions than 
Ford projects. Improvements beyond those pro- 
jected by the agency may be possible in such 
areas as automatic transmissions parasitic loss 
reduction, engine eflSciency improvements, mix 
shifts, and engine displacement/axle ratio reduc- 
tions. The agency is imable to quantify the un- 
certainty associated with these improvements. In 
this type of situation, agencies are required to 
compare the harm which is likely to result from 
erring either on the side of too stringent or too 
lenient standards. International Harvester Co. 
V. Rwkelshaus, 478 F.2d 615 (D.C. Cir 1973). 
The same type of balancing is required under 
the Act to determine at which point within the 
range of fuel economy improvement capabilities 
of the various manufacturers standards should 
be set. See Senate Report 94-516, at pages 
154—5. The potential hann from setting too 
stringent 4X2 standards was found to be the 
liability of the manufacturers for civil penalties 
(as high as $40 per truck produced in the case 
of Chrysler in the current rulemaking, i.e., 
achieving a CAFE of 17.2 mpg instead of 18.0) 
or the possibility of a decline in sales if a manu- 
facturer attempts to restrict product availability 
while his competitors can sell a more complete 
line of vehicles. The amount of any civil 
penalty liability could be reduced by the Secre- 
tary of Transportation in a variety of circum- 
stances, such as when the liability is due to 
certain circumstances outside the manufacturer's 
control or where payment of the full penalty 
would produce insolvency, bankruptcy, or a sub- 
stantial lessening of competition within the truck 
market. In the case of the 4X4 standard, all 
the manufacturers are projected to be capable of 



achieving compliance with the existing 15.5 mpg 
standard with relatively low risk (although the 
risk for Chrysler may well be greater than for 
GM and Ford), so these concerns do not apply 
to the same extent to 4X4 vehicles. 

In the case of the 4X2 standard, the risks 
associated with maintaining the standard at 18 
mpg are substantially greater and are faced by 
all the companies. The 0.8 mpg shortfalls faced 
by Chrysler and GM could be offset only through 
significant market restrictions, based on the 
agency's analysis. Given the magnitude of the 
risk involved, those companies might well decide 
to simply pay the resulting $40 per truck civil 
penalties. In that case, maintaining the 18 mpg 
standard would not produce any additional pe- 
troleum conservation. 

The benefits to the nation for Chrysler and 
the other manufacturers to meet the existing 
4X2 standard of 18 mpg rather than a standard 
of 17.2 mpg are the approximately 710 million 
additional gallons of gasoline saved over the 
lifetime (128,000 miles) of the 1981 model year 
trucks. The agency considers that potential 
energy savings to be significant. However, the 
risks associated with maintaining the previously 
established standard has led the agency to decide 
to reduce the 4X2 standard to 17.2 mpg, the max- 
imum achievable levels projected for GM and 
Chrysler. Since we project none of the major 
domestic 4X2 manufacturers to be able to meet 
the 18 mpg standard with only moderate risk, 
the agency cannot conclude that maintaining 
that standard would necessarily produce any 
additional energy savings. Should the manu- 
facturers attempt to meet the 18 mpg standard 
through product restrictions, those actions would 
appear to involve substantial risk, due to the 
substantial fuel economy shortfalls involved. Be- 
cause of the commercial uses for which many of 
these vehicles are applied, any marketing action 
which affected the trucks' utility in a substan- 
tially adverse manner could directly affect sales 
levels, and thereby industry profitability and 
employment. 

A point made by the Department of Energy, 
and supported by EPA (DN-169) and the 
Center for Auto Safety (DN-90), is that stand- 
ards should not be keyed to the "least capable" 
manufacturer, given the civil penalty/credit 



PART 533— PRE 33 



mechanism in the law and Conference Report 
language which indicates that "industry-wide" 
considerations must be taken into account. See 
43 FR 58841, December 18, 1978 (the proposed 
rule in this proceeding). GM, on the other hand, 
argues that fuel economy standards must be set 
at levels achievable by all. DN-82, Att. III. 
Chrysler argues that the issue of the "least ca- 
pable manufacturer" is irrelevant, since the 
problems raised by that company are industry- 
wide, not just a problem facing one company. 
DN-93, p. 1. The agency has repeatedly stated 
in past rulemaking economy standards need not 
be set at the maximum achievable fuel economy 
level of the "least capable" manufacturer. In 
the case of the 4X2 standard, the agency's 
analysis demonstrated no single "least capable" 
manufacturer, with all the major domestic man- 
ufacturers falling within a very narrow fuel 
economy range and a majority of the domestic 
fleet (GM and Chrysler) being projected at the 
same level, 17.2 mpg. Thus, the "least capable" 
manufacturer issue is not implicated with re- 
spect to the 4X2 standard. Nor is the issue 
implicated with respect to the 4X4 standard, 
since that standard could not be set at a higher 
level at this time, due to the 18-month leadtime 
rule of section 502(f) of the Act. 

Therefore, the agency is reducing the 1981 
model year light truck fuel economy standard 
for 4X2's to 17.2 mpg, but is denying Chrysler's 
request to lower the 4X4 standard. 

Other comments and impacts of this decision 
The comments of the Department of Energy 
are of special significance in NHTSA's fuel 
economy rulemaking, given its statutory role. 
Under sections 502(h) and (i) of the Act, 
NHTSA must consult with DOE in carrying out 
fuel economy related responsibilities, and must 
provide DOE with advance notice and an op- 
portunity to comment prior to issuing any pro- 
posed or final standards. In the case of 
proposed standards, NHTSA is required to dis- 
cuss any "unaccommodated" comments of DOE 
in the Federal Register notice. Since NHTSA 
did not propose specific standards in this pro- 
ceeding, but rather issued a "description of the 
subject and issues involved" within the mean- 
ing of 5 U.S.C. 533(b)(3), it is appropriate to 
address DOE's comments in this notice. 



DOE is concerned that a decision to reduce 
the light truck fuel economy standards consti- 
tutes a very unfortunate lost energy conserva- 
tion opportunity, the significance of which is 
magnified by the "large and growing demand 
for light duty trucks, increasing cost of imported 
oil and pressure that a revision of the 1981 
standards could also lead to lower standards in 
later years." DN-95, p. 1. NHTSA believes 
that the energy loss resulting from this decision 
is outweighed by the risks faced by the vehicle 
manufacturers, consistent with the statutory re- 
quirements that standards be set at the maximum 
feasible level. 

In particular, DOE is concerned that this 
decision may establish a precedent that stand- 
ards will be reduced every time a manufacturer's 
technology development program encounters a 
problem, thereby eliminating "any effective for- 
ward looking standard setting activity by DOT." 
Supra, p. 2. Several of the agency's reduced 
fuel economy improvement projections have 
been revised to conform with manufacturers' 
plans, but only to reflect more recent information 
about capability. To the extent these develop- 
ment problems cannot be overcome by the model 
year in which the standards will apply, these 
problems limit the fuel economy improvement 
capability of the manufacturers, and, therefore, 
limit the levels at which standards can be set. 
These levels reflect the agency's current assess- 
ment of the maximum feasible fuel economy for 
each manufacturer, based on the leadtime from 
the issuance of the original 1981 standards. The 
agency does not intend to allow every minor de- 
velopment program problem encountered by the 
manufacturers to trigger a favorable considera- 
tion of a petition to reduce fuel economy stand- 
ards, but that is not the case here as the prob- 
lems are industry-wide. 

DOE also argues that a revision to the fuel 
economy standards at this late date will penalize 
those manufacturei*s which have made plans and 
expended resources to meet the previous stand- 
ards. The record of this proceeding indicates 
a similarity of capability of the various major 
domestic manufacturers. Judging by the com- 
ments of Ford and GM, those companies are 
facing the same type of problems that Chrysler 
confronts and will not be able to achieve fuel 



PART 533— PRE 34 



economy levels significantly higher than Chry- 
sler's. Indeed, Ford and GM support a reduc- 
tion in the standards. 

The Notice published by the agency con- 
cerning this petition (43 FR 58840) raised the 
question of the effect of a reassessment of the 
model year 1981 standards on the standard for 
limited product line light trucks. In the re- 
sponse to that notice, the only manufacturer 
subject to that standard, International Har- 
vester, said that its 1979 projected corporate 
average fuel economy is 12.6 mpg or 1.4 mpg 
below the MY 1980 standard. DN-86. IH 
added that it expected "a considerable increase 
in fuel economj' due to exhaust emission calibra- 
tions optimization in MY 1980." Since MY 
1979 is the first year since the early 1970's that 
IH has had to comply with light duty truck 
emissions standards, the agency agrees with IH 
that substantial improvements are likely. IH 
has testified before Congress that it expects to 
meet the current 1980 and 1981 fuel economy 
standards. Therefore, the agency has not re- 
vised the limited product line standard. 

Manufacturers have informed the agency that 
one of the methods they plan to use to improve 
h the fuel economy of the currently regulated fleet 
of 0-8500 pounds G^^WR is the rerating of ve- 
hicles above 8500 pounds GV1\''R. These ac- 
tions do not contribute to fuel savings for the 
Nation. For this reason, the agency intends to 
monitor closely the manufacturers' production 
and marketing plans to determine the actual ex- 
tent of this shifting beyond 8500 GVWR. These 
activities may lead to a determination by the 
agency to set fuel economy standards for such 
vehicles after model year 1981. 

The environmental impacts of this decision 
are discussed in the Environmental Impact State- 
ment prepared in conjunction with the establish- 
ment of the original 1981 standards. Copies of 
that document are available from the individual 
listed as the "information contact" at the be- 
ginning of this notice. The agency has con- 
cluded that a complete revised environmental 
impact statement need not be prepared for this 
proceeding, since the original document con- 
sidered the impacts of a range of standards 
which encompasses both the original decision and 
the decision announced herein. The most sig- 



nificant environmental impact associated with 
this decision is the additional petroleum con- 
sumption, with attendant increases in petroleum 
production, transportation, refining, and trans- 
fer related environmental impacts. If the exist- 
ing model year 1981 standards are not changed, 
the agency projects a savings of 2.85 billion 
gallons of gasoline, compared to the 1980 stand- 
ard. The standards established herein will save 
2.14 billion gallons. 

In consideration of the foregoing, 49 CFR 
Chapter V is amended by changing the title of 
Part 533 to "Light Truck Fuel Economy Stand- 
ards" and by revising the 1981 model year stand- 
ards set forth in the table in section 533.5(a) 
as follows: 
5.33.5 Requirements 
(a) ♦ * * 



Model 2-wheel drive 
Year light trucks 

Captive 

Imports Other 



If-wheel drive 
light trucks 
Captive 
Imports Other 



Limited 

product line 

light trucks 



1979 


— 


17.2 


— 


15.8 


— 


1980 


16.0 


16.0 


14.0 


14.0 


14.0 


1981 


17.2* 


17.2* 


15.5* 


15.5* 


15.0* 



* These standards are 0.5 mile per gallon less If, by 
.January 1, 1980, the Environmental Protection Agency 
has not fully approved improved lubricants for use in 
fuel economy testing. 

A Final Regulatory Analysis of the economic 
consequences of this decision has been prepared 
in accordance with section lO.f of the Depart- 
ment's Procedures for Improving Government 
Regulations, 44 FR 11034 et seq. This analysis 
considered a range of fuel economy standards 
between the existing standards and those re- 
quested by Chrysler. The establishment of 17.2 
mpg as the fuel economy standards for 4X2 
vehicles decreases gasoline savings by 0.7 billion 
gallons over the life of the 1981 fleet. Compared 
to the 1980 standards, the revised 1981 standards 
will save about 2 billion gallons of gasoline, at 
a cost of $153 million in capital investment and 
$49 per vehicle retail price increase. Consumers 
will achieve a net savings of $255 per vehicle 
as a result of the 1981 standards (compared to 
the 1980 standards). Copies of this analysis 
are available from NHTSA's Office of Plans 



I 



PART 533— PRE 35 



and Programs, Koom 5212 of the Nassif Build- 
ing, Washington, D.C. 20590. 

(Sec. 9, Pub. L. 89-670, 80 Stat. 931 (49 U.S.C. 
1657); Sec. 301, Pub. L. 94-163, 89 Stat. 901 
(15 U.S.C. 2002) ; delegation of authority at 41 
FE 25015, June 22, 1976 and 43 FR 8525, March 
2, 1978) 



Issued on June 20, 1979. 



Joan Claybrook 
Administrator 

44 F.R. 36975 
June 25, 1979 



i 



PART 533— PRE 36 



PREAMBLE TO AN AMENDMENT TO PART 533— LIGHT TRUCK AVERAGE FUEL 

ECONOMY STANDARDS 

Standards for 1982 Model Year 
(Docket No. FE 78-01; Notice 2) 



ACTION: Final Rule. 

SUMMARY: This notice establishes fuel economy 
standards for model year 1982 light trucks. The 
establishment of these standards is required by 
section 502(b) of the Motor Vehicle Information 
and Cost Savings Act. These standards are intended 
to result in the savings of 1.2 billion gallons of 
gasoline over the life of the 1982 light truck fleet, 
compared to the consumption which would have 
occurred if fuel economy remained at the levels of 
the 1981 standards. 

DATES: These standards are applicable for the 
1982 model year. 

FOR FURTHER INFORMATION CONTACT: 

Mr. Francis J. Turpin, Office of Automotive 
Fuel Economy Standards (NRM-21), National 
Highway Traffic Safety Administration, 400 
Seventh Street, S.W., Washington, D.C. 20590 
(202-472-6902) 

SUPPLEMENTARY INFORMATION: In December 
1975, following the Arab oil embargo of 1973, 
substantial increases in the price of imported 
petroleum, and a recognition of the nation's 
vulnerability to interruptions of supply and rapid 
increases in the price of foreign oil, the Congress 
passed the Energy Policy and Conservation Act. 
That law added a new Title V to the Motor Vehicle 
Information and Cost Savings Act ("the Act"), 
authorizing a number of federal initiatives to 
improve automotive fuel efficiency. 

Section 502(b) of the Act requires the Secretary 
of Transportation to issue average fuel economy 
standards for light trucks beginning with the 1979 
model year. That provision requires that standards 



be set at the maximum feasible average fuel 
economy level, considering technological 
feasibility, economic practicability, the effects of 
other federal standards on fuel economy, and the 
need of the nation to conserve energy. That 
provision also requires that standards be 
established at least 18 months prior to the start of 
the model year to which they apply. To date, 
standards have been established through the 1981 
model year. On December 31, 1979, in 44 FR 
77199, the National Highway Traffic Safety 
Administration ("NHTSA" or "the agency"), 
which was delegated authority to administer the 
fuel economy program, proposed the issuance of 
light truck standards for model years 1982-85. 
These standards would apply to light trucks with 
gross vehicle weight ratings (GVWR) of up to 8500 
pounds, curb weights of less than 6000 pounds, and 
frontal areas less than 45 square feet. This class of 
vehicles includes most standard pickup trucks, 
vans, and utility vehicles which are used for 
personal or light duty commercial applications. 

This notice establishes standards for the 1982 
model year only. Due to the imminence of the date 
specified in the law for establishment of the 1982 
standards and to the complexity of the marketing 
and other issues involved in the later model years, 
standards for the 1983-85 model years will be 
established at a later date. The 1982 standards are 
18 mpg for two-wheel drive light trucks and 16 
mpg for four-wheel drive light trucks. 

The basis for the proposed standards is set forth 
in the preamble to the December 31 notice of 
proposed rulemaking (NPRM), the agency's 
rulemaking support paper (RSP), and the agency's 
regulatory analysis, copies of which are available 
from the individual listed as the "information 
contact" at the beginning of this notice. These 



PART 533; PRE 37 



standards are based upon information obtained in 
past rulemakings, the Department's own research 
activities, information submitted by the 
manufacturers in response to a July 1978 NHTSA 
questionnaire and a July 1979 special order, and 
other information. In general, the proposed 1982 
standards are based primarily on the projected use 
of "add-on" technology such as radial tires, 
improved accessories, automatic transmissions 
with lock-up torque converters, and overdrive 
manual transmissions. Items requiring longer lead 
times, such as the introduction of compact pickup 
truck models and new engines were not included in 
the proposal for 1982 for most manufacturers, but 
were considered in three alternative analyses 
discussed in the agency's rulemaking support 
paper. 

The fuel economy levels of 17.4 mpg for two- 
wheel drive (4x2) light trucks and 15.6 mpg for 
four-wheel drive (4 x 4) light trucks set forth in the 
NPRM were determined to be achievable by the 
"least capable manufacturer" with relatively 
minor difficulty, and were based on the agency's 
then current assessment of that manufacturer's 
capability. The NPRM noted that the final 1982 
standards might be established at other higher or 
lower levels, depending on the comments received 
and the degree to which standards would be keyed 
to the least capable manufacturer. The proposed 
standards were generally consistent with levels of 
fuel economy which the manufacturers planned to 
meet, due to market demands and the anticipated 
establishment of fuel economy standards for that 
year. However, in most cases the proposed 
standards did not reflect such fuel economy 
improvement actions as reduction of average 
engine displacement or axle ratio below 1981 
levels, or some feasible new model introductions. 

The only comments received on the NPRM with 
respect to the 1982 standards came from the five 
domestic manufacturers of light trucks, the Center 
for Auto Safety, and Purolator Courier 
Corporation. With one exception, Chrysler 
Corporation, none of the manufacturers claimed to 
be unable to meet the proposed 1982 standards, 
and several apparently plan to exceed them by 
substantial margins. (As noted in greater detail 
later in this notice, the plans of the manufacturers 
and confidential information available to the 
agency place all of the manufacturers, except 
Chrysler, above the final standards too.) Since 



filing its comments on the proposal, Chrysler's 
position has changed. In its March 1980 special 
order response, that company revised its 
projections upward and indicated that it now plans 
to exceed the proposed 4x2 standard and to 
closely approach the 4x4 proposal. In general, the 
manufacturers took exception to certain of the 
details of the agency's analysis for 1982, but did 
not claim that the agency had overstated 
substantially their achievable fuel economy levels 
for that year. 

It should be noted that the levels of fuel economy 
projected in the proposal understated the actual 
fuel economy improvement capability for some 
companies due to limitations discussed above and 
the agency's policy of not including the fuel 
economy benefits from usage of diesel engines 
until the questions relating to the possible adverse 
health effects of diesel engine emissions are more 
fully resolved. The EPA has recently issued diesel 
particulate standards, and they will not preclude 
the use of diesel engines in light trucks for the 1982 
model year. However, only two manufacturers 
plan to rely significantly on diesel engine usage for 
1982, GM and IH, and the increased fuel economy 
levels which the agency would project based on 
those plans would not change the balancing 
process by which the agency arrives at final 
standards. Therefore, the agency has not included 
diesel engines in its 1982 fuel economy analysis, 
but may do so for the 1983-85 final rule, as 
mentioned in the NPRM. See 44 FR 77204. 

The main issues raised in the comments on the 
1982 standards involve the applicability of the 
standards, and in particular whether captive 
import light trucks may be included in average fuel 
economy calculations and whether the agency can 
and should establish a separate class of light trucks 
and a separate fuel economy standard to 
accommodate manufacturers such as Chrysler and 
IH, which claim to need special consideration. The 
latter issue will be discussed at the end of this 
notice, in conjunction with selecting the levels of 
the 1982 standards. 

A. Inclitsion of captive imports. Section 503(bXl) 
of the Act provides that when a manufacturer both 
produces passenger automobiles in the United 
States and imports passenger automobiles, those 
two groups of vehicles are to be treated as if 
manufactured by separate manufacturers for fuel 
economy standards compliance purposes. The 



PART 533; PRE-38 



purpose of this provision is to remove any incentive 
the domestic manufacturers might have to comply 
with fuel economy standards by merely importing 
more small foreign-produced automobiles, thereby 
decreasing employment in the U.S. industry. See 
Congressional Record, p. H5383 (daily edition, 
June 12, 1975). Although the law does not specify 
procedures for calculating light truck average fuel 
economy, the legislative history states that a 
similar computation (including "special rules for 
imports") should be established as was done in the 
statute for passenger automobiles. See House 
Report 94-340 (94th Cong., 1st Sess. (1975), 91). In 
establishing standards for 1980-81 model year 
light trucks, the agency used its classification 
authority under section 502(b) to require separate 
compliance of captive import and other light trucks 
after the 1979 model year. See 43 FR 11995, March 
23, 1978. 

Four of the domestic manufacturers commented 
on the issue of inclusion of captive import light 
trucks in model years after 1981. GM argued that 
the law compels NHTSA to require separate 
compliance of domestic and captive import light 
trucks. This position is based upon the language in 
the House Report relating to a "similar 
computation" for light truck average fuel economy 
as was done statutorily for passenger automobiles. 
GM argues that this position is further supported 
by Congress' making the definition of the term 
"domestically manufactured" in section 
503(bX2XE) apply to both passenger automobiles 
and light trucks. That term is the key definition for 
purposes of requiring separate compliance of 
imported and domestic vehicles, and could have 
been limited in application to passenger 
automobiles had Congress so intended. Ford also 
favored requiring separate compliance for import 
and domestic light trucks, but argued that if 
imports are permitted to be included in the 
average fuel economy calculation for some 
manufacturers, they must be includable for all. 
International Harvester favored permitting the 
inclusion of captive imports, but only if a higher 
fuel economy standard were set for companies 
which did so. Chrysler favored permitting the 
inclusion of up to 80,000 captive import light 
trucks in a manufacturer's average fuel economy 
calculation, and argued that the agency has 
authority to permit this. 



One argument raised by Chrysler to support the 
inclusion of captive imports is that this step would 
raise the average fuel economy of its domestic fleet 
relative to the levels achieved by Ford's and GM's 
domestic fleets. (Inclusion of the captive imports 
would also increase the agency's assessment of 
Chrysler's ability to improve its domestic average 
fuel economy and might lead to the setting of 
higher standards than would be set were the 
captive imports excluded. Chrysler would still have 
the lowest projected fuel economy of all 
companies, however.) However, the agency 
remains of the view that the separate compliance 
requirement for domestic and captive import light 
trucks has a countervailing positive impact, in 
encouraging the domestic manufacturers to 
produce small trucks in the U.S. and thereby 
increase U.S. industry employment. Once this 
investment is made, the companies will have a 
stronger incentive to promote the sale of these 
more fuel efficient vehicles, thereby reducing 
gasoline consumption. Domestic production of 
small trucks will also improve the U.S. trade 
balance by capturing sales which would otherwise 
go to the importers. 

Chrysler also argued that permitting it to include 
captive imports in its CAFE would enable it to 
"test the market" for smaller, more fuel efficient 
types of vehicles. The agency's original decision to 
require separate comphance of captive import and 
other light trucks does not preclude Chrysler or 
other manufacturers from continuing to test the 
small truck market with imports, to determine if 
demand for such vehicles is adequate to support 
minimum feasible domestic production volumes. 
However, the agency doubts that additional 
evidence is needed to convince a manufacturer that 
a market exists for these vehicles. In fact, 
Chrysler, in an October 17, 1979, submission to the 
Treasury Department relating to its loan 
guarantee, projects that small pickup trucks will 
account for 23 percent of the light truck market in 
the early 1980's. Sales of compact Japanese pickup 
trucks increased 39 percent from 1978 to 1979, to 
465,000 units, despite a general decline of over 15 
percent in total light truck sales. The compact 
pickup trucks were the only segment of the truck 
market to register a sales increase. Given the 
nearly universally accepted predictions of future 
gas price increases and possible shortages, the 
market for compact, fuel efficient light trucks 



PART 533; PRE 39 



seems assured. The other domestic light truck 
manufacturers apparently agree with the agency's 
conclusion that the market is sufficient to support 
the sale of these trucks, given their plans to begin 
production in the next few model years. 

The agency remains convinced that the separate 
treatment of captive import and domestic light 
trucks is the position most consistent with the 
legislative mandate to develop similar average fuel 
economy calculation procedures for light trucks as 
for passenger automobiles. Therefore, this final 
rule makes no change in the current requirement 
for separation of foreign and domestic light truck 
fleets. 

B. Technical issues. Several rather minor 
objections were raised with respect to the agency's 
technical analysis of 1982 fuel economy 
improvement capability. All issues are discussed in 
greater detail in the agency's rulemaking support 
paper, copies of which are available from the 
individual listed as the "information contact" at 
the beginning of this notice. 

The first issue involves the baseline used to 
project 1982 fuel economy levels. For the NPRM, 
the agency used as the baseline its prior analysis of 
achievable 1981 fuel economy levels from the 
rulemaking proceeding to reconsider that year's 
standards (44 FR 36975, June 25, 1979). That 
analysis was in turn based upon 1979 sales mix and 
fuel economy test data. Only IH commented on the 
question of whether 1980 mix and test data should 
be used as a baseline to the extent that information 
becomes available. IH supported the use of 1980 
test data, but cautioned that the 1980 sales data 
might be unrepresentative due to market 
fluctuations. A shift in the light truck mix 
apparently occurred between early 1979 and the 
present time, with lighter trucks and smaller 
engines accounting for a larger portion of total 
sales. Although the agency is not revising its 
baseline estimates of average fuel economy, the 
standards established herein do reflect the changes 
in the truck market which occurred after the start 
of the 1979 model year, as discussed below. 

Both AM and IH argued that the 1981 standards 
should be the baseline for projecting 1982 fuel 
economy levels, and that the only additional 
technology which should be considered by the 
agency is that which could be added for the 1982 
model year. This approach would ignore any 
technology which was used by manufacturers to 



voluntarily exceed the 1981 standards, and would 
therefore inaccurately measure 1982 maximum 
feasible fuel economy levels. For the NPRM, the 
agency did include improvements by two 
manufacturers (Ford and GM) which raised their 
capabilities beyond the 1981 standards. Thus, the 
agency has rejected this suggestion, due to its 
inconsistency with the legal requirements that 
standards be established at maximum feasible 
levels. 

The agency also requested comment on its 
current policy of not including in standard-setting 
analyses the fuel economy benefits from diesel 
engines, pending resolution of various diesel- 
emission-related questions by EPA. All the 
manufacturers (but for AM, which did not address 
the issue) supported the continuation of this policy, 
which has the potential effect of reducing the level 
of standards which are set. Ford also suggested 
that the policy be extended to its planned PROCO 
engine. With respect to the diesel issue, the agency 
is continuing its current policy for the reasons 
discussed above. The PROCO issue has no direct 
bearing on the 1982 standards in any case, since 
the PROCO engine would not be available until 
some later model year. Ford's comment will be 
addressed in the 1983-85 final rule. 

IH also objected to the agency's methodology of 
assuming that if diesels were not available to that 
company, consumers would purchase the most 
efficient alternative gasoline engine available, a 
four-cylinder engine in IH's case. In fact, the 
agency substituted a combination of 4- and 
8-cylinder engines for the diesels, not solely the 
4-cylinder engines. However, the agency is of the 
view that the 4-cylinder engine is the closest 
substitute to the diesel in terms of acceleration 
performance and fuel economy, as discussed in the 
rulemaking support paper. 

Several objections were raised with respect to 
the agency's projections of various transmission 
improvements. However, none of these objections 
were accompanied by test data or supporting 
analysis. Therefore, the agency has not revised its 
analysis with respect to potential transmission 
usage. Additional discussion on transmission 
improvements is contained in the agency's 
rulemaking support paper. 

Ford objected to the fuel economy benefit from 
improved accessories projected by the agency. 



PART 533; PRE-40 



I 



} 



However, since Ford's statement did not indicate 
that such improvements were not feasible or 
provide any supporting data, the agency has not 
revised its projection used in the NPRM. Chrysler 
also differed with the agency's projection (and its 
own past estimates) of accessory improvements. 
No substantiating data for this change of position 
was provided, and the agency sees no reason why 
at least a portion of the originally projected 
improvement cannot be achieved by Chrysler. 
Although Chrysler pointed out that tests of one 
proposed technique provided no benefit, the 
agency considers it likely that other techniques 
may still provide a portion of the benefit. 

Chrysler also objected to the agency's estimate 
and reduced its own previous estimate of the fuel 
economy benefit it could obtain from aerodynamic 
improvements for 4x2 light trucks. However, 
Chrysler provided no data or analysis in support of 
its claim, beyond stating that only one previously 
proposed improvement had proven acceptable 
within the constraints of cost, engineering and 
styling. Also, Chrysler's current estimate of the 
relationship between reductions in aerodynamic 
drag and fuel economy improvements is much 
lower than both the agency's estimates and those 
of the other manufacturers. Accordingly, the 
agency cannot accept Chrysler's unsupported 
assertion in this area. 

Chrysler has also changed its position on feasible 
weight reduction for 1982. The agency had 
previously projected a very small improvement in 
this area (a reduction from projections made in the 
original 1981 standard-setting proceeding). Since 
Chrysler provided no basis to conclude that 
NHTSA's projected weight reduction is not 
feasible, the agency is retaining its original 
estimate. 

Ford, GM, and Chrysler all objected to the 
agency's projection of a 1 percent fuel economy 
benefit from improved axle and manual 
transmission lubricants for 1982. GM and Ford 
projected lower benefits than did the agency, and 
GM and Chrysler indicated that additional time 
would be needed to complete the necessary 
durability testing. The agency recognizes that the 
precise level of benefits has not been finally 
established, but believes that its projections are 
substantially correct. The agency recognizes too 
that durability is a matter that the manufacturers 
must address. However, except for Chrysler, the 



manufacturers' arguments were not supported by 
any new information and are the same arguments 
considered and rejected by the agency in the past 
proceedings on 1980-81 light truck standards and 
the reconsideration of the 1981 standards. GM's 
and Chrysler's comments discuss lower viscosity 
rear axle lubricants only and do not discuss the 
benefits from the use of synthetic base or friction 
modified axle lubricants. Ford has tested the 
friction modified lubricants and apparently has not 
encountered any durability problems. In the 
absence of data or information in support of these 
arguments, the agency is retaining its 1 percent 
axle lubricant projection, but not including this 
benefit for Chrysler until 1983. 

The manufacturers also objected to the agency's 
projection of a 3 percent fuel economy 
improvement for 1982 from the use of electronic 
engine control systems. Some manufacturers 
apparently assumed that the agency's projections 
were limited to systems for fully interactive 
electronic control of spark advance, air-to-fuel 
ratio, and exhaust gas recirculation rate. This was 
not the case, since, as was pointed out in the 
Support Paper for the NPRM, the agency was 
projecting the use of a variety of electronic 
controls which differ in sophistication. The 
primary basis for this projection was that 
electronic controls (not necessarily fully- 
interactive electronic controls) would be used on 
1981 model year passenger cars. In the 1980-81 
proposal on light trucks (42 FR 63184; December 
15, 1977), the agency projected that these controls 
could be applied to 1981 model year light trucks. 
The agency did not assume the use of controls in 
setting the final 1981 standards due to possible 
lead time problems in fully developing and 
reproducing the necessary software. Now some 
manufacturers are arguing that lead time does not 
-exist to apply electronic controls to the 1982 light 
truck fleet, and even if it were done, no fuel 
economy benefit would result. Again, those 
arguments are based primarily on 3-way catalyst 
systems. 

The agency rejects the lead time argument put 
forth by GM because the agency did not restrict its 
MY 1982 projections to 3-way catalyst systems and 
there has been sufficient lead time for large 
manufacturers such as GM and Ford to develop 
electronic control systems. Indeed, GM is 
intending to use a Knock Limiter System. Further, 



PART 533; PRE 41 



both Chrysler and Ford will be using some form of 
electronic controls on certain applications in MY 
1982. Several sources in the Support Paper for the 
NPRM substantiate the agency's position of 
average fuel economy benefits of from 3 to 5 
percent for electronic controls in various forms as 
does later information submitted by one 
manufacturer. Although some data submitted by 
the manufacturers showed no fuel economy 
improvement from specific electronic subsystems 
in particular applications, the agency is retaining 
its original estimate of 3 percent as a reasonable 
estimate of the average improvement in fuel 
economy. 

Ford and Chrysler objected to the agency's 
estimate of fuel economy benefits available from 
reducing engine displacement or total drive ratio 
(CID X N/V). Ford objected to the CID x N/V 
reductions projected in one alternative case in the 
rulemaking support paper, but that was not the 
reduction upon which the 1982 proposal was based. 
The agency believes that Ford can meet the 
standards established herein without making CID 
X N/V reductions beyond those planned. Chrysler, 
however, projects that for 1981 it will sell engines 
with larger average displacement, and 
consequently poorer fuel economy, than in 1980. 
The mix gets even worse for 1982. The agency 
cannot accept Chrysler's 1982 projection for 
purposes of setting standards. Against a 
background of current rapid gas price increases, 
uncertainties over Mideast oil supplies, and record 
sales of small imported automobiles, neither the 
agency nor Chrysler's domestic competitors views 
the market as being consistent with Chrysler's 
*■ .ecasts. Even if Chrysler were correct in its 
forecast, that company provided no information 
bearing on its ability to use marketing measures to 
promote the sale of smaller engines. However, the 
agency is accepting Chrysler's projected shift for 
1980-81, which is based on certain sales dislocations 
being carried over from 1979. Overall, the agency 
is retaining its original estimate of CID x N/V 
reductions for Chrysler. 

In the NPRM, the agency discussed a base case 
for making fuel economy improvements in 
1982-85. It also set forth three alternative cases 
for achieving higher fuel economy levels, by 
introducing additional compact truck models. 



major performance reductions, and eliminating 
many of the higher payload trucks. With respect to 
the "new model" case, the Center for Auto Safety 
objected to the fuel economy values projected by 
the agency for compact pickup truck and van 
models. Specifically, the Center argues that the 
new domestic models projected by the agency 
would still be larger than and have poorer fuel 
economy than imported light trucks, and would be 
unable to successfully compete with the imports in 
these times of increased demand for high fuel 
efficiency. According to the Center, the result of 
producing such vehicles would be further loss of 
sales to the imports, increased unemployment in 
the domestic industry, and a waste of capital due to 
the need to downsize these trucks again. The 
agency is concerned about the issue of new model 
attributes, but the issue raised relates to the 
1983-85 standards because of the inadequate lead 
time to change 1982 designs. The agency will 
consider this question more fully for the final rule 
on 1983-85 standards. 

C. Economic practicability. None of the 
manufacturers raised any specific objections with 
respect to the agency's analysis of the costs 
associated with compliance with the 1982 
standards. Since the agency's projections of 1982 
fuel economy improvements are no more stringent 
than the actions planned by the manufacturers to 
meet current market demand for greater fuel 
efficiency, the additional costs imposed by the 1982 
standards are speculative. For that reason, the 
agency has continued to determine the costs and 
benefits of improving fuel economy to the levels 
required by our standards, regardless of the 
motivation for making those improvements. 

IH raised two general economic issues. First, it 
requested that the agency conduct cash flow 
analyses for AM and IH as had been done for the 
larger domestic manufacturers. The 1982 model 
year capital investment required of these two 
companies, which rely extensively on suppliers for 
major components, is quite small. This makes cash 
flow a much less critical consideration for those 
companies than for the "Big Three." Further, IH's 
light truck production is a very small portion of 
that company's business. Thus, IH's light truck 
expenditures have a relatively small impact on its 



PART 533; PRE 42 



cash flow. Second, IH agrued that the agency 
consider the costs associated with fuel economy 
standards compliance, but which do not involve 
product changes. Apparently, IH is referring to 
the costs associated with commenting on proposed 
standards, responding to questionnaires and 
special orders for NHTSA, and submitting reports 
to the government. IH states that these costs are 
insignificant for the larger manufacturers, but 
important for companies having a much smaller 
share of the market, like IH. However, IH 
provided no cost information to support their 
argument. 

D. Effects of other federal standards. Two 
manufacturers addressed the issue of the effect of 
1982 safety standard amendments on fuel 
economy. GM argued that the changes to Standard 
204 (relating to steering column rearward 
displacement) would require structural 
reinforcement to its vans, adding 40 pounds 
additional weight. IH, on the other hand, 
estimated no adverse impact for its light truck 
fleet due to changes in safety requirements. The 
agency estimates that 40 pounds added to GM 
vans, if actually required, would have a negligibly 
small impact on measured fuel economy and no 

\ effect on its compliance with the 1982 standards. 

E. Need of the nation to conserve energy. 
None of the manufacturers took exception to the 

agency's discussion of the need of the nation to 
conserve energy, as set forth in the NPRM, 
rulemaking support paper, and preliminary 
regulatory analysis. Events continue to bear out 
the conclusion expressed by the agency in each 
standard-setting proceeding to date, that the need 
of the nation to conserve energy is so great as to 
require the establishment of the most stringent 
feasible fuel economy standards. 

F. Setting the 1982 standards. Based on 
comments received on the agency's NPRM, no 
significant revisions are required to the detailed 
technology usage projections which formed the 
basis for the proposed standards. However, due to 
rapid shifts in the light truck market and to 
corresponding changes in manufacturers' product 
plans, the estimates made by the agency in 
December no longer appear valid. For example, 
Chrysler recently submitted a response to an 
agency special order which projected 1982 fuel 
economy levels of 17.7 mpg for 4 x 2's and 15.3 
mpg for 4 X 4's 0.5 to 0.6 mpg above the levels it 



told NHTSA were its maximum feasible levels less 
than two months ago. Based on the plans of the 
various manufacturers to substantially change 
current trucks and on other information available 
to the agency, the fuel economy levels achievable 
with no more than moderate risk for the 1982 
model year are as follows: 

4x2 4x4 

American Motors — 16-17 

Chrysler 17.7 15.3 

Ford 18-19 16-17 

General Motors 18-19 16-17 

International Harvester .. . — 17.1 

The precise planned fuel economy levels of some of 
the manufacturers have been claimed to be 
confidential by some of the companies. 

The reason for these higher levels is that some 
manufacturers plan (in response to the rapidly 
shifting market) to take certain actions to improve 
fuel economy beyond those actions projected by 
the agency for the proposed standards. Also, some 
of these numbers include the benefits of diesel 
engines, which the agency did not include in its 
analysis. These additional actions either became 
more firmly established after the issuance of the 
NPRM, or were discussed in manufacturers' 
special order responses but were not fully 
integrated into the agency's proposal due to the 
short period of time between the receipt of special 
order responses and issuance of the NPRM. 

Because of the rapid changes in the truck 
market, with fuel efficiency playing a much 
greater role in consumers' purchasing decisions, it 
appears that the manufacturers' fuel economy 
improvement plans for 1982 are a more accurate 
indicator of the "maximum feasible average fuel 
economy" for that year than are the agency's 
projections in the NPRM. Given the limited lead 
time remaining until the beginning of the 1982 
model year and the substantial economic 
uncertainties facing the manufacturers and the 
national economy, the agency is relying primarily 
on the manufacturers' planned fuel economy levels 
in setting final 1982 standards. The final standards 
are also quite consistent with the fuel economy 
levels projected in the alternative cases in the 
agency's rulemaking support paper. 

The Act's legislative history provides guidance 
on the establishment of fuel economy standards in 
a situation like this one, in which one manufacturer 
has lower projected fuel economy than the rest of 



PART 533; PRE 43 



the industry. The Conference Report on the Act 
provides guidance in this regard as follows: 

The conference substitute lists a number of 

factors the Secretary shall consider in determining 

maximum feasible average fuel economy .... Such 

determination should .... take industrywide 

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 

automobile manufacturers. Such difficulties, 

however, should be given appropriate weight in 

setting the standard in light of the small number of 

domestic automobile 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. 

However, it should also be noted that provision 

has been made for granting relief from penalties 

under Section 508(b) in situations where 

competition will suffer significantly if penalties 

are imposed. 

Senate Report 94-340, 94th Cong., 1st Sess. (1975), 

at 154-5. Thus, the Secretary is required to balance 

the benefits to the nation of setting fuel economy 

standards at some level above that projected to be 

achievable with minimal risk by the "least capable" 

manufacturer against the resulting harm to that 

manufacturer and to industry competition. 

The main benefit from setting higher fuel economy 
standards is the additional petroleum savings which 
would result, or at least the greater certainty that 
these savings will be realized. This benefit is limited 
by feasibility constraints, since some levels of fuel 
economy either cannot be achieved or, more likely, 
could be achieved only at a risk perceived by the 
manufacturers to be so great that they would elect to 
pay civil penalties for failing to meet the standards 
rather than comply. This possibility of setting fuel 
economy standards which do not produce the 
anticipated savings is remote (but for Chrysler) if 
standards are set at levels at least up to 18 mpg for 4 
X 2's and 16 mpg for 4 x 4's. Over the fuel economy 
ranges which the manufacturers are able to achieve 
for 1982, each 0.1 mpg of additional average fuel 
economy for the industry (including both classes of 
trucks) produces additional gas savings of 
approximately 130 million gallons over the life of the 
affected vehicles. 



Setting standards at levels which can more 
readily be achieved by the least capable 
manufacturer could result in the loss of gasoline 
savings which a higher standard would produce. In 
other words, standards set at a level which 
Chrysler can readily achieve would be below the 
maximum level which the other manufacturers can 
meet, and the other manufacturers could choose to 
just meet the lower standards instead of achieving 
the higher fuel economy levels they are capable of 
meeting. It has been argued by some 
manufacturers that market forces would not 
permit any manufacturer to produce vehicles of 
less than maximum fuel economy. However, the 
concept of "maximum fuel economy" is one upon 
which the agency and some of the manufacturers 
would disagree. There is no certainty that the 
manufacturers would maintain their planned 1982 
fuel economy improvements if the fuel economy 
standards provided that latitude. In the unlikely 
event that setting 1982 standards well below GM's 
and Ford's capability (and below that of AM and 
IH in the case of 4 x 4's) did not result in lower 
energy conservation in 1982, it could have that 
effect in a later year. The setting of such standards 
would enable those companies to earn large 1982 
credits and thus possibly reduce the incentive for 
additional fuel economy improvements in a later 
year. The fact that Ford, in its comments on the 
NPRM, stated that its 1982 planned fuel economy 
levels had been reduced from levels reported to the 
agency in September 1979 is evidence that current 
plans are not absolutely fixed, and that lower fuel 
economy levels are a definite possibility. 

The agency is also directed to consider the possible 
competitive harm which would occur if standards 
were set at a level above which a manufacturer could 
meet with low risk. This harm could result from 
either the payment of civil penalties (and any 
resulting adverse publicity) or the taking of drastic 
actions to comply with the standards. With respect to 
the payment of civil penalties, the Secretary may 
waive penalties if the Federal Trade Commission 
certified that the payment of such penalties would 
produce a "substantial lessening of competition." 
Given Chrysler's situation as one of the three major 
domestic light truck producers and its current 
financial troubles, it is likely that such a finding 
would be made and potential penalties waived. More 
to the point, Chrysler will earn enough credits in 
1981 to eliminate any civil penalties for the majority 
of its trucks, the 4 x 2's. Credits carried over for its 4 
X 4 fleet would reduce the maximum civil penalty 



PART 533; PRE 44 



liability to about 2 million dollars. Given the 
public's awareness of Chrysler's problems, the 
small magnitude of the potential penalties, and the 
possibility that Chrysler might meet the standards, 
the agency discounts the adverse publicity factor. 

The remaining risk to be considered is the 
potential harm resulting from a manufacturer 
taking extraordinary actions to meet the standard 
and either producing vehicles which are not 
accepted in the market or incurring expenses 
which it cannot meet. Given the magnitude of the 
potential civil penalty liability for Chrysler of $35 
per 4x4 truck and the possibility that any penalty 
would be waived, it is inconceivable that company 
would take any actions to comply with the 
standards which might have serious adverse 
economic consequences for it. 

Further, the possibility remains that Chrysler 
may be able to achieve 1982 average fuel economy 
levels of 1 8 mpg for 4 x 2'sand 16mpgfor 4 x 4's. 
If Chrysler took such actions as further increasing 
the efficiency of its engines, reducing its average 
engine displacement by changing the mix of the 
vehicles sold, or instituting additional lightweight 
material substitutions, it may be able to comply 
with these standards. 

The agency concludes that the energy savings 
benefits associated with setting standards at levels 
of 18 mpg for 4 x 2's and 16 mpg for 4 x 4's 
outweigh the rather speculative harm to Chrysler 
of such standards. Therefore, after balancing the 
factors required by the law, the agency is 
establishing final standards of 18 mpg for 4 x 2's 
and 16 mpg for 4 x 4's. 

Commenters on the NPRM raised two issues 
which directly relate to the balancing process and 
selection of final standards. First, IH and Chrysler 
both argued that standards should be set at levels, 
readily achievable by the least capable 
manufacturer, and the Center for Auto Safety 
opposed such a process. IH argued that the 
adverse publicity associated with violating the 
standards would be very damaging to the "least 
capable manufacturer." The standards established 
herein can be met by IH, based on that company's 
current product plan, as described in its response 
to the agency's July 1979 special order. In Chrysler's 
case, the public is already aware of that company's 
current financial difficulties and should not draw 
additional adverse conclusions based on its possible 
failure to comply, particularly if civil penalties are 



offset by credits or waived. In any case, the 
potential loss in fuel savings resulting from setting 
standards at a level which Chrysler readily could 
meet outweighs any of the speculative effects on 
that company. 

The second argument, which was also supported 
by IH and Chrysler but opposed by GM, Ford, and 
the Center for Auto Safety, involves the use of the 
agency's authority under section 502(b) of the Act 
to set separate class fuel economy standards for 
companies with particular problems. IH argued 
that it needs such special treatment. However, 
based on its own plan and the agency's projections, 
it can comply with the standards established 
herein. With respect to the Chrysler situation, both 
GM and Ford argue that the agency lacks the 
authority to establish such a classification. Both 
manufacturers argue that the Act requires that 
standards apply equally to all manufacturers, and 
that the agency's authority to set standards for 
different classes applies to classes of vehicles, not 
of manufacturers. The Center for Auto Safety 
argues that the mechanism in the law for payment 
of moderate civil penalties for noncompliance and 
for reduction or elimination of those penalties in 
cases of need should be the sole method for dealing 
with the problems of the least capable 
manufacturer. Ford also argues that separate 
standards for different companies competing in 
the same market segment provides a competitive 
advantage to the company subject to the less 
stringent standard. 

The agency has in the past used its classification 
authority to promote maximum fuel savings while 
still not placing undue burdens on particular 
manufacturers. For example, the separate 4x4 
standard was established to account for American 
Motors, whose fleet is predominantly the less fuel 
efficient four wheel drive vehicles. The "limited 
product line" standard was established to provide 
a two year transition period for IH to gain 
experience with complying with more stringent 
emission standards, which were applied to that 
company's light trucks for the first time in 1979. 

With respect to IH, the two year period expires 
in 1981, and all indications are that IH has been 
able to improve its ability to meet more stringent 
emission standards without loss of fuel economy. 
The fuel economy of IH's 4x4 fleet for 1982 is on 
a par with that of the other manufacturers' 4x4 
fleets, so the agency is not granting IH's request to 



PART 533; PRE 45 



extend the applicability of that company's special 
class. IH argued that a separate class is needed to 
allow for the possibility that it might offer 4x2 
versions of its Scout vehicle in 1982. In recent 
years, the sales of these 4x2 derivatives of the 
standard 4x4 Scout have been at very low levels, 
dropping to under 300 units in 1979. In a 
September 13, 1979, letter to the agency, IH 
indicated that the Scout is available "only in four- 
wheel drive." In any case, given the low volumes 
involved, the availability of diesel engines to raise 4 
x 2 fuel economy, and the existence of carry-over 
credits if 4 x 2 Scouts continue to be sold, the 
agency sees no need to perpetuate the special class 
for IH. However, since IH and AM will still have 
fleets which are at least predominantly four wheel 
drive, the agency deems it necessary to extend the 
separate class for that type of vehicle. See 42 FR 
63192-3, December 19, 1977. 

Without deciding the question of whether the 
agency has the authority to set a separate standard 
for Chrysler but recognizing that serious questions 
exist in that regard, the agency deems it 
appropriate to employ other statutory mechanisms 
in dealing with that company's problems. Chrysler 
competes in the same market segments as GM and 
Ford, and the various truck models offered by 
those three companies are remarkably similar. 
There is no inherent technical reason why 
Chrysler's light trucks cannot achieve the same 
levels of fuel economy as the other companies. The 
agency does not seek to minimize the magnitude of 
the economic difficulties which confront Chrysler. 
However, the agency is concerned that the 
establishment of differential fuel economy 
standards for fleets of vehicles which are nearly 
identical on a model-for-model basis could have an 
anticompetitive effect. Congress considered the 
conflict between standards which require 
maximum fuel economy improvements and the 
inevitable differences in capabilities of the affected 
manufacturers, and developed the enforcement 
mechanism in section 508 of the Act (involving 
modest civil penalties for noncompliance, 
offsetting monetary credits, and waivers of 
penalties in certain instances) to deal with the 
situation. Therefore, the agency is not establishing 
a separate class and fuel economy standard for 
Chrysler. 



G. Miscellaneous comments. AM raised two 
procedural issues in regard to the 1982 standards. 
First, it argued that the agency failed to comply 
with the requirement in section 502 (b) of the Act 
that standards be issued 18 months prior to the 
start of the model year to which they apply. In 
AM's case, its 1982 production period will begin in 
July 1981, and 18 months prior to that date would 
be January 1980. As the agency noted in response 
to the same comment made by AM with respect to 
the 1980 standard, there is no single start of a 
model year for all companies in the industry (43 FR 
11995; March 23, 1978). Production begins as early 
as July (or even earlier in some cases such as with 
the GM X-body cars) and as late as December for 
some foreign manufacturers. However, the agency 
has endeavored to provide approximately 18 
months leadtime for the industry as a whole. Even 
for domestic companies with early-starting model 
years, these standards are established 18 months 
prior to the introduction for sale of the 1982 
models. Further, lead time should not be a problem 
for AM with respect to the 1982 standard, since its 
current product plan would lead it to exceed the 
standards promulgated herein. 

AM also objected to the brief 30 day comment 
period provided with respect to the 1982 standard. 
This short comment period was necessitated by the 
statutory deadline for issuance of that standard 
and by delays in issuing the NPRM resulting from 
requests from the industry to reduce the 1981 
standards. Although the agency seeks to provide 
more than 30 days to comment on proposed rules, 
NHTSA views the 30 day period as reasonable in 
this case, due to the relatively narrow issues 
involved. More time has been provided to comment 
on the 1983-85 standards, where the issues 
involved are much more complex. 

Purolator Courier Corporation argued for a 
more gradual increase in stringency in fuel 
economy standards to accommodate fleet truck 
operators like itself. It argued that much of the 
technology needed to comply with fuel economy 
standards is not fully proven, and that downsizing 
of light trucks would make those trucks less useful 
to commercial purchasers. Purolator also 
requested that a public hearing be held on the 
standards. The agency recognizes that changes to 
light trucks might result in some inconvenience to 
commercial users, e.g., from the need to train 
mechanics to repair new types of technology. 



PART 533; PRE 46 



However, the Act specifies that the agency must 
establish fuel economy standards at the maximum 
feasible level for each model year, necessarily 
producing changes in the truck fleet. The 
technology projected by the agency, particularly 
for the 1982 model year, is well proven and in most 
cases already in use on some vehicles. Further, the 
agency's standards do not necessitate the 
elimination of standard-size trucks with V-8 
engines, which Purolator claims to need. The 
agency does not see a need for a public hearing on 
these fuel economy standards, since the 
opportunity to submit written information is an 
effective means of addressing the primarily 
technical issues in a detailed fashion. 

H. Economic and energy impacts of the 1982 
standards. 

The agency considered the economic impacts of 
the 1982 standards, in accordance with Executive 
Order 12044 and the Department's regulations for 
implementing that order. See 44 FR 11034. Also 
considered were the "Urban and Community 
Impacts" of the standard, as specified in Executive 
Order 12074. These impacts are discussed in a 
Regulatory Analysis, copies of which are available 
from the agency's Office of Plans and Programs. 
The major conclusions of that document are that 
the standards will produce gasoline savings of 1.2 
billion gallons over the life of the 1982 model year 
light truck fleet. The investment requirement 
associated with making that improvement would 
be approximately $900 million, part of which would 
be assimilated in normal business as usual capital 
spending. The average retail price increase 
resulting from the standards is approximately $95, 



but this initial cost is more than offset by the 
operating cost savings over the life of the vehicle of 
about $470. No significant adverse "urban or 
community" impacts should result from the 
standards. 

I. Environmental impacts of the standards. 

The agency also considered the environmental 
impacts associated with the 1982 light truck 
standards, in accordance with the National 
Environmental Policy Act, 42 U.S. C. 4321, e( seq. 
As has been the case with all of the agency's fuel 
economy standards, the main environmental 
impacts are positive ones associated with the 
reduction of petroleum consumption. Copies of the 
Environmental Impact Analysis are available from 
the individual listed as the "information contact" 
at the beginning of this notice. 

J. Standards for 1983-85. As stated previously, 
the agency proposed standards for 1983-85 at the 
same time it proposed the 1982 standards. 
However, standards for the later 3 years are not 
being established now, due to the legal 
requirement for establishment of the 1982 
standards by this March and the much more 
complex issues involved in setting standards for 
1983-85. Comments on the 1983-85 standards are 
due by March 31, 1980, although the agency will 
consider late comments to the extent possible. It is 
NHTSA's intent to promulgate these standards 
this year, to provide ample leadtime for the 
manufacturers to develop compliance strategies. 

In consideration of the foregoing, 49 CFR 
Chapter V is amended as follows: 

1. By deleting the footnote to the table in section 
533.5 (a) and by revising the table to read as 
follows: 





Model 


year 




2-wheel drive 
light trucks 


i 


l-wheel drive 
light trucks 


Limited 




Captive 
imports 


Other 


Captive 
imports 




Other 


light trucks 


1979 . 








17.2 
16.0 
16.7 
18.0 


14.0 
15.0 
16.0 




15.8 
14.0 
15.0 
16.0 




1980 . 






16.0 


14.0 


1981 . 






16.7 


14.5 


1982 . 






18.0 















Issued on March 27, 1980. 



Joan Claybrook 
Administrator 

45 F.R. 20871 
March 31, 1980 



PART 533; PRE 47-48 



extend the applicability of that company's special 
class. IH argued that a separate class is needed to 
allow for the possibility that it might offer 4x2 
versions of its Scout vehicle in 1982. In recent 
years, the sales of these 4x2 derivatives of the 
standard 4x4 Scout have been at very low levels, 
dropping to under 300 units in 1979. In a 
September 13, 1979, letter to the agency, IH 
indicated that the Scout is available "only in four- 
wheel drive." In any case, given the low volumes 
involved, the availability of diesel engines to raise 4 
X 2 fuel economy, and the existence of carry-over 
credits if 4 x 2 Scouts continue to be sold, the 
agency sees no need to perpetuate the special class 
for IH. However, since IH and AM will still have 
fleets which are at least predominantly four wheel 
drive, the agency deems it necessary to extend the 
separate class for that type of vehicle. See 42 FR 
63192-3, December 19, 1977. 

Without deciding the question of whether the 
agency has the authority to set a separate standard 
for Chrysler but recognizing that serious questions 
exist in that regard, the agency deems it 
appropriate to employ other statutory mechanisms 
in dealing with that company's problems. Chrysler 
competes in the same market segments as GM and 
Ford, and the various truck models offered by 
those three companies are remarkably similar. 
There is no inherent technical reason why 
Chrysler's light trucks cannot achieve the same 
levels of fuel economy as the other companies. The 
agency does not seek to minimize the magnitude of 
the economic difficulties which confront Chrysler. 
However, the agency is concerned that the 
establishment of differential fuel economy 
standards for fleets of vehicles which are nearly 
identical on a model-for-model basis could have an 
anticompetitive effect. Congress considered the 
conflict between standards which require 
maximum fuel economy improvements and the 
inevitable differences in capabilities of the affected 
manufacturers, and developed the enforcement 
mechanism in section 508 of the Act (involving 
modest civil penalties for noncompliance, 
offsetting monetary credits, and waivers of 
penalties in certain instances) to deal with the 
situation. Therefore, the agency is not establishing 
a separate class and fuel economy standard for 
Chrysler. 



G. Miscellaneous comments. AM raised two 
procedural issues in regard to the 1982 standards. 
First, it argued that the agency failed to comply 
with the requirement in section 502 (b) of the Act 
that standards be issued 18 months prior to the 
start of the model year to which they apply. In 
AM's case, its 1982 production period will begin in 
July 1981, and 18 months prior to that date would 
be January 1980. As the agency noted in response 
to the same comment made by AM with respect to 
the 1980 standard, there is no single start of a 
model year for all companies in the industry (43 FR 
11995; March 23, 1978). Production begins as early 
as July (or even earlier in some cases such as with 
the GM X-body cars) and as late as December for 
some foreign manufacturers. However, the agency 
has endeavored to provide approximately 18 
months leadtime for the industry as a whole. Even 
for domestic companies with early-starting model 
years, these standards are established 18 months 
prior to the introduction for sale of the 1982 
models. Further, lead time should not be a problem 
for AM with respect to the 1982 standard, since its 
current product plan would lead it to exceed the 
standards promulgated herein. 

AM also objected to the brief 30 day comment 
period provided with respect to the 1982 standard. 
This short comment period was necessitated by the 
statutory deadline for issuance of that standard 
and by delays in issuing the NPRM resulting from 
requests from the industry to reduce the 1981 
standards. Although the agency seeks to provide 
more than 30 days to comment on proposed rules, 
NHTSA views the 30 day period as reasonable in 
this case, due to the relatively narrow issues 
involved. More time has been provided to comment 
on the 1983-85 standards, where the issues 
involved are much more complex. 

Purolator Courier Corporation argued for a 
more gradual increase in stringency in fuel 
economy standards to accommodate fleet truck 
operators like itself. It argued that much of the 
technology needed to comply with fuel economy 
standards is not fully proven, and that downsizing 
of light trucks would make those trucks less useful 
to commercial purchasers. Purolator also 
requested that a public hearing be held on the 
standards. The agency recognizes that changes to 
light trucks might result in some inconvenience to 
commercial users, e.g., from the need to train 
mechanics to repair new types of technology. 



PART 533; PRE 46 



However, the Act specifies that the agency must 
establish fuel economy standards at the maximum 
feasible level for each model year, necessarily 
producing changes in the truck fleet. The 
technology projected by the agency, particularly 
for the 1982 model year, is well proven and in most 
cases already in use on some vehicles. Further, the 
agency's standards do not necessitate the 
elimination of standard-size trucks with V-8 
engines, which Purolator claims to need. The 
agency does not see a need for a public hearing on 
these fuel economy standards, since the 
opportunity to submit written information is an 
effective means of addressing the primarily 
technical issues in a detailed fashion. 

H. Economic and energy impacts of the 1982 
standards. 

The agency considered the economic impacts of 
the 1982 standards, in accordance with Executive 
Order 12044 and the Department's regulations for 
implementing that order. See 44 FR 11034. Also 
considered were the "Urban and Community 
Impacts" of the standard, as specified in Executive 
Order 12074. These impacts are discussed in a 
Regulatory Analysis, copies of which are available 
from the agency's Office of Plans and Programs. 
The major conclusions of that document are that 
the standards will produce gasoline savings of 1.2 
billion gallons over the life of the 1982 model year 
light truck fleet. The investment requirement 
associated with making that improvement would 
be approximately $900 million, part of which would 
be assimilated in normal business as usual capital 
spending. The average retail price increase 
resulting from the standards is approximately $95, 



but this initial cost is more than offset by the 
operating cost savings over the life of the vehicle of 
about $470. No significant adverse "urban or 
community" impacts should result from the 
standards. 

I. Environmental impacts of the standards. 

The agency also considered the environmental 
impacts associated with the 1982 light truck 
standards, in accordance with the National 
Environmental Policy Act, 42 U.S.C. 4321, et seq. 
As has been the case with all of the agency's fuel 
economy standards, the main environmental 
impacts are positive ones associated with the 
reduction of petroleum consumption. Copies of the 
Environmental Impact Analysis are available from 
the individual listed as the "information contact" 
at the beginning of this notice. 

J. Standards for 1983-85. As stated previously, 
the agency proposed standards for 1983-85 at the 
same time it proposed the 1982 standards. 
However, standards for the later 3 years are not 
being established now, due to the legal 
requirement for establishment of the 1982 
standards by this March and the much more 
complex issues involved in setting standards for 
1983-85. Comments on the 1983-85 standards are 
due by March 31, 1980, although the agency will 
consider late comments to the extent possible. It is 
NHTSA's intent to promulgate these standards 
this year, to provide ample leadtime for the 
manufacturers to develop compliance strategies. 

In consideration of the foregoing, 49 CFR 
Chapter V is amended as follows: 

1. By deleting the footnote to the table in section 
533.5 (a) and by revising the table to read as 
follows: 





Model 


year 




2-wheel drive 
light trucks 


4 


-wheel drive 
light trucks 


Limited 
product line 




Captive 
imports 




Other 


Captive 
imports 




Other 


light trucks 


1979 . 










17.2 
16.0 
16.7 
18.0 


14.0 
15.0 
16.0 




15.8 
14.0 
15.0 

16.0 




1980 - 






16.0 


14.0 


1981 - 






16.7 


14.5 


1982 . 






18.0 















Issued on March 27, 1980. 



Joan Claybrook 
Administrator 

45 F.R. 20871 
March 31, 1980 



i 

1 



PART 533; PRE 47-48 



extend the applicability of that company's special 
class. IH argued that a separate class is needed to 
allow for the possibility that it might offer 4x2 
versions of its Scout vehicle in 1982. In recent 
years, the sales of these 4x2 derivatives of the 
standard 4x4 Scout have been at very low levels, 
dropping to under 300 units in 1979. In a 
September 13, 1979, letter to the agency, IH 
indicated that the Scout is available "only in four- 
wheel drive." In any case, given the low volumes 
involved, the availability of diesel engines to raise 4 
X 2 fuel economy, and the existence of carry-over 
credits if 4 x 2 Scouts continue to be sold, the 
agency sees no need to perpetuate the special class 
for IH. However, since IH and AM will still have 
fleets which are at least predominantly four wheel 
drive, the agency deems it necessary to extend the 
separate class for that type of vehicle. See 42 FR 
63192-3, December 19, 1977. 

Without deciding the question of whether the 
agency has the authority to set a separate standard 
for Chrysler but recognizing that serious questions 
exist in that regard, the agency deems it 
appropriate to employ other statutory mechanisms 
in dealing with that company's problems. Chrysler 
competes in the same market segments as GM and 
Ford, and the various truck models offered by 
those three companies are remarkably similar. 
There is no inherent technical reason why 
Chrysler's light trucks cannot achieve the same 
levels of fuel economy as the other companies. The 
agency does not seek to minimize the magnitude of 
the economic difficulties which confront Chrysler. 
However, the agency is concerned that the 
establishment of differential fuel economy 
standards for fleets of vehicles which are nearly 
identical on a model-for-model basis could have an 
anticompetitive effect. Congress considered the 
conflict between standards which require 
maximum fuel economy improvements and the 
inevitable differences in capabilities of the affected 
manufacturers, and developed the enforcement 
mechanism in section 508 of the Act (involving 
modest civil penalties for noncompliance, 
offsetting monetary credits, and waivers of 
penalties in certain instances) to deal with the 
situation. Therefore, the agency is not establishing 
a separate class and fuel economy standard for 
Chrysler. 



G. Miscellaneoits comments. AM raised two 
procedural issues in regard to the 1982 standards. 
First, it argued that the agency failed to comply 
with the requirement in section 502 (b) of the Act 
that standards be issued 18 months prior to the 
start of the model year to which they apply. In 
AM's case, its 1982 production period will begin in 
July 1981, and 18 months prior to that date would 
be January 1980. As the agency noted in response 
to the same comment made by AM with respect to 
the 1980 standard, there is no single start of a 
model year for all companies in the industry (43 FR 
11995; March 23, 1978). Production begins as early 
as July (or even earlier in some cases such as with 
the GM X-body cars) and as late as December for 
some foreign manufacturers. However, the agency 
has endeavored to provide approximately 18 
months leadtime for the industry as a whole. Even 
for domestic companies with early-starting model 
years, these standards are established 18 months 
prior to the introduction for sale of the 1982 
models. Further, lead time should not be a problem 
for AM with respect to the 1982 standard, since its 
current product plan would lead it to exceed the 
standards promulgated herein. 

AM also objected to the brief 30 day comment 
period provided with respect to the 1982 standard. 
This short comment period was necessitated by the 
statutory deadline for issuance of that standard 
and by delays in issuing the NPRM resulting from 
requests from the industry to reduce the 1981 
standards. Although the agency seeks to provide 
more than 30 days to comment on proposed rules, 
NHTSA views the 30 day period as reasonable in 
this case, due to the relatively narrow issues 
involved. More time has been provided to comment 
on the 1983-85 standards, where the issues 
involved are much more complex. 

Purolator Courier Corporation argued for a 
more gradual increase in stringency in fuel 
economy standards to accommodate fleet truck 
operators like itself. It argued that much of the 
technology needed to comply with fuel economy 
standards is not fully proven, and that downsizing 
of light trucks would make those trucks less useful 
to commercial purchasers. Purolator also 
requested that a public hearing be held on the 
standards. The agency recognizes that changes to 
light trucks might result in some inconvenience to 
commercial users, e.g., from the need to train 
mechanics to repair new types of technology. 



PART 533; PRE 46 



However, the Act specifies that the agency must 
establish fuel economy standards at the maximum 
feasible level for each model year, necessarily 
producing changes in the truck fleet. The 
technology projected by the agency, particularly 
for the 1982 model year, is well proven and in most 
cases already in use on some vehicles. Further, the 
agency's standards do not necessitate the 
elimination of standard-size trucks with V-8 
engines, which Purolator claims to need. The 
agency does not see a need for a public hearing on 
these fuel economy standards, since the 
opportunity to submit written information is an 
effective means of addressing the primarily 
technical issues in a detailed fashion. 

H. Economic and energy impacts of the 1982 
standards. 

The agency considered the economic impacts of 
the 1982 standards, in accordance with Executive 
Order 12044 and the Department's regulations for 
implementing that order. See 44 FR 11034. Also 
considered were the "Urban and Community 
Impacts" of the standard, as specified in Executive 
Order 12074. These impacts are discussed in a 
Regulatory Analysis, copies of which are available 
from the agency's Office of Plans and Programs. 
The major conclusions of that document are that 
the standards will produce gasoline savings of 1.2 
billion gallons over the life of the 1982 model year 
light truck fleet. The investment requirement 
associated with making that improvement would 
be approximately $900 million, part of which would 
be assimilated in normal business as usual capital 
spending. The average retail price increase 
resulting from the standards is approximately $95, 



but this initial cost is more than offset by the 
operating cost savings over the life of the vehicle of 
about $470. No significant adverse "urban or 
community" impacts should result from the 
standards. 

I. Environmental impacts of the standards. 

The agency also considered the environmental 
impacts associated with the 1982 light truck 
standards, in accordance with the National 
Environmental Policy Act, 42 U.S.C. 4321, et seq. 
As has been the case with all of the agency's fuel 
economy standards, the main environmental 
impacts are positive ones associated with the 
reduction of petroleum consumption. Copies of the 
Environmental Impact Analysis are available from 
the individual listed as the "information contact" 
at the beginning of this notice. 

J. Standards for 1983-85. As stated previously, 
the agency proposed standards for 1983-85 at the 
same time it proposed the 1982 standards. 
However, standards for the later 3 years are not 
being established now, due to the legal 
requirement for establishment of the 1982 
standards by this March and the much more 
complex issues involved in setting standards for 
1983-85. Comments on the 1983-85 standards are 
due by March 31, 1980, although the agency will 
consider late comments to the extent possible. It is 
NHTSA's intent to promulgate these standards 
this year, to provide ample leadtime for the 
manufacturers to develop compliance strategies. 

In consideration of the foregoing, 49 CFR 
Chapter V is amended as follows: 

1. By deleting the footnote to the table in section 
533.5 (a) and by revising the table to read as 
follows: 





Model 


year 




2-wheel drive 
light trucks 


I 


l-wheel drive 
light trucks 


Limited 
product line 




Captive 
imports 


Other 


Captive 
imports 




Other 


light trucks 


1979 








17.2 
16.0 
16.7 
18.0 


14.0 
15.0 
16.0 




15.8 
14.0 
15.0 
16.0 




1980 






16.0 


14.0 


1981 






16.7 


14.5 


1982 






18.0 















Issued on March 27, 1980. 



Joan Claybrook 
Administrator 

45 F.R. 20871 
March 31, 1980 



PART 533; PRE 47-48 



4 



i 



PREAMBLE TO AN AMENDMENT TO PART 533 

Light Truck Average Fuel Economy Standards; Model Years 1983-85 
(Docket No. FE 78-01; Notice 4) 



ACTION: Final rule. 

SUMMARY: This notice establishes average fuel 
economy standards for light trucks manufactured 
in model years 1983-85. Section 502(b) of the Motor 
Vehicle Information and Cost Savings Act ("the 
Act") requires that standards be established for 
each model year at the maximum feasible level. 
Model year 1983-85 light trucks complying with 
these standards are expected to consume approx- 
imately 10 billion less gallons of gasoline over their 
lifetime, than would have been consumed if light 
truck average fuel economy were to remain at the 
levels of the 1982 standards. 

FOR FURTHER INFORMATION CONTACT: 

Mr. Philip W. Davis, Office of Automotive 
Fuel Economy Standards (NRM-21), 400 
Seventh Street, S.W., Washington, D.C. 
20590 (202-472-6902) 

SUPPLEMENTARY INFORMATION: This notice 
establishes average fuel economy standards for 
light trucks manufactured in model years 
1983-1985. On December 31, 1979, the agency 
published proposed standards for light trucks 
manufactured in model years 1982-85, in 44 FR 
77199. Due to the requirement in section 502(b) of 
the Act that standards be established at least 18 
months prior to the start of the affected model 
year and due to the many complex issues involved 
in setting standards for the later model years, the 
agency separately established final standards for 
the 1982 model year on March 31, 1980. See 45 FR 
20871. Previously, the agency established stand- 
ards for light trucks manufactured in 1979 (42 FR 
13807, March 14, 1977), and 1980-81 (43 FR 11995, 
March 23. 1978, and 44 FR 36975, June 25, 1979). 
Passenger automobile standards were established 



in the Act for model years 1978-80 and 1985 and 
thereafter (15 U.S.C. 2002 (a)), and administra- 
atively by NHTSA for model years 1981-84 (42 FR 
33534, June 30, 1977). 

Section 502(b) of the Act requires that average 
fuel economy standards for light trucks be 
established for each model year at the "maximum 
feasible average fuel economy level." In determin- 
ing that level, the agency is directed to consider 
technological feasibility, economic practicability, 
the need of the nation to conserve energy, and the 
effects of other Federal motor vehicle standards 
on fuel economy. A discussion of how the agency 
interprets these requirements is set forth in the 
preamble to the notice establishing the 1981-84 
passenger automobUe standards, cited in the 
previous paragraph. 

In its proposal the agency invited comment upon 
a range of possible fuel economy standards for 
1983-85. The use of a range of fuel economy values 
rather than a single value for each model year 
reflected uncertainty at the time of the proposal 
with respect to such issues as demand for new, 
compact truck models, the acceptability to con- 
sumers of light trucks with smaller displacement 
engines (with corresponding higher fuel economy 
but reduced acceleration and grade-climbing 
capability), and the existence and magnitude of a 
claimed fuel economy penalty resulting from emis- 
sion standards applicable to light trucks beginning 
with the 1983 model year. Specifically, the ranges 
of fuel economy values cited in the proposal for 
2-wheel drive (4x2) and 4-wheel drive (4x4) light 
trucks were as follows: 



1983 
1984 
1985 



4x2 (mpg) 

18.0-20.0 
18.8-21.4 
19.7-22.4 



4x4 (mpg) 

15.6-18.0 
16.1-19.3 
16.2-19.9 



PART 533 -PRE 49 



The vehicles covered by these standards include 
the pickup trucks, vans, and utility vehicles typi- 
cally used for personal or mixed personal/commer- 
cial purposes, i.e., those with gross vehicle weight 
ratings (GVWR's) up to and including 8,500 
pounds. 

Comments on the proposed 1983-85 light truck 
standards were received from the domestic light 
truck manufacturers, Toyota, the U.S. Department 
of Energy (DOE) and the Regulatory Analysis 
Review Group (RARG). Because of the significance 
of certain issues raised by DOE and RARG, a 
notice was published in the Federal Register invit- 
ing public comments on those issues. See 45 FR 
35403, May 27, 1980. The comments received on 
various issues in the rulemaking are summarized 
below, along with the agency's response to those 
comments and a summary of the basis for the final 
standards. 

Many of the comments received in this rulemak- 
ing and many of the details of the agency's analysis 
contain confidential information. The confidentiali- 
ty of this information (typically involving future 
product plans of the domestic manufacturers, espe- 
cially for new models which have the greatest 
effect on fuel economy) prevents the agency from 
presenting in this notice a detailed description of 
the comments received and the agency's response 
to those comments. Nevertheless, the agency has 
attempted to describe the basis for the final stand- 
ards by providing a general overview of these mat- 
ters and an approximation of a "typical" future 
product plan for compliance with the standards 
established herein. This approach has been 
adopted after balancing the public's need to know 
the basis for the agency's actions against the 
manufacturers' needs to maintain the confiden- 
tiality of their future product plans. The agency in 
this case has tended to tip the balance in favor of 
preserving confidentiality. Comment is invited on 
how the agency could better resolve this conflict 
between the public's need to know and the manu- 
facturers' need to maintain confidentiality of cer- 
tain information. 

Structure of the Standard 

In all the light truck standard-setting to date, 
the agency has provided some form of separate 
treatment for 4-wheel drive vehicles. In 1979, the 
manufacturers were given the option of combining 
all their Ught trucks into one fleet and complying 



with the 4x2 numerical level. In 1980-82, no alter- 
native single standard was provided. Separate 
standards were provided (under the authority of 
section 502(b) of the Act to establish separate 
standards for different classes of light trucks) due 
to the lower fuel economy of 4x4's and the fact that 
two companies, American Motors and Interna- 
tional Harvester, offered fleets comprised almost 
exclusively of 4x4 vehicles. Given the lower 
average fuel economy of those vehicles, any single 
standard would have had to be set low enough to 
accommodate those companies (giving no incentive 
for the other companies to achieve higher fuel 
economy) or above their capability (possibly penal- 
izing those companies). Separate standards 
avoided this problem. 

While establishing separate standards for each 
of several vehicle classes reduces inequities for 
companies with less fuel efficient fleet mixes, it 
also has certain disadvantages. Separate class 
standards reduce manufacturers' flexibility in 
complying with standards, by requiring improve- 
ments to each class of vehicles subject to stand- 
ards rather than permitting the option of making a 
major improvement to only one class of vehicle. 
For example, under the classification system used 
for the model year 1980-82 standards, making a 
major improvement in the fuel economy of a manu- 
facturer's vans (which are 4x2's) would not assist 
that company's efforts to meet the 4x4 standard. 

RARG requested that NHTSA consider the 
establishment of a "composite" fuel economy 
standard as a means of providing varying levels of 
fuel economy standards based on differences in 
mix of 4x2 and 4x4 vehicles, or other more narrow 
classes, without the offsetting disadvantages of 
separate class standards. Each manufacturer's 
composite standard, for example could be based 
upon a projected mix of 4x2 and 4x4 vehicles, with 
a production-weighted average fuel economy 
standard being calculated from separate 4x2 and 
4x4 targets developed as the agency had devel- 
oped separate standards in the past. Thus, each 
company would have a different numerical fuel 
economy standard, depending on its projected pro- 
duction mix. A manufacturer with a high propor- 
tion of 4x2 vehicles would have a higher standard 
than a manufacturer with a lower proportion of 
them. 

All the major domestic manufacturers com- 
mented on the RARG proposal, with Chrysler sup- 



P ART 533 -PRE 50 



porting it and Ford supporting it as an option (to 
be used at the manufacturer's election) to comply- 
ing with separate standards. General Motors (GM) 
supported the concept of a composite standard but 
opposed separate standards for different com- 
panies. American Motors also opposed different 
standards for each company. 

The agency agrees with RARG's goals in pro- 
posing the composite standard, but, like some of 
the manufacturers, doubts the existence of any 
authority to set different standards for different 
companies based solely on mix projections. How- 
ever, the advantages of the composite standard 
can be achieved in the 1983-85 model years 
through the addition of an optional single average 
fuel economy standard applicable to all companies. 
The use of a single standard (other than one set at 
a very low level which would sacrifice fuel econ- 
omy) is possible because of projected substantial 
improvements in the AM fleet fuel economy (see 
following sections of this notice) and because Inter- 
national Harvester has decided to stop producing 
the Scout vehicle. This leaves the average fuel 
economy levels projected for all the domestic man- 
ufacturers within a narrow enough range to make 
the establishment of a single fuel economy stand- 
ard for all an effective means of promoting conser- 
vation while providing the manufacturers with 
substantial flexibility in achieving compliance. 

The combined standard is established as an op- 
tion to the separate 4x2 and 4x4 standards which 
the agency has issued beginning with the 1980 
model year. This action is being taken to permit 
manufacturers seeking greater investment flexi- 
bility to opt for the combined standard and to per- 
mit manufacturers seeking to increase sales of 4x4 
vehicles to opt for the separate standards. Fur- 
ther, this approach will provide some stability in 
the year-to-year structure of the agency's light 
truck standards and would provide relief in the 
post-1985 period should manufacturers such as 
American Motors not be able to make further fuel 
economy improvements in their exclusively 4x4 
fleets. 

Basic Methodology 

Several comments were received, principally 
from DOE, with regard to the methodology used 
by the agency to project future model year aver- 
age fuel economy. DOE objected that the baseline 
used by NHTSA to project future years' fuel econ- 



omy was inappropriate. The baseline used to 
develop the proposed fuel economy ranges for 
1983-85 was the 1981 standards, which were in 
turn based upon pre-1979 product mix estimates 
and 1979 fuel economy test results. More recent 
mix and fuel economy information was not avail- 
able at the time the agency proposed the 1983-85 
standards. In particular, DOE suggested that 
changes be made in the baseline to reflect the shift 
in light truck production mix for 1980. Included in 
this shift are a rerating of certain trucks with 
large engines above the 8,500 pound GVWR upper 
limit of the scope of these standards and a shift in 
the relative proportion of smaller and larger 
trucks, precipitated by the rapid increase in gaso- 
line prices in 1979-80. 

The agency determined that, to meet DOE's con- 
cern about the significant change which the domes- 
tic light truck fleets and market have undergone 
and will undergo by 1985, a different projection 
methodology would be used to set the 1983-85 
standards than has been used in the past. That 
methodology is described in detail in the agency's 
rulemaking support paper (RSP), copies of which 
are available from the individual listed as the "in- 
formation contact" at the beginning of this notice. 
Generally, future light truck offerings were 
grouped in seven classes. These classes provide 
distinctions between various types of vehicles 
which have clearly different market attributes. 
The potential characteristics of each group were 
analyzed (based primarily on the manufacturers' 
future product plans, particularly where lead time 
was a controlling factor) and fuel economy value 
derived. Sales projections for each group of 
vehicles were also developed based upon informa- 
tion available to the agency, including the manu- 
facturer's own estimates. Once group fuel economy 
and sales projections are derived, average fuel 
economy values for each of the model years 
1983-85 were calculated. 

DOE also suggested revisions to NHTSA's 
mathematical model used to predict the effect on 
fuel economy of small changes in vehicle weight, 
engine displacement, or axle ratio. DOE developed 
an alternate model which it believes provides a 
more accurate prediction of the effect of changes 
in these vehicles' attributes. Because of the DOE 
analysis, NHTSA reviewed its fuel economy model 
and has developed a new model which predicts fuel 
economy levels more accurately than the original 



PART 533 -PRE 51 



one and, in some cases, the alternative one 
developed by DOE. Both models provide fuel econ- 
omy estimates within 5 percent of EPA test data. 
The major area of concern expressed by DOE was 
an apparent misunderstanding of the limited man- 
ner in which the agency actually used its previous 
model. This area is described fully in the RSP. 

Technological Feasibility. 

The agency received a number of comments on 
its analysis of the various methods available to 
improve light truck fuel economy in the 1983-85 
model years, including a comprehensive analysis 
by the Department of Energy. The DOE analysis 
concluded that fuel economy levels approximately 
IV2 mpg above the upper end of the range of fuel 
economy levels proposed by the agency are 
achievable by 1985. However, DOE deferred to 
NHTSA on the manufacturers' capability to 
finance product changes. On the other hand, the 
vehicle manufacturers generally recommended 
that standards be established at the lower end of 
that range. These overall disagreements resulted 
from differences in the detailed fuel economy pro- 
jections for individual truck models, technology, 
and sales mix made by NHTSA, DOE, and the 
manufacturers. 

For the final rule, the agency is using fuel 
economy projections for individual new light truck 
models which tend to exceed those which formed 
the basis for the proposed standards. While the 
individual projections used in the proposal were 
composites reflecting information from a variety 
of sources (i.e., the same fuel economy value was 
used for all manufacturers' models of a particular 
type), final rule projections are manufacturer- 
specific. This change was made because the agen- 
cy received information about manufacturers' 
plans after the issuance of the proposal, because 
in many instances individual manufacturer plans 
could not readily be changed at this late date in 
the product introduction process for the 1981-85 
model years (particularly for the earlier years), 
and because in some cases the manufacturers" own 
estimates exceeded those of the agency. 

The agency's analysis is based on 12 major light 
truck types being offered in 1983-85 in seven basic 
market groups. The types include 4x2 and 4x4 
versions of the standard size pickup trucks, stand- 
ard size utility truck, compact pickup trucks 
(slightly larger than current imported trucks), and 



compact utility trucks, along with standard size 
vans, compact vans (slightly larger than the Volks- 
wagen Vanagon, but smaller than current domes- 
tic vans), and a small, front-wheel drive passenger 
car-derived pickup truck which would be approx- 
imately the size of current imports. The precise 
attributes projected for each manufacturer's light 
trucks were derived from confidential submis- 
sions from those companies and from independent 
agency analyses. The approximate fuel economy 
value (in miles per gallon) projected by the agency 
for each truck type are as follows: 



4x2 



4x4 



Full size pickup 


19-22 


16-19 


Compact pickup 


27-28 


23-26 


Small pickup (car- 






based) 


27-30 


- 


Full size van 


17-20 


- 


Compact van 


22-26 


- 


Full size utility 


16-18 


16-21 


Compact utility 


25-27 


21-24 



The above fuel economy values were derived by 
NHTSA from submissions from the manufacturers 
and from the agency's independent analysis. The 
manufacturer's estimates were verified by com- 
paring their planned new models with similar 
existing models (adjusting for weight or other dif- 
ferences) and by projecting the addition of all 
available fuel economy improving technology. This 
technology typically includes a 1 percent fuel 
economy benefit for accessory improvements, a 3 
percent improvement for engine and rear axle 
lubricants, a 1 percent benefit for tire improve- 
ments, and transmission improvements of from 3.5 
to 10 percent, depending on the type of transmis- 
sion involved. In most cases, the agency's inde- 
pendent assessment closely coincided with or was 
slightly more conservative than that of the 
manufacturers, in which case the agency used the 
manufacturer's estimate in the analysis. Where 
the manufacturer's estimate appeared to be undu- 
ly conservative, the agency used its own estimate. 

Sales projections for the various models were 
developed principally from the manufacturers' 
own estimates, estimates of Data Resources 
Incorporated, and the agency's own judgment of 
future light truck demand. The agency made two 
separate sales estimates of future light truck 
market conditions, which are described in detail 



PART 533 -PRE 52 



in the agency's Final Regulatory Analysis, copies 
of which are available from NHTSA's Office of 
Plans and Programs. The cases were developed to 
cover the probable range of light truck sales mixes 
in 1983-85. In general, Case A assumes that 
manufacturers undertake an aggressive program 
of introduction of new, fuel-efficient light truck 
models and that strong consumer demand for 
these models will exist. This case represents the 
agency's estimate of the largest number of new 
model introductions each manufacturer would like- 
ly be able to undertake, considering its financial 
position, lead time, and competitive pressures. 
Case B assumes that demand for compact light 
trucks is less than in Case A, but still significantly 
higher than in the past when no domestic compact 
trucks were produced. In the latter scenario, the 
introduction of new, fuel-efficient models is 
delayed one or more years compared to Case A 
due to lack of financial capability, need to invest 
in passenger car programs, and more limited 
demand for those trucks. The projected sales frac- 
tions for new light truck models for the various 
manufacturers and in the various model years are 
as follows: 

Case A Case B 



Case A Case B 



25% 



10% 



Compact 4x2 pickup 


25-35% 


15-25% 


Compact 4x4 






pickup/utility 


10-15% 


10% 


Compact van 


15-25% 


0-10% 


Small car-based 






pickup 


0-20% 


0-10% 



It should be noted that not every manufacturer is 
projected to offer all of these new models, and 
that current standard size truck models would 
still account for a substantial portion of light truck 
sales through 1985 under the agency's projections. 
A typical composite light truck fleet for 1985 
under the agency's analysis would contain roughly 
the following fleet mix: 

Case A Case B 



Standard 4x2 pickup 


20% 


40% 


Standard 4x4 






pickup/utility 


10% 


15% 


Standard van 


5% 


15% 


Compact 4x2 pickup 


20% 


15% 


Compact 4x4 






pickup/utility 


15% 


5% 



Compact van 
Small car-based 

pickup 5% 0% 

Using these approximate fuel economy values 
and sales fractions, one can calculate average fuel 
economy values of about 22 mpg for Case A and 20 
mpg for Case B. However, such averages are only 
approximations (used here because of the confiden- 
tial nature of much of the specific fuel economy 
values and sales projections) and do not reflect the 
problems which individual manufacturers face in 
financing new models. 

With respect to the 1983 and 1984 model years, 
the agency projected a fairly even rate of introduc- 
tion of these new models, given the major invest- 
ments required for production of a new vehicle and 
the current financial difficulties of the domestic 
manufacturers. This projection leads to average 
fuel economy levels increasing about 1.5 to 2 mpg 
per year over the level of the 1982 standards 
(about 17.5 mpg) for Case A or about 1 mpg per 
year for Case B, on a total domestic light truck 
fleet basis. 

As previously stated, the agency has chosen to 
set final standards for 1983-85 relying heavily on 
the domestic manufacturers' estimates of new 
model fuel economy values and market shares. 
This was done because the agency recognized the 
current financial difficulties of the domestic 
manufacturers (see discussion below) and inde- 
pendently verified the new model fuel economy 
values provided by the manufacturers. 

DOE's main objectives to NHTSA's new model 
projections were that the new compact pickup 
trucks should be projected to be the same size as 
current imports or smaller (rather than slightly 
larger as NHTSA projects), that the engines pro- 
jected for those vehicles should be all 4-cylinder 
(rather than a mix of 4 and 6-cylinder engines as 
NHTSA projects), and that redesigned standard 
pickup trucks should be projected to have lower 
weights than NHTSA had estimated. 

To a great extent DOE's disagreement with 
NHTSA with respect to the fuel economy levels 
projected for new models was phrased in terms of 
DOE's view of the domestic manufacturers' plans 
to offer new models. Based on numerous submis- 
sions to NHTSA, DOE's understanding of those 
plans is incorrect. Apparently the domestic manu- 



PART533-PRE53 



facturers have determined that new compact 
models slightly larger than those now offered by 
the foreign companies will be an attractive alter- 
native for consumers, providing more utility to the 
truck user at only about a 2 mpg sacrifice in fuel 
economy. The recent trend for the foreign manu- 
facturers has been to slightly increase the size of 
their trucks. The domestic companies apparently 
feel that their planned small trucks have the 
potential to draw some purchasers who might 
otherwise consider full size trucks, and that offer- 
ing new models identical to the imports might be 
less effective in attracting those purchasers and 
thereby result in less overall energy savings. In 
any case, the question of whether the domestic 
companies could offer smaller new models than 
they now plan is largely irrelevant, due to the ad- 
vanced stage of their product introduction process 
(trade press reports indicate manufacturers will 
begin to introduce these models in the 1982 model 
year). 

The agency received several comments on tech- 
nological improvements projected for the 1983-85 
model years. One area of comment involved the 1 
percent fuel economy benefit projected for im- 
proved engine accessories. DOE commented that a 
2 percent improvement is feasible, and some manu- 
facturers indicated that a lesser improvement is 
the most which could be accomplished through 
1985. The agency has retained its original projec- 
tion (based on several research studies and manu- 
facturer submissions) for the final rule, with the 
exception that accessory improvements were not 
projected for carry-over standard size trucks. No 
improvement was projected for the latter vehicles, 
due to limitations on manufacturer resources 
given the planned major product actions and the 
inefficiency associated with devoting resources to 
vehicles which would account for steadily dimin- 
ishing portions of total sales and which would be 
replaced by new models in the near future. The 
agency's original 1 percent benefit was retained 
due to the absence of any data or analysis sub- 
mitted by the commenters to support any other 
position. 

With respect to the agency's projection of a 1 
percent fuel economy benefit for reduced rolling 
resistance, none of the manufacturers presented 
data or engineering analyses supporting their 
claims that no such benefit is feasible. DOE argued 
that an additional 0.5 percent benefit should be 



provided for reduced brake drag, but submitted no 
data to support that claim. Here again, in the 
absence of supporting data or analysis for any con- 
trary position, the agency retained its original 
position. 

DOE also suggested that aerodynamic drag and 
weight reduction improvements should be pro- 
jected for the carry-over standard size vans and 
weight reduction improvements alone for stand- 
ard pickup trucks. DOE would apply these im- 
provements only where a manufacturer did not 
plan to replace these models in the near future. 
NHTSA did not adopt this suggestion for vans 
because of limited manufacture resources and 
because the cost associated with such changes 
could not be justified given the small potential fuel 
economy benefit and the relatively small market 
share (about 5 percent for Case A). With respect to 
the weight reduction comment for carryover pick- 
up trucks, the agency believes that meaningful 
weight reduction can be obtained only through ma- 
jor redesigns. The agency's basis for projecting no 
further major redesigns for the domestic manufac- 
turers is discussed in the "economic practicability" 
section of this notice. Due to the economic dif- 
ficulties of the domestic manufacturers and the 
large number of lay-offs of technical personnel in 
those companies (as prominently reported in the 
press), resources will likely be hard-pressed simply 
to introduce the planned new models. 

In the agency's proposal, an alternative set of 
assumptions (Case 4) was developed to obtain com- 
ment on the extent to which engine downsizing 
could be accomplished as a means of improving 
light truck fuel economy. The Case 4 scenario in- 
volved a major shift to the smallest displacement 
engines currently offered. DOE projected that a 
lesser reduction in engine displacement could be 
accomplished to provide about a 5 percent fuel 
economy improvement. According to DOE, this im- 
provement could be accomplished without degrad- 
ing vehicle performance, through improvements in 
engine power efficiency. The manufacturers gen- 
erally argued that only slight engine downsizing 
could be accomplished, with Ford stating that a 2 
percent fuel economy benefit could be obtained 
and GM stating that the feasibility of any engine 
downsizing in the future is "questionable." 

For the final rule, the agency is projecting major 
engine downsizing through the introduction of 
new, compact truck models. Given current low 



PART 533 -PRE 54 



sales of domestic trucks and the strong competi- 
tion being encountered from the imports, the agen- 
cy cannot project any further reductions in engine 
size (with probable reductions in vehicle accelera- 
tion capability) which might further jeopardize the 
marketability of these vehicles. DOE provided no 
data or analysis and NHTSA knows of none to sup- 
port its claim that further engine downsizing could 
be accomplished without sacrificing performance 
capability or durability. 

The final technological area addressed by com- 
menters is transmission improvements. The agen- 
cy is retaining its original projections of a 5 to 7 
percent improvement from 4-speed wide ratio 
manual transmissions (whether overdrive or direct 
drive), a 3.5 percent improvement when adding a 
lock-up clutch to a 3-speed automatic transmission, 
and a 10 percent improvement for automatic over- 
drive transmissions with lockup clutch. Several 
manufacturers argued that lower improvements 
should be projected, but they either did not sup- 
port their claims with data or, in one case, submit- 
ted data (after the agency requested it) which was 
more supportive of the agency's position than the 
manufacturer's. 

Ford argued that only a 0.5 percent improve- 
ment in fuel economy is available for its light 
trucks through the use of improved engine 
lubricants. Ford supported its position with data 
generated by the ASTM Fuel Efficient Oils Task 
Force, which indicates that Ford's current factory 
fill oil has superior fuel efficiency characteristics 
than the oils used by other manufacturers. In 
other words, it appears that Ford has already 
achieved part of the benefit available through the 
use of improved lubricants, leaving a small benefit 
remaining for the future. Therefore, the agency 
adopted Ford's projected improvement for our 
analysis of that manufacturer's capability. The 
agency continued to use 2 percent for the other 
manufacturers. 

The manufacturers unanimously suggested that 
the agency continue its policy of excluding diesel 
engines in standard-setting analyses until the 
health related questions associated with the 
widespread use of those engines are settled. DOE, 
on the other hand, argued that the agency's 
analysis should reflect the inclusion of this 
technology, which represents one of the most 
significant methods available for improving light 
truck fuel economy. Although EPA has estab- 



lished diesel particulate standards, the health 
effect issue remains open. Therefore, the agency's 
analysis reflects the plans of manufacturers to 
offer diesel engines in 1983-85 model year light 
trucks, but does not project any use of diesels 
beyond those plans. The agency is reluctant to pro- 
ject further dieselization while substantial health 
questions remain to be answered. The levels of the 
final standards do not require the use of diesels for 
compliance, since all companies can meet the 
standards without any diesel light trucks being 
offered. 

Ford commented that the agency should not pro- 
ject the use of PROCO ("programmed combus- 
tion") engines in 1983-85 model year light trucks. 
Ford recently announced the cancellation of its 
V-8 PROCO engine program due to a variety of 
economic and technical problems. Therefore, the 
agency will delete those engines from its analysis. 

Economic Practicability 

The current depressed condition of the domestic 
auto industry has had a major impact on the agen- 
cy's standard-setting process. Although the low 
fuel efficiency of current domestic vehicles was ini- 
tially a major contributing factor to that condition, 
the agency recognizes that major improvements in 
light truck fuel economy must be financed mainly 
through revenues generated from the sale of cur- 
rent vehicles. The recent downturn in the national 
economy has severely limited the resources avail- 
able to the manufacturers to improve light truck 
fuel economy. 

The agency performed cash flow analyses for 
Ford and General Motors, to assess their capabili- 
ty to finance fuel economy improvements. For 
Chrysler, the agency has relied on the more de- 
tailed analyses of the Chrysler Loan Guarantee 
Board. No analysis was conducted for American 
Motors, pending the completion of its financial 
arrangement with Renault. The agency's analysis 
for General Motors' U.S. and Canadian automotive 
operations in the 1980-85 period shows a loss of 
about $500 million for 1980, but a return to profit- 
ability for the remainder of the period. Due to the 
heavy capital investment plan announced by GM 
through 1985, net cash flow would be negative for 
GM through 1983, and would turn positive there- 
after. With respect to Ford, the agency's projec- 
tions are more pessimistic. The agency's analysis 
shows losses of over $2.5 billion for Ford's 



PART 533 -PRE 55 



domestic automotive operations in 1980, with an- 
nual but smaller losses through 1982. Thereafter, 
Ford would return to profitability. Even though 
Ford has recently announced reductions in its 
planned capital expenditures, its cash flow would 
remain negative until 1985, with a cumulative 
negative cash flow in 1980-84 of over $7 billion. 
This large projected negative cash flow led the 
agency to project no major capital expenditures 
beyond those planned by Ford for purposes of this 
rulemaking. (See section h of this notice.) 

The Effects of Other Federal 
Standards on Fuel Economy 

The manufacturers all argued that their ability 
to improve fuel economy in model years 1983-85 
would be impaired by changes in the stringency of 
light duty truck emission standards and related 
requirements. Those changes, which EPA had pro- 
posed to make effective beginning with the 1983 
model year but which were recently delayed until 
1984 to provide additional leadtime, would, in the 
manufacturers' view, result in fuel economy penal- 
ties ranging from 3 to 7 percent. General Motors 
has recently submitted 1981 model year data to 
both NHTSA and EPA which purports to show 
that the penalty could range as high as 13 percent 
for some light trucks. 

The manufacturers have based their claims on 
comparisons of 1980 49-state fuel economy and the 
fuel economy of light trucks meeting the more 
stringent California standards. The manufacturers 
believe that the stringency of the 1980 California 
standards approximates that of the 1984 Federal 
emission standards for light duty trucks. Both 
NHTSA and EPA have been wary in past rulemak- 
ings of relying on Federal-California fuel economy 
comparisons in predicting future model year ef- 
fects because of the additional leadtime available 
prior to the nationwide application of more strin- 
gent standards, questions about emission control 
technology used, and limitations on manufacturer 
resources available for developing and refining 
emission control technology to be used on vehicles 
sold only in one state. 

The most advanced emission control technology 
currently available is a system employing a 3-way 
catalyst with interactive electronic control of air- 
to-fuel ratio, spark advance, exhaust gas recircula- 
tion, and other parameters, and other emission- 
related hardware. This type of technology is being 



used to meet 1981 passenger automobile emission 
standards with little or no fuel economy penalty 
compared to automobiles meeting prior years' \ 
standards. Some of the manufacturers' projections 
of 1984 light truck fuel economy penalties are 
based on the use of this type of technology, but 
others do not include it, apparently due to cost con- 
siderations. In some cases, the manufacturers have 
based their projections of penalties on the use of 
simple oxidation catalyst systems, possibly incor- 
porating less sophisticated electronics. NHTSA's 
analysis of limited data from 1981 certification 
trucks which used some form of electronic controls 
showed no appreciable difference in fuel economy 
between California and Federal versions. 

EPA, in establishing the 1984 standards, con- 
cluded that the 1984 emission levels can be met 
without fuel economy penalty by using electronic 
engine control systems, improved oxidation cata- 
lysts, and air injection. Three-way catalysts would 
not be needed in most cases. EPA concluded, 
based upon a comparison of 1980 California and 
Federal light duty trucks, that with no improve- 
ment over the current California technology, a 
penalty of 5.2 percent on average would result. 
Since EPA concluded that California emission re- 
quirements for 1980 are more stringent than the 
1984 Federal standards and adjusting for future d 
engine mix changes, the fuel economy penalty " 
associated with the 1984 standards would be only 4 
percent if no technology improvements were 
implemented. Based on EPA's review of published 
technical literature, that agency concluded that 
through the use of "moderately complex" elec- 
tronics (controlling spark advance and exhaust gas 
recirculation rate) together with improved oxida- 
tion catalysts and air injection, the 1984 emission 
standards could be met without fuel economy 
penalty. Compliance with the standards was pro- 
jected by EPA to add $95 to the price of 1984 light 
trucks. The EPA analysis appears to be the most 
complete and detailed analysis of the emission 
penalty issue now available. Therefore, the agency 
projects for purposes of this final rule that the 
1984 emission levels can be met without fuel econ- 
omy penalty, consistent with the position taken by 
the agency in setting the 1981-84 passenger auto- 
mobile fuel economy standards. 

Ford projected an additional fuel economy 
penalty for a change in stringency in the light duty 
truck emission standards for oxides of nitrogen in 



PART 533 -PRE 56 



the 1985 model year. Such a change has not been 
proposed at this point. Therefore, NHTSA deems 
it premature to attempt to estimate the magnitude 
of any fuel economy penalty which might result 
from such changes. 

The manufacturers also estimated that adverse 
fuel economy effects would result from future 
changes in safety standards applicable to light 
trucks. These changes would result in slight in- 
creases in vehicle weight. Since the agency 
adopted the manufacturers' own weight estimates 
for future vehicles, their claims of safety-related 
weight additions have been adopted. 

The Need of the Nation to Conserve Energy 

The United States imported only 15% of its oil 
needs at a cost of $1.1 billion in 1955. In 1970, im- 
ported oil accounted for 31% of total consumption 
and cost the nation $3 billion. But by 1975, 49% of 
the domestic demand for oil had to be imported at 
a cost of $26.3 billion. This eight-fold increase in 
the cost of imported oil over five years was the 
result of huge OPEC price increases, falling 
domestic crude oil production, and continued in- 
crease in domestic demand. This trend has con- 
tinued. By 1979, imported oil, constituting 58% of 
petroleum consumed, cost the nation about $60 
billion; comparable import cost estimates for 1980 
are $82 billion, and at 51 percent of domestic 
petroleum consumption. 

The nation has become increasingly dependent 
for its oil supplies on the actions and decisions 
of a few foreign governments. This dependence 
has been demonstrated in the aftermath of the 
revolution in Iran when that country's oil pro- 
duction was stopped entirely in December 1978 
and, once resumed, only returned to about one- 
half of its former level. Although the U.S. no 
longer imports oil from Iran, this reduction was 
felt by all importers because it represented the 
difference between satisfying current world oil 
demand and a shortage of supply. OPEC, which 
supplied 83% of the U.S.'s imported oil in 1978, 
has taken advantage of the tight world oil mar- 
ket by more than doubling prices from $12.70 per 
barrel in December 1978, to more than $30 per bar- 
rel as of July 1980. Currently, prices on the 
world "spot" market are about $35 per barrel. 
An increase of this magnitude has severe adverse 
impacts on our trade balance, inflation, eco- 
nomic growth, unemployment, and confidence in 



the dollar as an international reserve currency. 

The rapid transition from a condition of ap- 
parent worldwide surplus in 1978 to one of short- 
age in 1979 has shown the instability of the world 
oil market. Now the Iran-Iraq war may again bring 
worldwide shortages. Thus, the nation's economic 
growth and national security are being heavily 
constrained by the decisions of a few foreign 
countries which control world oil prices and 
production. 

The U.S. can change this situation by increasing 
its domestic energy production and by reducing 
demand. The fuel economy standards program 
helps to reduce demand by motor vehicles. Light 
trucks account for about 7% of our total oil 
consumption (20% of automobile consumption) and 
an improvement in their fuel efficiency, beyond 
the level scheduled to be achieved through the MY 
1982 standards, is considered an integral part of 
the nation's total effort to conserve energy. 
Increased light truck fuel economy efficiency 
would contribute directly to reduced U.S. depend- 
ence on foreign oU and help limit foreign oU im- 
ports to a level no greater than the amount im- 
ported in 1978 — in accordance with the President's 
pledge. 

Selection of Final Standards 

Based on the analysis described above, the agen- 
cy projects that the following combined fuel 
economy levels can be achieved for model years 
1983-85: 



Case A 



Case B 





1983 


1984 


1985 


1983 


1984 


1985 


AM 


20.3 


21.7 


22.3 


20.2 


21.2 


21.5 


Chrysler 


20.6 


23.9 


27.0 


20.3 


20.4 


25.7 


Ford 


20.4 


21.8 


21.8 


19.0 


19.3 


19.4 


GM 


22.7 


23.2 


23.5 


21.1 


21.2 


22.0 



No separate analysis was conducted for the 
foreign manufacturers, which project exceeding 
these fuel economy levels by wide margins. 

The legal requirements for establishing the 
maximum feasible average fuel economy level for a 
particular model year, and thereby the levels of 
fuel economy standards for that year, are dis- 
cussed in the preamble to the agency's final rule 
establishing the 1982 light truck standards. See 45 
FR 20875-6, March 31, 1980. In general, the agency 
is directed to take "industry-wide considerations" 
into account in establishing standards, and should 



PART 533 -PRE 57 



not necessarily key the standards to the level of 
the least capable manufacturer. However, the 
agency must weigh the benefits to the nation of 
setting standards above such a manufacturer's 
level against the difficulties of individual com- 
panies. The agency must also consider the possible 
competitive harm associated with placing a severe 
strain on any company, given the small number of 
domestic manufacturers. In this proceeding, the 
agency is considering not only the range of 
capabilities among the various manufacturers but 
also the ranges of capability for individual com- 
panies, given the uncertainties associated with 
their abilities to finance new models and the 
ultimate market acceptance of those models. 

The agency has determined that standards re- 
quiring the high rates of model introduction and 
high sales levels of compact trucks inherent in 
Case A should be gradually phased in. Therefore, 
the standards established for 1983 are based on 
the Case B set of assumptions. Even this less ag- 
gressive scenario results in an increase in fuel 
economy of about 1.5 mpg over the 1982 standards, 
comparable to the rate of increase in the pas- 
senger automobile standards over the 1980-85 
period. As discussed previously in this notice, the 
Case B levels would permit deferral of new model 
introductions for some manufacturers and reduce 
the risk associated with only modest market 
acceptance of the new truck models. Relying on 
Case B for the 1983 model year reflects uncer- 
tainty regarding the national economy, the ability 
of the manufacturers to finance major new pro- 
grams in the near future, and the recent reduced 
overall consumer demand for cars and trucks. 

For 1984 and 1985, the agency has relied to a 
greater extent on the Case A scenario, with 1984 
projections falling between Case A and Case B and 
1985 projections more closely approaching Case A. 
This gradual increase in relative stringency of the 
agency's projections is due in part to the greater 
leadtime available for developing new programs 
and for generating the capital necessary to finance 
the required new products. Also reflected is 
greater long term certainty that, as gasoline prices 
increase, market demand for compact, fuel-effi- 
cient truck models will also increase. Although the 
past seven years have brought brief gasoline sup- 
ply gluts or price reductions, it is virtually certain 
that in the long run the trend toward reduced 
gasoline supplies and higher prices will continue. 



With respect to the range of fuel economy 
capabilities among manufacturers, the agency has 
determined that it is appropriate in this pro- 
ceeding to set the 1983-85 light truck fuel economy 
standards at levels achievable by the "least 
capable manufacturer." As stated by Ford in its 
comments on the 1983-85 standards, the reason- 
ableness of a decision to set standards above the 
level of the least capable manufacturer depends 
upon factors such as economic conditions and the 
degree of burden placed upon the individual com- 
panies. 

The severe economic problems facing the 
manufacturers (and in particular Ford, the least 
capable manufacturer for 1983-85 based on the 
agency's analysis) were discussed in prior sections 
of this notice. Setting standards above the levels 
projected for Ford in this proceeding could result 
in Ford attempting to introduce additional com- 
pact truck models or major new technology pro- 
grams such as diesel engines. While such actions, if 
successfully completed, might benefit Ford and 
the nation in the long run, the agency recognizes 
the uncertain availability of financial resources to 
take such actions. Setting standards above Ford's 
level might also result in product restrictions by 
Ford (e.g., limiting the sale of larger trucks and 
engines). Such actions could further erode Ford's 
economic situation. Finally, Ford could elect to pay 
civil penalties rather than attempting to meet the 
higher standards. Penalties could amount to as 
much as $75 million per year. While even a penalty 
that large might not result in insolvency for a com- 
pany as large as Ford or a "substantial lessening of 
competition" in the truck market (thereby permit- 
ting a reduction of penalties under section 508 of 
the Act), it is certainly substantial enough to make 
future fuel economy improvements even more dif- 
ficult to finance. 

The harm resulting from establishing fuel 
economy standards at Ford's level is the lost fuel 
savings. Considering the nation's serious energy 
problem (see discussion of "need of the nation to 
conserve energy," infra), the agency does not 
lightly dismiss this potential loss. However, given 
the seriousness of the industry's current financial 
problems, this potential loss in fuel savings is, in 
the agency's view, outweighed by the potential 
harm to Ford in setting standards above the level 
it can reasonably achieve. 

The situation faced by the agency in setting the 



PART 533 -PRE 58 



1983-85 standards differs from that for the 1982 
final rule, in which the agency set standards above 
the level of the least capable manufacturer. The 
most important difference between the two situa- 
tions is that the 1982 proceeding involved setting 
the fuel economy standards above the level of a 
much smaller portion of the light truck fleet. 
Chrysler, whose trucks represent 10-15 percent of 
domestic sales, had the lowest fuel economy pro- 
jection in that proceeding. Ford accounts for about 
35 percent of domestic sales. Further, Chrysler 
was projected to have sufficient monetary credits 
to avoid paying penalties for its 4x2 trucks, and to 
partially offset penalties for its much smaller 4x4 
fleet. The maximum total penalty should be under 
$1 million. 

By setting standards at the level of the least 
capable manufacturer and gradually shifting from 
the Case B scenario in 1983 toward the Case A 
scenario in 1985, fuel economy standards of 19 mpg 
in 1983, 20 mpg in 1984, and 21 mpg in 1985 result. 

The agency also calculated separate 4x2 and 4x4 
fuel economy levels. This was done by projecting a 
compliance strategy product plan for the least 
capable manufacturer to just meet the combined 
fuel economy standards and disaggregating that 
company's fleet into separate 4x2 and 4x4 sub- 
fleets. The resulting 4x2 and 4x4 standards are as 
follows: 19.5, 20.3, and 21.6 mpg for 4x2's in 
1983-85, respectively, and 17.5, 18.5, and 19.0 mpg 
for 4x4's in those same years. 

Other Comments Received 

RARG proposed that an alternative method- 
ology be used to set the 1983-85 fuel economy 
standards. This methodology would require that 
standards be based on available technological im- 
provements which provide fuel savings greater 
than their cost. The costs and benefits which go in- 
to this determination would include not only the 
relatively straightforward gasoline pump prices 
and technology costs but also some quantification 
of national security, balance of payments and 
related benefits as well as truck utility degrada- 
tion (e.g., smaller payload, reduced acceleration 
capability) costs. The manufacturers supported 
this approach in their comments. 

The RARG methodology is a slight variation of 
the cost-benefit test previously proposed by the 
Council on Wage and Price Stability and rejected 
by the agency as being inconsistent with the Act. 



Title V of the Cost Savings Act requires that 
standards be set at "maximum feasible" levels, 
which necessarily implies that all possible fuel 
economy improvements should be implemented. 
Given the historical background of the Act, passed 
as a response to the 1973 Oil Embargo, it appears 
that national security considerations, not con- 
sumer cost savings, are the primary focus of the 
legislation. Further, RARG concedes that setting a 
precise value for the national security benefits and 
vehicle utility changes would be quite difficult. It 
is the agency's view that Congress did not intend 
that the agency in the rulemaking process be re- 
quired to place a dollar value on factors (particu- 
larly the national security benefits) which are not 
quantifiable, and to use these numbers as the basis 
for setting standards. Nevertheless, the agency's 
fuel economy rulemaking has to date produced 
standards which produce substantial net benefits 
for consumers, and the standards established 
herein are no exception. 

GM argued that in valuing gasoline savings, a 20 
percent discount rate should be used. The agency 
has used a 10 percent discount rate, which is stand- 
ard for government programs, and constant dol- 
lars to account for inflation. GM bases its argu- 
ment on its claim that light truck purchases are 
generally a "producer capital investment" and that 
the opportunity cost for capital, together with a 
"risk premium" to account for risks associated 
with truck investments, would justify the 20 per- 
cent rate. However, the agency has presented data 
in its various light truck rulemaking proceedings 
which shows that light trucks are principally used 
for personal, agricultural, or small commercial 
operations. In those situations, a 10 percent dis- 
count rate is a more accurate representation of the 
opportunity cost. 

GM also argued for a change to the agency's 
classification regulations to permit redesigned 
versions of 4x2 utility vehicles to continue to be 
classified as light trucks even if their GVWR were 
to be reduced below 6,000 pounds. Under the 
agency's current regulations in 49 CFR Part 523 
such a change in the vehicles' GVWR would result 
in their being classified as passenger auto 
mobiles. GM argues that manufacturers should 
not be penalized (including these vehicles ir 
passenger automobile fleets might lower both cat 
and truck CAFE's) for reducing the weight ol 
their trucks. If adopted, such an amendment 



PART 533 -PRE 59 



would presumably apply to future compact 4x2 
utility vehicles as well. 

Chrysler also requested a revision to the vehicle 
classification regulations to assure that future 
compact passenger vans would be classified as 
light trucks, rather than as passenger automobiles. 
Current regulations classify large passenger vans 
as light trucks based on the ability of passenger 
van users to readily remove the rear seats to pro- 
duce a flat, floor level cargo-carrying space. Future 
compact passenger vans might not be able to sat- 
isfy that requirement. The agency's technical 
analysis for this rulemaking treats 4x2 utility 
vehicles and passenger vans as light trucks, 
consistent with the classification of current 
vehicles. However, this treatment should not be 
interpreted as a statement by the agency that all 
future designs of 4x2 utility vehicles and compact 
vans will continue to be classified as light trucks. 
The agency will in the near future issue a notice 
inviting comment on the proper classification of 
these vehicles, and what revisions, if any, should 
be made to current vehicle classification regula- 
tions. Based on all information now available to the 
agency, the levels of fuel economy standards estab- 
lished herein would not change if the vehicles in 
question were classified as passenger automobiles. 

AM again argued for the inclusion of captive 
import light trucks in a domestic manufacturer's 
CAFE. This issue has been fully dealt with in prior 
rulemakings and, in the absence of any new argu- 
ments, the agency will not modify its requirement 
that captive import light trucks must com- 
ply separately with light truck fuel economy 
standards. 

Impacts of the Standards 

The economic consequences and other impacts 
of the 1983-85 standards were considered by the 
agency in accordance with Executive Order 12221 
and the Department's implementing regulations. 
See 44 FR 11034. The agency also considered the 
"Urban and Community Impacts" of the regula- 
tions, as required by Executive Order 12074. The 
results of this are discussed in the agency's 



Regulatory Analysis, copies of which are available 
from the agency's Office of Plans and Programs. 
That document states that capital investments of 
approximately $3.8 billion will be required to raise 
the fuel economy of the domestic light truck fleet 
from the level of the 1982 standards to the level of 
the 1985 standards. This investment would reduce 
expenditures for imported petroleum by $7 billion 
over the life of the 1983-85 light truck fleet. 
Operating cost savings result from the increased 
fuel efficiency of the 1983-85 fleets. On a dis- 
counted basis, they amount to $1,250 per vehicle 
over its 128,000 mile life. Net consumer sav- 
ings—operating cost savings less retail price in- 
creases—are nearly $1,200 per vehicle. On a bene- 
fit to cost basis, these standards would have a ratio 
of 19 to 1. Or, the purchaser of a 1985 truck would 
be paying, through higher purchase prices, about 5 
cents for each of the 1,200 gallons that vehicle 
would save over its life— 5 cents to save each of 
1,200 gallons that would otherwise have cost the 
purchaser about $1.50 per gallon. These standards 
result in a 20 percent reduction in operating costs 
for a MY 1985 light truck. 

The environmental impacts of the 1983-85 stand- 
ards were also considered, as required by the Na- 
tional Environmental Policy Act, 42 U.S.C. 4321, et 
seq. The major environmental impacts associated 
with the standards were found to be positive, such 
as reductions of petroleum consumption and 
material usage (less iron and steel). No major 
adverse impacts were projected. 

Issued on December 8, 1980. 



Joan Claybrook 
Administrator 

45 FR 81593 
December 11, 1980 



PART 533 -PRE 60 



PREAMBLE TO AN AMENDMENT PART 533 

Light Truck Average Fuel Economy Standards 

Model Years 1985-86 

[Docket No. FE 78-01; Notice 6 and No. FE-84-01; Notice 2] 



ACTION: Final rule. 

SUMMARY: This notice amends the light truck 
average fuel economy standard for model year 

1985 and establishes a new standard for model 
year 1986. These standards are required to be 
established at the maximum feasible level, under 
section 502(b) of the Motor Vehicle Information 
and Cost Savings Act. It is anticipated that there 
will not be any loss of potential fuel savings 
associated with the revised 1985 standards. The 

1986 light truck fleet will consume 510 million 
gallons less than that which would have occurred if 
fuel economy levels remained at those now pro- 
jected for 1985. Light truck fuel economy stan- 
dards for model year 1987, proposed at the same 
time as the model year 1986 standards, will be 
issued at a later date. 

EFFECTIVE DATE: These standards are effective 
for the 1985 and 1986 model years. 



Background 

On March 8. 1984, NHTSA published a notice of 
proposed rulemaking (NPRM) on the establish- 
ment of light truck average fuel economy stan- 
dards for model years 1986 and 1987. See 49 FR 
8637. The issuance of the 1986 standard 18 months 
before model year 1986 is required by section 
502(b) of the Motor Vehicle Information and Cost 
Savings Act, 15 U.S.C. 2002(b). That provision re- 
quires the Secretary of Transportation to set light 
truck standards at the "maximum feasible average 
fuel economy level" for each model year after 1978. 



In determining the "maximum feasible" level, the 
Secretary is directed to consider four factors: 
technological feasibility, economic practicability, 
the need of the nation to conserve energy, and the 
effects of other Federal motor vehicle standard on 
fuel economy. See 15 U.S.C. 2002(e). 

The agency's March NPRM proposed ranges of 
possible standards for all types of light trucks, 
with the 1986 composite standard to be set within 
the range of 20.0 to 21.5 mpg and the 1987 com- 
posite standard to be set within the range of 20.0 
to 22.5 mpg. Ranges of standards were also pro- 
posed for two-wheel drive light trucks. These 
separate standards were proposed as optional 
means of compliance, consistent with the agency's 
practice in previous proceedings, and are intended 
to account for the fact that different manufac- 
turers' fleets contain significantly different pro- 
portions of four-wheel drive trucks, which tend to 
have lower fuel economy. 

Due to a continuing shift in consumer demand 
for light trucks, the agency anticipated that down- 
ward revisions to the standards would be neces- 
sary. The demand shifts, which are due primarily 
to the recent trend of stable and diminishing gaso- 
line prices, are manifested in higher levels of sales 
of larger light trucks and larger displacement 
engines than were previously anticipated by 
either the manufacturers or the agency. 

The market trends toward larger light trucks 
and larger displacement engines led Ford Motor 
Company to petition the agency on November 21, 
1983, to reduce the existing 1984 and 1985 light 
truck standards. Ford also argued that changes in 
light duty truck emissions standards and related 
procedures had led to a loss in fuel economy for 
those years. Ford requested that NHTSA reduce 



PART 533 -PRE 61 



the 1984 composite light truck fuel economy stan- 
dard from 20.0 to 19.0 mpg and the 1985 composite 
standard from 21.0 to 19.5 mpg, with correspond- 
ing changes to the optional two and four-wheel 
drive standards. On May 30, 1984, in 49 FR 22516, 
the agency proposed to grant Ford's request for 
the 1985 model year. However, the agency also 
proposed at that time to deny Ford's request for 
the 1984 model year, based on the agency's conclu- 
sion that the petition had not been timely filed for 
that model year. In its comments on this notice, 
Ford indicated that it would not pursue the issue 
of the 1984 standards since it had succeeded in as- 
suring compliance with the standards for that 
year. 

Summary of Decision 

Based on the agency's analysis of sales data for 
the 1984 model year and the manufacturers' most 
recent projections for future sales, market trends 
toward large vehicles and engines have continued 
and are likely to continue through at least 1986. 
Projected fuel economy levels for 1985 domestic 
light truck fleets have declined on the order of 1.5 
mpg since establishment of the standard, due 
almost entirely to mix shifts in vehicle size and 
engine displacement. These market trends are ex- 
pected to continue through at least the 1986 model 
year. Our analysis leads us to establish composite 
average fuel economy standards of 19.5 mpg for 
light trucks manufactured in the 1985 model year 
and 20.0 mpg for 1986 model year light trucks. 
Equivalent separate standards for two-wheel 
drive and four wheel drive light trucks are also 
established. A decision has not yet been reached 
with respect to the proposed 1987 model year stan- 
dards. The agency has concentrated its efforts on 
analyzing issues relating to the 1985-86 standards, 
which must be issued at this time. There is a con- 
siderable period of time before the agency is re- 
quired to issue 1987 model year standards. The 
agency needs additional time to complete its 
analysis of issues relating to such standards. Some 
of these issues, particularly those relating to 
market trends, are characterized by uncertainty 
and complexity. 

Basis for the Final Standards 

a. 1985 Standards. The basis for the agency's 
original 1985 standards is summarized at 45 FR 
81593, December 11, 1980. 



The fuel economy gains projected by the agency 
in that notice were due primarily to the introduc- 
tion of new compact pickup, utility, and van models 
and progressively higher sales levels for these 
models. The new models were projected to employ 
smaller, more efficient engines and other fuel 
economy-improving technology. However, in its 
May 30, 1984 notice, the agency indicated that a 
number of its projections had not been borne out in 
terms of current consumer preferences in the 
marketplace. In particular, the agency's May 30 
notice stated that market demand for light truck 
performance as reflected in engine mix and axle 
ratio usage, did not materialize as anticipated 
when the agency initially established the 1985 
standards. These and certain other less significant 
effects produced a 1.5 mpg loss in Ford's 1985 light 
truck average fuel economy. The original 1985 
standards were based primarily upon Ford's max- 
imum fuel economy capability, since that company 
had the lowest projected fuel economy, accounted 
for a substantial share of light truck sales, and 
faced serious risk of economic harm if standards 
were set at levels above its capability to achieve 
with a product mix reflecting market demand. As 
the agency has consistently stated in the past, the 
agency has a responsibility to set standards at a 
level that can be achieved by manufacturers 
having a substantial share of light truck sales. 

The agency has refined its analysis of Ford's 
1985 fuel economy capability for purposes of this 
final rule, and has performed analyses of the 
capability of Chrysler and General Motors as well. 
Other light truck manufacturers have significantly 
higher average fuel economy capabilities than the 
three large domestic manufacturers and account 
for a minority share of light truck sales. These 
other fleets have not been analyzed for this pro- 
ceeding, since it is clear that because of their small 
size they would not influence ultimate standards 
levels. The agency has concluded that there has 
been a market related 1.5 mpg loss in Ford's model 
year 1985 fuel economy capability. 

Increases in demand for larger displacement 
engines compared to levels anticipated at the time 
the 1985 standards were originally established 
caused 0.9 mpg of the drop in Ford's model year 
1985 capability. Increases in average vehicle 
weight principally resulting from higher than an- 
ticipated demand for larger vehicles produced a 
0.5 mpg drop, while a drop in demand for diesel 
engines caused a further 0.1 mpg loss. Several 



PART 533 -PRE 62 



I 



minor effects combined to produce an additional 
0.2 mpg loss, but were more than offset by a 0.4 
mpg fuel economy gain due to the use of fuel injec- 
tion in certain light truck engines. 

A 0.2 mpg loss in fuel economy was experienced 
by Ford coincident with the imposition of more 
stringent emission regulations. Although the 
agency has concluded that a 0.2 mpg fuel economy 
loss will occur for Ford in 1985, EPA has advised 
the agency that, in their opinion, this loss is due to 
efforts to improve engine performance through 
engine calibration and is not an inherent effect of 
the emissions standards. However, NHTSA has 
treated this effect as equivalent to the engine mix 
change effects described above since it appears to 
result from market demand for increased vehicle 
performance at a time of stable gasoline prices. 

A decline in General Motors 1985 fuel economy 
is also projected by the agency to a level of 20.0 
mpg. The magnitude of this reduction is similar to 
that experienced by Ford, and is also due to 
market demand factors. The major factors causing 
the decline in GM's 1985 fuel economy were found 
to be an increase in average vehicle weight and 
engine displacement due to higher than antici- 
pated demand for larger vehicles and engines, a 
decline in demand for diesel engines, reduced de- 
mand for manual transmissions, and increased de- 
mand for vehicles with four-wheel drive capability. 

Chrysler's 1985 fuel economy is estimated to be 
20.3 mpg. The other domestic and foreign manufac- 
turers were not assessed in detail in this analysis, 
for the reasons noted above. 

b. 1986 Standards. Based primarily on technol- 
ogy, the agency anticipates that Ford can achieve 
a fuel economy gain of 0.9 mpg over the 1985 stan- 
dard of 19.5 mpg. This fuel economy gain is due 
predominantly to the introduction of engines using 
more efficient lean burn/fast burn technologies (0.5 
mpg) and also to the elimination of the engine 
calibration/emissions effect described above (0.2 
mpg) and gradual growth in demand for new small 
vans (0.2 mpg). However, the agency believes 
these gains will be somewhat offset by continued 
market shifts, as discussed below. The emissions 
standards effects are also discussed below. 

The agency also projects that GM can achieve 
fuel economy gains of the same magnitude through 
engine efficiency improvements as projected for 
Ford (0.5 mpg). Through a variety of other minor 
improvements, the agency projects that GM can 
achieve an additional 0.1 mpg improvement. Taken 



together, these improvements will enable GM to 
achieve a composite average fuel economy of 20.6 
mpg in 1986. 

Chrysler is capable of achieving the highest 
1986 fuel economy levels of the "Big 3" domestic 
manufacturers, 21.5 mpg. This gain primarily 
results from the introduction of fuel efficient 
engine technology and the introduction of certain 
new light weight truck models. 

For each of the two model years covered by this 
rule, the agency concluded that fuel economy im- 
provements beyond those previously discussed 
are not feasible. 

d. Economic practicability. 

Economic factors have been of significance in 
the agency's standard-seting analysis, particularly 
the potential costs incurred by manufacturers 
should standards necessitate the sale of a "non- 
free market" model mix. As noted in the discussion 
of fleet technology above, virtually the entire fuel 
economy difference between the original 1985 
standard and the lower standards promulgated 
herein reflects a change in anticipated market de- 
mand for larger light trucks and engines, resulting 
from lower than anticipated gasoline prices. The 
mix of vehicles and engines projected in this notice 
for the 1985-86 model years is an estimate of free 
market demand for light trucks under current 
market conditions. 

It is possible that higher levels of fuel economy 
could be achieved by domestic manufacturers 
should they restrict their product offerings. For 
example, sales of particular larger light truck 
models and larger displacement engines could be 
limited or eliminated entirely. In its petition to 
reduce the 1984-85 light truck standards. Ford sub- 
mitted an analysis of the potential effects of 
restricting product offerings in this manner. This 
analysis showed that to achieve a 1.5 mpg average 
fuel economy benefit, sales reductions of 100,000 to 
180,000 units at Ford could occur, with resulting 
employment losses of 12,000 to 23,000 positions at 
Ford, its dealers and suppliers. To the extent that 
these sales restrictions merely shifted purchasers 
of larger trucks to other manufacturers, no net 
fuel economy benefit would be achieved. No com- 
menter in the proceeding directly took issue with 
the Ford analysis. The agency believes this analy- 
sis to be a reasonable projection of the impacts of 
restricting the availability of larger trucks and en- 
gines in the current market. Impacts of this mag- 
nitude would go beyond the realm of "economic 



PART 533 -PRE 63 



practicability" as contemplated in the Act, par- 
ticularly in view of the uncertain energy benefits. 

The agency has analyzed the economic impacts 
associated with the manufacturers' efforts to im- 
prove the fuel economy of individual light truck 
models in the 1985-86 time period. This analysis is 
set forth in a Regulatory Impact Analysis, copies 
of which are available in the agency's Docket Sec- 
tion. The agency projects an average retail price 
increase of $35 to result from these improvements. 
This price increase would be offset by operating 
cost savings of $176 for the average 1986 light 
truck, due to reduced lifetime gasoline consump- 
tion. Overall, the agency projects the domestic 
manufacturers' automotive operations to remain 
highly profitable over the 1985-86 period, based on 
current market trends. 

e. Effects of other Federal Standards on fuel 
economy. Three new light truck exhaust emission 
requirements were cited by several commenters 
as having possible adverse impacts on fuel econ- 
omy. The first requirement is a change in strin- 
gency in hydrocarbon and carbon monoxide emis- 
sions standards, which took effect in the 1984 
model year. The second requirement extends the 
useful life period for which manufacturers must 
certify compliance with emissions standards begin- 
ning with the 1985 model year. The third require- 
ment is an anticipated increase in stringency of 
light duty truck emission standards for oxides of 
nitrogen. 

The agency has concluded that none of these 
regulatory changes will impact 1985-86 light truck 
fuel economy levels. With regard to 1984 emissions 
standards changes and the extended useful life 
regulation, the agency concurs in a technical analy- 
sis provided by the Environmental Protection 
Agency (EPA) which indicates that there is no cau- 
sal link between these regulations and any loss in 
fuel economy experienced by the manufacturers. A 
Department of Transportation assessment of the 
1984-85 emissions regulations supported the EPA 
conclusions. In the case of the possible change in 
the emission standards for oxides of nitrogen, 
EPA has yet to issue proposed standards. Given 
the need for EPA to conduct a rulemaking pro- 
ceeding and provide adequate lead time, NHTSA 
concludes that it is unlikely that any change in 
stringency of that standard would occur by 1986. If 
this judgment turns out to be incorrect, the agency 
will reassess the impact of such a change on light 
truck fuel economy. 



General Motors argued that future light truck 
diesel particulate emission standards could effec- 
tively ban diesel engines in such vehicles, reducing 
fuel economy levels accordingly. EPA has indi- 
cated that these standards can be met with avaU- 
able technology. However for certain vehicles 
EPA concedes that the standards may require the 
use of particulate traps which could produce a fuel 
economy penalty of approximately 2 percent per 
affected vehicle. NHTSA is accepting the EPA 
analysis. Should the anticipated fuel economy 
penalty occur, the impact on the domestic manu- 
facturers' average fuel economy levels would be 
much less than 0.1 mpg, and would therefore not 
impact fuel economy standards levels. 

American Motors argued that changes in EPA 
test procedures will result in a fuel economy loss. 
American Motors did not provide an analysis of 
the quantitative impact of the proposed rule on 
American Motors' average fuel economy levels, 
and none of the other manufacturers argued for 
the existence of such an impact. In its comments, 
American Motors noted that the potential impact 
of the change in EPA procedures could be offset 
through testing additional vehicles, but pointed 
out that such testing might be too expensive for a 
smaller manufacturer. Should American Motors 
experience a fuel economy less, its average fuel 
economy levels will still be high enough to easily 
comply with the standards promulgated herein. 
Therefore, the agency is not making a specific 
adjustment in the standards to account for this 
potential effect. 

f. Need of the nation to conserve energy. 

The United States imported 15 percent of 
its oil needs at a cost of $1.1 billion in 1955. By 
1977, the import share peaked at 46.4 percent at a 
cost of $42 billion. While the import share of total 
petroleum demand has been steadily declining 
since 1977 to 1983 level of 28 percent, the cost con- 
tinued to rise to a 1981 peak level of $75.8 billion. 
Iii 1983, the percentage of imported petroleum was 
the lowest it had been during the prior decade, and 
the cost was lower than in 1979. During most of 
this period price controls on petroleum were in 
effect, sending the wrong economic signals to con- 
sumers. It is during such a period that fuel econ- 
omy standards are most effective. 

The rapid transition from apparent worldwide 
surplus in 1978 to shortage in 1979, to surplus 
again today points out the instability of the world 
oil market. The U.S. is now dependent for about 



PART 533 -PRE 64 



a third of its oil supplies on the actions and deci- 
sions of a few foreign governments. Although the 
concern over dependence on imported petroleum 
has lessened in the past few years, it is necessary 
to continue conservation efforts due to the uncer- 
tainty, especially in regard to the Middle East, of 
the future availability of petroleum. 

g. Determining the maximum feasible average 
fuel economy level In determining the level at 
which standards are to be set, the agency must 
take industrywide considerations into account. 
The Conference Report on Title V of the Motor 
Vehicle Information and Cost Saving Act provides 
in this regard as follows: 

...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 aver- 
age fuel economy. Rather, the Secretary must 
weigh the benefits to the nation of a higher 
average fuel economy standard against the 
difficulties of individual automobile manufac- 
turers. Such difficulties, however, should be 
given appropriate weight in setting the stan- 
dard in light of the small number of domestic 
automobile manufacturers that currently ex- 
ist, and the possible implications for the na- 
tional economy and for reduced competition 
association (sic) with a severe strain on any 
manufacturer. However, it should also be 
noted that provision has been made for grant- 
ing relief from penalties under Section 508(b) 
in situations where competition will suffer 
significantly if penalties are imposed. 

Senate Report 94-516, 94th Cong. 1st Sess. 
(1975), at 154-5. 

As in the proposals, NHTSA's analysis concludes 
for both years that Ford is the "least capable" 
manufacturer in regard to improving the average 
fuel efficiency of its light trucks. For the 1985 
model year, the agency projects that Ford can 
achieve 19.5 mpg, while GM could achieve 20.0 mpg 
and Chrysler 20.3 mpg. Production of 1985 model 
year vehicles has begun, so there is little that the 
manufacturers can do at this point to change their 
1985 average fuel economy through use of addi- 
tional technology. Setting the 1985 standards sig- 
nificantly above Ford's level would not likely in- 
crease that company's fuel economy performance 



through greater use of technology, but might re- 
quire drastic product restriction actions which 
would adversely affect employment at Ford. Such 
actions by Ford might also result in the shifting of 
sales of larger light trucks with large engines to 
other manufacturers, thereby achieving no net 
fuel economy improvement for the industry as a 
whole. On the other hand, setting standards below 
the level attainable by GM and Chrysler would not 
likely cause those companies to reduce their fuel 
economy performance, since the agency's pro- 
jected levels for those companies is based on the 
product mixes they plan to sell. Further, GM indi- 
cated in its comments that setting standards at a 
level below its planned levels would not cause GM 
to revise its plans. Therefore, the agency con- 
cludes that the risks associated with setting stan- 
dards above Ford's maximum feasible level and 
possibly forcing that company to adopt severe 
product restrictions outweigh the potential 
benefits from setting standards at a higher level. 

For the 1986 model year, the agency projects 
the maximum fuel economy Ford could achieve is 
20.4 mpg, GM 20.6 mpg, and Chrysler 21.5 mpg. 
Data provided by Ford indicate that Ford's 1986 
fuel economy could be as low as 19.6 mpg if con- 
sumers maintain a strong demand for larger 
vehicles. The agency also found that GM faces a 
number of technological risks involving certain 
engine efficiency improvements for 1986. If these 
technological actions became infeasible, NHTSA 
estimates the company's 1986 fuel economy would 
decline to 20.0 mpg. 

There are additional factors to be considered 
selecting the 1986 standards. Major technological 
changes can not be made in manufacturers' prod- 
uct plans for that year. New programs cannot be 
developed to compensate for market shifts or tech- 
nological problems. Futhermore, as noted in the 
NPRM, manufacturers' projections (and NHTSA's 
analyses) of their fuel economy improvement capa- 
bilities have declined over the past 1-1/2 years due 
to market changes. For all the above reasons, the 
agency has decided to set the 1986 composite stan- 
dard at 20.0 mpg. The agency believes the risks of 
reduced sales and employment resulting from at- 
tempts to achieve a higher level for MY 1986 out- 
weigh the potential fuel savings. 

The agency has decided to continue setting 4x2 
and 4x4 standards for each year as an alternative 
to the composite standard. Separate 4x2/4x4 
standards allow manufacturers greater flexibility 



PART 533 -PRE 65 



in planning their fuel economy improvements and 
do not discriminate against firms with truck fleets 
heavily weighted toward four-wheel drive or two- 
wheel drive models. 
The final standards are: 



Model 
Year 

1985 
1986 



Composite 

Standard 

MPG 

19.5 
20.0 



4x2 

Standard 

MPG 

19.7 
20.5 



4x4 

Standard 

MPG 

18.9 
19.5 



Other Comments on the NPRM 

In its March 1984 NPRM, the agency raised the 
possibility of changing the structure and scope of 
the current standards in several ways, including 
establishing a number of additional standards for 
subclasses of the light truck fleet and limiting the 
scope of the standards with regard to vehicles in 
the 6001-8500 pound gross vehicle weight range. 
Those commenters taking a position on the merits 
of this issue generally argued in favor of retaining 
the present structure of standards, at least for this 
rulemaking, citing the additional complexity 
resulting from multiple standards. Ford pointed 
out that addressing the issue at this time could 
delay the rulemaking, which is subject to stringent 
time constraints. Therefore, the agency is making 
no changes in this area at the current time. 

GM and Ford argued that the agency should 
revise the manner in which it evaluates the eco- 
nomic practicability of standards. Both companies 
argued that cost/benefit considerations should 
play a greater role in the agency's standard- 
setting, and Ford suggested a variety of additional 
factors the agency should consider. However, in 
this proceeding, none of the additional criteria sug- 
gested by Ford would affect the level at which the 
standards are set in this rule. Furthermore, the 
agency has always considered costA)enefit analysis 
results in setting fuel economy standards; indeed, 
the most stringent economic criterion for this rule 
has been the one the agency has traditionally 
relied upon: the risk of any substantial adverse 
economic impacts on the industry or the national 
economy. The standards are being set at the levels 
discussed above to avoid the risk of significant 
adverse employment impacts which could result if 
the manufacturers (and Ford in particular) 
restricted product offerings to comply with overly 
stringent standards. 



A coalition of public interest organization op- 
posed the agency's proposed 1986 standard level, 
arguing that it was based on an assumption of the 
continuation of the current favorable energy sup- 
ply and cost situation. The coalition recommended 
a standard of 22.5 mpg for model year 1986. No 
technical or economic analysis was provided to 
support the feasibility of a standard at this level. 
The agency agrees that the need of the nation to 
conserve energy remains strong and that the na- 
tion still faces the risk of energy problems in the 
future. However, section 502 of the Act requires 
the agency to set standards at the maximum feasi- 
ble average fuel economy level, considering not 
just energy conservation needs but also technical 
and economic factors. As discussed above, the 
agency believes that requiring compliance with 
more stringent standards than provided herein 
would create a risk of serious adverse economic 
repercussions such as losses in employment in the 
automobile and related industries, without neces- 
sarily producing the contemplated fuel economy 
gains. 

In its NPRM concerning the MY 1984-1985 stan- 
dards, the agency concluded that Ford's petition to 
amend the 1984 light truck standards was not 
timely filed due to legal time constraints for 
amending standards. The agency presented its 
tentative conclusion that amendments reducing 
the stringency of standards for a particular model 
year may be made up until the beginning of the 
model year but not after that time. Several vehicle 
manufacturers disagreed with this conclusion. 
Ford, GM and Volkswagen argued that amend- 
ments reducing the stringency of standards may 
be made at any time, including during a model 
year. Chrysler, on the other hand, argued that 
amendments reducing the stringency of standards 
must be made 18 months prior to the beginning of 
a model year. As discussed below, the agency has 
decided that its tentative conclusion was correct. 
The following paragraphs provide a complete dis- 
cussion of this issue both for purposes of this rule- 
making and to provide a complete discussion of 
this issue both for purposes of this rulemaking and 
to provide future guidance to manufacturers as to 
the correct timing of petitions. 

A model year is presumed to begin in the 
autumn of the preceding calendar year (see Center 
for Auto Safety v. NHTSA, 710 F.2d 842 (D.C. Cir. 
1983).) Ford's petition to reduce the existing 1984 
and 1985 light truck standards was filed on 



PART 533 -PRE 66 



November 21, 1983, and amended on January 20, 
1984. Since model year 1984 began in the fall of 
1983, it is clear that the 1984 light truck standards 
could not have been amended in response to the 
Ford petition prior to the start of that model year. 

Section 502(b) of the Motor Vehicle Information 
and Cost Savings Act (15 U.S.C. 2002(b) requires 
that the Secretary of Transportation "shall, by 
rule, prescribe average fuel economy standards" 
for light trucks for each model year beginning with 
1979. These standards must be prescribed at least 
"18 months prior to the beginning of the model 
year to which they apply. Id. 

Section 502(f)(1) of the Act provides that the 
"Secretary may, by rule, from time to time, 
amend" any light truck fuel economy standard "so 
long as such standard, as amended, meets the 
requirements" of section 502(b). Section 502(f)(2) 
provides that any amendment which makes stan- 
dards more stringent must be promulgated "at 
least 18 months prior to the beginning of the model 
year to which such amendment will apply." 

The Conference Report on the Energy Policy 
and Conservation act (the statute which added the 
fuel economy provisions to the Motor Vehicle In- 
formation and Cost Savings Act) contains the 
following discussion: 

Average fuel economy standards prescribed 
by the ST (Secretary of Transportation) for 
passenger automobiles in model years after 
1980, for nonpassenger automobiles, and for 
passenger automobiles manufactured by 
manufacturers of fewer than 10,000 passenger 
automobiles may amended from time to time 
as long as each such amendment satisfies the 
18 month rule — i.e., any amendment which 
has the effect of making an average fuel econ- 
omy standard more stringent must be promul- 
gated at least 18 months prior to the begin- 
ning of the model year to which such amend- 
ment will apply. An amendment which has the 
effect of making an average fuel economy 
standard less stringent can be promulgated at 
any time prior to the beginning of the model 
year in question. 

See Sen. Rep. 94-516, 94th Cong., 1st Sess. 
(1975) at 157. [Emphasis added.] 



I 



As noted above, Ford, General Motors and 
Volkswagen argued that there is not time limita- 



tion on amendments reducing the stringency of 
standards and that such amendments may be 
made in mid-model year. GM read section 502(f)(1) 
and section 502(f)(2) to together imply that Con- 
gress concluded that it was not necessary or 
appropriate to set time limits on standards reduc- 
tion rulemaking. GM argued that the statutory 
structure is unambiguous, citing Sands, Suther- 
land Statutory Construction Section 46.01 (Fourth 
Ed. 1973), for the plain meaning rule of statutory 
construction. Ford stated that the purpose of the 
leadtime provisions included in the Act is to pro- 
tect manufacturers from not being given sufficient 
time to plan and implement compliance with a 
more stringent standard and that the provisions 
should not be construed to operate to manufac- 
turers' detriment. Ford stated that as a general 
rule of statutory construction, a distinction must 
be made between utilizing legislative history for 
purposes of illuminating Congressional intent with 
respect to express statutory language and using 
such history to write into the law that which is not 
otherwise there. Ford also argued that the 
language of the Conference Report was intended 
to emphasize the fact that, in contrast to the situa- 
tion in which more stringent standards are estab- 
lished, there is no leadtime requirement with 
respect to less stringent standards. 

Chrysler, however, argued that amendments 
reducing the stringency of standards must be 
made at least 18 months prior to the beginning of 
the model year and that, therefore. Ford's petition 
was too late with respect to both the 1984 and 1985 
model years. Chrysler argued that section 502(b) 
calls for 18 months leadtime for any standards be- 
ing prescribed and that changes in standards come 
within that requirement. Chrysler contended that 
this specific language of the law takes precedence 
over the Conference Report. Chrysler stated that 
the 18 month requirement of section 502(f)(2) is also 
applicable since granting Ford's request would in 
effect make the standards more stringent for 
Chrysler. 

As suggested by the two very different views 
advanced by the commenters, the timing require- 
ments applicable to amendments which make stan- 
dards less stringent are not clear on the face of the 
statute. The language in section 502(f)(1) authoriz- 
ing amendments "from time to time" could be 
interpreted to permit amendments at any time. 
Alternatively, the language in that paragraph re- 
quiring that amendments to standards must comply 



PART 533 -PRE 67 



with requirements applicable to their original 
enactment could be interpreted to impose the 18 
month rule, one of the requirements of section 
502(b) on amendments to reduce standards. 

Where a statutory provision is ambiguous on its 
face, rules of statutory construction dictate that 
the legislative history of the provision must be 
considered. See Sutherland, "Statutory Construc- 
tion," 4th Ed., section 48.01. An Act's Conference 
Report has been considered the "most persuasive 
evidence of congressional intent" in this regard. 
Demby v. Schweiker,671 F.2d 507, 510 (D.C. Cir. 
1981). 

The agency believes the language of the Con- 
ference Report is clear on this point. As indicated 
above, the Conference Report includes a state- 
ment that "(a)n amendment which has the effect of 
making an average fuel economy standard less strin- 
gent can be promulgated at any time prior to the 
beginning of the model year in question." While 
the discussion in the Conference Report does not 
expressly prohibit amendments after the start of a 
model year, the quoted sentence certainly implies 
that result. If no limit on the timing of relaxatory 
amendments had been intended, the sentence 
would been ended after the words "... promul- 
gated at any time.. . ." The agency believes that 
Congress intended to provide certainty and finally 
for all parties concerned with regard to the levels 
of standards, to permit planning by the manufac- 
turers and the agency through cutting off amend- 
ments once a model year has begun. 

Ford has argued that a failure to permit amend- 
ments to fuel economy standards after the start of 
a model year places manufacturers in a difficult 
position, since unanticipated sales trends during 
the model year might impair its ability to comply. 
However, the agency is also concerned that 
amendments made after production has begun 
have some characteristics of ex post facto law. 

On this point, the agency notes that, as quoted 
above, section 502(b) and 502(f)(1) require that fuel 
economy standards and amendments to such stan- 
dards be prescribed "by rule". The term "rule" or- 
dinarily refers to prospective agency action. The 
Administrative Procedure Act's definition of rule 
incorporates the concept of "agency statement of 
general or particular applicability and future ef- 
fect." See 5 U.S.C. §551(4) (emphasis added). Since 
an average fuel economy standard regulates over- 
all production over an entire model year, a change 
to such a standard during the model year would 



represent, in part, retrospective agency action, 
with retroactive effect. On the issue of retroactive 
rules, Kenneth Culp Davis states that "... agencies 
have no powers except those conferred and courts 
are reluctant to imply power to issue retroactive 
rules.. . . " Davis, Administrative Law Treatise, 2d 
ed., §7.23. The agency does not believe that a court 
imply such authority in this instance, particularly 
given the statement in the legislative history 
implying that Congress intended the opposite 
result. 

The agency believes that Congress intended 
standards to be established before production 
begins, to encourage the achievement of particular 
fuel economy levels rather than imply ratifying 
past conduct. As noted above, Chrysler expressed 
similar concerns in its comments, noting that late 
changes in standards levels could adversely affect 
manufacturers who planned to meet the original 
levels. Therefore, the agency must reaffirm its 
previous position that petitions to amend fuel 
economy standards must be submitted in time to 
permit necessary rulemaking to be completed 
prior to the start of the model year. 

With respect to Chrysler's suggested construc- 
tion of section 502(f)(2), the agency sees no basis in 
the Act or its legislative history for construing 
"more stringent" amendments to mean anything 
other than its common meaning, i.e., numerically 
higher. Adopting Chrysler's proposed construc- 
tion would mean that all amendments make stan- 
dards "more stringent" regardless of the direction 
of the change, since any particular standards level 
will impact manufacturers unequally. In that case, 
the "more stringent" language of the Act would be 
rendered meaningless, a result to be avoided 
under normal rules of statutory construction. The 
agency rejects this argument. 

The agency recognizes the general concern 
raised by Chrysler that standards reductions may 
adversely affect manufacturers which made good 
faith efforts to achieve the initially established 
standards level. However, the agency must con- 
sider the feasibility of its standards for the in- 
dustry as a whole, as noted above. With regard to 
the 1985 standards, it appears that none of the 
domestic manufacturers, including Chrysler, will 
be able to meet the original standards. Therefore, 
the agency concludes that reducing the 1985 stan- 
dards is necessary. 

Ford has also requested that the agency specify 
the precise date by which petitions to amend fuel 



PART 533 -PRE 68 



economy standards must be filed. As noted above, 
the single court to address the issue has stated 
only that a given model year begins in the fall of 
the preceding calendar year (e.g., fall 1984 is the 
beginning of the 1985 model year). In its final rule 
establishing fuel economy reporting requirements, 
the agency took the position that, in the absence of 
any single "annual production period," the model 
year would be deemed to coincide with the calen- 
dar year, e.g., the 1985 model year would begin 
January 1, 1985. See 19 U.S.C. 2001(12) and 42 FR 
62374 (December 12, 1977). Since any amendments 
to standards must be promulgated prior to the 
start of the model year, petitions must be filed in 
time to permit the agency to complete a rulemak- 
ing proceeding on the petition prior to the start of 
the model year. The time necessary for such a 
proceeding will vary greatly depending on the 
complexity and controversiality of the issues in- 
volved. A proceeding would involve agency 
analysis of the petition, preparation and publica- 
tion of the necessary supporting documentation, a 
minimum public comment period, analysis of com- 
ents, and preparation and publication of the docu- 
mentation necessary to accompany the final deci- 
sion. The various uncertainties affecting the dura- 
tion of a proceeding make it impossible for the 
agency to specify a precise date after which peti- 
tions will not be accepted. However, it is clear that 
the Ford petition, which was filed in November of 
the preceding calendar year, was not timely. As a 
general matter, petitions regarding a particular 
model year's standards should be submitted no 
later than the early part of the preceding calendar 
year, and preferably before that time. 



In accordance with section 502(j) of the Act, the 
agency has submitted this rule to the Department 
of Energy for review. The Department of Energy 
indicated that it had no comment on the rule. 

In consideration of the foregoing, 49 CFR 
Chapter V is amended by revising Table II in 
S533.5(a) to read as follows: 

S533.5 Requirements. 

(a) * * * 

TABLE II 



Combined 2-wheel drive 
■••"-''"-'' light trucks 



4-wheel drive 
light trucks 



standard light ti 

Model Year ~Z ~. ;; '. ~ : 

Captive _ , Captive _., Captive _,, 

. '^ , Other . "^ ^ Other . *^ ^ Others 

imports imports imports 



1982 
1983 
1984 
1985 
1986 



17.5 17.5 

19.0 19.0 

20.0 20.0 

19.5 19.5 

20.0 20.0 



18.0 
19.5 
20.3 
19.7 
20.5 



18.0 
19.5 
20.3 
19.7 
20.5 



16.0 16.0 

17.5 17.5 

18.5 18.5 

18.9 18.9 

19.5 19.5 



Issued on October 16, 1984. 



Diane K. Steed 
Administrator 

49 FR 41250 
October 22, 1984 



PART 533 -PRE 69-70 



economy standards must be filed. As noted above, 
the single court to address the issue has stated 
only that a given model year begins in the fall of 
the preceding calendar year (e.g., fall 1984 is the 
beginning of the 1985 model year). In its final rule 
establishing fuel economy reporting requirements, 
the agency took the position that, in the absence of 
any single "annual production period," the model 
year would be deemed to coincide with the calen- 
dar year, e.g., the 1985 model year would begin 
January 1, 1985. See 19 U.S.C. 2001(12) and 42 FR 
62374 (December 12, 1977). Since any amendments 
to standards must be promulgated prior to the 
start of the model year, petitions must be filed in 
time to permit the agency to complete a rulemak- 
ing proceeding on the petition prior to the start of 
the model year. The time necessary for such a 
proceeding will vary greatly depending on the 
complexity and controversiality of the issues in- 
volved. A proceeding would involve agency 
analysis of the petition, preparation and publica- 
tion of the necessary supporting documentation, a 
minimum public comment period, analysis of com- 
ents, and preparation and publication of the docu- 
mentation necessary to accompany the final deci- 
sion. The various uncertainties affecting the dura- 
tion of a proceeding make it impossible for the 
agency to specify a precise date after which peti- 
tions will not be accepted. However, it is clear that 
the Ford petition, which was filed in November of 
the preceding calendar year, was not timely. As a 
general matter, petitions regarding a particular 
model year's standards should be submitted no 
later than the early part of the preceding calendar 
year, and preferably before that time. 



In accordance with section 502(j) of the Act, the 
agency has submitted this rule to the Department 
of Energy for review. The Department of Energy 
indicated that it had no comment on the rule. 

In consideration of the foregoing, 49 CFR 
Chapter V is amended by revising Table II in 
S533.5(a) to read as follows: 

S533.5 Requirements. 



(a) 



TABLE II 





Combined 


2-wheel drive 


4-wheel drive 




standard 


light trucks 


light trucks 


Model Year _ ,. 

Captive 

imports 


Other 


C^P''7 Other 
imports 


Captive „,, 
. '^ ^ Others 
imports 


1982 .. 


. . 17.5 


17.5 


18.0 18.0 


16.0 16.0 


1983 .. 


. . 19.0 


19.0 


19.5 19.5 


17.5 17.5 


1984 .. 


. . 20.0 


20.0 


20.3 20.3 


18.5 18.5 


1985 . . 


. . 19.5 


19.5 


19.7 19.7 


18.9 18.9 


1986 .. 


. . 20.0 


20.0 


20.5 20.5 


19.5 19.5 



Issued on October 16, 1984. 



Diane K. Steed 
Administrator 

49 FR 41250 
October 22, 1984 



PART 533 -PRE 69-70 



Sec. 

533.1 Scope 



PART 533— LIGHT TRUCK FUEL ECONOMY STANDARDS 
(Docket No. FE 77-05; Notice 5) 

(3) The term "domestically manufactured" 
is used as defined in section 503(b) (2) (E) of the 
Act. 



533.2 Purpose 

533.3 Applicability 

533.4 Definitions 

533.5 Requirements 

533.6 Measurement and calculation procedures 

5533.1 Scope. This part establishes average 
fuel economy standards pursuant to section 502(b) 
of the Motor Vehicle Information and Cost Savings 
Act, as amended, for light trucks. 

5533.2 Purpose. The purpose of this part is to 
increase the fuel economy of light trucks by 
establishing minimum levels of average fuel 
economy for those vehicles. 

5533.3 Applicability. This part applies to 
manufacturers of light trucks. 

5533.4 Definitions. 

(a) Statutory terms. 

(1) The terms "average fuel economy," 
"average fuel economy standard," "fuel 
economy," "import," "manufacture," "manufac- 
turer," and "model year" are used as defined in 
section 501 of the Act. 

(2) The term "automobile" is used as defined 
in section 501 of the Act and in accordance with 
the determinations in 49 CFR 523. 



(b) Other terms. As used in this part, unless 
otherwise required by the context— 

"Act" means the Motor Vehicle Information 
Cost Savings Act, as amended by Pub.L. 94-163. 

"Light truck" is used in accordance with the 
determinations in 49 CFR Part 523. 

"Captive import" means, with respect to a 
light truck, one which is not domestically manu- 
factured but which is imported in the 1980 model 
year or thereafter by a manufacturer whose prin- 
cipal place of business is in the United States. 

"4-wheel drive, general utility vehicle" means 
a 4-wheel drive, general purpose automobile 
capable of off-highway operation that has a 
wheelbase of not more than 110 inches, and that 
has a body shape similar to 1977 Jeep CJ-5 or 
CJ-7, or the 1977 Toyota Land Cruiser. 

"Limited product line light truck" means a 
light truck manufactured by a manufacturer 
whose light truck fleet is powered exclusively 
by basic engines which are not also used in pas- 
senger automobiles. 

"Basic engine" means a unique combination 
of manufacturer, engine displacement, number of 
cylinders, fuel system (as distinguished by num- 
ber of carburetor barrels or use of fuel injection), 
and catalyst usage. 

S533.5 Requirements 

(a) Each manufacturer of light trucks shall 
comply with the following average fuel economy 



I 



PART 533-1 



Model year 



2-wheel drive 
light trucks 



4-wheel drive 
light trucks 



Captive 
imports 



Other 



Captive 
imports 



Other 



Limited 
product line 
light trucks 



1979 




17.2 




15.8 




1980 


16.0 


16.0 


14.0 


14.0 


14.0 


1981 


16.7 


16.7 


15.0 


15.0 


14.5 


1982 


18.0 


18.0 


16.0 


16.0 


— 





Combined 2-wheel drive 4-wheel drive 

Standard light trucks light trucks 
Model year 

Captive „ , Captive „ , Captive 

. ^ , Others . ^ _^ Others . ^ _^ Others 

imports imports imports 

[1982 17^5 rU) 18^0 18^0 16^0 16^0 

1983 19.0 19.0 19.5 19.5 17.5 17.5 

1984 20.0 20.0 20.3 20.3 18.5 18.5 

1985 19.5 19.5 19.7 19.7 18.9 18.9 

1986 20.0 20.0 20.5 20.5 19.5 19.51 

(49 F.R. 41250-October 22, 1984. Effective: For 1985 and 1986 model years).] 

standards, expressed in miles per gallon, in the (2) Comply separately with the 2-wheel drive 

model year specified as applicable: standards and the 4-wheel drive standards 

(b) (1) For model year 1979, each manufacturer (segregating captive import and other light trucks) 

specified in paragraph (a) of this section. 

(i) Combine its 2- and 4-wheel drive light 

trucks and comply with the average fuel S533.6 Measurement and calculation procedures. 

economy standard in paragraph (a) for 2- (a) Any reference to a class of light trucks 

wheel dnve light trucks; or manufactured by a manufacturer shall be deemed: 

(ii) Comply separately with the two stand- .,^ m ■ i , n ■• i . . i • ^i . i 

A -f A ■ V, / ^ (1) To include aU light trucks m that class 

ards specified in paragraph (a). i ^ ■,, , ^, .^„j 

,„^ ■" , r ^r,^ 1 ,1 manufactured by persons who control, are controlled 

(2) For model year 1979, the standard by, or are under common control with, such manufec- 

specified in paragraph (a) for 4-wheel dnve light turer- and 
trucks applies only to 4-wheel drive general utility 

vehicles. All other 4-wheel drive light trucks in (2) To exclude all light trucks in that class 

that model year shall be included in the 2-wheel manufactured (within the meaning of paragraph 

drive category for compliance purposes. (a) (1) of this section) during a model year by such 

, . _i 11 ,r^o/^ J ir.r.i £ manufacturer which are exported prior to the ex- 

(c) For model years 1980 and 1981, manufac- . ^ ^on j e u ■ t-u At u a ^ 
^^ ' .ff 1- -.L J J .. 1- 1- i_.L X piration of 30 days following the end of such model 
turers of limited product line light trucks may: 

(1) Comply with the separate standard for ^ , mi <• i i- n i- w ^ i 

limited product line light trucks, or J^} ^^e average fiiel economy of all light trucks 

,„. „ , •, , ., X, .11 -n- ■, that are manufactured by a manufacturer and are 

• .?L?.T ^ with the other standards specified ^^^.^^^ ^^ 5333 ^^^ ^^ ^^ 3333 3^^^ ^j^^,j ^^ ^^^^. 

in ^ l)Oo. Old,), 3,S 3,PpllC3,DlG. • j ■ i 'ii. j j. i_t i_ j 

^ ^ ' ^^ mined in accordance with procedures established 

(d) For model years 1983-85, each manufacturer by the Administrator of the Environmental Protec- 
may: tion Agency under section 503(a) (2) of the Act. 

(1) Combine its 2- and 4-wheel drive light 
trucks (segregating captive import and other light 

trucks) and comply with the combined average fuel 42 F.R. 1 3807 

economy standard specified in paragraph (a); or March 14, 1977 



(Rev. 10/22/84) 



PART 533-2 



Sec. 

533.1 Scope 



PART 533— LIGHT TRUCK FUEL ECONOMY STANDARDS 
(Docket No. FE 77-05; Notice 5) 

(3) The term "domestically manufactured" 
is used as defined in section 503(b) (2) (E) of the 
Act. 



533.2 Purpose 

533.3 Applicability 

533.4 Definitions 

533.5 Requirements 

533.6 Measurement and calculation procedures 

5533.1 Scope. This part establishes average 
fuel economy standards pursuant to section 502(b) 
of the Motor Vehicle Information and Cost Savings 
Act, as amended, for light trucks. 

5533.2 Purpose. The purpose of this part is to 
increase the fuel economy of light trucks by 
establishing minimum levels of average fuel 
economy for those vehicles. 

5533.3 Applicability. This part applies to 
manufacturers of light trucks. 

5533.4 Definitions. 

(a) Statutory terms. 

(1) The terms "average fuel economy," 
"average fuel economy standard," "fuel 
economy," "import," "manufacture," "manufac- 
turer," and "model year" are used as defined in 
section 501 of the Act. 

(2) The term "automobile" is used as defined 
in section 501 of the Act and in accordance with 
the determinations in 49 CFR 523. 



(b) Other terms. As used in this part, unless 
otherwise required by the context— 

"Act" means the Motor Vehicle Information 
Cost Savings Act, as amended by Pub.L. 94-163. 

"Light truck" is used in accordance with the 
determinations in 49 CFR Part 523. 

"Captive import" means, with respect to a 
light truck, one which is not domestically manu- 
factured but which is imported in the 1980 model 
year or thereafter by a manufacturer whose prin- 
cipal place of business is in the United States. 

"4-wheel drive, general utility vehicle" means 
a 4-wheel drive, general purpose automobile 
capable of off-highway operation that has a 
wheelbase of not more than 110 inches, and that 
has a body shape similar to 1977 Jeep CJ-5 or 
CJ-7, or the 1977 Toyota Land Cruiser. 

"Limited product line light truck" means a 
light truck manufactured by a manufacturer 
whose light truck fleet is powered exclusively 
by basic engines which are not also used in pas- 
senger automobiles. 

"Basic engine" means a unique combination 
of manufacturer, engine displacement, number of 
cylinders, fuel system (as distinguished by num- 
ber of carburetor barrels or use of fuel injection), 
and catalyst usage. 



S533.5 Requirements 

(a) Each manufacturer of light trucks shall 
comply with the following average fuel economy 



PART 533-1 



Model year 



2-wheel drive 
light trucks 



4-wheel drive 
light trucks 



Captive 
imports 



Other 



Captive 
imports 



Other 



Limited 
product line 
light trucks 



1979 




17.2 




15.8 




1980 


16.0 


16.0 


14.0 


14.0 


14.0 


1981 


16.7 


16.7 


15.0 


15.0 


14.5 


1982 


18.0 


18.0 


16.0 


16.0 


— 





Combined 2-wheel drive 4-wheel drive 

Standard light trucks light trucks 
Model year 

Captive „ . Captive ^ , Captive ^ , 

. ^ Others . _^ Others . _^ Others 

imports imports imports 

[1982 17^5 17\5 18^^ 18^0 leio 16^0 

1983 19.0 19.0 19.5 19.5 17.5 17.5 

1984 20.0 20.0 20.3 20.3 18.5 18.5 

1985 19.5 19.5 19.7 19.7 18.9 18.9 

1986 20.0 20.0 20.5 20.5 19.5 19.51 

(49 F.R. 41250-October 22. 1984. Effective: For 1985 and 1986 model years).) 

standards, expressed in miles per gallon, in the (2) Comply separately with the 2-wheel drive 

model year specified as applicable: standards and the 4-wheel drive standards 

(b) (1) For model year 1979, each manufacturer (segregating captive import and other light trucks) 

specified in paragraph (a) of this section. 

(i) Combine its 2- and 4-wheel drive light 

trucks and comply with the average fuel S533.6 Measurement and calculation procedures. 

economy standard in paragraph (a) for 2- (^^ ^^y reference to a class of light trucks 

wheel drive light trucks; or manufactured by a manufacturer shall be deemed: 

(ii) Comply separately with the two stand- ,,, _, . , , „ ,. w ^ ■ • ^i ^ i 

ards specified in paragraph (a). ^^} To include all light trucks m that ckss 

■■ , , r. .^ , , , manufactured by persons who control, are controlled 

(2) For model year 1979, the standard by, or are under common control with, such manufac- 

specified in paragraph (a) for 4-wheel drive light turer- and 
trucks applies only to 4-wheel drive general utility 

vehicles. All other 4-wheel drive light trucks in (2) To exclude all light trucks in that class 

that model year shall be included in the 2-wheel manufactured (within the meaning of paragraph 

drive category for compliance purposes. (a) (1) of this section) during a model year by such 

,, „ J , ,„„^ , ,„„, J. manufacturer which are exported prior to the ex- 

(c) For model years 1980 and 1981, manufac- ... ^onj j? n • i.u j t u j i 
^^ i-i- -^ J J ^1- 1- . ^ ^ piration of 30 days following the end of such model 
turers oi limited product line light trucks may: 

(1) Comply with the separate standard for „ , mi i. i /• i, ,• w ^ , 
limited product line light trucks, or (^^ ^^e average fuel economy of all light trucks 

,„, „ , •■ , ,, ^, X J J •£: J that are manufactured by a manufacturer and are 

(2) Comply with the other standards specified ^^^.^^^ ^^ g^gg 3^^ ^^ ^^ 3333 5^^^ ^j^^j, ^^ ^^^^^. 

■* ^ ' ^^ mined in accordance with procedures established 

(d) For model years 1983-85, each manufacturer by the Administrator of the Environmental Protec- 
may: tion Agency under section 503(a) (2) of the Act. 

(1) Combine its 2- and 4-wheel drive light 
trucks (segregating captive import and other light 

trucks) and comply with the combined average fuel 42 F.R. 1 3807 

economy standard specified in paragraph (a); or March 14, 1977 



(Rev. 10/22fS4) 



PART 533-2 



Notice of Interpretation 
(Docket No. FE 79-01; Notice 1) 



Summary: This notice announces the agency's 
interpretation of the extent to which the law 
permits, with respect to 1979 and 1980, monetary 
credits earned by manufacturers of light trucks for 
exceeding fuel economy standards in one year to 
be applied to civil penalty liabilities for violating 
those standards in the other year. This interpreta- 
tion is being issued at the request of several 
manufacturers to assist them in planning com- 
pliance with light truck fuel economy standards. 

For further information contact: 

Mr. Theodore Bayler, National Highway 
Traffic Safety Administration, 400 Seventh 
Street, S.W., Washington, D.C. 20590, 202- 
755-9384. 

Supplementary information: Section 502(b) of the 
Motor Vehicle Information and Cost Savings Act 
("the Act"), 15 U.S.C. 2002(b), requires the 
Secretary of Transportation to establish average 
fuel economy standards for light trucks manufac- 
tured in each model year beginning with 1979. 
That provision also authorizes the Secretary to 
establish separate fuel economy standards for dif- 
ferent classes of light trucks. The Secretary used 
this authority to establish separate 1979 standards 
for "4-wheel general utility vehicles" with a gross 
vehicle weight rating (GVWR) not greater than 
6,000 lbs. and for "all other" light trucks in the 
same GVWR range. Manufacturers were, 
however, given the option of having all of their 
6,000 lbs and under GVWR light trucks comply 
with the more stringent standard for "all other" 
light trucks, rather than complying separately with 
the two standards. 

Different classes were established by the agency 
beginning with the 1980 model year. Separate 
standards were established for two- and four-wheel 
drive light trucks, and subclasses were established 
within those classes for captive import (i.e., trucks 



manufactured abroad and sold through a domestic 
manufacturer's dealer network) and domestic light 
trucks. A separate standard was also established 
for "limited product line light trucks," i.e., those 
produced by companies whose light trucks employ 
exclusively engines which are not also used in 
passenger cars. The change in the light truck 
classification was made because of the 
simultaneous change in the applicability of the fuel 
economy standards to cover light trucks up to 
8,500 pounds GVWR. The new classification 
system reflects the makeup of the larger fleets 
regulated in 1980 and the differences in the fuel 
economy improvement potential of the principal 
types of light trucks in that fleet. See discussion of 
this classification system in 42 FR 63185-7, 
December 15, 1977. 

Compliance with fuel economy standards is 
determined on the basis of the production- 
weighted average of the fuel economy ratings of all 
the vehicles subject to a standard in a given model 
year. The enforcement provisions of the Act ex- 
tend this averaging concept to compliance deter- 
minations for different model years. Civil penalties 
for violating a standard applicable to a class of 
light trucks in a model year are assessed at the rate 
of five dollars per vehicle for each tenth of a mile- 
per-gallon by which the average fuel economy of a 
manufacturer's vehicles subject to the standard 
falls short of that standard. Monetary credits for 
exceeding a standard are earned at the same rate. 
These credits may be applied to offset civil 
penalties which are assessed either in the 
immediately preceding or following model year. 
See section 508 of the Act. 

A key limitation with respect to the carrying 
backward or forward of credits is that "any credit 
. . . may only be applied to automobiles of the same 
class for which the credit was earned." See Con- 
ference Report on the Act, H.R. Rep. No. 94-700, 
94th cong., 1st Sess. 159 (1975), and section 



PART 533-3 



508(aX3) of the Act. It appears that this require- 
ment is intended to prevent manufacturers from 
defeating the purpose of a classification system by 
applymg credits earned for trucks in one class 
against penalties for violating the standard in 
another class; rather, each class of trucks is ex- 
pected to comply with standards (at least on 
average over a period of years) or be penalized. 
However, the requirements of section 508, as 
elaborated in the Conference Report, could be read 
to prohibit the manufacturers from using earned 
credits simply because the agency decides to 
change the boundaries of existing classes. 
Therefore, the agency sought comment on how the 
requirement that credits be transferred only 
within classes should be applied where the agency 
changed truck classifications, as it did between 
1979 and 1980. See the agency's notice of proposed 
rulemaking on the 1980-81 light truck fuel 
economy standards, 42 FR 63194, December 15, 
1977. 

Only the Center for Auto Safety and Ford Motor 
Company commented on the issue in response to 
the agency's request. The Center for Auto Safety 
argued that the requirement in the Act that credits 
must be applied only within a class is absolute, and 
only when a manufacturer's product offerings 
happen to coincide with the agency's new and old 
classes, so that the classes are in effect identical, 
could credits be transferred. Ford, on the other 
hand, argued that credits earned for vehicles in 
one class should be applicable to penalties in any 
class (in the prior or subsequent year) which 
overlaps with the former class. American Motors 
Corporation provided comments on the issue after 
the completion of the 1980-81 rulemaking. That 
company suggested that the 1979 "general utility 
vehicle" class and the 1980 four wheel drive class 
be treated as identical for purposes of applying 
credits; the same would be true for the 1979 
standard for "all other" trucks and the 1980 two- 
wheel drive standard. American Motors proposed 
that credits be transferable only within these pairs 
of standards. 

The agency interprets section 508 of the Act to 
require as much commonality as possible between 
classes in transferring credits, but not absolute 
identity. The intent of the Act is clearly to grant 



credits for "over achievement" in a particular 
model year by a manufacturer, and it would 
frustrate that intent if there were to be a forfeiture 
of credits when NHTSA decides to change the 
scope of classes. 

In transferring credits earned in the 1979-80 
model years, the agency will attempt to assure that 
those credits are applied to offset civil penalties on 
the same types of vehicles as those which 
generated the credits. This result will be pursued by 
pro-rating the earned credits according to the 
number of vehicles in the credit-earning class which 
would fall in the class subject to a civil penalty in the 
prior or subsequent year. 

For example, in applying 1979 credits to 1980, 
credits earned by four-wheel drive general utility 
vehicles in 1979 would be applicable to any 
penalties assessed against domestic four-wheel 
drive light trucks or captive import four-wheel 
drive light trucks in 1980, with the amount 
applicable to each 1980 four-wheel drive class to be 
determined based on the portion of the 1979 utility 
vehicles which is captive imports and the portion which is 
domestic. If all 1979 utility vehicles were domestic, 

1979 credits for that class of light truck would be 
applicable only to domestic four-wheel drive light 
trucks in 1980. 

Similarly, in applying 1980 credits to 1979, credits 
earned by 1980 four-wheel drive captive import 
trucks would be divided according to the proportion 
of those trucks which meet the definition of 4-wheel 
drive general utility vehicle and credits would be 
assigned on a pro-rata basis to the two 1979 truck 
classes, if either 1979 standard were violated. If the 
manufacturer elected to comply with the single, 
combined 1979 standard, then all credits earned by 

1980 trucks would be applicable to 1979 civil 
penalties. These assignments of credits would be 
made without regard to the gross vehicle weight 
ratings of affected vehicles, since none of the 
affected truck classifications depend on GVWR. 

Issued on November 1, 1979. 

Frank Berndt 
Chief Counsel 

44 F.R. 64943 
November 8, 1979 



PART 533-4 



Notice of Interpretation 
(Docl(et No. FE 79-01; Notice 1) 



Summary: This notice announces the agency's 
interpretation of the extent to which the law 
permits, with respect to 1979 and 1980, monetary 
credits earned by manufacturers of light trucks for 
exceeding fuel economy standards in one year to 
be applied to civil penalty liabilities for violating 
those standards in the other year. This interpreta- 
tion is being issued at the request of several 
manufacturers to assist them in planning com- 
pliance with light truck fuel economy standards. 

For further information contact: 

Mr. Theodore Bayler, National Highway 
Traffic Safety Administration, 400 Seventh 
Street, S.W., Washington, D.C. 20590, 202- 
755-9384. 

Supplementary information: Section 502(b) of the 
Motor Vehicle Information and Cost Savings Act 
("the Act"), 15 U.S.C. 2002(b), requires the 
Secretary of Transportation to establish average 
fuel economy standards for light trucks manufac- 
tured in each model year beginning with 1979. 
That provision also authorizes the Secretary to 
establish separate fuel economy standards for dif- 
ferent classes of light trucks. The Secretary used 
this authority to establish separate 1979 standards 
for "4-wheel general utility vehicles" with a gross 
vehicle weight rating (GVWR) not greater than 
6,000 lbs. and for "all other" light trucks in the 
same GVWR range. Manufacturers were, 
however, given the option of having all of their 
6,000 lbs and under GVWR light trucks comply 
with the more stringent standard for "all other" 
light trucks, rather than complying separately with 
the two standards. 

Different classes were established by the agency 
beginning with the 1980 model year. Separate 
standards were established for two- and four-wheel 
drive light trucks, and subclasses were established 
within those classes for captive import (i.e., trucks 



manufactured abroad and sold through a domestic 
manufacturer's dealer network) and domestic light 
trucks. A separate standard was also established 
for "limited product line light trucks," i.e., those 
produced by companies whose light trucks employ 
exclusively engines which are not also used in 
passenger cars. The change in the light truck 
classification was made because of the 
simultaneous change in the applicability of the fuel 
economy standards to cover light trucks up to 
8,500 pounds GVWR. The new classification 
system reflects the makeup of the larger fleets 
regulated in 1980 and the differences in the fuel 
economy improvement potential of the principal 
types of light trucks in that fleet. See discussion of 
this classification system in 42 FR 63185-7, 
December 15, 1977. 

Compliance with fuel economy standards is 
determined on the basis of the production- 
weighted average of the fuel economy ratings of all 
the vehicles subject to a standard in a given model 
year. The enforcement provisions of the Act ex- 
tend this averaging concept to compliance deter- 
minations for different model years. Civil penalties 
for violating a standard applicable to a class of 
light trucks in a model year are assessed at the rate 
of five dollars per vehicle for each tenth of a mile- 
per-gallon by which the average fuel economy of a 
manufacturer's vehicles subject to the standard 
falls short of that standard. Monetary credits for 
exceeding a standard are earned at the same rate. 
These credits may be applied to offset civil 
penalties which are assessed either in the 
immediately preceding or following model year. 
See section 508 of the Act. 

A key limitation with respect to the carrying 
backward or forward of credits is that "any credit 
. . . may only be applied to automobiles of the same 
class for which the credit was earned." See Con- 
ference Report on the Act, H.R. Rep. No. 94-700, 
94th cong., 1st Sess. 159 (1975), and section 



I 



PART 533-3 



508(aX3) of the Act. It appears that this require- 
ment is intended to prevent manufacturers from 
defeating the purpose of a classification system by 
applying credits earned for trucks in one class 
against penalties for violating the standard in 
another class; rather, each class of trucks is ex- 
pected to comply with standards (at least on 
average over a period of years) or be penalized. 
However, the requirements of section 508, as 
elaborated in the Conference Report, could be read 
to prohibit the manufacturers from using earned 
credits simply because the agency decides to 
change the boundaries of existing classes. 
Therefore, the agency sought comment on how the 
requirement that credits be transferred only 
within classes should be applied where the agency 
changed truck classifications, as it did between 
1979 and 1980. See the agency's notice of proposed 
rulemaking on the 1980-81 light truck fuel 
economy standards, 42 FR 63194, December 15, 
1977. 

Only the Center for Auto Safety and Ford Motor 
Company commented on the issue in response to 
the agency's request. The Center for Auto Safety 
argued that the requirement in the Act that credits 
must be applied only within a class is absolute, and 
only when a manufacturer's product offerings 
happen to coincide with the agency's new and old 
classes, so that the classes are in effect identical, 
could credits be transferred. Ford, on the other 
hand, argued that credits earned for vehicles in 
one class should be applicable to penalties in any 
class (in the prior or subsequent year) which 
overlaps with the former class. American Motors 
Corporation provided comments on the issue after 
the completion of the 1980-81 rulemaking. That 
company suggested that the 1979 "general utility 
vehicle" class and the 1980 four wheel drive class 
be treated as identical for purposes of applying 
credits; the same would be true for the 1979 
standard for "all other" trucks and the 1980 two- 
wheel drive standard. American Motors proposed 
that credits be transferable only within these pairs 
of standards. 

The agency interprets section 508 of the Act to 
require as much commonality as possible between 
classes in transferring credits, but not absolute 
identity. The intent of the Act is clearly to grant 



credits for "over achievement" in a particular 
model year by a manufacturer, and it would 
frustrate that intent if there were to be a forfeiture 
of credits when NHTSA decides to change the 
scope of classes. 

In transferring credits earned in the 1979-80 
model years, the agency will attempt to assure that 
those credits are applied to offset civil penalties on 
the same types of vehicles as those which 
generated the credits. This result will be pursued by 
pro-rating the earned credits according to the 
number of vehicles in the credit-earning class which 
would fall in the class subject to a civil penalty in the 
prior or subsequent year. 

For example, in applying 1979 credits to 1980, 
credits earned by four-wheel drive general utility 
vehicles in 1979 would be applicable to any 
penalties assessed against domestic four-wheel 
drive light trucks or captive import four-wheel 
drive light trucks in 1980, with the amount 
applicable to each 1980 four-wheel drive class to be 
determined based on the portion of the 1979 utility 
vehicles which is captive imports and the portion which is 
domestic. If all 1979 utility vehicles were domestic, 

1979 credits for that class of light truck would be 
applicable only to domestic four-wheel drive light 
trucks in 1980. 

Similarly, in applying 1980 credits to 1979, credits 
earned by 1980 four-wheel drive captive import 
trucks would be divided according to the proportion 
of those trucks which meet the definition of 4-wheel 
drive general utility vehicle and credits would be 
assigned on a pro-rata basis to the two 1979 truck 
classes, if either 1979 standard were violated. If the 
manufacturer elected to comply with the single, 
combined 1979 standard, then all credits earned by 

1980 trucks would be applicable to 1979 civil 
penalties. These assignments of credits would be 
made without regard to the gross vehicle weight 
ratings of affected vehicles, since none of the 
affected truck classifications depend on GVWR. 

Issued on November 1, 1979. 

Frank Berndt 
Chief Counsel 

44 F.R. 64943 
November 8, 1979 



PART 533-4 



[(■ 



PREAMBLE TO PART 535-TH REE-YEAR CARRY FORWARD 
AND CARRYBACK FOR MANUFACTURERS OF LIGHT TRUCKS 

(Docket No. FE 80-02; Notice 1) 



ACTION: Final rule. 

SUMMARY: This notice establishes regulations 
governing the transfer between model years of 
monetary credits earned by motor vehicle manu- 
facturers for exceeding the average fuel economy 
standards for light trucks. Manufacturers have 
previously been able to apply credits to the year 
immediately preceding and to the year immedi- 
ately following the year in which they are earned. 
Section 6(b) of the Automobile Fuel Efficiency Act 
of 1980 amended section 502 of the Motor Vehicle 
Information and Cost Savings Act to extend the 
number of years over which manufacturers can 
carry back or forward credits from one to three 
years. These regulations are promulgated pur- 
suant to the Efficiency Act's direction that im- 
plementing regulations be issued not later than 60 
days after the date of enactment. The provisions in 
these regulations are in almost all respects iden- 
tical to the provisions in the statute for passenger 
automobile credits. 

DATES: These regulations are effective upon 
publication in the Federal Register. 

FOR FURTHER INFORMATION CONTACT: 

Mr. Edward Clancy, Office of Chief Counsel, 
National Highway Traffic Safety 
Administration, 400 Seventh Street, S.W., 
Washington, D.C. 20590 (202-426-2992) 

SUPPLEMENTARY INFORMATION: Title V of the 
Motor Vehicle Information and Cost Savings Act 
establishes a program to improve automotive effi- 
ciency and conserve energy. Under that title, 
average (i.e., fleet) fuel economy standards are 
established for passenger automobiles and for 
light trucks. To discourage noncompliance with 
the standards and encourage exceeding the 



standards, the title provides a system of penalties 
and credits. Penalties are assessed against manu- 
facturers which fail to comply with applicable fuel 
economy standards. The penalties are assessed at 
a rate of $5 per vehicle for each tenth of a mile-per- 
gallon by which the average fuel economy of a 
manufacturer's vehicles subject to a standard falls 
short of that standard. Monetary credits for ex- 
ceeding the standards are earned at the same rate. 
This rate may be increased to up to $10 per tenth 
of a mile per gallon if the agency makes certain 
findings about the existence of substantial energy 
savings resulting from the change and the absence 
of any resulting adverse impacts. See section 
508(d) of the Act. Under the law as originally 
enacted, credits earned in one year may be used to 
offset civil penalties in the immediately prior year, 
and, if excess credits remain, in the immediately 
subsequent year. 

The Automobile Fuel Efficiency Act of 1980, 
signed into law on October 12, 1980, amended title 
V to make several changes relating to the earning 
and application of credits. One amendment in- 
creased the number of years that credits may be 
carried backward or forward to offset penalties 
from one to three years. That and another amend- 
ment provided that a manufacturer which fails to 
meet a fuel economy standard in a particular year 
will not be regarded as having engaged in unlawful 
conduct or be subject to civil penalties under 
either of two circumstances. The first circum- 
stance occurs if the manufacturer had previously 
earned sufficient credits to offset the penalty. Sec- 
ond, a manufacturer could achieve the same result 
if it submits to the agency an acceptable plan for 
earning in the subsequent three years sufficient 
credits to offset the penalty and if the manufac- 
turer actually earns those credits. 

While section 502 of the Act, as amended, sets 
forth detailed provisions for the three-year carry- 
back and carryforward of credits by passenger 



PART 535-PRE 1 



automobile manufacturers, that section simply 
provides with respect to light trucks that credits 
for light truck manufacturers are to be earned and 
available to be taken into account "to the same ex- 
tent and in the same manner" as provided for 
passenger automobile manufacturers. Section 
502(1)(2) requires that regulations governing light 
truck credits be promulgated not later than 60 
days after the enactment of the Efficiency Act. 
Thus, the regulations must be issued by December 
9, 1980. 

With one exception discussed below, the provi- 
sions in these regulations are essentially identical 
to the provisions in the statute regarding 
passenger automobile credits. As in the case of 
passenger automobile credits, the light truck 
credits are available first to be applied to the three 
years immediately preceding the year in which 
they are earned. Any residual amount of credits is 
then available to be applied to the three model 
years immediately following the year in which the 
credits are earned. In any year in which a manufac- 
turer believes that its average fuel economy will 
not meet an applicable light truck fuel economy 
standard, the manufacturer may submit a plan 
demonstrating that it will earn sufficient credits in 
the next three years which when taken into ac- 
count would allow the manufacturer to meet that 
standard. The NHTSA Administrator will approve 
any such plan unless the Administrator finds that 
it is unlikely that the plan will result in the 
manufacturer's earning sufficient credits to allow 
the manufacturer to meet the standard for the 
model year involved. 

The difference mentioned above between the 
provisions for passenger automobile credits and 
those for light truck credits arises from dif- 
ferences in the way in which the statute treats 
passenger automobiles and light trucks. Special 
provision must be made for light truck credits 
since light truck fuel economy standards may be 
set for all light trucks together or for classes of 
light trucks while class standards cannot be set for 
passenger automobiles. Title V and its history pro- 
vide that credits may not be applied across classes 
of light trucks. That is, credits earned for one class 
of light trucks may not be applied to offset 
penalties incurred for another class of light trucks. 
(See Conference Report on the Energy Policy and 
Conservation Act, H.R. Rep. No. 94-700, 94th 
Cong., 1st Sess. 159 (1975).) The prohibition against 



cross-class application of credits was previously 
discussed in a notice of interpretation published by 
the agency on November 8, 1979 (44 FR 64943). 

This notice also reaffirms the policy set forth in 
the November 1979 notice of interpretation 
regarding transfer of credits by a manufacturer 
between a year in which the manufacturer com- 
plies with a single fuel economy standard ap- 
plicable to all light trucks and a year in which it 
complies with several standards for different 
classes of light trucks. After seeking comments on 
the issue, the agency stated in its November 1979 
notice that its policy would be to attempt to assure 
that credits are applied to offset civil penalties on 
the same types of light trucks as those which 
generated the credits. The notice stated that 
credits would be prorated according to the number 
of light trucks in the credit-earning class which 
would fall in the class subject to a civil penalty. 
The several examples given in that notice to il- 
lustrate the application of this procedure are still 
appropriate. Additional examples are set forth 
below to illustrate how this procedure will be ap- 
plied in light of the manufacturers' choice in model 
years 1983-85 to comply with either a single stand- 
ard for all light trucks or with optional separate 
standards for two-wheel drive (4x2) and four-wheel 
drive (4x4) light trucks. 

For model years 1980-82, the agency established 
separate standards for 4x2 and 4x4 light trucks. 
Manufacturers are required to comply with those 
separate standards and do not have the choice of 
complying with a single standard. For model years 
1983-85, however, the agency established a single 
combined standard for 4x2 and 4x4 light trucks, 
while giving manufacturers the choice of comply- 
ing with optional separate standards. 

If a manufacturer elects to comply with the op- 
tional separate standards for model year 1983, no 
prorating will be necessary since the classes for 
model years 1980-82 are identical to those in model 
years 1983-85 (except for limited product line 
manufacturers). Thus, credits earned by exceeding 
the 4x2 standard for model year 1982 could be fully 
applied against a failure to comply with the model 
year 1983 standard for those vehicles. 

If a manufacturer elects to comply with the 
single, combined standard for 1983 and earns 
credits by exceeding that standard, application of 
those credits for failure to meet a standard in any 
of model years 1980-82 would require prorating. 



PART 535-PRE 2 



PREAMBLE TO PART 535— THREE-YEAR CARRY FORWARD 
AND CARRYBACK FOR MANUFACTURERS OF LIGHT TRUCKS 

(Docket No. FE 8002; Notice 1) 



ACTION: Final rule. 

SUMMARY: This notice establishes regulations 
governing the transfer between model years of 
monetary credits earned by motor vehicle manu- 
facturers for exceeding the average fuel economy 
standards for light trucks. Manufacturers have 
previously been able to apply credits to the year 
immediately preceding and to the year immedi- 
ately following the year in which they are earned. 
Section 6(b) of the Automobile Fuel Efficiency Act 
of 1980 amended section 502 of the Motor Vehicle 
Information and Cost Savings Act to extend the 
number of years over which manufacturers can 
carry back or forward credits from one to three 
years. These regulations are promulgated pur- 
suant to the Efficiency Act's direction that im- 
plementing regulations be issued not later than 60 
days after the date of enactment. The provisions in 
these regulations are in almost all respects iden- 
tical to the provisions in the statute for passenger 
automobile credits. 

DATES: These regulations are effective upon 
publication in the Federal Register. 

FOR FURTHER INFORMATION CONTACT: 

Mr. Edward Glancy, Office of Chief Counsel, 
National Highway Traffic Safety 
Administration, 400 Seventh Street, S.W., 
Washington. D.C. 20590 (202-426-2992) 

SUPPLEMENTARY INFORMATION: Title V of the 
Motor Vehicle Information and Cost Savings Act 
establishes a program to improve automotive effi- 
ciency and conserve energy. Under that title, 
average (i.e., fleet) fuel economy standards are 
established for passenger automobiles and for 
light trucks. To discourage noncompliance with 
the standards and encourage exceeding the 



standards, the title provides a system of penalties 
and credits. Penalties are assessed against manu- 
facturers which fail to comply with applicable fuel 
economy standards. The penalties are assessed at 
a rate of $5 per vehicle for each tenth of a mile-per- 
gallon by which the average fuel economy of a 
manufacturer's vehicles subject to a standard falls 
short of that standard. Monetary credits for ex- 
ceeding the standards are earned at the same rate. 
This rate may be increased to up to $10 per tenth 
of a mile per gallon if the agency makes certain 
findings about the existence of substantial energy 
savings resulting from the change and the absence 
of any resulting adverse impacts. See section 
508(d) of the Act. Under the law as originally 
enacted, credits earned in one year may be used to 
offset civil penalties in the immediately prior year, 
and, if excess credits remain, in the immediately 
subsequent year. 

The Automobile Fuel Efficiency Act of 1980, 
signed into law on October 12, 1980, amended title 
V to make several changes relating to the earning 
and application of credits. One amendment in- 
creased the number of years that credits may be 
carried backward or forward to offset penalties 
from one to three years. That and another amend- 
ment provided that a manufacturer which fails to 
meet a fuel economy standard in a particular year 
will not be regarded as having engaged in unlawful 
conduct or be subject to civil penalties under 
either of two circumstances. The first circum- 
stance occurs if the manufacturer had previously 
earned sufficient credits to offset the penalty. Sec- 
ond, a manufacturer could achieve the same result 
if it submits to the agency an acceptable plan for 
earning in the subsequent three years sufficient 
credits to offset the penalty and if the manufac- 
turer actually earns those credits. 

While section 502 of the Act, as amended, sets 
forth detailed provisions for the three-year carry- 
back and carryforward of credits by passenger 



PART 535-PRE 1 



automobile manufacturers, that section simply 
provides with respect to light trucks that credits 
for light truck manufacturers are to be earned and 
available to be taken into account "to the same ex- 
tent and in the same manner" as provided for 
passenger automobile manufacturers. Section 
502(1)(2) requires that regulations governing light 
truck credits be promulgated not later than 60 
days after the enactment of the Efficiency Act. 
Thus, the regulations must be issued by December 
9, 1980. 

With one exception discussed below, the provi- 
sions in these regulations are essentially identical 
to the provisions in the statute regarding 
passenger automobile credits. As in the case of 
passenger automobile credits, the light truck 
credits are available first to be applied to the three 
years immediately preceding the year in which 
they are earned. Any residual amount of credits is 
then available to be applied to the three model 
years immediately following the year in which the 
credits are earned. In any year in which a manufac- 
turer believes that its average fuel economy will 
not meet an applicable light truck fuel economy 
standard, the manufacturer may submit a plan 
demonstrating that it will earn sufficient credits in 
the next three years which when taken into ac- 
count would allow the manufacturer to meet that 
standard. The NHTSA Administrator will approve 
any such plan unless the Administrator finds that 
it is unlikely that the plan will result in the 
manufacturer's earning sufficient credits to allow 
the manufacturer to meet the standard for the 
model year involved. 

The difference mentioned above between the 
provisions for passenger automobile credits and 
those for light truck credits arises from dif- 
ferences in the way in which the statute treats 
passenger automobiles and light trucks. Special 
provision must be made for light truck credits 
since light truck fuel economy standards may be 
set for all light trucks together or for classes of 
light trucks while class standards cannot be set for 
passenger automobiles. Title V and its history pro- 
vide that credits may not be applied across classes 
of light trucks. That is, credits earned for one class 
of light trucks may not be applied to offset 
penalties incurred for another class of light trucks. 
(See Conference Report on the Energy Policy and 
Conservation Act, H.R. Rep. No. 94-700, 94th 
Cong., 1st Sess. 159 (1975).) The prohibition against 



cross-class application of credits was previously 
discussed in a notice of interpretation published by 
the agency on November 8, 1979 (44 FR 64943). 

This notice also reaffirms the policy set forth in 
the November 1979 notice of interpretation 
regarding transfer of credits by a manufacturer 
between a year in which the manufacturer com- 
plies with a single fuel economy standard ap- 
plicable to all light trucks and a year in which it 
complies with several standards for different 
classes of light trucks. After seeking comments on 
the issue, the agency stated in its November 1979 
notice that its policy would be to attempt to assure 
that credits are applied to offset civil penalties on 
the same types of light trucks as those which 
generated the credits. The notice stated that 
credits would be prorated according to the number 
of light trucks in the credit-earning class which 
would fall in the class subject to a civil penalty. 
The several examples given in that notice to il- 
lustrate the application of this procedure are still 
appropriate. Additional examples are set forth 
below to illustrate how this procedure will be ap- 
plied in light of the manufacturers' choice in model 
years 1983-85 to comply with either a single stand- 
ard for all light trucks or with optional separate 
standards for two-wheel drive (4x2) and four-wheel 
drive (4x4) light trucks. 

For model years 1980-82, the agency established 
separate standards for 4x2 and 4x4 light trucks. 
Manufacturers are required to comply with those 
separate standards and do not have the choice of 
complying with a single standard. For model years 
1983-85, however, the agency established a single 
combined standard for 4x2 and 4x4 light trucks, 
while giving manufacturers the choice of comply- 
ing with optional separate standards. 

If a manufacturer elects to comply with the op- 
tional separate standards for model year 1983, no 
prorating will be necessary since the classes for 
model years 1980-82 are identical to those in model 
years 1983-85 (except for limited product line 
manufacturers). Thus, credits earned by exceeding 
the 4x2 standard for model year 1982 could be fully 
applied against a failure to comply with the model 
year 1983 standard for those vehicles. 

If a manufacturer elects to comply with the 
single, combined standard for 1983 and earns 
credits by exceeding that standard, application of 
those credits for failure to meet a standard in any 
of model years 1980-82 would require prorating. 



PART 535- PRE 2 



The agency would prorate the model year 1983 
credits according to the proportion of model year 
1983 light trucks that are of the same type as the 
class whose standard was not met. Thus, if the 
manufacturer did not comply with the model year 
1982 standard for 4x2 light trucks and 70 percent 
of the model year 1983 light trucks were 4x2, then 
70 percent of the credits earned in model year 1983 
could be applied against the penalty for that non- 
compliance. 

Finally, if a manufacturer earns credits for ex- 
ceeding any of the model year 1980-82 class stand- 
ards and the manufacturer elects to comply with 
the single, combined standard for 1983, all credits 
earned by exceeding either or both of the separate 
standards for model years 1980-82 would be ap- 
plicable to penalties incurred in model year 1983. 

This notice is being issued without notice and 
comment for a variety of reasons. The requirement 
that the regulations be issued by December 9 
made it impracticable in the agency's judgment to 
provide notice and opportunity for comment. The 



agency also finds that making such provision is un- 
necessary since the regulations are in almost all 
respects identical to the statute. Finally, this rule 
is exempted as an interpretative rule from the 
statutory requirements for notice and comment. 

This final rule is being made effective upon 
publication in the Federal Register. The usual re- 
quirement for a 30-day delay in the effective date 
is not applicable as this is an interpretative rule. 

In consideration of the foregoing, Part 535 is 
added to 49 CFR Chapter V. 



Issued on December 9, 1980. 



Joan Claybrook 
Administrator 

45 FR 83233 
December 18, 1980 



PART 535-PRE 3-4 



The agency would prorate the model year 1983 
credits according to the proportion of model year 
1983 light trucks that are of the same type as the 
class whose standard was not met. Thus, if the 
manufacturer did not comply with the model year 
1982 standard for 4x2 light trucks and 70 percent 
of the model year 1983 light trucks were 4x2, then 
70 percent of the credits earned in model year 1983 
could be applied against the penalty for that non- 
compliance. 

Finally, if a manufacturer earns credits for ex- 
ceeding any of the model year 1980-82 class stand- 
ards and the manufacturer elects to comply with 
the single, combined standard for 1983, all credits 
earned by exceeding either or both of the separate 
standards for model years 1980-82 would be ap- 
plicable to penalties incurred in model year 1983. 

This notice is being issued without notice and 
comment for a variety of reasons. The requirement 
that the regulations be issued by December 9 
made it impracticable in the agency's judgment to 
provide notice and opportunity for comment. The 



agency also finds that making such provision is un- 
necessary since the regulations are in almost all 
respects identical to the statute. Finally, this rule 
is exempted as an interpretative rule from the 
statutory requirements for notice and comment. 

This final rule is being made effective upon 
publication in the Federal Register. The usual re- 
quirement for a 30-day delay in the effective date 
is not applicable as this is an interpretative rule. 

In consideration of the foregoing. Part 535 is 
added to 49 CFR Chapter V. 



Issued on December 9, 1980. 



Joan Claybrook 
Administrator 

45 FR 83233 
December 18, 1980 



PART 535-PRE 3-4 



I 



PART 535— THREE-YEAR CARRYFORWARD AND CARRYBACK OF 
CREDITS FOR LIGHT TRUCKS 



Section 

535.1 Scope. 

535.2 Applicability. 

535.3 Definitions. 

535.4 3-year carryforward and carrybacl( of credits. 

AUTHORITY: Sec. 9, Pub. L. 89-670, 80 Stat. 
931 (49 U.S.C. 1657); Sec. 301, Pub. L. 94-163, 89 
Stat. 901 (15 U.S.C. 2001); Sec. 6, Pub. L. 96-425, 

Stat (15 U.S.C. 2002); delegation of 

authority at 49 CFR 1.50. 

§ 535.1 Scope. 

This part establishes requirements for governing 
3-year carryforward and carryback of credits for 
manufacturers of light trucks. 

§ 535.2 Applicability. 

This part applies to manufacturers of light 
trucks. 

§ 535.3 Definitions. 

(a) Statutory terms. The terms "average fuel 
economy," "average fuel economy standard," 
"fuel economy," "manufacture," "manufacturer," 
and "model year" are used as defined in section 
501 of the Act. 

(b) Other terms. (1) "Act" means the Motor 
Vehicle Information and Cost Savings Act, as 
amended by Pub. L. 94-163 and 96-425. 

(2) "Administrator" means the Administrator 
of the National Highway Traffic Safety 
Administration. 

(3) The term "light truck" is used in accord- 
ance vvith the determinations in Parts 523 and 533 
of this chapter. 

(4) The term "class of light trucks" is used in 
accordance with the determinations in Part 533 of 
this chapter. 



§ 535.4 3-year carryforward and carrybacit of credits. 

(a) For purposes of this part, credits under this 
section shall be considered to be available to any 
manufacturer upon the completion of the model 
year which such credits are earned under para- 
graph (b) unless under paragraph (c) the credits are 
made available for use at a time prior to the model 
year in which earned. 

(b) Whenever the average fuel economy for a 
class of light trucks manufactured by a manufac- 
turer in a particular model year exceeds an appli- 
cable average fuel economy standard established in 
Part 533 of this chapter, such manufacturer shall be 
entitled to credit, calculated under paragraph (c), 
which— 

(1) Shall be available to be taken into account 
with respect to the average fuel economy for the 
same class of light trucks of that manufacturer for 
any of the 3 consecutive model years immediately 
prior to the model year in which such manufacturer 
exceeds such applicable average fuel economy 
standard, and 

(2) To the extent that such credit is not so taken 
into account pursuant to paragraph (bXl) of this sec- 
tion, shall be available to be taken into account with 
respect to the average fuel economy standard. 

(c)(1) At any time prior to the end of any model 
year, a manufacturer which has reason to believe 
that its average fuel economy for a class of light 
trucks will be below such applicable standard for 
the model year may submit a plan demonstrating 
that such manufacturer will earn sufficient credits 
under paragraph (b) within the next 3 model years 
which when taken into account would allow the 
manufacturer to meet that standard for the model 
year involved. 

(2) Such credits shall be available for the 
model year involved subject to— 

(i) the Administrator approving such plan; 
and 

(ii) the manufacturer earning credits in 
accordance with such plan. 



PART 535-1 



(3) The Administrator approves any such plan 
unless the Administrator finds that it is unlikely 
that the plan will result in the manufacturer earning 
sufficient credits to allow the manufacturer to meet 
the standard for the model year involved. 

(4) The Administrator provides notice to any 
manufacturer in any case in which the average fuel 
economy of that manufacturer is below the appli- 
cable standard under Part 533 of this chapter, after 
taking into account credits available under 
paragraph (bXl), and affords the manufacturer a 
reasonable period (of not less than 60 days) in which 
to submit a plan under this paragraph. 

(d) The amount of credit to which a manufacturer 
is entitled under this section shall be equal to— 

(1) the number of tenths of a mile per gallon by 
which the average fuel economy for a class of light 
trucks manufactured by such manufacturer in the 
model year in which the credit is earned pursuant to 
this section exceeds the applicable average fuel 
economy standard established in Part 533 of this 
Chapter, multiplied by 



(2) the total number of light trucks in that class 
manufactured by such manufacturer during such 
model year. 

(e) The Administrator takes credits into account 
for any model year on the basis of the number of 
tenths of a mile per gallon by which the manufac- 
turer involved was below an applicable average fuel 
economy standard for a class of light trucks for the 
model year and the volume of that class of light 
trucks manufactured that model year by the 
manufacturer. Credits may not be applied between 
classes of light trucks, except as determined by the 
Administrator to account for changes made in the 
definitions of classes between model years. Credits 
once taken into account for any model year shall not 
thereafter be available for any other model year. 
Prior to taking any credit into account, the Ad- 
ministrator provides the manufacturer involved 
with written notice and reasonable opportunity to 
comment thereon. 

45 F.R. 83233 
December 18, 1980 



PART 535-2 



( 



PART 535— THREE-YEAR CARRYFORWARD AND CARRYBACK OF 
CREDITS FOR LIGHT TRUCKS 



Section 

535.1 Scope. 

535.2 Applicability. 

535.3 Definitions. 

535.4 3-year carryforward and carryback of credits. 

AUTHORITY: Sec. 9, Pub. L. 89-670, 80 Stat. 
931 (49 U.S.C. 1657); Sec. 301, Pub. L. 94-163, 89 
Stat. 901 (15 U.S.C. 2001); Sec. 6, Pub. L. 96-425, 

Stat (15 U.S.C. 2002); delegation of 

authority at 49 CFR 1.50. 

§ 535.1 Scope. 

This part establishes requirements for governing 
3-year carryforward and carryback of credits for 
manufacturers of light trucks. 

§ 535.2 Applicability. 

This part applies to manufacturers of light 
trucks. 

§ 535.3 Definitions. 

(a) Statutory terms. The terms "average fuel 
economy," "average fuel economy standard," 
"fuel economy," "manufacture," "manufacturer," 
and "model year" are used as defined in section 
501 of the Act. 

(b) Other terms. (1) "Act" means the Motor 
Vehicle Information and Cost Savings Act, as 
amended by Pub. L. 94-163 and 96-425. 

(2) "Administrator" means the Administrator 
of the National Highway Traffic Safety 
Administration. 

(3) The term "light truck" is used in accord- 
ance vvith the determinations in Parts 523 and 533 
of this chapter. 

(4) The term "class of light trucks" is used in 
accordance with the determinations in Part 533 of 
this chapter. 



§ 535.4 3-year carryforward and carryback of credits. 

(a) For purposes of this part, credits under this 
section shall be considered to be available to any 
manufacturer upon the completion of the model 
year which such credits are earned under para- 
graph (b) unless under paragraph (c) the credits are 
made available for use at a time prior to the model 
year in which earned. 

(b) Whenever the average fuel economy for a 
class of light trucks manufactured by a manufac- 
turer in a particular model year exceeds an appli- 
cable average fuel economy standard established in 
Part 533 of this chapter, such manufacturer shall be 
entitled to credit, calculated under paragraph (c), 
which— 

(1) Shall be available to be taken into account 
with respect to the average fuel economy for the 
same class of light trucks of that manufacturer for 
any of the 3 consecutive model years immediately 
prior to the model year in which such manufacturer 
exceeds such applicable average fuel economy 
standard, and 

(2) To the extent that such credit is not so taken 
into account pursuant to paragraph (bXl) of this sec- 
tion, shall be available to be taken into account with 
respect to the average fuel economy standard. 

(c)(1) At any time prior to the end of any model 
year, a manufacturer which has reason to believe 
that its average fuel economy for a class of light 
trucks will be below such applicable standard for 
the model year may submit a plan demonstrating 
that such manufacturer will earn sufficient credits 
under paragraph (b) within the next 3 model years 
which when taken into account would allow the 
manufacturer to meet that standard for the model 
year involved. 

(2) Such credits shall be available for the 
model year involved subject to— 

(i) the Administrator approving such plan; 
and 

(ii) the manufacturer earning credits in 
accordance with such plan. 



PART 535-1 



(3) The Administrator approves any sucii plan 
unless the Administrator finds that it is unlikely 
that the plan will result in the manufacturer earning 
sufficient credits to allow the manufacturer to meet 
the standard for the model year involved. 

(4) The Administrator provides notice to any 
manufacturer in any case in which the average fuel 
economy of that manufacturer is below the appli- 
cable standard under Part 533 of this chapter, after 
taking into account credits available under 
paragraph (bXl), and affords the manufacturer a 
reasonable period (of not less than 60 days) in which 
to submit a plan under this paragraph. 

(d) The amount of credit to which a manufacturer 
is entitled under this section shall be equal to— 

(1) the number of tenths of a mile per gallon by 
which the average fuel economy for a class of light 
trucks manufactured by such manufacturer in the 
model year in which the credit is earned pursuant to 
this section exceeds the applicable average fuel 
economy standard established in Part 533 of this 
Chapter, multiplied by 



(2) the total number of light trucks in that class 
manufactured by such manufacturer during such 
model year. 

(e) The Administrator takes credits into account 
for any model year on the basis of the number of 
tenths of a mile per gallon by which the manufac- 
turer involved was below an applicable average fuel 
economy standard for a class of light trucks for the 
model year and the volume of that class of light 
trucks manufactured that model year by the 
manufacturer. Credits may not be applied between 
classes of light trucks, except as determined by the 
Administrator to account for changes made in the 
definitions of classes between model years. Credits 
once taken into account for any model year shall not 
thereafter be available for any other model year. 
Prior to taking any credit into account, the Ad- 
ministrator provides the manufacturer involved 
with written notice and reasonable opportunity to 
comment thereon. 

45 F.R. 83233 
December 18, 1980 



PART 535-2 



Effective: December 12, 1977 



PREAMBLE TO PART 537— AUTOMOTIVE FUEL ECONOMY REPORTS 

(Docket No. FE 77-03; Notice 2) 



This rule establishes the format and content 
requirements for semiannual reports on fuel econ- 
omy to be submitted to the National Highway 
Traffic Safety Administration by automobile 
manufacturers. Section .50.") of the Motor Vehicle 
Information and Cost Savings Act requires manu- 
facturers to submit semiannual reports on whether 
and how they will comply with applicable aver- 
age fuel economy standards and requires the 
Secretary of Transportation to promulgate rules 
governing those reports. Section .505 also author- 
izes the Secretary to require such reports as are 
necessary to enable him to implement the fuel 
economy provisions of the Act. This rule is in- 
tended primarily to satisfy the requirement for 
semiannual compliance reports. The reports are 
also necessary to enable the agency to prepare 
certain aspects of a statutorily required annual 
report to Congress regarding tlie fuel economy 
standards. 

Effective date : December 12, 1977. 

For further information contact: 

Steve Kratzke 

Office of Chief Counsel 

National Highway Traffic Safety 

Administration 
Washington, D.C. 20590 
202-426-2992 

Supplementary information : 

Background information. 

The National Highway Traffic Safety Admin- 
istration (NHTSA) is establishing the format 
and content requirements for the semiannual 
automotive fuel economy reports to be submitted 
by all manufacturers of automobiles beginning 
with the 1978 model year. The reciuirements for 
these reports will appear in a new Part 537, 



added to NHTSA regulations in Title 49 of the 
Code of Federal Regulations by this action. This 
rule is issued pursuant to section 505(a) and (c) 
of Title V of the Motor Vehicle Information and 
Cost Savings Act, as amended ("the Act"). 
Authority to implement Title V was delegated 
by the Secretary of Transportation to the Ad- 
ministrator of NHTSA in a notice published on 
June 22, 1976, 41 FR 25015. 

This final rule was preceded by a notice of 
proposed rulemaking ("NPRM") published April 
11, 1977, at 42 FR 18867. The proposed rule 
would have required the manufacturers to report 
information on their automobiles produced in the 
current model year and on their automobiles that 
the manufacturers plan to produce in future 
model years, i.e., the five model years following 
the current model year. Most of the current 
model year information was intended to meet the 
requirement in section 505(a) for the manufac- 
turers to submit semiannual compliance reports 
to the agency. The future model year data were 
intended to be used by the NHTSA primarily in 
establishing and amending future average fuel 
economy standards to meet the urgent national 
need for enei'gy conservation and secondarily in 
evaluating future fuel economy standards for the 
purposes of preparing the annual reviews which 
section 502(a) (2) of the Act requires to be sub- 
mitted to Congress. These data would offset the 
incompleteness of the manufacturers' voluntary 
submissions to the agency. A typical shortcoming 
is that the manufacturers tend to discuss their 
plans instead of their capabilities. 

All comments to the NPRM were considered in 
developing this final rule. The major issues 
whicii have been raised, and their resolution, are 
described in the following discussion. 



PART 537— PRE 1 



Effective: December 12, 1977 

Su?nmary of major differences behveen the 
])ropose<l and fnal ndes. 

The portion of the proposed rules adopted by 
this notice is ahnost unchanged except for clari- 
fying and narrowing changes. The major dif- 
ferences between the proposed and final rules are 
stated below. 

(1) Tiie 1978 pre-model year report is required 
to contain only the following information relating 
to passenger automobiles: the manufacturer's 
projected average fuel economy and views on the 
representativeness of the projection; model type 
fuel economy information; certain vehicle con- 
figuration technical information; and a general 
discussion of the manufacturer's marketing 
measures. 

(2) The final rule does not adopt the proposed 
requirements for submitting current model year 
information regarding vehicle acceleration 
graphs, reduction of total drive ratio, impact of 
other Federal standards on fuel economy, impacts 
of efforts to comply with average fuel economy 
standards on automobile performance, material 
composition, additional compliance efforts, costs, 
gross income and market share, and engine sys- 
tem combinations and fuel systems. 

(3) The final rule does not adopt the proposed 
requirements for submitting future model year 
information. Under those requirements, the 
manufacturer would have submitted information 
regarding projected average fuel economy, model 
type fuel economy and technological information, 
current fuel economy technology, future fuel 
economy technology, automobile technology and 
sales mix changes, weight reduction, reduction of 
total drive ratio, technological differences between 
passenger and nonpassenger automobiles, market- 
ing measures, additional compliance efforts, im- 
pact of other Federal automobile standards on 
fuel economy, impacts of efforts to comply with 
average fuel economy standards on automobile 
performance, availability of capital, manufactur- 
ing costs, shifts in consumer demand, and gross 
income and market share. 

(4) Supplementary reports are required only 
from manufacturers which previously reported 
in a semiannual report that they would comply 
witli the applicable average fuel economy stand- 
ards and then find that they will fail to comply. 



As proposed, the nile also required supplemen- 
tary reports to be filed by manufacturers which 
previously reported that they would not comply 
with the standards and then find that the extent 
of their noncompliance will be greater than that 
reported and by manufacturers whose average 
fuel economy was just slightly above the stand- 
ards and declining. 

(5) The reporting responsibility for multistage 
automobiles has been assigned exclusively to the 
incomplete automobile manufacturers. The 
NPRM had proposed that the incomplete auto- 
mobile manufacturer would always be required 
to report on its incomplete automobiles. It 
would have also required a report to be filed by 
an intermediate or final-stage manufacturer that 
exceeded certain maximum specifications for 
those multistage automobiles. 

Scope and purpose of the reports. 

Section 505(a) of the Act provides as follows: 

(1) Each manufacturer shall submit a re- 
port to the Secretary during the 30-day 
period preceding the beginning of each 
model year after model year 1977, and dur- 
ing the 30-day period beginning on the 180th 
day of each model year. Each such report 
shall contain (A) a statement as to whether 
such manufacturer will comply with average 
fuel economy standards under section 502 
applicable to the model year for which such 
report is made; (B) a plan which describes 
the steps the manufacturer has taken or in- 
tends to take in order to comply with such 
standards; and (C) such other information 
as the Secretary may require. 

(2) Whenever a manufacturer determines 
that a plan submitted under paragraph (1) 

• which he stated was sufficient to insure com- 
pliance with applicable average fuel economy 
standards is not sufficient to insure such com- 
pliance, he shall submit a report to the 
Secretary containing a revised plan which 
specifies any additional measures which such 
manufacturer intends to take in order to 
comply with such standards, and a statement 
as to whether such revised plan is sufficient 
to insure such compliance. 



PART 537— PRE 2 



!■! 



EfFecHve: December 12, 1977 



PREAMBLE TO PART 537— AUTOMOTIVE FUEL ECONOMY REPORTS 

(Docket No. FE 77-03; Notice 2) 



This rule establishes the format and content 
requirements for semiannual reports on fuel econ- 
omy to be submitted to the National Highway 
Traffic Safety Administration by automobile 
uianufacturers. Section 505 of the Motor Vehicle 
Information and Cost Savings Act requires manu- 
facturers to submit semiannual reports on whether 
and how they will comply with applicable aver- 
age fuel economy standards and requires the 
Secretary of Transportation to promulgate rules 
governing those reports. Section 505 also author- 
izes the Secretary to re(iuire such reports as are 
necessary to enable him to implement the fuel 
economy provisions of the Act. This rule is in- 
tended primarily to satisfy the requirement for 
semiannual compliance reports. The reports are 
also necessary to enable the agency to prepare 
certain aspects of a statutorily required annual 
report to Congress regarding the fuel economy 
standards. 

Effective date: December 12, 1977. 

For further information contact : 

Steve Kratzke 

Office of Chief Counsel 

National Highway Traffic Safety 

Administration 
Washington, D.C. 20590 
202-426-2992 

Supplementary information : 

Background hifoi-mation. 

The National Highway Traffic Safety Admin- 
istration (NHTSA) is establishing the format 
and content re(iuirements for the semiannual 
automotive fuel economy reports to be submitted 
l)y all manufacturers of automobiles beginning 
with tlie 1078 model year. The requirements for 
these reports will appear in a new Part 537, 



added to NHTSA regulations in Title 49 of the 
Code of Federal Regulations by this action. This 
rule is issued pursuant to section 505(a) and (c) 
of Title V of the Motor Vehicle Information and 
Cost Savings Act, as amended ("the Act"). 
Authority to implement Title V was delegated 
by the Secretary of Transportation to the Ad- 
ministrator of NHTSA in a notice published on 
June 22, 1976, 41 FR 25015. 

This final rule was preceded by a notice of 
proposed rulemaking ("NPRM") published April 
11, 1977, at 42 FR 18867. The proposed rule 
would have required the manufacturers to report 
information on their automobiles produced in the 
current model year and on their automobiles that 
the manufacturers plan to produce in future 
model years, i.e., the five model years following 
the current model year. Most of the current 
model year information was intended to meet the 
requirement in section 505(a) for the manufac- 
turers to submit semiannual compliance reports 
to the agency. The future model year data were 
intended to be used by the NHTSA primarily in 
establishing and amending future average fuel 
economy standards to meet the urgent national 
need for energy conservation and secondarily in 
evaluating future fuel economy standards for the 
purposes of preparing the annual reviews which 
section 502(a) (2) of the Act requires to be sub- 
mitted to Congress. These data would offset the 
incompleteness of the manufacturers' voluntary 
submissions to the agency. A typical shortcoming 
is that the manufacturers tend to discuss their 
plans instead of their capabilities. 

All connnents to the NPRM were considered in 
developing this final rule. The major issues 
which have been raised, and their resolution, are 
described in the following discussion. 



PART 537— PRE 1 



Effective: December 12, 1977 



Summai'y of major differences between the 
•proposed and final niles. 

The portion of the proposed rules adopted by 
this notice is ahnost unchanged except for clari- 
fying anil narrowing changes. The major dif- 
ferences between the proposed and final rules are 
stated below. 

(1) Tlie 1978 pre-inodel year report is required 
to contain only the following information relating 
to passenger automobiles: the manufacturer's 
projected average fuel economy and views on the 
representativeness of the projection; model type 
fuel economy information; certain vehicle con- 
figuration technical information; and a general 
discussion of the manufacturer's marketing 
measures. 

(2) The final rule does not adopt the proposed 
requirements for submitting current model year 
information regarding vehicle acceleration 
graphs, reduction of total drive ratio, impact of 
other Federal standards on fuel economy, impacts 
of efforts to comply with average fuel economy 
standards on automobile performance, material 
composition, additional compliance efforts, costs, 
gross income and market share, and engine sys- 
tem combinations and fuel systems. 

(3) The final rule does not adopt the proposed 
requirements for submitting future model year 
information. Under those requirements, the 
manufacturer would have submitted information 
regarding projected average fuel economy, model 
type fuel economy and technological information, 
current fuel economy technology, future fuel 
economy technology, automobile technology and 
sales mix changes, weight reduction, reduction of 
total drive ratio, technological differences between 
passenger and nonpassenger automobiles, market- 
ing measures, additional compliance efforts, im- 
pact of other Federal automobile standards on 
fuel economy, impacts of efforts to comply with 
average fuel economy standards on automobile 
performance, availability of capital, manufactur- 
ing costs, shifts in consumer demand, and gross 
income and market share. 

(4) Supplementary reports are required only 
from manufacturers which previously reported 
in a semiannual report that they would comply 
witii the applicable average fuel economy stand- 
ards and then find that they will fail to comply. 



As proposed, the rule also required supplemen- 
tary reports to be filed by manufacturers which 
previously reported that they would not comply 
with the standards and then find tliat the extent 
of their noncompliance will be greater than that 
reported and by manufacturers whose average 
fuel economy was just slightly above the stand- 
ards and declining. 

(5) The reporting responsibility for multistage 
automobiles has been assigned exclusively to the 
incomplete automobile manufacturers. The 
NPRM had proposed that the incomplete auto- 
mobile manufacturer would always be required 
to report on its incomplete automobiles. It 
would have also required a report to be filed by 
an intermediate or final-stage manufacturer that 
exceeded certain maximum specifications for 
those multistage automobiles. 

Scope and purpose of the reports. 

Section 505(a) of the Act provides as follows: 

(1) Each manufacturer shall submit a re- 
port to the Secretary during the 30-day 
period preceding the beginning of each 
model year after model year 1977, and dur- 
ing the 30-day period beginning on the 180th 
day of each model year. Each such report 
shall contain (A) a statement as to whether 
such manufacturer will comply with average 
fuel economy standards under section 502 
applicable to the model year for which such 
report is made; (B) a plan which describes 
the steps the manufacturer has taken or in- 
tends to take in order to comply with such 
standards; and (C) such other information 
as the Secretary may require. 

(2) Whenever a manufacturer determines 
that a plan submitted under paragraph (1) 
which he stated was sufficient to insure com- 
pliance with applicable average fuel economy 
standards is not sufficient to insure such com- 
pliance, he shall submit a report to the 
Secretary containing a revised plan which 
specifies any additional measures which such 
manufacturer intends to take in order to 
comply with such standards, and a statement 
as to whether such revised plan is sufficient 
to insure such compliance. 



PART 537— PRE 2 



i 



Efftcllva: D«c*mb*r 12, 1977 



(3) The Secretary shall prescribe rules 
setting forth the form and content of the 
reports required under paragraphs (1) and 
(2). 

Section 505(c)(1) of the Act requires ever}' 
manufacturer to establish and maintain such 
records, make such reports, conduct such tests, 
and provide such items and information as the 
NHTSA may, by rule, reasonably require to 
carry out its duties imder Title V. Section 
r)02(a)(2) requires the NHTSA to transmit to 
the Congress not later than January 15 of each 
year a review of the average fuel economy stand- 
ards; section r)02(a)(3), (b) and (c) requires the 
NHTSA to establish average fuel economy stand- 
ards; and section 502(a)(4) and (f) gives the 
NHTSA the authority to amend average fuel 
economy standards. 

Several commenters urged that the rule require 
reports with a limited scope and purpose. Volks- 
wagen of America, Inc. ("Volkswagen"), com- 
mented that any manufacturer projecting 
compliance with the currently applicable average 
fuel economy standards should be exempted from 
providing any business or technological data in 
its reports. Chrysler Corporation ("Chrysler") 
and Ford Motor Company ("Ford") made essen- 
tially the same point, commenting that a manu- 
facturer projecting compliance with the average 
fuel economy standards should only be required 
to report its projected average fuel economy and 
the fuel economy levels and projected production 
level for each model type. 

These suggestions are inconsistent with the 
plain meaning of the language of section 505(a). 
Apparently, Chrysler and Ford believe that the 
fuel economy values and projected production 
levels for each base level constitute the manufac- 
turer's plans for achieving compliance. The 
agency disagrees. The fuel economy infonuation 
and projected production levels describe only the 
result the manufacturer liopes to achieve. Section 
505(a) (1) (B) specifically requires that tiie report 
also include a description of the steps that the 
manufacturer has taken or will take to achieve 
tiiat result. The "steps" that can be taken to 
impi-ove a\erage fuel economy and acliieve com- 
pliance generally fall into two categories: (1) 
lechnologj- iiuproxements and (2) shifts in tiie 
mix of models and options offered for sale. The 



latter category includes the marketing measures 
undertaken to promote particular mix goals. 

Further, the effective implementation of the 
fuel economy program requires that these semi- 
annual reports should also enable the Agency to 
monitor the degree of effort being made by the 
various manufacturers to improve their average 
fuel economy. This information is necessary for 
the agency and Congress to judge the sufficiency 
of the standards and statutory enforcement 
scheme, including the civil penalty formula, for 
obtaining improvements in average fuel economy. 
This information will also permit a comparison 
of the approaches being taken by the manufac- 
turers to improve average fuel economy. 

Applicability. 

Mr. Andrew Pickens commented that the re- 
porting requirements should only apply to manu- 
facturers producing vehicles that use petroleum- 
based fuel. 

This rule is applicable to only those manufac- 
turers. Section 501(1) of the Act defines an 
"automobile" as "any 4-wheeled vehicle propelled 
by fuel . . ." Section 501(5) of the Act specifies: 
The term "fuel" means gasoline and diesel 
oil. The Secretary may, by rule, include any 
other liquid fuel or any gaseous fuel within 
the meaning of the term "fuel" if he deter- 
mines that such inclusion is consistent with 
the need of the Nation to conserve energy. 

Since the NHTSA has not included any fuel 
other than gasoline or diesel oil within the defi- 
nition of fuel, no change is necessary in the pro- 
posed applicability provision to accommodate 
Mr. Pickens' concern. 

Three low-volume manufacturers, Rolls Royce 
Motors International ("Rolls Royce"), Avanti 
Motor Corporation ("Avanti"), and Checker 
Motors Corporation ("Checker"), all indicated 
that, because of their limited staffs and resources, 
and their small impact on industry average fuel 
economy, their reports should be limited in scope. 
A low-volume manufacturer is one that produces 
fewer than 10,000 passenger automobiles world- 
wide annually. See section 502(c) of the Act and 
42 FR 38374, establishing 49 CFR 525. Only 
Checker made specific suggestions. It suggested 
that low-volume manufacturers not be required 
to provide data on marketing measures or addi- 



PART 537— PRE 3 



Effective: December 12, 1977 



tional compliance efforts, since low-volume manu- 
factineis generally produce specialized vehicles 
with a limited number of vehicle configurations. 

This agency has no authority to apply selec- 
tively the explicit reporting requirements of 
section 505(a)(1)(A) and (B) ; that is, (A) a 
statement whether that manufacturer will comply 
with the applicable average fuel economy stand- 
ards and (B) that manufacturer's plan describ- 
ing the steps it has taken or will take to comply 
with the standard. The statute expressly requires 
each manufacturer to comply with those require- 
ments. Based on appropriate distinctions be- 
tween different groups of manufacturers, NHTSA 
may selectively apply reporting requirements 
adopted under the authority of section 505(a) 
(1)(C) and (c). 

As stated above, marketing measures are one of 
the steps that the manufacturer can take to im- 
prove its average fuel economy level. As such, 
they are required by section 505(a) (1) (B) to be 
described in each semiannual report filed under 
section 505(a). The agency notes further that 
the fewer configurations that a manufacturer has, 
the simpler that reporting the manufacturer's 
marketing plans will, in all likelihood, be. 

The information on additional compliance ef- 
forts and costs is not required to be included in 
the reports of any manufacturer. Therefore, 
there is no need to consider whether low volume 
manufacturers should be afforded special treat- 
ment in providing such information. 

The NPEM proposed to allocate reporting re- 
sponsibilities among multistage automobile manu- 
lacturers depending upon which manufacturer of 
a multistage automobile had become the manu- 
facturer for standards compliance purposes under 
Part 529. See 42 FR 38369, July 28, 1977, for 
the text of Part 529. There are three types of 
multistage automobile manufacturers. The in- 
complete automobile manufacturer is the manu- 
facturer that assembles the frame and chassis 
structure, power train, steering system, suspension 
system, and braking system. An intermediate 
manufacturer is a manufacturer, other than the 
incomplete automobile manufacturer or final- 
stage manufacturer, which performs manufactur- 
ing operations on an incomplete automobile. The 
final-stage manufacturer is the manufacturer that 
completes the production of the imiltistage auto- 



mobile except for addition of readily attachable 
components and minor finishing operations. Part 
529 generally treats the incomplete automobile 
manufacturer as the manufacturer of the nmlti- 
stage automobile. However, in certain circum- 
stances specified in Part 529, the intermediate or 
final-stage manufacturer can become the manu- 
facturer for purposes of certain Title V require- 
ments. 

The NPRM proposed that when an inter- 
mediate or final-stage manufacturer became the 
manufacturer of a multistage automobile for 
standards compliance purposes, that manufac- 
turer would shai'e the reporting responsibilities 
with the incomplete automobile manufacturer. 
It was proposed further that the report by the 
intermediate or final-stage manufacturers be lim- 
ited to the same information as low-volume manu- 
facturers are required to provide. The reasoning 
behind the latter proposal was that, compared to 
the incomplete automobile manufacturer, the 
intermediate or final-stage manufacturer would 
have less knowledge about the specifications of 
the technological aspects of the incomplete auto- 
mobile that most significantly affect fuel economy. 
Additionally, an intermediate or final-stage manu- 
facturer would have a negligible engineering staff 
because of the small size and less technical nature 
of its manufacturing operation. Most of these 
manufacturers are small enough to be low volume 
manufacturers. Xo comments were received on 
this subject. 

Upon further reflection, the NHTSA has de- 
termined that the reports filed by intermediate 
and final-stage manufacturers would be of very 
limited value to this agency. Exceeding the 
specifications would typically cause the fuel econ- 
omy data and technological information in their 
I'eports to differ only slightly from the data and 
information already submitted for these automo- 
biles by the incomplete automobile manufacturers. 

Further, the reports would cover a very small 
number of automobiles, i.e., only those incomplete 
automobiles for which the intermediate and final- 
stage manufacturers had exceeded the maximimi 
specifications. It is anticipated that these maxi- 
mum specifications will very rarely be exceeded 
by the intermediate and final-stage manufactur- 
ers, since doing so would require these manufac- 
turers to recertify the automobiles for compliance 



PART 537— PRE 4 



Effective: December 12, 1977 



(3) The Secretary shall prescribe rules 
setting forth the form and content of the 
reports required under paragraphs (1) and 
(2). 

Section 505(c)(1) of the Act requires every 
manufacturer to establish and maintain such 
records, make such reports, conduct such tests, 
and provide such items and information as the 
NHTSA may, by rule, reasonably require to 
carry out its diitics imder Title V. Section 
r)02(a)(2) requires the XHTSA to transmit to 
the Congress not later than January 15 of each 
year a review of the average fuel economy stand- 
ards; section r)02(a)(3), (b) and (c) requires the 
NHTSA to establish average fuel economy stand- 
ards; and section 502(a)(4) and (f) gives the 
XHTSA the authority to amend average fuel 
economy standards. 

Several commenteis urged that the rule require 
reports with a limited scope and purpose. Volks- 
wagen of America, Inc. ("Volkswagen"), com- 
mented that any manufacturer projecting 
compliance with the currently applicable average 
fuel economy standards should be exempted from 
providing any business or technological data in 
its reports. Chrysler Corporation ("Chrysler") 
and Ford Motor Company ("Ford") made essen- 
tially the same point, commenting that a manu- 
facturer projecting compliance with the average 
fuel economy standards should only be required 
to report its projected average fuel economy and 
the fuel economy levels and projected production 
level for each model type. 

These suggestions are inconsistent with the 
plain meaning of the language of section 505(a). 
Apparently, Chrysler and Ford believe that the 
fuel economy values and projected production 
levels for each base level constitute the manufac- 
turer's plans for achieving compliance. The 
agency disagrees. The fuel economy infonnation 
and projected production levels de.scribe only the 
result the manufacturer hopes to achieve. Section 
505(a) (1) (B) specifically requires that the report 
also include a description of the steps that the 
manufacturer has taken or will take to acliieve 
that result. The "steps" that can be taken to 
improve average fuel economy and acliieve com- 
pliance generally fall into two categories: (1) 
technology impr()\einents and (2) shifts in the 
mix of models and options offered for sale. The 



latter category includes the marketing measures 
undertaken to promote particular mix goals. 

Further, the effective implementation of the 
fuel economy program requires that these semi- 
annual reports should also enable the Agency to 
monitor the degree of effort being made by the 
various manufacturers to improve their average 
fuel economy. This information is necessary for 
the agency and Congress to judge the sufficiency 
of the standards and statutory enforcement 
scheme, including the civil penalty formula, for 
obtaining improvements in average fuel economy. 
This information will also permit a comparison 
of the approaches being taken by the manufac- 
turers to improve average fuel economy. 

Applicability. 

Mr. Andrew Pickens commented that the re- 
porting requirements should only apply to manu- 
facturers producing vehicles that use petroleum- 
based fuel. 

This rule is applicable to only those manufac- 
turers. Section 501(1) of the Act defines an 
"automobile" as "any 4-wheeled vehicle propelled 
by fuel . . ." Section 501(5) of the Act specifies: 
The term "fuel" means gasoline and diesel 
oil. The Secretary may, by rule, include any 
other liquid fuel or any gaseous fUel within 
the meaning of the term "fuel" if he deter- 
mines that such inclusion is consistent with 
the need of the Nation to conserve energy. 
Since the XHTSA has not included any fuel 
other than gasoline or diesel oil within the defi- 
nition of fuel, no change is necessary in the pro- 
posed applicability provision to accommodate 
Mr. Pickens' concern. 

Three low-volume manufacturers, Rolls Royce 
Motors International ("Rolls Royce"), Avanti 
Motor Corporation ("Avanti"), and Checker 
Motors Corporation ("Checker"), all indicated 
that, because of their limited staffs and resources, 
and their small impact on industry average fuel 
economy, their reports should be limited in scope. 
A low-volume manufacturer is one that produces 
fewer than 10,000 passenger automobiles world- 
wide annually. See section 502(c) of the Act and 
42 FR 38374, establishing 49 CFR 525. Only 
Checker made specific suggestions. It suggested 
that low-volume manufacturers not be required 
to provide data on marketing measures or addi- 



PART 537— PRE 3 



EfFeclive: December 12, 1977 



tional compliance efforts, since low-volume manu- 
facturers f;:enerally produce specialized vehicles 
with a limited number of vehicle configurations. 

This agency lias no authority to apply selec- 
tively the explicit reporting requirements of 
section 505 (a) (1) (A) and (B) ; that is, (A) a 
statement whether that nuinufacturer will comply 
with the applicable average fuel economy stand- 
ards and (B) that manufacturer's plan describ- 
ing the steps it has taken or will take to comply 
with the standard. The statute expressly requires 
each manufacturer to comply with those require- 
ments. Based on appropriate distinctions be- 
tween different groups of manufacturers, NHTSA 
may selectively apply reporting requirements 
adopted under the authority of section 505(a) 
(1)(C) and (c). 

As stated above, marketing measures are one of 
the steps that the manufacturer can take to im- 
prove its average fuel economy level. As such, 
they are required by section 505(a) (1) (B) to be 
described in each semiannual report filed under 
section 505(a). The agency notes further that 
the fewer configurations that a manufacturer has, 
the simpler that reporting the manufacturer's 
marketing plans will, in all likelihood, be. 

The information on additional compliance ef- 
forts and costs is not required to be included in 
the reports of any manufacturer. Therefore, 
there is no need to consider whether low volume 
manufacturers should be afforded special treat- 
ment in providing such information. 

The NPRM proposed to allocate reporting re- 
snonsibilities among multistage automobile manu- 
lacturers depending upon which manufacturer of 
a multistage automobile had become the manu- 
facturer for standards compliance purposes under 
Part 529. See 42 FR 38369, July 28, 1977, for 
the text of Part 529. There are three types of 
multistage automobile manufacturers. The in- 
complete automobile manufacturer is the nianu- 
facturer that assembles the frame and chassis 
.structure, power train, steering system, suspension 
system, and braking system. An intermediate 
manufacturer is a manufacturer, other than the 
incomplete automobile manufacturer or final- 
stage manufacturer, which performs manufactur- 
ing operations on an incomplete automobile. The 
linal-stage manufacturer is the manufacturer that 
completes the production of the multistage auto- 



mobile except for addition of readily attachable 
components and minor finishing operations. Part 
529 generally treats the incomplete automobile 
manufacturer as the manufacturer of the nmlti- 
stage automobile. However, in certain circum- 
stances specified in Part 529. the intermediate or 
final-stage manufacturer can become the manu- 
facturer for purposes of certain Title V require- 
ments. 

The NPRM proposed that when an inter- 
mediate or final-stage manufacturer became the 
manufacturer of a multistage automobile for 
standards compliance purposes, that manufac- 
turer would share the reporting responsibilities 
with the incomplete automobile manufacturer. 
It was proposed further that the report by the 
intermediate or final-stage manufacturers be lim- 
ited to the same information as low-volume manu- 
facturers are required to provide. The reasoning 
behind the latter proposal was that, compared to 
the incomplete automobile manufacturer, the 
intermediate or final-stage manufacturer would 
have less knowledge about the specifications of 
the technological aspects of the incomplete auto- 
mobile that most significantly affect fuel economy. 
Additionally, an intermediate or final-stage manu- 
facturer would have a negligible engineering staff 
because of the small size and less technical nature 
of its manufacturing operation. Most of these 
manufacturers are small enough to be low volume 
manufacturers. No comments were received on 
this subject. 

Upon further reflection, the NHTSA has de- 
termined that the reports filed by intermediate 
and final-stage manufacturers would be of very 
limited value to this agency. Exceeding the 
specifications would typically cause the fuel econ- 
omy data and technological information in their 
I'eports to differ only slightly from the data and 
information already submitted for these automo- 
biles by the incomplete automobile manufacturers. 

Further, the reports would cover a very small 
number of automobiles, i.e., only those incomplete 
automobiles for which the intermediate and final- 
stage manufacturers had exceeded the maximum 
specifications. It is anticipated that these maxi- 
mum specifications will very rarely be exceeded 
by the intermediate and final-stage manufactur- 
ers, since doing so would require these manufac- 
turers to recertify the automobiles for compliance 



PART 537— PRE 4 



Effective: December 12, 1977 



witli tlic C'lean Air Act and icdetennine tlie fuel 
economy of tlie aiitoniohiles. Tliese inannfactur- 
ei-s would also he retiuired to determine whether 
rxeeediiifr tiie weight maximum afl'ected the auto- 
mohiles" compliance with the Federal Motor 
Veiiicle Safety Standards. This testing would 
he a relatively expensive process, particularly 
considerinj:; that these manufacturers would not 
have their own testin<r facilities available. 

The ajrency is also mindful that the burden 
that would be imposed on the intermediate and 
final-staj^re manufacturers if they were required 
to prepare these reports would be greater relative 
to that imposed on lar<rer manufacturers. As 
stated above, these manufacturers have a minimal 
en<rineerin<r staff, if any. 

After a reconsideration of all these factors, the 
NIITSA has determined under section 501(9) of 
tiie Act and Part r)2!) that the incomplete auto- 
mobile manufacturer of a multistajje automobile 
will always be considered its manufacturer for 
purposes of the Act's reportinjr requirements. 
This rule has been chan<re(l to provide that inter- 
mediate and final-stajie manufacturers are not 
required to file reports. 

The a<rency's re-examination of the implemen- 
tation of this rule by multistage manufacturers 
lias also resulted in several changes in the rule to 
facilitate the reports by the incomplete automo- 
bile manufacturer. The data in § 537.7(c) is 
generally required to be i)rovided by model type. 
IIowe\er, the incomplete automobile manufac- 
lurer does not always know what the model type 
of the multistage automobile will be when com- 
pleted. Accordingly, the incomplete automobile 
manufacturer is recjuired to provide the fuel 
economy information in § 537.7(c) and (e) by 
base level, rather than by model type. Further, 
the technical information in § 537.7(c) (4) 
(xviii)-(xxii) and (c)(5) requires knowledge of 
how tlie automobile will be completed, and, there- 
fore, is not re(|uired to be pro\ided by incomplete 
automobile manufacturers with respect to multi- 
stage automobiles. 

Timing of the reports. 

Section 505(a) (1) of the Act specifies the time 
periods during which semiannual reports for a 
model year must lie submitted. The first report, 
called tiie "prc-inodel year report" in this rule. 



must be submitted during the 30-day period im- 
mediately preceding the model year. The second 
report, the "mid-model year report," must be 
submitted during the 30-day period beginning on 
the 180th day of the model year. 

Ford commented that the EPA has designated 
the date on which comparable class fuel economy 
ranges become available as the beginning of the 
model year in a notice published November 10, 
1976, 4i FR 49752, at 49756. Ford did not clearly 
indicate the basis for its belief that that notice, 
which dealt with fuel economy labeling require- 
ments, contained any designation of the model 
year. Nowhere in the preamble to that notice 
did the EPA give any indication that it was 
making a determination of the model year. 

Further, the language of the rule itself shows 
that the EPA was not making any determination 
of the model year. 40 CFR § 600.314(d) (1) 
reads: "The range will be made available on a 
date that coincides as closely as possible to the 
date of the general model year introduction for 
the industry." Rather than indicating that the 
beginning of the model year occurs on the date 
on which the EPA announces the comparable 
class ranges, this language indicates that the EPA 
recognized that the beginning of the model year 
is not dependent on and does not coincide with 
the announcement of the ranges. The EPA 
merely stated that the two dates should occur as 
close together as possible. After a review of 
EPA's November 10 notice, this agency has con- 
cluded that nowhere therein did the EPA make 
any determination of the model yeai'. The EPA 
concurs with that conclusion. 

Volvo of America, Inc. ("Volvo"), stated that 
its interpretation of the term "model year" as 
applied to foreign manufacturers was that the 
model year begins on the date when the first 
vehicle of the current model year is publicly 
offered for sale in the United States. 

Section 501(12) of the Act defines "model 
year" as a manufacturer's annual production 
period which includes January 1 of the calendar 
year, and gives the EPA Administrator the 
authority to determine the manufacturer's an- 
nual production period. If a manufacturer has 
no annual production period or if the EPA does 
not determine wiien that period occurs, the manu- 
facturer's model year is the calendar year. 



PART 537— PRE 5 



Effective: December 12, 1977 



To date, no determination of the "model year" 
has been made specifically for the purposes of 
section 505 (a). In the rule specifying the 1978 
model year fuel economy testing and calculation 
procedures (41 FR 38674, September 10, 1976). 
the EPA stated that the 1978 model year for 
domestic manufacturers would begin no earlier 
than August, 1977. This determination, however, 
was made without regard to section 505(a). 
Rather, it was made to provide all parties with 
12 months advance notice of the applicable test- 
ing and calculation procedures, in accordance 
with the provisions of section 503(d) of the Act. 

Based on its consultation with the EPA, this 
agency has come to the following conclusions in 
which EPA concurs. Since the EPA has not yet 
determined any annual production period for do- 
mestic or foreign automobile manufacturers ap- 
plicable to section 505(a), the manufacturers have 
no annual production period for the purposes of 
section 505(a). Accordingly, under the terms of 
section 501(12), the section 505(a) model year 
for these manufacturers is the calendar year. 
Therefore, the pre-model year reports for 1978 
must be submitted to this agency not earlier than 
December 2, 1977, and not later than December 
31, 1977. 

The use of the calendar year as the model year 
for the manufacturers puts both commenting 
manufacturers in a position at least as favorable 
as the ones they had requested. Ford will now 
have a period in which to prepare its 1978 pre- 
model year report that is several months longer 
than the one it would have had if its comment 
had been adopted. Since Volvo has generally 
introduced its new automobiles on January 1, this 
rule will, in effect, treat Volvo as it had requested. 

The EPA has indicated to this agency that it 
will take appropriate action under Title V re- 
garding the definition of model year to be used 
with respect to the submission of reports for the 
1979 and subsequent model years. 

This agency recognizes that some confusion 
may result from the use of one definition of model 
year to determine when the reports must be sub- 
mitted and another definition to determine which 
automobiles are to be discussed in the reports. It 
should be emphasized that this determination of 
the model year is applicable only to the timing 



provisions of section 505(a) of the Act. The 
determination is made only to inform the manu- 
facturers and the public precisely when these 
semiannual fuel economy reports must be sub- 
mitted. 

This determination does not mean that the 
manufacturers' reports must contain information 
on every automobile produced between January 1 
and December 31 of each year. Section 505 
specifies that the reports must indicate whether 
the manufacturer will comply with the average 
fuel economy standards applicable under section 
502 to the model year for which the report is 
made, and the manufacturer's plan for achieving 
that compliance. Thus, the reports are to contain 
information only on automobiles produced during 
that model year. To determine the beginning of 
the model year to which a standard applies, the 
manufacturers must look to the relevant EPA 
determination of the model year for the purposes 
of section 502. Under the relevant EPA deter- 
mination, the 1978 model year for the domestic 
manufacturers will run from approximately 
August 1977 to July 1978. 

Based on its assumption that the pre-model ■ 
year reports might be due in early September, V 
Ford expressed concern that the NPRM would 
require it to submit one preliminary fuel economy 
average in its pre-model year report to the 
NHTSA and a different, second preliminary 
average to the EPA a short time later. The 
EPA currently requires all manufacturers to 
submit a preliminary average fuel economy cal- 
culation to that agency not later than 10 days 
after the manufacturer's public introduction date. 
40 CFR 600.506-78. Ford stated that the sub- 
mission of two different averages would be bur- 
densome and that the first average would be less 
representative than the second. In the case of 
domestic manufacturers, the problem of being 
required to submit two different preliminary 
averages is obviated by the discussion above re- j 
garding the beginning of a model year for re- 
porting purposes. Instead of having to submit ' 
their pre-model year reports perhaps several 
weeks before the submission of their preliminary 
average to the EPA, the domestic manufacturers 
will not have to submit those reports until several 
months after that submission to the EPA. There ^ 
will not be any significant burden since the aver- ,^ 



PART 537— PRE 6 



Effective: December 12, 1977 



witli tlie Clean Air Act and redetermine the fuel 
economy of tiie automohiles. Tliese manufactur- 
ers would also he re(|uiie(l to determine whether 
exceedinfi the weijjht maximum atl'ected the auto- 
mohiles' compliance with the Federal Motor 
Vehicle Safety Standards. This testing; would 
he a relatively expensive process, particularly 
considerinji^ that tlicse manufacturers would not 
have their own testinff facilities available. 

The ajrency is also mindful that the burden 
that would he imposed on the intermediate and 
final-stafre manufacturers if they were required 
to prepare these reports would be greater relative 
to that imposed on laiger manufacturers. As 
stated above, these manufacturers have a minimal 
en<rineerin<r staff, if any. 

After a reconsideration of all these factors, the 
XHTSA has determined under section 501(9) of 
the Act and Part '}29 that the incomplete auto- 
mobile manufacture!' of a multistage automobile 
will always be considered its manufacturer for 
purposes of the Act's reporting requirements. 
This rule has been changed to provide that inter- 
mediate and final-stage manufacturers are not 
required to file reports. 

The agency's re-examinarion of the implemen- 
tation of this rule bj- multistage manufacturers 
has also resulted in several changes in the rule to 
facilitate the reports by the incomplete automo- 
bile manufacturer. The data in § 537.7(c) is 
generally required to be provided by model type. 
However, the incomplete automobile manufac- 
turer does not alwaj's know what the model type 
of the multistage automobile will be when com- 
pleted. Accordingly, the incomplete automobile 
manufacturer is re<iuired to provide the fuel 
economy information in § 537.7(c) and (e) by 
base level, rather than by model type. Further, 
the technical information in §537.7 (c)(4) 
(xviii)-(xxii) and (c)(5) requires knowledge of 
how the automobile will be completed, and, there- 
fore, is not required to be piovided by incomplete 
automobile manufacturers with respect to nndti- 
stage automobiles. 

Timing of the reports. 

Section 505(a) (1) of the Act specifies the time 
periods during which semiannual reports for a 
nifxlel year must be submitted. The first report, 
called the "pie-model year report" in this rule, 



must be submitted during the 30-day period im- 
mediately preceding the model year. The second 
report, the "mid-model year report," must be 
submitted during the 30-day period beginning on 
the 180th day of the model year. 

Ford commented that the EPA has designated 
the date on which comparable class fuel economy 
ranges become available as the beginning of the 
model year in a notice published November 10, 
1976, 4i FR 49752, at 49756. Ford did not clearly 
indicate the basis for its belief that that notice, 
which dealt with fuel economy labeling require- 
ments, contained any designation of the model 
year. Nowhere in the preamble to that notice 
did the EPA give any indication that it was 
making a determination of the model year. 

Further, the language of the rule itself shows 
that the EPA was not making any determination 
of the model year. 40 CFR § 600.314(d) (1) 
reads: "The range will be made available on a 
date that coincides as closely as possible to the 
date of the general model year introduction for 
the industry." Rather than indicating that the 
beginning of the model year occurs on the date 
on which the EPA announces the comparable 
class ranges, this language indicates that the EPA 
recognized that the beginning of the model year 
is not dependent on and does not coincide with 
the announcement of the ranges. The EPA 
merely stated that the two dates should occur as 
close together as possible. After a review of 
EPA's November 10 notice, this agency has con- 
cluded that nowhere therein did the EPA make 
any determination of the model year. The EPA 
concurs with that conclusion. 

Volvo of Ameiica, Inc. ("Volvo"), stated that 
its interpretation of the term "model year" as 
applied to foreign manufacturers was that the 
model year begins on the date when the first 
vehicle of the current model year is publicly 
offered for sale in the United States. 

Section 501(12) of the Act defines "model 
year" as a manufacturer's annual production 
period which includes January 1 of the calendar 
year, and gives the EPA Administrator the 
authority to determine the manufacturer's an- 
nual production period. If a manufacturer has 
no annual production period or if the EPA does 
not determine when that period occurs, the manu- 
facturer's model year is the calendar year. 



PART 537— PRE 5 



Effective: December 12, 1977 



To date, no determination of the "model year" 
has been made specifically for the purposes of 
section 505(a). In the rule specifying the 1978 
model year fuel economy testing and calculation 
procedures (41 FR 38674, September 10, 1976), 
the EPA stated that the 1978 model year for 
domestic manufacturers would begin no earlier 
than August, 1977. This determination, however, 
was made without regard to section 505(a). 
Rather, it was made to provide all parties with 
12 months advance notice of the applicable test- 
ing and calculation procedures, in accordance 
with the provisions of section 503(d) of the Act. 

Based on its consultation with the EPA, this 
agency has come to the following conclusions in 
which EPA concurs. Since the EPA has not yet 
determined any annual production period for do- 
mestic or foreign automobile manufacturers ap- 
plicable to section 505(a), the manufacturers have 
no annual production period for the purposes of 
section 505(a). Accordingly, under the terms of 
section 501(12), the section 505(a) model year 
for these manufacturers is the calendar year. 
Therefore, the pre-model year reports for 1978 
must be submitted to this agency not earlier than 
December 2, 1977, and not later than December 
31, 1977. 

The use of the calendar year as the model year 
for the manufacturers puts both commenting 
manufacturers in a position at least as favorable 
as the ones they had requested. Ford will now 
have a period in which to prepare its 1978 pre- 
model year report that is several months longer 
than the one it would have had if its comment 
had been adopted. Since Volvo has generally 
introduced its new automobiles on January 1, this 
rule will, in effect, treat Volvo as it had requested. 

The EPA has indicated to this agency that it 
will take appropriate action under Title V re- 
garding the definition of model year to be used 
with respect to the submission of reports for the 
1979 and subsequent model years. 

This agency recognizes that some confusion 
may result from the use of one definition of model 
year to determine when the reports must be sub- 
mitted and another definition to determine which 
automobiles are to be discussed in the reports. It 
should be emphasized that this determination of 
the model year is applicable only to the timing 



provisions of section 505(a) of the Act. The 
determination is made only to inform the manu- 
facturers and the public precisely when these 
semiannual fuel economy reports must be sub- 
mitted. 

This determination does not mean that the 
manufacturers' reports must contain information 
on every automobile produced between January 1 
and December 31 of each year. Section 505 
specifies that the reports must indicate whether 
the manufacturer will comply with the average 
fuel economy standards applicable under section 
502 to the model year for which the report is 
made, and the manufacturer's plan for achieving 
that compliance. Thus, the reports are to contain 
information only on automobiles produced during 
that model year. To determine the beginning of 
the model year to which a standard applies, the 
manufacturers must look to the relevant EPA 
determination of the model year for the purposes 
of section 502. Under the relevant EPA deter- 
mination, the 1978 model year for the domestic 
manufacturers will run from approximately 
August 1977 to July 1978. 

Based on its assumption that the pre-model fl 
year reports might be due in early September, 
Ford expressed concern that the NPRM would 
require it to submit one preliminary fuel economy 
average in its pre-model year report to the 
XHTSA and a different, second preliminary 
average to the EPA a short time later. The 
EPA currently requires all manufacturers to 
submit a preliminary average fuel economy cal- 
culation to that agency not later than 10 days 
after the manufacturer's public introduction date. 
40 CFR 600.506-78. Ford stated that the sub- 
mission of two different averages would be bur- 
densome and that the first average would be less 
representative than the second. In the case of 
domestic manufacturers, the problem of being 
required to submit two different preliminary 
averages is obviated by the discussion above re- 
garding the beginning of a model year for re- 
porting purposes. Instead of having to submit 
their pre-model year reports perhaps several 
weeks before the submission of their preliminary 
average to the EPA, the domestic manufacturers 
will not have to submit those reports until several 
months after that submission to the EPA. There 
will not be any significant burden since the aver- 



PART 537— PRE 6 



1 



Effective: December 12, 1977 



age submitted in tlie pre-model year report will 
be the same as the preliminary average submitted 
to the EPA, except as modified to reflect nmning 
changes and new model introductions made since 
the submission of that average to the EPA. Based 
on this agency's participation in EPA's 1977 
model year pilot program for calculating the 
manufacturers' average fuel economies, NHTSA 
lielieves that all four of the major domestic manu- 
facturers will have programmed computers to 
calculate their average fuel economy levels for 
1978 and later model years, so that these manu- 
facturers can quickly and at little cost determine 
the effects of changes in fuel economy or produc- 
tion data on their overall average. 

Foreign manufactui'ei"s might still face the 
problem of being recpiired to subnut two separate 
calculations of their preliminary average fuel 
economy. If a manufacturer had its introduction 
date on January 1, as many foreign manufac- 
turers do, the manufacturer would not be required 
to submit its preliminary average fuel economy 
calculation to the EPA until January 11. How- 
ever, that manufacturer would be required to 
submit a preliminary average fuel economy in its 
report to the XHT8A, due not later than De- 
cember 31. This agency would thus be faced 
with the prospect of receiving a preliminary 
average less representative than the one to be 
subsequently submitted to EPA. 

To avoid this problem, this rule has been 
changed from what was proposed in the NPRM. 
Under this rule, a manufacturer is not required 
to include the fuel economy data required for the 
pre-model year repoit by § r).37.7(b), (c)(1) and 
(2), and (c)(4) (xiv)-(xvi) and (xxiv), if that 
report is due to be submitted before the fifth day 
after the date l)v which the manufacturer is re- 
quired to submit the preliminary determination 
of average fuel economy to the EPA under 40 
CFR 6fl0.r)06. Any )iianufacturer taking ad- 
vantage of this oppoitunity is required to submit 
a supjilementary report to this agency not later 
tiian tile fiftii day after the date by which tliat 
manufacturer nmst subnut the preliminary de- 
termination. This supplementary report must 
contain all tlie information the manufacturer 
omitted from its semiannual report, pursuant to 
tiie above provision, and any revisions of the 
information previously submitted in the semi- 



annual report as are necessary to reflect this new 
information. 

Semiannual reports. 

The short time remaining for the manufac- 
turers to submit their 1978 pre-model year reports 
lias necessitated a substantial reduction of the 
information required in that report. Under this 
rule, the report would cover passenger automo- 
biles only. AVith respect to those automobiles, 
the manufacturer would provide its projected 
average fuel economy and views on the repre- 
sentativeness of the projection, its model type 
fuel economy information, certain vehicle con- 
figuration technical information, and a general 
discussion of the manufacturer's marketing 
measures. None of this information requires any 
new analytical work to prepare and, thus, should 
be readily available to the manufacturers for 
inclusion in a report to this agency. 

Further, to alleviate the time pressures on the 
manufacturers and ensure the submission of full 
reports, the agency will not take enforcement ac- 
tion on timeliness grounds against any manufac- 
turer which submits its pre-model year report by 
January 31, 1978. 

Many commenters complained that the report- 
ing requirements proposed in the NPRM would 
impose unreasonable and excessive additional 
testing costs. These complaints were primarily 
applicable to the proposed future model year re- 
porting requirements. To the extent that the 
complaints were directed to the current model 
year reporting requirements, they appear to apply 
largely to items not adopted in this rule. 

In the NPRM, the agency discussed its con- 
sideration of possible ways of avoiding the im- 
position of any new testing costs, and requested 
comments on the desirability of permitting a 
manufacturer to submit responses that were an 
estimate or a set or range of alternatives. To 
avoid abuse of that opportunity and ensure the 
usefulness of the estimates, the agency further 
proposed that any manufactiirer submitting esti- 
mates or alternatives would be required to state 
the basis for each estimate or alternative, the 
major uncertainties associated with it, and the 
most likely value in the case of an estimate and 
the most likely alternative in the case of a set or 
range of alternatives. Despite the request for 



PART 537— PRE 7 



Effective: December 12, 1977 



comments on this proposed method, only one 
manufacturer addressed this issue. Volvo stated 
that permitting estimates would give the NHTSxV 
more representative data, and make the manu- 
facturers task less burdensome. 

To place the smallest burden on the industry 
consistent vvitli the XHTSA's need for informa- 
tion, this rule permits manufacturers to submit 
estimates in response to requirements for data on 
marketing. A manufacturer may not provide 
estimates in response to the requirement for fuel 
economy data or technical specifications data. 
One of the primary purposes of the fuel economy 
data is to calculate average fuel economy. Gross 
estimates of fuel economy are unsuitable for mak- 
ing such an important and sensitive calculation. 
The rule accordingly requires the manufacturer 
to submit fuel economy values which have been 
approved by the EPA for specified vehicle con- 
figurations, if values have been approved. If a 
value has not been approved for a configuration, 
the manufacturer must submit any available un- 
approved fuel economy value developed through 
the use of EPA's test procedures or through 
analytical methods approved by the EPA. If 
none of the above types of values are available, 
the manufacturer is required to submit a fuel 
economy value based on tests or analyses com- 
parable to the tests or analyses requii-ed by the 
EPA, and a description of the tests or analyses 
conducted by the manufacturer. The technical 
specifications can be easily determined at little or 
no expense. Further, almost all of that informa- 
tion nuist already be generated for purposes other 
than this rule. 

Projected average fuel economy. 

Commenters generally agreed that this was a 
necessary piece of information. As explained in 
the preamble to the XPRM, the XHTSA believes 
that submission of this information would be 
equivalent to a statement whether the manufac- 
turer would comply with the applicable average 
fuel economy standards, as required to be included 
in the reports by section 50o(a)(l)(A) of the 
Act. 

P'ord challenged the inclusion of a requirement 
that nuinufacturers state wliether tlieir projected 
average fuel economy is a sufficiently accurate 
representation for the purposes of assessing pen- 



alties and awarding credits under the Act. If it 
were not a sufficiently representative figure, the 
manufacturer would be required to explain how 
and why the insufficiency resulted, and what ad- 
ditional fuel economy data is necessaiy to correct 
the insufficiency. The need, if any, might be to 
develop fuel economy values for vehicle config- 
urations for which no values are required to be 
provided. The manufacturer must also state any 
plans that it has to undertake the testing or 
analysis necessary to develop the data and to 
submit it to EPA under 40 CFR 600.509-78. 
Section 600.509-78 permits manufacturers to 
supplement voluntarily the fuel economy data 
that EPA requires from each manufacturer. As 
noted by EPA in its notice establishing section 
600.509-78, that section's purpose is to accom- 
modate the manufacturer who does not believe 
that the testing required by EPA provides a 
reasonable basis for making compliance determi- 
nations (41 FR 38674, at 38678; September 10, 
1976). 

The disclosure requirement is included in this 
rule because it is essential for the efficient func- 
tioning of the fuel economy program. It is in 
the interests of both the government and the in- 
dustry that the manufacturers' calculated average 
fuel economies must be as truly representative of 
the manufacturers" average fuel economies as 
practicable. If the calculated average are too 
low, the manufacturers could have an undue 
financial burden imposed on them in the form of 
large, unwarranted penalties. To avoid an un- 
warranted penalty, a manufacturer might under- 
take costly and unwarranted vehicle modifications 
or unnecessary production shifts. If, on the other 
hand, the calculated averages are too high, the 
nation would be deprived of the total fuel savings 
envisioned by the Act and the manufacturers 
would be given an undue credit. 

The EPA was aware of the importance of en- 
suring repi'esentative calculated average fuel 
economies and discussed the issue at length in its 
notice establisliing tlie fuel economy testing and 
calculation procedures (41 FR 38674, at 38676, 
September 10, 1976). The disclosure requirement 
in this I'ule will supplement the EPA's efforts in 
40 CFR 600.509-78 to ensure the representative- 
ness of tlie calculated averages. 



PART 537— PRE 8 



Effective: December 12, 1977 



ago, submitted in the pre-model year report will 
l)e tlie Haine as tiie preliminary average submitted 
to the EPA, except as modified to reflect running 
changes and new model introductions made since 
tiie submission of tliat average to the EPA. Based 
on this agency's participation in EPA's 1977 
model year pilot program for calculating the 
manufacturers' average fuel economies, NHTSA 
believes that all four of the major domestic manu- 
facturers will liave programmed computers to 
calculate their average fuel economy levels for 
1978 and later model years, so that these manu- 
facturers can quiclvly and at little cost determine 
tlie effects of changes in fuel economy or produc- 
tion data on their overall average. 

Foreign manufacturere might still face the 
problem of being required to submit two separate 
calculations of their preliminary average fuel 
economy. If a manufacturer had its introduction 
date on January 1, as many foreign manufac- 
turers do, tiie manufacturer would not be required 
to submit its preliminary average fuel economy 
calculation to the EPA until January 11. How- 
ever, that manufacturer would be required to 
submit a preliminary average fuel economy in its 
report to the NHTSA, due not later than De- 
cember 31. This agency would thus be faced 
with the prospect of receiving a preliminary 
average less representative than the one to be 
subsequently submitted to EPA. 

To avoid this problem, this rule has been 
changed from what was proposed in the NPRM. 
Under tliis rule, a manufacturer is not required 
to include the fuel economy data required for the 
pre-model year report by §;j37.7(b), (c)(1) and 
(2), and (c)(4) (xiv)-(xvi) and (xxiv), if that 
report is due to be submitted before the fifth day 
after tiie date by which the manufacturer is re- 
quired to submit tlie preliminary determination 
of average fuel economy to the EPA under 40 
CFR 600.506. Any manufacturer taking ad- 
vantage of this opportunity is required to submit 
a supplementary report to tiiis agency not later 
tliaii the fiftli day after tlie date by which that 
mamifactuiei' must submit tlie preliminary de- 
teniiination. This supplementary report must 
contain all the information the manufacturer 
omitted from its seiiiiannual report, pursuant to 
tlie above jiiovision, and any revisions of the 
infoiiiiatioii previously submitted in the semi- 



annual report as are necessary to reflect this new 
information. 

Semianmud reports. 

The short time remaining for the manufac- 
turers to submit their 1978 pre-model year reports 
has necessitated a substantial reduction of the 
information required in that report. Under this 
rule, the report would cover passenger automo- 
biles only. With respect to those automobiles, 
the manufacturer would provide its projected 
average fuel economy and views on the repre- 
sentativeness of the projection, its model type 
fuel economy information, certain vehicle con- 
figuration technical information, and a general 
discussion of the manufacturer's marketing 
measures. None of this information requires any 
new analytical work to prepare and, thus, should 
be readily available to the manufacturers for 
inclusion in a report to this agency. 

Further, to alleviate the time pressures on the 
manufacturers and ensure the submission of full 
reports, the agency will not take enforcement ac- 
tion on timeliness grounds against any manufac- 
turer which submits its pre-model year report by 
January 31, 1978. 

Many commenters complained that the report- 
ing requirements proposed in the NPRM would 
impose unreasonable and excessive additional 
testing costs. These complaints were primarily 
applicable to the proposed future model year re- 
porting requirements. To the extent that the 
complaints were directed to the current model 
year reporting requirements, they appear to apply 
largely to items not adopted in this rule. 

In the NPRM, the agency discussed its con- 
sideration of possible ways of avoiding the im- 
position of any new testing costs, and requested 
comments on the desirability of permitting a 
manufacturer to submit responses that were an 
estimate or a set or range of alternatives. To 
avoid abuse of tliat opportunity and ensure the 
usefulness of the estimates, the agency further 
proposed that any manufacturer submitting esti- 
mates or alternatives would be required to state 
the basis for each estimate or alternative, the 
major uncertainties associated with it, and the 
most likely value in the case of an estimate and 
the most likely alternative in the case of a set or 
range of alternatives. Despite the request for 



PART 537— PRE 7 



Effective: December 12, 1977 



comments on tliis proposed method, only one 
manufacturer addressed this issue. Volvo stated 
that permitting estimates would give the NHTSA 
more representative data, and make the manu- 
facturer's task less burdensome. 

To place the smallest burden on the industry 
consistent with the NHTSA's need for informa- 
tion, tliis rule permits manufacturers to submit 
estimates in response to requirements for data on 
marketing. A manufacturer may not provide 
estimates in response to the requirement for fuel 
economy data or technical specifications data. 
One of the primary purposes of the fuel economy 
data is to calculate average fuel economy. Gross 
estimates of fuel economy are unsuitable for mak- 
ing sucli an important and sensitive calculation. 
The rule accordingly requires the manufacturer 
to submit fuel economy values which have been 
approved by the EPA for specified vehicle con- 
figurations, if values have been approved. If a 
value has not been approved for a configuration, 
the manufacturer must submit any available un- 
approved fuel economy value developed through 
the use of EPA's test procedures or through 
analytical methods approved by the EPA. If 
none of the above types of values are available, 
the manufacturer is required to submit a fuel 
economy value based on tests or analyses com- 
parable to the tests or analyses required by the 
EPA, and a description of the tests or analyses 
conducted by the manufacturer. The technical 
specifications can be easily determined at little or 
no expense. Further, almost all of tliat informa- 
tion must already be generated for purposes other 
than this rule. 

Projected average fuel economy. 

Commenters generally agreed tliat this was a 
necessary piece of information. As explained in 
the preamble to the XPRM, the NHTSA believes 
that submission of this information would be 
equivalent to a statement whether the manufac- 
turer would comply with the applicable average 
fuel economy standards, as required to be included 
in the reports by section 505(a)(1)(A) of the 
Act. 

Ford challenged the inclusion of a requirement 
that manufacturers state whether their projected 
average fuel economy is a sufficiently accurate 
representation for the puiposes of assessing pen- 



alties and awarding credits under the Act. If it 
were not a sufficiently representative figure, the 
manufacturer would be required to explain how 
and why the insufficiency resulted, and what ad- 
ditional fuel economy data is necessary to correct 
the insufficiency. The need, if any, might be to 
develop fuel economy values for vehicle config- 
urations for which no values are required to be 
provided. The manufacturer nmst also state any 
plans that it has to undertake the testing or 
analysis necessary to develop the data and to 
submit it to EPA under 40 CFR 600.509-78. 
Section 600.50f)-78 permits manufacturers to 
supplement voluntarily the fuel economy data 
that EPA requires from each manufacturer. As 
noted by EPA in its notice establishing section 
600.509-78, that section's purpose is to accom- 
modate the manufacturer who does not believe 
that the testing requii'ed by EPA provides a 
reasonable basis for making compliance determi- 
nations (41 FR 38674, at 38678; September 10, 
1976). 

The disclosure reqiurement is included in this 
rule because it is essential for the efficient func- 
tioning of the fuel economy program. It is in 
the interests of both the government and the in- 
dustry that the manufacturers' calculated average 
fuel economies must be as truly representative of 
the manufacturers' average fuel economies as 
practicable. If the calculated average are too 
low, the manufacturers could have an undue 
financial burden imposed on them in the form of 
large, unwarranted penalties. To avoid an un- 
warranted penalty, a manufacturer might under- 
take costly and unwarranted vehicle modifications 
or unnecessary production shifts. If, on the other 
hand, the calculated averages are too high, the 
nation would be deprived of the total fuel savings 
envisioned by the Act and the manufacturers 
would be given an undue credit. 

The EPA was aware of the importance of en- 
suring representative calculated average fuel 
economies and discussed the issue at length in its 
notice establisliing the fuel economy testing and 
calculation procedures (41 FR 38674, at 38676, 
September 10, 1976). The disclosure requirement 
in this rule will supplement the I^PA's efforts in 
40 CFR 600.509-78 to ensure the representative- 
ness of the calculated averages. 



PART 537— PRE 8 



t 



Effective: December 12, 1977 



Refiiiirin<r inaniifaoturers to disclose deficien- 
cies wliich tliey lielieve exist in tlie projected 
avera^^e and to disclose their plans for fjeneratin<r 
additional fuel economy data would enable the 
jrovernment to avoid duplicatin<f the manufac- 
turers' efforts to jrenei'ate that data and tiie waste 
of public resources resultin<r from such duplica- 
tion. It would also inform tlie jrovernment about 
tlie extent to wiiicli the manufacturers were not 
<roin<; to <ienerate the additional data. The gov- 
ernment could then decide whether to undertake 
any of tlie testin<r and analysis itself. Timinof 
would be critical to the ability of the government 
to undertake any additional testing. The prob- 
ability of the go\ernineiit"s being able to locate 
readily the precise vehicle configurations needed 
will steadily decline as the end of a model year 
ai)proaches. Further, the demand on the govern- 
ment's test facilities for emissions and fuel econ- 
omy testing purposes requiies that the goveinment 
have some flexibility in scheduling any additional 
testing. 

By requiring that apparent deficiencies in the 
projected average fuel economy be disclosed, the 
reporting regulation would aid in ensuring the 
steady and orderly implementation of tiie fuel 
economy program l)v resolving problems before 
the end of tlie model year wlien corrective actions 
miglit still l)e taken. The entire fuel economy 
l)rogram. which constitutes the primary element 
of the national etl'ort to conserve gasoline, might 
1)€ disrupted if deficiencies exist and are not re- 
vealed until it is too late to take any corrective 
action. 

The establishment of an orderly procedure for 
identifying and reporting apparent deficiencies 
in projected average fuel economies sliould also 
aid in promoting pul)lic confidence in the fuel 
economy program. The success of the program 
depends in part on the faith of the public and 
the manufacturers in the fuel economy averages 
calculated for the manufacturers. 

The burden imposed on the manufacturers by 

the disclosure rei|uirement should be fairly small. 

If a manufacturer has not identified any deficien- 
] cies in its projected u\crage fuel economy, it 

simply reports that fact. If. on the other hand. 

information available to tiie manufactuier leads 
, it to believe that there are deficiencies, if simply 



reports the nature and cause of the deficiencies as 
well as any plans for reducing or correcting them. 

After considering the benefits to be gained 
from the disclosure requirement and the minimal 
resulting burdens, the agency has determined that 
the requirement is both a necessary and a reason- 
able means for ensuring the smooth functioning 
of the fuel economy program. 

Ford characterized this requirement as "an un- 
fortunate effort to force manufacturers to waive 
their right to challenge the manner in which 
EPA, in consultation with DOT, developed fuel 
economy testing procedures and calculations un- 
der section .503 of the Act." The agency believes 
that Ford may not have understood the I'equire- 
ment and its purpose fully. 

This disclosure requirement does not require 
that any manufacturer waive the opportunity to 
make such a challenge. A waiver is "the volun- 
tary and intentional relinquishment of a known 
right, claim, or privilege." 28 Am. Jur. Estoppel 
and Waiver §154 (1966). Without considering 
the other elements of a waiver, it may be seen 
from the absence of any relinquishment that no 
waiver is imposed by this requirement. If a 
manufacturer states and explains its beliefs re- 
garding the representativeness of the projected 
average, it is not thereby precluded from restat- 
ing tliose beliefs at a later time, such as when the 
final average is calculated. Alternatively, if a 
manufactuier states in one of its reports that, 
based on current information and analyses, there 
do not appear to be any deficiencies in the pro- 
jection, the manufacturer is not precluded from 
subsequently stating that new information and 
analysis have revealed previously undiscovered 
deficiencies. 

Model type fuel economy aiid technical injor- 
mation. 

To provide tlie agency with the basis for a 
manufacturer's projected average fuel economy, 
the rule icfiuires the manufacturer to provide fuel 
economy values for each model type of its auto- 
mobiles and describe the fuel economy related 
technical infoiinatioii and specifications of each 
\eliicle configuration on which the model type 
fuel economv values were ba.sed. 



PART 537— PRE 9 



Effective: December 12, 1977 



Ford commented that it was unlikely that the 
XHTSA could make use of the approach anjrle. 
departure anjjle, and breakover angle for all the 
passenger cars sold by Ford. These data, and 
the requiied axle clearance, ininimuni running 
clearance, and any other features which the 
manufacturer believes make an automobile ca- 
pable of off-highway operation, were included in 
the NPRM to permit the NHTSA to determine 
whether the classification scheme of Part 523 was 
adequately differentiating automobiles capable of 
off-highway operation from other automobiles. 
The NHTSA now believes this purpose will be 
adequately served if the features that make an 
automobile capable of off-highway operation are 
provided only with respect to those automobiles 
claimed to be capable of off-highway operation 
as determined under Part 523. If the category 
"automobiles capable of off-highway operation'" 
fails to include automobiles that the manufac- 
turers believe should be included, the manufac- 
turers will presumably inform the NHTSA of 
that belief. 

Both Ford and Chrysler indicated that this 
fuel economy information should be required by 
base level, rather than model type. Neither 
manufacturer explained why the information 
should be provided in that fashion. Further, 
neither indicated that providing the information 
by model type would pose any significant prob- 
lem for them. EPA procedures that the manu- 
facturers are to follow to calculate their 
preliminary average fuel economies provide for 
determining fuel economy values for vehicle con- 
figurations, then base levels, and finally model 
types. The model type fuel economies are then 
used to calculate the average fuel economy. Con- 
version of base level fuel economies to model type 
fuel economies requires that the manufacturers 
simply follow the calculation procedure in 40 
CFR 600.207-77 (b). The manufacturers must 
perform these calculations in any event at essen- 
tially the same time to satisfy the EPA require- 
ment for the preliminary average. NHTSA 
could not" calculate the average since it would 
lack the necessary sales data to make the conver- 
sion from base level values to model type values. 
The agency has decided, therefore, to require the 
fuel economy information by model type. 



Chrysler objected to providing the road load 
power at 50 miles per hour, stating that this 
would dramatically increase their testing costs. 
This requirement was not intended to impose any 
isdditional testing costs. To clarify that inten- 
tion, the requirement has been reworded to pro- 
vide that road load power information must be 
provided for an automobile only if a manufac- 
turer has detennined, for whatever purpose, that 
it differs from the road load setting prescribed 
for that automobile in 40 CFR 86.177-11 (d). 
There is no requirement that the setting be deter- 
mined for the purposes of preparing the fuel 
economy reports. 

Both Chrysler and Toyota Motor Sales, U.S.A., 
Inc. ("Toyota"), objected to the proposed re- 
quirement that each manufacturer provide a 
graph of acceleration and velocity versus time 
from to 60 miles per hour for each configura- 
tion. Toyota indicated that it does not plan 
models according to this index, and that this 
requirement would impose additional testing. 
Chrysler concurred in this latter statement. 

This information was proposed to be required 
to show any effects of complying with increas- 
ingly more stringent fuel economy standai'ds on 
the acceleration capabilities of the manufacturer's 
automobiles over a wide range of speeds. The 
NHTSA expects that these effects will be felt 
more at some speed ranges than at others. How- 
ever, the NHTSA is uncertain of how accurately 
this acceleration data could be provided without 
any additional acceleration testing. If manufac- 
turers like Toyota perform limited acceleration 
testing, e.g., test the acceleration of only certain 
models, those manufacturers might need to per- 
form tests on the untested models so that they 
would have a reliable basis for estimating the 
acceleration for all the configurations listed in 
the report. To avoid imposing any additional 
testing, the agency has deleted the requirement 
for acceleration and velocity data from this rule. 

Automobile technology and sales mix changes. 

Avanti and Checker stated that they would be 
dependent upon their engine suppliers for infor- 
mation regarding changes in the technology used 
in their engines. The agency believes that by the 
time the pre-model year report is filed for a 
model year by one of these manufacturers, the 



PART 537— PRE 10 



EfFective: December 12, 1977 



ReqiiiriiifT manufacturers to disclose deficien- 
cies wliich they believe exist in the projected 
avera^re and to disclose their plans for pencratinf: 
additional fuel economy data would enalile the 
irovernnient to avoid duplicatinjr the manufac- 
turers" ert'orts to generate that data and the waste 
of public resources resultinij: from sucli duplica- 
tion. It would also inform the government about 
the extent to wliicli the manufactuiers were not 
•joinfT to fienerate the tidditional data. The <rov- 
cmment could then decide whether to undertake 
any of the testiii<r and analysis it.self. Timing 
would be critical to the ability of the (government 
to undertake any additional testing. The prob- 
ability of the government's being able to locate 
readily the precise vehicle configurations needed 
will steadily decline as the end of a model year 
approaches. Further, the demand on the govern- 
ment's test facilities for emissions and fuel econ- 
omy testing purposes requires that the government 
have some flexibility in scheduling any additional 
testing. 

By requiring that apparent deficiencies in the 
projected average fuel economy be disclosed, the 
reporting regulation would aid in ensuring the 
steady and orderly implementation of the fuel 
economy i)rogram by resolving problems before 
the end of the model year wlien corrective actions 
might still be taken. The entire fuel economy 
program, wliich constitutes the prinuiry element 
of the national effort to conserve gasoline, might 
\ie disrupted if deficiencies exist and are not re- 
veale<l until it is too late to take any corrective 
action. 

The establishment of an orderly procedure for 
identifying and reporting ajjparent deficiencies 
in projected average fuel economies should also 
aid in promoting public confidence in the fuel 
economy program. The success of the program 
dei)ends in part on the faith of the public and 
the manufactuiers in tiie fuel economy averages 
calculated for the manufacturers. 

The burden imi)o.sed on tiip manufacturers by 
the disclosure reciuirement should be fairly small. 
If a manufacturer has not identified any deficien- 
cies in its projected average fuel economy, it 
simply reports that fact. If. on tiie other hand, 
information available to the manufacturer leads 
it to believe that there are deficiencies, it simply 



reports the nature and cause of the deficiencies as 
well as any plans for reducing or correcting them. 

After considering the benefits to be gained 
from the disclosure requirement and the minimal 
resulting burdens, the agency has determined that 
the requirement is both a necessary and a reason- 
able means for ensuring the smooth functioning 
of the fuel economy program. 

Ford characterized this requirement as "an un- 
fortunate effort to force manufacturers to waive 
their right to challenge the manner in which 
EPA, in consultation with DOT, developed fuel 
economy testing procedures and calculations un- 
der section ,^03 of the Act.'' The agency believes 
that Ford may not have understood the require- 
ment and its purpose fullj'. 

This disclosure requirement does not require 
that any manufacturer waive the opportunity to 
make such a challenge. A waiver is "the volun- 
tary and intentional relinquishment of a known 
right, claim, or privilege." 28 Am. Jur. Estoppel 
and Waive)' §154 (1966). Without considering 
the other elements of a waiver, it may be seen 
from the absence of any relinquishment that no 
waiver is imposed by this requirement. If a 
manufacturer states and explains its beliefs re- 
garding the representativeness of the projected 
average, it is not thereby precluded from restat- 
ing those beliefs at a later time, such as when the 
final average is calculated. Alternatively, if a 
manufacturer states in one of its reports that, 
based on current information and analyses, there 
do not appear to be any deficiencies in the pro- 
jection, the manufacturer is not precluded from 
subsequently stating that new information and 
analysis have revealed previously undiscovered 
deficiencies. 

Model type fuel economy and technical infor- 
mation. 

To i)rovide the agency with the basis for a 
manufacturer's projected average fuel economy, 
the I'ule requires the manufacturer to provide fuel 
economy values for each model type of its auto- 
mobiles and desciibe tlie fuel economy related 
technical infcnination and specifications of each 
vehicle configuration on wliich the model typte 
fuel economv values wei'e based. 



PART 537— PRE 9 



Effective: December 12, 1977 



Ford commented that it was unlikely that the 
XHTSA could make use of the approach angle, 
departure angle, and breakover angle for all the 
passenger cars sold by Ford. These data, and 
the required axle clearance, minimum running 
clearance, and any other features which the 
manufacturer believes make an automobile ca- 
pable of otf-highway operation, were included in 
the NPRM to permit the NHTSA to determine 
whether the classification scheme of Part 523 was 
adequately differentiating automobiles capable of 
off-highway operation fi-om other automobiles. 
The NHTSA now believes this purpose will be 
adequately served if the features that make an 
automobile capable of off-highway operation are 
provided only with respect to those automobiles 
claimed to be capable of off-highway operation 
as determined under Part 523. If the category 
"automobiles capable of off-highway operation" 
fails to include automobiles that the manufac- 
turers believe should be included, the manufac- 
turers will presumably inform the NHTSA of 
that belief. 

Both Ford and Chrysler indicated that this 
fuel economy information should be required by 
base level, rather than model type. Neithe*' 
manufacturer explained why the information 
should be provided in that fashion. Further, 
neither indicated that providing the information 
by model type would pose any significant prob- 
lem for them. EPA procedures that the manu- 
facturers are to follow to calculate their 
preliminary average fuel economies provide for 
determining fuel economy values for vehicle con- 
figurations, then base levels, and finally model 
types. The model type fuel economies are then 
used to calculate the average fuel economy. Con- 
version of base level fuel economies to model type 
fuel economies requires that the manufacturers 
simply follow the calculation procedure in 40 
CFR 600.207-77 (b). The manufacturers must 
perform these calculations in any event at essen- 
tially the same time to satisfy the EPA require- 
ment for the preliminary average. NHTSA 
could not calculate the average since it would 
lack the necessary sales data to make the conver- 
sion from base level values to model type values. 
The agency has decided, therefore, to require the 
fuel economy information by model type. 



Chrysler objected to providing the road load 
power at 50 miles per hour, stating that this 
would dramatically increase their testing costs. 
This requirement was not intended to impose any 
additional testing costs. To clarify that inten- 
tion, the requirement has been reworded to pro- 
vide that road load power information must be 
provided for an automobile only if a manufac- 
turer has deteniiined, for whatever purpose, that 
it differs from the road load setting prescribed 
for that automobile in 40 CFR 86.177-11 (d). 
There is no requirement that the setting be deter- 
mined for the purposes of preparing the fuel 
economy reports. 

Both Chrysler and Toyota Motor Sales, U.S.A., 
Inc. ("Toyota"), objected to the proposed re- 
quirement that each manufacturer provide a 
graph of acceleration and velocity versus time 
from to 60 miles per houi- for each configura- 
tion. Toyota indicated that it does not plan 
models according to this index, and that this 
requirement would impose additional testing. 
Chrysler concurred in this latter statement. 

This information was proposed to be required 
to show any effects of complying with increas- 
ingly more stringent fuel economy standards on 
the acceleration capabilities of the manufacturer's 
automobiles over a wide range of speeds. The 
NHTSA expects that these effects will be felt 
more at some speed ranges than at others. How- 
ever, the NHTSA is uncertain of how accurately 
this acceleration data could be provided without 
any additional acceleration testing. If manufac- 
turers like Toyota perform limited acceleration 
testing, e.g., test the acceleration of only certain 
models, those manufacturers might need to per- 
form tests on the untested models so that they 
would have a I'eliable basis for estimating the 
acceleration for all the configurations listed in 
the report. To avoid imposing any additional 
testing, the agency has deleted the requirement 
for acceleration and velocity data from this rule. 

Automobile technology and sales mix changes. 

Avanti and Checker stated that they would be 
dependent upon their engine suppliers for infor- 
mation regarding changes in the technology used 
in their engines. The agency believes that by the 
time the pre-model year report is filed for a 
model year by one of these manufacturers, the 



PART 537— PRE 10 



Effective: December 12, )977 



manufacturer should have been able to determine 
for itself or learn from the suppliers the differ- 
ences in specifications between their engines for 
the current model year and those for previous 
model years. The agency expects the suppliers 
to cooperate to the extent necessary to enable 
these low-volume manufacturers to provide the 
required data. 

Both Rolls Royce and Toyota indicated that 
they could not improve their fuel economy by 
chanfjinp the sales mix. However, the combined 
fuel economy of Toyota's subcompacts for the 
1977 model year ranjres between 24 and 41 miles 
per gallon, according to the Second Edition of 
the 1977 EPA/FEA Gas Mileage Guide. Shifts 
in its mix could enable Toyota to achieve a higher 
or lower average fuel economy. If a manufac- 
turer produces only one model type, and that 
model type is in the same inertia weight class in 
both the current model year and immediately 
preceding model year, the manufacturer would 
have no sales mix changes to rejjort. Xo burden 
is imposed on that manufactui'er. 

Marketing measures. 

The XPRM contained a proposal that the 
manufacturer be required to state and describe 
its marketing measures for each model type of 
its automobiles. The rationale for requiring a 
description not only of marketing measures de- 
signed to aid a manufacturer in improving its 
average fuel economy, but also of those measures 
that would tend to have the opposite effect, was 
to provide tlie agency with the full context in 
which to evaluate the former set of measures. 

As noted above, many of the manufacturers 
commented that the reports should not be re- 
quired to include marketing information. This 
comment could not be adopted because section 
505(a) requires inclusion of tliat information. 

Toyota commented that it makes no special 
marketing efforts to improve its average fuel 
economy, since it produces only subcompacts. 
whicli Toyota characterized as very fuel efficient. 
Tiiis agency notes tliat the marketing efforts of 
certain manufactureis will not affect whether 
they achieve compliance with tlie fuel economy 
standards. If the lowest fuel economy for any 
model type produced by a manufacturer for the 



current model year equals or exceeds the appli- 
cable average fuel economy standard, the manu- 
facturer's marketing efforts have no bearing on 
compliance and are not one of the steps the manu- 
facturer has taken to achieve compliance. Such 
manufacturer cannot fail to comply with the 
standard, regradless of its marketing efforts, since 
any production mix will comply. Therefore, a 
manufacturer whose sales mix includes only 
models with fuel economy levels equal to or 
greater than the applicable average fuel economy 
standard is not required to include in its reports 
for that model year any discussion of its market- 
ing measures. 

Further, the agency has decided to reduce sub- 
stantially the extent to which manufacturers 
must report marketing measures that will not aid 
the manufacturer in improving its average fuel 
economy. The final rule does not require a gen- 
eral description of all of the manufacturer's ad- 
vertising, pricing, and dealer incentive programs. 

The proposed requirement that the manufac- 
turer describe how its use of advertising, pricing, 
and dealer incentives was designed to aid the 
manufacturer in improving its average fuel econ- 
omy is adopted in this rule substantially as pro- 
posed in the NPRM. Both the pre- and 
mid-model year reports are required to include a 
description of the manufacturer's dealer incentive 
programs that will be implemented and a descrip- 
tion of the manufacturer's advertising and pric- 
ing that will tend to aid the manufacturer in 
improving its average fuel economy during the 
current model year. Advertising and pricing 
programs that will tend to aid the manufacturer 
in improving its average fuel economy include 
all programs to promote the sales of model types 
whose average fuel economy equals or exceeds 
the applicable standards, and any programs to 
promote the sales of a model type below the 
standard in lieu of sales of a model type further 
below the standard. As a quantification of the 
manufacturer's advertising efforts, the final rule 
requires that each report state the amount to be 
spent to advertise each carline, with additional 
information to l)e provided regarding model 
types, if available. Additionally, the mid-model 
year reports must include a discussion of the 
marketing efforts actually made by the manufac- 



PART 537— PRE 11 



EfFecllve: December 12, 1977 



turer during the first half of tlie model year. No 
retrospective reporting of marketing eft'orts made 
during tlie second half of the model year is re- 
quired by tliis rule. Accordingly, tliis agency is 
considering further rulemaking to require the re- 
porting of marketing efforts made during the 
second half of a model year in the pre-model 
year report for the following model year. 

AMC was the only commenter that agreed that 
marketing information should be required in the 
report, and indicated its willingness to provide 
this information. 

The NPRM proposed that the marketing infor- 
mation be provided by model type. However, 
Ford and Chrysler both indicated that the mar- 
keting information was not available by model 
type. Neither indicated how it was available, 
however. Most advertising appears to be by car 
line, with perhaps one model type or vehicle 
configuration being highlighted. Based on this 
pattern, the NHTSA believes that the informa- 
tion is available by car line to all manufacturers. 
Therefore, this rule has been changed to provide 
that the marketing infonnation be provided by 
car line and, when available, by model type too. 

Concerns were expressed by two manufacturers 
about their ability to provide the marketing data 
within the period specified in the NPRM. 
Chrysler stated that it would be very difficult to 
provide tliis information before tlie start of the 
model year, since the marketing measui'es change 
during the model year in response to the eco- 
nomic conditions and the competitive environ- 
ment. Further, according to Chrysler, the data 
is not available in detail at the time required. 
Ford agreed with this assertion, and indicated 
that dealer incentives are approved during the 
model year. 

None of these comments took into consideration 
the provision in the proposal for submitting esti- 
mates wlien precise answers cannot be given. 
Under this provision, whicli has been adopted in 
this rule, manufacturers may submit information 
about their planned advertising as estimates or 
as sets or ranges of alternatives. If no incentives 
are planned, then there would be none to report. 
Thus, these manufacturers should not encounter 
the types of problems they suggested. 



Chrysler, Ford, and General Motors all indi- ' 

cated that if their marketing plans were disclosed, 
there would be severe anti-competitive effects. 
In view of this concern, this agency assumes that 
the manufacturers will request confidential treat- 
ment of this information. The NHTSA pro- 
cedures for dealing with material claimed to be 
confidential are discussed below, in the section of 
this preamble on confidential information. 

General Motors suggested that the NHTSA 
had incorrectly assumed that marketing measures 
control consumer demand. The NHTSA made 
no such assumption. The agency does believe 
that marketing measures can influence the con- 
sumer demand. The substantial advertising 
budgets, rebate programs and dealer incentives 
of the manufacturers indicate that they share this 
belief. 

Reduction of (CID) (N/V), Impact of other 
Federal standards on fuel economy, Impacts of 
efforts to comply with average fuel economy 
standards an automobile performaiice, Material 
composition, and Engine system combinations 
and fuel systems. 

These five items were proposed to be included I 
in the current model year section of the proposed ^ 
report primarily to verify predictions made by 
the manufacturers in the future model year sec- 
tion of previously submitted semiannual reports. 
Since the manufacturers are not required by this 
rule to provide future model year information, 
this current model year information would not 
serve its primary intended purpose, and the re- 
quirement for its submission is therefore deleted. 

Additional compliance efforts. This item was 
proposed to be included in the reports to aid this 
agency in determining the feasibility of addi- 
tional compliance efforts by a manufacturer 
projecting noncompliance with a standard. Sec- 
tion 505(a) does not require inclusion of this 
requirement in the rule. Upon a re-examination 
of this requirement, the NHTSA has determined 
that it could meets its information need better by 
exercising its authority under section 505(c) of 
the Act to send out a special order requiring 
specific, detailed infosnation from a manufac- 
turer which projects noncompliance. Accord- 
ingly, this rule does not include the requirement, 
for this item. a 



PART 537— PRE 12 



EfFactlva: December 12, 1977 



manufacturer should have been able to determine 
for itself or learn from the suppliers the differ- 
ences in specifications between their engines for 
the current model year and those for previous 
model years. The agency expects the suppliers 
to cooperate to the extent necessary to enable 
these low-volume manufacturers to provide the 
required data. 

Both Rolls Royce and Toyota indicated that 
they could not improve their fuel economy by 
chanofinfj the sales mix. However, the combined 
fuel economy of Toyota's subcompacts for the 
1977 model year randies between 24 and 41 miles 
per fjallon, accordinjr to the Second Edition of 
the 1077 EPA/FEA Gas Mileage Guide. Shifts 
in its mix could enable Toyota to achieve a higher 
or lower average fuel economy. If a manufac- 
turer produces only one model type, and that 
model type is in the same inertia weight class in 
both the current model year and immediately 
preceding model year, the manufacturer would 
have no sales mix changes to report. Xo burden 
is imposed on that manufacturer. 

Marketing measures. 

The NPRM contained a proposal that the 
manufacturer be required to state and describe 
its marketing measures for each model type of 
its automobiles. The rationale for requiring a 
description not only of marketing measures de- 
signed to aid a manufacturer in improving its 
average fuel economy, but also of those measures 
that would tend to have the opposite effect, was 
to provide the agency with the full context in 
which to evaluate the former set of measures. 

As noted above, many of the manufacturers 
commented that the reports should not be re- 
quired to include marketing information. This 
conunent could not be adopted because section 
505 (a) requires inclusion of that information. 

Toyota commented that it makes no special 
marketing efforts to improve its average fuel 
economy, since it produces only subcompacts. 
which Toyota characterized as very fuel efficient. 
This agency notes that the marketing efforts of 
certain manufacturers will not affect whether 
they achieve compliance with the fuel economy 
standards. If the lowest fuel economy for any 
model type produced by a manufacturer for the 



current model year equals or exceeds the appli- 
cable average fuel economy standard, the manu- 
facturer's marketing efforts have no bearing on 
compliance and are not one of the steps the manu- 
facturer has taken to achieve compliance. Such 
manufacturer cannot fail to comply with the 
standard, regradless of its marketing efforts, since 
any production mix will comply. Therefore, a 
manufacturer whose sales mix includes only 
models with fuel economy levels equal to or 
greater than the applicable average fuel economy 
standard is not required to include in its reports 
for that model year any discussion of its market- 
ing measures. 

Further, the agency has decided to reduce sub- 
stantially the extent to which manufacturers 
must report marketing measures that will not aid 
the manufacturer in improving its average fuel 
economy. The final rule does not require a gen- 
eral description of all of the manufacturer's ad- 
vertising, pricing, and dealer incentive programs. 

The proposed requirement that the manufac- 
turer describe how its use of advertising, pricing, 
and dealer incentives was designed to aid the 
manufacturer in improving its average fuel econ- 
omy is adopted in this rule substantially as pro- 
posed in the NPRM. Both the pre- and 
mid-model year reports are required to include a 
description of the manufacturer's dealer incentive 
programs that will be implemented and a descrip- 
tion of the manufacturer's advertising and pric- 
ing that will tend to aid the manufacturer in 
improving its average fuel economy during the 
current model year. Advertising and pricing 
programs that will tend to aid the manufacturer 
in improving its average fuel economy include 
all programs to promote the sales of model types 
whose average fuel economy equals or exceeds 
the applicable standards, and any programs to 
promote the sales of a model type below the 
standard in lieu of sales of a model type further 
below the standard. As a quantification of the 
manufacturer's advertising efforts, the final rule 
requires that each report state the amount to be 
spent to advertise each carline, with additional 
information to be provided regarding model 
types, if available. Additionally, the mid-model 
year I'eports must include a discussion of the 
marketing efforts actually made by the manufac- 



PART 537— PRE 11 



Effective: December 12, 1977 



turer during the first half of the model year. No 
retrospective reporting of marketing efl'orts made 
during the second half of the model year is re- 
quired by this rule. Accordingly, this agency is 
considering further rulemaking to require the re- 
porting of marketing efforts made during the 
second half of a model year in the pre-model 
year report for the following model year. 

AMC was the only commenter that agreed that 
marketing information should be required in the 
report, and indicated its willingness to provide 
this information. 

The NPRM proposed that the marketing infor- 
mation be provided by model type. However, 
Ford and Chrysler both indicated that the mar- 
keting information was not available by model 
type. Neither indicated how it was available, 
however. Most advertising appears to be by car 
line, with perhaps one model type or vehicle 
configuration being highlighted. Based on this 
pattern, the NHTSA believes that the informa- 
tion is available by car line to all manufacturers. 
Therefore, this rule has been changed to provide 
that the marketing infonnation be provided by 
car line and, when available, by model type too. 

Concerns were expressed by two manufacturers 
about their ability to provide the marketing data 
within the period specified in the NPRM. 
Chrysler stated that it would be very difficult to 
provide this information before the start of the 
model year, since the marketing measures change 
during the model year in response to the eco- 
nomic conditions and the competitive environ- 
ment. Further, according to Chrysler, the data 
is not available in detail at the time required. 
Ford agreed with this assertion, and indicated 
that dealer incentives are approved during the 
model year. 

None of these comments took into consideration 
the provision in the proposal for submitting esti- 
mates when precise answers cannot be given. 
Under this provision, which has been adopted in 
this rule, manufacturers may submit information 
about their planned advertising as estimates or 
as sets or ranges of alternatives. If no incentives 
are planned, then there would be none to report. 
Thus, these manufacturers should not encounter 
the types of problems they suggested. 



Chrysler, Ford, and General Motors all indi- 
cated that if their marketing plans were disclosed, 
there would be severe anti-competitive effects. 
In view of this concern, this agency assumes that 
the manufacturers will request confidential treat- 
ment of this information. The NHTSA pro- 
cedures for dealing with material claimed to be 
confidential are discussed below, in the section of 
this preamble on confidential information. 

General Motors suggested that the NHTSA 
had incorrectly assumed that marketing measures 
control consumer demand. The NHTSA made 
no such assumption. The agency does believe 
that marketing measures can influence the con- 
sumer demand. The substantial advertising 
budgets, rebate programs and dealer incentives 
of the manufacturers indicate that they share this 
belief. 

Reduction of (CID) (N/V), Impact of other 
Federal standards mi fuel economy, Impacts of 
efforts to comply with average fuel economy 
standards on automobile performance. Material 
composition, and Engine system combinations 
and fuel systems. 

These five items were proposed to be included | 
in the current model year section of the proposed 
report primarily to verify predictions made by 
the manufacturers in the future model year sec- 
tion of previously submitted semiannual reports. 
Since the manufacturers are not required by this 
rule to provide future model year information, 
this current model year information would not 
serve its primary intended purpose, and the re- 
quirement for its submission is therefore deleted. 

Additional compliance efforts. This item was 
proposed to be included in the reports to aid this 
agency in determining the feasibility of addi- 
tional compliance efforts by a manufacturer 
projecting noncompliance with a standard. Sec- 
tion. 505 (a) does not require inclusion of this 
requirement in the rule. Upon a re-examination 
of this requirement, the NHTSA has determined 
that it could meets its information need better by 
exercising its authority under section 505(c) of 
the Act to send out a special order requiring 
specific, detailed information from a manufac- 
turer which projects noncompliance. Accord- 
ingly, this rule does not include the requirement, 
for this item. - 



PART 537— PRE 12 



EfFecHve: December 12, 1977 



Costs and Gross income awl market share. 
Data on these subjects were proposed to be re- 
quired in the reports so that the XHTSA could 
compare the effectiveness and costs of the dif- 
ferent manufacturers' compliance strategies and 
assess the impacts of complying with the average 
fuel economy standards on the manufacturers in- 
dividually and as an industry and on consumers. 
Requirements for these data have been deleted 
in view of tlie agency's decision to limit the scope 
of the rei)ort to compliance related purposes. 
When necessary to obtain information to enable 
NIITSA to make the assessments of the impacts 
of compliance on the manufacturers and consum- 
ers, it can use special orders. 

Fufrire model year data. The XPRM proposed 
that the manufacturei's be required to include in 
their semiannual reports, beginning with the 1978 
model year, information concerning their ability 
to improve future average fuel economy and the 
costs and other impacts that would result from 
making improvements. Ford commented that 
the proi)osal for reporting future model year in- 
formation was very extensive and presented 

k miique and troublesome problems for the industry 
in view of the scope of the information required, 
the ability of the industry to comply with the 
reporting I'equirements, and the potential effects 
of the reporting requirements on competition 
within the industry. Ford also questioned the 
usefulness of the information since much of the 
information is, according to that company, sub- 
ject to cliange. To allow time for a more thor- 
ough consideration of these (]uestions, Ford 
requested that the NHTSA publish a final rule 
on current model year information, and treat the 
section of the XPRM on future model year data 
as an advance notice of proposed rulemaking. 
Ford suggested that a new 60-day comment 
period on the future model year data be allowed, 
followed by a public hearing. Since section 
.■)().") (a) does not lequire futtiie model year report- 
ing. Ford believes that XHTSA has no statutoiy 
deadline for promulgation of tlie future model 
year re|)orting requirement. AMC expressed 
substantially tlie same views. 

Other manufacturers made tiie same point, al- 
though they expressed it in terms of the scope of 

^ the proposal and the purposes to be served by the 



information. Chrysler stated that the scope of 
the X'PRM was excessive, and that the reporting 
requirements for current and future model years 
should be considered separately. According to 
Chrysler, the reporting rule should be used only 
to permit the XHTSA to determine whether the 
manufacturer will comply with the applicable 
average fuel economy standards. Chrysler also 
suggested that special orders be used to obtain 
any needed future model year information. 

Rolls Royce, AMC, and British Leyland Motors 
Inc. ("British Leyland") all indicated that the 
scope of the proposed report was so broad that 
members of their engineering staffs would have 
to be withdrawn from their fuel economy im- 
provement programs to collect and analyze the 
data required to comply with the proposed re- 
porting requirements. To avoid this situation, 
British Leyland suggested that the purpose of 
the reports should be limited to obtaining data 
to evaluate the manufacturers' plans for compli- 
ance. Toyota and Peugeot also commented that 
the purpose of the reports should be limited to 
obtaining information sufficient to evaluate the 
manufacturers' plans for compliance. 

With respect to the leadtime allowed. General 
Motors recommended that future model year data 
not be required to be reported in the 1978 model 
year, because of the short leadtime. Chrysler 
indicated that it would need at least twelve 
months after publication of the final rule to sub- 
mit all the future model year data proposed in 
the X'^PRM. Volvo, on the other hand, indicated 
that it could thoroughly prepare this information 
in time for submission with the 1978 mid-model 
year report. 

After considering these comments, the NHTSA 
has decided not to include any requirements for 
future model year information in the final rule. 
The agency agrees that the timing on establishing 
the reporting requirements for current model 
year information is more critical, given the pro- 
visions of section 50.5(a) of the Act, than the 
timing on establishing requirements for future 
model year information. The agency will con- 
tinue to consider the various options open to it 
for obtaining future model year information, in- 
cluding issuing a new proposal or special orders. 



PART 537— PRE 13 



Effective: December 1 2, 1 977 



Supplementary reports. Section 505(a) (2) re- 
quires tliat if a manufacturer indicated in its 
recent semiannual! report that it would comply 
with a fuel economy standard and then deter- 
mines that its compliance plan is not sufficient to 
enable it to achieve compliance, the manufacturer 
must submit a revised plan specifying any addi- 
tional measures that it will take to achieve com- 
pliance. Information on compliance plans and 
potential noncompliances would enable the agency 
to determine whether the manufacturers were 
making good faith efforts to comply with the 
standards. Using its authority under section 
505(a) and (c), the agency intentionally went 
beyond this requirement in the NPRM. 

The first case in which a supplementary report 
was proposed to be required was when a manu- 
facturer's projected average fuel economy had 
decreased by 0.1 mile per gallon or more from its 
most recently reported average, and the resultant 
average was below the standard or less than 0.4 
miles per gallon above the standard. This re- 
quirement was intended to alert this agency 
either that a manufacturer that had projected 
compliance might be in imminent danger of non- 
compliance, or that a manufacturer that had 
projected noncompliance had experienced a fur- 
ther decrease in its average fuel economy. The 
purpose of this requirement was to provide this 
agency with information explaining the declining 
average fuel economy and the steps that the 
manufacturer intended to take to minimize the 
decrease. 

Both Ford and Chrysler objected to this pro- 
posal as burdensome and stated that it was their 
interpretation of section 505(a)(2) that supple- 
mentary' reports were required only when a manu- 
facturer's plans, as reported to the NHTSA, were 
no longer sufficient to ensure compliance with an 
applicable average fuel economy standard. 

After a reconsideration of the proposed re- 
quirements and the comments received, the 
NHTSA has determined to narrow the rule so 
that it requires a supplementary report to be filed 
only in the circumstances specified in section 
505(a)(2). As in the case of the future model 
year information, the agency desires to consider 
further the value and burden of requiring this 
information which is outside the nominal scope 
of section 502(a) (2). The XHTSA will monitor 



the reports filed under the standards, and con- 
sider whether supplemental reporting in addition 
to the minimum required by section 502(a)(2) 
of the Act should be required. Accordingly, this 
rule requires a supplementary report to be filed 
only if the manufacturers average fuel economy 
for a particular model year in its most recent 
semi-annual report was equal to or greater than 
an applicable average fuel economy standard, and 
the manufacturer subsequently projects that its 
average fuel economy for that model year has 
fallen below that standard. 

Ford and Chrysler expressed the fear that the 
NPRM would require overly frequent supple- 
mental reporting. To reduce the frequency of 
supplemental reports, Ford and Chrysler sug- 
gested that a greater decrease than 0.1 mile per 
gallon be required to trigger the necessity for a 
supplementary report. No threshold is specified 
in this rule because none is necessary to accom- 
modate the manufacturers' concerns about fre- 
quent supplementary reports. Under this rule, a 
manufacturer is not required to file more than 
one supplementary report to each semiannual re- 
port as a result of lower average fuel economy 
projections. 

The second case in which a supplementary re- 
port was proposed to be required in the NPRM 
was when a manufacturer's statement concerning 
the representativeness of its average fuel economy 
is no longer an accurate statement of the manu- 
facturer's views regarding that matter. This 
supplementary reporting requirement was in- 
tended to ensure that a manufacturer promptly 
raised and explained any concerns about the rep- 
lesentativeness of the average and the possible 
need for additional fuel economy values. 

Ford objected to this proposed supplementary 
reporting requirement based on Ford's interpre- 
tation that the NPRM would have required a 
supplementary report to be filed "whenever any 
statement with respect to the projected average 
fuel economy becomes partially or wholly inac- 
curate or incomplete." Ford stated that this 
would require daily reporting, and that the stand- 
ard was so subjective as to be meaningless. 

Ford apparently misinterpreted the proposed 
requirement. The NPRM proposed that a sup- 
plementary report be required when a manufac- 



PART 537— PRE 14 



Effective: December 12, 1977 



Costs and Gross income and market share. 
Data on these subjects were proposed to be re- 
quired in the reports so that the NHTSA could 
compare tlie effectiveness and costs of the dif- 
ferent manufacturers' compliance strategies and 
assess the impacts of complyin"; with the average 
fuel economy standards on the manufacturers in- 
dividually and as an industry and on consumers. 
Ketiuirements for these data have been deleted 
in view of the agency's decision to limit the scope 
of the report to compliance related purposes. 
When necessary to obtain information to enable 
NHTSA to make the assessments of the impacts 
of compliance on the manufacturers and consum- 
ei's, it can use special orders. 

Future model year data.-. The XPRM proposed 
tliat the manufacturers be required to include in 
their semiannual reports, beginning with the 1978 
model year, information concerning their ability 
to improve future average fuel economy and the 
costs and other impacts that would result from 
making improvements. Ford commented that 
the proposal for reporting future model year in- 
formation was very extensive and presented 
unicjue and troublesome problems for the industry 
in view of the scope of the information required, 
the ability of the industry to comply with the 
reporting requirements, and the potential effects 
of the reporting requirements on competition 
within the industry. Ford also questioned the 
usefulness of the information since much of the 
information is, according to that company, sub- 
ject to change. To allow time for a more thor- 
ougii consideration of these (juestions. Ford 
requested that the NHTSA publish a final rule 
on current model year information, and treat the 
section of the XPRM on future model year data 
as an advance notice of proposed rulemaking. 
Ford suggested that a hew 60-day comment 
period on the future model year data be allowed, 
followed by a public hearing. Since section 
r)Or)(a) does not require future model year report- 
ing. Ford believes that XHTSA has no statutoiy 
deadline for pronnilgation of tlie future model 
year reporting requirement. AMC expressed 
.substantially the same view!«. 

Other manufacturers made the same jjoint. al- 
tiiough they expressed it in terms of the scope of 

(the proposal and the purposes to be served by the 
J 

PART 537 



information. Chrysler stated that the scope of 
the XPRM was excessive, and that the reporting 
requirements for current and future model years 
should be considered separately. According to 
Chrysler, the reporting rule should be used only 
to permit the X'^HTSA to determine whether the 
manufacturer will comply with the applicable 
average fuel economy standards. Chrysler also 
suggested that special orders be used to obtain 
any needed future model year information. 

Rolls Royce, AMC, and British Leyland Motors 
Inc. ("British Leyland") all indicated that the 
scope of the proposed report was so broad that 
members of their engineering staffs would have 
to be withdrawn from their fuel economy im- 
provement programs to collect and analyze the 
data required to comply with the proposed re- 
porting requirements. To avoid this situation, 
British Leyland suggested that the purpose of 
the reports should be limited to obtaining data 
to evaluate the manufacturers' plans for compli- 
ance. Toyota and Peugeot also commented that 
the purpose of the reports should be limited to 
obtaining information sufficient to evaluate the 
manufacturers' plans for compliance. 

With respect to the leadtime allowed, General 
Motors recommended that future model year data 
not be required to be reported in the 1978 model 
year, because of the short leadtime. Chrysler 
indicated that it would need at least twelve 
months after publication of the final rule to sub- 
mit all the future model year data proposed in 
the XPR]\L Volvo, on the other hand, indicated 
that it could thoroughly prepare this information 
in time for submission with the 1978 mid-model 
year report. 

After considering these comments, the NHTSA 
has decided not to include any requirements for 
future model year information in the final rule. 
The agency agrees that the timing on establishing 
file reporting requirements for current model 
year information is more critical, given the pro- 
visions of section 505(a) of the Act, than the 
timing on establishing requirements for future 
model year information. The agency will con- 
tinue to consider the various options open to it 
for obtaining future model year infoi'mation, in- 
cluding issuing a new proposal or special orders. 

—PRE 13 



Effective: December 12, 1977 



Sufplementary reports. Section 50.5(a) (2) re- 
quires that if a manufacturer indicated in its 
recent semiannual! report that it would comply • 
with a fuel economy standard and then deter- 
mines that its compliance plan is not sufficient to 
enable it to achieve compliance, the manufacturer 
must submit a revised plan specifying any addi- 
tional measures that it will take to achieve com- 
pliance. Information on compliance plans and 
potential noncompliances would enable the agency 
to determine whether the manufacturers were 
making good faith efforts to comply with the 
standards. Using its authority under section 
505(a) and (c), the agency intentionally went 
beyond this requirement in the XPRM. 

The first case in which a supplementary report 
was proposed to be required was when a manu- 
facturer's projected average fuel economy had 
decreased by 0.1 mile per gallon or more from its 
most recently reported average, and the resultant 
average was below the standard or less than 0.4 
miles per gallon above the standard. This re- 
quirement was intended to alert this agency 
either that a manufacturer that had projected 
compliance might be in imminent danger of non- 
compliance, or that a manufacturer that had 
projected noncompliance had experienced a fur- 
ther decrease in its average fuel economy. The 
purpose of this requirement was to provide this 
agency with information explaining the declining 
average fuel economy and the steps that the 
manufacturer intended to take to minimize the 
decrease. 

Both Ford and Chrysler objected to this pro- 
posal as burdensome and stated that it was their 
interpretation of section 505(a)(2) that supple- 
mentarj' reports were required onlj- when a manu- 
facturer's plans, as reported to the XHTSA, were 
no longer sufficient to ensure compliance with an 
applicable average fuel economy standard. 

After a reconsideration of the proposed re- 
quirements and the comments received, the 
NHTSA has determined to narrow the rule so 
that it requires a supplementary report to be filed 
only in the circumstances specified in section 
505(a)(2). As in the case of the future model 
year information, the agency desires to consider 
further the value and burden of requiring this 
information which is outside the nominal scope 
of section 502(a) (2). The NHTSA will monitor 



the reports filed under the standards, and con- 
sider whether supplemental reporting in addition 
to the minimum required by section 502(a)(2) 
of the Act should be required. Accordingly, this 
rule requires a supplementary report to be filed 
only if the manufacturer's average fuel economy 
for a particular model year in its most recent 
semi-annual report was equal to or greater than 
an applicable average fuel economy standard, and 
the manufacturer subsequently projects that its 
average fuel economy for that model year has 
fallen below that standard. 

Ford and Chrysler expressed the fear that the 
XPRM would require overly frequent supple- 
mental reporting. To reduce the frequency of 
supplemental reports, Ford and Chrysler sug- 
gested that a greater decrease than 0.1 mile per 
gallon be required to trigger the necessity for a 
supplementary report. Xo threshold is specified 
in this rule because none is necessary to accom- 
modate the manufacturers' concerns about fre- 
quent supplementary reports. Under this rule, a 
manufacturer is not required to file more than 
one supplementary report to each semiannual re- 
port as a result of lower average fuel economy 
projections. 

The second case in which a supplementary re- 
port was proposed to be required in the NPRM 
was when a manufacturer's statement concerning 
the representativeness of its average fuel economy 
is no longer an accurate statement of the manu- 
facturer's views regarding that matter. This 
supplementary reporting requirement was in- 
tended to ensure that a manufacturer promptly 
raised and explained any concerns about the rep- 
resentativeness of the average and the possible 
need for additional fuel economy values. 

Ford objected to this proposed supplementary 
reporting requirement based on Ford's interpre- 
tation that the XPRM would have required a 
supplementary report to be filed "whenever any 
statement with respect to the projected average 
fuel economy becomes partially or wholly inac- 
curate or incomplete." Ford stated that this 
would require daily reporting, and that the stand- 
ard was so subjective as to be meaningless. 

Ford apparently misinterpreted the proposed 
requirement. The XPRM proposed that a sup- 
plementary report be required when a manufac- 



PART 537— PRE 14 



Effective: December 12, 1977 



turer deteiiiiined tliat its previous statements 
under § r)37.7(b) (3) re<rardin<r tlie representative- 
ness of an averajre do not accurately reflect its 
current views. This re(|uirenu'nt is narrower 
tlian Ford understood it tf) he. A manufacturer's 
views about the representativeness will presum- 
ably chan<ie only after some analysis of these 
procedures by the manufacturers. Even if a 
manufacturer were to perform a new analysis 
every day, it seems implausible that each new 
analysis would yield a diHerent result than the 
immediately pi'ecedinjr analysis. Since Ford did 
not explain why different results were likely, the 
XHTSA assumes that Ford's statement about 
daily repoitinjr was based on some misinterpre- 
tation of this section. 

In response to Ford's conmient that the stand- 
ard was too subjective, the language in the rule 
has been clarified. The rule requires a supple- 
mentary report to be filed when a manufacturer 
determines that its projected average fuel econ- 
omy as reported to the NHTSA is less represen- 
tative than the manufacturer previously reported 
it to be. 

Supplementary information on the manufac- 
turer's views about the representativeness of its 
projected average fuel ec;pnomy is needed so that 
the XHTSA will be promptly informed about 
the possible need to determine fuel economy 
values for additional base levels or vehicle con- 
figurations. The information would be used to 
promote efficient, non-duplicative use of resources 
and to avoid the disruption of the fuel economy 
program, as explained above in the section of this 
preamble on semiannual reports. This supple- 
mentary reporting requirement imposes no burden 
on the manufacturer other than to record and 
submit the results of analyses it has already made. 
Mercedes commented that manufacturers which 
profluce for sale in the United States not more 
than 100.000 automobiles in a given model year 
should not be required to comply with the sup- 
plementary reporting requirements. The XHTSA 
has no authority to exempt such manufacturers 
from submitting a supplementai-y report when 
it no longer piojects compliance since those sup- 
plementary reports are required from all manu- 
facturei-s by section 502(a) (-2). The agency 
continues to believe that supplementary reporting 
, regarding the representativeness of a manufac- 



turer's projected average fuel economy should be 
requii'ed from all manufacturers. It is important 
to. ensure the compliance of all manufacturers, 
large and small, with the average fuel economy 
standards. Further, this reporting requirement 
should impose no significant burden on even the 
smallest of manufacturers. If a manufacturer 
has conducted some analysis and concludes that 
its average is not sufficiently representative, it 
simply reports that conclusion and the reasons 
therefor. Otherwise, the manufacturer submits no 
supplementary information regarding representa- 
tiveness. 

Toyota commented that the requirement that 
supplementary reports be filed within 30 days of 
the date when the manufacturer determines or 
should have determined that a supplementary 
report is required is too short a period for foreign 
manufacturers, particularly considering the time 
losses inherent in the language differences and 
communication problems confronting those manu- 
facturers in non-English speaking coimtries. 
Toyota did not, however, suggest an alternative 
period. This agency has determined Toyota's 
comments have some merit and that a slightly 
longer time period to file the supplementary re- 
ports should be permitted. Accordingly, this rule 
requires the supplementary report to be received 
by the XHTSA not later than 45 days from the 
date on which the manufacturer determined, or 
with reasonable diligence could have determined, 
that a supplementary report was required. This 
45-day period should be ample time to generate 
the material, draft and translate the report, and 
send it air mail to this agency. 

X'one of the comments received by this agency 
were directed to the proposed content of the 
supplementary reports. This rule essentially fol- 
lows the proposal in requiring that the manufac- 
turer state the revised average fuel economy 
projection or the previously unreported element 
of unrepresentativeness of the projected average 
fuel economy, as appropriate, explain the new 
projection or element of representativeness, and 
show any changes to the previously submitted 
report which must be made in light of this newly 
reported information. To clarify the types of 
Vervisions that must be included in the supple- 
mentary reports, this rule specifies that the manu- 
facturer no longer projecting compliance shall 



PART 537— PRE 15 



EfFecllve: December 12, 1977 



include any additional technological improve- 
ments, sales mix changes, and marketing efforts 
it intends to make. If the manufacturer does not 
intend to attempt to take additional steps to 
achieve compliance, it must describe the steps it 
could take imder § 537.7(f), relating to additional 
compliance efforts. In the case of a manufacturer 
that no longer believes its average fuel economy 
figure is as representative as it previously stated, 
the rule requires a statement of the reasons for 
the insufficient representativeness, the additional 
testing or analysis necessary to eliminate the in- 
sufficiency, and any plans of the manufacturer to 
undertake the additional testing or analysis. 

Treatment of information claimed to he confi- 
dential business information. The NPRM set out 
format and content requirements for asserting 
and supporting a claim that certain information 
be withheld from public disclosure as confidential 
business information. In addition, the NPRM 
indicated a procedure by which the agency would 
consider and act upon claims for confidentiality. 
Since the publication of the NPRM, it has be- 
come clear to the agency that comprehensive 
regulations governing confidential business infor- 
mation, and information which is claimed to be 
confidential, are necessary. Such regulations are 
in preparation. The procedures and requirements 
in the final reporting regulation will be followed 
in the interim. 

Several comments were received relating to the 
treatment of information which is claimed to be 
confidential business information. Chrysler stated 
that it did not "believe that a requirement of a 
showing of significant competitive damage is 
authorized by the Motor Vehicle Information and 
Cost Savings Act (as amended), but only that a 
showing of competitive damage is enough to re- 
quire confidential treatment." The requirement 
of "significant" competitive damage proposed in 
the NPRM is drawn from the express terms of 
section 505 (d) (1) of the Act. That section pro- 
vides that the agency may withhold information 
from the public on the grounds that the informa- 
tion is confidential business information '■'■only if 
the [Administrator] . . . determines that such 
information, if disclosed would result in signifi- 
cant competitive damage." (Emphasis added.) 
Chrysler provided no information, legislative 
history, or other argument in support of its be- 



lief tliat the Act, notwithstanding the terms of 
section 505(d) (1), does not I'equire a showing of 
significant competitive damage to support a 
manufacturer's claim of confidentiality. More- 
over, no other manufacturer made an argument 
similar to Chrysler's argument. Because of the 
express terms of section 505(d)(1), and the 
mandatory nature of its directive, the agency 
must reject Chrysler's argument. 

Chrysler also claimed that certain categories or 
types of information, which Chrysler identified 
in its comments, should be entitled to "prima 
facie" confidential treatment when submitted. 
The agency agrees with Chrysler that some sort 
of class treatment of information claimed to be 
confidential business information would be ex- 
tremely beneficial. Class determination will re- 
duce the burdens on manufacturers asserting 
claims for confidentiality, as well as the agency's 
burden of evaluating claims for confidential treat- 
ment of information. Moreover, class determina- 
tions will also help to ensure evenhanded 
treatment of claims for confidentiality. 

The agency also agrees with Chrysler that 
classes should provide for "prima facie" cate- j 
gorization, rather than "per se" categorization. 
The prima facie approach, by establishing a re- 
buttable presumption of confidentiality, or non- 
confidentiality, will allow the agency the 
flexibility to give special consideration to special 
cases that may arise. 

The agency, however, cannot agree with the 
categories of information which Chrysler claims 
should be afforded prima facie confidential treat- 
ment. The categories enumerated by Chrysler 
would include information that might be too 
general to be considered confidential business in- 
formation, within the meaning of section 505(d) 
(1) of the Act. Moreover, the agency is unwill- 
ing to, make a class determination of the con- 
fidentiality of certain kinds of information 
without providing the opportunity for comment 
from intei'ested persons on the appropriateness 
of the class. Therefore, the agency will defer 
establishing classes of information for the pur- 
poses of determining business confidentiality un- 
til the rulemaking establishing procedures for 
the treatment of confidential information men- 
tioned above is completed. The agency believes ^ 
that the continued use of case-by-case determina- ( 



PART 537— PRE 16 



Effective: December 12, 1977 



I 



turcr (letennincd that its prc\'ious statements 
under § r)37.7(b) (3) repardinfr the representative- 
ness of an avcrajre do not afcnrately reflect its 
current views. This re(iuireinent is narrower 
tlian Ford understood it to he. A manufacturer's 
views ahoiit the representativeness will presuni- 
ahly chanjre only after some analysis of these 
procedures by the manufacturers. Even if a 
manufacturer were to perforin a new analysis 
every day, it seems implausible that each new 
analysis would yield a different result than the 
immediately precedinfi analysis. Since Ford did 
not explain why different results were likely, the 
N'HTSA assumes tiiat Ford's statement about 
daily reportinjr was based on some misinterpre- 
tation of this section. 

In response to Ford's comment that the stand- 
ard was too subjective, the lanf^uage in the rule 
lias been clarifie<l. The rule requires a supple- 
mentary report to he filed when a manufacturer 
determines that its projected average fuel econ- 
omy as repoi'ted to the NUTS A is less represen- 
tative than the manufacturer previously reported 
it to be. 

Supplementary information on the manufac- 
turer's \iews about the representativeness of its 
projected average fuel e(;pnomy is needed so that 
the NHTSA will be promptly informed about 
the possible need to determine fuel economy 
values for additional base levels or vehicle con- 
ti<ru rat ions. The information would be used to 
promote efficient, non-duplicative use of resources 
and to avoid the disruption of the fuel economy 
program, as explained above in the section of this 
preamble on semiannual reports. This supple- 
mentary reporting requirement imposes no burden 
on the manufacturer other than to record and 
submit the results of analyses it has already made. 
Mercedes commented that manufacturers which 
produce for sale in the United States not more 
than 100,000 automobiles in a given model year 
should not be required to comply with the sup- 
plementary reporting requirements. The NHTSA 
has no authority to exempt such manufacturers 
from submitting a supplementary report when 
it no longer projects compliance since those sup- 
plementary reports are required from all manu- 
factuiei-s by section 502(a)(2). The agency 
continues to t>elieve that supplementary reporting 
, regarding the representativene.ss of a manufac- 



turer's projected average fuel economy should be 
required from all manufacturers. It is important 
to ensure the compliance of all manufacturers, 
large and small, with the average fuel economy 
standards. Further, this reporting requirement 
should impose no significant burden on even the 
smallest of manufacturers. If a manufacturer 
has conducted some analj'sis and concludes that 
its average is not sufficiently representative, it 
simply reports that conclusion and the reasons 
therefor. Otherwise, the manufacturer submits no 
supplementary information regarding representa- 
tiveness. 

Toyota commented that the requirement that 
supplementary reports be filed within 30 days of 
the date when the manufacturer determines or 
should have determined that a supplementary 
report is required is too short a period for foreign 
manufacturers, particularly considering the time 
losses inherent in the language differences and 
communication problems confronting those manu- 
facturers in non-English speaking countries. 
Toyota did not, however, suggest an alternative 
period. This agency has determined Toyota's 
comments have some merit and that a slightly 
longer time period to file the supplementary re- 
ports should be permitted. Accordingly, this rule 
requires the supplementary report to be received 
by the NHTSA not later than 45 days from the 
date on which the manufacturer determined, or 
with reasonable diligence could have determined, 
that a supplementary report was required. This 
45-day period should be ample time to generate 
the material, draft and translate the report, and 
send it air mail to this agency. 

None of the comments received by this agency 
were directed to the proposed content of the 
supplementary reports. This rule essentially fol- 
lows the proposal in requiring that the manufac- 
turer state the revised average fuel economy 
projection or the previously unreported element 
of unrepresentativeness of the projected average 
fuel economy, as appropriate, explain the new 
projection or element of representativeness, and 
show any changes to the previously submitted 
report which must be made in light of this newly 
reported information. To clarify the types of 
revisions that must be included in the supple- 
mentary reports, this rule specifies that the manu- 
facturer no longer projecting compliance shall 



PART 537— PRE 15 



Effective: December 12, 1977 



include any additional technological improve- 
ments, sales mix changes, and marketing elforts 
it intends to make. If the manufacturer does not 
intend to attempt to take additional steps to 
achieve compliance, it must describe the steps it 
could take under § 537.7(f), relating to additional 
compliance efforts. In the case of a manufacturer 
that no longer believes its average fuel economy 
figure is as representative as it previously stated, 
the rule requires a statement of the reasons for 
the insufficient representativeness, the additional 
testing or analysis necessary to eliminate the in- 
sufficiency, and any plans of the manufacturer to 
undertake the additional testing or analysis. 

Treatment of information claimed to he confi- 
dential business information. The NPRM set out 
format and content requirements for asserting 
and supporting a claim that certain information 
be withheld from public disclosure as confidential 
business information. In addition, tlie NPRM 
indicated a procedure by which the agency would 
consider and act upon claims for confidentiality. 
Since the publication of the NPRM, it has be- 
come clear to the agency that comprehensive 
regulations governing confidential business infor- 
mation, and information which is claimed to be 
confidential, are necessary. Such regulations are 
in preparation. The procedures and requirements 
in the final reporting regulation will be followed 
in the interim. 

Several comments were received relating to the 
treatment of information which is claimed to be 
confidential business information. Chrysler stated 
that it did not "believe that a requirement of a 
showing of significant competitive damage is 
authorized by the Motor Vehicle Information and 
Cost Savings Act (as amended), but only that a 
showing of competitive damage is enough to re- 
quire confidential treatment." The requirement 
of "significant" competitive damage proposed in 
the NPRM is drawn from the e.xpress terms of 
section 50o(d) (1) of the Act. That section pro- 
vides that the agency may withhold information 
from the public on the grounds that the informa- 
tion is confidential business information "on/y if 
the [Administrator] . . . determines that such 
information, if disclosed would result in signifi- 
cant competitive damage." (Emphasis added.) 
Chrysler provided no information, legislative 
history, or other argument in support of its be- 



lief that the Act, notwithstanding the terms of 
section 50.5(d) (1), does not require a showing of 
significant competitive damage to support a 
manufacturer's claim of confidentiality. More- 
over, no other manufacturer made an argument 
similar to Chrysler's argument. Because of the 
expi'ess terms of section 505(d)(1), and the 
mandatory nature of its directive, the agency 
must reject Chrysler's argument. 

Chrysler also claimed that certain categories or 
types of information, which Chrysler identified 
in its comments, should be entitled to "prima 
facie" confidential treatment when submitted. 
The agency agrees with Chrysler that some sort 
of class treatment of information claimed to be 
confidential business information would be ex- 
tremely beneficial. Class determination will re- 
duce the burdens on manufacturers asserting 
claims for confidentiality, as well as the agency's 
burden of evaluating claims for confidential treat- 
ment of information. Moreover, class determina- 
tions will also help to ensure evenhanded 
treatment of claims for confidentiality. 

The agency also agrees with Chrysler that ■ 
classes should provide for "prima facie" cate- ^^ 
gorization, rather than "per se" categorization. 
The prima facie approach, by establishing a re- 
buttable presumption of confidentiality, or non- 
confidentiality, will allow the agency the 
flexibility to give special consideration to special 
cases that may arise. 

The agency, however, cannot agree with the 
categories of information which Chrysler claims 
should be afforded prima facie confidential treat- 
ment. The categories enumerated by Chrysler 
would include information that might be too 
general to be considered confidential business in- 
formation, within the meaning of section 505(d) 
(1) of. the Act. Moreover, the agency is unwill- 
ing to make a class determination of the con- 
fidentiality of certain kinds of information 
without providing the opportunity for comment 
from interested persons on the appropriateness 
of the class. Therefore, the agency will defer 
establishing classes of information for the pur- 
poses of determining business confidentiality un- 
til the rulemaking establishing procedures for 
the treatment of confidential information men- 
tioned above is completed. The agency believes gBl 
that the continued use of case-by-case determina- I * 



PART 537— PRE 16 



Effective: December 12, 1977 



tions of confidentiality for the interim period 
siiould not be unduly burdensome on the manu- 
facturers or the a<rency. 

Chrysler also commented that when a deter- 
mination is made that certain information is 
confidential, that information should not be dis- 
closed unless a "requester is able to make a sub- 
stantial (as opposed to a casual [sic]) showinfr 
of need to review this information." Althou<i'h 
Chrysler did not specifically reference it. this 
comment is presumably directed at the Admin- 
istrator's power under section 505(d)(1) to re- 
lease confidential business information when 
relevant to a proceedin<j under Title V of the 
Act. The ajrency has interpreted section 505(d) 
(1) as jjivinf;: it the power to release confidential 
business information in a proceeding when it is 
in the public interest to do so. Tlie determina- 
tion of whether the release of confidential busi- 
ness information is in the public interest will 
usually entail a balancinj;: of benefits and harms, 
both public and pri\ate, that may result from the 
release of information which has been determined 
to be confidential business information. Certainly. 
^ the need for the information may be an important 
' factor in this balancinfr, as would other factors, 
such as the effect on competition resulting from 
the release of confidential business information. 
The agency agrees with Chrysler that these, 
as well as other factors, should be carefully 
considered before the exercise of the power to 
release admittedly confidential information. How- 
ever, tlie agency cannot now assign weight to, or 
even identify, all the factors that should be con- 
sidered prior to the release of confidential busi- 
ness information. The exercise of the 505(d) (1) 
power nuist proceed on a case-by-case basis. 

Chrysler .stated in its comments that a sub- 
mitter of information should have ample oppor- 
tunity to object to the proposed lelease of 
confidential business information, or to withdraw 
tiiat information. The agency agrees that sub- 
mitters of confidential infoiniation. or infoiiua- 
tion claimed to be confidential, should liave notice 
of, and opportunity to object to, tlie proposed 
release of that information. Tiie XPRM and the 
final rule provide for such notice, as will tiie 
rule governing the treatment of confidential in- 
fonnation. The submitter will have at least ten 
'(Bdavs, when feasible, between notice of intention 



to disclose and actual disclosure, during which 
time the manufacturer may make any objections 
or take any other action that it regards as ap- 
propriate. 

The agency does not agree that the submitter 
of information should have, in any circimistances, 
the right to withdraw information which it has 
been lawfully required to submit. Such a right 
would give to the submitter of the information, 
rather than the agency, the power to determine 
what information should be made publicly avail- 
able. Since Congress clearly gave this power to 
the agency in section 505(d) (1), Chrysler's com- 
ment must be rejected. 

Although Ford, General Motors, and AMC 
made no comments specifically relating to the 
procedures for treating confidential business in- 
formation, those manufacturers did express some 
concern about the harmful effects, especially harm 
to competition, that would result from disclosure 
of some of the information which the agency is 
requiring. Those comments did not explain how 
disclosure may occur. Presumably, there is no 
issue of accidental disclosure of information. The 
agency knows of no instance where confidential 
business information in the agency's pos-session 
was inadvertently or negligently disclosed to the 
public. The agency takes precautions to ensure 
that confidential information in its possession is 
not inadvertently released. Those precautions 
have been effective in the past, and there is no 
reason to believe that they will not continue to be 
effective. 

To the extent that confidential information may 
be released under the power contained in section 
505(d)(1). the statements made with respect to 
the Chrysler comments are applicable here. The 
agency will consider all the interests, including 
the interests of the competitive structure of the 
automobile industry, before releasing any confi- 
dential business information. The agency will 
not release any information or, indeed, take any 
action at all, unless the agency believes that its 
actions will be in the public interest. 

lioth Ford and Oeneral Motors were concerned 
that confidential business information may be in- 
cluded in the agency's report to the Congress. 
The agency "s report to Congress will be a public 
clocuiiKMit. Therefore, the agency would have to 
(Un'ide to disclose any confidential information 



PART 537— PRE 17 



EffacHva: December 12, 1977 



before placing it in the report. Given the nature 
of the report to the Congress, the agency believes 
it is unlikely that disclosure of confidential busi- 
ness information would be necessary for an in- 
formative and complete report to the Congress, 
and that there are no grounds for the manufac- 
turers' concern in this regard. 

A minor change has been made with respect to 
the NPRM's provisions for incorporation by 
reference of information in these reports. The 
NPRM had proposed that, when a document was 
incorporated by reference in this report, the 
manufacturer would be required to append a 
copy of the incorporated document to the report. 
The NHTSA has determined that this provision 
is unnecessary in the case of documents which 
have previously been submitted to NHTSA. With 
respect to documents incorporated by reference 
which have previously been submitted to the 
NHTSA, the manufacturer is required to clearly 
identify the document and indicate the date on 
which and by whom the document was submitted 
to the NHTSA. 

Implementation costs. In accordance with De- 
partment of Transportation policy encouraging 
adequate analysis of the consequences of regula- 
tory action (41 FR 16200, April 16, 1976), the 
agency has summarized below its evaluation of 
the economic and other consequences of this ac- 



tion on the public and private sectors. The total 
annual cost of implementing this final rule is 
expected to be less than $775,000 for the manu- 
facturers and the Federal government. The 
share of the manufacturers would be $650,000, 
and that of the Federal government would be 
$125,000. The costs to the manufacturers will 
consist primarily of the additional administrative 
costs incurred to gather, tabulate, and submit the 
required information. The total costs for a manu- 
facturer's semiannual and supplementary reports 
for a model year will range between $160,000 for 
a large manufacturer and $5,000 for a low volume 
manufacturer exempted under section 502(c) of 
Title V. 

In light of the foregoing, Title 49, Code of 
Federal Regulations, is amended by adding a 
new Part 537, Automotive Fvsl Economy Reports. 

The program official and attorney principally 
responsible for the development of this rule are 
Anees Adil and Stephen Kratzke, respectively. 



Issued December 7, 1977. 



Joan Claybrook 
Administrator 

42 F.R. 62374 
December 12, 1977 



f 



PART 537— PRE 18 



(€*? 



Effective: December 12, 1977 



tions of confidentiality for tlio intoiiin period 
sliould not he unduly hui'd(>nsoine on the manu- 
facturers or the a<:ency. 

Chrysler also commented that wlien a deter- 
mination is made that certain information is 
confidential, that information should not be dis- 
closed unless a "requester is able to make a sub- 
stantial (as opposed to a casual [sic] ) showing 
of need to review this information." Althou<rh 
Ciirysler did not specifically reference it, this 
comment is presumably directed at the Admin- 
istrator's power imder section 505(d)(1) to re- 
lease confidential business information when 
relevant to a proceedinp under Title V of the 
Act. The ajrency has interpreted section 505(d) 
(1) as <rivin<r it the power to release confidential 
business information in a proceeding when it is 
in the public interest to do so. Tlie determina- 
tion of whether the release of confidential busi- 
ness information is in the public interest will 
usually entail a balancinjj: of benefits and harms, 
both public and private, that may result from the 
release of information wliicli has been determined 
to be confidential business information. Certainly, 
k tiie need for the information may he an important 
" factor in tliis balancinfr. as would other factors, 
such as tlie effect on competition resultin<j; from 
the release of confidential business information. 
The agency agrees with Chrysler that these, 
as well as other factors, should be carefully 
considered before the e.xercise of the power to 
release admittedly confidential information. How- 
ever, tlie agency cannot now assign weight to, or 
even identify, all the factors that should be con- 
sidered prior to the release of confidential busi- 
ness information. The exercise of the 505(d) (1) 
power must proceed on a case-by-case basis. 

Chrysler stated in its comments that a sub- 
mitter of information should have ample oppor- 
tunity to object to the proposed release of 
confidential business information, or to witlidraw 
that information. The agency agrees tliat sub- 
mitters of confidential infornuition, or infoiinn- 
tion claimed to be confidential, sliould lia\e notice 
of, and opportunity to object to. the proposed 
lelease of that information. The XPRM and the 
final rule provide for sucii notice, as will the 
rule governing the treatment of confidential in- 
fonnation. The submitter will haxc at least ten 
^ days, when feasible, between notice of intention 



to disclose and actual disclosure, during which 
time the manufacturer may make any objections 
or take any other action that it regards as ap- 
propriate. 

The agency does not agree that the submitter 
of information should have, in any circumstances, 
the right to withdraw information which it has 
been lawfully required to submit. Such a right 
would give to the submitter of the information, 
rather than the agency, the power to determine 
what information should be made publicly avail- 
able. Since Congress clearly gave this power to 
the .agency in section 505(d) (1), Chrysler's com- 
ment must be rejected. 

Although Ford, General Motors, and AMC 
made no comments specifically relating to the 
procedures for treating confidential business in- 
formation, those manufacturers did express some 
concern about the harmful effects, especially harm 
to competition, that would result from disclosure 
of some of the information which the agency is 
requiring. Those comments did not explain how 
disclosure may occur. Presumably, there is no 
issue of accidental disclosure of information. The 
agency knows of no instance where confidential 
business information in the agency's possession 
was inadvertently or negligently disclosed to the 
public. The agency takes precautions to ensure 
that confidential information in its possession is 
not inadvertently released. Those precautions 
have been effective in the past, and there is no 
reason to believe that they will not continue to be 
effective. 

To the extent that confidential information may 
be released under the power contained in section 
505(d)(1), the statements made with respect to 
the Chrysler comments are applicable here. The 
agency will consider all the interests, including 
the interests of the competitive structure of the 
automobile industry, before releasing any confi- 
dential business information. The agency will 
not release any information or. indeed, take any 
action at all, unless the agency believes that its 
actions will be in the public interest. 

Both Ford and General Motors were concerned 
that confidential business information may be in- 
cluded in the agency's rei)ort to the Congress. 
The agency's report to Congress will be a public 
docuiiieiit. Therefore, the agency would have to 
decide to disclose anv confidential information 



PART 537— PRE IT 



Effective: December 12, 1977 



before placinjr it in the report. Given the nature 
of tlie report to the Confrress, the agency believes 
it is unlikely that disclosure of confidential busi- 
ness information would be necessary for an in- 
formative and complete report to the Congress, 
and that there are no grounds for the manufac- 
turers' concern in this regard. 

A minor change has been made with respect to 
the XPKM's provisions for incorporation by 
reference of information in these reports. The 
NPRM had proposed that, when a document was 
incorporated by reference in this report, the 
manufacturer would be required to append a 
copy of the incorporated document to the report. 
The NHTSA has determined that this provision 
is unnecessary in the case of documents which 
have previously been submitted to NHTSA. With 
respect to documents incorporated by reference 
which have previously been submitted to the 
NHTSA, the manufacturer is required to clearly 
identify the document and indicate the date on 
which and by whom the document was submitted 
to the NHTSA. 

Implementation costs. In accordance with De- 
partment of Transportation policy encouraging 
adequate analysis of the consequences of regula- 
tory action (41 FR 16200, April 16, 1976), the 
agency has summarized below its evaluation of 
the economic and other consequences of this ac- 



tion on the public and private sectors. The total 
annual cost of implementing this final rule is 
expected to be less than $775,000 for the manu- 
facturers and the Federal government. The 
share of the manufacturers would be $650,000, 
and that of the Federal government would be 
$125,000. The costs to the manufacturers will 
consist primarily of the additional administrative 
costs incurred to gather, tabulate, and submit the 
required information. The total costs for a manu- 
facturer's semiannual and supplementary reports 
for a model year will range between $160,000 for 
a large manufacturer and $5,000 for a low volume 
manufacturer exempted under section 502(c) of 
Title V. 

In light of the foregoing, Title 49, Code of 
Federal Regulations, is amended by adding a 
new Part 537, Automotive Fuel Economy Reports. 

The program official and attorney principally 
lesponsible for the development of this rule are 
Anees Adil and Stephen Kratzke, respectively. 



Issued December 7, 1977. 



Joan Claybrook 
Administrator 



42 F.R. 62374 
December 12, 1977 



PART 537— PRE 18 



PREAMBLE TO AN AMENDMENT TO PART 537-AUTOMOTIVE FUEL 

ECONOMY REPORTS 

(Docket Nos. FE 76-04; Notice 5; 
FE 77-03, Notice 4; 80-21, Notice 1) 



ACTION: Final Rule. 

SUMMARY: This notice makes conforming 
amendments to several of the agency's regulations 
deleting specific requirements for confidentiality 
determinations. These conforming amendments 
are needed as a result of the publication today of a 
new agency regulation governing requests for con- 
fidentiality determinations (Part 512). Since that 
new regulation supercedes the confidentiality pro- 
visions existing in several of the agency's other 
regulations, these conforming amendments are 
being made without notice and opportunity for 
comment. 



EFFECTIVE DATE: 

tive April 9, 1981. 



These amendments are effec- 



FOR FURTHER INFORMATION CONTACT: 

Roger Tilton, Office of Chief Counsel, 
National Highway Traffic Safety Adminis- 
tration, 400 Seventh Street, S.W., 
Washington, D.C. 20590 (202-426-9511). 

SUPPLEMENTARY INFORMATION: In accordance 
with the above. Title 49 of the Code of Federal 
Regulations is amended as follows. 

Part 525, Exemptions From Average Fuel 
Economy Standards, is revised as follows: 

(1) Section 525.6(g) (1) and (2) are deleted and 
replaced with the following: 

(g) Specify and segregate any part of the infor- 
mation and data submitted under this part that the 
petitioner wishes to have withheld from public 
disclosure in accordance with Part 512 of this 
Chapter. 

(2) Section 525.13 is deleted and section 
525.12 is revised to read: 



§ 525.12 Public Inspection of Information. 

(a) Except as provided in paragraph (b), any per- 
son may inspect available information relevant to a 
petition under this Part, including the petition and 
any supporting data, memoranda of informal 
meetings with the petitioner or any other in- 
terested persons, and the notices regarding the 
petition, in the Docket Section of the National 
Highway Traffic Safety Administration. Any per- 
son may obtain copies of the information available 
for inspection under this paragraph in accordance 
with Part 7 of the regulations of the Office of the 
Secretary of Transportation (49 CFR Part 7). 

(b) Except for the release of confidential infor- 
mation authorized by section 505 of the Act and 
Part 512 of this Chapter, information made 
available for public inspection does not include in- 
formation for which confidentiality is requested 
under § 525.6(g) and is granted in accordance with 
Part 512 and sections 502 and 505 of the Act and 
section 552(b) of Title 5 of the United States Code. 

Part 537, Automotive Fuel Economy Reports, is 
revised as follows: 

(1) Section 537.5(c) (7) (i) and (ii) are deleted 
and replaced with the following: 

(7) Specify any part of the information or data 
in the report that the manufacturer believes 
should be withheld from public disclosure as 
trade secret or other confidential business infor- 
mation in accordance with Part 512 of this 
Chapter. 

(2) Section 537.12 is deleted and section 
537.11 is revised to read: 

§ 537.11 Public Inspection of Information. 

(a) Except as provided in paragraph (b), any per- 
son may inspect the information and data submit- 



PART 537; PRE 19 



ted by a manufacturer under this part in the docket 
section of the National Highway Traffic Safety Ad- 
ministration. Any person may obtain copies of the 
information available for inspection under this sec- 
tion in accordance with the regulations of the 
Secretary of Transportation in Part 7 of this title. 

(b) Except for the release of confidential infor- 
mation authorized by section 505 of the Act and 
Part 512 of this Chapter, information made 
available under paragraph (a) for public inspection 
does not include information for which confiden- 
tiality is requested under § 537.5(c) (7) and is 
granted in accordance with Part 512 of this 
Chapter, section 505 of the Act, and section 552(b) 
of Title 5 of the United States Code. 

Part 555, Temporary Exemption From Motor 
Vehicle Safety Standards, is revised as follows: 
(1) Section 555.5(b) (6) is revised to read: 
(6) Specify any part of the information and 

data submitted which petitioner requests be 



withheld from public disclosure in accordance 

with Part 512 of this Chapter. 
(2) Section 555.10(b) is revised to read: 

(b) Except for the release of confidential infor- 
mation authorized by Part 512 of this Chapter, in- 
formation made available for inspection under 
paragraph (a) shall not include materials not rele- 
vant to the petition for which confidentiality is re- 
quested and granted in accordance with sections 
112, 113, and 158 of the Act (15 U.S.C. 1401, 1402, 
and 1418) and section 552(b) of Title 5 of the 
United States Code. 

Issued on December 30, 1980. 



Joan Claybrook 
Administrator 



46 F.R. 2063 
January 8, 1981 



i 



PART 537; PRE 20 



PREAMBLE TO AN AMENDMENT TO PART 537-AUTOMOTIVE FUEL 

ECONOMY REPORTS 

(Docket Nos. FE 76-04; Notice 5; 
FE 77-03, Notice 4; 80-21, Notice 1) 



ACTION: Final Rule. 

SUMMARY: This notice makes conforming 
amendments to several of the agency's regulations 
deleting specific requirements for confidentiality 
determinations. These conforming amendments 
are needed as a result of the publication today of a 
new agency regulation governing requests for con- 
fidentiality determinations (Part 512). Since that 
new regulation supercedes the confidentiality pro- 
visions existing in several of the agency's other 
regulations, these conforming amendments are 
being made without notice and opportunity for 
comment. 



. EFFECTIVE DATE: 
f tive April 9, 1981. 



These amendments are effec- 



FOR FURTHER INFORMATION CONTACT: 

Roger Tilton, Office of Chief Counsel, 
National Highway Traffic Safety Adminis- 
tration, 400 Seventh Street, S.W., 
Washington, D.C. 20590 (202-426-9511). 

SUPPLEMENTARY INFORMATION: In accordance 
with the above. Title 49 of the Code of Federal 
Regulations is amended as follows. 

Part 525, Exemptions From Average Fuel 
Ewnomy Standards, is revised as follows: 

(1) Section 525.6(g) (1) and (2) are deleted and 
replaced with the following: 

(g) Specify and segregate any part of the infor- 
mation and data submitted under this part that the 
petitioner wishes to have withheld from public 
disclosure in accordance with Part 512 of this 
Chapter. 

(2) Section 525.13 is deleted and section 
525.12 is revised to read: 



§ 525.12 Public Inspection of Information. 

(a) Except as provided in paragraph (b), any per- 
son may inspect available information relevant to a 
petition under this Part, including the petition and 
any supporting data, memoranda of informal 
meetings with the petitioner or any other in- 
terested persons, and the notices regarding the 
petition, in the Docket Section of the National 
Highway Traffic Safety Administration. Any per- 
son may obtain copies of the information available 
for inspection under this paragraph in accordance 
with Part 7 of the regulations of the Office of the 
Secretary of Transportation (49 CFR Part 7). 

(b) Except for the release of confidential infor- 
mation authorized by section 505 of the Act and 
Part 512 of this Chapter, information made 
available for public inspection does not include in- 
formation for which confidentiality is requested 
under § 525.6(g) and is granted in accordance with 
Part 512 and sections 502 and 505 of the Act and 
section 552(b) of Title 5 of the United States Code. 

Part 537, Automotive Fv£l Economy Reports, is 
revised as follows: 

(1) Section 537.5(c) (7) (i) and (ii) are deleted 
and replaced with the following: 

(7) Specify any part of the information or data 
in the report that the manufacturer believes 
should be withheld from public disclosure as 
trade secret or other confidential business infor- 
mation in accordance with Part 512 of this 
Chapter. 

(2) Section 537.12 is deleted and section 
537.11 is revised to read: 

§ 537.11 Public Inspection of Information. 

(a) Except as provided in paragraph (b), any per- 
son may inspect the information and data submit- 



PART 537; PRE 19 



ted by a manufacturer under this part in the docket 
section of the National Highway Traffic Safety Ad- 
ministration. Any person may obtain copies of the 
information available for inspection under this sec- 
tion in accordance with the regulations of the 
Secretary of Transportation in Part 7 of this title. 

(b) Except for the release of confidential infor- 
mation authorized by section 505 of the Act and 
Part 512 of this Chapter, information made 
available under paragraph (a) for public inspection 
does not include information for which confiden- 
tiality is requested under § 537.5(c) (7) and is 
granted in accordance with Part 512 of this 
Chapter, section 505 of the Act, and section 552(b) 
of Title 5 of the United States Code. 

Part 555, Temporary Exemption From Motor 
Vehicle Safety Standards, is revised as follows: 
(1) Section 555.5(b) (6) is revised to read: 
(6) Specify any part of the information and 

data submitted which petitioner requests be 



withheld from public disclosure in accordance 

with Part 512 of this Chapter. 
(2) Section 555.10(b) is revised to read: 

(b) Except for the release of confidential infor- 
mation authorized by Part 512 of this Chapter, in- 
formation made available for inspection under 
paragraph (a) shall not include materials not rele- 
vant to the petition for which confidentiality is re- 
quested and granted in accordance with sections 
112, 113, and 158 of the Act (15 U.S.C. 1401, 1402, 
and 1418) and section 552(b) of Title 5 of the 
United States Code. 

Issued on December 30, 1980. 



Joan Claybrook 
Administrator 

46 F.R. 2063 
January 8, 1981 



^ 



PART 537; PRE 20 



PREAMBLE TO AN AMENDMENT TO PART 537 

Automotive Fuel Economy; Semi-annual Reports 
(Docket No. FE 77-03; Notice 7) 



ACTION: Final rule. 

SUMMARY: This notice amends the agency's 
automotive fuel economy reporting requirements 
by deleting certain information submission 
requirements. The deleted requirements applied 
to information the agency has determined to be 
no longer necessary for it to monitor the 
automotive industry's progress in achieving 
higher levels of average fuel economy. The agency 
is adopting this amendment as proposed, to permit 
the vehicle manufacturers to take advantage of 
the reduced requirements in the next reports 
required to be submitted. However, the agency 
will continue to evaluate comments responding to 
the request in its proposal regarding suggestions 
for further reductions in the requirements. 

DATE: This action is effective on August 12, 
1982. 

SUPPLEMENTARY INFORMATION: Section 505 
of the Motor Vehicle Information and Cost Savings 
Act requires each automobile manufacturer 
(other than those small manufacturers which have 
been granted an alternative fuel economy standard 
under section 502(c) of the Act) to submit to the 
agency semi-annual reports relating to that 
manufacturer's efforts to comply with average 
fuel economy standards. The Act specifies that 
each report must contain a statement as to 
whether the manufacturer will comply with 
average fuel economy standards for that year, a 
plan describing the steps the manufacturer has 
taken or will take to comply, and any other 
information the agency may require. Whenever a 
manufacturer determines that a plan it submitted 
in one of its reports is no longer adequate to 
assure compliance, it must submit a revised plan. 
Section 505(c) of the Act also authorizes the 



agency to require further reports to be submitted, 
as necessary for the agency to carry out its 
responsibilities under the Act. The Act requires 
the agency to issue rules establishing the form 
and content of all reports. 

On December 12, 1977, in 42 F.R. 62374, the 
agency established form and content requirements 
for fuel economy reports. Those requirements 
were designed to elicit information necessary to 
monitor compliance with standards and to assist 
the agency in its standard-setting activities for 
passenger automobiles and light trucks. However, 
in light of the agency's determination that, for the 
foreseeable future, market forces appear to 
provide adequate incentive for the production of 
and demand for fuel efficient vehicles (see 46 F.R. 
22243, April 16, 1981) and that the establishment 
of additional passenger automobile fuel economy 
standards is therefore unnecessary, some of the 
information required to be submitted in fuel 
economy reports was found to be no longer needed 
by the agency. Therefore, on February 22, 1982, 
the agency proposed deleting portions of its fuel 
economy reporting requirements which were 
originally established principally to assist future 
rulemaking. See 47 F.R. 7706. 

The agency's December 1977 rule required the 
submission of five general categories of 
information: (1) the manufacturer's projected 
average fuel economy; (2) the projected fuel 
economy and sales for each model type; (3) a 
variety of technical and sales data for each 
vehicle configuration; (4) a description of 
technology and sales changes from the preceding 
model year which increase the manufacturer's 
average fuel economy, and of changes made 
during the model year which will affect average 
fuel economy; and (5) a description of marketing 
measures the manufacturer expects to use to 
improve average fuel economy. The proposed 



PART 537; PRE 21 



revisions to the reporting requirements would 
have required the submission of the detailed 
configuration data only once per year, instead of 
requiring it for each semi-annual report, and 
would have deleted the requirements for 
submission of sales and technology change 
information and information on marketing 
measures. 

The agency received ten comments on the 
proposed changes, eight from vehicle 
manufacturers and two from consumer 
organizations. The vehicle manufacturers 
generally supported the proposed reductions and 
suggested additional areas where information 
submission requirements might be reduced. The 
consumer organizations opposed the reductions, 
arguing that the agency should continue to 
establish fuel economy standards for each model 
year and that even if the agency merely monitors 
the need for future standards, much of the no- 
longer-required information would still be highly 
useful. 

For the reasons set forth below, the agency 
disagrees with the arguments set forth by the 
two consumer groups. As an immediate measure, 
the agency is promulgating an amended reporting 
rule identical to the proposed amendment. This 
step was suggested by Ford Motor Company in 
its NPRM comments. Taking that action will 
permit a less stringent rule to be in effect in time 
for the preparation and submission of future 
reports. The agency will review the comments by 
the vehicle manufacturers to determine whether 
additional reductions in the reporting 
requirements are appropriate and consistent 
with the agency's statutory obligations. 

The Environmental Policy Institute and the 
Center for Auto Safety both argued that the 
agency should not adopt the proposed modifications 
to the reporting rule because the agency should 
proceed to establish fuel economy standards for 
model years after 1985. Under section 502(a)(1) of 
the Act, Congress established an average fuel 
economy standard of 27.5 miles per gallon for 
passenger automobiles manufactured in the 1985 
model year and thereafter. However, under 
section 502(a)(4) of the Act, the agency is 
authorized to amend the standard for 1985 or any 
model year thereafter to a level determined to be 
the maximum feasible average fuel economy level. 
The agency's April 16 notice announced the 



agency's determination that it is not now 
necessary to exercise the discretionary authority 
granted under section 502(a)(4) of the Act to issue 
additional passenger automobile standards, given 
current high gasoline prices and demand for fuel 
efficient vehicles and announced plans of the 
vehicle manufacturers to produce efficient 
vehicles. The agency reaffirmed that position in 
denying a petition from the Center for Auto 
Safety to commence rulemaking on such standards 
(see 46 F.R. 48383, October 1, 1981) and still 
remains of that view. 

The standards-related information previously 
required to be submitted in the semi-annual 
reports and now being deleted was useful when 
the agency engaged in major fuel economy 
standard setting proceedings virtually every 
year, as it did from 1976-1980. However, even for 
those proceedings, it was necessary to supplement 
those reports with some detailed information 
obtained through the use of questionnaires and 
special orders to the manufacturers. The agency 
simply sees no need for the continued submission 
of certain information semi-annually. If changed 
circumstances create a need in the future for the 
issuance of additional passenger car standards, 
for example, the agency could obtain the necessary 
information in the same manner as in the earlier 
proceedings, i.e., through the use of 
questionnaires and special orders. 

The Center for Auto Safety also argued that 
the fuel economy reporting rule should not be 
modified, since the agency still needs all the 
previously required data to fulfill its stated intent 
of monitoring the actions of the manufacturers in 
producing and marketing fuel efficient vehicles, 
as well as consumer demand for such vehicles. 
The agency disagrees. Long term trends in 
automotive fuel efficiency can be ascertained 
with less detailed and less frequently submitted 
information than is necessary to establish 
standards which must be enforced to the nearest 
0.1 mile per gallon. Information on vehicle model 
types, along with the annual updates of more 
detailed configuration data, provides adequate 
information to assess such trends. Marketing 
measure information was more useful in times 
when manufacturers might have needed to use 
such measures to raise their average fuel 
economy levels enough to comply with applicable 
fuel economy standards. In the current market 



PART 537; PRE 22 



PREAMBLE TO AN AMENDMENT TO PART 537 

Automotive Fuel Economy; Semi-annual Reports 
(Docket No. FE 77-03; Notice 7) 



ACTION: Final rule. 

SUMMARY: This notice amends the agency's 
automotive fuel economy reporting requirements 
by deleting certain information submission 
requirements. The deleted requirements applied 
to information the agency has determined to be 
no longer necessary for it to monitor the 
automotive industry's progress in achieving 
higher levels of average fuel economy. The agency 
is adopting this amendment as proposed, to permit 
the vehicle manufacturers to take advantage of 
the reduced requirements in the next reports 
required to be submitted. However, the agency 
will continue to evaluate comments responding to 
the request in its proposal regarding suggestions 
for further reductions in the requirements. 

DATE: This action is effective on August 12, 
1982. 

SUPPLEMENTARY INFORMATION: Section 505 
of the Motor Vehicle Information and Cost Savings 
Act requires each automobile manufacturer 
(other than those small manufacturers which have 
been granted an alternative fuel economy standard 
under section 502(c) of the Act) to submit to the 
agency semi-annual reports relating to that 
manufacturer's efforts to comply with average 
fuel economy standards. The Act specifies that 
each report must contain a statement as to 
whether the manufacturer will comply with 
average fuel economy standards for that year, a 
plan describing the steps the manufacturer has 
taken or will take to comply, and any other 
information the agency may require. Whenever a 
manufacturer determines that a plan it submitted 
in one of its reports is no longer adequate to 
assure compliance, it must submit a revised plan. 
Section 505(c) of the Act also authorizes the 



agency to require further reports to be submitted, 
as necessary for the agency to carry out its 
responsibilities under the Act. The Act requires 
the agency to issue rules establishing the form 
and content of all reports. 

On December 12, 1977, in 42 F.R. 62374, the 
agency established form and content requirements 
for fuel economy reports. Those requirements 
were designed to elicit information necessary to 
monitor compliance with standards and to assist 
the agency in its standard-setting activities for 
passenger automobiles and light trucks. However, 
in light of the agency's determination that, for the 
foreseeable future, market forces appear to 
provide adequate incentive for the production of 
and demand for fuel efficient vehicles (see 46 F.R. 
22243, April 16, 1981) and that the establishment 
of additional passenger automobile fuel economy 
standards is therefore unnecessary, some of the 
information required to be submitted in fuel 
economy reports was found to be no longer needed 
by the agency. Therefore, on February 22, 1982, 
the agency proposed deleting portions of its fuel 
economy reporting requirements which were 
originally established principally to assist future 
rulemaking. See 47 F.R. 7706. 

The agency's December 1977 rule required the 
submission of five general categories of 
information: (1) the manufacturer's projected 
average fuel economy; (2) the projected fuel 
economy and sales for each model type; (3) a 
variety of technical and sales data for each 
vehicle configuration; (4) a description of 
technology and sales changes from the preceding 
model year which increase the manufacturer's 
average fuel economy, and of changes made 
during the model year which will affect average 
fuel economy; and (5) a description of marketing 
measures the manufacturer expects to use to 
improve average fuel economy. The proposed 



PART 537; PRE 21 



revisions to the reporting requirements would 
have required the submission of the detailed 
configuration data only once per year, instead of 
requiring it for each semi-annual report, and 
would have deleted the requirements for 
submission of sales and technology change 
information and information on marketing 
measures. 

The agency received ten comments on the 
proposed changes, eight from vehicle 
manufacturers and two from consumer 
organizations. The vehicle manufacturers 
generally supported the proposed reductions and 
suggested additional areas where information 
submission requirements might be reduced. The 
consumer organizations opposed the reductions, 
arguing that the agency should continue to 
establish fuel economy standards for each model 
year and that even if the agency merely monitors 
the need for future standards, much of the no- 
longer-required information would still be highly 
useful. 

For the reasons set forth below, the agency 
disagrees with the arguments set forth by the 
two consumer groups. As an immediate measure, 
the agency is promulgating an amended reporting 
rule identical to the proposed amendment. This 
step was suggested by Ford Motor Company in 
its NPRM comments. Taking that action will 
permit a less stringent rule to be in effect in time 
for the preparation and submission of future 
reports. The agency will review the comments by 
the vehicle manufacturers to determine whether 
additional reductions in the reporting 
requirements are appropriate and consistent 
with the agency's statutory obligations. 

The Environmental Policy Institute and the 
Center for Auto Safety both argued that the 
agency should not adopt the proposed modifications 
to the reporting rule because the agency should 
proceed to establish fuel economy standards for 
model years after 1985. Under section 502(a)(1) of 
the Act, Congress established an average fuel 
economy standard of 27.5 miles per gallon for 
passenger automobiles manufactured in the 1985 
model year and thereafter. However, under 
section 502(a)(4) of the Act, the agency is 
authorized to amend the standard for 1985 or any 
model year thereafter to a level determined to be 
the maximum feasible average fuel economy level. 
The agency's April 16 notice announced the 



agency's determination that it is not now 
necessary to exercise the discretionary authority 
granted under section 502(a)(4) of the Act to issue 
additional passenger automobile standards, given 
current high gasoline prices and demand for fuel 
efficient vehicles and announced plans of the 
vehicle manufacturers to produce efficient 
vehicles. The agency reaffirmed that position in 
denying a petition from the Center for Auto 
Safety to commence rulemaking on such standards 
(see 46 F.R. 48383, October 1, 1981) and still 
remains of that view. 

The standards-related information previously 
required to be submitted in the semi-annual 
reports and now being deleted was useful when 
the agency engaged in major fuel economy 
standard setting proceedings virtually every 
year, as it did from 1976-1980. However, even for 
those proceedings, it was necessary to supplement 
those reports with some detailed information 
obtained through the use of questionnaires and 
special orders to the manufacturers. The agency 
simply sees no need for the continued submission 
of certain information semi-annually. If changed 
circumstances create a need in the future for the 
issuance of additional passenger car standards, 
for example, the agency could obtain the necessary 
information in the same manner as in the earlier 
proceedings, i.e., through the use of 
questionnaires and special orders. 

The Center for Auto Safety also argued that 
the fuel economy reporting rule should not be 
modified, since the agency still needs all the 
previously required data to fulfill its stated intent 
of monitoring the actions of the manufacturers in 
producing and marketing fuel efficient vehicles, 
as well as consumer demand for such vehicles. 
The agency disagrees. Long term trends in 
automotive fuel efficiency can be ascertained 
with less detailed and less frequently submitted 
information than is necessary to establish 
standards which must be enforced to the nearest 
0.1 mile per gallon. Information on vehicle model 
types, along with the annual updates of more 
detailed configuration data, provides adequate 
information to assess such trends. Marketing 
measure information was more useful in times 
when manufacturers might have needed to use 
such measures to raise their average fuel 
economy levels enough to comply with applicable 
fuel economy standards. In the current market 



PART 537; PRE 22 



situation, compliance with standards is typically 
assured by comfortable margins. Thus, marketing 
measures are targeted to problems associated 
with inventories of over-stocked vehicles. With 
regard to technological change information, this 
material is typically available to the agency in the 
trade press. It can also be derived from the 
configuration and model type data in many cases. 
Finally, running changes are generally minor, 
unplanned product revisions caused by parts 
shortages or driveability complaints by consumers, 
such as a change in tire type or in carburetor 
calibration. Major actions which could significantly 
affect fuel economy are rarely implemented as 
running changes. 

The agency finds good cause for making this 
amendment effective immediately, since it would 
permit the manufacturers to avoid devoting 
resources to the preparation of information which 
the agency has determined to be of little value in 
carrying out its responsibilities. The immediate 
effective date is authorized under the 
Administrative Procedure Act for that reason 
and, since this rulemaking "relieves a restriction," 
within the meaning of 5 U.S.C. 553(d). 

NHTSA has determined that this proceeding 
does not involve a major rule within the meaning 
of section 1, paragraph (b), of Executive Order 
12291 because it is not likely to have an effect on 
the economy of $100 million or more, to result in a 
major increase in costs or prices, or to have a 
significant adverse effect on competition, 
employment, investment, productivity, innovation, 
or the ability of United States firms to meet 



foreign competition. This action is also not 
significant for purposes of Department of 
Transportation procedures for internal review of 
regulatory actions. A regulatory evaluation of 
this action has been prepared and has been placed 
in the rulemaking docket for this notice. Copies of 
that document can be obtained from the agency's 
Docket Section at the address stated above. 

Pursuant to the Regulatory Flexibility Act, the 
agency has considered the impact of this 
rulemaking action on small entities. The agency 
certifies that this action will not have a 
significant economic impact on a substantial 
number of small entities. Therefore, a regulatory 
flexibility analysis will not be required for this 
action. The agency has concluded that few, if any, 
manufacturers of passenger cars are small 
entities and that, in any event, any effect on such 
manufacturers will be positive in terms of 
reduced costs. NHTSA has also concluded that 
the environmental consequences of this action 
will be of such limited scope that they clearly will 
not have a significant effect on the quality of the 
human environment. 

Issued on August 5, 1982. 



Raymond A. Peck, Jr. 
Administrator 

47 F.R. 34985 
August 12, 1982 



PART 537: PRE 23-24 



^ 



i 



situation, compliance with standards is typically 
assured by comfortable margins. Thus, marketing 
measures are targeted to problems associated 
with inventories of over-stocked vehicles. With 
regard to technological change information, this 
material is typically available to the agency in the 
trade press. It can also be derived from the 
configuration and model type data in many cases. 
Finally, running changes are generally minor, 
unplanned product revisions caused by parts 
shortages or driveability complaints by consumers, 
such as a change in tire type or in carburetor 
calibration. Major actions which could significantly 
affect fuel economy are rarely implemented as 
running changes. 

The agency finds good cause for making this 
amendment effective immediately, since it would 
permit the manufacturers to avoid devoting 
resources to the preparation of information which 
the agency has determined to be of little value in 
carrying out its responsibilities. The immediate 
effective date is authorized under the 
Administrative Procedure Act for that reason 
and, since this rulemaking "relieves a restriction," 
within the meaning of 5 U.S.C. 553(d). 

NHTSA has determined that this proceeding 
does not involve a major rule within the meaning 
of section 1, paragraph (b), of Executive Order 
12291 because it is not likely to have an effect on 
the economy of $100 million or more, to result in a 
major increase in costs or prices, or to have a 
significant adverse effect on competition, 
employment, investment, productivity, innovation, 
or the ability of United States firms to meet 



foreign competition. This action is also not 
significant for purposes of Department of 
Transportation procedures for internal review of 
regulatory actions. A regulatory evaluation of 
this action has been prepared and has been placed 
in the rulemaking docket for this notice. Copies of 
that document can be obtained from the agency's 
Docket Section at the address stated above. 

Pursuant to the Regulatory Flexibility Act, the 
agency has considered the impact of this 
rulemaking action on small entities. The agency 
certifies that this action will not have a 
significant economic impact on a substantial 
number of small entities. Therefore, a regulatory 
flexibility analysis will not be required for this 
action. The agency has concluded that few, if any, 
manufacturers of passenger cars are small 
entities and that, in any event, any effect on such 
manufacturers will be positive in terms of 
reduced costs. NHTSA has also concluded that 
the environmental consequences of this action 
will be of such limited scope that they clearly will 
not have a significant effect on the quality of the 
human environment. 

Issued on August 5, 1982. 



Raymond A. Peck, Jr. 
Administrator 

47 F.R. 34985 
August 12, 1982 



PART 537; PRE 23-24 



(f 



PART 537— AUTOMOTIVE FUEL ECONOMY REPORTS 



Section 

537.1 Scope. 

537.2 Purpose. 

537.3 Applicability. 

537.4 Definitions. 

537.5 General requirements for reports. 

537.6 General content of reports. 

537.7 Pre-model year and mid-model year re- 
ports. 

537.8 Supplementary reports. 

537.9 Determination of fuel economy values and 
average fuel economy. 

537.10 Incorporation by reference. 

537.11 Public inspection of information. 

537.12 Confidential information. 

AUTHORITY: Section 9, Pub. L. 89-670, 80 
Stat. 931 (49 U.S.C. 1657); Section 301, Pub. L. 
94-163, 89 Stat. 901 (15 U.S.C. 2005); delegation 
of authority at 41 FR 25015, June 22, 1976. 

§ 537.1 Scope. 

This part estabHshes requirements for automo- 
bile manufacturers to submit reports to the Na- 
tional Highway Traffic Safety Administration 
regarding their efforts to improve automotive fuel 
economy. 

§ 537.2 Purpose. 

The purpose of this part is to obtain informa- 
tion to aid the National Highway Traffic Safety 
Administration in evaluating automobile manu- 
facturers' plans for complying with average fuel 
economy standards and in preparing an annual 
review of the average fuel economy standards. 

§ 537.3 Applicability. 

This part applies to automobile manufacturers. 



§ 537.4 Definitions. 

(a) Statutory terms. (1) The terms "average 
fuel economy standard," "fuel," "manufacture," 
and "model year" are used as defined in section 
501 of the Act. 

(2) The term "manufacturer" is used as de- 
fined in section 501 of the Act and in accord- 
ance with Part 529 of this chapter. 

(3) The terms "average fuel economy," "fuel 
economy," and "model type" are used as de- 
fined in Subpart A of 40 CFR Part 600. 

(4) The terms "automobile," "automobile 
capable of off-highway operation" and "passen- 
ger automobile" are used as defined in section 
501 of the Act and in accordance with the 
determinations in Part 523 of this chapter. 

(b) Other terms. (1) The term "loaded ve- 
hicle weight" is used as defined in Subpart A of 
40 CFR Part 86. 

(2) The terms "axle ratio," "base level," 
"body style," "car line," "city fuel economy," 
"combined fuel economy," "engine code," 
"gross vehicle weight," "highway fuel econ- 
omy," "inertia weight," "transmission class," 
and "vehicle configuration" are used as defined 
in Subpart A of 40 CFR Part 600. 

(3) The term "nonpassenger automobile" is 
used as defined in Part 523 of this chapter and 
in accordance with determinations in that part. 

(4) The terms "approach angle," "axle 
clearance," "breakover angle," "cargo carrying 
volume," "departure angle," "passenger carry- 
ing volume," "running clearance," and "tempo- 
rary living quarters" are used as defined in 
Part 523 of this chapter. 

(5) The term "incomplete automobile manu- 
facturer" is used as defined in Part 529 of 
this chapter. 

(6) The term "designated seating position" 
is used as defined in § 571.3 of this chapter. 



PART 537-1 



(7) As used in this part, unless otherwise 
required by the context: 

(i) "Act means the Motor Vehicle Infor- 
mation and Cost Savings Act (Pub. L. 92- 
513), as amended by the Energy Policy and 
Conservation Act (Pub. L. 94-163). 

(ii) "Administrator" means the Adminis- 
trator of the National Highway Traffic 
Safety Administration or the Administrator's 
delegate. 

(iii) "Current model year" means: 

(A) In the case of a pre-model year re- 
port, the full model year immediately 
following the period during which that 
report is required by § 537.5(b) to be sub- 
mitted. 

(B) In the case of a mid-model year 
report, the model year during which that 
report is required by § 537.5(b) to be sub- 
mitted. 

(iv) "Average" means a production- 
weighted average. 

(v) "Sales mix" means the number of 
automobiles, and the percentage of a manu- 
facturer's annual total production of auto- 
mobiles, in each inertia weight class, which 
the manufacturer plans to produce in a 
specified model year. 

(vi) "Total drive ratio" means the ratio 
of an automobile's engine rotational speed 
(in revolutions per minute) to the auto- 
mobile's forward speed (in miles per 
hour). 



§ 537.5 General requirements for reports. 

(a) For each current model year, each manu- 
facturer shall submit a pre-model year report, a 
mid-model year report, and, as required by § 537.8, 
supplementary reports. 

(b) (1) The pre-model year report required by 
this part for each current model year must be 
submitted not more than 30 days and not less 
than 1 day before the 1st day of that model 
year. 



(2) The mid-model year report required by this 
part for each current model year must be submit- 
ted not earlier than the 180th day and not later 
than the 209th day of that model year. 

(3) Each supplementary report must be sub- 
mitted in accordance with § 537.8(c). 

(c) Each report required by this part must: 

(1) Identify the report as a pre-model year 
report, mid-model year report, or supplementary 
report, as appropriate; 

(2) Identify the manufacturer submitting the 
report; 

(3) State the full name, title, and address of 
the official responsible for preparing the report; 

(4) Be submitted in 10 copies to: Ad- 
ministrator, National Highway Traffic Safety 
Administration, 400 Seventh Street, S.W., 
Washington, D.C. 20590; 

(5) Identify the current model year; 

(6) Be written in the English language; and 

1(7) Specify any part of the information or 
data in the report that the manufacturer believes 
should be withheld from public disclosure as 
trade secret or other confidential business infor- 
mation in accordance with Part 512 of this 
Chapter. (46 F.R. 2063- January 8, 1981. Effec- 
tive: April 9, 1981)1 

(d) Each report required by this part must be 
based upon all information and data available to 
the manufacturer 30 days before the report is sub- 
mitted to the Administrator. 

(e) (1) Any manufacturer may provide any item 
of information or data required by § 537.7 (e) as an 
estimate, or as a set or range of alternatives. 

(2) Any manufacturer submitting estimates, 
or sets or ranges of alternatives as permitted 
by paragraph (e) (1) of this section, shall state: 

(i) The method for determining them; 

(ii) The major uncertainties associated 
with them; and 



(Rev. 1/8/81) 



PART 537-2 



PART 537— AUTOMOTIVE FUEL ECONOMY REPORTS 



Section 

537.1 Scope. 

537.2 Purpose. 

537.3 Applicability. 

537.4 Definitions. 

537.5 General requirements for reports. 

537.6 General content of reports. 

537.7 Pre-model year and mid-model year re- 
ports. 

537.8 Supplementary reports. 

537.9 Determination of fuel economy values and 
average fuel economy. 

537.10 Incorporation by reference. 

537.11 Public inspection of information. 

537.12 Confidential information. 

AUTHORITY: Section 9, Pub. L. 89-670, 80 
Stat. 931 (49 U.S.C. 1657); Section 301, Pub. L. 
94-163, 89 Stat. 901 (15 U.S.C. 2005); delegation 
of authority at 41 FR 25015, June 22, 1976. 

§ 537.1 Scope. 

This part establishes requirements for automo- 
bile manufacturers to submit reports to the Na- 
tional Highway Traffic Safety Administration 
regarding their efforts to improve automotive fuel 
economy. 

§ 537.2 Purpose. 

The purpose of this part is to obtain informa- 
tion to aid the National Highway Traffic Safety 
Administration in evaluating automobile manu- 
facturers' plans for complying with average fuel 
economy standards and in preparing an annual 
review of the average fuel economy standards. 

§ 537.3 Applicability. 

This part applies to automobile manufacturers. 



§ 537.4 Definitions. 

(a) Statutory terms. (1) The terms "average 
fuel economy standard," "fuel," "manufacture," 
and "model year" are used as defined in section 
501 of the Act. 

(2) The term "manufacturer" is used as de- 
fined in section 501 of the Act and in accord- 
ance with Part 529 of this chapter. 

(3) The terms "average fuel economy," "fuel 
economy," and "model type" are used as de- 
fined in Subpart A of 40 CFR Part 600. 

(4) The terms "automobile," "automobile 
capable of off-highway operation" and "passen- 
ger automobile" are used as defined in section 
501 of the Act and in accordance with the 
determinations in Part 523 of this chapter. 

(b) Other terms. (1) The term "loaded ve- 
hicle weight" is used as defined in Subpart A of 
40 CFR Part 86. 

(2) The terms "axle ratio," "base level," 
"body style," "car line," "city fuel economy," 
"combined fuel economy," "engine code," 
"gross vehicle weight," "highway fuel econ- 
omy," "inertia weight," "transmission class," 
and "vehicle configuration" are used as defined 
in Subpart A of 40 CFR Part 600. 

(3) The term "nonpassenger automobile" is 
used as defined in Part 523 of this chapter and 
in accordance with determinations in that part. 

(4) The terms "approach angle," "axle 
clearance," "breakover angle," "cargo carrying 
volume," "departure angle," "passenger carry- 
ing volume," "running clearance," and "tempo- 
rary Hving quarters" are used as defined in 
Part 523 of this chapter. 

(5) The term "incomplete automobile manu- 
facturer" is used as defined in Part 529 of 
this chapter. 

(6) The term "designated seating position" 
is used as defined in § 571.3 of this chapter. 



PART 537-1 



(7) As used in this part, unless otherwise 
required by the context: 

(i) "Act means the Motor Vehicle Infor- 
mation and Cost Savings Act (Pub. L. 92- 
513), as amended by the Energy Policy and 
Conservation Act (Pub. L. 94-163). 

(ii) "Administrator" means the Adminis- 
trator of the National Highway Traffic 
Safety Administration or the Administrator's 
delegate. 

(iii) "Current model year" means: 

(A) In the case of a pre-model year re- 
port, the full model year immediately 
following the period during which that 
report is required by § 537.5(b) to be sub- 
mitted. 

(B) In the case of a mid-model year 
report, the model year during which that 
report is required by § 537.5(b) to be sub- 
mitted. 

(iv) "Average" means a production- 
weighted average. 

(v) "Sales mix" means the number of 
automobiles, and the percentage of a manu- 
facturer's annual total production of auto- 
mobiles, in each inertia weight class, which 
the manufacturer plans to produce in a 
specified model year. 

(vi) "Total drive ratio" means the ratio 
of an automobile's engine rotational speed 
(in revolutions per minute) to the auto- 
mobile's forward speed (in miles per 
hour). 



§ 537.5 General requirements for reports. 

(a) For each current model year, each manu- 
facturer shall submit a pre-model year report, a 
mid-model year report, and, as required by § 537.8, 
supplementary reports. 

(b) (1) The pre-model year report required by 
this part for each current model year must be 
submitted not more than 30 days and not less 
than 1 day before the 1st day of that model 
year. 



(2) The mid-model year report required by this 
part for each current model year must be submit- 
ted not earlier than the 180th day and not later 
than the 209th day of that model year. 

(3) Each supplementary report must be sub- 
mitted in accordance with § 537.8(c). 

(c) Each report required by this part must: 

(1) Identify the report as a pre-model year 
report, mid-model year report, or supplementary 
report, as appropriate; 

(2) Identify the manufacturer submitting the 
report; 

(3) State the full name, title, and address of 
the official responsible for preparing the report; 

(4) Be submitted in 10 copies to: Ad- 
ministrator, National Highway Traffic Safety 
Administration, 400 Seventh Street, S.W., 
Washington, D.C. 20590; 

(5) Identify the current model year; 

(6) Be written in the English language; and 

[(7) Specify any part of the information or 
data in the report that the manufacturer believes 
should be withheld from public disclosure as 
trade secret or other confidential business infor- 
mation in accordance with Part 512 of this 
Chapter. (46 F.R. 2063-January 8, 1981. Effec- 
tive: April 9, 1981)1 

(d) Each report required by this part must be 
based upon all information and data available to 
the manufacturer 30 days before the report is sub- 
mitted to the Administrator. 

(e)(1) Any manufacturer may provide any item 
of information or data required by § 537.7 (e) as an 
estimate, or as a set or range of alternatives. 

(2) Any manufacturer submitting estimates, 
or sets or ranges of alternatives as permitted 
by paragraph (e) (1) of this section, shall state: 

(i) The method for determining them; 

(ii) The major uncertainties associated 
with them; and 



(Rev. 1/8/S1) 



PART 537-2 



(iii) The most likely value in the case of 
an estimate and the most likely alternative 
in the case of a set or range of alternatives. 

§ 537.6 General content of reports. 

(a) Pre-modet year and mid-model year re- 
ports. Except as provided in paragraph (c) of 
this section, the pre-model year report and the 
mid-model year report for model year 1978 and 
each model year thereafter must contain the in- 
formation required by § 537.7(a). 

(b) Supplementary report. Each supplemen- 
tary report must contain the information required 
by S537.8(b) (1), (2), or (3), as appropriate. 

(c) Exceptions. 

(1) The pre-model year report for model 
year 1978 is required to contain only the infor- 
mation specified in § 537.7(b) and (c)(l)-(4) 
for passenger automobiles and a description of 
how the manufacturer will use marketing 
measures to aid in achieving the sales mix of 
passenger automobiles projected for that model 
year. 

(2) The mid-model year report for model 
year 1978 is required to contain only the infor- 
mation specified in § 537.7(b)-(e) for passen- 
ger automobiles. 

(3) The pre-model year report is not re- 
quired to contain the information specified in 
§ 537.7(b), (c) (1) and (2), or (c) (4) (xiv)- 
(xvi) and (xxiv) if that report is required to 
be submitted before the fifth day after the date 
by which the manufacturer must submit the 
preliminary determination of its average fuel 
economy for the current model year to the 
Environmental Protection Agency under 40 
CFR 600.506. Each manufacturer that does 
not include information under the exception in 
the immediately preceding sentence shall indi- 
cate in its report the date by which it must 
submit that preliminary determination. 

(4) The pre-model year report and the mid- 
model year report submitted by an incomplete 
automobile manufacturer for any model year 
are not required to contain the information 
specified in § 537.7(c) (4) (xviii)-(xxii) and 



(c) (5). The information provided by the in- 
complete automobile manufacturer under 
§ 537.7(c) and (e) shall be according to base 
level instead of model type or carline. 
§ 537.7 Pre-model year and mid-model year 
reports. 

(a) (1) Provide the information required by 
paragraphs (b)-(e) of this section for the manu- 
facturer's passenger automobiles for the current 
model year. 

(2) After providing the information re- 
quired by paragraph (a) (1) of this section, 
provide the information required by para- 
graphs (b)-(e) of this section for each class, 
as specified in Part 533 of this chapter, of the 
manufacturer's non-passenger automobiles for 
the current model year. 

(b) (1) Projected average fuel economy. State 
the projected average fuel economy for the manu- 
facturer's automobiles determined in accordance 
with § 537.9 and based upon the fuel economy 
values and projected sales figures provided under 
paragraph (c) (2) of this section. 

(2) State the projected final average fuel 
economy that the manufacturer anticipates 
having if the changes described under para- 
graph (d)(1) (ii) will cause that average to be 
different from the average fuel economy pro- 
jected under paragraph (b) (1) of this section. 

(3) State whether the manufacturer believes 
that the projection it provides under paragraph 
(b) (2) of this section, or if it does not provide 
an average under that paragraph, the projec- 
tion it provides under paragraph (b) (1) of 
this section, sufficiently represents the manufac- 
turer's average fuel economy for the current 
model year for the purposes of the Act. In 
the case of a manufacturer that believes that 
the projection is not sufficiently representative 
for those purposes, state the specific nature of 
and reason for the insufficiency and the specific 
additional testing for derivation of fuel econ- 
omy values by analytical methods believed by 
the manufacturer necessary to eliminate the 
insufficiency and any plans of the manufacturer 
to undertake that testing or derivation volun- 
tarily and submit the resulting data to the 
Environmental Protection Agency under 40 
CFR 600.509. 



PART 537-3 



(c) Model type fuel economy and technical in- 
formation. (1) For each model type of the 
manufacturer's automobiles, provide the informa- 
tion specified in paragraph (c) (2) of this section 
in tabular form. List the model types in order 
of increasing average inertia weight from top to 
bottom down the left side of the table and list the 
information categories in the order specified in 
paragraph (c) (2) of this section from left to 
right across the top of the table. 

(2) (i) City fuel economy; 

(ii) Highway fuel economy; 
(iii) Combined fuel economy; and 
(iv) Projected sales for the current model 
year. 

(3) For each vehicle configuration whose 
fuel economy was used to calculate the fuel 
economy values for a model type under para- 
graph (c) (2) of this section, provide the infor- 
mation specified in paragraph (c) (4) of this 
section in tabular form. List the vehicle con- 
figurations, by model type in the order listed 
under paragraph (c) (2) of this section, from 
top to bottom down the left of the table and 
list the information categories across the top 
of the table from left to right in the order 
specified in paragraph (c) (4) of this section. 

(4) (i) Loaded vehicle weight; 
(ii) Inertia weight; 

(iii) Cubic inch displacement of engine; 

(iv) Number of engine cylinders; 

(v) SAE net horsepower; 

(vi) Engine code; 

(vii) Fuel system (number of carburetor 
barrels or, if fuel injection is used, so indi- 
cate); 

(viii) Emission control system; 

(ix) Transmission class; 

(x) Number of forward speeds; 

(xi) Existence of overdrive (indicate yes 
or no); 

(xii) Total drive ratio; 

(xiii) Axle ratio; 

(xiv) City fuel economy; 

(xv) Highway fuel economy; 

(xvi) Combined fuel economy; 

(xvii) Projected sales for the current 
model year; 

(xviii) (A) In the case of passenger auto- 
mobiles, interior volume index, determined 



in accordance with Subpart D of 40 CFR 
Part 600; 

(B) In the case of nonpassenger auto- 
mobiles: 

(1) Passenger-carrying volume, and 

(2) Cargo-carrying volume; 

(xix) Number of designated seating posi- 
tions; 

(xx) Performance of the function described 
in S 523.5(a) (5) of this chapter (indicate yes 
or no); 

(xxi) Existence of temporary living quar- 
ters (indicate yes or no); 

(xxii) Body style; 

(xxiii) Frontal area; 

(xxiv) Road load power at 50 miles per 
hour, if determined by the manufacturer for 
purposes other than compliance with this 
Part to differ from the road load setting 
prescribed in 40 CFR § 86.177-ll(d); 

(xxv) Optional equipment which the 
manufacturer is required under 40 CFR 
Parts 86 and 600 to have actually installed 
on the vehicle configuration, or the weight 
of which must be included in the curb weight 
computation for the vehicle configuration, for 
fuel economy testing purposes. 

(5) For each model type of automobile 
which is classified as an automobile capable of 
off-highway operation under Part 523 of this 
chapter, provide the following data: 

(i) Approach angle; 
(ii) Departure angle; 
(iii) Breakover angle; 
(iv) Axle clearance; 
(v) Minimum running clearance; and 
(vi) Existence of 4-wheel drive (indicate 
yes or no). 

(6) The fuel economy values provided under 
paragraphs (c) (2) and (4) of this section shall 
be determined in accordance with § 537.9. 

(d) Automobile technology and sales mix 
changes. (1) For each inertia weight class of the 
manufacturer's automobiles— 

(i) Describe the differences between the 
technology of its automobiles for the current 
model year and of its automobiles for the 
immediately preceding model year that result 
in its automobiles for the current model year 



PART 537-4 



(iii) The most likely value in the case of 
an estimate and the most likely alternative 
in the case of a set or range of alternatives. 

§ 537.6 General content of reports. 

(a) Pre-model year and mid-model year re- 
ports. Except as provided in paragraph (c) of 
this section, the pre-model year report and the 
mid-model year report for model year 1978 and 
each model year thereafter must contain the in- 
formation required by § 537.7(a). 

(b) Supplementary report. Each supplemen- 
tary report must contain the information required 
by S537.8(b) (1), (2), or (3). as appropriate. 

(c) Exceptions. 

(1) The pre-model year report for model 
year 1978 is required to contain only the infor- 
mation specified in § 537.7(b) and (c)(l)-(4) 
for passenger automobiles and a description of 
how the manufacturer will use marketing 
measures to aid in achieving the sales mix of 
passenger automobiles projected for that model 
year. 

(2) The mid-model year report for model 
year 1978 is required to contain only the infor- 
mation specified in § 537.7(b)-(e) for passen- 
ger automobiles. 

(3) The pre-model year report is not re- 
quired to contain the information specified in 
S 537.7(b), (c)(1) and (2), or (c)(4) (xiv)- 
(xvi) and (xxiv) if that report is required to 
be submitted before the fifth day after the date 
by which the manufacturer must submit the 
preliminary determination of its average fuel 
economy for the current model year to the 
Environmental Protection Agency under 40 
CFR 600.506. Each manufacturer that does 
not include information under the exception in 
the immediately preceding sentence shall indi- 
cate in its report the date by which it must 
submit that preliminary determination. 

(4) The pre-model year report and the mid- 
model year report submitted by an incomplete 
automobile manufacturer for any model year 
are not required to contain the information 
specified in % 537.7(c) (4) (xviii)-(xxii) and 



(c) (5). The information provided by the in- 
complete automobile manufacturer under 
§ 537.7(c) and (e) shall be according to base 
level instead of model type or carline. 
§ 537.7 Pre-model year and mid-model year 
reports. 

(a) (1) Provide the information required by 
paragraphs (b)-(e) of this section for the manu- 
facturer's passenger automobiles for the current 
model year. 

(2) After providing the information re- 
quired by paragraph (a)(1) of this section, 
provide the information required by para- 
graphs (b)-(e) of this section for each class, 
as specified in Part 533 of this chapter, of the 
manufacturer's non-passenger automobiles for 
the current model year. 

(b) (1) Projected average fuel economy. State 
the projected average fuel economy for the manu- 
facturer's automobiles determined in accordance 
with § 537.9 and based upon the fuel economy 
values and projected sales figures provided under 
paragraph (c) (2) of this section. 

(2) State the projected final average fuel 
economy that the manufacturer anticipates 
having if the changes described under para- 
graph (d) (1) (ii) will cause that average to be 
different from the average fuel economy pro- 
jected under paragraph (b) (1) of this section. 

(3) State whether the manufacturer believes 
that the projection it provides under paragraph 
(b) (2) of this section, or if it does not provide 
an average under that paragraph, the projec- 
tion it provides under paragraph (b) (1) of 
this section, sufficiently represents the manufac- 
turer's average fuel economy for the current 
model year for the purposes of the Act. In 
the case of a manufacturer that believes that 
the projection is not sufficiently representative 
for those purposes, state the specific nature of 
and reason for the insufficiency and the specific 
additional testing for derivation of fuel econ- 
omy values by analytical methods believed by 
the manufacturer necessary to eliminate the 
insufficiency and any plans of the manufacturer 
to undertake that testing or derivation volun- 
tarily and submit the resulting data to the 
Environmental Protection Agency under 40 
CFR 600.509. 



PART 537-3 



(c) Model type fuel economy and technical in- 
formation. (1) For each model type of the 
manufacturer's automobiles, provide the informa- 
tion specified in paragraph (c) (2) of this section 
in tabular form. List the model types in order 
of increasing average inertia weight from top to 
bottom down the left side of the table and list the 
information categories in the order specified in 
paragraph (c) (2) of this section from left to 
right across the top of the table. 

(2) (i) City fuel economy; 

(ii) Highway fuel economy; 
(iii) Combined fuel economy; and 
(iv) Projected sales for the current model 
year. 

(3) For each vehicle configuration whose 
fuel economy was used to calculate the fuel 
economy values for a model type under para- 
graph (c) (2) of this section, provide the infor- 
mation specified in paragraph (c) (4) of this 
section in tabular form. List the vehicle con- 
figurations, by model type in the order listed 
under paragraph (c) (2) of this section, from 
top to bottom down the left of the table and 
list the information categories across the top 
of the table from left to right in the order 
specified in paragraph (c) (4) of this section. 

(4) (i) Loaded vehicle weight; 
(ii) Inertia weight; 

(iii) Cubic inch displacement of engine; 

(iv) Number of engine cylinders; 

(v) SAE net horsepower; 

(vi) Engine code; 

(vii) Fuel system (number of carburetor 
barrels or, if fuel injection is used, so indi- 
cate); 

(viii) Emission control system; 

(ix) Transmission class; 

(x) Number of forward speeds; 

(xi) Existence of overdrive (indicate yes 
or no); 

(xii) Total drive ratio; 

(xiii) Axle ratio; 

(xiv) City fuel economy; 

(xv) Highway fuel economy; 

(xvi) Combined fuel economy; 

(xvii) Projected sales for the current 
model year; 

(xviii) (A) In the case of passenger auto- 
mobiles, interior volume index, determined 



in accordance with Subpart D of 40 CFR 
Part 600; 

(B) In the case of nonpassenger auto- 
mobiles: 

(1) Passenger-carrying volume, and 

(2) Cargo-carrying volume; 

(xix) Number of designated seating posi- 
tions; 

(xx) Performance of the function described 
in § 523.5(a) (5) of this chapter (indicate yes 
or no); 

(xxi) Existence of temporary living quar- 
ters (indicate yes or no); 

(xxii) Body style; 

(xxiii) Frontal area; 

(xxiv) Road load power at 50 miles per 
hour, if determined by the manufacturer for 
purposes other than compliance with this 
Part to differ from the road load setting 
prescribed in 40 CFR § 86.177-ll(d); 

(xxv) Optional equipment which the 
manufacturer is required under 40 CFR 
Parts 86 and 600 to have actually installed 
on the vehicle configuration, or the weight 
of which must be included in the curb weight 
computation for the vehicle configuration, for 
fuel economy testing purposes. 

(5) For each model type of automobile 
which is classified as an automobile capable of 
off-highway operation under Part 523 of this 
chapter, provide the following data: 

(i) Approach angle; 
(ii) Departure angle; 
(iii) Breakover angle; 
(iv) Axle clearance; 
(v) Minimum running clearance; and 
(vi) Existence of 4-wheel drive (indicate 
yes or no). 

(6) The fuel economy values provided under 
paragraphs (c) (2) and (4) of this section shall 
be determined in accordance with § 537.9. 

(d) Automobile technology and sales mix 
changes. (1) For each inertia weight class of the 
manufacturer's automobiles— 

(i) Describe the differences between the 
technology of its automobiles for the current 
model year and of its automobiles for the 
immediately preceding model year that result 
in its automobiles for the current model year 



PART 537-4 



having higher fuel economy than its auto- 
mobiles for the immediately preceding model 
year. 

(ii) Describe any running changes that the 
manufacturer intends to make on its automo- 
biles for the current model year that will 
affect the fuel economy of those automobiles. 

(2) Describe any differences in the projected 
sales mixes of the inertia weight classes of the 
manufacturer's automobiles for the current 
model year and of the manufacturer's automo- 
biles for the immediately preceding model year 
that result in its automobiles for the current 
model year having higher average fuel economy 
than its automobiles for the immediately pre- 
ceding model year. 

(e) Marketing measures. (1) Describe and 
quantify the rrianufacturer's advertising and auto- 
mobile base price and equipment option pricing 
that will tend to aid the manufacturer in improv- 
ing the average fuel economy of its automobiles 
for the current model year. 

(2) Describe and quantify the manufactur- 
er's dealer incentive programs that have been 
or will be implemented during the current 
model year foi- each carline of the manufac- 
turer's automobiles. 

(3) State the total number of dollars spent 
and to be spent on advertising for the current 
model year for each carline of the manufac- 
turer's automobiles and, to the extent available, 
for each model type in that carline. 

§ 537.8 Supplementary reports. 

(a)(1) Except as provided in paragraph (d) 
of this section, each manufacturer whose most 
recently submitted semiannual report contained 
an average fuel economy projection under § 537.7 
(b) (2) or, if no average fuel economy was pro- 
jected under that section, under § 537.7(b) (1), 
that was not less than the applicable average fuel 
economy standard and who now projects an av- 
erage fuel economy which is less than the ap- 
plicable standard, shall file a supplementary 
report containing the information specified in 
paragraph (b) (1) of this section. 

(2) Except as provided in paragraph (d) 
of this section, each manufacturer that deter- 
mines that its average fuel economy for the 



current model year as projected under § 537.7 
(b) (2) or, if no average fuel economy was 
projected under that section, as projected under 
§ 537.7(b) (1), is less representative than the 
manufacturer previously reported it to be under 
§ 537.7(b) (3), this section, or both, shall file a 
supplementary report containing the informa- 
tion specified in paragraph (b) (2) of this 
section. 

(3) Each manufacturer whose pre-model 
year report omits any of the information speci- 
fied in § 537.7(b), (c)(1) and (2), or (c)(4) 
(xiv)-(xvi) and (xxiv) shall file a supplemen- 
tary report containing the information speci- 
fied in paragraph (b) (3) of this section. 

(b) (1) The supplementary report required by 
paragraph (a) (1) of this section must contain: 

(i) Such revisions of and additions to the 
information previously submitted by the 
manufacturer under this part regarding the 
automobiles whose projected average fuel 
economy has decreased as specified in para- 
graph (a) (1) of this section as are neces- 
sary— 

(A) To reflect the decrease and its 
cause; 

(B) To describe any expanded use or 
introduction of technological improve- 
ments, production mix changes and mar- 
keting measures that the manufacturer 
intends to make to comply with the ap- 
plicable average fuel economy standard; 
and 

(C) To indicate a new projected average 
fuel economy based upon these additional 
measures. 

(ii) An explanation of the cause of the 
decrease in average fuel economy that led to 
the manufacturer's having to submit the 
supplementary report required by paragraph 
(a) (1) of this section. 

(2) The supplementary report required by 
paragraph (a) (2) of this section must con- 
tain— 

(i) A statement of the specific nature of 
and reason for the insufficiency in the repre- 
sentativeness of the projected average fuel 
economy; 



PART 537-5 



(ii) A statement of specific additional 
testing or derivation of fuel economy values 
by analytical methods believed by the manu- 
facturer necessary to eliminate the insuf- 
ficiency; and 

(iii) A description of any plans of the 
manufacturer to undertake that testing or 
derivation voluntarily and submit the result- 
ing data to the Environmental Protection 
Agency under 40 CFR 600.509. 
(3) The supplementary report required by 
paragraph (a)(3) of this section must contain: 

(i) All of the information omitted from 
the pre-model year report under § 537.6(c) 
(2); and 

(ii) Such revisions of and additions to the 
information submitted by the manufacturer 
in its pre-model year report regarding the 
automobiles produced during the current 
model year as are necessary to reflect the 
information provided under paragraph (b) 
(3) (i) of this section. 

(c) (1) Each report required by paragraph 
(a) (1) or (2) of this section must be submitted 
in accordance with § 537.5(c) not more than 45 
days after the date on which the manufacturer 
determined, or could have determined with rea- 
sonable diligence, that a report is required under 
paragraph (a) (1) or (2) of this section. 

(2) Each report required by paragraph 
(a) (3) of this section must be submitted in ac- 
cordance with § 537.(c) not later than five days 
after the day by which the manufacturer is 
required to submit a preliminary calculation 
of its average fuel economy for the current 
model year to the Environmental Protection 
Agency under 40 CFR 600.506 

(d) A supplementary report is not required 
to be submitted by the manufacturer under para- 
graphs (a) (1) or (2) of this section: 

(1) With respect to information submitted 
under this Part before the most recent semi- 
annual report submitted by the manufacturer 
under this Part, or 

(2) When the date specified in paragraph 
(c) of this section occurs: 

(i) During the 60-day period immediately 
preceding the day by which the mid-model 
year report for the current model year must 



be submitted by the manufacturer under this 
Part, or 

(ii) After the day by which the pre-model 
year report for the model year immediately 
following the current model year must be 
submitted by the manufacturer under this 
Part. 
§ 537.9 Determination of fuel economy values 
and average fuel economy. 

(a) Vehicle configuration fuel economy values. 

(1) For each vehicle configuration for which 
a fuel economy value is required under para- 
graph (c) of this section and has been deter- 
mined and approved under 40 CFR Part 600, 
the manufacturer shall submit that fuel econ- 
omy value. 

(2) For each vehicle configuration specified 
in paragraph (a) (1) of this section for which 
a fuel economy value approved under 40 CFR 
600 does not exist, but for which a fuel econ- 
omy value determined under that Part exists, 
the manufacturer shall submit that fuel econ- 
omy value. 

(3) For each vehicle configuration specified 
in paragraph (a) (1) of this section for which 
a fuel economy value has been neither deter- 
mined nor approved under 40 CFR Part 600, 
the manufacturer shall submit a fuel economy 
value based on tests or analyses comparable to 
those prescribed or permitted under 40 CFR 
Part 600 and a description of the test proce- 
dures or analytical methods used. 

(b) Base level and model type fuel economy 
values. 

For each base level and model type, the manu- 
facturer shall submit a fuel economy value based 
on values submitted under paragraph (a) of 
this section and calculated in the same manner as 
base level and model type fuel economy values 
are calculated for use under Subpart F of 40 
CFR Part 600. 

(c) Average fuel economy. 

Average fuel economy must be based upon fuel 
economy values calculated under paragraph (b) 
of this section for each model type and must be 
calculated in accordance with 40 CFR 600.506, 
using the configuration specified in 40 CFR 
600.506(a) (2), except that fuel economy values 



PART 537-6 



having higher fuel economy than its auto- 
mobiles for the immediately preceding model 
year. 

(ii) Describe any running changes that the 
manufacturer intends to make on its automo- 
biles for the current model year that will 
affect the fuel economy of those automobiles. 

(2) Describe any differences in the projected 
sales mixes of the inertia weight classes of the 
manufacturer's automobiles for the current 
model year and of the manufacturer's automo- 
biles for the immediately preceding model year 
that result in its automobiles for the current 
model year having higher average fuel economy 
than its automobiles for the immediately pre- 
ceding model year. 

(e) Marketing measures. (1) Describe and 
quantify the manufacturer's advertising and auto- 
mobile base price and equipment option pricing 
that will tend to aid the manufacturer in improv- 
ing the average fuel economy of its automobiles 
for the current model year. 

(2) Describe and quantify the manufactur- 
er's dealer incentive programs that have been 
or will be implemented during the current 
model year for each carline of the manufac- 
turer's automobiles. 

(3) State the total number of dollars spent 
and to be spent on advertising for the current 
model year for each carline of the manufac- 
turer's automobiles and, to the extent available, 
for each model type in that carline. 

§ 537.8 Supplementary reports. 

(a)(1) Except as provided in paragraph (d) 
of this section, each manufacturer whose most 
recently submitted semiannual report contained 
an average fuel economy projection under § 537.7 
(b) (2) or, if no average fuel economy was pro- 
jected under that section, under § 537.7(b) (1), 
that was not less than the applicable average fuel 
economy standard and who now projects an av- 
erage fuel economy which is less than the ap- 
plicable standard, shall file a supplementary 
report containing the information specified in 
paragraph (b) (1) of this section. 

(2) Except as provided in paragraph (d) 
of this section, each manufacturer that deter- 
mines that its average fuel economy for the 



current model year as projected under § 537.7 
(b) (2) or, if no average fuel economy was 
projected under that section, as projected under 
§ 537.7(b) (1), is less representative than the 
manufacturer previously reported it to be under 
§ 537.7(b) (3), this section, or both, shall file a 
supplementary report containing the informa- 
tion specified in paragraph (b) (2) of this 
section. 

(3) Each manufacturer whose pre-model 
year report omits any of the information speci- 
fied in § 537.7(b), (c)(1) and (2), or (c)(4) 
(xiv)-(xvi) and (xxiv) shall file a supplemen- 
tary report containing the information speci- 
fied in paragraph (b) (3) of this section. 

(b) (1) The supplementary report required by 
paragraph (a) (1) of this section must contain: 

(i) Such revisions of and additions to the 
information previously submitted by the 
manufacturer under this part regarding the 
automobiles whose projected average fuel 
economy has decreased as specified in para- 
graph (a) (1) of this section as are neces- 
sary— 

(A) To reflect the decrease and its 
cause; 

(B) To describe any expanded use or 
introduction of technological improve- 
ments, production mix changes and mar- 
keting measures that the manufacturer 
intends to make to comply with the ap- 
plicable average fuel economy standard; 
and 

(C) To indicate a new projected average 
fuel economy based upon these additional 
measures. 

(ii) An explanation of the cause of the 
decrease in average fuel economy that led to 
the manufacturer's having to submit the 
supplementary report required by paragraph 
(a) (1) of this section. 

(2) The supplementary report required by 
paragraph (a) (2) of this section must con- 
tain— 

(i) A statement of the specific nature of 
and reason for the insufficiency in the repre- 
sentativeness of the projected average fuel 
economy; 



PART 537-5 



(ii) A statement of specific additional 
testing or derivation of fuel economy values 
by analytical methods believed by the manu- 
facturer necessary to eliminate the insuf- 
ficiency; and 

(iii) A description of any plans of the 
manufacturer to undertake that testing or 
derivation voluntarily and submit the result- 
ing data to the Environmental Protection 
Agency under 40 CFR 600.509. 
(3) The supplementary report required by 
paragraph (a)(3) of this section must contain: 
(i) All of the information omitted from 
the pre-model year report under § 537.6(c) 
(2); and 

(ii) Such revisions of and additions to the 
information submitted by the manufacturer 
in its pre-model year report regarding the 
automobiles produced during the current 
model year as are necessary to reflect the 
information provided under paragraph (b) 
(3) (i) of this section. 
(c)(1) Each report required by paragraph 
(a)(1) or (2) of this section must be submitted 
in accordance with § 537.5(c) not more than 45 
days after the date on which the manufacturer 
determined, or could have determined with rea- 
sonable diligence, that a report is required under 
paragraph (a) (1) or (2) of this section. 

(2) Each report required by paragraph 
(a) (3) of this section must be submitted in ac- 
cordance with § 537.(c) not later than five days 
after the day by which the manufacturer is 
required to submit a preliminary calculation 
of its average fuel economy for the current 
model year to the Environmental Protection 
Agency under 40 CFR 600.506 
(d) A supplementary report is not required 
to be submitted by the manufacturer under para- 
graphs (a) (1) or (2) of this section: 

(1) With respect to information submitted 
under this Part before the most recent semi- 
annual report submitted by the manufacturer 
under this Part, or 

(2) When the date specified in paragraph 
(c) of this section occurs: 

(i) During the 60-day period immediately 
preceding the day by which the mid-model 
year report for the current model year must 



be submitted by the manufacturer under this 
Part, or 

(ii) After the day by which the pre-model 
year report for the model year immediately 
following the current model year must be 
submitted by the manufacturer under this 
Part. 

§ 537.9 Determination of fuel economy values 
and average fuel economy. 

(a) Vehicle configuration fuel economy values. 

(1) For each vehicle configuration for which 
a fuel economy value is required under para- 
graph (c) of this section and has been deter- 
mined and approved under 40 CFR Part 600, 
the manufacturer shall submit that fuel econ- 
omy value. 

(2) For each vehicle configuration specified 
in paragraph (a) (1) of this section for which 
a fuel economy value approved under 40 CFR 
600 does not exist, but for which a fuel econ- 
omy value determined under that Part exists, 
the manufacturer shall submit that fuel econ- 
omy value. 

(3) For each vehicle configuration specified 
in paragraph (a) (1) of this section for which 
a fuel economy value has been neither deter- 
mined nor approved under 40 CFR Part 600, 
the manufacturer shall submit a fuel economy 
value based on tests or analyses comparable to 
those prescribed or permitted under 40 CFR 
Part 600 and a description of the test proce- 
dures or analytical methods used. 

(b) Base level and model type fuel economy 
values. 

For each base level and model type, the manu- 
facturer shall submit a fuel economy value based 
on values submitted under paragraph (a) of 
this section and calculated in the same manner as 
base level and model type fuel economy values 
are calculated for use under Subpart F of 40 
CFR Part 600. 

(c) Average fuel econom,y. 

Average fuel economy must be based upon fuel 
economy values calculated under paragraph (b) 
of this section for each model type and must be 
calculated in accordance with 40 CFR 600.506, 
using the configuration specified in 40 CFR 
600.506(a) (2), except that fuel economy values 



PART 537-6 



for running changes and for new base levels are 
required only for those changes made or base 
levels added before the average fuel economy is 
required to be submitted under this Part. 

§ 537.10 Incorporation by reference. 

(a) A manufacturer may incorporate by ref- 
erence in a report required by this Part any docu- 
ment other than a report, petition, or application, 
or portion thereof submitted to any Federal de- 
partment or agency more than two model years 
before the current model year. 

(b) A manufacturer that incorporates by ref- 
erence a document not previously submitted to 
the National Highway Traffic Safety Adminis- 
tration shall append that document to the report. 

(c) A manufacturer that incorporates by ref- 
erence a document shall clearly identify the docu- 
ment, and, in the case of a document previously 
submitted to the National Highway Traffic Safety 
Administration, indicate the date on which, and 



the person by whom, the document was submitted 
to this agency. 

§ 537.1 1 Public Inspection of Information. 

[(a) Except as provided in paragraph (b), any per- 
son may inspect the information and data submitted 
by a manufacturer under this part in the docket sec- 
tion of the National Highway Traffic Safety 
Administration. Any person may obtain copies of 
the information available for inspection under this 
section in accordance with the regulations of the 
Secretary of Transportation in Part 7 of this title. 

(b) Except for the release of confidential infor- 
mation authorized by section 505 of the Act and 
Part 512 of this Chapter, information made 
available under paragraph (a) for public inspection 
does not include information for which confiden- 
tiality is requested under S 537.5(c)(7) and is 
granted in accordance with Part 512 of this 
Chapter, section 505 of the Act, and section 552(b) 
of Title 5 of the United States Code. (46 F.R. 
2063- January 8, 1981. Effective: April 9, 1981)1 



(R«v. 1/B'81) 



PART 537-7-8 



f 



1 



u 



for running changes and for new base levels are 
required only for those changes made or base 
levels added before the average fuel economy is 
required to be submitted under this Part. 

§ 537.10 Incorporation by reference. 

(a) A manufacturer may incorporate by ref- 
erence in a report required by this Part any docu- 
ment other than a report, petition, or application, 
or portion thereof submitted to any Federal de- 
partment or agency more than two model years 
before the current model year. 

(b) A manufacturer that incorporates by ref- 
erence a document not previously submitted to 
the National Highway Traffic Safety Adminis- 
tration shall append that document to the report. 

(c) A manufacturer that incorporates by ref- 
erence a document shall clearly identify the docu- 
ment, and, in the case of a document previously 
submitted to the National Highway Traffic Safety 
Administration, indicate the date on which, and 



the person by whom, the document was submitted 
to this agency. 

§ 537.1 1 Public Inspection of Information. 

[(a) Except as provided in paragraph (b), any per- 
son may inspect the information and data submitted 
by a manufacturer under this part in the docket sec- 
tion of the National Highway Traffic Safety 
Administration. Any person may obtain copies of 
the information available for inspection under this 
section in accordance with the regulations of the 
Secretary of Transportation in Part 7 of this title. 

(b) Except for the release of confidential infor- 
mation authorized by section 505 of the Act and 
Part 512 of this Chapter, information made 
available under paragraph (a) for public inspection 
does not include information for which confiden- 
tiality is requested under $ 537.5(c)(7) and is 
granted in accordance with Part 512 of this 
Chapter, section 505 of the Act, and section 552(b) 
of Title 5 of the United States Code. (46 F.R. 
2063- January 8, 1981. Effective: April 9, 1981)1 



(R«v. 1/8/81) 



PART 537-7-8 



PREAMBLE TO PART 551— PROCEDURAL RULES 
(Docket No. 4) 



The purpose of this rule-making action is to 
adopt new Part 351 — General Procedural Rules. 

The new part will eventually contain the rules 
on those matters that are common to all proce- 
dures. At this time only the rules governing 
submittals in writing, and governing service of 
process on designated agents of foreign manu- 
facturers, are being adopted. 

The rules governing submittals in writing are 
those considered necessary for the efficient han- 
dling of business. These rules apply, of course, 
to written comments on notices of proposed rule- 
making. Designation of agents by foreign manu- 
facturers to receive service of process is required 
by section 110(e) of the National Traffic and 
Motor Vehicle Safety Act of 1966, and the rules 
implement this provision. Both groups of rules 
are self-explanatory. Since these rules are pro- 
cedural in character, notice of proposed rule- 
making is not required (5 U.S.C. 553(b)). 

In consideration of the foregoing, Chapter II 
of Title 49 of the Code of Federal Regulations 
is amended by inserting, in Subchapter B, a new 
part as set forth below. This action is taken 
under the authority of sections 110(e) and 119 
of the National Traffic and Motor Vehicle Safety 
Act of 1966 (80 Stat. 718) ; 23 U.S.C. section 315 
and chapter 4; and the delegation of authority 
of October 20, 1966 (31 F.R. 13952) . 

These rules become effective December 20, 1966. 



Issued in Washington, D.C., on December 15, 
1966. 

Alan S. Boyd, 

Under Secretary of Commorce 

for Transportation 



SUBPART A— GENERAL 



Sec. 
351.1 



Scope. 



SUBPART B— [RESERVED] 
351.31 Form of communications. 
351.33 Address of communications. 
351.35 Subscription of communications. 
351.37 Language of communications. 

SUBPART D— SERVICE OF PROCESS; AGENTS 
351.41 [Reserved] 
351.43 [Reserved] 

351.45 Service of process on foreign manufac- 
turers and importers 

AUTHORITY: The provisions of this Part 
351 issued under sees. 110(e), 119, 80 Stat. 719, 
728; 15 U.S.C. 1399, 1407, 23 U.S.C. 315, 401- 
404; Delegation of Authority, 31 F.R. 13952, 
32 F.R. 5606. 

31 F.R. 16267 
December 20, 1966 



PART 551— PRE 1-2 



PREAMBLE TO PART 551— PROCEDURAL RULES 
(Docket No. 4) 



The purpose of this rule-making action is to 
adopt new Part 351 — General Procedural Rules. 

The new part will eventually contain the rules 
on those matters that are common to all proce- 
dures. At this time only the rules governing 
submittals in writing, and governing service of 
process on designated agents of foreign manu- 
facturers, are being adopted. 

The rules governing submittals in writing are 
those considered necessary for the efficient han- 
dling of business. These rules apply, of course, 
to written comments on notices of proposed rule- 
making. Designation of agents by foreign manu- 
facturers to receive service of process is required 
by section 110(e) of the National Traffic and 
Motor Vehicle Safety Act of 1966, and the rules 
implement this provision. Both groups of rules 
are self-explanatory. Since these rules are pro- 
cedural in character, notice of proposed rule- 
making is not required (5 U.S.C. 553(b)). 

In consideration of the foregoing, Chapter II 
of Title 49 of the Code of Federal Regulations 
is amended by inserting, in Subchapter B, a new 
part as set forth below. This action is taken 
under the authority of sections 110(e) and 119 
of the National Traffic and Motor Vehicle Safety 
Act of 1966 (80 Stat. 718) ; 23 U.S.C. section 315 
and chapter 4; and the delegation of authority 
of October 20, 1966 (31 F.R. 13952). 

These rules become effective December 20, 1966. 



Issued in Washington, D.C., on December 15, 
1966. 

Alan S. Boyd, 

Under Secretary of Commerce 

for Transportation 



SUBPART A— GENERAL 



Sec. 
351.1 

351.31 
351.33 
351.35 
351.37 



Scope. 

SUBPART B— [RESERVED] 
Form of communications. 
Address of communications. 
Subscription of communications. 
Language of communications. 



SUBPART D— SERVICE OF PROCESS; AGENTS 
351.41 [Reserved! 
351.43 [Reserved] 

351.45 Service of process on foreign manufac- 
turers and importers 

AUTHORITY: The provisions of this Part 
351 issued under sees. 110(e), 119, 80 Stat. 719, 
728; 15 U.S.C. 1399, 1407, 23 U.S.C. 315, 401- 
404; Delegation of Authority, 31 F.R. 13952, 
32 F.R. 5606. 

31 F.R. 16267 
December 20, 1966 



PART 551— PRE 1-2 



V 



'd 



Efftctiv*: July 27, 1973 



PREAMBLE TO AMENDMENT TO PART 551— PROCEDURAL RULES 



Parts 501, 551, and 553 of Title 49, Code of 
Federal Regulations, currently detail the dele- 
gated powers, general procedures, and rulemak- 
ing procedures utilized by the National Highway 
Traffic Safety Administration (NHTSA) to 
implement the National Traffic and Motor 
Vehicle Safety Act of 1966, Public Law 89-563. 
The Motor Vehicle Information and Cost 
Savings Act, Public Law 92-513, vests addi- 
tional authority in the NHTSA. This amend- 
ment extends the applicability of Parts 501, 551, 
and 553 to the Cost Savings Act to establish 
uniform rulemaking procedures for both Acts. 

Accordingly, amendments are made to 49 CFR, 
Part 501, "Organization and delegation of 
powers and duties". Part 551, "Procedural rules", 
and Part 553, "Rulemaking procedures: motor 
vehicle safety standards". . . . 

Since this amendment relates to NHTSA 
organization, procedures, and practices, it is 



found that notice and public procedure thereon 
are unnecessary. 

Effective date: July 27, 1973. Because this 
notice is only an extension of existing procedures 
to new areas of jurisdiction, it is found that an 
immediate effective date is in the public interest. 

(Sees. 9, Pub. L. 89-670, 80 Stat. 944, 49 U.S.C. 
1657; 103, 119, Pub. L. 89-563, 80 Stat. 718, 15 
U.S.C. 1392, 1407; 102, 105, 201, 205, 302, and 
408, Pub. L. 92-513, 86 Stat. 947, 15 U.S.C. 1912, 
1915, 1941, 1945, 1962, and 1988; delegation of 
authority at 38 FR 12147). 

Issued on July 23, 1973. 

James E. Wilson 
Associate Administrator 
Traffic Safety Programs 

38 F.R. 20086 
July 27, 1973 



PART 551— PRE 3-4 



Efhctiv*: July 27, 1973 



PREAMBLE TO AMENDMENT TO PART 551— PROCEDURAL RULES 



Parts 501, 551, and 553 of Title 49, Code of 
Federal Kegulations, currently detail the dele- 
gated powers, general procedures, and rulemak- 
ing procedures utilized by the National Highway 
Traffic Safety Administration (NHTSA) to 
implement the National Traffic and Motor 
Vehicle Safety Act of 1966, Public Law 89-563. 
The Motor Vehicle Information and Cost 
Savings Act, Public Law 92-513, vests addi- 
tional authority in the NHTSA. This amend- 
ment extends the applicability of Parts 501, 551, 
and 553 to the Cost Savings Act to establish 
uniform rulemaking procedures for both Acts. 

Accordingly, amendments are made to 49 CFR, 
Part 501, "Organization and delegation of 
powers and duties". Part 551, "Procedural rules", 
and Part 553, "Rulemaking procedures: motor 
vehicle safety standards". . . . 

Since this amendment relates to NHTSA 
organization, procedures, and practices, it is 



found that notice and public procedure thereon 
are unnecessary. 

Effective date: July 27, 1973. Because this 
notice is only an extension of existing procedures 
to new areas of jurisdiction, it is found that an 
immediate effective date is in the public interest. 

(Sees. 9, Pub. L. 89-670, 80 Stat. 944, 49 U.S.C. 
1657; 103, 119, Pub. L. 89-563, 80 Stat. 718, 15 
U.S.C. 1392, 1407; 102, 105, 201, 205, 302, and 
408, Pub. L. 92-513, 86 Stat. 947, 15 U.S.C. 1912, 
1915, 1941, 1945, 1962, and 1988; delegation of 
authority at 38 FR 12147). 

Issued on July 23, 1973. 

James E. Wilson 
Associate Administrator 
Traffic Safety Programs 

38 F.R. 20086 
July 27, 1973 



PART 551— PRE 3-4 



PART 551— PROCEDURAL RULES 



SUBPART A— GENERAL 



§551.1. Scope. 

This part contains rule of procedure generally 
applicable to the transaction of official business 
under the National Traffic and Motor Vehicle 
Safety Act of 1966, the Motor Vehicle Informa- 
tion and Cost Savings Act, and the Highway 
Safety Act of 1966. These rules apply in 
addition to the rules governing specific proceed- 
ings. In case of inconsistency with these general 
rules, the specific rules prevail. 

SUBPART B— [RESERVED] 

SUBPART C— SUBMITTALS IN WRITING 

§ 551.31 Form of Communications. 

Any communication in writing relating to of- 
ficial business (including formal documents) 
shall be on opaque and durable paper not larger 
than 9 by 14 inches in size. Tables, charts, or 
originals of other documents that are attached 
to communications shall be folded to this size, 
if possible. The left margin of communications 
shall be at least IV2 inches wide, and if a com- 
munication is bound, it shall be bound on the 
left side. All copies submitted shall be legible. 

§551.33 

Unless otherwise specified, communications 
shall be addressed to the Administrator, National 
Highway Traffic Safety Administration, U.S. 
Department of Transportation, 400 Seventh 
Street, S.W., Washington, D.C. 20590. Com- 
munications may not be addressed to a staff 
member's private address. 

§ 551.35 Subscription of communications. 

Each communication shall be signed in ink and 
shall disclose the full legal name and address of 
the person signing it and, if he is an agent, of 
his principal. 



§ 551.37 Language of communications. 

Communications and attachments thereto shall 
be in English. Any matter written in a foreign 
language will be considered only if accompanied 
by a translation into English. A translation 
shall bear a certificate by the translator certi- 
fying that he is qualified to make the translation; 
that the translation is complete except as other- 
wise clearly indicated; and that it is accurate to 
the best of the translator's knowledge and belief. 
The translator shall sign the certificate in ink 
and state his full, legal name, occupation and 
address. 

SUBPART D— SERVICE OF PROCESS; AGENTS 
§551.41 [Reserved] 
§551.43 [Reserved] 

§551.45 Service of process on foreign manu- 
facturers and importers. 

(a) Designation of agent for service. Any 
manufacturer, assembler or importer of motor 
vehicles or motor vehicle equipment (hereinafter 
called manufacturer) before offering a motor 
vehicle or item of motor vehicle equipment for 
importation into the United States, shall desig- 
nate a permanent resident of the United States 
as his agent upon whom service of all processes, 
notices, orders, decisions, and requirements may 
be made for him and on his behalf as provided 
in section 110(e) of the National Traffic and 
Motor Vehicle Safety Act of 1966 (80 Stat. 718) 
and in this section. The agent may be an indi- 
vidual, a firm, or a domestic corporation. Any 
number of manufacturers may designate the 
same person as agent. 

(b) Form and contents of designation. The 
designation shall be addressed to the 
Administrator, National Highway Traffic Safety 
Administration, U.S. Department of Transporta- 
tion, 400 Seventh Street, S.W., Washington, D.C. 
20590. It shall be in writing and dated; all 



PART 551-1 



signatures shall be in ink. The designation shall be 
made in legal form required to make it valid, and 
binding on the laws, or other requirements govern- 
ing the making of the designation by the manufac- 
turer at the place and time where it is made, and 
the person or persons signing the designation shall 
certify that it is so made. The designation shall 
disclose the full legal name, principal place of 
business, and mailing address of the manufacturer. 
If any of the products of the manufacturer do not 
bear his legal name, the marks, trade names, or 
other designations of origin which these products 
bear shall be stated in the designation. The 
designation of agent shall provide that it remains 
in effect until withdrawn or replaced by the 
manufacturer. The designation shall bear a 
declaration of acceptance duly signed by the 
designated agent. The full legal name and mailing 
address of the agent shall be stated. Designations 
are binding on the manufacturer even when not in 
compliance with all requirements of this section 



until rejected by the Administrator. The 
designated agent may not assign performance of 
his functions under the designation to another 
person. 

(c) Method of service. Service of any process, 
notice, order, requirement, or decision specified in 
section 110(e) of the National Traffic and Motor 
Vehicle Safety Act of 1966 may be made by 
registered or certified mail addressed to the agent, 
with return receipt requested, or in any other 
manner authorized by law. If service cannot be 
effected because the agent has died (or, if a firm or 
a corporation ceased to exist) or moved, or other- 
wise does not receive correctly addressed mail, 
service may be made by posting as provided in 
section 110(e). 



31 F.R. 16267-8 
December 20, 1966 



PART 551-2 



PART 551 — PROCEDURAL RULES 



SUBPART A— GENERAL 



§551.1. Scope. 

This part contains rule of procedure generally 
applicable to the transaction of official business 
under the National Traffic and Motor Vehicle 
Safety Act of 1966, the Motor Vehicle Informa- 
tion and Cost Savings Act, and the Highway 
Safety Act of 1966. These rules apply in 
addition to the rules governing specific proceed- 
ings. In case of inconsistency with these general 
rules, the specific rules prevail. 

SUBPART B— [RESERVEDl 

SUBPART C-SUBMITTALS IN WRITING 

§ 551.31 Form of Communications. 

Any communication in writing relating to of- 
ficial business (including formal documents) 
shall be on opaque and durable paper not larger 
than 9 by 14 inches in size. Tables, charts, or 
originals of other documents that are attached 
to communications shall be folded to this size, 
if possible. The left margin of communications 
shall be at least IV2 inches wide, and if a com- 
munication is bound, it shall be bound on the 
left side. All copies submitted shall be legible. 

§551.33 

Unless otherwise specified, communications 
shall be addressed to the Administrator, National 
Highway Traffic Safety Administration, U.S. 
Department of Transportation, 400 Seventh 
Street, S.W., Washington, D.C. 20590. Com- 
munications may not be addressed to a staff 
member's private address. 

§ 551.35 Subscription of communications. 

Each communication shall be signed in ink and 
shall disclose the full legal name and address of 
the person signing it and, if he is an agent, of 
his principal. 



§ 551.37 Language of communications. 

Communications and attachments thereto shall 
be in English. Any matter written in a foreign 
language will be considered only if accompanied 
by a translation into English. A translation 
shall bear a certificate by the translator certi- 
fying that he is qualified to make the translation; 
that the translation is complete except as other- 
wise clearly indicated; and that it is accurate to 
the best of the translator's knowledge and belief 
The translator shall sign the certificate in ink 
and state his full, legal name, occupation and 
address. 

SUBPART D— SERVICE OF PROCESS; AGENTS 
§551.41 [Reserved] 
§551.43 (Reserved] 

§551.45 Service of process on foreign manu- 
facturers and importers. 

(a) Designation of agent for service. Any 
manufacturer, assembler or importer of motor 
vehicles or motor vehicle equipment (hereinafter 
called manufacturer) before offering a motor 
vehicle or item of motor vehicle equipment for 
importation into the United States, shall desig- 
nate a permanent resident of the United States 
as his agent upon whom service of all processes, 
notices, orders, decisions, and requirements may 
be made for him and on his behalf as provided 
in section 110(e) of the National Traffic and 
Motor Vehicle Safety Act of 1966 (80 Stat. 718) 
and in this section. The agent may be an indi- 
vidual, a firm, or a domestic corporation. Any 
number of manufacturers may designate the 
same person as agent. 

(b) Form and contents of designation. The 
designation shall be addressed to the 
Administrator, National Highway Traffic Safety 
Administration, U.S. Department of Transporta- 
tion, 400 Seventh Street, S.W., Washington, D.C. 
20590. It shall be in writing and dated; all 



PART 551-1 



signatures shall be in ink. The designation shall be 
made in legal form required to make it valid, and 
binding on the laws, or other requirements govern- 
ing the making of the designation by the manufac- 
turer at the place and time where it is made, and 
the person or persons signing the designation shall 
certify that it is so made. The designation shall 
disclose the full legal name, principal place of 
business, and mailing address of the manufacturer. 
If any of the products of the manufacturer do not 
bear his legal name, the marks, trade names, or 
other designations of origin which these products 
bear shall be stated in the designation. The 
designation of agent shall provide that it remains 
in effect until withdrawn or replaced by the 
manufacturer. The designation shall bear a 
declaration of acceptance duly signed by the 
designated agent. The full legal name and mailing 
address of the agent shall be stated. Designations 
are binding on the manufacturer even when not in 
compliance with all requirements of this section 



until rejected by the Administrator. The 
designated agent may not assign performance of 
his functions under the designation to another 
person. 

(c) Method of service. Service of any process, 
notice, order, requirement, or decision specified in 
section 110(e) of the National Traffic and Motor 
Vehicle Safety Act of 1966 may be made by 
registered or certified mail addressed to the agent, 
with return receipt requested, or in any other 
manner authorized by law. If service cannot be 
effected because the agent has died (or, if a firm or 
a corporation ceased to exist) or moved, or other- 
wise does not receive correctly addressed mail, 
service may be made by posting as provided in 
section 110(e). 



31 F.R. 16267-8 
December 20, 1966 



PART 551-2 



Effodiv*: S«pl«nlMr 4, I97S 



PREAMBLE TO PART 552— PETITIONS FOR RULEMAKING, DEFEa, AND 

NONCOMPLIANCE ORDERS 

(Docket No. 75-12; NoHca 2) 



This notice establishes a new regulation speci- 
fying the requirements for submission of peti- 
tions for rulemaking, and petitions for the 
commencement of defect or non-compliance pro- 
ceedings in accordance with section 124 of the 
National Traffic and Motor Vehicle Safety Act, 
15 U.S.C. 1410a. It also describes the pro- 
cedures the NHTSA will follow in acting upon 
such petitions. 

The notice of proposed rulemaking on which 
this issuance is based was issued on May 16, 1975 
(40 CFR 21486), in response to which eight com- 
ments were received. After careful consideration 
of those comments, the NHTSA has determined 
that no substantial change from the proposal is 
called for in the language of the rule. 

Most of the comments received in response to 
the proposed resolution supported the establish- 
ment of some kind of regulation with respect to 
petitions for rulemaking. American Motors sup- 
ported the proposal without qualification, while 
the other commenters suggested changes of vary- 
ing import. 

The Center for Auto Safety argued that the 
proposed rule was too narrow, as it did not deal 
with petitions to close defect investigations. 
Section 124 of the Act, upon which Part 552 is 
based, establishes formal requirements for peti- 
tions in the major areas of agency activity imder 
the Act: petitions to "commence proceedings" 
concerning the issuance, amendment, or revoca- 
tion of a motor vehicle safety standard, and 
petitions to "commence proceedings" concerning 
the issuance of an order with respect to the fail- 
ure to comply with a safety standard or the 
existence of a safety-related defect. These are 
in fact the main areas in which petitions have 
been received by the agency in the past. Section 
124 indicates an intent of Congress to provide. 



and at the same time to limit, formal "petition 
treatment" to these areas. This treatment in- 
cludes a statutory deadline for action, and Fed- 
eral Register publication of reasons for denial. 
A corollary of this Congressional intent is that 
an informal response by the agency to other types 
of requests for action is satisfactory. Accord- 
ingly, such other requests will not be treated as 
petitions, but will be handled informally (as in 
the past) under existing correspondence or other 
appropriate NHTSA procedures. 

The Center for Auto Safety also urged that, 
upon denial of a petition, the NHTSA should 
be required to provide the reasons for the denial 
in specific detail. This suggestion is outside the 
intent of the statutory provision, and without 
merit. A full discussion of the agency's reasons 
for denial of a petition is provided to the peti- 
tioner, and copies of such a denial letter are 
(except for confidential matter) generally avail- 
able to any person upon request. This agency 
does not find any intent of Congress to require 
the full text of denial letters to be printed in the 
Federal Register. The NHTSA practice of pub- 
lishing a summary of its reasons for a denial 
appears to satisfy both the letter and the spirit 
of section 124. The reason for the provision is 
to make the agency publicly accountable and 
"responsible" (from the title of the section) for 
its negative decisions, as it naturally is for its 
positive ones. A person who, put on notice by 
the Federal Register publication, wishes to delve 
more deeply into the background of the matter 
may readily do so by requesting further informa- 
tion from the agency. 

Greneral Motors objected to the use of the 
"reasonable possibility" standard in determining 
whether to grant or deny a petition because it 
would allow for the granting of virtually any 



PABT 552— PRE 1 



Effective: September 4, 1975 

petition. The NHTSA does not agree. It should 
be remembered that the grant of a petition under 
this part leads only to the commencement of 
agency action to gather information necessary 
to make a decision. The use of the modifier 
"reasonable" limits the discretion of the Admin- 
istrator t« grant only a petition for an order or 
rule that has a reasonable chance of being issued, 
not a petition for any order or rule that may 
conceivably be issued. The substitution of the 
term "reasonable probability," as urged by GM, 
would tend to transform a threshold decision as 
to whether or not the rule or order might issue 
into a determination of whether or not it should 
issue. Such a result would dilute the intent of 
both section 124 and Part 552 to provide means 
for interested parties, without access to complete 
data, to seek remedial action regarding what 
they consider to be defective or unsafe char- 
acteristics of motor vehicles. 

GM also urged that a petitioner be required to 
verify the facts alleged in the petition before 
any information requests are made to the manu- 
facturer. Such a requirement would preclude 
the granting of a petition submitted by an in- 
dividual or organization with limited resources. 
The technical review conducted by the Associate 
Administrator necessarily includes an analysis 
of the facts alleged in the petition. If he de- 
termines that the facts need verification by the 
petitioner, he has the discretion to request that 
the petitioner submit additional information. 
However, to require such information as a condi- 
tion precedent to granting the petition would 
not only unduly burden the petitioner, but also 
would exceed the statutory requirement that the 
petition merely set forth the facts which it is 
claimed establish the necessity of an order, not 
that it prove those facts. 

The Recreation Vehicle Industry Association 
(RVIA) objected to the provision denying cross 
examination of witnesses at hearings held on 
petitions under Part 552. It is well established 
that the NHTSA may hold informal hearings 
under the Traffic Safety Act, in cases such as 
Automotive Parts & Accessories Ass^n, Inc. v. 
Boyd, 407 F.2d 330, 334 (D.C. Cir. 1968). The 
purpose of an informal hearing is to permit the 
NHTSA to determine whether or not a petitioner 



has a valid complaint or request for rulemaking. 
This purpose is best served by allowing both 
sides to present information and arguments 
without the necessity for conforming to strict 
evidentiary rules. In addition, the drafters of 
section 124 intended to encourage the free use 
of the petition procedure in alerting the NHTSA 
to vehicle safety problems. The possibility of 
having to submit to rigorous cross-examination 
might deter many potential petitioners from uti- 
lizing this procedure. Accordingly, the provi- 
sion allowing for an informal hearing has been 
retained intact. 

The RVIA also argued that the manufacturer 
be allowed to respond to the petition before the 
Administrator decided whether to grant or deny 
it. Such a proposal misapprehends the purpose 
of the petition and ignores the opportunities a 
manufacturer has to respond to adverse informa- 
tion submitted in a petition. If the NHTSA 
denies the petition, there is no need for response 
as there is no action adverse to the manufacturer. 
If the petition is granted, the applicable 
rulemaking and investigatory procedures are 
commenced, with full opportunity for the manu- 
facturer to present data and arguments against 
the proposed rule or order. As noted above, the 
purpose of the technical review is to facilitate 
a threshold decision as to whether an order or 
rule might issue, not whether it will. Thus it 
is not necessary to consider the comments of the 
manufacturer before deciding whether to grant 
or deny. 

The proposed time for Federal Register pub- 
lication of notice of a denial of a petition was 
30 days. In order to allow time to prepare a 
monthly publication of a notice of denials, in the 
interest of efficieny and conservation of Federal 
Register space, this period is set at 45 days. 

In light of the foregoing. Title 49, Code of 
Federal Regulation, is amended by the addition 
of a new Part 552, Petitions for Rulemaking, 
Defect, and Noncompliance Orders. . . . 

Effective date: September 4, 1975. 

Issued on September 4, 1975. 

James B. Gregory 
Administrator 
40 F.R. 42013 
September 10, 1975 



PART 552— PRE 2 



EfFcdiv*: Scptambtr 4, I97S 



PREAMBLE TO PART 552— PETITIONS FOR RULEMAKING, DEFEa, AND 

NONCOMPLIANCE ORDERS 

(Docket No. 75-12; Notice 2) 



This notice establishes a new regulation speci- 
fying the requirements for submission of peti- 
tions for rulemaking, and petitions for the 
commencement of defect or non-compliance pro- 
ceedings in accordance with section 124 of the 
National Traffic and Motor Vehicle Safety Act, 
15 U.S.C. 1410a. It also describes the pro- 
cedures the NHTSA will follow in acting upon 
such petitions. 

The notice of proposed rulemaking on which 
this issuance is based was issued on May 16, 1975 
(40 CFR 21486), in response to which eight com- 
ments were received. After careful consideration 
of those comments, the NHTSA has determined 
that no substantial change from the proposal is 
called for in the language of the rule. 

Most of the comments received in response to 
the proposed resolution supported the establish- 
ment of some kind of regulation with respect to 
petitions for rulemaking. American Motors sup- 
ported the proposal without qualification, while 
the other commenters suggested changes of vary- 
ing import. 

The Center for Auto Safety argued that the 
proposed rule was too narrow, as it did not deal 
with petitions to close defect investigations. 
Section 124 of the Act, upon which Part 552 is 
based, establishes formal requirements for peti- 
tions in the major areas of agency activity under 
the Act: petitions to "commence proceedings" 
concerning the issuance, amendment, or revoca- 
tion of a motor vehicle safety standard, and 
petitions to "commence proceedings" concerning 
the issuance of an order with respect to the fail- 
ure to comply with a safety standard or the 
existence of a safety-related defect. These are 
in fact the main areas in which petitions have 
been received by the agency in the past. Section 
124 indicates an intent of Congress to provide, 



and at the same time to limit, formal "petition 
treatment" to these areas. This treatment in- 
cludes a statutory deadline for action, and Fed- 
eral Register publication of reasons for denial. 
A corollary of this Congressional intent is that 
an informal response by the agency to other types 
of requests for action is satisfactory. Accord- 
ingly, such other requests will not be treated as 
petitions, but will be handled informally (as in 
the past) under existing correspondence or other 
appropriate NHTSA procedures. 

The Center for Auto Safety also urged that, 
upon denial of a petition, the NHTSA should 
be required to provide the reasons for the denial 
in specific detail. This suggestion is outside the 
intent of the statutory provision, and without 
merit. A full discussion of the agency's reasons 
for denial of a petition is provided to the peti- 
tioner, and copies of such a denial letter are 
(except for confidential matter) generally avail- 
able to any person upon request. This agency 
does not find any intent of Congress to require 
the full text of denial letters to be printed in the 
Federal Register. The NHTSA practice of pub- 
lishing a summary of its reasons for a denial 
appears to satisfy both the letter and the spirit 
of section 124. The reason for the provision is 
to make the agency publicly accountable and 
"responsible" (from the title of the section) for 
its negative decisions, as it naturally is for its 
positive ones. A person who, put on notice by 
the Federal Register publication, wishes to delve 
more deeply into the background of the matter 
may readily do so by requesting further informa- 
tion from the agency. 

Greneral Motors objected to the use of the 
"reasonable possibility" standard in determining 
whether to grant or deny a petition because it 
would allow for the granting of virtually any 



PART 552— PRE 1 



Effective: September 4, 1975 

petition. The NHTSA does not agree. It should 
be remembered that the grant of a petition under 
this part leads only to the commencement of 
agency action to gather information necessary 
to make a decision. The use of the modifier 
"reasonable" limits the discretion of the Admin- 
istrator to grant only a petition for an order or 
rule that has a reasonable chance of being issued, 
not a petition for any order or rule that may 
conceivably be issued. The substitution of the 
term "reasonable probability," as urged by GM, 
would tend to transform a threshold decision as 
to whether or not the rule or order tnight issue 
into a determination of whether or not it should 
issue. Such a result would dilute the intent of 
both section 124 and Part 552 to provide means 
for interested parties, without access to complete 
data, to seek remedial action regarding what 
they consider to be defective or unsafe char- 
acteristics of motor vehicles. 

GM also urged that a petitioner be required to 
verify the facts alleged in the petition before 
any information requests are made to the manu- 
facturer. Such a requirement would preclude 
the granting of a petition submitted by an in- 
dividual or organization with limited resources. 
The technical review conducted by the Associate 
Administrator necessarily includes an analysis 
of the facts alleged in the petition. If he de- 
termines that the facts need verification by the 
petitioner, he has the discretion to request that 
the petitioner submit additional information. 
However, to require such information as a condi- 
tion precedent to granting the petition would 
not only unduly burden the petitioner, but also 
would exceed the statutory requirement that the 
petition merely set forth the facts which it is 
claimed establish the necessity of an order, not 
that it prove those facts. 

The Recreation Vehicle Industry Association 
(RVIA) objected to the provision denying cross 
examination of witnesses at hearings held on 
petitions under Part 552. It is well established 
that the NHTSA may hold informal hearings 
under the Traffic Safety Act, in cases such as 
Automotive Parts <& Accessories Ass^n, Inc. v. 
Boyd, 407 F.2d 330, 334 (D.C. Cir. 1968). The 
purpose of an informal hearing is to permit the 
NHTSA to determine whether or not a petitioner 



has a valid complaint or request for rulemaking. , 
This purpose is best served by allowing both 
sides to present information and arguments 
without the necessity for conforming to strict 
evidentiary rules. In addition, the drafters of 
section 124 intended to encourage the free use 
of the petition procedure in alerting the NHTSA 
to vehicle safety problems. The possibility of 
having to submit to rigorous cross-examination 
might deter many potential petitioners from uti- 
lizing this procedure. Accordingly, the provi- 
sion allowing for an informal hearing has been 
retained intact. 

The RVIA also argued that the manufacturer 
be allowed to respond to the petition before the 
Administrator decided whether to grant or deny 
it. Such a proposal misapprehends the purpose 
of the petition and ignores the opportunities a 
manufacturer has to respond to adverse informa- 
tion submitted in a petition. If the NHTSA 
denies the petition, there is no need for response 
as there is no action adverse to the manufacturer. 
If the petition is granted, the applicable 
rulemaking and investigatory procedures are 
commenced, with full opportunity for the manu- 
facturer to present data and arguments against 
the proposed rule or order. As noted above, the \, 
purpose of the technical review is to facilitate 
a threshold decision as to whether an order or 
rule might issue, not whether it will. Thus it 
is not necessary to consider the comments of the 
manufacturer before deciding whether to grant 
or deny. 

The proposed time for Federal Register pub- 
lication of notice of a denial of a petition was 
30 days. In order to allow time to prepare a 
monthly publication of a notice of denials, in the 
interest of efficieny and conservation of Federal 
Register space, this period is set at 45 days. 

In light of the foregoing. Title 49, Code of 
Federal Regulation, is amended by the addition 
of a new Part 552, Petitions for Rulemaking, 
Defect, and Noncompliance Orders. . . . 
Effective date; September 4, 1975. 
Issued on September 4, 1975. 

James B. Gregory 
Administrator 
40 F.R. 42013 
September 10, 1975 



PART 552— PRE 2 



PART 552— PETITIONS FOR RULEMAKING, DEFECT, AND 
NONCOMPLIANCE ORDERS 



Sec. 

552.1 Scope. 

552.2 Purpose. 

552.3 General. 

552.4 Requirements for Petition. 

552.5 Improperly filed petitions. 

552.6 Technical review. 

552.7 Public hearing. 

552.8 Determination whether to commence a 

proceeding. 

552.9 Grant of petition. 

552.10 Denial of petition. 

Authority: Sec. 103, 119, Pub. L. 89-563, 80 
Stat. 718, (15 U.S.C. 1392, 1407); Sec. 124, 152 
Pub. L. 93-492, 88 Stat. 1470, (15 U.S.C. 1410a, 
1412); delegation of authority at 49 CFR 1.51. 

§ 552.1 Scope. This part establishes pro- 
cedures for the submission and disposition of 
petitions filed by interested persons pursuant to 
the National Traffic and Motor Vehicle Safety 
Act and the Motor Vehicle Information and Cost 
Savings Act, to initiate rulemaking or to make 
a determination that a motor vehicle or item of 
replacement equipment does not comply with an 
applicable Federal motor vehicle safety standard 
or contains a defect which relates to motor ve- 
hicle safety. 

§ 552.2 Purpose. The purpose of this part is 
to enable the National Highway Traffic Safety 
Administration to identify and respond on a 
timely basis to petitions for rulemaking or de- 
fect or noncompliance determinations, and to 
inform the public of the procedures following 
in response to such petitions. 



§ 552.3 General. Any interested person may 
file with the Administrator a petition requesting 
him (1) to commence a proceeding respecting 
the issuance, amendment, or revocation of a 
motor vehicle safety standard, or (2) to com- 
mence a proceeding to determine whether to 
issue an order concerning the notification and 
remedy of a failure of a motor vehicle or item 
of replacement equipment to comply with an 
applicable motor vehicle safety standard or a 
defect in such vehicle or equipment that relates 
to motor vehicle safety. 

§ 552.4 Requirements for petition. A petition 
filed under this part should be addressed and 
submitted to: Administrator, National Highway 
Traffic Safety Administration, 400 Seventh 
Street, S.W., Washington, D.C. 20590. Each 
petition filed under this part must— 

(a) Be written in the English language; 

(b) Have, preceding its text, a heading that 
includes the word "Petition"; 

(c) Set forth facts which it is claimed estab- 
lish that an order is necessary; 

(d) Set forth a brief description of the sub- 
stance of the order which it is claimed should 
be issued; and 

(e) Contain the name and address of the 
petitioner. 

§ 552.5 Improperly filed petitions, (a) A peti- 
tion that is not addressed as specified in § 552.4, 
but that meets the other requirements of that 
section, will be treated as a properly filed peti- 
tion, received as of the time it is discovered and 
identified. 

(b) A document that fails to conform to one 
or more of the requirements of 552.4(a) through 
(e) will not be treated as a petition under this 
part. Such a document will be treated according 



PART 552-1 



to the existing correspondence or other appro- 
priate procedures of the NHTSA, and any sug- 
gestions contained in it will be considered at the 
discretion of the Administrator or his delegate. 

§ 552.6 Technical review. The appropriate 
Associate Administrator conducts a technical re- 
view of the petition, to determine whether there 
is a reasonable possibility that the requested 
order will be issued at the conclusion of the 
appropriate proceeding. The technical review 
may consist of an analysis of the material sub- 
mitted, together with information already in the 
possession of the agency, or it may also include 
the collection of additional information, or a 
public meeting in accordance with § 552.7. 

§ 552.7 Public meeting. If the Associate Ad- 
ministrator decides that a public meeting on the 
subject of the petition would contribute to the 
determination whether to commence a proceeding, 
he issues a notice of public meeting for publica- 
tion in the Federal Register to advise interested 
persons of the time, place, and subject matter 
of the public meeting and invite their participa- 
tion. Interested persons may submit their views 
and evidence through oral or written presenta- 
tions, or both. There is no cross examination of 
witnesses. A transcript of the meeting is kept 
and exhibits may be accepted as part of the tran- 
script. Sections 556 and 557 of Title 5, United 
States Code, do not apply to meetings held under 
this part. The Chief Counsel designates a mem- 
ber of his staff to serve as legal officer at the 
meeting. 

§ 552.8 Determination whether to commence 
a proceeding. At the conclusion of the technical 
review, the Administrator or his delegate deter- 



mines whether there is a reasonable possibility 
that the order requested in the petition will be 
issued at the conclusion of the appropriate pro- 
ceeding. If such a reasonable possibility is 
found, the petition is granted. If it is not found, 
the petition is denied. In either event, the peti- 
tioner is notified of the grant or denial not more 
than 120 days after receipt of the petition by 
the NHTSA. 

§ 551.9 Grant of petition, (a) If a petition 
for rulemaking with respect to a motor vehicle 
safety standard is granted, a rulemaking pro- 
ceeding is promptly commenced in accordance 
with applicable NHTSA and statutory proce- 
dures. The granting of such a petition and the 
commencement of a rulemaking proceeding does 
not signify, however, that the rule in question 
will be issued. A decision as to the issuance of 
the rule is made on the basis of all available 
information developed in the course of the rule- 
making proceeding, in accordance with statutory 
criteria. 

(b) If a petition with respect to a noncom- 
pliance or a defect is granted, a proceeding to 
determine the existence of the noncompliance or 
defect is promptly commenced by the initiation 
of an investigation by the Office of Standards 
Enforcement or the Office of Defects Investiga- 
tion, as appropriate. 

§ 552.10 Denial of petition. If a petition is 
denied, a Federal Register notice of the denial is 
issued within 45 days of the denial, setting forth 
the reasons for denial of the petition. 

40 F.R. 42013 
September 10, 1975 



PART 552-2 



PART 552— PETITIONS FOR RULEMAKING, DEFECT, AND 
NONCOMPLIANCE ORDERS 



Sec. 

552.1 Scope. 

552.2 Purpose. 

552.3 General. 

552.4 Requirements for Petition. 

552.5 Improperly filed petitions. 

552.6 Technical review. 

552.7 Public hearing. 

552.8 Determination whether to commence a 

proceeding. 

552.9 Grant of petition. 

552.10 Denial of petition. 

Authority: Sec. 103, 119, Pub. L. 89-563, 80 
Stat. 718, (15 U.S.C. 1392, 1407); Sec. 124, 152 
Pub. L. 93-492, 88 Stat. 1470, (15 U.S.C. 1410a, 
1412); delegation of authority at 49 CFR 1.51. 

§ 552.1 Scope. This part establishes pro- 
cedures for the submission and disposition of 
petitions filed by interested persons pursuant to 
the National Traffic and Motor Vehicle Safety 
Act and the Motor Vehicle Information and Cost 
Savings Act, to initiate rulemaking or to make 
a determination that a motor vehicle or item of 
replacement equipment does not comply with an 
applicable Federal motor vehicle safety standard 
or contains a defect which relates to motor ve- 
hicle safety. 

§ 552.2 Purpose. The purpose of this part is 
to enable the National Highway Traffic Safety 
Administration to identify and respond on a 
timely basis to petitions for rulemaking or de- 
fect or noncompliance determinations, and to 
inform the public of the procedures following 
in response to such petitions. 



§ 552.3 General. Any interested person may 
file with the Administrator a petition requesting 
him (1) to commence a proceeding respecting 
the issuance, amendment, or revocation of a 
motor vehicle safety standard, or (2) to com- 
mence a proceeding to determine whether to 
issue an order concerning the notification and 
remedy of a failure of a motor vehicle or item 
of replacement equipment to comply with an 
applicable motor vehicle safety standard or a 
defect in such vehicle or equipment that relates 
to motor vehicle safety. 

§ 552.4 Requirements for petition. A petition 
filed under this part should be addressed and 
submitted to: Administrator, National Highway 
Traffic Safety Administration, 400 Seventh 
Street, S.W., Washington, D.C. 20590. Each 
petition filed under this part must— 

(a) Be written in the English language; 

(b) Have, preceding its text, a heading that 
includes the word "Petition"; 

(c) Set forth facts which it is claimed estab- 
lish that an order is necessary; 

(d) Set forth a brief description of the sub- 
stance of the order which it is claimed should 
be issued; and 

(e) Contain the name and address of the 
petitioner. 

§ 552.5 Improperly filed petitions, (a) A peti- 
tion that is not addressed as specified in S 552.4, 
but that meets the other requirements of that 
section, will be treated as a properly filed peti- 
tion, received as of the time it is discovered and 
identified. 

(b) A document that fails to conform to one 
or more of the requirements of 552.4(a) through 
(e) will not be treated as a petition under this 
part. Such a document will be treated according 



PART 552-1 



to the existing correspondence or other appro- 
priate procedures of the NHTSA, and any sug- 
gestions contained in it will be considered at the 
discretion of the Administrator or his delegate. 

§ 552.6 Technical review. The appropriate 
Associate Administrator conducts a technical re- 
view of the petition, to determine whether there 
is a reasonable possibility that the requested 
order will be issued at the conclusion of the 
appropriate proceeding. The technical review 
may consist of an analysis of the material sub- 
mitted, together with information already in the 
possession of the agency, or it may also include 
the collection of additional information, or a 
public meeting in accordance with § 552.7. 

§ 552.7 Public meeting. If the Associate Ad- 
ministrator decides that a public meeting on the 
subject of the petition would contribute to the 
determination whether to commence a proceeding, 
he issues a notice of public meeting for publica- 
tion in the Federal Register to advise interested 
persons of the time, place, and subject matter 
of the public meeting and invite their participa- 
tion. Interested persons may submit their views 
and evidence through oral or written presenta- 
tions, or both. There is no cross examination of 
witnesses. A transcript of the meeting is kept 
and exhibits may be accepted as part of the tran- 
script. Sections 556 and 557 of Title 5, United 
States Code, do not apply to meetings held under 
this part. The Chief Counsel designates a mem- 
ber of his staff to serve as legal officer at the 
meeting. 

§ 552.8 Determination whether to commence 
a proceeding. At the conclusion of the technical 
review, the Administrator or his delegate deter- 



mines whether there is a reasonable possibility 
that the order requested in the petition will be 
issued at the conclusion of the appropriate pro- 
ceeding. If such a reasonable possibility is 
found, the petition is granted. If it is not found, 
the petition is denied. In either event, the peti- 
tioner is notified of the grant or denial not more 
than 120 days after receipt of the petition by 
the NHTSA. 

§ 551.9 Grant of petition, (a) If a petition 
for rulemaking with respect to a motor vehicle 
safety standard is granted, a rulemaking pro- 
ceeding is promptly commenced in accordance 
with applicable NHTSA and statutory proce- 
dures. The granting of such a petition and the 
commencement of a rulemaking proceeding does 
not signify, however, that the rule in question 
will be issued. A decision as to the issuance of 
the rule is made on the basis of all available 
information developed in the course of the rule- 
making proceeding, in accordance with statutory 
criteria. 

(b) If a petition with respect to a noncom- 
pliance or a defect is granted, a proceeding to 
determine the existence of the noncompliance or 
defect is promptly commenced by the initiation 
of an investigation by the Office of Standards 
Enforcement or the Office of Defects Investiga- 
tion, as appropriate. 

§ 552.10 Denial of petition. If a petition is 
denied, a Federal Register notice of the denial is 
issued within 45 days of the denial, setting forth 
the reasons for denial of the petition. 

40 F.R. 42013 
September 10, 1975 



PART 552-2 



iff*«tlv«: Nev«mb«r 17, 1««7 



PREAMBLE TO PART 553— RULEMAKING PROCEDURES: MOTOR VEHICLE SAFETY 

STANDARDS 



This amendment revokes "Part 215 — Rule- 
Making; Initial Safety Standards," 31 F.R. 
13127, as amended, in 31 F.R. 15197, 32 F.R. 
976, 32 F.R. 5832, and 32 F.R. 13000, and adds 
a new Part 353 — "Rule-Making Procedures: 
Motor Vehicle Safety Standards" to the regula- 
tions of the Federal Highway Administration. 

The purpose of this part is to describe the 
procedures applicable to the Federal Highway 
Administration in prescribing public rules for 
motor vehicle safety standards and to provide 
for appropriate participation by interested per- 
sons. 

The new part provides for general notices of 
proposed rule making, to be published in the 
Federal Begister, except in cases where the Ad- 
ministration finds that notice is impractical, un- 
necessary or contrary to the public interest. The 
new part also provides for petitions for extension 
of time to comment on notices of proposed rule 
making, petitions for reconsideration, and peti- 
tions for proposed rule making. 

Sections 556 and 557 of Title 5, United States 
Code (formerly sections 7 and 8 of the Admin- 
istrative Procedure Act), do not apply to rule 
making under this part. Consequently, hearings 
are not a required part of the rule-making pro- 
cedure. However, hearings may be held, when- 
ever it is considered necessary and desirable. 
Unless otherwise specified, any hearing held 
would be nonadversary, with no formal pleadings 
and no adverse party. A rule issued after such 
hearing would not necessarily be based exclu- 
sively on the record of the hearing. 

All final rules will be published in the Federal 
Register, unless, in accordance with section 
552(a) of Title 5, United States Code, actual 
and timely notice has been given to all persons 
subject to it. 

Since this amendment relates to Federal High- 
way Administration organization, procedures. 



and practices, notice and public procedure hereon 
is not necessary and it may be made effective in 
less than thirty (30) days after publication in 
the Federal Register. 

This amendment is made under the authority 
of sections 103 and 119 of the National Traffic 
and Motor Vehicle Safety Act of 1966 (15 U.S.C. 
1407), and the delegation of authority of October 
14, 1967 (32 F.R. 14277). 

In consideration of the foregoing. Title 49 [23] 
of the Code of Federal Regulations is amended 
by deleting Part 215 and adding the following 
new Part 353 — "Rule-Making Procedures: Motor 
Vehicle Safety Standards" effective November 
17, 1967. 

Issued in Washington, D.C., on November 9, 
1967. 





Lowell K. Bridwell, 




Federal Highway Administrator 




SUBPART A— GENERAL 


Sec. 




353.1 


Applicability. 


353.3 


Daflnitiont. 


353.5 


Regulatory dockets. 


353.7 


Rocords. 



SUBPART B— PROCEDURES FOR ADOPTION OF 

RULES UNDER SECTIONS 103 AND 109 

OF THE ACT 

353.1 1 Gonoral. 

353.13 Initiation of ruU making. 

353.15 Contontt of noticot of propoiod nil* 

making. 
353,17 Participation of intorosttd ptrsont. 
353.19 Potitiont for oxtontion of timo to eom- 

mont. 
353.21 Contents of written commonlt. 
353.23 Centidoration of comments received. 



PART 553— PRE 1 



IffMllv*: Novambtr 17, 1967 

353.25 Additional rule-making proceedings. 

353.27 Hearings. 

353.29 Adoption of final rules. 

353.31 Petitions for rule making. 

353.33 Processing of petitions. 

353.35 Petitions for reconsideration. 

353.37 Proceedings on petitions for reconsid- 
eration. 



AUTHORITY: The provisions of this Part 
353 issued under sees. 103 and 119, 80 Stat. 728; 
15 U.S.C. 1407 ; Delegation of Authority of Oct. 
14, 1967 (32 F.R. 14277). 

32 F.R. 15818 
November 17, 1967 



PART 553— PRE 2 



<l 



Ilh«tiv«: Novambar 17, 1967 



PREAMBLE TO PART 553— RULEMAKING PROCEDURES: MOTOR VEHICLE SAFETY 

STANDARDS 



This amendment revokes "Part 215 — Rule- 
Making; Initial Safety Standards," 31 F.R. 
13127, as amended, in 31 F.R. 15197, 32 F.R. 
976, 32 F.R. 5832, and 32 F.R. 13000, and adds 
a new Part 353 — "Rule-Making Procedures: 
Motor Vehicle Safety Standards" to the regula- 
tions of the Federal Highway Administration. 

The purpose of this part is to describe the 
procedures applicable to the Federal Highway 
Administration in prescribing public rules for 
motor vehicle safety standards and to provide 
for appropriate participation by interested per- 
sons. 

The new part provides for general notices of 
proposed rule making, to be published in the 
Federal Register, except in cases where the Ad- 
ministration finds that notice is impractical, un- 
necessary or contrary to the public interest. The 
new part also provides for petitions for extension 
of time to comment on notices of proposed rule 
making, petitions for reconsideration, and peti- 
tions for proposed rule making. 

Sections 556 and 557 of Title 5, United States 
Code (formerly sections 7 and 8 of the Admin- 
istrative Procedure Act), do not apply to rule 
making under this part. Consequently, hearings 
are not a required part of the rule-making pro- 
cedure. However, hearings may be held, when- 
ever it is considered necessary and desirable. 
Unless otherwise specified, any hearing held 
would be nonadversary, with no formal pleadings 
and no adverse party. A rule issued after such 
hearing would not necessarily be based exclu- 
sively on the record of the hearing. 

All final rules will be published in the Federal 
Register, unless, in accordance with section 
552(a) of Title 5, United States Code, actual 
and timely notice has been given to all persons 
subject to it. 

Since this amendment relates to Federal High- 
way Administration organization, procedures, 



and practices, notice and public procedure hereon 
is not necessary and it may be made effective in 
less than thirty (30) days after publication in 
the Federal Register. 

This amendment is made under the authority 
of sections 103 and 119 of the National Traffic 
and Motor Vehicle Safety Act of 1966 (16 U.S.C. 
1407), and the delegation of authority of October 
14,1967 (32 F.R. 14277). 

In consideration of the foregoing, Title 49 [23] 
of the Code of Federal Regulations is amended 
by deleting Part 215 and adding the following 
new Part 353 — "Rule-Making Procedures: Motor 
Vehicle Safety Standards" effective November 
17, 1967. 

Issued in Washington, D.C., on November 9, 
1967. 





Lowell K. Bridwell, 




Federal Highway Administrator 




SUBPART A— GENERAL 


Sec. 




353.1 


Applicability. 


353.3 


Definitions. 


353.5 


Regulatory dockots. 


353.7 


Records. 



SUBPART B— PROCEDURES FOR ADOPTION OF 

RULES UNDER SECTIONS 103 AND 109 

OF THE Aa 

353.1 1 General. 

353.13 Initiation of rule making. 

353.15 Contents of notices of proposed rule 

making. 
353.17 Participation of interested persons. 
353.19 Petitions for extension of time to cem' 

ment. 
353.21 Contents of written comments. 
353.23 Consideration of comments received. 



PART 553— PRE 1 



Iffcctiv*: Nevtmbcr 17, 1967 



353.25 Additional rule-making proceedings. 

353.27 Hearings. 

353.29 Adoption of final rules. 

353.31 Petitions for rule making. 

353.33 Processing of petitions. 

353.35 Petitions for reconsideration. 

353.37 Proceedings on petitions for reconsid- 
eration. 



AUTHORITY: The provisions of this Part 
353 issued under sees. 103 and 119, 80 Stat. 728; 
15 U.S.C. 1407; Delegation of Authority of Oct. 
14, 1967 (32 F.R. 14277). 

32 F.R. 15818 
November 17, 1967 



PART 553— PRE 2 



i 



PREAMBLE TO AMENDMENT TO PART 553— RULEMAKING PROCEDURES: MOTOR 

VEHICLE SAFETY STANDARDS 

Effect of Petition for Reconsideration 



Sections 553.35 and 553.37 of Title 49, Code 
of Federal Regulations, provide procedural rules 
for submission of, and action u^on, petitions for 
reconsideration of rules issued under the Na- 
tional Traffic and Motor Vehicle Safety Act (15 
U.S.C. 1381 et seq.). The purpose of this notice 
is to establisli a new section in Part 553, to make 
clear the National Highway Safety Bureau's in- 
terpretation of the effect of the filing of a peti- 
tion for reconsideration upon the running of the 
60-day period for judicial review of orders issued 
under the Act (16 U.S.C. 1394). 

The Bureau's position is that the 60-day period 
for judicial review is stayed by a timely petition 
for reconsideration of an order, and that the re- 
view period does not expire until 60 days after 
the Director's disposition of the petition by 
notice in the Federal Register. A party ad- 
versely affected by the order may, however, seek 
judicial review before the petition is disposed of. 

The staying of the expiration of the review 
period while action is being taken on petitions 
for reconsideration is manifestly in the interest 
both of affected parties and orderly administra- 
tion by the Bureau. Original orders are often 
amended on reconsideration. If the expiration 
of the judicial review period is not stayed, 
affected parties will be forced to file their appeal 
in court within 30 days after filing a petition 
for reconsideration, regarding an issue that may 
subsequently be mooted by Bureau action on the 
petition. There would be corresponding pressure 
on the Bureau to take hasty action on the peti- 
tion. It appears that the intent of the statute 
would be best carried out by allowing an appeal 



at any time between the original Bureau order 
and 60 days after final action on petitions. 

The language of the statute can support this 
interpretation. The key language is that a per- 
son may seek judicial review "at any time prior 
to the 60th day after such order is issued" (15 
U.S.C. 1394(a)(1)). Where a rule is promul- 
gated, and then action is taken on a petition for 
reconsideration, actually both actions can rea- 
sonably be viewed as the issuance of an order. 
A party may accordingly wait until the last 
"order" in the rulemaking process to prepare 
his court action, with 60 days to do so. Alterna- 
tively, he may appeal immediately after the rule 
is first issued, as, for example, where the effective 
date is soon enough that he considers it im- 
portant to obtain an immediate resolution of the 
issues. 

In light of the foregoing. Part 553, Rule- 
making Procedures: Motor Vehicle Safety 
Standards, of Title 49, Code of Federal Regula- 
tions is amended by adding a new § 553.39, Effect 
of petition for reconsideration on time for seek- 
ing judicial review, to read as set forth below. 
Since this rule is interpretative in nature, notice 
and public procedure thereon are unnecessary, 
and it is effective upon publication in the Fed- 
eral Register. 

Issued on December 17, 1970. 

Douglas W. Toms, 
Director. 

December 19, 1970 
35 F.R. 19268 



PART 663— PRE 3-4 



PREAMBLE TO AMENDMENT TO PART 553— RULEMAKING PROCEDURES: MOTOR 

VEHICLE SAFETY STANDARDS 

Effect of Petition for Reconsideration 



Sections 553.35 and 553.37 of Title 49, Code 
of Federal Regulations, provide procedural rules 
for submission of, and action u^on, petitions for 
reconsideration of rules issued under the Na- 
tional TraflSc and Motor Vehicle Safety Act (15 
U.S.C. 1381 et seq.). The purpose of this notice 
is to establish a new section in Part 553, to make 
clear the National Highway Safety Bureau's in- 
terpretation of the effect of the filing of a peti- 
tion for reconsideration upon the running of the 
60-day period for judicial review of orders issued 
under the Act (15 U.S.C. 1394). 

The Bureau's position is that the 60-day period 
for judicial review is stayed by a timely petition 
for reconsideration of an order, and that the re- 
view period does not expire until 60 days after 
the Director's disposition of the petition by 
notice in the Federal Register. A party ad- 
versely affected by the order may, however, seek 
judicial review before the petition is disposed of. 

The staying of the expiration of the review 
period while action is being taken on petitions 
for reconsideration is manifestly in the interest 
both of affected parties and orderly administra- 
tion by the Bureau. Original orders are often 
amended on reconsideration. If the expiration 
of the judicial review period is not stayed, 
affected parties will be forced to file their appeal 
in court within 30 days after filing a petition 
for reconsideration, regarding an issue that may 
subsequently be mooted by Bureau action on the 
petition. There would be corresponding pressure 
on the Bureau to take hasty action on the peti- 
tion. It appears that the intent of the statute 
would be best carried out by allowing an appeal 



at any time between the original Bureau order 
and 60 days after final action on petitions. 

The language of the statute can support this 
interpretation. The key language is that a per- 
son may seek judicial review "at any time prior 
to the 60th day after such order is issued" (15 
U.S.C. 1394(a)(1)). Where a rule is promul- 
gated, and then action is taken on a petition for 
reconsideration, actually both actions can rea- 
sonably be viewed as the issuance of an order. 
A party may accordingly wait until the last 
"order" in the rulemaking process to prepare 
his court action, with 60 days to do so. Alterna- 
tively, he may appeal immediately after the rule 
is first issued, as, for example, where the effective 
date is soon enough that he considers it im- 
portant to obtain an immediate resolution of the 
issues. 

In light of the foregoing. Part 553, Rule- 
making Procedures: Motor Vehicle Safety 
Standards, of Title 49, Code of Federal Regula- 
tions is amended by adding a new § 553.39, Effect 
of petition for reconsideration on time for seek- 
ing judicial review, to read as set forth below. 
Since this rule is interpretative in nature, notice 
and public procedure thereon are unnecessary, 
and it is effective upon publication in the Fed- 
eral Register. 

Issued on December 17, 1970. 

Douglas W. Toms, 
Director. 



December 19, 
35 F.R. 19268 



1970 



PART 653— PRE 3-4 



EffMtIv*: February S, 1971 



PREAMBLE TO AMENDMENT TO PART 553— RULEMAKING PROCEDURES: MOTOR 

VEHICLE SAFETY STANDARDS 

Petitions for Extension of Time to Comment 



Section 553.19, rulemaking procedures, in 
Chapter 5 of Title 49, Code of Federal Regula- 
tions, currently requires that a petition for exten- 
tion of time to comment on a rulemaking notice 
be received not later than 3 days before the 
expiration of the comment period specified in the 
notice. The 3-day requirement has proven un- 
satisfactory in situations where the petition is 
received close to the deadline, and the agency 
determines that it should be denied. The 3-day 
period does not allow sufficient time for the 
agency to process the petition, notify the peti- 
tioner of its determination, and leave time in the 
comment period for the petitioner to submit 
comments. 

To remedy this problem, § 553.19 is hereby 
amended to require that petitions for extensions 
of time be submitted not later than 10 days be- 



fore the expiration of the comment period. This 
will provide time for agency action within the 
comment period, and for petitioners whose peti- 
tions are denied to submit comments, if they 
wish, before the comment period expires. 

Since this amendment concerns agency pro- 
cedure, notice and public procedure thereon are 
unnecessary, and it is effective upon publication 
in the Federal Register (2-5-71), with respect 
to all rulemaking notices issued subsequent to 
its publication. 

Issued on February 2, 1971. 

Douglas W. Toms, 
Acting Administrator. 

36 F.R. 2511 
February 5, 1971 



> 



PIlRT 668— pre 6-6 



EffMllv*: February S, 1971 



PREAAWLE TO AMENDMENT TO PART 553— RULEMAKING PROCEDURES: MOTOR 

VEHICLE SAFETY STANDARDS 

Petitions for Extension of Time to Comment 



Section 553.19, rulemaking procedures, in 
Chapter 5 of Title 49, Oxie of Federal Regula- 
tions, currently requires that a petition for exten- 
tion of time to comment on a rulemaking notice 
be received not later than 3 days before the 
expiration of the comment period specified in the 
notice. The 3-day requirement has proven un- 
satisfactory in situations where the petition is 
received close to the deadline, and the agency 
determines that it should be denied. The 3-day 
period does not allow sufficient time for the 
agency to process the petition, notify the peti- 
tioner of its determination, and leave time in the 
comment period for the petitioner to submit 
comments. 

To remedy this problem, § 553.19 is hereby 
amended to require that petitions for extensions 
of time be submitted not later than 10 days be- 



fore the expiration of the comment period. This 
will provide time for agency action within the 
comment period, and for petitioners whose peti- 
tions are denied to submit comments, if they 
wish, before the comment period expires. 

Since this amendment concerns agency pro- 
cedure, notice and public procedure thereon are 
unnecessary, and it is effective upon publication 
in the Federal Register (2-5-71), with respect 
to all rulemaking notices issued subsequent to 
its publication. 

Issued on February 2, 1971. 

Douglas W. Toms, 
Acting Administrator. 

36 F.R. 2511 
February 5, 1971 



PAET 658— PRE 6-6 



n 



I 



PREAMBLE TO AMENDMENT TO PART 553— RULEMAKING PROCEDURES: 
MOTOR VEHICLE SAFETY STANDARDS 

Statement of Policy: Action on Petitions for Reconsideration 



The Center for Auto Safety has submitted a 
petition for rulemaking requesting that the 
NHTSA amend 49 CFR Part 553, Rulemaking 
Procedures, to provide that NHTSA must re- 
si>ond to petitions for reconsideration within 60 
days of the date the rule in question is published 
in the Federal Register. The Center cited the 
interval of 5 months and 19 days that elapsed 
before issuance of the recent action on petitions 
concerning Standard No. 208, Occupant Crash 
Protection, as an illustration of the need for such 
a rule. 

The NHTSA does not agree that the elapsed 
interval in that case, in view of the complexity 
of the issues raised and the hundreds of pages of 
highly technical material submitted in the peti- 
tions, was unjustified. This agency does, how- 
ever, recognize that the period of reconsideration 
is one of considerable uncertainty to interested 
parties, since the rule in question has been issued, 
the effective date is approaching, and active prep- 
aration for compliance presumably is underway. 

It has been determined, therefore, that a state- 
ment of policy on this subject will be appropriate, 
for the guidance of all parties concerned. A 
period of 90 days from issuance of the rule will 
be the normal period for action on reconsidera- 
tion. This period will allow only 60 days for 
agency action, which is considered the shortest 



practicable period for the necessary steps: de- 
tailed review of the petitions, gathering of sup- 
plementary information as necessary, making 
basic technical and policy decisions, drafting of 
the action document, and review by responsible 
officials. Where that period is found insufficient, 
a Federal Register notice will be issued stating 
the date by which action is expected to be com- 
pleted. 

Accordingly, an Appendix is hereby added to 
49 CFR Part 553, .... 

Effective date : March 1, 1972. This statement 
is issued in the interest of orderly administration 
and public information. It shall not aflFect the 
validity of any rules hereafter issued by the Na- 
tional Highway Traffic Safety Administration, or 
the legal rights, duties, or liabilities of any per- 
sons pursuant to those rules. 

This notice is issued under the authority of 
section 119 of the National Traffic and Motor 
Vehicle Safety Act, 15 U.S.C. 1407, and the dele- 
gation of authority at 49 CFR 1.51. 



Issued on February 14, 1972. 



Douglas W. Toms 
Administrator 

37 F.R. 3632 
February 18, 1972 



PART 553— PRE 7-8 



(I 



C{ 



I 



PREAMBLE TO AMENDMENT TO PART 553— RULEMAKING PROCEDURES: 
MOTOR VEHICLE SAFETY STANDARDS 

Statement of Policy: Action en Petitions for Reconsideration 



The Center for Auto Safety has submitted a 
petition for rulemaking requesting that the 
NHTSA amend 49 CFR Part 553, Rulemaking 
Procedures, to provide that NHTSA must re- 
sjwnd to petitions for reconsideration within 60 
days of the date the rule in question is published 
in the Federal Register. The Center cited the 
interval of 5 months and 19 days that elapsed 
before issuance of the recent action on petitions 
concerning Standard No. 208, Occupant Crash 
Protection, as an illustration of the need for such 
a rule. 

The NHTSA does not agree that the elapsed 
interval in that case, in view of the complexity 
of the issues raised and the hundreds of pages of 
iiighly technical material submitted in the peti- 
tions, was unjustified. This agency does, how- 
ever, recognize that the iJeriod of reconsideration 
is one of considerable uncertainty to interested 
parties, since the rule in question has been issued, 
the effective date is approaching, and active prep- 
aration for compliance presumably is underway. 

It has been determined, therefore, that a state- 
ment of policy on this subject will be appropriate, 
for the guidance of all parties concerned. A 
period of 90 days from issuance of the rule will 
be the normal period for action on reconsidera- 
tion. This period will allow only 60 days for 
agency action, which is considered the shortest 



practicable i^eriod for the necessary steps: de- 
tailed review of the petitions, gathering of sup- 
plementary information as necessary, making 
basic technical and policy decisions, drafting of 
the action document, and review by responsible 
officials. A^^lere that i>eriod is found insufficient, 
a Federal Register notice will be issued stating 
the date by which action is expected to be com- 
pleted. 

Accordingly, an Appendix is hereby added to 
49 CFR Part 553, .... 

Eifective date: March 1, 1972. This statement 
is issued in the interest of orderly administration 
and public information. It shall not affect the 
validity of any rules hereafter issued by the Na- 
tional Highway Traffic Safety Administration, or 
the legal rights, duties, or liabilities of any per- 
sons pursuant to those rules. 

This notice is issued under the authority of 
section 119 of the National Traffic and Motor 
Vehicle Safety Act, 15 U.S.C. 1407, and the dele- 
gation of authority at 49 CFR 1.51. 



Issued on February 14, 1972. 



Douglas W. Toms 
Administrator 

37 F.R. 3632 
February 18, 1972 



PART 553— PRE 7-8 



(f 



i< 



I Dtay M, If7> 



PREAMBLE TO AMENDMENT TO PART 553~«ULEMAKIN6 PROCEDURES 



Sections 553.81 and 553.86 of Title 49, Code 
of Federal Regulations, currently specify that 
petitions for rulemaking and for reconsideration 
of rules should be addressed to the Docket Room 
of the National Highway Traffic Safety Admin- 
istration. To conform to internal NHTSA cor- 
respondence procedures, §§ 558.31 and 553.85 are 
hereby amended by changing the submission ad- 
dress to the general mailing address specified in 
§ 551.83. For public information, the same ad- 
dress is added to § 553.19, Petitions for extension 
of time to comment. 

The requirement of § 563.31(b)(1) that peti- 
tions for rulemaking be submitted in duplicate 
is unnecessary and inconsistent with agency 
policy with respect to other submissions, and is 
being deleted. As in the case of other' petitions 



and comments, it is requested but not required 
that 10 copies be submitted. 

Accordingly, amendments are made to 49 CFR 
Part 668, Rulemaking Prooedwret: Motor Ve- 
hicle Safety Standarde. . . . 

Since this amendment concerns internal agency 
procedure, it is found that notice and public 
procedure thereon are unnecessary. 

Effective date: May 28, 1978. 

(Sec. 119, Pub. L. 89-668, 80 Stat. 718, 16 
U.S.C. 1407; delegation of authority at 49 CFR 
1.61) 

Issued on April 18, 1978. 

James E. Wilson 
Acting Administrator 
3S P.R. 9124 
April 20, 1973. 



^^ 



PART 568— PRE 9-10 



^ 



d 



MmNmi NUir 1*. I*7> 



PREAMBLE TO AMENDMENT TO PART 553— RULEMAKING PROCEDURES 



Sections 553.31 and 563.85 of Title 49, Code 
of Federal Regulations, currently specify that 
petitions for rulemaking and for reconsideration 
of rules should be addressed to the Docket Boom 
of the National Highway TraflSc Safety Admin- 
istration. To conform to internal NHTSA cor- 
respondence procedures, §§ 553.31 and 553.85 are 
hereby amended by changing the submission ad- 
dress to the general mailing address specified in 
§ 551.33. For public information, the same ad- 
dress is added to § 553.19, Petitiont for extension 
of time to comment. 

The requirement of § 553.81(b)(1) that peti- 
tions for rulemaking be submitted in duplicate 
is unnecessary and inconsistent with agency 
policy with respect to other submissions, and is 
being deleted. As in the case of other petitions 



and comments, it is requested but not required 
that 10 copies be submitted. 

Accordingly, amendments are made to 49 CFR 
Part 668, Rulemaking Procedures: Motor Ve- 
hicle Safety Standards. . . . 

Since this amendment concerns internal agency 
procedure, it is found that notice and public 
procedure thereon are unnecessary. 

Effective date: May 28, 1978. 

(Sec. 119, Pub. L. 89-663, 80 Stat. 718, 16 
U.S.C. 1407; delegation of authority at 49 CFR 
1.61) 

Issued on April 18, 1978. 

James E. Wilson 
Acting Administretor 
38 FJ. 9t24 
April 20, 1973. 



PART 668— PRE 9-10 



EffKHva: July 27, 1973 



PREAMBLE TO AMENDMENT TO PART 553— RULEA/UKING PROCEDURES 



Parts 501, 551, and 553 of Title 49, Code of 
Federal Regulations, currently detail the dele- 
gated powers, general procedures, and rulemak- 
ing procedures utilized by the National Highway 
Traffic Safety Administration (NHTSA) to 
implement the National Traffic and Motor 
Vehicle Safety Act of 1966, Public Law 89-563. 
The Motor Vehicle Information and Cost 
Savings Act, Public Law 92-513, vests addi- 
tional authority in the NHTSA. This amend- 
ment extends the applicability of Parts 501, 551, 
and 553 to the Cost Savings Act to establish 
imiform rulemaking procedures for both Acts. 

Accordingly, amendments are made to 49 CFR, 
Part 501, "Organization and delegation of 
powers and duties", Part 551, "Procedural rules", 
and Part 553, "Rulemaking procedures: motor 
vehicle safety standards". . . . 

Since this amendment relates to NHTSA 
organization, procedures, and practices, it is 



found that notice and public procedure thereon 
are unnecessary. 

Effective date: July 27, 1973. Because this 
notice is only an extension of existing procedures 
to new areas of jurisdiction, it is found that an 
immediate effective dat« is in the public interest. 

(Sees. 9, Pub. L. 89-670, 80 Stat. 944, 49 U.S.C. 
1657; 103, 119, Pub. L. 89-563, 80 Stat. 718, 15 
U.S.C. 1392, 1407; 102, 105, 201, 205, 302, and 
408, Pub L. 92-513, 86 Stat. 947, 15 U.S.C. 1912, 
1915, 1941, 1945, 1962, and 1988; delegation of 
authority at 38 FR 12147). 

Issued on July 23, 1973. 

James E. Wilson 
Associate Administrator 
Traffic Safety Programs 

38 F.R. 20086 
July 27, 1973 



PART 553— PRE 11-12 



(( 



Efhctivs: July 37, 1973 



PREAMBLE TO AMENDMENT TO PART 553— RULEMAKING PROCEDURES 



Parts 501, 551, and 553 of Title 49, Code of 
Federal Regulations, currently detail the dele- 
gated powers, general procedures, and rulemak- 
ing procedures utilized by the National Highway 
Traffic Safety Administration (NHTSA) to 
implement the National Traffic and Motor 
Vehicle Safety Act of 1966, Public Law 89-563. 
The Motor Vehicle Information and Cost 
Savings Act, Public Law 92-513, vests addi- 
tional authority in the NHTSA. This amend- 
ment extends the applicability of Parts 501, 551, 
and 553 to the Cost Savings Act to establish 
imiform rulemaking procedures for both Acts. 

Accordingly, amendments are made to 49 CFR, 
Part 501, "Organization and delegation of 
powers and duties", Part 551, "Procedural rules", 
and Part 553, "Rulemaking procedures: motor 
vehicle safety standards". . . . 

Since this amendment relates to NHTSA 
organization, procedures, and practices, it is 



found that notice and public procedure thereon 
are unnecessary. 

Effective date: July 27, 1973. Because this 
notice is only an extension of existing procedures 
to new areas of jurisdiction, it is found that an 
immediate effective date is in the public interest. 

(Sees. 9, Pub. L. 89-670, 80 Stat. 944, 49 U.S.C. 
1657; 103, 119, Pub. L. 89-563, 80 Stat. 718, 15 
U.S.C. 1392, 1407; 102, 105, 201, 205, 302, and 
408, Pub L. 92-513, 86 Stat. 947, 15 U.S.C. 1912, 
1915, 1941, 1945, 1962, and 1988; delegation of 
authority at 38 FR 12147). 

Issued on July 23, 1973. 

James E. Wilson 
Associate Administrator 
Traffic Safety Programs 

38 F.R. 20086 
July 27, 1973 



PART 553— PRE 11-12 



PREAMBLE TO AMENDMENT TO PART 553 — RULEMAKING PROCEDURES 



The purpose of this notice is to change the 
time specified, as an agency jwlicy, for the 
NHTSA to act on petitions for reconsideration 
to 90 days from the closing date for tlie petitions. 

On February 18. 1972, the NHTSA published 
a notice (37 FR 3632) adding an appendix to 49 
CFR Part 553 that established an agency policy 
of responding to petitions for reconsideration 
within 90 days from publication of the final nile. 
The policy was instituted in order to remove some 
uncertaintly as to the time when the agency 
would act on petitions following the issuance of 
a rule. 

Since a period of 30 days from the issuance of 
a rule is allowed for the submission of petitions 
for reconsideration, the present policy allows only 
60 days for the NHTSA to analyze the petitions 
and decide on, draft and have reviewed the ap- 
propriate response. It has become apparent that 
60 days are not adequate time to complete this 
process. In conformance with the NHTSA's aim 
to specify a normal period for action on petitions 
for reconsideration, the period is being extended 
to 90 days from the closing date for petitions. 



It has been determined that this is necessary to 
afford sufficient time for consideration of the peti- 
tions and the issuance of a response to the issues 
they raise. 

As provided in the February 18, 1972 notice 
(37 FR 3632), where this period is foimd in- 
sufficient, a Federal Register notice will be issued 
stating the date by which action is expected to be 
completed. 

Accordingly, the appendix to 49 CFR Part 553 
is revised: 

Effective date: April 25, 1974. 

(Sec. 119, Pub. L. 89-563, 80 Stat. 718 (15 
U.S.C. 1407) ; delegation of authority at 49 CFR 
1.51) 



Issued on April 22, 1974. 



James B. Gregory 
Administrator 

39 F.R. 14593 
April 25, 1974 



PART 553— PRE 13-14 



PREAMBLE TO AMENDMENT TO PART 553— RULEMAKING PROCEDURES 



The purpose of this notice is to change the 
time specified, as an agency policy, for the 
NHTSA to act on petitions for reconsideration 
to 90 days from the closing date for the petitions. 

On February 18, 1972, the NHTSA published 
a notice (37 FR 3632) adding an appendix to 49 
CFR Part 553 that established an agency policy 
of responding to petitions for reconsideration 
within 90 days from publication of the final nile. 
The policy was instituted in order to remove some 
uncertaintly as to tiie time when the agency 
would act on petitions following the issuance of 
a rule. 

Since a period of 30 days from the issuance of 
a rule is allowed for the submission of petitions 
for reconsideration, the present policy allows only 
60 days for the NHTSA to analyze the petitions 
and decide on, draft and have reviewed the ap- 
propriate response. It has become apparent that 
60 days are not adequate time to complete this 
process. In conformance with the NHTSA's aim 
to specify a normal period for action on petitions 
for reconsideration, the period is being extended 
to 90 days from the closing date for petitions. 



It has been determined that this is necessary to 
afford sufficient time for consideration of the peti- 
tions and the issuance of a response to the issues 
they raise. 

As provided in the February 18, 1972 notice 
(37 FR 3632), where this period is found in- 
sufficient, a Federal Register notice will be issued 
stating the date by which action is expected to be 
completed. 

Accordingly, the appendix to 49 CFR Part 553 
is revised: 

Effective date: April 25, 1974. 

(Sec. 119, Pub. L. 89-563, 80 Stat. 718 (15 
U.S.C. 1407) ; delegation of authority at 49 CFR 
1.51) 



Issued on April 22, 1974. 



James B. Gregory 
Administrator 

39 F.R. 14593 
April 25, 1974 



PART 553— PRE 13-14 



i 



EffacHve: October 13, 1975 



PREAMBLE TO AMENDMENT TO PART 553— RULEMAKING PROCEDURES 

(Docket No. 75-17; Notice 2) 



This notice amends title 49, Code of Federal 
Regulations, Part 553, Rulemaking Procedures, 
by deleting those sections of the part which set 
out procedures by which interested persons may 
petition the NHTSA to undertake rulemaking. 
These procedures have been incorporated in a 
new Part 552, Petitions for Rulemaking, Defect, 
and Noncompliance Orders, of Title 49, Code of 
Federal Regulations, published today in a sepa- 
rate notice. 

The amendments provide that the National 
Highway Traffic Safety Administrator may ini- 
tiate rulemaking on his own motion, on the rec- 
ommendation of other agencies of the Federal 
Government, or on petition by any interested 
person after a determination in accordance with 
Part 552 that grant of the petition is advisable 
(§553.11). 

The amendment also reverses the order of sec- 
tions dealing with initiation of rulemaking and 
notice of proposed rulemaking, presently set out 
in section^! 553.13 and 553.11, respectively, to 
more closely follow the chronology of the rule- 
making process. 

Only one comment, from American Motors 
Corporation, was received in response to the 
notice proposing these amendments (40 F.R. 
25480, June 16, 1975). AMC asserted that the 



language of the new section 553.11 could be mis- 
interpreted to mean that recommendations from 
other Federal agencies would be treated as an- 
other form of petition for rulemaking, rather 
than as input to the Administrator in making a 
determination whether or not to commence rule- 
making on his own motion. The NHTSA does 
not agree that the language of section 553.11 is 
subject to such an interpretation, as it neither 
expressly nor impliedly directs the Administrator 
to treat recommendations from other agencies as 
petitions. It merely continues the intent of the 
previous section 533.13 that the recommendations 
of other agencies may be considered by the Ad- 
ministrator in determining whether to initiate 
rulemaking proceedings in response to a petition 
from an interested paity or on his own motion. 

In light of the foregoing, 49 CFR Part 553, 
Rulemaking Procedures, is amended as follows: 

Effective date : October 13, 1975. 

(Sec. 119, Pub. L. 89-563, 80 Stat. 718 (15 
U.S.C. 1407) ; delegation of authority at 49 CFR 
1.51.) 

Issued on September 4, 1975. 

James B. Gregory 
Administrator 

40 F.R. 42015 
September 10, 1975 



PART 553— PRE 15-16 







^ 



EfFective: October 13, 1975 



PREAMBLE TO AMENDMENT TO PART 553— RULEMAKING PROCEDURES 

(Docket No. 75-17; Notice 2) 



This notice amends title 49, Code of Federal 
Reflations, Part 553, Rvlemaking Procedures, 
by deleting those sections of the part which set 
out procedures by which interested persons may 
petition the NHTSA to undertake rulemaking. 
These procedures have been incorporated in a 
new Part 552, Petitions for Rulemaking, Defect, 
and Noncompliance Orders, of Title 49, Code of 
Federal Regulations, published today in a sepa- 
rate notice. 

The amendments provide that the National 
Highway Traffic Safety Administrator may ini- 
tiate rulemaking on his own motion, on the rec- 
ommendation of other agencies of the Federal 
Government, or on petition by any interested 
person after a determination in accordance with 
Part 552 that grant of the petition is advisable 
(§553.11). 

The amendment also reverses the order of sec- 
tions dealing with initiation of rulemaking and 
notice of proposed rulemaking, presently set out 
in sections 553.13 and 553.11, respectively, to 
more closely follow the chronology of the rule- 
making process. 

Only one comment, from American Motors 
Corporation, was received in response to the 
notice proposing these amendments (40 F.R. 
25480, June 16, 1975). AMC asserted that the 



language of the new section 553.11 could be mis- 
interpreted to mean that recommendations from 
other Federal agencies would be treated as an- 
other form of petition for rulemaking, rather 
than as input to the Administrator in making a 
determination whether or not to comuience rule- 
making on his own motion. The NHTSA does 
not agree that the language of section 553.11 is 
subject to such an interpretation, as it neither 
expressly nor impliedly directs the Administrator 
to treat recommendations from other agencies as 
petitions. It merely continues the intent of the 
previous section 533.13 that the recommendations 
of other agencies may be considered by the Ad- 
ministrator in determining whether to initiate 
rulemaking proceedings in response to a petition 
from an interested party or on his own motion. 

In light of the foregoing, 49 CFR Part 553, 
Rulemaking Procedures, is amended as follows: 

Effective date : October 13, 1975. 

(Sec. 119, Pub. L. 89-563, 80 Stat. 718 (15 
U.S.C. 1407) ; delegation of authority at 49 CFR 
1.51.) 

Issued on September 4, 1975. 

James B. Gregory 
Administrator 

40 F.R. 42015 
September 10, 1975 



PART 553— PRE 15-16 



i 



IffKllv*: Nov*mb«r 14, 197S 



PREAMBLE TO AMENDMENT TO PART 553— RULEMAKING PROCEDURES 

(Dockat No. 75-17; NoNc* 1) 



On September 10, 1976, a notice was published 
amending 49 CFR Part 553, Rulemaking Pro- 
cedures, to delete certain provisions of the regula- 
tion incorporated in a new Part 552, Petitions for 
Rulemaking, Defect, and Noncompliance Orders, 
published the same day (40 F.R. 42015). Sec- 
tion 553.35(a) refers to "petitions filed under 
§ 553.31." However, the provisions of § 553.31 
are now incorporated in 49 CFR Part 552. As 
a result, the notice amending Part 553 should 
have included an amendment to § 553.35(a) re- 
flecting this change. 

Accordingly, the phrase "petitions filed under 
§553.31" in paragraph (a) of section 553.35 is 
changed to read "petitions filed under Part 552 
of this chapter." 



Effective date: November 14, 1975. Because 
this amendment clarifies a previous notice and 
imposes no additional burden on any person, it 
is foimd for good cause shown that an immediate 
effective date is in the public interest. 

(Sec. 119, Pub. L. 89-563, 80 Stat. 718 (16 
U.S.C. 1407) ; delegation of authority at 49 CFR 
1.51.) 

Issued on November 10, 1975. 

James B. Gregory 
Administrator 

40 F.R. 53032 
Nov«mb«r 14, 1975 



PART 653— PRE 17-18 



BhcHva: November 14, 197S 



PREAMBLE TO AMENDMENT TO PART 553— RULEMAKING PROCEDURES 

(Docket No. 75-17; Notice 1) 



On September 10, 1975, a notice was published 
amending 49 CFR Part 553, Rulemaking Pro- 
cedures, to delete certain provisions of the regula- 
tion incorporated in a new Part 552, Petition.8 for 
Rulemaking, Defect, and Noncompliance Orders, 
published the same day (40 F.R. 42015). Sec- 
tion 553.35(a) refers to "petitions filed under 
§ 553.31." However, the provisions of § 553.31 
are now incorporated in 49 CFR Part 552. As 
a result, the notice amending Part 553 should 
have included an amendment to § 553.35(a) re- 
flecting this change. 

Accordingly, the phrase "petitions filed under 
§ 553.31" in paragraph (a) of section 553.35 is 
changed to read "petitions filed under Part 552 
of this chapter." 



Effective date: November 14, 1975. Because 
this amendment clarifies a previous notice and 
imposes no additional burden on any person, it 
is found for good cause shown that an immediate 
eflFective date is in the public interest. 

(Sec. 119, Pub. L. 89-563, 80 Stat. 718 (15 
U.S.C. 1407) ; delegation of authority at 49 CFR 
1.51.) 

Issued on November 10, 1975. 

James B. Gregory 
Administrator 

40 F.R. 53032 
November 14, 1975 



PART 553— PRE 17-18 



Effective: November 14, 1977 



PREAMBLE TO AMENDMENT TO PART 553— RULEMAKING PROCEDURES 

(Docket No. 77-07; Notice 1) 



This notice requires persons who comment on 
Advance Notices of Proposed Rulemaking or 
Notices of Proposed Rulemaking and pereons 
who submit Petitions for Reconsideration to limit 
the length of their written submissions to 15 
pages. The 15-page limit will facilitate evalua- 
tion of submissions and encourage persons mak- 
ing submissions to detail their primary argu- 
ments in a succinct and concise manner. 
Effective Date: November 14, 1977. 
For Further Information Contact: 

Bernard P. Klein 

Office of Chief Counsel 

National Highway Safety Administration 

400 Seventh Street, S.W. 

Washington, D.C. 20590 

(202-426-1840) 

Supplementary Information : 49 CFR 553.21 
sets forth the requirements for the contents of 
written comments which are submitted in re- 
sponse to Advance Notices of Proposed Rule- 
making (ANPRM) and Notices of Proposed 
Rulemaking (NPRM). 49 CFR 553.35 sets 
forth the requirements for the contents of writ- 
ten statements accompanying Petitions for Re- 
consideration. The National Highway Traffic 
Safety Administration (NHTSA) hereby adopts 
a procedure, effective immediately, requiring the 
above submissions to be limited to 15 pages in 
length. Necessary attachments to the submis- 
sions may be appended without regard to the 
15-page limit. 

It has been the experience of NHTSA that 
submissions significantly longer than 15 pages 
generally contain repetitious and even extraneous 
sections, as well as sections more appropriately 
drafted in an appendix than in the body of the 
argument. Such drafting detracts from the logic 
and clarity of a submission, with the result that 
NHTSA has encountered difficulties in ascer- 



taining the precise import of a comment or 
statement as well as difficulties in separating 
arguments from alleged facts. Administrative 
time is lost and the risk is created that valuable 
insight which could be provided by a submission 
escapes notice. It is expected that a clearer 
statement of the primary argument will aid the 
public in reviewing the docket. Additionally, 
it is reasonable to assume that the 15-page limit, 
by encouraging commenters and petitioners to 
detail their primary arguments in a succinct and 
concise fashion, will aid persons making sub- 
missions to NHTSA in identifying and express- 
ing the more significant aspects of their com- 
munications. 

It should be noted that this amendment does 
not limit the relevant data or supporting argu- 
ments that may be submitted by comment or 
petition for reconsideration, since necessary at- 
taclunents may be appended to the submission 
without regard to the 15-page limit. Addi- 
tionally, it is recognized that there may be in- 
stances where, because of the complexity of the 
subject matter, the 15-page limit would be an 
inappropriate restriction. The NHTSA may 
waive the 15-page limit or establish a different 
limit for a particular Federal Register notice. 
The waiver will be published in the notice to 
which it applies. 

In consideration of the foregoing, 49 CFR 
553 is amended to read as follows . . . 

(Sees. 103, 119, Pub. L. 89-563, 80 Stat. 718, 
15 U.S.C. 1392, 1407; sees. 102, 201, 408, 501, 
Pub. L. 92-513, 86 Stat. 947, 15 U.S.C. 1912, 
1941, 1988, 2001; delegation of authority at 49 
CFR 1.50) 

Issued on November 4, 1977. 

Joan Claybrook 
Administrator 
42 F.R. 58949 
November 14, 1977 



PART 553— PRE 19-20 



Effective: November 14, 1977 



PREAMBLE TO AMENDMENT TO PART 553— RULEMAKING PROCEDURES 

(Docket No. 77-07; Notice 1) 



This notice requires persons who comment on 
Advance Notices of Proposed Rulemaking or 
Notices of Proposed Rulemakin<r and persons 
wlio submit Petitions for Reconsideration to limit 
the length of their written submissions to 15 
pages. The IS-page limit will facilitate evalua- 
tion of submissions and encourage persons mak- 
ing submissions to detail their primary argu- 
ments in a succinct and concise manner. 
Effective Date: November 14, 1977. 
For Further Information Contact: 

Bernard P. Klein 

Office of Chief Counsel 

National Higliway Safety Administration 

400 Seventh Street, S.W. 

Washington, D.C. 20590 

(202-426-1840) 

Supplementary Information: 49 CFR 553.21 
sets forth the requirements for the contents of 
written comments which are submitted in re- 
sponse to Advance Notices of Proposed Rule- 
making (ANPRM) and Notices of Proposed 
Rulemaking (NPRM). 49 CFR 553.35 sets 
forth the requirements for the contents of writ- 
ten statements accompanying Petitions for Re- 
consideration. The National Highway Traffic 
Safety Administration (NHTSA) hereby adopts 
a procedure, effective immediately, requiring the 
above submissions to be limited to 15 pages in 
length. Necessary attachments to the submis- 
sions may be appended without regard to the 
15-page limit. 

It has been the experience of NHTSA that 
submissions significantly longer than 15 pages 
generally contain repetitious and even extraneous 
sections, as well as sections more appropriately 
drafted in an appendix than in the body of the 
argument. Such drafting detracts from the logic 
and clarity of a submission, with the result that 
NHT.SA has encountered difficulties in ascer- 



taining the precise import of a comment or 
statement as well as difficulties in separating 
arguments from alleged facts. Administrative 
time is lost and the risk is created that valuable 
insight which could be provided by a submission 
escapes notice. It is expected that a clearer 
statement of the primary argument will aid the 
public in reviewing the docket. Additionally, 
it is reasonable to assume that the 15-page limit, 
by encouraging commenters and petitioners to 
detail their primary arguments in a succinct and 
concise fashion, will aid persons making sub- 
missions to NHTSA in identifying and express- 
ing the more significant aspects of their com- 
munications. 

It should be noted that this amendment does 
not limit the relevant data or supporting argu- 
ments that may be submitted by comment or 
petition for reconsideration, since necessary at- 
taclunents may be appended to the submission 
without regard to the 15-page limit. Addi- 
tionally, it is recognized that there may be in- 
stances where, because of the complexity of the 
subject matter, the 15-page limit would be an 
inappropriate restriction. The NHTSA may 
waive the 15-page limit or establish a different 
limit for a particular Federal Register notice. 
The waiver will be published in the notice to 
which it applies. 

In consideration of the foregoing, 49 CFR 
553 is amended to read as follows . . . 

(Sees. 103, 119, Pub. L. 89-563, 80 Stat. 718, 
15 U.S.C. 1392, 1407; sees. 102, 201, 408, 501, 
Pub. L. 92-513, 86 Stat. 947, 15 U.S.C. 1912, 
1941, 1988, 2001; delegation of authority at 49 
CFR 1.50) 

Issued on November 4, 1977. 

Joan Claybrook 
Administrator 
42 F.R. 58949 
November 14, 1977 



PART 553— PRE 19-20 



f 



^ 



PART 553— RULEMAKING PROCEDURES 



SUBPART A— GENERAL 

§ 553.1 Applicability. 

This part prescribes rulemaking procedures that 
apply to the issuance, amendment, and revocation 
of rules pursuant to the National Traffic and Motor 
Vehicle Safety Act of 1966 and the Motor Vehicle 
Information and Cost Savings Act. 

§ 553.3 Definitions. 

"Acts" means the National Traffic and Motor 
Vehicle Safety Act of 1966, Public Law 89-563, 15 
U.S.C. 1391, et seq., and the Motor Vehicle 
Information and Cost Savings Act, Public Law 
92-513, 15 U.S.C. 1901, et seq. 

"Administrator" means the Administrator of 
the National Highway Traffic Safety 
Administration or a person to whom he has 
delegated final authority in the matter concerned. 

"Rule" includes any order, regulation, or 
Federal motor vehicle safety standard issued 
under the Acts. 



§ 553.5 Regulatory docket. 

(a) Information and data deemed relevant by 
the Administrator relating to rulemaking actions, 
including notices of proposed rulemaking; 
comments received in response to notices: 
petitions for rulemaking and reconsideration; 
denials of petitions for rulemaking and 
reconsideration; records of additional rulemaking 
proceedings under $ 553.25: and final rules are 
maintained in the Docket Room, National Highway 
Traffic Safety Administration, 400 Seventh Street, 
S.W., Washington, D.C. 20590. 

(b) Any person may examine any docketed 
material at the Docket Room at any time during 
regular business hours after the docket is established, 



except material ordered withheld fi^om the public 
under applicable provisions of the Acts and section 
552(b) of Title 5 of the United States Code, and 
may obtain a copy of it upon payment of a fee. 

§ 553.7 Records. 

Records of the National Highway Traffic Safety 
Administration relating to rulemaking 
proceedings are available for inspection as 
provided in section 552(b) of Title 5 of the United 
States Code and Part 7 of the Regulations of the 
Secretary of Transportation (49 CFR Part 7; 32 
F.R. 9284 et seq.). 



SUBPART B-PROCEDURES FOR ADOPTION OF 
RULES 



§553.11 Initiation of rulemaking. 

The Administrator may initiate rulemaking 
either on his own motion or on petition by any 
interested person after a determination in 
accordance with Part 552 of this title that grant of 
the petition is advisable. The Administrator may, 
in his discretion, also consider the 
recommendations of other agencies of the United 
States. 

§ 553.1 3 Notice of proposed rulemaking. 

Unless the Administrator, for good cause, finds 
that notice is impracticable, unnecessary, or 
contrary to the public interest, and incorporates 
that finding and a brief statement of the reasons 
for it in the rule, a notice of proposed rulemaking is 
issued and interested persons are invited to 
participate in the rulemaking proceedings under 
applicable provisions of the Acts. 



PART 553-1 



§ 553.15 Contents of notices of proposed 
rulemaking. 

(a) Each notice of proposed rulemaking is 
published in the Federal Register, unless all per- 
sons subject to it are named and are personally 
served with a copy of it. 

(b) Each notice, whether published in the 
Federal Register or personally served, includes— 

(1) A statement of the time, place, and na- 
ture of the proposed rulemaking proceedings; 

(2) A reference to the authority under which 
it is issued; 

(3) A description of the subjects and issues 
involved or the substance and terms of the 
proposed rule; 

(4) A statement of the time within which 
written comments must be submitted; and 

(5) A statement of how and to what extent 
interested persons may participate in the pro- 
ceeding. 

§ 553.17 Participation by interested persons. 

(a) Any interested person may participate in 
rulemaking proceeding by submitting comments 
in writing containing information, views or 
arguments. 

(b) In his discretion, the Administrator may 
invite any interested person to participate in the 
rulemaking procedures described in § 553.25. 

§553.19 Petitions for extension of time to 
comment. 

A petition for extension of the time to sub- 
mit comments must be received not later than 10 
days before expiration of the time stated in the 
notice. The petitions must be submitted to: Ad- 
ministrator, National Highway Traffic Safety 
Administration, U.S. Department of Transpor- 
tation, 400 Seventh Street, S.W., Washington, 
D. C. 20590. It is requested, but not required, 
that 10 copies be submitted. The filing of the 
petition does not automatically extend the time 
for petitioner's comments. Such a petition is 
granted only if the petitioner shows good cause 
for the extension, and if the extension is con- 
sistent with the public interest. If an extension 
is granted, it is granted to all persons, and it is 
published in the Federal Register. 



§ 553.21 Contents of written comments. 

[All written comments shall be in English. Unless 
otherwise specified in a notice requesting comments, 
comments may not exceed 15 pages in length, but 
necessary attachments may be appended to the 
submission wdthout regard to the 15-page limit. Any 
interested person shall submit as a part of his written 
comments all material that he considers relevant to 
any statement of fact made by him. Incorporation by 
reference should be avoided. However, if incorpora- 
tion by reference is necessary, the incorporated 
material shall be identified with respect to document 
and page. It is requested, but not required, that 10 
copies of the comments and attachments, if any, be 
submitted. (42 F.R. 58949-November 14, 1977. 
Effective: 11/14/77)] 

§ 553.23 Consideration of comments received. 

All timely comments are considered before 
final action is taken on a rulemaking proposal. 
Late filed comments may be considered as far as 
practicable. 

§ 553.25 Additional rulemaking proceedings. 

The Administrator may initiate any further 
rulemaking proceedings that he finds necessary 
or desirable. For example, interested persons 
may be invited to make oral arguments, to par- 
ticipate in conferences between the Administrator 
or his representative and interested persons at 
which minutes of the conference are kept, to 
appear at informal hearings presided over by 
officials designated by the Administrator at which 
a transcript or minutes are kept, or participate 
in any other proceeding to assure informed ad- 
ministrative action and to protect the public 
interest. 

§ 553.27 Hearings. 

(a) Sections 556 and 557 of Title 5, United 
States Code, do not apply to hearings held under 
this part. Unless otherwise specified, hearings 
held under this part are informal, nonadversary, 
fact-finding proceedings, at which there are no 
formal pleadings or adverse parties. Any rule 
issued in a case in which an informal hearing 
is held is not necessarily based exclusively on 
the record of the hearing. 



(Rev. 11(14/77) 



PART 553-2 



PART S53-RULEMAKING PROCEDURES 



SUBPART A— GENERAL 

§ 553.1 Applicability. 

This part prescribes rulemaking procedures that 
apply to the issuance, amendment, and revocation 
of rules pursuant to the National Traffic and Motor 
Vehicle Safety Act of 1966 and the Motor Vehicle 
Information and Cost Savings Act. 



§ 553.3 Definitions. 

"Acts" means the National Traffic and Motor 
Vehicle Safety Act of 1966, Public Law 89-563, 15 
U.S.C. 1391, et seq., and the Motor Vehicle 
Information and Cost Savings Act, Public Law 
92-513, 15 U.S.C. 1901, et seq. 

"Administrator" means the Administrator of 
the National Highway Traffic Safety 
Administration or a person to whom he has 
delegated final authority in the matter concerned. 

"Rule" includes any order, regulation, or 
Federal motor vehicle safety standard issued 
under the Acts. 



§ 553.5 Regulatory docket. 

(a) Information and data deemed relevant by 
the Administrator relating to rulemaking actions, 
including notices of proposed rulemaking; 
comments received in response to notices: 
petitions for rulemaking and reconsideration; 
denials of petitions for rulemaking and 
reconsideration; records of additional rulemaking 
proceedings under S 553.25: and final rules are 
maintained in the Docket Room, National Highway 
Traffic Safety Administration, 400 Seventh Street, 
S.W., Washington, D.C. 20590. 

(b) Any person may examine any docketed 
material at the Docket Room at any time during 
r^ular business hours after the docket is established. 



except material ordered withheld from the public 
under applicable provisions of the Acts and section 
552(b) of Title 5 of the United States Code, and 
may obtain a copy of it upon payment of a fee. 

§ 553.7 Records. 

Records of the National Highway Traffic Safety 
Administration relating to rulemaking 
proceedings are available for inspection as 
provided in section 552(b) of Title 5 of the United 
States Code and Part 7 of the Regulations of the 
Secretary of Transportation (49 CFR Part 7; 32 
F.R. 9284 et seq.). 



SUBPART B— PROCEDURES FOR ADOPTION OF 
RULES 



§553.11 Initiation of rulemaking. 

The Administrator may initiate rulemaking 
either on his own motion or on petition by any 
interested person after a determination in 
accordance with Part 552 of this title that grant of 
the petition is advisable. The Administrator may, 
in his discretion, also consider the 
recommendations of other agencies of the United 
States. 

§553.13 Notice of proposed rulemaking. 

Unless the Administrator, for good cause, finds 
that notice is impracticable, unnecessary, or 
contrary to the public interest, and incorporates 
that finding and a brief statement of the reasons 
for it in the rule, a notice of proposed rulemaking is 
issued and interested persons are invited to 
participate in the rulemaking proceedings under 
applicable provisions of the Acts. 



PART 553-1 



§ 553.15 Contents of notices of proposed 
rulemaking. 

(a) Each notice of proposed rulemaking is 
published in the Federal Register, unless all per- 
sons subject to it are named and are personally 
served with a copy of it. 

(b) Each notice, whether published in the 
Federal Register or personally served, includes— 

(1) A statement of the time, place, and na- 
ture of the proposed rulemaking proceedings; 

(2) A reference to the authority under which 
it is issued; 

(3) A description of the subjects and issues 
involved or the substance and terms of the 
proposed rule; 

(4) A statement of the time within which 
written comments must be submitted; and 

(5) A statement of how and to what extent 
interested persons may participate in the pro- 
ceeding. 

§ 553.17 Participation by Interested persons. 

(a) Any interested person may participate in 
rulemaking proceeding by submitting comments 
in writing containing information, views or 
arguments. 

(b) In his discretion, the Administrator may 
invite any interested person to participate in the 
rulemaking procedures described in § 553.25. 



§553.19 Petitions for extension of time to 
comment. 

A petition for extension of the time to sub- 
mit comments must be received not later than 10 
days before expiration of the time stated in the 
notice. The petitions must be submitted to: Ad- 
ministrator, National Highway Traffic Safety 
Administration, U.S. Department of Transpor- 
tation, 400 Seventh Street, S.W., Washington, 
D. C. 20590. It is requested, but not required, 
that 10 copies be submitted. The filing of the 
petition does not automatically extend the time 
for petitioner's comments. Such a petition is 
granted only if the petitioner shows good cause 
for the extension, and if the extension is con- 
sistent with the public interest. If an extension 
is granted, it is granted to all persons, and it is 
published in the Federal Register. 



§ 553.21 Contents of written comments. 

(All written comments shall be in English. Unless 
otherwise specified in a notice requesting comments, 
comments may not exceed 15 pages in length, but 
necessary attachments may be appended to the 
submission without regard to the 15-page limit. Any 
interested person shall submit as a part of his written 
comments all material that he considers relevant to 
any statement of fact made by him. Incorporation by 
reference should be avoided. However, if incorpora- 
tion by reference is necessary, the incorporated 
material shall be identified with respect to document 
and page. It is requested, but not required, that 10 
copies of the comments and attachments, if any, be 
submitted. (42 F.R. 58949-November 14, 1977. 
Effective: 11/14/77)1 

§ 553.23 Consideration of comments received. 

All timely comments are considered before 
final action is taken on a rulemaking proposal. 
Late filed comments may be considered as far as 
practicable. 

§ 553.25 Additional rulemaking proceedings. 

The Administrator may initiate any further 
rulemaking proceedings that he finds necessary 
or desirable. For example, interested persons 
may be invited to make oral arguments, to par- 
ticipate in conferences between the Administrator 
or his representative and interested persons at 
which minutes of the conference are kept, to 
appear at informal hearings presided over by 
officials designated by the Administrator at which 
a transcript or minutes are kept, or participate 
in any other proceeding to assure informed ad- 
ministrative action and to protect the public 
interest. 

§ 553.27 Hearings. 

(a) Sections 556 and 557 of Title 5, United 
States, Code, do not apply to hearings held under 
this part. Unless otherwise specified, hearings 
held under this part are informal, nonadversary, 
fact-finding proceedings, at which there are no 
formal pleadings or adverse parties. Any rule 
issued in a case in which an informal hearing 
is held is not necessarily based exclusively on 
the record of the hearing. 



(Rev. 11/14/77) 



PART 553-2 



(b) The Administrator designates a represen- 
tative to conduct any hearing held under this 
part. The Chief Counsel designates a member of 
his staff to serve as legal officer at the hearing. 



§ 553.29 Adoption of final rules. 

F'inal rules are prepared by representatives 
of the office concerned and the Office of the Chief 
Counsel. The rule is then submitted to the 
Administrator for his consideration. If the 
Administrator adopts the rule, it is published in the 
Federal Register, unless all persons subject to it 
are named and are personally served with a 
copy of it. 



§ 553.31 Reserved. 



§ 553.33 Reserved. 



§ 553.35 Petitions for reconsideration. 

[(a) Any interested person may petition the 
Administrator for reconsideration of any rule 
issued under this part. The petition shall be 
submitted to: Administrator, National Highway 
Traffic Safety Administration, 400 Seventh 
Street, S.W., Washington, D.C. 20590. It is 
requested, but not required, that 10 copies be 
submitted. The petition must be received not 
later than 30 days after publication of the rule 
in the Federal Register. Petitions filed after 
that time will be considered as petitions filed 
under Part 552 of this chapter. The petition 
must contain a brief statement of the complaint 
and an explanation as to why compliance with 
the rule is not practicable, is unreasonable, or 
is not in the public interest. Unless otherwise 
specified in the final rule, the statement and 
explanation together may not exceed 15 pages 
in length, but necessary attachments may be ap- 
pended to the submission without regard to the 
15- page limit. 

(b) If the petitioner requests the consideration 
of additional facts, he must state the reason they 
were not presented to the Administrator within 
the prescribed time. 



(c) The Administrator does not consider 
repetitious petitions. 

(d) Unless the Administrator otherwise pro- 
vides, the filing of a petition under this section 
does not stay the effectiveness of the rule. (42 F.R. 
58949-November 14, 1977. Effective: 11/14/77)1 

§ 553.37 Proceedings on petitions for recon- 
sideration. 

The Administrator may grant or deny, in 
whole or in part, any petition for reconsideration 
without further proceedings. In the event he 
determines to reconsider any rule, he may issue 
a final decision on reconsideration without fur- 
ther proceedings, or he may provide such oppor- 
tunity to submit comment or information and 
data as he deems appropriate. Whenever the 
Administrator determines that a petition should 
be granted or denied, he prepares a notice of the 
grant or denial of a petition for reconsideration, 
for issuance to the petitioner and issues it to the 
petitioner. The Administrator may consolidate 
petitions relating to the same rule. 

§ 553.39 Effect of petition for reconsideration 
on time for seeidng judicial review. 

The filing of a timely petition for reconsidera- 
tion of any rule issued under this part postpones 
the expiration of the 60-day period in which to seek 
judicial review of that rule, as to every person 
adversely affected by the rule. Such a person may 
file a petition for judicial review at any time from 
the issuance of the rule in question until 60 days 
after publication in the Federal Register of the Ad- 
ministrator's disposition of any timely petitions for 
reconsideration. 



APPENDIX 

Statement of Policy: Action on Petitions for 
Reconsideration 

It is the policy of National Highway Traffic 
Safety Administration to issue notice of the 
action taken on a petition for reconsideration 
within 90 days after the closing date for receipt 



(Rȴ. 11/14/77) 



PART 553-3 



of such petitions, unless it is found impracticable to the date by which ,t « expected that action will be 

take action within that time. In cases where it is taken, wUl be published m the Federa Register, 
so found and the delay beyond that period is i^KLViT iq«7 

expected to be substantial, notice of that fact, and NovemDer 17, iwf 



PART 553-4 



(b) The Administrator designates a represen- 
tative to conduct any hearing held under this 
part. The Chief Counsel designates a member of 
his staff to serve as legal officer at the hearing. 



§ 553.29 Adoption of final ruies. 

Final rules are prepared by representatives 
of the office concerned and the Office of the Chief 
Counsel. The rule is then submitted to the 
Administrator for his consideration. If the 
Administrator adopts the rule, it is published in the 
Federal Register, unless all persons subject to it 
are named and are personally served with a 
copy of it. 



§ 553.31 Reserved. 



§ 553.33 Reserved. 



§ 553.35 Petitions for reconsideration. 

[(a) Any interested person may petition the 
Administrator for reconsideration of any rule 
issued under this part. The petition shall be 
submitted to: Administrator, National Highway 
Traffic Safety Administration, 400 Seventh 
Street, S.W., Washington, D.C. 20590. It is 
requested, but not required, that 10 copies be 
submitted. The petition must be received not 
later than 30 days after publication of the rule 
in the Federal Register. Petitions filed after 
that time will be considered as petitions filed 
under Part 552 of this chapter. The petition 
must contain a brief statement of the complaint 
and an explanation as to why compliance with 
the rule is not practicable, is unreasonable, or 
is not in the public interest. Unless otherwise 
specified in the final rule, the statement and 
explanation together may not exceed 15 pages 
in length, but necessary attachments may be ap- 
pended to the submission without regard to the 
15-page limit. 

(b) If the petitioner requests the consideration 
of additional facts, he must state the reason they 
were not presented to the Administrator within 
the prescribed time. 



(c) The Administrator does not consider 
repetitious petitions. 

(d) Unless the Administrator otherwise pro- 
vides, the filing of a petition under this section 
does not stay the effectiveness of the rule. (42 F.R. 
58949-November 14, 1977. Effective: 11/14/77)1 

§ 553.37 Proceedings on petitions for recon- 
sideration. 

The Administrator may grant or deny, in 
whole or in part, any petition for reconsideration 
without further proceedings. In the event he 
determines to reconsider any rule, he may issue 
a final decision on reconsideration without fur- 
ther proceedings, or he may provide such oppor- 
tunity to submit comment or information and 
data as he deems appropriate. Whenever the 
Administrator determines that a petition should 
be granted or denied, he prepares a notice of the 
grant or denial of a petition for reconsideration, 
for issuance to the petitioner and issues it to the 
petitioner. The Administrator may consolidate 
petitions relating to the same rule. 

§ 553.39 Effect of petition for reconsideration 
on time for seeking judicial review. 

The filing of a timely petition for reconsidera- 
tion of any rule issued under this part postpones 
the expiration of the 60-day period in which to seek 
judicial review of that rule, as to every person 
adversely affected by the rule. Such a person may 
file a petition for judicial review at any time from 
the issuance of the rule in question until 60 days 
after publication in the Federal Register of the Ad- 
ministrator's disposition of any timely petitions for 
reconsideration. 



APPENDIX 

Statement of Policy: Action on Petitions for 
Reconsideration 

It is the policy of National Highway Traffic 
Safety Administration to issue notice of the 
action taken on a petition for reconsideration 
within 90 days after the closing date for receipt 



(Rev. 11/14/77) 



PART 553-3 



of such petitions, unless it is found impracticable to the date by which it is expected that action will be 

take action within that time. In cases where it is taken, will be published in the Federal Register. 
80 found and the delay beyond that period is 32 F.R. 15818 

expected to be substantial, notice of that fact, and November 17, 1967 



PART 553-4 



PREAMBLE TO PART 554— STANDARDS ENFORCEMENT AND 
DEFECTS INVESTIGATION 



(Docket No. 75-26; Notice 2) 



ACTION: Final Rule. 



SUMMARY: This notice amends Title 49 of the 
Code of Federal Regulations by the addition of a 
new Part 554, "Standards Enforcement and 
Defects Investigation," to codify existing agency 
procedures with respect to noncompliance and 
defect investigations. 

EFFECTIVE DATE: March 20, 1980. 

FOR FURTHER INFORMATION CONTACT: 

Roger Tilton, Office of Chief Counsel, 
National Highway Traffic Safety Adminis- 
tration, 400 Seventh Street, S.W., 
Washington, D.C. 20590 (202-426-2993) 

SUPPLEMENTARY INFORMATION: 

A notice of proposed rulemaking to establish 
Part 554 was published in the Federal Register on 
September 30, 1975, (40 FR 44842). Ten comments 
were received from vehicle manufacturers and 
consumer groups. The National Motor Vehicle 
Safety Advisory Council did not take a position on 
the proposal. The Vehicle Equipment Safety 
Commission did not submit comments. 

The NHTSA is adding Part 554 to Title 49 to 
combine and condense previously published policy 
directives (39 FR 1373, January 8, 1974; 38 FR 
31460, November 14, 1973) and to modify its 
procedures somewhat, as contemplated by the 
Motor Vehicle and Schoolbus Safety Amendments 
of 1974 (Pub. L. 93-492, 88 Stat. 1470). This 
codification is intended to better inform interested 
persons of the agency's procedures. 

The comments submitted in resonse to the notice 
of proposed rulemaking were generally in favor of 
this codification. Most commenters suggested 
minor changes, and many of the changes have been 
incorporated into the wording of the final rule. 



American Motors Corporation (AMC), Grove 
Manufacturing Company, and International 
Harvester (IH) recommended that the scope of the 
investigatory powers described in section 554.4 be 
limited to protect the privacy of manufacturers. 
Section 112 of the Act prescribes the extent of the 
agency's powers of investigation, and these 
powers are not expanded, and cannot be, by virtue 
of this regulation. The purpose of Part 554 is merely 
to make public the procedures that the agency has 
employed in the past as authorized by section 112. 
In view of this limited role, a recitation of limits 
found in the statute is unnecessary. 

The Center for Auto Safety requested that the 
agency change section 554.4 to amplify the fact 
that the five investigatory techniques detailed in 
that section are not the exclusive means available 
to the agency for pursuing an investigation. The 
agency agrees with this suggested modification. 
The enumerated investigatory techniques are only 
the major methods employed by the agency to 
pursue investigations. The agency modifies the 
language of the section to indicate that other 
investigatory means will be used where necessary. 

IH and Recreation Vehicle Industry Association 
(RVIA) suggested changes to section 554.6. IH 
recommended written notification of a compliance 
test failure to an "appropriate designated 
contact." RVIA requested notification of the 
commencement of defect investigations as well as 
compliance test failures. 

The notification provided in paragraph (b) is 
made only upon the finding of a compliance test 
failure. The NHTSA agrees with RVIA that 
manufacturers should be notified at the beginning 
of a defect investigation as well. Additionally, the 
agency understands the need for timely notifica- 
tion of noncompliance investigations. It has been 
the policy of the NHTSA to issue written notifica- 



PART 554; PRE 1 



tion of the commencement of both defect and non- 
compliance investigations. The NHTSA, therefore, 
amends paragraph (b) of section 554.6 to provide 
for timely written notification to the manufacturer 
of defect and noncompliance investigations. 

The agency always attempts to notify an 
appropriate official within the company. To require 
notification of an "appropriate designated 
contact" as suggested by IH would mean that each 
manufacturer would be required to file with the 
NHTSA the name of an individual to whom 
notification could be sent. Additionally, the 
manufacturer would need to update this filing 
whenever necessary. The agency concludes that 
this would be unnecessarily burdensome and, 
therefore, reserves the right to contact any person 
with the apparent authority to receive this notifica- 
tion. There has been no indication that notices to 
date have gone astray. 

The Center for Auto Safety argued that 
paragraph (b) of section 554.7 should provide more 
specific criteria for the opening of a formal defects 
investigation. The NHTSA deems it unnecessary 
to be more specific about the pertinent criteria that 
warrant the commencement of an investigation. 
The decision to proceed with a defects investiga- 
tion is based upon a careful analysis of a variety of 
data. These data differ from case to case. Offices 
within the agency exercise their collective judg- 
ment as to the necessity for an investigation, given 
the particular facts of any case. For this reason, 
the NHTSA concludes that modification of 
paragraph (b) is unnecessary. 

IH and Ford suggested that the agency define 
the term "exempt material" in section 554.9 to 
avoid confusion. Additionally, they both 
recommended that the NHTSA clarify the section 
to indicate that the disclosure of exempt com- 
munications as well as all other exempt material 
would be prohibited. 

The NHTSA utilizes a two-step approach to the 
disclosure of confidential material pertaining to 
safety-related defects and noncompliances. The 
agency first determines whether the information 
qualifies for confidential treatment under any 
statutory authority. Second, the agency exercises 
its discretion under paragraph (e) of section 112 of 
the National Traffic and Motor Vehicle Safety Act 
(the Act) whereby the NHTSA may disclose con- 
fidential material if relevent to any proceeding 



undertaken pursuant to the Act. After determin- 
ing relevance, the agency, under the authority 
granted in section 158 (a) (2) (B) of the Act, 
releases confidential information pertaining to 
safety-related defects and noncompliances only 
when deemed necessary by the agency. The agency 
is amending section 554.9, therefore, to indicate 
that any communication or part of a file pertaining 
to a safety-related defect or noncompliance that is 
considered confidential will not be disclosed unless 
that disclosure is deemed necessary. 

Many commenters suggested changes to section 
554.10. Rohr Industries and AMC recommended 
that the phrase "preliminary determination" be 
changed to "initial determination" to make it 
consistent with Part 556. The NHTSA agrees with 
this suggestion and amends the language 
accordingly to reflect this change. 

IH and General Motors Corporation (GM) 
suggested that the proposed 30-day time limit 
would be insufficient to prepare for the hearing 
that follows an initial determination. The language 
of this section indicates that any time period is only 
an approximation of the date upon which a hearing 
normally would be scheduled. The NHTSA has 
decided that 30 days allows sufficient time to 
prepare for the hearing, since manufacturers are 
forewarned of an investigation at its initiation and 
can, at that time, commence planning to dispute 
agency findings. The agency will, however, amend 
section 554.10 to show that hearings are normally 
scheduled within 30 days of the initial determina- 
tion but that the 30-day requirement can be 
extended by the Administrator for good cause 
shown. 

Most commenters argued that section 554.10 
should allow for cross-examination at the hearings 
as well as other more formal procedures. The 
NHTSA has carefully considered these and similar 
comments for this part and in other contexts in our 
regulations and concludes that the informal pro- 
cedures, as authorized by Congress, do provide 
adequate opportunity for comment and presenta- 
tion of facts. 

AMC suggested that paragraph (e) of section 
554.10 be deleted. They believe that the file should 
be closed once the Administrator finds that there is 
no noncompliance or safety-related defect. The 
Center for Auto Safety, on the other hand, 
requested that the agency amend paragraph (e) to 
allow any interested person to demand a public 
hearing once the Administrator has made his 
finding. 



PART 554; PRE 2 



PREAMBLE TO PART 554— STANDARDS ENFORCEMENT AND 
DEFECTS INVESTIGATION 



(Docket No. 75-26; Notice 2) 



ACTION: Final Rule. 



SUMMARY: This notice amends Title 49 of the 
Code of Federal Regulations by the addition of a 
new Part 554, "Standards Enforcement and 
Defects Investigation," to codify existing agency 
procedures with respect to noncompliance and 
defect investigations. 

EFFECTIVE DATE: March 20, 1980. 

FOR FURTHER INFORMATION CONTACT: 

Roger Til ton. Office of Chief Counsel, 
National Highway Traffic Safety Adminis- 
tration, 400 Seventh Street, S.W., 
Washington, D.C. 20590 (202-426-2993) 

SUPPLEMENTARY INFORMATION: 

A notice of proposed rulemaking to establish 
Part 554 was published in the Federal Register on 
September 30, 1975, (40 FR 44842). Ten comments 
were received from vehicle manufacturers and 
consumer groups. The National Motor Vehicle 
Safety Advisory Council did not take a position on 
the proposal. The Vehicle Equipment Safety 
Commission did not submit comments. 

The NHTSA is adding Part 554 to Title 49 to 
combine and condense previously published policy 
directives (39 FR 1373, January 8, 1974; 38 FR 
31460, November 14, 1973) and to modify its 
procedures somewhat, as contemplated by the 
Motor Vehicle and Schoolbus Safety Amendments 
of 1974 (Pub. L. 93-492, 88 Stat. 1470). This 
codification is intended to better inform interested 
persons of the agency's procedures. 

The comments submitted in resonse to the notice 
of proposed rulemaking were generally in favor of 
this codification. Most commenters suggested 
minor changes, and many of the changes have been 
incorporated into the wording of the final rule. 



American Motors Corporation (AMC), Grove 
Manufacturing Company, and International 
Harvester (IH) recommended that the scope of the 
investigatory powers described in section 554.4 be 
limited to protect the privacy of manufacturers. 
Section 112 of the Act prescribes the extent of the 
agency's powers of investigation, and these 
powers are not expanded, and cannot be, by virtue 
of this regulation. The purpose of Part 554 is merely 
to make public the procedures that the agency has 
employed in the past as authorized by section 112. 
In view of this limited role, a recitation of limits 
found in the statute is unnecessary. 

The Center for Auto Safety requested that the 
agency change section 554.4 to amplify the fact 
that the five investigatory techniques detailed in 
that section are not the exclusive means available 
to the agency for pursuing an investigation. The 
agency agrees with this suggested modification. 
The enumerated investigatory techniques are only 
the major methods employed by the agency to 
pursue investigations. The agency modifies the 
language of the section to indicate that other 
investigatory means will be used where necessary. 

IH and Recreation Vehicle Industry Association 
(RVIA) suggested changes to section 554.6. IH 
recommended written notification of a compliance 
test failure to an "appropriate designated 
contact." RVIA requested notification of the 
commencement of defect investigations as well as 
compliance test failures. 

The notification provided in paragraph (b) is 
made only upon the finding of a compliance test 
failure. The NHTSA agrees with RVIA that 
manufacturers should be notified at the beginning 
of a defect investigation as well. Additionally, the 
agency understands the need for timely notifica- 
tion of noncompliance investigations. It has been 
the policy of the NHTSA to issue written notifica- 



PART 554; PRE 1 



tion of the commencement of both defect and non- 
compliance investigations. The NHTSA, therefore, 
amends paragraph (b) of section 554.6 to provide 
for timely written notification to the manufacturer 
of defect and noncompliance investigations. 

The agency always attempts to notify an 
appropriate official within the company. To require 
notification of an "appropriate designated 
contact" as suggested by IH would mean that each 
manufacturer would be required to file with the 
NHTSA the name of an individual to whom 
notification could be sent. Additionally, the 
manufacturer would need to update this filing 
whenever necessary. The agency concludes that 
this would be unnecessarily burdensome and, 
therefore, reserves the right to contact any person 
with the apparent authority to receive this notifica- 
tion. There has been no indication that notices to 
date have gone astray. 

The Center for Auto Safety argued that 
paragraph (b) of section 554.7 should provide more 
specific criteria for the opening of a formal defects 
investigation. The NHTSA deems it unnecessary 
to be more specific about the pertinent criteria that 
warrant the commencement of an investigation. 
The decision to proceed with a defects investiga- 
tion is based upon a careful analysis of a variety of 
data. These data differ from case to case. Offices 
within the agency exercise their collective judg- 
ment as to the necessity for an investigation, given 
the particular facts of any case. For this reason, 
the NHTSA concludes that modification of 
paragraph (b) is unnecessary. 

IH and Ford suggested that the agency define 
the term "exempt material" in section 554.9 to 
avoid confusion. Additionally, they both 
recommended that the NHTSA clarify the section 
to indicate that the disclosure of exempt com- 
munications as well as all other exempt material 
would be prohibited. 

The NHTSA utilizes a two-step approach to the 
disclosure of confidential material pertaining to 
safety-related defects and noncompliances. The 
agency first determines whether the information 
qualifies for confidential treatment under any 
statutory authority. Second, the agency exercises 
its discretion under paragraph (e) of section 112 of 
the National Traffic and Motor Vehicle Safety Act 
(the Act) whereby the NHTSA may disclose con- 
fidential material if relevent to any proceeding 



undertaken pursuant to the Act. After determin- 
ing relevance, the agency, under the authority 
granted in section 158 (a) (2) (B) of the Act, 
releases confidential information pertaining to 
safety-related defects and noncompliances only 
when deemed necessary by the agency. The agency 
is amending section 554.9, therefore, to indicate 
that any communication or part of a file pertaining 
to a safety-related defect or noncompliance that is 
considered confidential will not be disclosed unless 
that disclosure is deemed necessary. 

Many commenters suggested changes to section 
554.10. Rohr Industries and AMC recommended 
that the phrase "preliminary determination" be 
changed to "initial determination" to make it 
consistent with Part 556. The NHTSA agrees with 
this suggestion and amends the language 
accordingly to reflect this change. 

IH and General Motors Corporation (GM) 
suggested that the proposed 30-day time limit 
would be insufficient to prepare for the hearing 
that follows an initial determination. The language 
of this section indicates that any time period is only 
an approximation of the date upon which a hearing 
normally would be scheduled. The NHTSA has 
decided that 30 days allows sufficient time to 
prepare for the hearing, since manufacturers are 
forewarned of an investigation at its initiation and 
can, at that time, commence planning to dispute 
agency findings. The agency will, however, amend 
section 554.10 to show that hearings are normally 
scheduled within 30 days of the initial determina- 
tion but that the 30-day requirement can be 
extended by the Administrator for good cause 
shown. 

Most commenters argued that section 554.10 
should allow for cross-examination at the hearings 
as well as other more formal procedures. The 
NHTSA has carefully considered these and similar 
comments for this part and in other contexts in our 
regulations and concludes that the informal pro- 
cedures, as authorized by Congress, do provide 
adequate opportunity for comment and presenta- 
tion of facts. 

AMC suggested that paragraph (e) of section 
554.10 be deleted. They believe that the file should 
be closed once the Administrator finds that there is 
no noncompliance or safety-related defect. The 
Center for Auto Safety, on the other hand, 
requested that the agency amend paragraph (e) to 
allow any interested person to demand a public 
hearing once the Administrator has made his 
finding. 



PART 554; PRE 2 



The purpose of paragraph (e) is to allow the 
Administrator to seek further public comments in 
those rare cases where further comment might add 
significant new data. Normally, the public meeting 
held prior to the determination will provide ample 
opportunity to comment. On those occasions when 
a public meeting is not held prior to a finding that a 
noncompliance or safety-related defect does not 
exist, the Administrator should be permitted, not 
required, to seek further information by way of a 
public meeting where, in his opinion, additional 
information would be useful. To preserve this 
discretion, the agency retains the paragraph as 
written and declines to adopt the suggested 
changes. 

GM requested that section 554.11 be modified to 
state that a manufacturer can proceed to a district 
court to obtain a trial de novo of the 
Administrator's determination. Judicial review of 
agency decisions is granted by Congress. The 
National Traffic and Motor Vehicle Safety Act 
specifically enumerates the procedures available to 
manufacturers to review the agency's decisions. 
Regulations promulgated by the NHTSA can in no 
way expand or restrict the manufacturer's right to 



seek judicial review. Since judicial review is a 
Constitutional guarantee with limited Congres- 
sional discretion to allocate it among the several 
courts, it would be inappropriate for the agency to 
proffer rules concerning this review. 

Rohr Industries requested that the NHTSA 
change section 554.11 to require publication in the 
FEDERAL REGISTER of a finding that a defect or 
noncompliance does not exist. The agency agrees 
with Rohr's suggestion to publish the 
Administrator's finding and section 554.11 has 
been modified accordingly. 

In consideration of the foregoing, Title 49, Code 
of Federal Regulations, is amended by the addition 
of a new Part 554 titled "Standards Enforcement 
and Defects Investigation," as set forth below. 

Issued on February 11, 1980. 



Joan Claybrook 
Administrator 



45 F.R. 10796 
Febniary 19, 1980 



PART 554; PRE 3-4 



The purpose of paragraph (e) is to allow the 
Administrator to seek further public comments in 
those rare cases where further comment might add 
significant new data. Normally, the public meeting 
held prior to the determination will provide ample 
opportunity to comment. On those occasions when 
a public meeting is not held prior to a finding that a 
noncompliance or safety-related defect does not 
exist, the Administrator should be permitted, not 
required, to seek further information by way of a 
public meeting where, in his opinion, additional 
information would be useful. To preserve this 
discretion, the agency retains the paragraph as 
written and declines to adopt the suggested 
changes. 

GM requested that section 554.11 be modified to 
state that a manufacturer can proceed to a district 
court to obtain a trial de novo of the 
Administrator's determination. Judicial review of 
agency decisions is granted by Congress. The 
National Traffic and Motor Vehicle Safety Act 
specifically enumerates the procedures available to 
manufacturers to review the agency's decisions. 
Regulations promulgated by the NH'TSA can in no 
way expand or restrict the manufacturer's right to 



seek judicial review. Since judicial review is a 
Constitutional guarantee with limited Congres- 
sional discretion to allocate it among the several 
courts, it would be inappropriate for the agency to 
proffer rules concerning this review. 

Rohr Industries requested that the NHTSA 
change section 554.11 to require publication in the 
FEDERAL REGISTER of a finding that a defect or 
noncompliance does not exist. The agency agrees 
with Rohr's suggestion to publish the 
Administrator's finding and section 554.11 has 
been modified accordingly. 

In consideration of the foregoing, Title 49, Code 
of Federal Regulations, is amended by the addition 
of a new Part 554 titled "Standards Enforcement 
and Defects Investigation," as set forth below. 

Issued on February 11, 1980. 



Joan Claybrook 
Administrator 



45 F.R. 10796 
February 19, 1980 



PART 554; PRE 3-4 



(I 



PART 554— STANDARDS ENFORCEMENT AND DEFECTS INVESTIGATION 

(Docket No. 75-26; Notice 2) 



Sec. 

554.1 Scope. 

554.2 Purpose. 

554.3 Application. 

554.4 Office of vehicle safety compliance. 

554.5 Office of defects investigation. 

554.6 Opening an investigation. 

554.7 Investigation priorities. 

554.8 Monthly reports. 

554.9 Availability of files. 

554.10 Preliminary determinations and public 

meetings. 

554.11 Final determinations. 

S 554.1 Scope. 

This part establishes procedures for enforcing 
Federal motor vehicle safety standards, and 
associated regulations investigating possible 
safety-related defects, and making non-compliance 
and defect determinations. 

§ 554.2 Purpose. 

The purpose of this part is to inform interested 
persons of the procedures followed by the National 
Highway Traffic Safety Administration in order 
more fairly and effectively to implement National 
Traffic and Motor Vehicle Safety Act (the Act). 

S 554.3 Application. 

This pjirt applies to actions, investigations, and 
defect and non-compliance determinations of the 
National Highway Traffic Safety Administration 
under sections 109, 112, 124, 152, 156, 157, and 
158 of the Act (15 U.S.C. 1398, 1401, 1411, 1412, 
1416, 1417, 1418). 

$ 554.4 Office of Vehicle Safety Compliance. 

The Office of Vehicle Safety Compliance 
investigates compliance with Federal motor vehi- 
cle safety standards and associated regulations, 
and to this end may— 



(a) Verify that manufacturers certify com- 
pliance with all applicable safety standards; 

(b) Collect field reports from all sources; 

(c) Inspect manufacturers' certification test 
data and other supporting evidence, including 
dealer communications; 

(d) Inspect vehicles and equipment already in 
use or new vehicles and equipment at any stage of 
the manufacturing, distribution and sales chain; 

(e) Conduct selective compliance tests; and 

(f) Utilize other means necessary to conduct 
investigations. 

§ 554.5 Office of Defects Investigation. 

The Office of Defects Investigation conducts 
investigations to implement the provisions of the 
Act concerning the identification and correction of 
safety-related defects in motor vehicles and motor 
vehicle equipment. It elicits from every available 
source and evaluates on a continuing basis any 
information suggesting the existence of a safety- 
related defect. 

§ 554.6 Opening an Investigation. 

(a) A compliance or defect investigation is 
opened either on the motion of the Administrator 
or his delegate or on the granting of a petition of 
an interested party under Part 552 of this chapter. 

(b) A manufacturer is notified immediately by 
telephone of any compliance test failure in order to 
enable the manufacturer to begin his own 
investigation. Notification is sent by mail at the 
beginning of any defect or non-compliance 
investigation. 

§ 554.7 Investigation priorities. 

(a) Compliance investigation priorities are 
reviewed annually and are set according to the 
following criteria: 

(1) Prior compliance test data; 



PART 554-1 



(2) Accident data; 

(3) Engineering analysis of vehicle and equip- 
ment designs; 

(4) Consumer complaints; and 

(5) Market share. 

(b) Defects inputs are reviewed periodically by 
an appropriate panel of engineers in consultation 
with the Office of Chief Counsel to determine 
whether a formal investigation should be opened 
by the Office of Defects Investigation. 

§ 554.8 Monthly reports. 

(a) Compliance. A monthly compliance report is 
issued which lists investigations opened, closed, 
and pending during that month, identifies 
compliance test reports accepted, and indicates 
how individual reports may be obtained. 

(b) Defects. A monthly defects report is issued 
which lists investigations opened, closed, pending, 
and suspended during that month. An investiga- 
tion may be designated "suspended" where the in- 
formation available is insufficient to warrant fur- 
ther investigation. Suspended cases are 
automatically closed 60 days after appearing in a 
monthly report unless new information is received 
which justifies a different disposition. 

§ 554.9 Availability of files. 

All files of closed or suspended investigations are 
available for public inspection in the NHTSA 
Technical Reference Library. Communications 
between the agency and a manufacturer with 
respect to ongoing investigations are also 
available. Such files and communications may con- 
tain material which is considered confidential but 
.as been determined to be necessary to the subject 
proceeding. Material which is considered confiden- 
tial but has not been determined to be necessary to 
the subject proceeding will not be disclosed. 
Reproduction of entire public files or of individual 
documents can be arranged. 

§ 554.10 Initial detenminations and public meetings. 

(a) An initial determination of failure to comply 
with safety standards or of a safety-related defect 
is made by the Administrator or his delegate based 
on the completed investigative file compiled by the 
appropriate office. 

(b) The determination is communicated to the 
manufacturer in a letter which makes available all 



information on which the decision is based. The letter 
advises the nmnufacturer of his right to present data, 4 
views and arguments to establish that there is no ' 
defect or failure to comply or that the alleged defect 
does not affect motor vehicle safety. The letter also 
specifies the time and place of a public meeting for 
the presentation of arguments or sets a date by 
which written comments must be submitted. Submis- 
sion of all information, whether at a public hearing or 
in written form, is normally scheduled about 30 days 
after the initial determination. The deadline for 
submission of information can be extended by the 
Administrator for good cause shovra. 

(c) Public notice of an initial determination is 
made in a FEDERAL Register notice that— 

(1) Identifies the motor vehicle or item of 
equipment and its manufacturer; 

(2) Summarizes the information upon which 
the determination is based; 

(3) Gives the location of all information 
available for public examination; and 

(4) States the time and place of a public 
meeting or the deadline for written submissions in 
which the manufacturer and interested persons 
may present data, views, and arguments re- 
specting the determination. , 

(d) A transcript of the public meeting is kept and \\ 
exhibits may be offered. There is no cross- 
examination of witnesses. 

(e) If the Administrator makes a determination 
that a failure to comply or a safety-related defect 
does not exist he may, at his discretion in a 
particular case, within 60 days of the determina- 
tion, invite interested persons to submit their 
views on the NHTSA investigation in a public 
meeting. Notice and procedures for such a meeting 
are as specified in paragraphs (c) and (d) of this 
section. 

§554.11 Final determinations. 

(a) The Administrator bases his final determina- 
tion on the completed investigatory file and the 
data, views, and arguments submitted at the public 
meeting. 

(b) If the Administrator determines that a 
failure to comply or a safety-related defect exists, 
he orders the manufacturer to furnish the notifica- 
tion specified in the Act and to remedy the defect 
or failure to comply. 



PART 554-2 



PART 554— STANDARDS ENFORCEMENT AND DEFECTS INVESTIGATION 

(Dock«t No. 75-26; Notic* 2) 



Sec. 

554.1 Scope. 

554.2 Purpose. 

554.3 Application. 

554.4 Office of vehicle safety compliance. 

554.5 Office of defects investigation. 

554.6 Opening an investigation. 

554.7 Investigation priorities. 

554.8 Monthly reports. 

554.9 Availability of files. 

554.10 Preliminary determinations and public 

meetings. 

554.11 Final determinations. 

I 554.1 Scope. 

This part establishes procedures for enforcing 
Federal motor vehicle safety standards, and 
associated regulations investigating possible 
safety-related defects, and making non-compliance 
and defect determinations. 

f 554.2 Purpose. 

The purpose of this part is to inform interested 
persons of the procedures followed by the National 
Highway Traffic Safety Administration in order 
more fairly and effectively to implement National 
Traffic and Motor Vehicle Safety Act (the Act). 

I 554.3 Application. 

This part applies to actions, investigations, and 
defect and non-compliance determinations of the 
National Highway Traffic Safety Administration 
under sections 109, 112, 124, 152, 156, 157, and 
158 of the Act (15 U.S.C. 1398, 1401, 1411, 1412, 
1416, 1417, 1418). 

f 554.4 Office of Vehicle Safety Compliance. 

The Office of Vehicle Safety Compliance 
investigates compliance with Federal motor vehi- 
cle safety standards and aissociated regulations, 
and to this end may— 



(a) Verify that manufacturers certify com- 
pliance with all applicable safety standards; 

(b) Collect field reports from all sources; 

(c) Inspect manufacturers' certification test 
data and other supporting evidence, including 
dealer communications; 

(d) Inspect vehicles and equipment already in 
use or new vehicles and equipment at any stage of 
the manufacturing, distribution and sales chain; 

(e) Conduct selective compliance tests; and 

(f) UtUize other means necessary to conduct 
investigations. 

S 554.5 Office of Defects investigation. 

The Office of Defects Investigation conducts 
investigations to implement the provisions of the 
Act concerning the identification and correction of 
safety-related defects in motor vehicles and motor 
vehicle equipment. It elicits from every available 
source and evaluates on a continuing basis any 
information suggesting the existence of a safety- 
related defect. 

§ 554.6 Opening an investigation. 

(a) A compliance or defect investigation is 
opened either on the motion of the Administrator 
or his delegate or on the granting of a p)etition of 
an interested, party under Part 552 of this chapter. 

(b) A manufacturer is notified immediately by 
telephone of any compliance test failure in order to 
enable the manufacturer to begin his own 
investigation. Notification is sent by mail at the 
beginning of any defect or non-compliance 
investigation. 

§ 554.7 Investigation priorities. 

(a) Compliance investigation priorities are 
reviewed annually and are set according to the 
following criteria: 

(1) Prior compliance test data; 



PART 554-1 



(2) Accident data; 

(3) Engineering analysis of vehicle and equip- 
ment designs; 

(4) Consumer complaints; and 

(5) Market share. 

(b) Defects inputs are reviewed periodically by 
an appropriate panel of engineers in consultation 
with the Office of Chief Counsel to determine 
whether a formal investigation should be opened 
by the Office of Defects Investigation. 

§ 554.8 Monthly reports. 

(a) Compliance. A monthly compliance report is 
issued which lists investigations opened, closed, 
and pending during that month, identifies 
compliance test reports accepted, and indicates 
how individual reports may be obtained. 

(b) Defects. A monthly defects report is issued 
which lists investigations opened, closed, pending, 
and suspended during that month. An investiga- 
tion may be designated "suspended" where the in- 
formation available is insufficient to warrant fur- 
ther investigation. Suspended cases are 
automatically closed 60 days after appearing in a 
monthly report unless new information is received 
which justifies a different disposition. 

§ 554.9 Availability of files. 

All files of closed or suspended investigations are 
available for public inspection in the NHTSA 
Technical Reference Library. Communications 
between the agency and a manufacturer with 
respect to ongoing investigations are also 
available. Such files and communications may con- 
tain material which is considered confidential but 
.as been determined to be necessary to the subject 
proceeding. Material which is considered confiden- 
tial but has not been determined to be necessary to 
the subject proceeding will not be disclosed. 
Reproduction of entire public files or of individual 
documents can be arranged. 

§ 554.10 Initial determinations and public meetings. 

(a) An initial determination of failure to comply 
with safety standards or of a safety-related defect 
is made by the Administrator or his delegate based 
on the completed investigative file compiled by the 
appropriate office. 

(b) The determination is communicated to the 
manufacturer in a letter which makes available all 



information on which the decision is based. The letter 
advises the manufacturer of his right to present data, 
views and arguments to establish that there is no 
defect or failure to comply or that the alleged defect 
does not affect motor vehicle safety. The letter also 
specifies the time and place of a public meeting for 
the presentation of arguments or sets a date by 
which written comments must be submitted. Submis- 
sion of all information, whether at a public hearing or 
in written form, is normally scheduled about 30 days 
after the initial determination. The deadline for 
submission of information can be extended by the 
Administrator for good cause shovra. 

(c) Public notice of an initial determination is 
made in a Federal Register notice that— 

(1) Identifies the motor vehicle or item of 
equipment and its manufacturer; 

(2) Summarizes the information upon which 
the determination is based; 

(3) Gives the location of all information 
available for public examination; and 

(4) States the time and place of a public 
meeting or the deadline for written submissions in 
which the manufacturer and interested persons 
may present data, views, and arguments re- 
specting the determination. 

(d) A transcript of the public meeting is kept and 
exhibits may be offered. There is no cross- 
examination of witnesses. 

(e) If the Administrator makes a determination 
that a failure to comply or a safety-related defect 
does not exist he may, at his discretion in a 
particular case, within 60 days of the determina- 
tion, invite interested persons to submit their 
views on the NHTSA investigation in a public 
meeting. Notice and procedures for such a meeting 
are as specified in paragraphs (c) and (d) of this 
section. 

§ 554.11 Final determinations. 

(a) The Administrator bases his final determina- 
tion on the completed investigatory file and the 
data, views, and arguments submitted at the public 
meeting. 

(b) If the Administrator determines that a 
failure to comply or a safety-related defect exists, 
he orders the manufacturer to furnish the notifica- 
tion specified in the Act and to remedy the defect 
or failure to comply. 



PART 554-2 



I 



(c) If the Administrator determines that a determination and the reasons for it appears in 
failure to comply or a safety-related defect does each completed public file. 

not exist, he so notifies the manufacturer and 

publishes this finding in the Federal Register. 45 F R 10796 

(d) A statement of the Administrator's final February 19, 1980 



I 



I PART 554-3-4 



( 



I 



(c) If the Administrator determines that a determination and the reasons for it appears in 
failure to comply or a safety-related defect does each completed public file. 

not exist, he so notifies the manufacturer and 

publishes this finding in the Federal Register. 45 p p 10796 

(d) A statement of the Administrator's final February 19, 1980 



I 



PART 564-3-4 



EfhcNvti January 39, 1973 



PREAMBLE TO PART 555— TEMPORARY EXEMPTION FROM MOTOR 

VEHICLE SAFETY STANDARDS 

(Docket No. 72-30; Notice 2) 



This notice amends Title 49 of the Code of 
Federal Regulations by adding a new Part 555, 
"Temporary Exemption from Motor Vehicle 
Safety Standards," effective January 29, 1973. A 
notice of proposed rulemaking on this subject was 
published December 1, 1972 (37 F.R. 25533), 
and opportunity afforded for comment. 

On October 25, 1972 P.L. 92-548 was enacted, 
amending section 123 of the National Traffic 
and Motor Vehicle Safety Act of 1966 to pro- 
vide four bases upon which a manufacturer of 
motor vehicles might apply for a temporary ex- 
emption from one or more Federal motor vehicle 
safety standards. The legislative intent is clearly 
expressed as to the information required to sub- 
stantiate an application on each basis. A discus- 
sion follows of each basis, the required informa- 
tion and the principal issues raised in response 
to the proposal. 

1. Substantial Economic Hardship. A manufac- 
turer whose total motor vehicle production in his 
most recent year of manufacture did not exceed 
10,000 may petition for relief on grounds that 
compliance would cause him substantial economic 
hardship and that he has, in good faith, attempted 
to comply with the standards. Hardship exemp- 
tions are granted for periods not to exceed three 
years. Section 123 of the Act and the proposed 
regulations require an applicant to include in his 
petition a complete financial statement showing 
the basis of the economic hardship and a com- 
plete description of his good faith effort to com- 
ply with the standards. Although it was not 
required by the Act, the NHTSA also proposed 
to require a description of the steps a manufac- 
turer proposes to take during the exemption 
period to achieve full compliance and the esti- 
mated date by which full compliance is to be 
achieved. 



Submissions on the issue of economic hardship 
were received from Senator Warren Magnuson, 
Chairman of the Senate Committee on Commerce, 
the Public Interest Research Group, the Center 
for Auto Safety, Freightliner Corporation, and 
Lotus Cars, Ltd. Senator Magnuson and the 
Research Group have suggested that the NHTSA 
should adopt application guidelines modeled af- 
ter those of the Environmental Protection Agency 
for requests for suspension of the effective date 
of motor vehicle emission standards. The Re- 
search Group has drafted a model application 
form using the EPA guidelines as a departure 
point. Senator Magnuson also suggested that 
cost data concerning the affected component 
should be required, as well as a chronological an- 
alysis by the petitioner of its efforts to comply 
with the standard following issuance of the notice 
of proposed rulemaking. Finally, he urged that 
a company be required to submit an analysis of 
the effects on its economic stability of the ab- 
sence of an exemption. The Center for Auto 
Safety believes that all financial data should 
be presented in dollar figures. Lotus Cars, Ltd. 
suggested that, if a manufacturer has no plans 
to achieve conformity because the production run 
of a model is nearing its end, the regulations 
should specifically permit him to so state. 
Freightliner Corporation commented that hard- 
ship should be considered in relation to the total 
economic picture "including the purchaser" and 
the particular job a vehicle is intended to per- 
form. It expressed fear that the legislation was 
not enacted with multi-stage manufacturers in 
mind. Freightliner appears to be concerned 
about hardship situations that may occur to man- 
ufacturers whose total annual volume exceeds 
10,000 units and who are called upon to provide 
costly custom equipment. 



PART 555— PRE 1 



Effactiva: January 29, 1973 



In formulating the regulations for hardship 
applications the NHTSA has adopted many of 
the suggestions of Senator Magnuson and the 
Public Interest Research Group. Engineering 
and financial data that must be submitted with 
the application will include a list or description 
of each component that would have to be modified 
in order to achieve compliance, together with an 
itemization of the estimated cost to the petitioner 
to modify each such component if required to do 
so on an emergency basis, or at the end of one-, 
two-, and three-year periods. The manufacturer 
will also include what it estimates as the price 
increase per vehicle to balance the total costs in- 
curred were it to achieve compliance, and a state- 
ment of the anticipated effect of the price increase. 
Corporate balance sheets for the three fiiscal years 
immediately preceding the application must be 
submitted, as well as a projected balance sheet 
for the fiscal year following any denial of the 
petition. The financial data must be in dollar 
figures, as the Center for Auto Safety suggested. 
The manufacturer would also be allowed to dis- 
cuss other hardship factors that a denial would 
cause, such as loss of market. In its description 
of compliance efforts a manufacturer will be 
required to submit a chronological analysis show- 
ing the relationship of those efforts to the rule- 
making history of the standard, and to discuss 
alternate means of compliance that may have been 
considered, and the reasons for the rejection of 
each. As proposed, a manufacturer must also 
describe the steps to be taken while the exemp- 
tion is in effect to achieve full compliance, and 
the estimated date by which full compliance will 
be achieved. 

The NHTSA did not adopt the format and in- 
formational content of the EPA guidelines for 
several reasons. There is a basic difference in 
the Clean Air Act and the Traffic Safety Act. 
Under the former, the public health is para- 
mount. All motor vehicles must meet certain 
emission standards by the 1975 model year. A 
one-year suspension is possible, but only upon 
technological grounds, and not for economic 
hardship. Suspensions are granted on the basis 
of fulfilling four criteria — (1) that it is essential 
to the public interest and public health of the 
United States, (2) that all good faith efforts have 
been made to meet the established standards, (3) 



that effective emission control technology is not 
available, or has not been available for a sufficient 
time to achieve compliance prior to the effective 
date of such standard and (4) that the study and 
investigation of the National Academy of Sci- 
ences and other available information has not 
indicated that technology or other alternatives 
are available to meet the emission standards. By 
the 1976 model year all vehicles will comply and 
no further suspension is possible. The proof to 
support an emission standard suspension thus 
differs substantially from that required for hard- 
ship. On the other hand, under the Traffic 
Safety Act, motor vehicle safety must be balanced 
with other factors of the public interest including 
the desirability of affording a continuing and 
wide choice of vehicles to meet differing needs, 
and encouraging the continuation of relatively 
small manufacturers. In some instances, the 
safety exemption sought may be limited in time 
and scope, and extensively detailed informa- 
tion such as EPA requires may be unnecessary 
to document the request. 

With reference to the comments by Freight- 
liner, the NHTSA does take into account the I 
vehicle purchaser, in that it is concerned with 
the effect of a denial upon the availability of 
vehicles and their retail prices. Moreover, 
throughout its existence this agency has been 
aware of the problems of custom-truck manu- 
facturers and has tried to accommodate them, 
consistent with considerations of motor vehicle 
safety. 

2. Other Bases for Exemption. A manufac- 
turer may apply for an exemption for a period 
not to exceed two years and covering up to 2,500 
vehicles for any 12-month period that the ex- 
emption is in effect on any one of three additional 
bases: that it would assist in the development 
or field evaluation of new motor vehicle safety 
features, that it would assist in the development 
or field evaluation of a low-emission vehicle, or 
that, in the absence of an exemption, it would be 
imable to sell a motor vehicle whose overall level 
of safety is equivalent to or exceeds the overall 
level of safety of non-exempted motor vehicles. 
To substantiate the development of safety fea- 
tures, it was proposed that the applicant estab- 
lish the innovational nature of the safety feature 
and that it would provide a level of safety at 



PART 555— PRE 2 



MkHvci Jamranr 39, 1979 



PREAMBLE TO PART 555— TEMPORARY EXEMPTION FROM MOTOR 

VEHICLE SAFETY STANDARDS 

(Docket No. 72-30; NoNco 2) 



This notice amends Title 49 of the Code of 
Federal Regulations by adding a new Part 555, 
"Temporary Exemption from Motor Vehicle 
Safety Standards," effective January 29, 1973. A 
notice of proposed rulemaking on this subject was 
published December 1, 1972 (37 F.R. 25533), 
and opportunity afforded for comment. 

On October 25, 1972 P.L. 92-548 was enacted, 
amending section 123 of the National Traffic 
and Motor Vehicle Safety Act of 1966 to pro- 
vide four bases upon which a manufacturer of 
motor vehicles might apply for a temporary ex- 
emption from one or more Federal motor vehicle 
safety standards. The legislative intent is clearly 
expressed as to the information required to sub- 
stantiate an application on each basis. A discus- 
sion follows of each basis, the required informa- 
tion and the principal issues raised in response 
to the proposal. 

1. Substantial Economic Hardship. A manufac- 
turer whose total motor vehicle production in his 
most recent year of manufacture did not exceed 
10,000 may petition for relief on grounds that 
compliance would cause him substantial economic 
hardship and that he has, in good faith, attempted 
to comply with the standards. Hardship exemp- 
tions are granted for periods not to exceed three 
years. Section 123 of the Act and the proposed 
regulations require an applicant to include in his 
petition a complete financial statement showing 
the basis of the economic hardship and a com- 
plete description of his good faith effort to com- 
ply with the standards. Although it was not 
required by the Act, the NHTSA also proposed 
to require a description of the steps a manufac- 
turer proposes to take during the exemption 
period to achieve full compliance and the esti- 
mated date by which full compliance is to be 
achieved. 



Submissions on the issue of economic hardship 
were received from Senator Warren Magnuson, 
Chairman of the Senate Committee on Commerce, 
the Public Interest Research Group, the Center 
for Auto Safety, Freightliner Corporation, and 
Lotus Cars, Ltd. Senator Magnuson and the 
Research Group have suggested that the NHTSA 
should adopt application guidelines modeled af- 
ter those of the Environmental Protection Agency 
for requests for suspension of the effective date 
of motor vehicle emission standards. The Re- 
search Group has drafted a model application 
form using the EPA guidelines as a departure 
point. Senator Magnuson also suggested that 
cost data concerning the affected component 
should be required, as well as a chronological an- 
alysis by the petitioner of its efforts to comply 
with the standard following issuance of the notice 
of proposed rulemaking. Finally, he urged that 
a company be required to submit an analysis of 
the effects on its economic stability of the ab- 
sence of an exemption. The Center for Auto 
Safety believes that all financial data should 
be presented in dollar figures. Lotus Cars, Ltd. 
suggested that, if a manufacturer has no plans 
to achieve conformity because the production run 
of a model is nearing its end, the regulations 
should specifically permit him to so state. 
Freightliner Corporation commented that hard- 
ship should be considered in relation to the total 
economic picture "including the purchaser" and 
the particular job a vehicle is intended to per- 
form. It expressed fear that the legislation was 
not enacted with multi-stage manufacturers in 
mind. Freightliner appears to be concerned 
about hardship situations that may occur to man- 
ufacturers whose total annual volume exceeds 
10,000 units and who are called upon to provide 
costly custom equipment. 



PART 555— PRE 1 



EffKllv*: January 29, 1973 



In formulating the regulations for hardship 
applications the NHTSA has adopted many of 
the suggestions of Senator Magnuson and the 
Public Interest Research Group. Engineering 
and financial data that must be submitted with 
the application will include a list or description 
of each component that would have to be modified 
in order to achieve compliance, together with an 
itemization of the estimated cost to the petitioner 
to modify each such component if required to do 
so on an emergency basis, or at the end of one-, 
two-, and three-year periods. The manufacturer 
will also include what it estimates as the price 
increase per vehicle to balance the total costs in- 
curred were it to achieve compliance, and a state- 
ment of the anticipated effect of the price increase. 
Corporate balance sheets for the three fiscal years 
immediately preceding the application must be 
submitted, as well as a projected balance sheet 
for the fiscal year following any denial of the 
petition. The financial data must be in dollar 
figures, as the Center for Auto Safety suggested. 
The manufacturer would also be allowed to dis- 
cuss other hardship factors that a denial would 
cause, such as loss of market. In its description 
of compliance efforts a manufacturer will be 
required to submit a chronological analysis show- 
ing the relationship of those efforts to the rule- 
making history of the standard, and to discuss 
alternate means of compliance that may have been 
considered, and the reasons for the rejection of 
each. As proposed, a manufacturer must also 
describe the steps to be taken while the exemp- 
tion is in effect to achieve full compliance, and 
the estimated date by which full compliance will 
be achieved. 

The NHTSA did not adopt the format and in- 
formational content of the EPA guidelines for 
several reasons. There is a basic difference in 
the Clean Air Act and the TraflSc Safety Act. 
Under the former, the public health is para- 
mount. All motor vehicles must meet certain 
emission standards by the 1975 model year. A 
one-year suspension is possible, but only upon 
technological grounds, and not for economic 
hardship. Suspensions are granted on the basis 
of fulfilling four criteria — (1) that it is essential 
to the public interest and public health of the 
United States, (2) that all good faith ^orts have 
been made to meet the established standards, (3) 



that effective emission control technology is not 
available, or has not been available for a sufficient 
time to achieve compliance prior to the effective 
date of such standard and (4) that the study and 
investigation of the National Academy of Sci- 
ences and other available information has not 
indicated that technology or other alternatives 
are available to meet the emission standards. By 
the 1976 model year all vehicles will comply and 
no further suspension is possible. The proof to 
support an emission standard suspension thus 
differs substantially from that required for hard- 
ship. On the other hand, under the Traffic 
Safety Act, motor vehicle safety must be balanced 
with other factors of the public interest including 
the desirability of affording a continuing and 
wide choice of vehicles to meet differing needs, 
and encouraging the continuation of relatively 
small manufacturers. In some instances, the 
safety exemption sought may be limited in time 
and scope, and extensively detailed informa- 
tion such as EPA requires may be unnecessary 
to document the request. 

With reference to the comments by Freight- 
liner, the NHTSA does take into account the | 
vehicle purchaser, in that it is concerned with 
the effect of a denial upon the availability of 
vehicles and their retail prices. Moreover, 
throughout its existence this agency has been 
aware of the problems of custom-truck manu- 
facturers and has tried to accommodate them, 
consistent with considerations of motor vehicle 
safety. 

2. Other Bases for Exemption. A manufac- 
turer may apply for an exemption for a period 
not to exceed two years and covering up to 2,500 
vehicles for any 12-month period that the ex- 
emption is in effect on any one of three additional 
bases: that it would assist in the development 
or field evaluation of new motor vehicle safety 
features, that It would assist in the development 
or field evaluation of a low-emission vehicle, or 
that, in the absence of an exemption, it would be 
unable to sell a motor vehicle whose overall level 
of safety is equivalent to or exceeds the overall 
level of safety of non-exempted motor vehicles. 
To substantiate the development of safety fea- 
tures, it was proposed that the applicant estab- 
lish the innovational nature of the safety feature 
and that it would provide a level of safety at / 



PART 555— PRE 2 



EfFadlva: January 29, 1973 



1% 



least equivalent to the level of safety established 
in the standard from which exemption is sought. 
To substantiate the development of a low-emis- 
sion vehicle, it was proposed that the applicant 
establish the emission feature of his vehicle and 
that an exemption would aid in its development 
as well as evidence that a temporary exeYnption 
would not unreasonably degrade the safety of 
the vehicle. Finally, to substantiate that failure 
to provide an exemption would prevent the sale 
of an otherwise safe vehicle, it was proposed that 
an applicant submit evidence that the vehicle 
could not otherwise be sold, and provide an anal- 
ysis of how the vehicle provides an overall level 
of safety equal to or exceeding the overall level 
of safety of non-exempted vehicles. 

The Public Interest Research Group again 
suggested that the proposal be amplified to pro- 
vide guidelines similar to those of EPA, and 
supplied formats for each of the three bases. 
The NHTSA concurs with the Research Group 
to the extent that it has expanded the proposal 
so that the regulation includes some of the in- 
formation and data suggested, but it has not 
adopted the format in detail, for the reasons 
previously discussed. 

A manufacturer who wishes to develop or 
evaluate new safety features must document the 
innovational nature of the features. He must 
also submit an analysis establishing that the 
safety level provided by the feature equals or 
exceeds the level of safety established in the 
standard from which exemption is sought, includ- 
ing a description of how complying and non- 
complying vehicles differ, the results of tests 
that demonstrate performance which meets or 
exceeds the safety levels of the standard, and 
substantiation that a temporary exemption would 
facilitate the development or field evaluation of 
the vehicle. The manufacturer is also required 
to indicate his intent at the end of the exemp- 
tion period to conform to the standard, or to 
petition for rulemaking to amend the standard 
80 that the feature might be incorporated into it. 

Somewhat similar information is required of a 
manufacturer who wishes to develop or evaluate 
a low-emission vehicle, although in this instance 
the NHTSA is also interested in a manufac- 
turer's test results showing how far the vehicle 



deviates from the standard, as part of the manu- 
facturer's showing that the exemption would not 
unreasonably degrade the safety of the vehicle. 

A manufacturer who petitions on the basis that 
the overall level of safety is equivalent to or ex- 
ceeds the overall level of non-exempted vehicles 
must describe how exempted and non-exempted 
vehicles differ, describe safety features that the 
vehicle offers as standard equipment that are 
not required by the Federal standards, and sub- 
mit both comparative test results showing how 
far the vehicle deviates from the standard, and 
the results of any tests showing that the vehicle 
exceeds the minimum requirements of any Fed- 
eral standard. The manufacturer must also state 
wliether he intends to comply at the end of the 
exemption period. Petitions for renewal of an 
exemption under each of these three bases are 
required to state the number of exempted vehicles 
sold in the United States under the prior ex- 
emption. 

3. Miscellaneous Comments. The Public In- 
terest Research Group and the Center for Auto 
Safety requested that § 555.7, Processing of peti- 
tions., be rewritten to include a provision for 
informal public hearings to be held at the discre- 
tion of the Administrator. Such a provision, in 
the opinion of the Research Group, "might well 
preclude protracted litigation by fully addressing 
issues in an informal public hearing." The re- 
quested provision has not been included in the 
final rule as it is considered unnecessary. Such 
a power is inherent in the Administrator's gen- 
eral powers and may be invoked in any appro- 
priate occasions. It is not specifically required 
by the legislation, which deems notice and an 
opportunity to comment in writing a sufficient 
forum and means of assuring informed admin- 
istrative action and of protecting the public 
interest. 

The Center for Auto Safety requested that 
§ 555.8, Termination of tem,porary exemptions, in- 
clude a provision that the Administrator will en- 
tertain petitions for termination from interested 
persons. Although such a provision is not neces- 
sarj' since the agency would consider any in- 
formation brought to its attention that is relevant 
(o its regulatory functions, a section to this effect 
lias been added for public information. It pro- 



PART 565— PRE 3 



MfccHvai January 29, 1973 



vides that petitions for termination of an ex- 
emption will be handled in accordance with the 
procedures of §§ 553.31 and .33 on petitions for 
rulemaking. The Center also asked whether 
the civil penalty provisions of section 109 could 
apply in the event it was determined that an 
exemption had been granted on the basis of 
fraudulent information. The NHTSA believes 
that civil penalties could apply in this instance, 
through the application of sections 108, 109, and 
li2. In addition, the general fraud provisions 
of 18 XJ.S.C. 1001 provide both criminal and civil 
penalties for submission of false information. 

Senator Magnuson, Lotus, and the Research 
Group commented that the temporary exemp- 
tion labels (i§ 555.9) should include the title of 
the standard as a matter of clearer public dis- 
closure. The comments have merit and the labels, 
both windshield and certification, must state 
the title of any exempted standard. The Re- 
search Group has further commented that the 
NHTSA has ignored the provision of Section 
123(b) that written notification of the exemp- 
tion be delivered to the dealer and first pur- 
chaser. The agency does not agree with the 
Research Group and believes that the windshield 
label constitutes written notification, fulfilling 
this discretionary requirement. 

Finally, comments were addressed to the ade- 
quacy of § 555.10, Availability for public inspec- 
tion. The NHTSA has adopted the Center for 
Auto Safety's comment that subsection (a) should 
be revised to provide availability of memoranda 
of all metings held pursuant to § 555.7(a). How- 
ever, the NHTSA has not agreed with the 
Center's suggestion that the agency commit itself 



to make such memoranda available within a spec- 
ified time limit "such as five working days". 
The agency will use its best efforts to place memo- 
randa of this nature in the dockets as soon as 
practicable. The Center, Senator Magnuson, and 
the Research Group pointed out that Section 
123(b) of the Act authorizes the Secretary to 
withhold only information "not relevant to the 
application for exemption". This agency concurs 
and minor rewording of § 555.10(b) clarifies this. 
Senator Magnuson encourages the agency "as a 
general policy, to release information contained 
in applications for exemptions on the basis that 
all such information is relevant to the application 
or it would not have been included by the manu- 
facturer". The NHTSA agrees with this general 
policy. It will carefully scrutinize requests for 
confidential treatment of information and lib- 
erally interpret the relevancy of that information 
to the petition. 

In consideration of the foregoing, Title 49 
Code of Federal Regulations is amended by add- 
ing Part 555, Temporary Exemption from Fed- 
eral Motor Vehicle Safety Standards, as set 
forth below. 

Effective date: January 29, 1973. 

(Sec. 3, Pub. L. 92-548, 86 Stat. 1159; Sec. 
119, Pub. L. 89-563 (15 U.S.C. 1410, 1407), 80 
Stat. 718; delegation of authority at 49 CFR 
1.51) 

Issued on January 22, 1973. 

Douglas W. Toms 
Administrator 

38 F.R. 2693 
January 29, 1973 



PART 665— PRE 4 



7 least equivalent to the level of safety established 
in the standard from which exemption is sought. 
To substantiate the development of a low-emis- 
sion vehicle, it was proposed that the applicant 
establish the emission feature of his vehicle and 
that an exemption would aid in its development 
as well as evidence that a temporary exemption 
would not unreasonably degrade the safety of 
the vehicle. Finally, to substantiate that failure 
to provide an exemption would prevent the sale 
of an otherwise safe vehicle, it was proposed that 
an applicant submit evidence that the vehicle 
could not otherwise be sold, and provide an anal- 
ysis of how the vehicle provides an overall level 
of safety equal to or exceeding the overall level 
of safety of non-exempted vehicles. 

The Public Interest Research Group again 
suggested that the proposal be amplified to pro- 
vide guidelines similar to those of EPA, and 
supplied formats for each of the three bases. 
The NHTSA concurs with the Research Group 
to the extent that it has expanded the proposal 
so that the regxilation includes some of the in- 
formation and data suggested, but it has not 

^ adopted the format in detail, for the reasons 

^ previously discussed. 

A manufacturer who wishes to develop or 
evaluate new safety features must document the 
innovational nature of the features. He must 
also submit an analysis establishing that the 
safety level provided by the feature equals or 
exceeds the level of safety established in the 
standard from which exemption is sought, includ- 
ing a description of how complying and non- 
complying vehicles diiTer, the results of tests 
that demonstrate performance which meets or 
exceeds the safety levels of the standard, and 
substantiation that a temporary exemption would 
facilitate the development or field evaluation of 
the vehicle. The manufacturer is also required 
to indicate his intent at the end of the exemp- 
tion period to conform to the standard, or to 
petition for rulemaking to amend the standard 
so that the feature might be incorporated into it. 

Somewhat similar information is required of a 

manufacturer who wishes to develop or evaluate 

a low-emission vehicle, although in this instance 

the NHTSA is also interested in a manufac- 

1^ turer's test results showing how far the vehicle 



EffKtIv*: January 29, 1973 

deviates from the standard, as part of the manu- 
facturer's showing that the exemption would not 
unreasonably degrade the safety of the vehicle. 

A manufacturer who petitions on the basis that 
the overall level of safety is equivalent to or ex- 
ceeds the overall level of non-exempted vehicles 
must describe how exempted and non-exempted 
vehicles differ, describe safety features that the 
vehicle offers as standard equipment that are 
not required by the Federal standards, and sub- 
mit both comparative test results showing how 
far the vehicle deviates from the standard, and 
the results of any tests showing that the vehicle 
exceeds the minimum requirements of any Fed- 
eral standard. The manufacturer must also state 
whether he intends to comply at the end of the 
exemption period. Petitions for renewal of an 
exemption under each of these three bases are 
required to state the number of exempted vehicles 
sold in the United States under the prior ex- 
emption. 

3. MisceUaneotts Comments. The Public In- 
terest Research Group and the Center for Auto 
Safety requested that § 555.7, Processing of peti- 
tions, be rewritten to include a provision for 
informal public hearings to be held at the discre- 
tion of the Administrator. Such a provision, in 
the opinion of the Research Group, "might well 
preclude protracted litigation by fully addressing 
issues in an informal public hearing." The re- 
quested provision has not been included in the 
final rule as it is considered unnecessary. Such 
a power is inherent in the Administrator's gen- 
eral powers and may be invoked in any appro- 
priate occasions. It is not specifically required 
by the legislation, which deems notice and an 
opportunity to comment in writing a sufficient 
forum and means of assuring informed admin- 
istrative action and of protecting the public 
interest. 

The Center for Auto Safety requested that 
§ 555.8, Termination of temporary exem,ption8, in- 
clude a provision that the Administrator will en- 
tertain petitions for termination from interested 
persons. Although such a provision is not neces- 
sary since the agency would consider any in- 
formation brought to its attention that is relevant 
to its regulatory functions, a section to this effect 
has been added for public information. It pro- 



PART 555— PRE 3 



I January 39, 1973 



vides that petitions for termination of an ex- 
emption will be handled in accordance with the 
procedures of §§ 553.31 and .33 on petitions for 
rulemaking. The Center also asked whether 
the civil penalty provisions of section 109 could 
apply in the event it was determined that an 
exemption had been granted on the basis of 
fraudulent information. The NHTSA believes 
that civil penalties could apply in this instance, 
through the application of sections 108, 109, and 
li2. In addition, the general fraud provisions 
of 18 U.S.C. 1001 provide both criminal and civil 
penalties for submission of false information. 

Senator Magnuson, Lotus, and the Research 
Group commented that the temporary exemp- 
tion labels (>§ 555.9) should include the title of 
the standard as a matter of clearer public dis- 
closure. The comments have merit and the labels, 
both windshield and certification, must state 
the title of any exempted standard. The Ee- 
search Group has further commented that the 
NHTSA has ignored the provision of Section 
123(b) that written notification of the exemp- 
tion be delivered to the dealer and first pur- 
chaser. The agency does not agree with the 
Research Group and believes that the windshield 
label constitutes written notification, fulfilling 
this discretionary requirement. 

Finally, comments were addressed to the ade- 
quacy of § 555.10, Availability for public inspec- 
tion. The NHTSA has adopted the Center for 
Auto Safety's comment that subsection (a) should 
be revised to provide availability of memoranda 
of all metings held pursuant to § 555.7(a). How- 
ever, the NHTSA has not agreed with the 
Center's suggestion that the agency conmiit itself 



to make such memoranda available within a spec- 
ified time limit "such as five working days". 
The agency will use its best efforts to place memo- 
randa of this nature in the dockets as soon as 
practicable. The Center, Senator Magnuson, and 
the Research Group pointed out that Section 
123(b) of the Act authorizes the Secretary to 
withhold only information "not relevant to the 
application for exemption". This agency concurs 
and minor rewording of § 555.10(b) clarifies this. 
Senator Magnuson encourages the agency "as a 
general policy, to release information contained 
in applications for exemptions on the basis that 
all such information is relevant to the application 
or it would not have been included by the manu- 
facturer". The NHTSA agrees with this general 
policy. It will carefully scrutinize requests for 
confidential treatment of information and lib- 
erally interpret the relevancy of that information 
to the petition. 

In consideration of the foregoing. Title 49 
Code of Federal Regulations is amended by add- 
ing Part 555, Temporary Exemption from Fed- 
eral Motor Vehicle Safety Standards, as set 
forth below. 

Effective date: January 29, 1973. 

(Sec. 3, Pub. L. 92-548, 86 Stat. 1159; Sec. 
119, Pub. L. 89-563 (15 U.S.C. 1410, 1407), 80 
Stat. 718; delegation of authority at 49 CFR 
1.51) 

Issued on January 22, 1973. 

Douglas W. Toms 
Administrator 

38 F.R. 2693 
January 29, 1973 



PART 665— PRE 4 



E«h<Nv«: March IS, 1974 



PREAMBLE TO AMENDMENT TO PART 555— TEMPORARY EXEMPTION FROM 

MOTOR VEHICLE SAFETY STANDARDS 

(Docket No. 72-30; Notico 4) 



This notice amends 49 CFR Part 55ft to specify 
that the NHTSA will notify i^etitioners directly 
when their petitions are found not to contain 
required information, and timt income statements 
must be included in support of hardship i)eti- 
tions. 

The NHTSA projjosed these amendments on 
October 29, 1973 (38 F.R. 29817). Interested 
persons have been offered an opj)ortunity to i)ar- 
ticipate in the making of the amendments and 
due consideration has been given to tlie two com- 
ments that were received in resjjonse to the notice. 

A comment by H. E. Waterman of Howie, 
Maryland, suggests that the agency adojjt the 
essence of Federal Aviation Regulation § 11.25 
Petition for rulemaking or exemptions to em- 
phasize public interest factors, rather than the 
"private interests" of the petitioner. Mr. AVater- 
man commented that "If an applicant considers 
his finances to be of interest relative to his peti- 
tion, he should be given an opiwrtunity to state 
his financial condition, but that should not be 
emphasized by establisliment of such a require- 
ment". 

Mr. Waterman's comment is inapix)site. The 
exemption authority of the Federal Aviation 
Administration is broader than that provided 
the NHTSA, and grant of exemption under FAR 
§ 11.25 is not based specifically ujwn factors of 
substantial economic hardship. The NHTSA haS 
concluded that it must request detailed financial 
data from hardship petitioners to assist it and 
the public in evaluating the merits of hardship 
claims, and it does not request such information 
of petitioners who file for exemption on other 
grounds. 



Mr. Waterman's conunent on public interest 
factors however is in ^wint. In addition to find- 
ing that one of the four appropriate statutory 
bases for exemption is present, the Administrator 
must also make a finding that the exem])ti(m is 
in the public mterest and consistent with the 
objectives of the National Traffic and Motor 
Vehicle Safety Act. The regulation currently 
does not siiecifically require th*^ petitioner to sub- 
mit public interest arguments, and the NHTSA 
believes that it should be amended to so provide. 
Accordingly § 555.5 Petition for exemption is be- 
ing amended to require the i^etition to "contain 
any information, views, or arguments available 
to the petitioner as to why the granting of the 
petition would be in the public interest and con- 
sistent with the objectives of the Act". 

American Motors commented that income state- 
ments and balance sheets are generally only part 
of a larger overall picture of the financial impact 
of compliance, and that to specifically require 
them might exclude the submission of other docu- 
ments which could similarly describe the impact. 
It suggests amending the regulation to require 
only that the basis for an exemption for sub- 
stantial economic hardship be fully documented. 

The NHTSA does not consider its informa- 
tional requirements restrictive and has not 
adopted the comments of American Motors. Sec- 
tion 556. (a)(1) contains a broad request for 
"engineering and financial information demon- 
strating in detail how compliance or failure to 
obtain an exemption would cause substantial 
economic hardship" which includes but is not 
limited to five specific categories of information, 
plus "(vi) A discussion of other hardships (e.g. 



PART 565— PRE 6 



Efhctiv*: March 15, 1974 

loss of market) that the petitioner desires the U.S.C. 1407; delegation of authority at 49 CFR 

agency to consider". 1.51.) 

In consideration of the foregoing, 49 CFR Issued on February 7, 1974. 

Part 555 is amended t n r^ 

James B. Gregory 

Effective date: March 15, 1974. Administrator 

(Sec. 3, Pub. L. 92-548, 86 Stat 1159, 15 U.S.C. 39 F.R. 5489 

1410; sec. 119, Pub. L. 89-563, 80 Stat. 718. 15 February 13, 1974 



PART 555— PRE 6 



ElhcMv*: March 15, 1974 



PREAMBLE TO AMENDMENT TO PART 555— TEMPORARY EXEMPTION FROM 

MOTOR VEHICLE SAFETY STANDARDS 

(Dockat No. 72-30; Notice 4) 



This notice amends 49 CFR Part 555 to si^ecify 
that the NHTSA will notify {petitioners directly 
when their jietitions are found not to contain 
required information, and that income statements 
must be included in supiwrt of hardship i)eti- 
tions. 

The NHTSA proi)osed these amendments on 
October 29, 1973 (38 F.R. 29817). Interested 
l^ersons liave l^een oHered an opportiuiity to par- 
ticipate in the making of tlie amendments and 
due consideration has been given to the two com- 
ments that were received in resiwnse to the notice. 

A comment by H. E. Waterman of Howie, 
Maryland, suggests that the agency adopt tiie 
essence of Federal Aviation Regulation § 11.25 
Petition for rulemaking or exempfionx to em- 
phasize public interest factors, rather than the 
"private interests" of the petitioner. Mr. Water- 
man commented that "If an applicant considers 
his finances to be of interest relative to his peti- 
tion, he should be given an opi)ortnnity to state 
his financial condition, but that should not be 
emphasized by establishment of such a require- 
ment". 

Mr. Waterman's comment is inapjwsite. The 
exemption authority of the Federal Aviation 
Administration is broader than that provided 
the NHTSA, and grant of exemption under FAR 
§ 11.25 is not based specifically ui)on factors of 
substantial economic hardship. The NHTSA ha& 
concluded that it must request detailed financial 
data from hardship petitioners to assist it and 
the public in evaluating the merits of hardship 
claims, and it does not request such information 
of petitioners who file for exemption on otlier 
grounds. 



Mr. Waterman's comment on public interest 
factors however is in jwint. In addition to find- 
ing that one of the four appropriate statutory 
bases for exemption is present, the Administrator 
must also make a finding that the exemption is 
in the public interest and ('(msistent with tlu^ 
objectives of the National Traffic and Motor 
Vehicle Safety Act. The regulation currently 
does not specifically require the petitioner to sub- 
mit public interest arguments, and the NHTSA 
belie \es that it should be amended to so provide. 
Accordingly § 555.5 Petition for exemption is be- 
ing amended to require the j^etition to "contain 
any information, views, or argiunents available 
to the petitioner as to why the granting of the 
petition would be in the public interest and con- 
sistent with the objectives of the Act". 

American Motors commented that income state- 
ments and balance sheets are generally only part 
of a larger overall picture of the financial impact 
of compliance, and that to specifically require 
them might exclude the submission of other docu- 
ments which could similarly describe the impact. 
It suggests amending the regulation to require 
only that the basis for an exemption for sub- 
stantial economic hardship be fully documented. 

The NHTSA does not consider its informa- 
tional requirements restrictive and has not 
adopted the comments of American Motors. Sec- 
tion 556.(a)(l) contains a broad request for 
"engineering and financial information demon- 
strating in detail how compliance or failure to 
obtain an exemption would cause substantial 
economic hardship" which includes but is not 
limited to five specific categories of information, 
plus "(vi) A discussion of other hardships (e.g. 



PART 555— PRE 5 



MmMv*) March IS, 1974 

loss of market) that the petitioner desires the U.S.C. 1407; delegation of authority at 49 CFR 

agency to consider". 1.61.) 

In consideration of the foregoing, 49 CFR Issued on February 7, 1974. 

Part 555 is amended .... t r> /-< 

James B. Gregory 

Effective date: March 15, 1974. Administrator 

(Sec. 3, Pub. L. 92-548, 86 Stat 1159, 15 U.S.C. 39 F.R. 5489 

1410; sec. 119, Pub. L. 89-563, 80 Stat. 718. 15 Fabruary 13, 1974 



PART 655— PRE 6 



(! 



Effacllve: Novembar 24, 1974 



PREAMBLE TO AMENDMENT TO PART 555— TEMPORARY EXEMPTION FROM 

MOTOR VEHICLE SAFETY STANDARDS 

(Docket No. 72-30; Notice 5) 



This notice amends 49 CFR Part 555 to specify 
that denials as well as grants are published in 
the Federal Register, and to clarify that the 
effective date of a temporary exemption is its date 
of publication in the Federal Register unless a 
later effective date is specified. The amendments 
also specify that an expiring exemption does not 
terminate during consideration of a petition for 
its renewal. 

These amendments pertain to agencj' practice 
and are interpretative in nature. Accordingly, 
pursuant to 5 U.S.C. § 553(b), it has been found 
that no notice of proposed rulemaking is called 
for. 

Section 555.7(a) is amended to specify that 
when the Administrator determines that a peti- 
tion does not contain adequate justification and is 
denied, the petitioner is notified in writing and a 
notice of the denial is published in the Federal 
Register. Publication of denials has been an 
agency practice and the regulation is amended to 
reflect it. 

A new subparagraph (f) is added to 49 CFR 
555.7 to specify that the effective date of a tem- 
porary exemption is the date of publication of 
the notice of grant in the Federal Register unless 
a later effective date is specified. Interested per- 
sons have asked whether exemptions can be made 
effective as of the date of the filng of a petition 
for relief, or can include the total production of 
a model year that begins before the date an ex- 
emption is granted. This amendment is intended 
to clarify the agency's policy that exemptions 
should not have a retroactive effect which could 
serve to excuse manufacture of nonconforming 



vehicles in violation of section 108(a)(1) of the 
National Traffic and Motor Vehicle Safety Act. 

In section 555.8 the references to paragraph 
(c) in paragraphs (a) and (b) are changed to 
paragraph (d), to indicate that the cause of an 
early termination of an exemption by the Ad- 
ministrator is through administrative action 
(paragraph (d)), rather than through petition 
by interested persons (paragraph (c)). A new 
paragraph (c) is added to § 555.8, implementing 
the Administrative Procedure Act provision at 
5 U.S.C. § 558(c), stating in effect that when a 
timely and sufficient application for renewal of 
a temporary exemption has been received before 
the exemption's termination date, the exemption 
does not expire until the Administrator grants 
or denies the petition for renewal. A timely 
application is one that is received not later than 
60 days before the expiration of an exemption. 
A sufficient application is one that contains in- 
formation required by § 555.5. 

In consideration of the foregoing, 49 CFR 
Part 555 is amended. . . . 

Effective date: November 24, 1974. 

(Sec. 3, Pub. L. 92-548, 86 Stat. 1159, 15 U.S.C. 
1410; sec. 119, Pub. L. 89-563, 80 Stat. 718, 15 
U.S.C. 1407 ; delegation of authority at 49 CFR 
1.51). 

Issued on October 21, 1974. 

James B. Gregory 
Administrator 

39 F.R. 37988 
October 25, 1974 



PART 555— PRE 7-8 



Effective: November 24, 1974 



PREAMBLE TO AMENDMENT TO PART 555— TEMPORARY EXEMPTION FROM 
MOTOR VEHICLE SAFETY STANDARDS 

(Docket No. 72-30; Notice 5) 



This notice amends 49 CFR Part 555 to specify 
that denials as well as grants are published in 
the Federal Register, and to clarify that the 
eflFective dat« of a temporary exemption is its date 
of publication in the Federal Register imless a 
later effective date is specified. The amendments 
also specify that an expiring exemption does not 
terminate during consideration of a petition for 
its renewal. 

These amendments pertain to agency practice 
and are interpretative in nature. Accordingly. 
pursuant to 5 U.S.C. § 553(b), it has been found 
that no notice of proposed rulemaking is called 
for. 

Section 555.7(a) is amended to specify that 
when the Administrator determines that a peti- 
tion does not contain adequate justification and is 
denied, the petitioner is notified in writing and a 
notice of the denial is published in the Federal 
Register. Publication of denials has been an 
agency practice and the regulation is amended to 
reflect it. 

A new subparagraph (f) is added to 49 CFR 
655.7 to specify that the effective date of a tem- 
porary exemption is the date of publication of 
the notice of grant in the Federal Register unless 
a later effective date is specified. Interested per- 
sons have asked whether exemptions can be made 
effective as of the date of the filng of a petition 
for relief, or can include the total production of 
a model year that begins before the date an ex- 
emption is granted. This amendment is intended 
to clarify the agency's policy that exemptions 
should not have a retroactive effect which could 
serve to excuse manufacture of nonconforming 



vehicles in violation of section 108(a)(1) of the 
National Traffic and Motor Vehicle Safety Act. 

In section 555.8 the references to paragraph 
(c) in paragraphs (a) and (b) are changed to 
paragraph (d), to indicate that the cause of an 
early termination of an exemption by the Ad- 
ministrator is through administrative action 
(paragraph (d)), rather than through petition 
by interested persons (paragraph (c)). A new 
paragraph (c) is added to § 555.8, implementing 
the Administrative Procedure Act provision at 
5 U.S.C. § 558(c), stating in effect that when a 
timely and sufficient application for renewal of 
a temporary exemption has been received before 
the exemption's termination date, the exemption 
does not expire until the Administrator grants 
or denies the petition for renewal. A timely 
application is one that is received not later than 
60 days before the expiration of an exemption. 
A sufficient application is one that contains in- 
formation required by § 555.5. 

In consideration of the foregoing, 49 CFR 
Part. 555 is amended. . . . 

Effective date : November 24, 1974. 

(Sec. 3, Pub. L. 92-548, 86 Stat. 1159, 15 U.S.C. 
1410; sec. 119, Pub. L. 89-563, 80 Stat. 718, 15 
U.S.C. 1407 ; delegation of authority at 49 CFR 
1.51). 

Issued on October 21, 1974. 

James B. Gregory 
Administrator 

39 F.R. 37988 
October 25, 1974 



PART 555— PRE 7-8 



Effective: May 30, 1975 



PREAMBLE TO AMENDMENT TO PART 555— TEMPORARY EXEMPTION FROM MOTOR 

VEHICLE SAFETY STANDARDS 
(Docket No. 73-20; Notice 6) 



This notice amends 49 CFR § 555.10(b) to 
clarify that information made available for pub- 
lic inspection shall include all submitted ma- 
terials that are specifically required by § 555.6. 
The amendment is effective 30 days after publi- 
cation in the Federal Register. 

This amendment pertains to a^ncy practice 
and is clarifying and interpretative in nature. 
Accordingly, pui-suant to 5 U.S.C. 553(b), it is 
found that notice of proposed rulemaking is un- 
necessary. 

Currently § 555.10(b) states that "Information 
made available for inspection shall not include 
materials not relevant to the petition that are to 
be withheld from the public in accordance with 
sections 112 and 113 of the Act (15 U.S.C. 1401, 
1402) and section 552(b) of Title 5 of the United 
States Code." 

Some petitioners for temporary exemptions on 
hardship grounds have requested that confidential 
treatment be given such items as estimated price 
increases that would be caused by compliance, 
projected balance sheets and income statements 
for the fiscal year following denial of a petition, 
or the efforts to be taken to achieve compliance 
while the exemption is in effect. The usual 
reason given is that the information could be 
harmful to the petitioner in the hands of its 
competitors. The NHTSA has uniformly denied 



such requests if they involve materials that the 
regulation specifically requires to be submitted. 
These materials are necessary for a determination 
by the NHTSA of whether the statutory basis 
for exemption exists. This agency finds that all 
materials it requests pursuant to the regulation, 
and which are used in its own decisions, should 
be available for inspection in the docket by mem- 
bers of the public who wish to reach their own 
conclusion on the merits of the petition. Ma- 
terials submitted gratuitously will, of course, be 
withheld from availability for inspection, if the 
petitioner requests it and if it is a matter that 
may be withheld in accordance with sections 112, 
113, and 158 of the National Traffic and Motor 
Vehicle Safety Act. 

In consideration of the foregoing, 49 CFR 
§ 555.10(b) is amended. . . . 

Ejfective date : May 30, 1975. 

(Sec. 3, Pub. L. 92-548, 86 Stat. 1159, 15 
U.S.C. 1410, sec. 119, Pub. L. 89-563, 80 Stat. 
718, 15 U.S.C. 1407; delegation of authority at 
49 CFR 1.51.) 

Issued on April 24, 1975. 

James B. Gregory 
Administrator 

40 F.R. 18789 
April 30, 1975 



PART 555— PRE 9-10 



JSI-MS 0-77-8 



Effective: May 30, 1975 



PREAMBLE TO AMENDMENT TO PART 555— TEMPORARY EXEMPTION FROM MOTOR 

VEHICLE SAFETY STANDARDS 
(Docket No. 73-20; Notice 6) 



This notice amends 49 CFR § 555.10(b) to 
clarify that information made available for pub- 
lic inspection shall include all submitted ma- 
terials that are specifically required by § 555.6. 
The amendment is effective 30 days after publi- 
cation in the Federal Register. 

This amendment pertains to agency practice 
and is clarifying and interpretative in nature. 
Accordingly, pursuant to 5 U.S.C. 553(b), it is 
found that notice of proposed rulemaking is un- 
necessary. 

Currently § 555.10(b) states that "Information 
made available for inspection shall not include 
materials not relevant to the petition that are to 
be withheld from the public in accordance with 
sections 112 and 113 of the Act (15 U.S.C. 1401, 
1402) and section 552(b) of Title 5 of the United 
States Code." 

Some petitioners for temporary' exemptions on 
hardship grounds have requested that confidential 
treatment be given such items as estimated price 
increases that would be caused bj- compliance, 
projected balance sheets and income statements 
for the fiscal year following denial of a petition, 
or the efforts to be taken to achieve compliance 
while the exemption is in effect. The usual 
reason given is that the information could be 
harmful to the petitioner in the hands of its 
competitors. The NHTSA has uniformly denied 



such requests if they involve materials that the 
regulation specifically requires to be submitted. 
These materials are necessary for a determination 
by the NHTSA of whether the statutory basis 
for exemption exists. This agency finds that all 
materials it requests pursuant to the regulation, 
and which are used in its own decisions, should 
be available for inspection in the docket by mem- 
bers of the public who wish to reach their own 
conclusion on the merits of the petition. Ma- 
terials submitted gratuitously will, of course, be 
withheld from availability for inspection, if the 
petitioner requests it and if it is a matter that 
may be withheld in accordance with sections 112, 
113, and 158 of the National Traffic and Motor 
Vehicle Safety Act. 

In consideration of the foregoing, 49 CFR 
§ 555.10(b) is amended. . . . 

Elective date : May 30, 1975. 

{Sec. 3, Pub. L. 92-548, 86 Stat. 1159, 15 
U.S.C. 1410, sec. 119, Pub. L. 89-563, 80 Stat. 
718, 15 U.S.C. 1407; delegation of authority at 
49 CFR 1.51.) 

Issued on April 24, 1975. 

James B. Gregory 
Administrator 

40 F.R. 18789 
April 30, 1975 



I 



PART 555— PRE 9-10 



iJI-OM O - 77 . « 



( 



Effacliv*: S«pl«mb«r 10, 1975 



PREAMBLE TO AMENDMENT TO PART 555— TEMPORARY EXEMPTION FROM FEDERAL 

MOTOR VEHICLE SAFETY STANDARDS 
(Docket 73-20; Notice 7) 



This notice amends 49 CFR Part 555 to reflect 
the fact that the Administrator considers peti- 
tions to modify exemptions. 

On July 7, 1975, the Administrator published 
notice (40 F.R. 28504) of a petition by General 
Motors Corporation to modify the temporary 
exemption previously granted Motor Coach In- 
dustries, Inc. Under § 555.8(c) the Adminis- 
trator may receive petitions to terminate tempo- 
rary exemptions, and, under § 555.8(d), he may 
terminate them. The Administrator's power 
with respect to temporary exemptions necessar- 
ily includes modification of an exemption when 
to do so is in the public interest and consistent 
with the objectives of the National TraflSc and 
Motor Vehicle Safety Act, or when the exemp- 
tion is based upon misrepresentations. Accord- 
ingly, § 555.8(c) and § 555.8(d) are amended to 
reflect this fact. In addition, the section refer- 
ences to processing of petitions (§ 555.31, 
§553.35) are changed to Part 552 to reflect recent 
amendments (40 F.R. 42014). A new paragraph 



is added to specify that notices of termination 
or modification will appear in the Federal 
Register. 

In consideration of the foregoing, in § 555.8 
of Title 49, Code of Federal Regulations, para- 
graph (c) and the introductory phase of para- 
graph (d) are revised, and paragraph (f) is 
added. . . . 

Effective date: September 10, 1975. Since the 
amendment reflects internal policy and proce- 
dure it may be made effective upon publication. 

(Sec. 3, Pub. L. 92-548, 86 Stat 1159, 15 U.S.C. 
1410, Sec. 119, Pub. L. 89-563, 80 Stat 718, 15 
U.S.C. 1407 ; delegation of authority at 49 CFR 
1.51.) 

Issued on September 4, 1975. 

James B. Gregory 
Administrator 

40 F.R. 42015 
September 10, 1975 



PART 555-PRE 11-12 



EffocHv*: S«p*«mb«r 10, I97S 



PREAMBLE TO AMENDMENT TO PART 555— TEMPORARY EXEMPTION FROM FEDERAL 

MOTOR VEHICLE SAFETY STANDARDS 
(Docket 73-20; Notice 7) 



This notice amends 49 CFR Part 555 to reflect 
the fact that the Administrator considers peti- 
tions to modify exemptions. 

On July 7, 1975, the Administrator published 
notice (40 F.R. 28504) of a petition by General 
Motors Corporation to modify the temporary 
exemption previously granted Motor Coach In- 
dustries, Inc. Under § 555.8(c) the Adminis- 
trator may receive petitions to terminate tempo- 
rary exemptions, and, under § 555.8(d), he may 
terminate them. The Administrator's power 
with respect to temporarj' exemptions necessar- 
ily includes modification of an exemption when 
to do so is in the public interest and consistent 
with the objectives of the National Traffic and 
Motor Vehicle Safety Act, or when the exemp- 
tion is based upon misrepresentations. Accord- 
ingly, § 555.8(c) and § 555.8(d) are amended to 
reflect this fact. In addition, the section refer- 
ences to processing of petitions (§ 555.31, 
§553.35) are changed to Part 552 to reflect recent 
amendments (40 F.R. 42014). A new paragraph 



is added to specify that notices of termination 
or modification will appear in the Federal 
Register. 

In consideration of the foregoing, in § 555.8 
of Title 49, Code of Federal Regulations, para- 
graph (c) and the introductory phase of para- 
graph (d) are revised, and paragraph (f) is 
added. . . . 

Effective date: September 10, 1975. Since the 
amendment reflects internal policy and proce- 
dure it may be made effective upon publication. 

(Sec. 3, Pub. L. 92-548, 86 Stat 1159, 15 U.S.C. 
1410, Sec. 119, Pub. L. 89-563, 80 Stat 718, 15 
U.S.C. 1407; delegation of authority at 49 CFR 
1.51.) 

Issued on September 4, 1975. 

James B. Gregory 
Administrator 

40 F.R. 42015 
September 10, 1975 



PART 555-PRE 11-12 



PREAMBLE TO AN AMENDMENT TO PART 555— TEMPORARY EXEMPTION 
FROM MOTOR VEHICLE SAFETY STANDARDS 

(Docket Nos. FE 76-04; Notice 5; 
FE 77-03, Notice 4; 80-21, Notice 1) 



ACTION: Final Rule. 

SUMMARY: This notice makes conforming 
amendments to several of the agency's regulations 
deleting specific requirements for confidentiality 
determinations. These conforming amendments 
are needed as a result of the publication today of a 
new agency regulation governing requests for con- 
fidentiality determinations (Part 512). Since that 
new regulation supercedes the confidentiality pro- 
visions existing in several of the agency's other 
regulations, these conforming amendments are 
being made without notice and opportunity for 
comment. 



I EFFECTIVE DATE: 

tive April 9, 1981. 



These amendments are effec- 



FOR FURTHER INFORMATION CONTACT: 

Roger Tilton, Office of Chief Counsel, 
National Highway Traffic Safety Adminis- 
tration, 400 Seventh Street, S.W., 
Washington, D.C. 20590 (202-426-9511). 

SUPPLEMENTARY INFORMATION: In accordance 
with the above, Title 49 of the Code of Federal 
Regulations is amended as follows. 

Part 525, Exemptions From Average Fuel 
EcoTuyrny Standards, is revised as follows: 

(1) Section 525.6(g) (1) and (2) are deleted and 
replaced with the following: 

(g) Specify and segregate any part of the infor- 
mation and data submitted under this part that the 
petitioner wishes to have withheld from public 
disclosure in accordance with Part 512 of this 
Chapter. 

(2) Section 525.13 is deleted and section 
525.12 is revised to read: 



§ 525.12 Public inspection of Information. 

(a) Except as provided in paragraph (b), any per- 
son may inspect available information relevant to a 
petition under this Part, including the petition and 
any supporting data, memoranda of informal 
meetings with the petitioner or any other in- 
terested persons, and the notices regarding the 
petition, in the Docket Section of the National 
Highway Traffic Safety Administration. Any per- 
son may obtain copies of the information available 
for inspection under this paragraph in accordance 
with Part 7 of the regulations of the Office of the 
Secretary of Transportation (49 CFR Part 7). 

(b) Except for the release of confidential infor- 
mation authorized by section 505 of the Act and 
Part 512 of this Chapter, information made 
available for public inspection does not include in- 
formation for which confidentiality is requested 
under § 525.6(g) and is granted in accordance with 
Part 512 and sections 502 and 505 of the Act and 
section 552(b) of Title 5 of the United States Code. 

Part 537, Automotive Fuel Economy Reports, is 
revised as follows: 

(1) Section 537.5(c) (7) (i) and (ii) are deleted 
and replaced with the following: 

(7) Specify any part of the information or data 
in the report that the manufacturer believes 
should be withheld from public disclosure as 
trade secret or other confidential business infor- 
mation in accordance with Part 512 of this 
Chapter. 

(2) Section 537.12 is deleted and section 
537.11 is revised to read: 

§ 537.11 Public Inspection of Information. 

(a) Except as provided in paragraph (b), any per- 
son may inspect the information and data submit- 



PART 555; PRE 13 



ted by a manufacturer under this part in the docket 
section of the National Highway Traffic Safety Ad- 
ministration. Any person may obtain copies of the 
information available for inspection under this sec- 
tion in accordance with the regulations of the 
Secretary of Transportation in Part 7 of this title. 

(b) Except for the release of confidential infor- 
mation authorized by section 505 of the Act and 
Part 512 of this Chapter, information made 
available under paragraph (a) for public inspection 
does not include information for which confiden- 
tiality is requested under § 537.5(c) (7) and is 
granted in accordance with Part 512 of this 
Chapter, section 505 of the Act, and section 552(b) 
of Title 5 of the United States Code. 

Part 555, Temporary Exemption From Motor 
Vehicle Safety Standards, is revised as follows: 
(1) Section 555.5(b) (6) is revised to read: 
(6) Specify any part of the information and 

data submitted which petitioner requests be 



withheld from public disclosure in accordance 

with Part 512 of this Chapter. 
(2) Section 555.10(b) is revised to read: 

(b) Except for the release of confidential infor- 
mation authorized by Part 512 of this Chapter, in- 
formation made available for inspection under 
paragraph (a) shall not include materials not rele- 
vant to the petition for which confidentiality is re- 
quested and granted in accordance with sections 
112, 113, and 158 of the Act (15 U.S.C. 1401, 1402, 
and 1418) and section 552(b) of Title 5 of the 
United States Code. 

Issued on December 30, 1980. 



Joan Claybrook 
Administrator 



46 F.R. 2063 
January 8, 1981 



PART 555; PRE 14 



i 



PREAMBLE TO AN AMENDMENT TO PART 555-TEMPORARY EXEMPTION 
FROM MOTOR VEHICLE SAFETY STANDARDS 

(Docket Nos. FE 76-04; Notice 5; 
FE 77-03, Notice 4; 80-21, Notice 1) 



ACTION: Final Rule. 

SUMMARY: This notice makes conforming 
amendments to several of the agency's regulations 
deleting specific requirements for confidentiality 
determinations. These conforming amendments 
are needed as a result of the publication today of a 
new agency regulation governing requests for con- 
fidentiality determinations (Part 512). Since that 
new regulation supercedes the confidentiality pro- 
visions existing in several of the agency's other 
regulations, these conforming amendments are 
being made without notice and opportunity for 
comment. 



EFFECTIVE DATE: 

tive April 9, 1981. 



These amendments are effec- 



FOR FURTHER INFORMATION CONTACT: 

Roger Tilton, Office of Chief Counsel, 
National Highway Traffic Safety Adminis- 
tration, 400 Seventh Street, S.W., 
Washington, D.C. 20590 (202-426-9511). 

SUPPLEMENTARY INFORMATION: In accordance 
with the above. Title 49 of the Code of Federal 
Regulations is amended as follows. 

Part 525, Exemptions From Average Fuel 
Economy Standards, is revised as follows: 

(1) Section 525.6(g) (1) and (2) are deleted and 
replaced with the following: 

(g) Specify and segregate any part of the infor- 
mation and data submitted under this part that the 
petitioner wishes to have withheld from public 
disclosure in accordance with Part 512 of this 
Chapter. 

(2) Section 525.13 is deleted and section 
525.12 is revised to read: 



§ 525.12 Public Inspection of Information. 

(a) Except as provided in paragraph (b), any per- 
son may inspect available information relevant to a 
petition under this Part, including the petition and 
any supporting data, memoranda of informal 
meetings with the petitioner or any other in- 
terested persons, and the notices regarding the 
petition, in the Docket Section of the National 
Highway Traffic Safety Administration. Any per- 
son may obtain copies of the information available 
for inspection under this paragraph in accordance 
with Part 7 of the regulations of the Office of the 
Secretary of Transportation (49 CFR Part 7). 

(b) Except for the release of confidential infor- 
mation authorized by section 505 of the Act and 
Part 512 of this Chapter, information made 
available for public inspection does not include in- 
formation for which confidentiality is requested 
under § 525.6(g) and is granted in accordance with 
Part 512 and sections 502 and 505 of the Act and 
section 552(b) of Title 5 of the United States Code. 

Part 537, Automotive Fuel Economy Reports, is 
revised as follows: 

(1) Section 537.5(c) (7) (i) and (ii) are deleted 
and replaced with the following: 

(7) Specify any part of the information or data 
in the report that the manufacturer believes 
should be withheld from public disclosure as 
trade secret or other confidential business infor- 
mation in accordance with Part 512 of this 
Chapter. 

(2) Section 537.12 is deleted and section 
537.11 is revised to read: 

§ 537.11 Public Inspection of Information. 

(a) Except as provided in paragraph (b), any per- 
son may inspect the information and data submit- 



PART 555; PRE 13 



ted by a manufacturer under this part in the docket 
section of the National Highway Traffic Safety Ad- 
ministration. Any person may obtain copies of the 
information available for inspection under this sec- 
tion in accordance with the regulations of the 
Secretary of Transportation in Part 7 of this title. 

(b) Except for the release of confidential infor- 
mation authorized by section 505 of the Act and 
Part 512 of this Chapter, information made 
available under paragraph (a) for public inspection 
does not include information for which confiden- 
tiality is requested under § 537.5(c) (7) and is 
granted in accordance with Part 512 of this 
Chapter, section 505 of the Act, and section 552(b) 
of Title 5 of the United States Code. 

Part 555, Temporary Exemption From Motor 
Vehicle Safety Standards, is revised as follows: 
(1) Section 555.5(b) (6) is revised to read: 
(6) Specify any part of the information and 

data submitted which petitioner requests be 



withheld from public disclosure in accordance 

with Part 512 of this Chapter. 
(2) Section 555.10(b) is revised to read: 

(b) Except for the release of confidential infor- 
mation authorized by Part 512 of this Chapter, in- 
formation made available for inspection under 
paragraph (a) shall not include materials not rele- 
vant to the petition for which confidentiality is re- 
quested and granted in accordance with sections 
112, 113, and 158 of the Act (15 U.S.C. 1401, 1402, 
and 1418) and section 552(b) of Title 5 of the 
United States Code. 

Issued on December 30, 1980. 



Joan Claybrook 
Administrator 



46 F.R. 2063 
January 8, 1981 



PART 555; PRE 14 



(< 



PART 555— TEMPORARY EXEMPTION FROM MOTOR VEHICLE SAFETY STANDARDS 



§ 555.1 Scope. This part establishes 
requirements for the temporary exemption, by the 
National Highway Traffic Safety Administration 
(NHTSA), of certain motor vehicles from 
compliance with one or more Federal motor 
vehicle safety standards in accordance with section 
123 of the National Traffic and Motor Vehicle 
Safety Act of 1966, 15 U.S.C. 1410. 

§ 555.2 Purpose. The purpose of this part is to 
provide a means by which manufacturers of motor 
vehicles may obtain temporary exemptions from 
Federal motor vehicle safety standards on the 
bases of substantial economic hardship, facilitation 
of the development of new motor vehicle safety or 
low-emission engine features, or existence of an 
equivalent overall level of motor vehicle safety. 

§ 555.3 Application. This part applies to 
manufacturers of motor vehicles. 

§ 555.4 Definitions. 

"Administrator" means the National Highway 
Traffic Safety Administrator or his delegate. 

"United States" means the several States, the 
District of Columbia, the Commonwealth of Puerto 
Rico, Guam, the Virgin Islands, the Canal Zone, 
and American Samoa. 

§ 555.5 Petition for exemption. 

(a) A manufacturer of motor vehicles may 
petition the NHTSA for a temporary exemption 
from any Federal motor vehicle safety standard or 
for a renewal of any exemption on the bases of 
substantial economic hardship, facilitation of the 
development of new motor vehicle safety or low- 
emission engine features, or the existence of an 
equivalent overall level of motor vehicle safety. 

(b) Each petition filed under this part for an 
exemption or its renewal must— 

(1) Be written in the English language; 

(2) Be submitted in three copies to: 



Administrator, National Highway Traffic 
Safety Administration, Washington, D.C. 
20590; 

(3) State the full name and address of the 
applicant, the nature of its organization 
(individual, partnership, corporation, etc.) and the 
name of the State or country under the laws of 
which it is organized; 

(4) State the number and title, and the text or 
substance of the standard or portion thereof from 
which the temporary exemption is sought, and the 
length of time desired for such exemption; 

(5) Set forth the basis for the petition and the 
information required by § 555.6(a), (b), (c), or (d) 
as appropriate. 

[(6) Specify any part of the information and 
data submitted which petitioner requests be 
withheld from public disclosure in accordance 
with Part 512 of this Chapter. 

(7) Set forth the reasons why the granting of 

the exemption would be in the public interest and 

consistent with the objectives of the National 

Traffic and Motor Vehicle Safety Act. 

(c) The knowing and willful submission of false, 

fictitious or fraudulent information will subject the 

petitioner to the civil and criminal penalties of 18 

U.S.C. 1001. (46 F.R. 2063-January 8, 1981. 

Effective: April 9, 1981)1 

§ 555.6 Basis for petition. 

(a) If the basis of the petition is substantial 
economic hardship the petitioner shall provide the 
following information. 

(1) Engineering and financial information 
demonstrating in detail how compliance or failure 
to obtain an exemption would cause substantial 
economic hardship, including— 

(i) A list or description of each item of 
motor vehicle equipment that would have to 
be modified in order to achieve compliance; 



(Rev. 1/Bf81) 



PART 555-1 



(ii) The itemized estimated cost to modify 
each such item of motor vehicle equipment if 
compliance were to be achieved— 

(A) As soon as possible, 

(B) At the end of a one-year exemption 
period, (if the petition is for one year or 
more) 

(C) At the end of a two-year exemption 
period, (if the petition is for two years or 
more) 

(D) At the end of a three-year exemp- 
tion period, (if the petition is for three 
years) 

(iii) The estimated price increase per vehicle to 
balance the total costs incurred pursuant to 
subdivision (ii) of this subparagraph and a state- 
ment of the anticipated effect of each such price 
increase; 

(iv) Corporate balance sheets and income 
statements for the three fiscal years immediately 
preceding the filing of the application; 

(v) Projected balance sheet and income state- 
ment for the fiscal year following a denial of the 
petition; and 

(vi) A discussion of any other hardships 
(e.g., loss of market) that the petitioner desires 
the agency to consider. 

(2) A description of its efforts to comply 
with the standards, including— 

(i) A chronological analysis of such efforts 
showing its relationship to the rulemaking 
history of the standard from which exemption is 
sought; 

(ii) A discussion of alternate means of 
compliance considered and the reasons for 
rejection of each; 

(iii) A description of the steps to be taken, 
while the exemption is in effect, and the 
estimated date by which full compliance will be 
achieved either by design changes or termination 
of production of nonconforming vehicles; and 

(iv) The total number of motor vehicles pro- 
duced by or on behalf of the petitioner in the 
12-month period prior to filing the petition, and 



the inclusive dates of the period. (Section 123 
of the Act limits eligibility for exemption on 
the basis of economic hardship to manufac- 
turers whose total motor vehicle production 
does not exceed 10,000.) 

(b) If the basis of the petition is the development 
or field evaluation of new motor vehicle safety 
features, the petitioner shall provide the following 
information: 

(1) A description of the safety features, and 
research, development, and testing documenta- 
tion establishing the innovational nature of 
such features. 

(2) An analysis establishing that the level of 
safety of the features is equivalent to or exceeds 
the level of safety established in the standard 
from which exemption is sought, including— 

(i) A detailed description of how a motor 
vehicle equipped with the safety features 
differs from one that complies with the 
standard; 

(ii) If applicant is presently manufac- 
turing a vehicle conforming to the standard, 
the results of tests conducted to substantiate 
certification to the standard; and 

(iii) The results of tests conducted on the 
safety features that demonstrate perform- 
ance which meets or exceeds the requirements 
of the standard. 

(3) Substantiation that a temporary exemp- 
tion would facilitate the development or field 
evaluation of the vehicle. 

(4) A statement whether, at the end of the 
exemption period, the manufacturer intends to 
conform to the standard, apply for a further 
exemption, or petition for rulemaking to amend 
the standard to incorporate the safety features. 

(5) A statement that not more than 2,500 
exempted vehicles will be sold in the United 
States in any 12-month period for which an ex- 
emption may be granted pursuant to this 
paragraph. A petition for renewal of such an 
exemption shall also include the total number of 
exempted vehicles sold in the United States 
under the existing exemption. 

(c) If the basis of the petition is the development 
or field evaluation of a low-emission vehicle, the 
petitioner shall provide— 



PART 555-2 



PART 555— TEMPORARY EXEMPTION FROM MOTOR VEHICLE SAFETY STANDARDS 



§ 555.1 Scope. This part establishes 
requirements for the temporary exemption, by the 
National Highway Traffic Safety Administration 
(NHTSA), of certain motor vehicles from 
compliance with one or more Federal motor 
vehicle safety standards in accordance with section 
123 of the National Traffic and Motor Vehicle 
Safety Act of 1966, 15 U.S.C. 1410. 

§ 555.2 Purpose. Thepurposeof thispart is to 
provide a means by which manufacturers of motor 
vehicles may obtain temporary exemptions from 
Federal motor vehicle safety standards on the 
bases of substantial economic hardship, facilitation 
of the development of new motor vehicle safety or 
low-emission engine features, or existence of an 
equivalent overall level of motor vehicle safety. 

§ 555.3 Application. This part applies to 
manufacturers of motor vehicles. 

§ 555.4 Definitions. 

"Administrator" means the National Highway 
Traffic Safety Administrator or his delegate. 

"United States" means the several States, the 
District of Columbia, the Commonwealth of Puerto 
Rico, Guam, the Virgin Islands, the Canal Zone, 
and American Samoa. 

§ 555.5 Petition for exemption. 

(a) A manufacturer of motor vehicles may 
petition the NHTSA for a temporary exemption 
from any Federal motor vehicle safety standard or 
for a renewal of any exemption on the bases of 
substantial economic hardship, facilitation of the 
development of new motor vehicle safety or low- 
emission engine features, or the existence of an 
equivalent overall level of motor vehicle safety. 

(b) Each petition filed under this part for an 
exemption or its renewal must— 

(1) Be written in the English language; 

(2) Be submitted in three copies to: 



Administrator, National Highway Traffic 
Safety Administration, Washington, D.C. 
20590; 

(3) State the full name and address of the 
applicant, the nature of its organization 
(individual, partnership, corporation, etc.) and the 
name of the State or country under the laws of 
which it is organized; 

(4) State the number and title, and the text or 
substance of the standard or portion thereof from 
which the temporary exemption is sought, and the 
length of time desired for such exemption; 

(5) Set forth the basis for the petition and the 
information required by § 555.6(a), (b), (c), or (d) 
as appropriate. 

1(6) Specify any part of the information and 
data submitted which petitioner requests be 
withheld from public disclosure in accordance 
with Part 512 of this Chapter. 

(7) Set forth the reasons why the granting of 

the exemption would be in the public interest and 

consistent with the objectives of the National 

Traffic and Motor Vehicle Safety Act. 

(c) The knowing and willful submission of false, 

fictitious or fraudulent information will subject the 

petitioner to the civil and criminal penalties of 18 

U.S.C. 1001. (46 F.R. 2063-January 8, 1981. 

Effective: April 9, 1981)1 

§ 555.6 Basis for petition. 

(a) If the basis of the petition is substantial 
economic hardship the petitioner shall provide the 
following information. 

(1) Engineering and financial information 
demonstrating in detail how compliance or failure 
to obtain an exemption would cause substantial 
economic hardship, including— 

(i) A list or description of each item of 
motor vehicle equipment that would have to 
be modified in order to achieve compliance; 



(R«v. i/a/ai) 



PART 555-1 



(ii) The itemized estimated cost to modify 
eacii such item of motor vehicle equipment if 
comphance were to be achieved— 

(A) As soon as possible, 

(B) At the end of a one-year exemption 
period, (if the petition is for one year or 
more) 

(C) At the end of a two-year exemption 
period, (if the petition is for two years or 
more) 

(D) At the end of a three-year exemp- 
tion period, (if the petition is for three 
years) 

(iii) The estimated price increase per vehicle to 
balance the total costs incurred pursuant to 
subdivision (ii) of this subparagraph and a state- 
ment of the anticipated effect of each such price 
increase; 

(iv) Corporate balance sheets and income 
statements for the three fiscal years immediately 
preceding the filing of the application; 

(v) Projected balance sheet and income state- 
ment for the fiscal year following a denial of the 
petition; and 

(vi) A discussion of any other hardships 
(e.g., loss of market) that the petitioner desires 
the agency to consider. 

(2) A description of its efforts to comply 
with the standards, including— 

(i) A chronological analysis of such efforts 
showing its relationship to the rulemaking 
history of the standard from which exemption is 
sought; 

(ii) A discussion of alternate means of 
compliance considered and the reasons for 
rejection of each; 

(iii) A description of the steps to be taken, 
while the exemption is in effect, and the 
estimated date by which full compliance will be 
achieved either by design changes or termination 
of production of nonconforming vehicles; and 

(iv) The total number of motor vehicles pro- 
duced by or on behalf of the petitioner in the 
12-month period prior to filing the petition, and 



the inclusive dates of the period. (Section 123 
of the Act limits eligibility for exemption on 
the basis of economic hardship to manufac- 
turers whose total motor vehicle production 
does not exceed 10,000.) 

(b) If the basis of the petition is the development 
or field evaluation of new motor vehicle safety 
features, the petitioner shall provide the following 
information: 

(1) A description of the safety features, and 
research, development, and testing documenta- 
tion establishing the innovational nature of 
such features. 

(2) An analysis establishing that the level of 
safety of the features is equivalent to or exceeds 
the level of safety established in the standard 
from which exemption is sought, including— 

(i) A detailed description of how a motor 
vehicle equipped with the safety features 
differs from one that complies with the 
standard; 

(ii) If applicant is presently manufac- 
turing a vehicle conforming to the standard, 
the results of tests conducted to substantiate 
certification to the standard; and 

(iii) The results of tests conducted on the 
safety features that demonstrate perform- 
ance which meets or exceeds the requirements 
of the standard. 

(3) Substantiation that a temporary exemp- 
tion would facilitate the development or field 
evaluation of the vehicle. 

(4) A statement whether, at the end of the 
exemption period, the manufacturer intends to 
conform to the standard, apply for a further 
exemption, or petition for rulemaking to amend 
the standard to incorporate the safety features. 

(5) A statement that not more than 2,500 
exempted vehicles will be sold in the United 
States in any 12-month period for which an ex- 
emption may be granted pursuant to this 
paragraph. A petition for renewal of such an 
exemption shall also include the total number of 
exempted vehicles sold in the United States 
under the existing exemption. 

(c) If the basis of the petition is the development 
or field evaluation of a low-emission vehicle, the 
petitioner shall provide— 



PART 555-2 



(1) Substantiation that the motor vehicle is 
a low-emission vehicle as defined by section 
123(g) of the Act. 

(2) Research, development, and testing doc- 
umentation establishing that a temporary ex- 
emption would not unreasonably degrade the 
safety of the vehicle, including— 

(i) A detailed description of how the 
motor vehicle equipped with the low-emission 
engine would, if exempted, differ from one 
that complies with the standard; 

(ii) If applicant is presently manufac- 
turing a vehicle conforming to the standard, 
the results of tests conducted to substantiate 
certification to the standard; 

(iii) The results of any tests conducted 
on the vehicle that demonstrate its failure 
to meet the standard, expressed as compara- 
tive performance levels; and 

(iv) Reasons why the failure to meet the 
standard does not unreasonably degrade the 
safety of the vehicle. 

(3) Substantiation that a temporary exemp- 
tion would facilitate the development or field 
evaluation of the vehicle. 

(4) A statement whether, at the end of the 
exemption period, the manufacturer intends 
to conform with the standard. 

(5) A statement that not more than 2,500 
exempted vehicles will be sold in the United 
States in any 12-month period for which an 
exemption may be granted pursuant to this 
paragraph. A petition for renewal of an ex- 
emption shall also include the total number 
of exempted vehicles sold in the United States 
under the existing exemption. 

(d) If the basis of the petition is that the peti- 
tioner is otherwise unable to sell a motor vehicle 
whose overall level of safety is equivalent to or 
exceeds the overall level of safety of non- 
exempted motor vehicles, the petitioner shall 
provide— 

(1) A detailed analysis of how the vehicle 
provides an overall level of safety equivalent 
to or exceeding the overall safety of non-ex- 
empted vehicles, including— 

(i) A detailed description of how the 
motor vehicle, if exempted, differs from one 
that conforms to the standard; 



(ii) A detailed description of any safety 
features that the motor vehicle offers as 
standard equipment that are not required by 
the Federal motor vehicle safety standards; 

(iii) The results of any tests conducted on 
the vehicle demonstrating that it fails to 
meet the standard, expressed as comparative 
performance levels; 

(iv) The results of any tests conducted 
on the vehicle demonstrating that its overall 
level of safety exceeds that which is achieved 
by conformity to the standards. 

(v) Other arguments that the overall level 
of safety of the vehicle equals or exceeds the 
level of safety of non-exempted vehicles. 

(2) Substantiation that compliance would 
prevent the sale of the vehicle. 

(3) A statement whether, at the end of the 
exemption period, the manufacturer intends to 
comply with the standard. 

(4) A statement that not more than 2,500 
exempted vehicles will be sold in the United 
States in any 12-month period for which an 
exemption may be granted pursuant to this 
paragraph. A petition for renewal of any ex- 
emption shall also include the total number of 
exempted vehicles sold in the United States 
under the existing exemption. 



§ 555.7 Processing of petitions. 

(a) The NHTSA publishes in the Federal 
Register, affording opportunity for comment, a 
notice of each petition containing the informa- 
tion required by this part. However, if the 
NHTSA finds that a petition does not contain 
the information required by this part, it so in- 
forms the petitioner, pointing out the areas of 
insufficiency and stating that the petition will not 
receive further consideration until the required 
information is submitted. 

(b) No public hearing, argument or other for- 
mal proceeding is held directly on a petition filed 
under this part before its disposition under this 
section. 

(c) Any interested person may, upon written 
request, appear informally before an appropriate 
official of the NHTSA to discuss a petition for 



PART 555-3 



exemption or the action taken in response to a 
petition. 

(d) If the Administrator determines that the 
petition does not contain adequate justification, he 
denies it and notifes the petitioner in writing. He 
also publishes in the Federal Register a notice of 
the denial and the reasons for it. 

(e) If the Administrator determines that the 
petition contains adequate justification, he grants 
it, and notifies the petitioner in writing. He also 
publishes in the Federal Register a notice of the 
grant and the reasons for it. 

(f) Unless a later effective date is specified in the 
notice of the grant, temporary exemption is effec- 
tive upon publication of the notice in the Federal 
Register and exempts vehicles manufactured on 
and after the effective date. 

§ 555.8 Termination of temporary exemptions. 

(a) A temporary exemption from a standard 
granted on the basis of substantial economic hard- 
ship terminates according to its terms but not later 
than 3 years after the date of issuance unless 
terminated sooner pursuant to paragraph (d) of 
this section. 

(b) A temporary exemption from a standard 
granted on a basis other than substantial economic 
hardship terminates according to its terms but not 
later than 2 years after the date of issuance unless 
terminated sooner pursuant to subparagraph (d). 

(c) Any interested person may petition for the 
termination or modification of an exemption 
granted under this part. The petition will be pro- 
cessed in accordance with the procedures of Part 
552 of this chapter. 

(d) The Administrator terminates or modifies a 
temporary exemption if he determines that— 

(1) The temporary exemption is no longer con- 
sistent with the public interest and the objectives 
of the Act; or 

(2) The temporary exemption was granted on 
the basis of false, fraudulent, or misleading 
representations or information. 

(e) If a petition for renewal of a temporary 
exemption that meets the requirements of § 555.5 
has been filed not later than 60 days before the 
termination date of an exemption, the exemption 
does not terminate until the Administrator grants 
or denies the petition for renewal. 



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

(i) a petition for termination or modification of 
an exemption and the action taken in response to 
it; and 

(ii) any termination or modification of an 
exemption pursuant to the Administrator's own 
motion. 



§ 555.9 Temporary exemption iabels. A 

manufacturer of an exempted vehicle shall— 

(a) Submit to the Administrator, within 30 days 
after receiving notification of the grant of an 
exemption, a sample of the certification label 
required by PART 567 of this chapter and 
paragraph (c) of this section; 

(b) Affix securely to the windshield or side 
window of each exempted vehicle a label in the 
English language containing the statement re- 
quired by paragraph (c) (1) or (c) (2) of this section, 
and with the words "SHOWN ABOVE" omitted. 

(c) Meet all applicable requirements of Part 567 
of this chapter, except that— 

(1) Instead of the statement required by 
S 567.4(g) (5) of this Chapter, the following state- 
ment shall appear: "THIS VEHICLE CON- 
FORMS TO ALL APPLICABLE FEDERAL 
MOTOR VEHICLE SAFETY [AND BUMPER) 
STANDARDS IN EFFECT ON THE DATE OF 
MANUFACTURE SHOWN ABOVE EXCEPT 
FOR STANDARDS NOS. [Listing the stand- 
ards by number and title for which an exem.ption 
has been granted]. EXEMPTED PURSUANT 
TO NHTSA EXEMPTION NO 

(2) Instead of the statement required by 
§ 567..5(c) (7) (iii), the following statement shall 
appear: THIS VEHICLE CONFORMS TO ALL 
APPLICABLE FEDERAL MOTOR VEHICLE 
SAFETY [AND BUMPER) STANDARDS IN 
EFFECT IN [Month, Year] EXCEPT FOR 
STANDARD NOS. [Listing the standards by 
number and title for which an exemption has 
been granted). EXEMPTED PURSUANT TO 
NHTSA EXEMPTION NO 



(Rev. 10/19/82) 



PART 555-4 



(1) Substantiation that the motor vehicle is 
a low-emission vehicle as defined by section 
123(g)of the Act. 

(2) Research, development, and testing doc- 
umentation establishing that a temporary ex- 
emption would not unreasonably degrade the 
safety of the vehicle, including— 

(i) A detailed description of how the 
motor vehicle equipped with the low-emission 
engine would, if exempted, differ from one 
that complies with the standard; 

(ii) If applicant is presently manufac- 
turing a vehicle conforming to the standard, 
the results of tests conducted to substantiate 
certification to the standard; 

(iii) The results of any tests conducted 
on the vehicle that demonstrate its failure 
to meet the standard, expressed as compara- 
tive performance levels; and 

(iv) Reasons why the failure to meet the 
standard does not unreasonably degrade the 
safety of the vehicle. 

(3) Substantiation that a temporary exemp- 
tion would facilitate the development or field 
evaluation of the vehicle. 

(4) A statement whether, at the end of the 
exemption period, the manufacturer intends 
to conform with the standard. 

(5) A statement that not more than 2,500 
exempted vehicles will be sold in the United 
States in any 12-month period for which an 
exemption may be granted pursuant to this 
paragraph. A petition for renewal of an ex- 
emption shall also include the total number 
of exempted vehicles sold in the United States 
under the existing exemption. 

(d) If the basis of the petition is that the peti- 
tioner is otherwise unable to sell a motor vehicle 
whose overall level of safety is equivalent to or 
exceeds the overall level of safety of non- 
exempted motor vehicles, the petitioner shall 
provide— 

(1) A detailed analysis of how the vehicle 
provides an overall level of safety equivalent 
to or exceeding the overall safety of non-ex- 
empted vehicles, including— 

(i) A detailed description of how the 
motor vehicle, if exempted, differs from one 
that conforms to the standard; 



(ii) A detailed description of any safety 
features that the motor vehicle offers as 
standard equipment that are not required by 
the Federal motor vehicle safety standards; 

(iii) The results of any tests conducted on 
the vehicle demonstrating that it fails to 
meet the standard, expressed as comparative 
performance levels; 

(iv) The results of any tests conducted 
on the vehicle demonstrating that its overall 
level of safety exceeds that which is achieved 
by conformity to the standards. 

(v) Other arguments that the overall level 
of safety of the vehicle equals or exceeds the 
level of safety of non-exempted vehicles. 

(2) Substantiation that compliance would 
prevent the sale of the vehicle. 

(3) A statement whether, at the end of the 
exemption period, the manufacturer intends to 
comply with the standard. 

(4) A statement that not more than 2,500 
exempted vehicles will be sold in the United 
States in any 12-month period for which an 
exemption may be granted pursuant to this 
paragraph. A petition for renewal of any ex- 
emption shall also include the total number of 
exempted vehicles sold in the United States 
under the existing exemption. 



§ 555.7 Processing of petitions. 

(a) The NHTSA publishes in the Federal 
Register, affording opportunity for comment, a 
notice of each petition containing the informa- 
tion required by this part. However, if the 
NHTSA finds that a petition does not contain 
the information required by this part, it so in- 
forms the petitioner, pointing out the areas of 
insufficiency and stating that the petition will not 
receive further consideration until the required 
information is submitted. 

(b) No public hearing, argument or other for- 
mal proceeding is held directly on a petition filed 
under this part before its disposition under this 
section. 

(c) Any interested person may, upon written 
request, appear informally before an appropriate 
official of the NHTSA to discuss a petition for 



PART 555-3 



exemption or the action taken in response to a 
petition. 

(d) If the Administrator determines that the 
petition does not contain adequate justification, he 
denies it and notifes the petitioner in writing. He 
also publishes in the Federal Register a notice of 
the denial and the reasons for it. 

(e) If the Administrator determines that the 
petition contains adequate justification, he grants 
it, and notifies the petitioner in writing. He also 
publishes in the Federal Register a notice of the 
grant and the reasons for it. 

(f) Unless a later effective date is specified in the 
notice of the grant, temporary exemption is effec- 
tive upon publication of the notice in the Federal 
Register and exempts vehicles manufactured on 
and after the effective date. 

§ 555.8 Termination of temporary exemptions. 

(a) A temporary exemption from a standard 
granted on the basis of substantial economic hard- 
ship terminates according to its terms but not later 
than 3 years after the date of issuance unless 
terminated sooner pursuant to paragraph (d) of 
this section. 

(b) A temporary exemption from a standard 
granted on a basis other than substantial economic 
hardship terminates according to its terms but not 
later than 2 years after the date of issuance unless 
terminated sooner pursuant to subparagraph (d). 

(c) Any interested person may petition for the 
termination or modification of an exemption 
granted under this part. The petition will be pro- 
cessed in accordance with the procedures of Part 
552 of this chapter. 

(d) The Administrator terminates or modifies a 
temporary exemption if he determines that— 

(1) The temporary exemption is no longer con- 
sistent with the public interest and the objectives 
of the Act; or 

(2) The temporary exemption was granted on 
the basis of false, fraudulent, or misleading 
representations or information. 

(e) If a petition for renewal of a temporary 
exemption that meets the requirements of § 555.5 
has been filed not later than 60 days before the 
termination date of an exemption, the exemption 
does not terminate until the Administrator grants 
or denies the petition for renewal. 



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

(i) a petition for termination or modification of 
an exemption and the action taken in response to 
it; and 

(ii) any termination or modification of an 
exemption pursuant to the Administrator's own 
motion. 



§ 555.9 Temporary exemption labels. A 

manufacturer of an exempted vehicle shall— 

(a) Submit to the Administrator, within 30 days 
after receiving notification of the grant of an 
exemption, a sample of the certification label 
required by PART 567 of this chapter and 
paragraph (c) of this section; 

(b) Affix securely to the windshield or side 
window of each exempted vehicle a label in the 
English language containing the statement re- 
quired by paragraph (c) (1) or (c) (2) of this section, 
and with the words "SHOWN ABOVE" omitted. 

(c) Meet all applicable requirements of Part 567 
of this chapter, except that— 

(1) Instead of the statement required by 
§ 567.4(g) (5) of this Chapter, the following state- 
ment shall appear: "THIS VEHICLE CON- 
FORMS TO ALL APPLICABLE FEDERAL 
MOTOR VEHICLE SAFETY (AND BUMPERJ 
STANDARDS IN EFFECT ON THE DATE OF 
MANUFACTURE SHOWN ABOVE EXCEPT 
FOR STANDARDS NOS. [Listing the stand- 
ards by number and title for which an exemption 
has been granted]. EXEMPTED PURSUANT 
TO NHTSA EXEMPTION NO. 

(2) Instead of the statement required by 
§ 567.5(c) (7) (iii), the following statement shall 
appear: THIS VEHICLE CONFORMS TO ALL 
APPLICABLE FEDERAL MOTOR VEHICLE 
SAFETY [AND BUMPERl STANDARDS IN 
EFFECT IN [Month, Year] EXCEPT FOR 
STANDARD NOS. [Listing the standards by 
number and title for which an exemption has 
been granted). EXEMPTED PURSUANT TO 
NHTSA EXEMPTION NO. 



(Rev. 10/19/82) 



PART 555-4 



§ 555.10 Availability for public Inspection. 

(a) Information relevant to a petition under this 
part, including the petition and supporting data, 
memoranda of informal meetings with the 
petitioner or any other interested person, and the 
grant or denial of the petition, is available for 
public inspection, except as specified in paragraph 
(b) of this section, in the Docket Section, Room 
5109, National Highway Traffic Safety 
Administration, 400 Seventh Street, S.W., 
Washington, D.C. 20590. Copies of available 
information may be obtained, as provided in Part 7 
of the regulations of the Office of the Secretary of 
Transportation (49 CFR Part 7). 



1(b) Except for the release of confidential 
information authorized by Part 512 of this 
Chapter, information made available for inspection 
under paragraph (a) shall not include materials not 
relevant to the petition for which confidentiality is 
requested and granted in accordance with sections 
112, 113, and 158 of the Act (15 U.S.C. 1401, 1402, 
and 1418) and section 552(b) of Title 5 of the 
United States Code. (46 F.R. 2063-January 8, 
1981. Effective: April 9, 1981)1 



38 F.R. 2693 
January 29, 1973 



(R«v. 1/8/81) 



PART 555-5-6 



§ 555.10 Availability for public Inspection. 

(a) Information relevant to a petition under this 
part, including the petition and supporting data, 
memoranda of informal meetings with the 
petitioner or any other interested person, and the 
grant or denial of the petition, is available for 
public inspection, except as specified in paragraph 
(b) of this section, in the Docket Section, Room 
5109, National Highway Traffic Safety 
Administration, 400 Seventh Street, S.W., 
Washington, D.C. 20590. Copies of available 
information may be obtained, as provided in Part 7 
of the regulations of the Office of the Secretary of 
Transportation (49 CFR Part 7). 



[(b) Except for the release of confidential 
information authorized by Part 512 of this 
Chapter, information made available for inspection 
under paragraph (a) shall not include materials not 
relevant to the petition for which confidentiality is 
requested and granted in accordance with sections 
112, 113, and 158of the Act(15U.S.C. 1401, 1402, 
and 1418) and section 552(b) of Title 5 of the 
United States Code. (46 F.R. 2063- January 8, 
1981. Effective: April 9, 1981)1 



38 F.R. 2693 
January 29, 1973 



(Rev. 1/8/ai) 



PART 555-5-6 



Effective: March 9, 1977 



PREAMBLE TO PART 556— EXEMPTION FOR INCONSEQUENTIAL DEFECT 

OR NONCOMPLIANCE 

(Docket No. 75-21; Notice 2) 



This notice amends Title 49 of the Code of 
Federal Reg:iilations to add Part r)56, "Exemp- 
tion for Inconsequential Defect or Noncom- 
pliance," which establishes procedures for 
petitioning by manufacturers for exemption from 
notice and remedy requirements of the National 
Traffic and Motor Vehicle Safety Act on grounds 
that a defect or noncompliance is inconsequential 
as it relates to motor vehicle safety. 

A notice of proposed rulemaking to establish 
Part 556 was published in the FEDERAL REG- 
ISTER on Au^ist 25, 1975 (40 FR 37047). 
Fifteen comments were received from vehicle and 
equipment manufacturers and trade associations 
representing these groups. The National Motor 
Vehicle Safety Advisory Council did not take a 
position on the proposal. The Vehicle Equip- 
ment Safety Commission did not comment on the 
proposal. 

The NHTSA is adding Part 556 to Title 49 to 
establish procedures that will implement the leg- 
islative mandate of section 157 of the National 
Traffic and Motor Vehicle Safety Act (the Act) 
(as amended by Pub. L. 93-492, 88 Stat. 1470, 
October 27, 1974; 15 U.S.C. 1417). The new 
regulation prescribes procedures for the submis- 
sion of petitions, including filing time and peti- 
tion content. Other provisions are included 
concerning the processing and disposition of pe- 
titions, meetings to present oral comments, and 
the rescission of exemptions. 

Conmients on the proposal were in agreement 
with the intent of the legulation. Several com- 
ment" suggested modification of certain sections 
with respect to content and language. 

International Harvester (IH) requested that 
the proposed language of sections 556.1 and 556.2 
of Part 556 be modified to ensure that the re- 



quirements for notification and remedy would be 
suspended pending a determination on the in- 
consequentiality petition. 

It is the agency's view that the modifications 
recommended by IH are unnecessary. Wlien the 
agency initially determines that a defect or non- 
compliance has occurred, it notifies the manufac- 
turer who is provided a 30-day period in which 
to submit an inconsequentiality petition. The 
manufacturer's duty to notify and remedy does 
not become mandatory until tlie agency makes 
two final determinations: the first, that a non- 
compliance or defect in fact exists, and the second, 
that it is not inconsequential. These determina- 
tions are not made until after receipt of submis- 
sions, written and oral, from the manufacturer 
and other interested parties. Under Part 556, 
the agency would dispose of the petition for in- 
consequentiality concurrently with its final deter- 
mination of a defect or noncompliance. Therefore, 
the notification and remedy provisions would 
never become effective until there has been a 
final determination of the petition for inconse- 
quentiality. 

When a manufacturer determines that a defect 
or noncompliance exists, on the other hand, he 
will be exempted temporarily from notice and 
remedy requirements until the NHTSA finally 
disposes of his petition for exemption. The 
agency interprets the requirement in the proposed 
amendment to Part 577 that manufacturers pro- 
vide notification of a defect or noncompliance 
unless exempted by the Administrator pursuant 
to section 157 of the Act to mean that notification 
need not occur until after the disposition of an 
inconsequentiality petition. 

Association Peugeot-Renault suggested that the 
phrase "has determined" in the first sentence of 
paragraph 556.4(a) be changed to "has finally 



PART 556— PRE 1 



Effective: March 9. 1977 



determined" for purposes of clarification. There 
is no distinction between these phrases with re- 
spect to manufacturer-initiated determinations of 
a defect or noncompliance. The distinction be- 
comes meaningful only when the NHTSA makes 
an initial determination as opposed to a final 
determination. Therefore, the agency has de- 
cided to retain the language "has detennined," 
since it is not ambiguous, and it is consistent 
with Parts 573 and 577. 

Comments were received from American 
Motors Corporation (AMC), Volkswagen, Chrys- 
ler, General Motors (GM), and the Motor Vehicle 
Manufacturers Association (MVMA) requesting 
clarification of the use of the term "defect" in 
the regulation. These connnents expressed the 
opinion that the legislative history of section 157 
of the Act as well as other provisions of the Act 
clearly indicate that any defect requiring action 
must be related to motor vehicle safety. 

The NHTSA agrees that the Act and its under- 
lying history are directed to manufacturer re- 
sponsibility for defects that relate to motor 
vehicle safety. In view of possible ambiguity in 
the use of the word "defect" alone, the qualifying 
words "related to motor vehicle safety" have been 
added throughout tlie regulation where appro- 
priate. 

The agency is modifying paragraph (b) (4) of 
section 556.4 to require submission of the number 
of motor vehicles or replacement equipment and 
the period in which they were produced for 
which an exemption is sought. This infomiation 
is considered necessary and falls within the ambit 
of the proposal. 

Several commenters suggested that the agency 
delete paragraph (c) of section 556.4, because 18 
U.S.C. 1001 applies to all willful submissions of 
false information to any department or agency 
from any source, thereby making paragraph (c) 
redundant. Tlie agency agrees that the reference 
to this criminal penalty is not necessary to the 
purpose of the regulation, and it is, therefore, 
deleted. 

Many commenters requested a change in para- 
graph (d) of section 556.4. AMC, Chrysler, GM, 
and the MVMA all requested that the 15-day 
time limit on petitions be deleted. They argued 
that manufacturere should be able to petition 



within a reasonable time after a defect is deter- 
mined to exist as allowed in Part 577. This may 
not occur until after the final determination is 
made by the NHTSA. 

The agency has concluded that the modification 
described above would unduly delay remedy of 
defects and noncompliances, as well as enforce- 
ment and compliance actions. The requested 
modification would allow a manufacturer to pro- 
ceed through an agency-initiated defect determi- 
nation, and tlien, within a reasonable time, 
petition for a determination of inconsequentiality. 
This sei-ial procedure would be time-consuming 
and redundant, allowing potentially dangerous 
vehicles to go unremedied longer than necessary. 
It is true that Part 577 specifies notification of 
the public within a "reasonable time" (conform- 
ing to the requirements of § 153(b)(1) of the 
Act) in the case of a manufacturer's determina- 
tion. Reasonable time is appropriate in the 
context of Part 577, since notification might need 
to be made to thousands of individuals. Part 556 
requires only the filing of a single petition and, 
therefore, should be subject to a time limitation. 

White Motor Company and IH proposed that 
the NHTSA define 15 days to mean 15 working 
days. Association Peugeot-Renault and Uni- 
royal, on the other hand, suggested that the 
agency extend the time limit to 30 days. Some 
commenters pointed out that the proposed re- 
quirement of receipt of the petition within 15 
days might leave the manufacturer with only 
four working days to conduct tests and draft the 
petitions. After careful consideration, the 
NHTSA has decided to require petitions to be 
submitted within 30 days. This provides a reason- 
able limit on the time for filing a petition for 
exemption. Moreover, it assures that all submis- 
sions will be received prior to the meeting au- 
thorized under section 152(a) of the Act. 

The MVMA and GM suggested that the lan- 
guage in paragraph (3) (i) of section 556.5 be 
changed for clarity. They argued that the word- 
ing of that paragraph indicates that a public 
meeting prior to the disposition of a petition for 
exemption is mandatory. Their modification 
would require someone to request a meeting be- 
fore the NHTSA would establish a time and 
place for it. 



PART 556— PRE 2 



EfFecHve: March 9, 1977 



PREAMBLE TO PART 556— EXEMPTION FOR INCONSEQUENTIAL DEFECT 

OR NONCOMPLIANCE 

(Docket No. 75-21; Notice 2) 



This notice amends Title 49 of the Code of 
Federal Regulations to add Part 556, "Exemp- 
tion for Inconsequential Defect or Noncom- 
pliance," which establishes procedures for 
petitioning by manufacturers for exemption from 
notice and remedy requirements of the National 
Traffic and Motor Vehicle Safety Act on grounds 
that a defect or noncompliance is inconsequential 
as it relates to motor vehicle safety. 

A notice of proposed rulemaking to establish 
Part 556 was published in the FEDERAL REG- 
ISTER on August 25, 1975 (40 FR 37047). 
Fifteen comments were received from vehicle and 
equipment manufacturers and trade associations 
representing these groups. The National Motor 
Vehicle Safety Advisory Council did not take a 
position on the proposal. The Vehicle Equip- 
ment Safety Commission did not comment on the 
proposal. 

The NHTSA is adding Part 556 to Title 49 to 
establish procedures that will implement the leg- 
islative mandate of section 157 of the National 
Traffic and Motor Vehicle Safety Act (the Act) 
(as amended by Pub. L. 93-492, 88 Stat. 1470, 
October 27, 1974; 15 U.S.C. 1417). The new 
regulation prescribes procedures for the submis- 
sion of petitions, including filing time and peti- 
tion content. Other provisions are included 
concerning the processing and disposition of pe- 
titions, meetings to present oral comments, and 
the rescission of exemptions. 

Comments on the proposal were in agreement 
with the intent of the regulation. Several com- 
ments suggested modification of certain sections 
with respect to content and language. 

International Harvester (IH) requested that 
the proposed language of sections 556.1 and 556.2 
of Part 556 be modified to ensure that the re- 



quirements for notification and remedy would be 
suspended pending a determination on the in- 
consequent iality petition. 

It is the agency's view that the modifications 
recommended by IH are unnecessary. When the 
agency initially determines that a defect or non- 
compliance has occurred, it notifies the manufac- 
turer who is provided a 30-day period in which 
to submit an inconsequentiality petition. The 
manufacturer's duty to notify and remedy does 
not become mandatory until the agency makes 
two final determinations: the first, that a non- 
compliance or defect in fact exists, and the second, 
that it is not inconsequential. These determina- 
tions are not made until after receipt of submis- 
sions, written and oral, from the manufacturer 
and other interested parties. Under Part 556, 
the agency would dispose of the petition for in- 
consequentiality concurrently with its final deter- 
mination of a defect or noncompliance. Therefore, 
the notification and remedy provisions would 
never become effective until there has been a 
final determination of the petition for inconse- 
quentiality. 

When a manufacturer determines that a defect 
or noncompliance exists, on the other hand, he 
will be exempted temporarily from notice and 
remedy requirements until the NHTSA finally 
disposes of his petition for exemption. The 
agency interprets the requirement in the proposed 
amendment to Part 577 that manufacturers pro- 
vide notification of a defect or noncompliance 
unless exempted by the Administrator pursuant 
to section 157 of the Act to mean that notification 
need not occur until after the disposition of an 
inconsequentiality petition. 

Association Peugeot-Renault suggested that the 
phrase "has determined" in the first sentence of 
paragraph 556.4(a) be changed to "has finally 



PART 556— PRE 1 



Effective: Morch 9, 1977 



determined" for purposes of clarification. There 
is no distinction between these phrases with re- 
spect to manufacturer-initiated determinations of 
a defect or noncompliance. The distinction be- 
comes ineaninfjful only when the NHTSA makes 
an initial determination as opposed to a final 
determination. Therefore, the agency has de- 
cided to retain the language "has detennined," 
since it is not ambiguous, and it is consistent 
with Parts 573 and 577. 

Comments were received from American 
Motors Corporation (AMC), Volkswagen, Chrys- 
ler, General Motors (GM), and the Motor Vehicle 
Manufacturers Association (MVMA) requesting 
clarification of the use of the term "defect" in 
the regulation. These conunents expressed the 
opinion that the legislative history of section 157 
of the Act as well as other provisions of the Act 
clearly indicate that any defect requiring action 
must be related to motor vehicle safety. 

The NHTSA agrees that the Act and its under- 
lying history are directed to manufacturer re- 
sponsibility for defects that relate to motor 
vehicle safety. In view of possible ambiguity in 
the use of the word "defect" alone, the qualifying 
words "related to motor vehicle safety" have been 
added throughout the regulation where appro- 
priate. 

The agency is modifying paragraph (b) (4) of 
section 556.4 to require submission of the number 
of motor vehicles or replacement equipment and 
the period in which they were produced for 
which an exemption is sought. This information 
is considered necessary and falls within the ambit 
of the proposal. 

Several commenters suggested that the agency 
delete paragi'aph (c) of section 556.4, because 18 
U.S.C. 1001 applies to all willful submissions of 
false information to any department or agency 
from any source, thereby making paragraph (c) 
redundant. The agency agrees that the reference 
to this criminal penalty is not necessary to the 
purpose of the regulation, and it is, therefore, 
deleted. 

Many commenters requested a change in para- 
graph (d) of section 556.4. AMC, Chrysler, GM, 
and the MVMA all requested that the 15-day 
time limit on petitions be deleted. They argued 
that manufactuiers should be able to petition 



within a reasonable time after a defect is deter- 
mined to exist as allowed in Part 577. This may 
not occur until after the final determination is 
made by the NHTSA. 

The agency has concluded that the modification 
described above would unduly delay remedy of 
defects and noncompliances, as well as enforce- 
ment and compliance actions. The requested 
modification would allow a manufacturer to pro- 
ceed through an agency-initiated defect determi- 
nation, and then, within a reasonable time, 
petition for a determination of inconsequentiality. 
This serial procedure would be time-consuming 
and redundant, allowing potentially dangerous 
vehicles to go unremedied longer than necessary. 
It is true that Part 577 specifies notification of 
the public within a "reasonable time" (conform- 
ing to the requirements of § 153(b)(1) of the 
Act) in the case of a manufacturers determina- 
tion. Reasonable time is appropriate in the 
context of Part 577, since notification might need 
to be made to thousands of individuals. Part 556 
requires only the filing of a single petition and, 
therefore, should be subject to a time limitation. 

White Motor Company and IH proposed that 
the NHTSA define 15 days to mean 15 working 
days. Association Peugeot -Renault and Uni- 
royal, on the other hand, suggested that the 
agency extend the time limit to 30 days. Some 
commenters pointed out that the proposed re- 
quirement of receipt of the petition within 15 
days might leave the manufacturer with only 
four working days to conduct tests and draft the 
petitions. After careful consideration, the 
NHTSA has decided to require petitions to be 
submitted within 30 days. This provides a reason- 
able limit on the time for filing a petition for 
exemption. Moreover, it assures that all submis- 
sions will be received prior to the meeting au- 
thorized under section 152(a) of the Act. 

The MVMA and GM suggested that the lan- 
guage in paragraph (3) (i) of section 556.5 be 
changed for clarity. They argued that the word- 
ing of that paragraph indicates that a public 
meeting prior to the disposition of a petition for 
exemption is mandatory. Their modification 
would require someone to request a meeting be- 
fore the NHTSA would establish a time and 
place for it. 



PART 556— PRE 2 



Effective: March 9, 1977 



This aspect of para<rraph (3) (i) was proposed 
to allow the ajrency to publish the time and loca- 
tion of a meetinsT concurrently with the publica- 
tion in the FEDERAL REGISTER of the 
manufacturer's petition for an inconsequentiality 
determination. Since issuance of the proposal, 
the airency has had more experience with section 
IM petitions. To date meetin<js have not been 
required for disposition of these petitions. There- 
fore, the final rule incorporates the lanj^ua^e 
suirpested by the MVMA and GM to establish 
that public meetinjrs will be held "upon request 
of the petitioner or interested persons." 

^fany comnienters requested that parajrraph 
(a)(3)(ii) of section .556.5 be amended to allow 
the manufacturer to choose to have a meeting on 
the inconsequentiality petition that is separate 
from a ineetinjr held pursuant to section 152(a) 
of the Act. These commenters believe that preju- 
dice may result if they are required to ar^ie 
simultaneously that no defect or noncompliance 
exists and that any defect or noncompliance that 
may be found is inconsequential. 

The lansruape of section 556.4 paraofraph (d) 
was intended to ensure that a petition for incon- 
sequentiality would not constitute a concession of 
the existence of a defect. Consideration of the 
petition at the section 1.52(a) meeting is analogous 
to the consideration of more formal alternative 
pleadings in other lejral forums. Separate hear- 
inps or meetings are not held merely because 
there exist two alternative defenses. Therefore, 
the agency does not agree that the consolidation 
of the two arguments would result in prejudice. 
Accordingly, the request for separate meetings is 
denied. 

Several comments were made concerning a 
modification of section 556.6 to require formal 
adversarial hearings. The meetings proposed by 
the agency are fact-finding, not adversarial. The 
purpose of the meetings is to yield further infor- 
mation to facilitate the decision-making process. 
The informal meeting process is less time- 
consuming than advei-sarial proceedings and it 
yields equally reliable factual information. Fur- 
ther. Congress has authorized the agency in sec- 
tion 157 of the Act to proceed informally. The 
agency will retain, therefore, the informal meet- 
ing procedure. 



Association Peugeot -Renault would delete the 
last sentence in paragraph (b) of section 556.6. 
They believed that a decision made by the 
NHTSA on an inconsequentiality petition should 
be based entirely upon matters covered at a meet- 
ing. The agency does not agree. These meetings 
serve to gather information. They are a supple- 
ment to other sources of information utilized by 
the NHTSA. Decisions must be based upon 
thorough consideration of all information re- 
ceived from all sources. 

The NHTSA in deciding section 157 petitions 
has afforded an opportunity for manufacturers 
to appeal the denial of an exemption based upon 
inconsequentiality of defect or noncompliance. 
The agency intends to continue this process and, 
in addition, to allow any interested person to 
appeal the grant or denial of an exemption by 
submitting written data, views, or arguments. 
To reflect this policy, the agency modifies the 
proposed section 556.7 to allow an appeal proce- 
dure within the agency. 

Several commenters requested minor modifica- 
tions of section 556.8. GM suggested that the 
agency publish guidelines to establish procedures 
for rescission of an exemption. The agency con- 
cludes that the section provides sufficient guide- 
lines for the rescission process. No rescission will 
be made prior to the receipt of new data and 
notice and opportunity to comment thereon. In 
the unlikely circumstance that procedure proves 
to be insufficient, future opportunity exists for a 
revision of the procedures. A minor modification 
of the wording of section 556.8 is made for 
clarity. 

AMC, MVMA, and GM suggested that the 
agency amend section 556.9 to state that confi- 
dential material would not be subject to public 
inspection. The agency has determined that this 
modification is unnecessary. Section 112 para- 
graph (e) of the Act defines the limits for the 
release of confidential matei'ial. A repetition of 
this restriction in Part 556 would be redundant. 

In accordance with recently enunciated Depart- 
ment of Transportation policy encouraging ade- 
([uate analysis of the consequences of regidatory 
action (41 FR 16200; April 16, 1976), the agency 
herewith summarizes its evaluation of the eco- 



PART 556— PRE 3 



Effective: March 9, 1977 

nomic and other consequences of this action on 
the public and private sectors, including possible 
loss of safety benefits. Since this part is merely 
procedural and fulfills the mandate of section 157 
of the Act, there will be at most minimal costs 
associated with its implementation and no loss of 
safety benefits. 

In consideration of the foregoing. Title 49, 
Code of Federal Regulations, is amended by the 
addition of a new Part 556 titled "Exemption 
for Inconsequential Defect or Noncompliance." 



Effective date : March 9, 1977. 

(Sec. 102, Pub. L. 93-492, 88 Stat. 1470 (15 
U.S.C. 1417) ; delegation of authority at 49 CFR 
1.50.) 

Issued on January 31, 1977. 

John W. Snow 
Administrator 

42 F.R. 7145 
February 7, 1977 



PART 556— PRE 4 



( 



Effective: March 9, 1977 



This aspect of paragrraph (3) (i) was proposed 
to allow the agency to publish the time and loca- 
tion of a meetinsr concurrently with the publica- 
tion in the FEDERAL REGISTER of the 
manufacturer's petition for an inconsequentiality 
determination. Since issuance of the proposal, 
the aironcy has had more experience with section 
157 petitions. To date meeting have not been 
required for disposition of these petitions. There- 
fore, the final rule incorporates the lannfuafre 
su<r<rested by the MVMA and GM to establish 
that public meetin<rs will be held "upon request 
of the petitioner or interested persons." 

Many commenters requested that paragraph 
(a) (3) (ii) of section 5.56.5 be amended to allow 
the manufacturer to choose to have a meeting on 
the inconsequentiality petition that is separate 
from a meeting held pursuant to section 152(a) 
of the Act. These commenters believe that preju- 
dice may result if they are required to argue 
simultaneously that no defect or noncompliance 
exists and that any defect or noncompliance that 
may be foimd is inconsequential. 

The language of section 556.4 paragraph (d) 
was intended to ensure that a petition for incon- 
sequentiality would not constitute a concession of 
the existence of a defect. Consideration of the 
petition at the section 152(a) meeting is analogous 
to the consideration of more formal alternative 
pleadings in other legal forums. Separate hear- 
ings or meetings are not held merely because 
there exist two alternative defenses. Therefore, 
the agency does not agree that the consolidation 
of the two argimients would result in prejudice. 
Accordingh", the request for separate meetings is 
denied. 

Several comments were made concerning a 
modification of section 556.6 to require formal 
adversarial hearings. The meetings proposed by 
the agency are fact-finding, not adversarial. The 
purpose of the meetings is to yield further infor- 
mation to facilitate the decision-making process. 
The informal meeting process is less time- 
consumii\g than adversarial proceedings and it 
yields equally reliable factual information. Fur- 
ther, Congress has authorized the agency in sec- 
tion 1.57 of the Act to proceed informally. The 
agency will retain, therefore, the informal meet- 
ing procedure. 



Association Peugeot-Renault would delete the 
last sentence in paragraph (b) of section 556.6. 
They believed that a decision made by the 
NHTSA on an inconsequentiality petition should 
be based entirely upon matters covered at a meet- 
ing. The agency does not agree. These meetings 
serve to gather information. They are a supple- 
ment to other sources of information utilized by 
the NHTSA. Decisions must be based upon 
thorough consideration of all information re- 
ceived from all sources. 

The NHTSA in deciding section 157 petitions 
has afforded an opportunity for manufacturers 
to appeal the denial of an exemption based upon 
inconsequentiality of defect or noncompliance. 
The agency intends to continue this process and, 
in addition, to allow any interested person to 
appeal the grant or denial of an exemption by 
submitting written data, views, or argiunents. 
To reflect this policy, the agency modifies the 
proposed section 556.7 to allow an appeal proce- 
dure within the agency. 

Several commenters requested minor modifica- 
tions of section 556.8. GM suggested that the 
agency publish guidelines to establish procedures 
for rescission of an exemption. The agency con- 
cludes that the section provides sufficient guide- 
lines for the re^scission process. No rescission will 
be made prior to the receipt of new data and 
notice and opportunity to comment thereon. In 
the unlikely circumstance that procedure proves 
to be insufficient, future opportunity exists for a 
revision of the procedures. A minor modification 
of the wording of section 556.8 is made for 
clarity. 

AMC, MVMA, and GM suggested that the 
agency amend section 556.9 to state that confi- 
dential material would not be subject to public 
inspection. The agency has determined that this 
modification is unnecessary. Section 112 para- 
graph (e) of the Act defines the limits for the 
release of confidential material. A repetition of 
this restriction in Part 556 would be redundant. 

In accordance with recently enunciated Depart- 
ment of Transportation policy encouraging ade- 
quate analysis of the consequences of regulatory 
action (41 FR 16200; April 16, 1976), the agency 
herewith sununarizes its evaluation of the eco- 



PART 556— PRE 3 



Effeclive: March 9, 1977 

noinic and other consequences of this action on Effective date: March 9, 1977. 

the public and private sectors, including possible (gee. 102, Pub. L. 93-492, 88 Stat. 1470 (15 

loss of safety benefits. Since this part is merely U.S.C. 1417) ; delegation of authority at 49 CFR 

procedural and fulfills the mandate of section 157 1.50.) 

of the Act, there will be at most minimal costs jggyg^j ^^ January 31, 1977. 

associated with its implementation and no loss of 

safety benefits. John W. Snow 

In consideration of the foregoing, Title 49, Administrator 

Code of Federal Regulations, is amended by the 

addition of a new Part 556 titled "Exemption 42 F.R. 7145 

for Inconsequential Defect or Noncompliance." February 7, 1977 



( 



PART 556— PRE 4 



k 



PART 556— EXEMPTION FOR INCONSEQUENTIAL DEFECT OR NONCOMPLIANCE 



Sec 

556.1 Scope. 

556.2 Purpose. 

556.3 Application. 

556.4 Petition for exemption. 

556.5 Processing of petition. 

556.6 Meetings. 

556.7 Disposition of petition. 

556.8 Rescission of exemption. 

556.9 Public Inspection of relevant Information. 

AUTHORITY: Sec. 157, Pub. L. 93-492, 88 
Stat. 1470 (15 U.S.C. 1417), delegation of au- 
thority at 49 CFR 1.50. 

§ 556.1 Scope. 

This part sets forth procedures, pursuant to 
section 157 of the Act, for exempting manufac- 
turers of motor vehicles and replacement equip- 
ment from the Act's notice and remedy 
requirements when a defect or noncompliance is 
determined to be inconsequential as it relates to 
motor vehicle safety. 

§ 556.2 Purpose. 

The purpose of this part is to enable manufac- 
turers of motor vehicles and replacement equip- 
ment to petition the NHTSA for exemption from 
the notification and remedy requirements of the 
Act due to the inconsequentiality of the defect or 
noncompliance as it relates to motor vehicle 
safety, and to give all interested persons an op- 
portunity for presentation of data, views, and 
arguments on the issue of inconsequentiality. 

§ 556.3 Application. 

This part applies to manufacturers of motor 
vehicles and replacement equipment. 

§ 556.4 Petition for exemption. 

(a) A manufacturer who has determined the 
existence, in a motor vehicle or item of replace- 



ment equipment that he produces, of a defect 
related to motor vehicle safety or a noncompli- 
ance with an applicable Federal motor vehicle 
safety standard, or who has received notice of an 
initial determination by the NHTSA of the 
existence of a defect related to motor vehicle 
safety or a noncompliance, may petition for 
exemption from the Act's notification and remedy 
requirements on the grounds that the defect or 
noncompliance is inconsequential as it relates to 
motor vehicle safety.' 

(b) Each petition submitted under this part 
shall— 

(1) Be written in the English language; 

(2) Be submitted in three copies to: Admin- 
istrator, National Highway Traffic Safety Ad- 
ministration, Washington, D.C. 20590; 

(3) State the full name and address of the 
applicant, the nature of its organization (e.g., 
individual, partnership, or corporation) and the 
name of the State or country under the laws of 
which it is organized. 

(4) Describe the motor vehicle or item of 
replacement equipment, including the number in- 
volved and the period of production, and the 
defect or noncompliance concerning which an 
exemption is sought; and 

(5) Set forth all data, veiws, and arguments 
of the petitioner supporting his petition. 

(c) In the case of defects related to motor 
vehicle safety or noncompliances determined to 
exist by a manufacturer, petitions imder this part 
must be submitted not later than 30 days after 
such determination. In the case of defects re- 
lated to motor vehicle safety or noncompliances 
initially determined to exist by the NHTSA, 
petitions must be submitted not later than 30 days 
after notification of the determination has been 
received by the manufacturer. Such a petition 
will not constitute a concession by the manufac- 



PART 556-1 



Effective: March 9, 1977 



turer of, nor will it be considered relevant to, the 
existence of a defect related to motor vehicle 
safety or a nonconformity. 

§ 556.5 Processing of petition. 

(a) The NHTSA publishes a notice of each 
petition in the Federal Register. Such notice 
includes: 

(1) A brief summary of the petition; 

(2) A statement of the availability of the 
petition and other relevant information for pub- 
lic inspection; and 

(3) (i) In the case of a defect related to 
motor vehicle safety or a noncompliance deter- 
mined to exist by the manufacturer, an invitation 
to interested persons to submit written data, 
views, and arguments concerning the petition, 
and, upon request by the petitioner or interested 
persons, a statement of the time and place of a 
public meeting at which such materials may be 
presented orally if any person so desires. 

(ii) In the case of a defect related to 
motor vehicle safety or a noncompliance initially 
determined to exist by the NHTSA, an invitation 
to interested persons to submit written data, 
views, and arguments concerning the petition or 
to submit such data, views, and arguments orally 
at the meeting held pursuant to section 152(a) 
of the Act following the initial determination, or 
at a separate meeting if deemed appropriate by 
the agency. 

§ 556.6 iMeetings. 

(a) At a meeting held under this part, any 
interested person may make oral (as well as 
written) presentations of data, views, and argu- 
ments on the question of whether the defect or 
noncompliance described in the Federal Register 
notice is inconsequential as it relates to motor 
vehicle safety. 

(b) Sections 556 and 557 of Title 5, United 
States Code, do not apply to any meeting held 
under this part. Unless otherwise specified, any 
meeting held under this part is an informal, 
nonadversary, fact-finding proceeding, at which 
there are no formal pleadings or adverse parties. 
A decision to grant or deny a petition, after a 
meeting on such petition, is not necessarily based 
exclusively on the record of the meeting. 



(c) The Administrator designates a represen- 
tative to conduct any meeting held under this 
part. The Chief Counsel designates a member 
of his staff to serve as legal officer at the meeting. 
A transcript of the proceeding is kept and ex- 
hibits may be kept as part of the transcript. 

§ 556.7 Disposition of petition. 

Notice of either a grant or denial of a petition 
for exemption from the notice and remedy re- 
quirements of the Act based upon the inconse- 
quentiality of a defect or noncompliance is issued 
to the petitioner and published in the Federal 
Register. The effect of a grant of a petition is 
to relieve the manufacturer from any further re- 
sponsibility to provide notice and remedy of the 
defect or noncompliance. The effect of a denial 
is to continue in force, as against a manufacturer, 
all duties contained in the Act relating to notice 
and remedy of the defect or noncompliance. Any 
interested person may appeal the grant or denial 
of a petition by submitting written data, views, 
or arguments to the Administrator. 

§ 556.8 Rescission of decision. 

The Administrator may rescind a grant or de- 
nial of an exemption issued under this part any 
time after the receipt of new data and notice and 
opportunity for comment thereon, in accordance 
with § 556.5 and § 556.7. 

§ 556.9 Pubiic inspection of reievant information. 

Information relevant to a petition under this 
part, including the petition and supporting data, 
memoranda of informal meetings with the peti- 
tioner or any other interested person concerning 
the petition, and the notice granting or denying 
the petition, are available for public inspection 
in the Docket Section, Room 5109, National 
Highway Traffic Safety Administration, 400 
Seventh Street, S.W., Washington, D.C. 20590. 
Copies of available information may be obtained 
in accordance with Part 7 of the regulations of 
the Office of the Secretary of Transportation (49 
CFR Part 7). 

42 F.R. 7147 
February 7, 1977 



PART 556-2 



PART 556-EXEMPTION FOR INCONSEQUENTIAL DEFECT OR NONCOMPLIANCE 



Sec. 

556.1 Scope. 

556.2 Purpose. 

556.3 Application. 

556.4 Petition for exemption. 

556.5 Processing of petition. 

556.6 Meetings. 

556.7 Disposition of petition. 

556.8 Rescission of exemption. 

556.9 Public Inspection of relevant Information. 

AUTHORITY: Sec. 157, Pub. L. 93-492, 88 
Stat. 1470 (15 U.S.C. 1417), delegation of au- 
thority at 49 CFR 1.50. 

§ 556.1 Scope. 

This part sets forth procedures, pursuant to 
section 157 of the Act, for exempting manufac- 
turers of motor vehicles and replacement equip- 
ment from the Act's notice and remedy 
requirements when a defect or noncompliance is 
determined to be inconsequential as it relates to 
motor vehicle safety. 

§ 556.2 Purpose. 

The purpose of this part is to enable manufac- 
turers of motor vehicles and replacement equip- 
ment to petition the NHTSA for exemption from 
the notification and remedy requirements of the 
Act due to the inconsequentiality of the defect or 
noncompliance as it relates to motor vehicle 
safety, and to give all interested persons an op- 
portunity for presentation of data, views, and 
arguments on the issue of inconsequentiality. 

§ 556.3 Application. 

This part applies to manufacturers of motor 
vehicles and replacement equipment. 

§ 556.4 Petition for exemption. 

(a) A manufacturer who has determined the 
existence, in a motor vehicle or item of replace- 



ment equipment that he produces, of a defect 
related to motor vehicle safety or a noncompli- 
ance with an applicable Federal motor vehicle 
safety standard, or who has received notice of an 
initial determination by the NHTSA of the 
existence of a defect related to motor vehicle 
safety or a noncompliance, may petition for 
exemption from the Act's notification and remedy 
requirements on the grounds that the defect or 
noncompliance is inconsequential as it relates to 
motor vehicle safety.' 

(b) Each petition submitted under this part 
shall- 

(1) Be written in the English language; 

(2) Be submitted in three copies to: Admin- 
istrator, National Highway Traffic Safety Ad- 
ministration, Washington, D.C. 20590; 

(3) State the full name and address of the 
applicant, the nature of its organization (e.g., 
individual, partnership, or corporation) and the 
name of the State or country under the laws of 
which it is organized. 

(4) Describe the motor vehicle or item of 
replacement equipment, including the number in- 
volved and the period of production, and the 
defect or noncompliance concerning which an 
exemption is sought; and 

(5) Set forth all data, veiws, and arguments 
of the petitioner supporting his petition. 

(c) In the case of defects related to motor 
vehicle safety or noncompliances determined to 
exist by a manufacturer, petitions under this part 
must be submitted not later than 30 days after 
such determination. In the case of defects re- 
lated to motor vehicle safety or noncompliances 
initially determined to exist by the NHTSA, 
petitions must be submitted not later than 30 days 
after notification of the determination has been 
received by the manufacturer. Such a petition 
will not constitute a concession by the manufac- 



PART 556-1 



Effective: March 9, 1977 



turer of, nor will it be considered relevant to, the 
existence of a defect related to motor vehicle 
safety or a nonconformity. 

§ 556.5 Processing of petition. 

(a) The NHTSA publishes a notice of each 
petition in the Federal Register. Such notice 
includes: 

(1) A brief summary of the petition; 

(2) A statement of the availability of the 
petition and other relevant information for pub- 
lic inspection; and 

(3) (i) In the case of a defect related to 
motor vehicle safety or a noncompliance deter- 
mined to exist by the manufacturer, an invitation 
to interested persons to submit written data, 
views, and arguments concerning the petition, 
and, upon request by the petitioner or interested 
persons, a statement of the time and place of a 
public meeting at which such materials may be 
presented orally if any person so desires. 

(ii) In the case of a defect related to 
motor vehicle safety or a noncompliance initially 
determined to exist by the NHTSA, an invitation 
to interested persons to submit written data, 
views, and arguments concerning the petition or 
to submit such data, views, and arguments orally 
at the meeting held pursuant to section 152(a) 
of the Act following the initial determination, or 
at a separate meeting if deemed appropriate by 
the agency. 

§ 556.6 {Meetings. 

(a) At a meeting held under this part, any 
interested person may make oral (as well as 
written) presentations of data, views, and argu- 
ments on the question of whether the defect or 
noncompliance described in the Federal Register 
notice is inconsequential as it relates to motor 
vehicle safety. 

(b) Sections 556 and 557 of Title 5, United 
States Code, do not apply to any meeting held 
under this part. Unless otherwise specified, any 
meeting held under this part is an informal, 
nonadversary, fact-finding proceeding, at which 
there are no formal pleadings or adverse parties. 
A decision to grant or deny a petition, after a 
meeting on such petition, is not necessarily based 
exclusively on the record of the meeting. 



(c) The Administrator designates a represen- 
tative to conduct any meeting held under this 
part. The Chief Counsel designates a member 
of his staff to serve as legal officer at the meeting. 
A transcript of the proceeding is kept and ex- 
hibits may be kept as part of the transcript. 

§ 556.7 Disposition of petition. 

Notice of either a grant or denial of a petition 
for exemption from the notice and remedy re- 
quirements of the Act based upon the inconse- 
quentiality of a defect or noncompliance is issued 
to the petitioner and published in the Federal 
Register. The effect of a grant of a petition is 
to relieve the manufacturer from any further re- 
sponsibility to provide notice and remedy of the 
defect or noncompliance. The effect of a denial 
is to continue in force, as against a manufacturer, 
all duties contained in the Act relating to notice 
and remedy of the defect or noncompliance. Any 
interested person may appeal the grant or denial 
of a petition by submitting written data, views, 
or arguments to the Administrator. 

§ 556.8 Rescission of decision. 

The Administrator may rescind a grant or de- 
nial of an exemption issued under this part any 
time after the receipt of new data and notice and 
opportunity for comment thereon, in accordance 
with § 556.5 and § 556.7. 

§ 556.9 Public inspection of reievant information. 

Information relevant to a petition under this 
part, including the petition and supporting data, 
memoranda of informal meetings with the peti- 
tioner or any other interested person concerning 
the petition, and the notice granting or denying 
the petition, are available for public inspection 
in the Docket Section, Room 5109, National 
Highway Traffic Safety Administration, 400 
Seventh Street, S.W., Washington, D.C. 20590. 
Copies of available information may be obtained 
in accordance with Part 7 of the regulations of 
the Office of the Secretary of Transportation (49 
CFR Part 7). 

42 F.R. 7147 
February 7, 1977 



PART 556-2 



Effective: January 31, 1977 



PREAMBLE TO PART 557— PETITIONS FOR HEARINGS ON NOTIFICATION 

AND REMEDY OF DEFECTS 

(Docket No. 75-31; Notice 2) 



This notice amends Chapter V of Title 49 of 
the Code of Federal Regulations by the addition 
of a new Part 5iU, Petition.^ for Hearings on 
Notifcat/'on and Remedy of Defects^ jrovemino; 
petitions for hearinjrs on whether or not a manu- 
facturer has reasonahly met its obligation to 
notify owners, dealers, and purchasers of a safety- 
related defect or noncompliance with a safety 
standard, or to remedy the defect or noncom- 
pliance. Tlie new part also specifies the pro- 
cedures to be followed in holding such a hearing. 

The XHT8A proposed the regulation (40 FR 
569'26. December ;"i. 1975) to carry out a statu- 
tory provision concerning the hearing. Section 
156 of the National Traffic and Motor Vehicle 
Safety Act (15 U.S.C. 1416) provides that 
"[u]pon petition of any interested person or on 
his own motion, the Secretary may hold a hear- 
ing in whicli any interested person (including a 
manufacturer) may make oral (as well as writ- 
ten) presentations of data, views, and arguments 
on the (piestion of whether a manufacturer has 
reasonablj- met his obligation to notify under 
section 151 or 152, and to remedy a defect or 
failure to comply under section 154." Sections 
151 and 152 require a manufacturer to notify 
owners, dealere, and purchasers of a safety-re- 
lated defect or failure to comply with an appli- 
cable Federal motor vehicle safety standard in 
any motor vhecile or item of equipment manu- 
factured by him. Section 154 requires a manu- 
facturer to remedy without charge such defects 
or failures to comply. Section 156 also provides 
that 

[i]f the Secretary determines the manu- 
facturer has not reasonably met such ob- 
ligation, he shall order the manufacturer 
to take specified action to comply with 
such obligation; and in addition, the Sec- 



retary may take other action authorized 
by this title. 

Five comments were received from private per- 
sons, five comments were received from manu- 
facturers and trade associations, and two com- 
ments were received from consumer groups; the 
Consumer Protection Division of the County 
Manager's Office for Metropolitan Dade County; 
and the Center for Auto Safety (the Center). 
The National Motor Vehicle Safety Advisoiy 
Council did not take a position on the proposal. 
The Vehicle Equipment Safety Commission did 
not comment on the proposal. 

Four of the comments received from private 
persons objected to the institution of hearings as 
meaningless or a waste of money. The fifth pri- 
vate party supported issuance of the regidation. 
The four commenters appeared to be unaware of 
the provision for these hearings mandated by 
section 156 of the Act, independent of the promul- 
gation of Part 557. The agency does believe that 
the informal hearing minimizes the expense that 
will be involved in fulfilling this statutory man- 
date. 

Walker Manufacturing objected that permit- 
ting "[a|ny interested person" to file a petition 
would invite spurious requests whose pursuit 
would be a waste of time and money. The agency 
conformed to the statutory language of section 
156 that "any interested person" can petition for 
this hearing, and concludes that a narrowing of 
the language would be contrary to the intent of 
Congress in establishing the right. 

The Consumer Protection Division for Metro- 
politan Dade County suggested that the Con- 
sumer Product Safety Commission (CPSC) 
would l>e a more suitable agency with which to 
vest this hearing procedure, because of better 
public identification with its consumer protection 
role. However, the jurisdiction of the CPSC 



PART 557— PRE 1 



Effective: January 31, 1977 



under the Consumer Product Safety Act (15 
U.S.C. 2051, et seq.) does not include motor ve- 
hicles or motor vehicle equipment (15 U.S.C. 
2052), and the autliorit}' to carry out section 156 
is vested in the Department of Transportation. 

Firestone Tire and Rubber Company suo^pested 
that the hearing procedure could be consolidated 
with the hearing procedures set forth in Part 552 
{Petitions for RvJemaking, Deject, and Non- 
compliance Orders) of XHTSA regulations (49 
CFR Part 552). Part 552 addresses the proce- 
dures that arise from a request for the initiation 
of agencj' action in a rulemaking defect, or non- 
compliance area. Unlike those situations, Part 
557 addresses the different and more limited con- 
siderations of an evaluation of an ongoing action 
undertaken by persons outside the agency. The 
separation of these functions into different pro- 
cedural regidations clarifies these distinct func- 
tions. Accordingly, the agency declines to adopt 
the Firestone suggestion. 

The Center appeared to misunderstand why 
minimum qualification requirements were estab- 
lished for hearing petitions. The regulation 
states that, to be considered as a petition, a docu- 
ment must be written in English, have the word 
"petition" preceding its text, request a hearing, 
and contain a brief statement of the alleged 
failure and a summary of the data, views, or 
arguments that would be presented at the hear- 
ing. Reasonable considerations underlie these 
minimum qualification requirements. For ex- 
ample, the agency undertakes to respond to such 
petitions within 60 days, and the agency must 
be able to recognize a document as a petition if 
the writer wishes to have it treated as such. This 
is the basis for requiring that the word "peti- 
tion" appear. The Centers request that the spec- 
ifications be relaxed to recognize as petitions 
filings in Spanish as well as English from the 
Commonwealth of Puerto Rico and the Canal 
Zone does not detract from the intent of the 
qualification requirements, and the final regula- 
tion is accordingly modified. 

The Center's more basic objection is that per- 
sons effectively will not be on notice that a 
request for a hearing must confonn to the re- 
quirements of Part 557 to be treated as a petition. 
^^Hiile it is true that it must so conform to achieve 
petition status (entitling it to a reply within 60 



days), it is not true that a non-conforming re- '\ 
quest would not result in the calling of a hearing. 
Any complaint, request, or series of them, can 
result in the calling of a hearing on the Admin- 
istrator's own motion. The Administrator is not 
precluded from deciding to hold a hearing simply 
because a person's complaint does not qualify 
as a petition. Thus, the agency disagrees with 
the Center's conclusion that Part 557 "denies 
an owner the right to a hearing unless he or she 
follows the regulation in every detail." 

For this reason, the agency does not consider 
necessary the Center's request for an amendment 
of the newly revised Part 557 (dealing with no- 
tification of safety-related defects or noncompli- 
ances) to include the detailed specifications for 
the content of a Part 557 petition. It is noted 
that the agency is unaware of any supplemental 
submission by the Center to the docket on revi- 
sion of Part 577, either at the time the comments 
on that docket were evaluated, or as of this date. 
"With regard to the Center's suggestion that each 
complainant be advised by return mail to re- 
submit any request for a hearing in the proper 
format, it is just this sort of response the agency 
intends to avoid by its flexible approach. , 1 

In a related matter, the Dade County Man- 
ager's office believed that a lawyer would be 
required to draft the petition specified by § 557.4. 
This is not the case. A normal letter format, 
preceded by the word "petition" and containing 
the petitioner's complaint and its reasons for the 
complaint are all that is required. In response 
to the point that every complaint should not 
precipitate a hearing, it is simply noted that the 
grant of a petition is within the discretion of the 
Administrator under the statute, as set forth in 
§ 557.6 of the new regulation. 

Section 557.6 of the regidation sets forth the 
factors considered by the Administrator in deter- 
mining whether to hold a hearing. The factoids 
listed are: the nature of the complaint; the seri- 
ousness of the alleged breach of obligation to 
remedy ; the existence of similar complaints ; and 
the ability of the NHTSA to resolve the problem 
without holding a hearing. The Center con- 
sidered the first factor (the nature of the com- 
plaint) to be meaningless, and suggested its 
clarification or deletion. 



PART 557— PRE 2 



(( 



Effective: JanuofY 31, 1977 



PREAMBLE TO PART 557— PETITIONS FOR HEARINGS ON NOTIFICATION 

AND REMEDY OF DEFECTS 

(Docket No. 75-31; Notice 2) 



This notice amends Chapter V of Title 40 of 
the Code of Federal Re<rulations by the addition 
of a new Part 557, Petitions for Ilear/'ngs on 
Notification and Remedy of Defects, fjoveminoj 
petitions for hearings on wliether or not a manu- 
facturer has reasonably met its oblifjation to 
notify owners, dealers, and purchasers of a safety- 
related defect or noncompliance with a safety 
standard, or to remedy the defect or noncom- 
pliance. The new part also specifies the pro- 
cedures to be followed in holding such a hearino;'. 

The NHTSA proposed the refrulation (40 FR 
56926, December 5. 1975) to carry out a statu- 
tory provision concerniufr the hearing. Section 
156 of the National Traffic and Motor Vehicle 
Safety Act (15 U.S.C. 1416) provides that 
"[u]pon petition of any interested person or on 
his own motion, the SecreiaiT may hold a hear- 
ing in which any interested person (including a 
manufacturer) may make oral (as well as writ- 
ten) i)resentations of data, views, and arguments 
on the question of wiiether a manufacturer has 
reasonably met his obligation to notify under 
section 151 or 152. and to remedy a defect or 
failure to comply under section 154." Sections 
151 and 152 require a manufacturer to notify 
owners, dealei-s. and purchasers of a safety-re- 
lated defect or failure to comply with an appli- 
cable Federal motor vehicle safety standard in 
any motor vhecile or item of equipment manu- 
factured by him. Section 154 requires a manu- 
facturer to remedy without charge such defects 
or failures to comply. Section 156 also provides 
that 

[i]f the Secretary determines the manu- 
facturer has not reasonably met such ob- 
ligation, he shall order tlie manufacturer 
to take specified action to comply with 
such obligation : and in addition, the Sec- 



retary may take other action authorized 
by this title. 

Five comments were received from private per- 
sons, five comments were received from manu- 
facturers and trade associations, and two com- 
ments were received from consumer groups; the 
Consumer Protection Division of the County 
Manager's Office for Metropolitan Dade County; 
and the Center for Auto Safety (the Center). 
The National Motor Vehicle Safety Advisory 
Council did not take a position on the proposal. 
The Vehicle Equipment Safety Commission did 
not comment on the proposal. 

Four of the comments received from private 
persons objected to the institution of hearings as 
meaningless or a waste of money. The fifth pri- 
vate party supported issuance of the regulation. 
The four commenters appeared to be imaware of 
the provision for these hearings mandated by 
section 156 of the Act, independent of the promul- 
gation of Part 557. The agency does believe that 
the informal hearing minimizes the expense that 
will be involved in fulfilling this statutory man- 
date. 

"Walker Manufacturing olijected that permit- 
ting "[a|ny interested person" to file a petition 
would invite spurious requests whose pursuit 
would be a waste of time and money. The agency 
conformed to the statutory langiiage of section 
156 that "any interested person" can petition for 
this hearing, and concludes that a narrowing of 
the language would be contrary to the intent of 
Congress in establishing the right. 

The Consumer Protection Division for Metro- 
politan Dade County suggested that the Con- 
sumer Product Safety Commission (CPSC) 
would be a more suitable agency with which to 
vest this hearing procedure, because of better 
public identification with its consumer protection 
role. However, the jurisdiction of the CPSC 



PART 557— PRE 1 



EfFecHve: January 31, 1977 



under the Consumer Product Safety Act (15 
U.S.C. 2051, et seq.) does not include motor ve- 
hicles or motor vehicle equipment (15 U.S.C. 
2052), and the authority to carry out section 156 
is vested in the Department of Transportation. 

Firestone Tire and Rubber Company su^p:ested 
that the hearing procedure could be consolidated 
with the hearing procedures set forth in Part 552 
{Petitions for Rulemaking^ Defect^ and Non- 
coinpliance Orders) of NHTSA regulations (49 
CFR Part 552). Part 552 addresses the proce- 
dures that arise from a request for the initiation 
of agency action in a rulemaking defect, or non- 
compliance area. Unlike those situations, Part 
557 addi-esses the different and more limited con- 
siderations of an evaluation of an ongoing action 
undertaken by persons outside the agency. The 
separation of these functions into different pro- 
cedural regulations clarifies these distinct func- 
tions. Accordingly, the agency declines to adopt 
the Firestone suggestion. 

The Center appeared to misunderstand why 
minimum qualification requirements were estab- 
lished for hearing petitions. The regulation 
states that, to be considered as a petition, a docu- 
ment must be written in English, have the word 
"petition" preceding its text, request a hearing, 
and contain a brief statement of the alleged 
failure and a summary of the data, views, or 
arguments that would be presented at the hear- 
ing. Reasonable considerations underlie these 
minimum qualification requirements. For ex- 
ample, the agency undertakes to respond to such 
petitions within 60 days, and the agency must 
be able to recognize a document as a petition if 
the writer wishes to have it treated as such. This 
is the basis for requiring that the word "peti- 
tion" appear. The Center's request that the spec- 
ifications be relaxed to recognize as petitions 
filings in Spanish as well as English from the 
Commonwealth of Puerto Rico and the Canal 
Zone does not detract from the intent of the 
qualification requirements, and the final regula- 
tion is accordingly modified. 

The Center's more basic objection is that per- 
sons effectively will not be on notice that a 
request for a hearing must conform to the re- 
quirements of Part 557 to be treated as a petition. 
"VAHiile it is true that it must so conform to achieve 
petition status (entitling it to a reply within 60 



days), it is not true that a non-conforming re- i 
quest would not result in the calling of a hearing. ' 
Any complaint, request, or series of them, can 
result in the calling of a hearing on the Admin- 
istrator's own motion. The Administrator is not 
precluded from deciding to hold a hearing simply 
because a person's complaint does not qualify 
as a petition. Thus, the agency disagrees with 
the Center's conclusion that Part 557 "denies 
an owner the right to a hearing unless he or she 
follows the regulation in ev-ery detail." 

For this reason, the agency does not consider 
necessaiy the Center's request for an amendment 
of the newly revised Part 557 (dealing with no- 
tification of safety-related defects or noncompli- 
ances) to include the detailed specifications for 
the content of a Part 557 petition. It is noted 
that the agency is unaware of any supplemental 
submission by the Center to the docket on revi- 
sion of Part 577, either at the time the comments 
on that docket were evaluated, or as of this date. 
With regard to the Center's suggestion that each 
complainant be advised by return mail to re- 
submit any request for a hearing in the proper 
format, it is just this sort of response the agency 
intends to avoid by its flexible approach. A 

In a related matter, the Dade County Man- * 
ager's office believed that a lawyer would be 
required to draft the petition specified by § 557.4. 
This is not the case. A normal letter format, 
preceded by the word "petition" and containing 
the petitioner's complaint and its reasons for the 
complaint are all that is required. In response 
to the point that every complaint should not 
precipitate a hearing, it is simply noted that the 
grant of a petition is within the discretion of the 
Administrator under the statute, as set forth in 
§ 557.6 of the new regulation. 

Section 557.6 of the regulation sets forth the 
factors considered by the Administrator in deter- 
mining whether to hold a hearing. The factors 
listed are : the nature of the complaint ; the seri- 
ousness of the alleged breach of obligation to 
remedy; the existence of similar complaints; and 
the ability of the \HTSA to resolve the problem 
without holding a hearing. The Center con- 
sidered the first factor (the nature of the com- 
plaint) to be meaningless, and suggested its 
clarification or deletion. 



PART 557— PRE 2 



Effective: Januory 31, 1977 



Stiitinjr tlie iiatiiro of tlic coniplaiiit is (lopinod 
necessary fo allow NHTSA to jii(l<ro wliothpi- tlio 
issues of fact or opinion are of a type tliat could 
he i-esolved by a hearing. In those cases where 
facts or eniriiieerin<r considerations are not at 
issue and only a policy decision remains to be 
made, the Administrator could make his finding 
without holdiu'r a heai-inir. A related factor 
(listed as § r)57.6(a) (4) ) is the NHTSA's ability 
to resolve a particidar complaint without a hear- 
ing. S)ich a case would he wlien factual issues 
aiT in dispute, but the facts arc ah"eady gathered. 
The ajrency therefore disa'rrees with the Center's 
assessment of § r)5T.6(a) (1) and declines to 
modify it or delete it. 

The Center viewed the second factor listed in 
§5.57.6 (the seriousness of the allored breach of 
ohlifration to remedy) as impermissibly vasrue 
also. The Center's submission implies that only 
two types of "breach of oblifration" exist : failure 
to i-epair and refusal to i-emedy without charge. 
In fact, every conceivable type of "alle<ied breach 
of oblitation" exists, all with differing levels of 
seriousness. For example, in a recall to replace 
seat belts, an owner could object that a shoi-tasre 
of red seat belts resulted in installation of black 
seat belts in place of what had been ori<rinally 
fitted. Another example would be a failure of 
a notification letter to list the correct address of 
the dealei- that will undertake a particular re- 
pair. The apency needs to exercise its discretion 
in such cases to decide whether the o^ravity of the 
objection merits a public hearing. 

The Center also argued that §557.6(4) (the 
ability of the XITTSA to resolve a problem with- 
out holdinfr a hearin.<r) constitutes an impermis- 
sible "escape hatch" from aTcncy responsibilities. 
This comment isrnores the lan<rua<re of the Act. 
Section 156 states that the Secretary "may hold 
a hearinir." a statutory grant of discretion now 
pn>pei'ly reflected in the implementing regulation, 
and intended to expedite the agency's decisions 
in the public interest, not avoid them. 

The Recreation Vehicle Industry Association 
(RVTA) requested that the information pre- 
sented to the XIIT.SA in accordance with Part 
573 (Defect Reports) lie listed as a specific factor 
to be considered in deciding whether to hold a 
public hearing. The RYIA appears to be re- 



questing that a particular body of information 
be singled out for review in reaching the deci- 
sion. Of course, all information related to the 
case will enter into the decision, but the agency 
has sought to list in § 557.6 factoi-s other than 
the information itself that would enter into the 
decision whether or not a hearing is necessary. 
This decision is separate from tlie decision of the 
adequacy of the notification and remedy itself. 
For this reason, the RVIA suggestion is not 
adopted. 

The RVIA asked that a manufacturer be ad- 
vised to the receipt of a petition and its eventual 
disposition. American Motors Corporation 
(AMC) also reque.sted notification of receipt. 
The agency considers these requests reasonable, 
and will provide in its administrative practices 
for a copy of the petition acknowledgment and 
decision letters to be sent to the manufacturer 
involved. 

Section 557.6 provides that the Administrator 
shall grant or deny the petition in time to notify 
the petitioner within 60 days of receipt of the 
petition. The Center argued for a 30-day limit, 
arguing that a longer period would necessarily 
have serious safety consequencies in evei-y case. 
The agency does not agree with this view. First, 
the decision on whether or not to hold a hearing 
is not the fundamental question of whether or 
not the manufacturer has taken the steps re- 
quired of it by the statute. Also, the significance 
of the alleged failure to adequately meet respon- 
sibilities will vary from case to case, justifying 
differing periods of time in which to reach a 
decision. Finally, the 60-day period is a maxi- 
mum, and a decision in situations in which signif- 
icant safety gains are made by quick action can 
be made sooner. For these reasons, the Center's 
suggestion is not adopted. 

The Center also believed that immediate publi- 
cation of the reasons for denial of a petition 
would be necessary and desirable. The agency 
Imows no reason why this would be the case, but 
rather concludes that notice to the petitioner 
within the allotted period is the significant step 
in the case of a denial. The publication only 
serves as a record function. Experience with a 
similar publication schedule for denial of rule- 
making petitions has been satisfactory. 



PART 557— PRE 3 



Effective: Jonuary 31, 1977 



The Center further sufjfjested that all hcarinjrs 
be conducted within 30 days of the decision to 
fjrant a hearinfj, and that a final decision on the 
adequacy of notification or remedy be made with- 
in 30 days of the heariiifr. The a<fency intends 
to schedule hearinj2;s within a reasonable time 
after the petition is ofranted, but is unable to 
assure that a hearinji; can always be held within 
a 30-day period. As for the request that a deci- 
sion be reached within 30 days of the hearing, 
the agency relies on information other tlian that 
presented at the hearing and is not able to state 
unequivocally that the hearing will produce the 
information necessary to reach a decision within 
30 days of holding the hearing. .Vccordingly. 
the Center's suggestions are not adopted. 

Section .557.7 of the regulation sets forth the 
nature of the public hearing that is contemplated 
by the regulation. The section provides for sub- 
mission of views orally or in writing, the main- 
tenance of a transcript and exhibits, and the 
presence in some cases of a legal officer. Tlie 
RVIA, AMC, and International Harvester Com- 
pany (IH) asked that the informal non-adver- 
sarial hearings be revised to permit cross-exami- 
nation of those who appear by those who disagi'ee 
with them. IH also asked that, upon agreement 
of the petitioner and the manufacturer involved, 
the hearing be modified to conform to the adjudi- 
catory specifications of sections 556 and 557 of 
the Administrative Procedures Act. 

The agency will take into consideration these 
requests for possible future action. At tliis time, 
the NHTSA wishes to conform its regulation to 
the scope expressed in the proposal. The matter 
of ui)gi-ading hearings to a more adversarial level 
will be treated therefore at a later date. AVith 
regard to IH's request for the opportunity to 
further develop views on newly developed ma- 
terial, the agency will accept written supple- 
mental views for attachment to the transcript of 
the hearing. Revision of the regulation to pro- 
vide for this practice is not necessary. 

The RVIA concluded its comments with the 
recommendation that, in the event of a finding 
that a manufacturer has not reasonably met its 
notification and remedy obligations, the finding 
be accompanied by a statement of the grounds 
upon which the Administrator based his deter- 



mination. The agency does not contemplate the 
issuance of such a finding without stating its 
reasons, and therefore concludes that its con- 
templated actions will confonn to the RVIA 
recommendation. 

In accordance with Department of Transpor- 
tation policy encouraging adequate analysis of 
the consequences of regulatory action (41 FR 
16200, April 16, 1976), the agency herewith sum- 
marizes its evaluation of the economic and other 
consequencies of this action on the public and 
XJrivate sectors, including possible loss of safety 
benefits. In this case, the new regulation merely 
establishes procedures to carry out the mandate 
of section 156 of tlie Act to provide for a pos- 
sible hearing on the adequacy of notification and 
remedy in the case where any interested person 
requests such a hearing. The informal nature 
of the hearing should have minimal costs of those, 
including manufacturers, who participate. While 
minimum requirements for petitioning might re- 
sidt in some increase in time for assessing the 
adequacy of notificationand remedy in some cases, 
it is believed that any consequent effect on high- 
way safety was contemplated by Congress in 
providing for the hearings. 

In consideration of tlie foregoing, a new Part 
557, Petitions for Hearings on Notif cation and 
Remedy of Defects, is added to Title 49 of the 
Code of Federal Regulations, as set forth below. 

Effective date: January 31, 1977. Because the 
regulation is procedural and does not create a 
burden upon any regidated person, its found for 
good cause shown that an effective date earlier 
than 180 days following issuance is in the public 
interest. 

(Sec. 9, Pub. 89-670, 80 Stat. 931 (49 U.S.C. 
16,57) ; Sec. 103, 119, Pub. L. 89-563, 80 Stat. 718 
(15 U.S.C. 1392, 1407) ; Sec. 156, Pub. L. 93-192, 
88 Stat. 1470 (15 U.S.C. 1416) ; delegation of 
authority at 49 CFR 1.50) 



Issued on December 22, 1976. 



John AV. Snow 
Administrator 

41 F.R. 56810 
December 30, 1976 



PART 557— PRE 4 



EfFecfive: January 31, 1977 



Statin<r tlie natui-e of tlie complaint is deemed 
necessary to allow XITTSA to jiid<re whotlier the 
issues of fact or opinion are of a type that could 
lie resolved by a heaiinp. In those cases where 
facts 01' encineeriuiT considei'ations are not at 
issue and only a policy decision remains to be 
made, the Administrator could make his finding 
without holding a hearin<r. A i-elated factor 
(listed as § r)r)7.6(a) (4)) is the XHTSA's ability 
to resolve a particular complaint without a hear- 
ing. Such a case would be when factual issues 
are in dispute, but the facts are already jrathered. 
The ajrency therefore disa.<rrees with the Center's 
assessment of § 5r)7.6(a) (1) and declines to 
modify it or delete it. 

The Center viewed the second factor listed in 
§ .').57.6 (the seriousness of the alle.'red breach of 
obliTation to remedy) as impermissibly vasrue 
also. Tlie Center's submission imi)lies that only 
two types of "breach of obligation" exist : failure 
to repair and refusal to i"emedy without charge. 
In fact, every conceivable type of "alleged breach 
of oblinration" exists, all with difFerinq; levels of 
seriousness. For example, in a recall to replace 
seat belts, an owner could object that a shortage 
of red seat belts resulted in installation of black 
seat belts in place of what had been orifrinally 
fitted. Anotlier example woidd be a failure of 
a notification letter to list the correct address of 
the dealer that will undertake a particidar re- 
pair. The agency needs to exercise its discretion 
in such cases to decide whetlier the gravity of the 
objection merits a public hearing. 

The Center also argued that g,5r)7.6(4) (the 
ability of the XHTSA to resolve a problem with- 
out holding a hearin.<r) constitutes an impermis- 
sible "esca|>e liatch" from aTency responsibilities. 
This comment ignores the language of the Act. 
Section 1.56 states that the Secretary "may hold 
a hearing." a statutory grant of discretion now 
properly reflected in the implementing rcrulation, 
and intended to expedite the agency's decisions 
in the public interest, not avoid them. 

The Recreation Vehicle Industry Association 
(RVIA) ix'quested that the information pre- 
sented to the XHTSA in accordance with Part 
573 (Defect Reports) be listed as a specific factor 
to be considered in deciding whether to hold a 
public hearing. The RVIA appears to be re- 



questing that a particular body of information 
be singled out for review in reaching the deci- 
sion. Of course, all information related to the 
case will enter into the decision, but the agency 
has sought to list in § ri.'")7.6 factoi-s other than 
the information itself that would enter into the 
decision whether or not a hearing is necessary. 
This decision is separate from the decision of the 
adequacy of the notification and remedy itself. 
For this reason, the RVIA suggestion is not 
adopted. 

The RVIA asked that a manufacturer be ad- 
vised to the receipt of a petition and its eventual 
disposition. American Motors Corporation 
(AMC) also requested notification of receipt. 
The agency considers these requests reasonable, 
and will provide in its administrative practices 
for a copy of the petition acknowledgment and 
decision letters to be sent to the manufacturer 
involved. 

Section 557.6 provides that the Administrator 
shall grant or deny the petition in time to notify 
the petitioner within 60 days of receipt of the 
petition. The Center argued for a 30-day limit, 
arguing that a longer period would necessarily 
have serious safety consequencies in every case. 
The agency does not agree with this view. First, 
the decision on whether or not to hold a hearing 
is not the fundamental qiiestion of whether or 
not the manufacturer has taken the steps re- 
quired of it by the statute. Also, the significance 
of the alleged failure to adequately meet respon- 
sibilities will vary from case to case, justifying 
differing periods of time in which to reach a 
decision. Finally, the 60-day period is a maxi- 
mum, and a decision in situations in which signif- 
icant safety gains are made by quick action can 
be made sooner. For these reasons, the Center's 
suggestion is not adopted. 

The Center also believer! that immediate publi- 
cation of the reasons for denial of a petition 
would be necessary and desirable. The agency 
laiows no reason why tliis would l>e the case, but 
rather concludes that notice to the petitioner 
within the allotted period is the significant step 
in the case of a denial. The publication only 
serves as a record function. Experience with a 
similar publication schedule for denial of rule- 
making petitions has been satisfactory. 



PART 557— PRE 3 



Effective: January 31, 1977 



The Center further sufrs'ested tliat all hearin<;.s 
be conducted within 30 days of the decision to 
firant a hearinji, and that a final decision on the 
adequacy of notification or remedy ])e made with- 
in 30 days of the hearinjr. The ao^ency intends 
to schedule hearings within a reasonable time 
after the petition is granted, but is unable to 
assure that a hearing can always be held witliin 
a 30-day period. As for the request that a deci- 
sion be reached within 30 days of the hearing, 
the agency relies on information other tlian that 
presented at the hearing and is not able to state 
unequivocally tliat the hearing will prcnluce the 
information necessary to reach a decision witliin 
30 days of holding the hearing. Accordingly, 
the Center's suggestions are not adopted. 

Section 557.7 of the regulation sets forth the 
nature of the public hearing that is contejnplateil 
by the regulation. The section provides for sub- 
mission of views orally or in writing, the main- 
tenance of a transcript and exhibits, and the 
presence in some cases of a legal officer. The 
RVIA, AMC, and International Harvester Com- 
pany (IH) asked that the informal non-adver- 
sarial hearings be revised to permit cross-exami- 
nation of those who appear by those who disagree 
with them. IH also asked that, upon agreement 
of the petitioner and the manufacturer involved, 
the hearing be modified to conform to the adjudi- 
catory specifications of sections 556 and 557 of 
the Administrative Procedures Act. 

The agency will take into consideration these 
requests for possible future action. At this time, 
the XHTSA wishes to conform its regulation to 
the scope expressed in the proposal. The matter 
of upgrading hearings to a more adversarial level 
will be treated therefore at a later date. With 
i-egard to IH's request for the opportunity to 
further develop views on newly developed ma- 
terial, the agency will accept written supple- 
mental views for attachment to the transcript of 
the hearing. Revision of the regulation to pro- 
vide for this practice is not necessary. 

The RVIA concluded its comments with the 
recommendation that, in the event of a finding 
that a manufacturer has not reasonably met its 
notification and remedy obligations, the finding 
be accompanied by a statement of the grounds 
upon which the Administrator based his deter- 



mination. The agencj' does not contemplate the 
issuance of such a finding without stating its 
reasons, and therefore concludes that its con- 
templated actions will conform to the RVIA 
recommendation. 

In accordance with Department of Transpor- 
tation policy encouraging adequate analysis of 
the consequences of regulatory action (41 FR 
16200, April 16, 1976), the agency herewith sum- 
marizes its evaluation of the economic and other 
consequencies of this action on the public and 
private sectors, including possible loss of safety 
benefits. In this case, the new regulation merely 
establishes procedures to cari-y out the mandate 
of section 156 of the Act to provide for a pos- 
sible hearing on the adequacy of notification and 
remedy in the case where any interested person 
requests such a hearing. The informal nature 
of the hearing should have minimal costs of those, 
including manufacturers, who participate. "\Miile 
minimum requirements for petitioning might re- 
sult in some increase in time for assessing the 
adequacy of notificationand remedy in some cases, 
it is believed that any consequent effect on high- 
way safety was contemplated by Congress in 
providing for the hearings. 

In consideration of the foregoing, a new Part 

557, Petitions for Hearings on Notif cation and 
Remedy of Defects, is added to Title 49 of the 
Code of Federal Regulations, as set forth below. 

Effective date: January 31, 1977. Because the 
regulation is procedural and does not create a 
burden upon any regidated person, its found for 
good cause shown that an effective date earlier 
than 180 days following issuance is in the public 
interest. 

(Sec. 9, Pub. 89-670, 80 Stat. 931 (49 U.S.C. 
1657) ; Sec. 103, 119, Pub. L. 89-563, 80 Stat. 718 
(15 U.S.C. 1392, 1407) ; Sec. 156, Pub. L. 93-492, 
88 Stat. 1470 (15 U.S.C. 1416); delegation of 
authority at 49 CFR 1.50) 

Issued on December 22, 1976. 

John AV. Snow 
Administrator 

41 F.R. 56810 
December 30, 1976 



PART 557— PRE 4 



PART 557-PETITIONS FOR HEARINGS ON NOTIFICATION 
AND REMEDY OF DEFECTS 



Sec. 

557.1 Scope. 

557.2 Purpose. 

557.3 General. 

557.4 Requirements for petition. 

557.5 Improperly filed petitions. 

557.6 Determination whether to hold a public 

hearing. 

557.7 Public hearing. 

557.8 Determination of manufacturer's obliga- 

tion. 

§ 557.1 Scope. 

This part establishes procedures under section 
156 of the National Traffic and Motor Vehicle 
Safety Act of 1966, as amended (88 Stat. 1470, 
15 U.S.C. 1416), for the submission and disposi- 
tion of petitions filed by interested persons for 
hearings on the question of whether a manufac- 
turer has reasonably met his obligation to notify 
owners, purchasers, and dealers of a safety-re- 
lated defect or failure to comply with a Federal 
motor vehicle safety standard, or to remedy such 
defect or failure to comply. This part also 
establishes procedures for holding a hearing on 
these questions. 

S 557.2 Purpose. 

The purpose of this part is to enable the 
National Highway Traffic Safety Administration 
to identify and respond on a timely basis to peti- 
tions for hearings on whether a manufacturer 
has reasonably met his obligation to notify or 
remedy, and to establish the procedures for such 
hearings. 



§ 557.3 General. 

Any interested person may file with the Ad- 
ministrator a petition requesting him to hold a 
hearing on— 

(a) Whether a manufacturer has reasonably 
met his obligation to notify owners, purchasers, 
and dealers of a safety-related defect in any 
motor vehicle or item of replacement equipment 
manufactured by him; 

(b) Whether a manufacturer has reasonably 
met his obligation to notify owners, purchasers, 
and dealers of a failure to comply with an appli- 
cable Federal motor vehicle safety standard in 
any motor vehicle or item of replacement equip- 
ment manufactured by him; 

(c) Whether the manufacturer has reasonably 
met his obligation to remedy a safety-related de- 
fect in any motor vehicle or item of replacement 
equipment manufactured by him; or 

(d) Whether the manufacturer has reasonably 
met his obligation to remedy a failure to comply 
with an applicable Federal motor vehicle safety 
standard in any motor vehicle or item of replace- 
ment equipment manufactured by him. 

§ 557.4 Requirements for petition. 

A petition filed under this part should be 
addressed and submitted to: Administrator, 
National Highway Traffic Safety Administration, 
400 Seventh Street SW., Washington, D.C. 20590. 
Each petition filed under this part must— 

(a) Be written in the English or Spanish 
language; 

(b) Have, preceding its text, the word "Peti- 
tion"; 

(c) Contain a brief statement concerning the 
alleged failure of a manufacturer to meet rea- 
sonably his obligation to notify or remedy; 



PART 557-1 



(d) Contain a brief summary of the data, 
views, or arguments that the petitioner wishes 
to present in a hearing on whether or not a manu- 
facturer has reasonably met his obUgations to 
notify or remedy; 

(e) Specifically request a hearing. 

§ 557.5 Improperly filed petitions. 

(a) A petition that is not addressed as specified 
in S 557.4, but that meets the other requirements 
of that section, will be treated as a properly filed 
petition, received as of the time it is discovered 
and identified. 

(b) A document that fails to conform to one 
or more of the requirements of paragraphs 
S 557.4(a) (1) through (5) will not be treated 
as a petition under this part. Such a document 
will be treated according to the existing cor- 
respondence and other procedures of the NHTSA, 
and any information contained in it will be con- 
sidered at the discretion of the Administrator. 

§ 557.6 Determination whether to hold a public 
hearing. 

(a) The Administrator considers the following 
factors in determining whether to hold a hearing: 

(1) The nature of the complaint; 

(2) The seriousness of the alleged breach of 
obligation to remedy; 

(3) The existence of similar complaints; 

(4) The ability of the NHTSA to resolve the 
problem without holding a hearing; and 

(5) Other pertinent matters. 

(b) If, after considering the above factors, 
the Administrator determines that a hearing 
should be held, the petition is granted. If it is 
determined that a hearing should not be held, the 
petition is denied. In either case, the petitioner 
is notified of the grant or denial not more than 
60 days after receipt of the petition by the 
NHTSA. 



(c) If a petition submitted under this part is 
denied, a Federal Register notice of the denial / 
is issued within 45 days of the denial, setting ^ 
forth the reasons for it. 

(d) The Administrator may conduct a hearing 
under this part on his own motion. 

§ 557.7 Public hearing. 

If the Administrator decides that a public 
hearing under this part is necessary, he issues a 
notice of public hearing in the Federal Register, 
to advise interested persons of the time, place, 
and subject matter of the public hearing and 
invite their participation. Interested persons 
may submit their views through oral or written 
presentation, or both. There is no cross-examina- 
tion of witnesses. A transcript of the hearing is 
kept and exhibits may be accepted as part of the 
transcript. Sections 556 and 557 of Title 5, 
United States Code, do not apply to hearings 
held under this part. When appropriate, the 
Chief Counsel designates a member of his staff 
to serve as legal officer at the hearing. 

§ 557.8 Determination of manufacturer's obligation. 

If the Administrator determines, on the basis || 
of the information presented at a hearing or any ^ 
other information that is available to him, that 
the manufacturer has not reasonably met his 
obligation to notify owners, dealers, and pur- 
chasers of a safety-related defect or faUure to 
comply with a Federal motor vehicle safety 
standard or to remedy such defect or failure to 
comply, he orders the manufacturer to take 
specified action to comply with his obligation, 
consistent with the authority granted the Admin- 
istrator by the Act. 



41 F.R. 56810 
December 30, 1976 



PART 557-2 



PART 557-PETITIONS FOR HEARINGS ON NOTIFICATION 
AND REMEDY OF DEFECTS 



Sec. 

557.1 Scope. 

557.2 Purpose. 

557.3 General. 

557.4 Requirements for petition. 

557.5 Improperly filed petitions. 

557.6 Determination whether to hold a public 

hearing. 

557.7 Public hearing. 

557.8 Determination of manufacturer's obliga- 

tion. 

§ 557.1 Scope. 

This part establishes procedures under section 
I 156 of the National Traffic and Motor Vehicle 
Safety Act of 1966, as amended (88 Stat. 1470, 
15 U.S.C. 1416), for the submission and disposi- 
tion of petitions filed by interested persons for 
hearings on the question of whether a manufac- 
turer has reasonably met his obligation to notify 
owners, purchasers, and dealers of a safety-re- 
lated defect or failure to comply with a Federal 
motor vehicle safety standard, or to remedy such 
defect or failure to comply. This part also 
establishes procedures for holding a hearing on 
these questions. 

§ 557.2 Purpose. 

The purpose of this part is to enable the 
National Highway Traffic Safety Administration 
to identify and respond on a timely basis to peti- 
tions for hearings on whether a manufacturer 
has reasonably met his obligation to notify or 
remedy, and to establish the procedures for such 
hearings. 



§ 557.3 General. 

Any interested person may file with the Ad- 
ministrator a petition requesting him to hold a 
hearing on— 

(a) Whether a manufacturer has reasonably 
met his obligation to notify owners, purchasers, 
and dealers of a safety-related defect in any 
motor vehicle or item of replacement equipment 
manufactured by him; 

(b) Whether a manufacturer has reasonably 
met his obligation to notify owners, purchasers, 
and dealers of a failure to comply with an appli- 
cable Federal motor vehicle safety standard in 
any motor vehicle or item of replacement equip- 
ment manufactured by him; 

(c) Whether the manufacturer has reasonably 
met his obligation to remedy a safety-related de- 
fect in any motor vehicle or item of replacement 
equipment manufactured by him; or 

(d) Whether the manufacturer has reasonably 
met his obligation to remedy a failure to comply 
with an applicable Federal motor vehicle safety 
standard in any motor vehicle or item of replace- 
ment equipment manufactured by him. 

§ 557.4 Requirements for petition. 

A petition filed imder this part should be 
addressed and submitted to: Administrator, 
National Highway Traffic Safety Administration, 
400 Seventh Street SW., Washington, D.C. 20590. 
Each petition filed under this part must— 

(a) Be written in the English or Spanish 
language; 

(b) Have, preceding its text, the word "Peti- 
tion"; 

(c) Contain a brief statement concerning the 
alleged failure of a manufacturer to meet rea- 
sonably his obligation to notify or remedy; 



PART 557-1 



(d) Contain a brief summary of the data, 
views, or arguments that the petitioner wishes 
to present in a hearing on whether or not a manu- 
facturer has reasonably met his obHgations to 
notify or remedy; 

(e) Specifically request a hearing. 

§ 557.5 Improperly filed petitions. 

(a) A petition that is not addressed as specified 
in § 557.4, but that meets the other requirements 
of that section, will be treated as a properly filed 
petition, received as of the time it is discovered 
and identified. 

(b) A document that fails to conform to one 
or more of the requirements of paragraphs 
§ 557.4(a) (1) through (5) will not be treated 
as a petition under this part. Such a document 
will be treated according to the existing cor- 
respondence and other procedures of the NHTSA, 
and any information contained in it will be con- 
sidered at the discretion of the Administrator. 

§ 557.6 Determination whether to hold a public 
hearing. 

(a) The Administrator considers the following 
factors in determining whether to hold a hearing: 

(1) The nature of the complaint; 

(2) The seriousness of the alleged breach of 
obligation to remedy; 

(3) The existence of similar complaints; 

(4) The ability of the NHTSA to resolve the 
problem without holding a hearing; and 

(5) Other pertinent matters. 

(b) If, after considering the above factors, 
the Administrator determines that a hearing 
should be held, the petition is granted. If it is 
determined that a hearing should not be held, the 
petition is denied. In either case, the petitioner 
is notified of the grant or denial not more than 
60 days after receipt of the petition by the 
NHTSA. 



(c) If a petition submitted under this part is 
denied, a Federal Register notice of the denial 
is issued within 45 days of the denial, setting 
forth the reasons for it. 

(d) The Administrator may conduct a hearing 
under this part on his own motion. 

§ 557.7 Public hearing. 

If the Administrator decides that a public 
hearing under this part is necessary, he issues a 
notice of public hearing in the Federal Register, 
to advise interested persons of the time, place, 
and subject matter of the public hearing and 
invite their participation. Interested persons 
may submit their views through oral or written 
presentation, or both. There is no cross-examina- 
tion of witnesses. A transcript of the hearing is 
kept and exhibits may be accepted as part of the 
transcript. Sections 556 and 557 of Title 5, 
United States Code, do not apply to hearings 
held under this part. When appropriate, the 
Chief Counsel designates a member of his staff 
to serve as legal officer at the hearing. 

§ 557.8 Determination of manufacturer's obligation. 

If the Administrator determines, on the basis 
of the information presented at a hearing or any 
other information that is avaUable to him, that 
the manufacturer has not reasonably met his 
obligation to notify owners, dealers, and pur- 
chasers of a safety-related defect or failure to 
comply with a Federal motor vehicle safety 
standard or to remedy such defect or failure to 
comply, he orders the manufacturer to take 
specified action to comply with his obligation, 
consistent with the authority granted the Admin- 
istrator by the Act. 



41 F.R. 56810 
December 30, 1976 



PART 557-2 



Vehicle Identification Number Content Requirements 
(Docket No. 1-22; Notice 12) 



ACTION: Final rule. 



SUMMARY: This notice amends Federal Motor 
Vehicle Safety Standard No. 115, Vehicle Iden- 
tification Number, by deleting portions of that 
standard and reissuing those portions as a general 
agency regulation. This is being taken in response 
to a petition from the Motor Vehicle Manufac- 
turers Association (MVMA). It is intended to 
assiu-e that the recall and remedy provisions of the 
National Traffic and Motor Vehicle Safety Act 
("the Act") do not apply to certain errors in vehicle 
identification numbers (VIN's) which are minor 
and have no safety consequences. The basic 
substantive requirements of Standard 115 are un- 
changed by this action. 



DATES: This action is effective 30 days after 
publication in the Federal Register. 

SUPPLEMENTARY INFORMATION: The VIN is 
that unique number assigned each vehicle during 
production by the manufacturer for purposes of 
identification and inventory control. The VIN has 
other users. A variety of other organizations use 
the VIN for such purposes as vehicle registration, 
insurance rating, and theft investigation. NHTSA 
uses the VIN in its safety research and investiga- 
tion activities. 

In 1968, Federal Motor Vehicle Safety Standard 
(FMVSS) 115 was adopted, specifying that each 
passenger car must be assigned a unique VIN. In 
1979, FMVSS 115 was extended to cover motor 
vehicles other than passenger cars. Also, a 
uniform, 17-character format for VIN's was then 
established, specifying coded information such as 
the identity of the manufacturer, vehicle make, 
type of vehicle, various vehicle attributes, model 



year, plant of manufacture, and production se- 
quence. The VIN also contains a check digit which 
aids in the detection of errors in the transcription 
of VIN's by the users of the numbers. 

On June 13, 1980, MVMA petitioned this agency 
to withdraw FMVSS 115 and re-issue its provi- 
sions in the form of a general agency regulation. 
The significance of this change stems from section 
152 of the Act (15 U.S.C. 1412), which provides 
that whenever the Secretary of Transportation 
determines that a vehicle does not comply with a 
FMVSS, the Secretary must require the vehicle's 
manufacturer to notify the owners, purchasers, 
and dealers of the vehicle of that noncompliance 
and to remedy the noncompliance. However, in the 
case of a noncompliance with a regulation other 
than a FMVSS, the notification and remedy 
requirements of the Act do not apply. For those 
noncompliances, more flexible methods of enforce- 
ment are permitted. 

MVMA sought to assure through its requested 
amendment that errors in the assignment of VIN's 
would not trigger the recall and remedy provisions 
of the Act. Requiring that errors in assigned VIN's 
must be physically corrected would be undesirable 
in most cases for two reasons. First, correcting the 
errors would be an expensive and burdensome 
process, whose possible benefits would be greatly 
outweighed by the costs. These burdens and costs 
are discussed in the NPRM. In most cases, simply 
providing information on the nature of the error to 
users of the VIN's would solve any problems 
caused by the incorrect VIN. Second, changing a 
previously assigned VIN could create anti-theft 
problems. Law enforcement authorities consider 
the presence of an altered VIN in a vehicle to be an 
indication that the vehicle has been stolen. If VIN's 
were frequently altered lawfully, it would be more 
difficult for the police to detect stolen vehicles. 



PART 565-PRE 1 



Further, if the equipment necessary to alter VIN's 
were widely available (such as at all auto dealers, 
as might be necessary to conduct a recall and 
remedy campaign), thieves' access to such equip- 
ment would be greatly increased. Law enforce- 
ment authorities have consistently recommended 
to NHTSA that VIN numbers, once assigned, 
should not be altered for any reason, even if the 
original number was incorrect. 

The only exception to the recall requirement is 
contained in section 157 of the Act (15 U.S.C. 
1417) which authorizes exemptions from these re- 
quirements based on a demonstration that the 
noncompliance is inconsequential as it relates to 
safety. This authority could be used to relieve a 
manufacturer of the necessity of conducting a 
recall and remedy campaign to correct minor VIN 
errors. Minor labeling errors were among the ex- 
amples given in the legislative history of the provi- 
sion for the sorts of errors that are inconsequen- 
tial. While exemptions might well be given under 
section 157 for minor VIN errors, the necessity of 
conducting the exemption proceedings for such er- 
rors imposes an excessive administrative burden. 
The amendments made by this notice eliminate 
that burden. 

MVMA suggested that one possible consequence 
of a change in the status of the VIN provisions 
might be a loss or narrowing of Federal preemp- 
tion. Under section 103(d) of the Act (15 U.S.C. 
1392(d)), whenever a FMVSS is in effect, no State 
may establish or maintain a requirement applicable 
to the same aspect of performance unless the State 
requirement is identical to the FMVSS. The 
removal of various VIN requirements from 
FMVSS 115 removes them also from the operation 
of section 103(d). Recognizing this and the clear 
undesirability of having differing VIN require- 
ments established by the States, MVMA modified 
its petition on April 18, 1982. In its modified peti- 
tion, MVMA requested that only certain VIN pro- 
visions be shifted from the standard to the regula- 
tion. Requirements establishing the fundamental 
characteristics of the VIN, such as its length, loca- 
tion, and readability, would remain in the stand- 
ard. Under the amended petition, the content of 
the VIN would be specified in the VIN regulation. 
The combined standard /regulation scheme is in- 
tended to remove the threats of potentially costly 
recall campaigns to correct minor VIN errors or of 
inconsequentiality proceedings, while ensuring 
that the preemptive effect of the FMVSS is still 
maintained for the more significant requirements. 



After reviewing the MVMA petition, the agency 
tentatively concluded that MVMA's suggested j 
regulatory changes have merit, and proposed to 
adopt those changes. See 47 FR 42004, September 
23, 1982. (The agency believes that general prin- 
ciples of Federal preemption are sufficient to 
assure that the VIN regulation will preempt any in- 
consistent State requirements.) Based on further 
review of that petition and the comments received 
on the September notice of proposed rulemaking 
(NPRM), the agency is herein adopting these 
changes in final form. 

Comments on the NPRM 

Virtually all the comments received on the 
September NPRM supported the proposed 
changes to FMVSS 115. However, several com- 
menters suggested slight changes or clarifications 
to the proposed regulatory language. The most 
controversial aspect of the proposal was the provi- 
sion which would exempt from certain VIN re- 
quirements vehicles imported into the United 
States under bond, which do not meet U.S. stand- 
ards, but which will subsequently be modified to 
meet those standards. As a practical matter, this 
provision applies to individuals or organizations 
which import small numbers of vehicles. Several > 
commenters expressed the fear that this provision m 
could result in the importation of large numbers of ^ 
vehicles (such as by a foreign manufacturer) with 
nonconforming VIN's. These commenters sug- 
gested that the exemption be limited to a max- 
imum of 5 vehicles per year per individual. While 
the agency agrees that the exemption should not 
be applied to an actual manufacturer, it cannot 
justify selecting any particular arbitrary limit, 
such as five vehicles, to exclude larger commercial 
organizations. However, in response to these com- 
ments, the agency is amending this provision to ex- 
clude actual manufacturers of vehicles and their 
subsidiaries. 

Several commenters also suggested that infor- 
mation on VIN errors should be provided to the 
National Crime Information Center (NCIC, part of 
the Federal Bureau of Investigation) and the Na- 
tional Automobile Theft Bureau (NATB, a private 
organization affiliated with the insurance 
industry). These organizations could enter the in- 
formation in their computer systems, thereby mak- 
ing it available to State motor vehicle administra- 
tions, law enforcement organizations, and other 



PART 565-PRE 2 



Vehicle Identification Number Content Requirements 
(Docket No. 1-22; Notice 12) 



ACTION: Final rule. 



SUMMARY: This notice amends Federal Motor 
Vehicle Safety Standard No. 115, Vehicle Iden- 
tification Number, by deleting portions of that 
standard and reissuing those portions as a general 
agency regulation. This is being taken in response 
to a petition from the Motor Vehicle Manufac- 
turers Association (MVMA). It is intended to 
assure that the recall and remedy provisions of the 
National Traffic and Motor Vehicle Safety Act 
("the Act") do not apply to certain errors in vehicle 
identification numbers (VIN's) which are minor 
and have no safety consequences. The basic 
substantive requirements of Standard 115 are un- 
changed by this action. 



DATES: This action is effective 30 days after 
publication in the Federal Register. 

SUPPLEMENTARY INFORMATION: The VIN is 
that unique number assigned each vehicle during 
production by the manufacturer for purposes of 
identification and inventory control. The VIN has 
other users. A variety of other organizations use 
the VIN for such purposes as vehicle registration, 
insurance rating, and theft investigation. NHTSA 
uses the VIN in its safety research and investiga- 
tion activities. 

In 1968, Federal Motor Vehicle Safety Standard 
(FMVSS) 115 was adopted, specifying that each 
passenger car must be assigned a unique VIN. In 
1979, FMVSS 115 was extended to cover motor 
vehicles other than passenger cars. Also, a 
uniform, 17-character format for VIN's was then 
established, specifying coded information such as 
the identity of the manufacturer, vehicle make, 
type of vehicle, various vehicle attributes, model 



year, plant of manufacture, and production se- 
quence. The VIN also contains a check digit which 
aids in the detection of errors in the transcription 
of VIN's by the users of the numbers. 

On June 13, 1980, MVMA petitioned this agency 
to withdraw FMVSS 115 and re-issue its provi- 
sions in the form of a general agency regulation. 
The significance of this change stems from section 
152 of the Act (15 U.S.C. 1412), which provides 
that whenever the Secretary of Transportation 
determines that a vehicle does not comply with a 
FMVSS, the Secretary must require the vehicle's 
manufacturer to notify the owners, purchasers, 
and dealers of the vehicle of that noncompliance 
and to remedy the noncompliance. However, in the 
case of a noncompliance with a regulation other 
than a FMVSS, the notification and remedy 
requirements of tiie Act do not apply. For those 
noncompliances, more flexible methods of enforce- 
ment are permitted. 

MVMA sought to assure through its requested 
amendment that errors in the assignment of VIN's 
would not trigger the recall and remedy provisions 
of the Act. Requiring that errors in assigned VIN's 
must be physically corrected would be undesirable 
in most cases for two reasons. First, correcting the 
errors would be an expensive and burdensome 
process, whose possible benefits would be greatly 
outweighed by the costs. These burdens and costs 
are discussed in the NPRM. In most cases, simply 
providing information on the nature of the error to 
users of the VIN's would solve any problems 
caused by the incorrect VIN. Second, changing a 
previously assigned VIN could create anti-theft 
problems. Law enforcement authorities consider 
the presence of an altered VIN in a vehicle to be an 
indication that the vehicle has been stolen. If VIN's 
were frequently altered lawfully, it would be more 
difficult for the police to detect stolen vehicles. 



PART 565-PRE 1 



Further, if the equipment necessary to alter VIN's 
were widely available (such as at all auto dealers, 
as might be necessary to conduct a recall and 
remedy campaign), thieves' access to such equip- 
ment would be greatly increased. Law enforce- 
ment authorities have consistently recommended 
to NHTSA that VIN numbers, once assigned, 
should not be altered for any reason, even if the 
original number was incorrect. 

The only exception to the recall requirement is 
contained in section 157 of the Act (15 U.S.C. 
1417) which authorizes exemptions from these re- 
quirements based on a demonstration that the 
noncompliance is inconsequential as it relates to 
safety. This authority could be used to relieve a 
manufacturer of the necessity of conducting a 
recall and remedy campaign to correct minor VIN 
errors. Minor labeling errors were among the ex- 
amples given in the legislative history of the provi- 
sion for the sorts of errors that are inconsequen- 
tial. While exemptions might well be given under 
section 157 for minor VIN errors, the necessity of 
conducting the exemption proceedings for such er- 
rors imposes an excessive administrative burden. 
The amendments made by this notice eliminate 
t