o
US. Department
of Transportation
National Highway
Traffic Safety
Administration
Federal Motor Vehicle
Safety Standards
and Regulations
D 8. 6/2: 992 ■ ^ j j
jderal Hotor Uehicle Safety Standa.
With Amendments and
Interpretations Issued Through
December 1992
^ Federal Motor Vehicle
Safety Standards
and Regulations
us Department
of Transportation
National Highway
Traffic Safety
Administration
With Amendments and
Interpretations Issued Through
December 1992
TD 8. 6/2; 992 " ^ j 3
Federal llotor Uehicle Safety Standi..
Foreword
This reference volume contains Federal Motor Vehicle Safety Standards and
Regulations, including amendments and interpretations, issued through
December 1989.
The volume is divided into three sections. The first section contains
procedural rules and regulations. The second section contains the standards. The
third section contains rulings and additional regulations.
Each section is sub-divided into Parts which correspond to the Part numbers
appearing in the United States Code of Federal Regulations, as shown in the
following examples:
Part 551— Procedural Rules
Part 567— Certification
Part 571 —Motor Vehicle Safety Standards
Part 575— Consumer Information
The arrangement of the Parts within a section consists of preamble material,
followed by the applicable standard or regulation. To simplify the incorporation
of amended material into the text, amendments are issued as full replacement
pages, with each page having the same page number as the page it replaces.
The page numbering system is designed to keep related materials together,
while permitting expansion of the material within a section. Each page number
identifies: the Part to which it belongs, the standard or regulation with which it
is concerned, and the page number. For example, page one of Standard No. 108
is listed as PART 571; S 108-1. Preamble material (which is not amended) has
the same numbering system, except that the abbreviation PRE precedes the
page number (e.g. PART 571; S 108-PRE 1).
New standards, amendments, interpretations and other changes are issued
periodically as supplements to this document. These are loose leaf, pre-punched
and distributed automatically to subscribers to this publication. A sample layout
of a changed page with explanatory annotations appears on page iii.
For sale by the Superintendent of Documents, U.S. Government Printing Office
Washington, D.C. 20402
#
t
Material enclosed in
brackets represents
amendment to
standard
SAMPLE PAGE
MOTOR VEHICLE SAFETY STANDARD NO. 203
Impact Protection for the Driver from the Steering Control System— Passenger Cars
51. Purpose \and scope. This standard speci-
fies requirementsVor steering control systems that
will minimize chestt, neck, and facial injuries to
the driver as a resist of impact.
52. Application. (This standard applies to
passenger cars. However, it does not apply to
vehicles that conform to the frontal barrier crash
requirements (S5.1) of Standard No. 208
(§ 571.208) by means of other than seat belt as-
semblies. (40 F.R. 17992— April 24, 1987. Ef-
fective: 5/27/87)1 ^
53. Definitions. "St/ering control system'
means the basic steering mechanism and its as-
sociates trim hardware, including any portion
of a sneering column assembly that provides
energy Absorption uyon impact.
54. Requirement/
S4.1 Except asf provided in S4.2, when the
steering control ^ystem is impacted by a body
block in kccordamce with Society of Automotive
Engineers Recommended Practice J944, "Steer-
ing Wheal Assembly Laboratory Test Proce-
dure," Deieniper 1965 or an approved equivalent,
at a relative velocity of 15 miles per hour, the
impact force developed on the chest of the body
block transmitted to the steering control system
shall not exceed 2,500 pounds.
54.2 A Type 2 seat belt assembly that con-
forms to Motor Vehicle Safety Standard No. 209
shall be installed for the driver of any vehicle
with forward control configuration that does not
meet the requirements of S4.1.
54.3 The steering control system shall be so
constructed that no components or attachments,
including horn actuating mechanisms and trim
hardware, can catch the driver's clothing or
jewelry during normal driving maneuvers.
Interpretation
The term "Jewelry" in paragraph S4.3 refers
to watches, rings, and bracelets without loosely
attached or dangling members.
32 F.R. 2414
February 3, 1987
Issue of Federal Register
in which amendment was
issued and effective date
of amendment
Issue of Federal Register
in which Standard was
originally issued
Part of Code of Federal Regulations
in which Standard appears
\ Date of latest revision
(Rev. 1/13/87)
Standard number
Page number
PART 571; S203-1
in
#
Section One
Part 510 — Information Gathering Powers
Part 511 — Adjudicative Procedures
Part 512 — Confidential Business Information
Part 520 — Procedures for Considering Environmental Impacts
Part 523 — Vehicle Classification
Part 525 — Exemptions From Average Fuel Economy Standards
Part 526 — Petitions and Plans for Relief Under the Automobile Fuel Efficiency Act of 1980
Part 527 — Reduction of Passenger Automobile Average Fuel Economy Standards
Part 529 — Manufacturers of Multistage Automobiles
Part 531 — Passenger Automobile Average Fuel Economy Standards
Part 533 — Light Truck Average Fuel Economy Standards
Part 535 — 3-year Carryforward and Carryback of Credits for Light Trucks
Part 537 — Automotive Fuel Economy Reports
Part 538 — Driving Ranges for Dual Energy and Natural Gas Dual Energy Passenger Automobiles
Part 541 — Federal Motor Vehicle Theft Prevention Standard
Part 542 — Procedures for Selecting Lines to Be Covered by the Theft Prevention Standard
Part 543 — Exemption From Vehicle Theft Prevention Standard
Part 544 — Insurer Reporting Requirements
Part 551 — Procedural Rules
Part 552 — Petitions for Rulemaking, Defect, and Non-Compliance Orders
Part 553 — Rulemaking Procedures
Part 554 — Standards Enforcement and Defect Investigation
Part 555 — Temporary Exemption From Motor Vehicle Safety Standards
Part 556 — Exemption for Inconsequential Defect or Non-Compliance
Part 557 — Petitions for Hearings on Notification and Remedy of Defects
Part 565 — Vehicle Identification Number — Content Requirements
Part 566 — Manufacturer Identification
Part 567— Certification
Part 568 — Vehicles Manufactured in Two or More Stages
Part 569 — Regrooved Tires
Part 570 — Vehicle-in-Use Inspection Standard
Part 571 — Federal Motor Vehicle Safety Standards
Part 572 — Anthropomorphic Test Dummies
Part 573 — Defect and Noncompliance Reports
Part 574 — Tire Identification and Recordkeeping
Part 575 — Consumer Information Regulations
Part 576 — Record Retention
Part 577 — Defect and Noncompliance Notification
Part 579 — Defect and Noncompliance Responsibility
Part 580 — Odometer Disclosure Requirements
Part 581 — Bumper Standard
Part 582 — Insurance Cost Information Regulations
Part 585 — Automatic Restraint Phase-in Reporting Requirements
Part 586 — Side Impact Phase-in Reporting Requirements
Part 587 — Side Impact Moving Deformable Barrier
Part 588 — Child Restraint Systems Recordkeeping Requirements (Eff. 3-9-93)
Part 590 — Motor Vehicle Emission Inspections
Part 591 — Importation of Vehicles and Equipment Subject to Federal Safety Bumper and Theft Prevention
Standards
Part 592 — Registered Importers of Vehicles Not Originally Manufactured to Conform to the Federal Motor
Vehicle Safety Standards
Part 593 — Determinations That a Vehicle Not Originally Manufactured to Conform to the Federal Motor
Vehicle Safety Standards Is Eligible for Importation
Part 594 — Schedule of Fees Authorized by the National Traffic and Motor Vehicle Safety Act
#
PREAMBLE TO PART 510— INFORMATION GATHERING POWERS
(Docket No. 78-01; Notice 3)
ACTION: Final rule.
SUMMARY: This notice establishes a final rule
governing the issuance and use of compulsory
process by the National Highway Traffic Safety
Administration (NHTSA) in carrying out its duties
under the National Traffic and Motor Vehicle
Safety Act of 1966, as amended, (the Safety Act),
and the Motor Vehicle Information and Cost
Savings Act, as amended, (the Cost Savings Act).
This final rule was preceded by an interim final
rule, which set forth the procedures the agency
would use in exercising its information gathering
powers, and solicited comments on those
procedures. This rule informs the public of those
procedures, and of the rights which the public has
with respect to those procedures.
EFFECTIVE DATE: This rule will become effective
(45 days after publication in the Federal Register).
FOR FURTHER INFORMATION CONTACT:
Mr. Steve Kratzke,
Office of Chief Counsel,
National Highway Traffic Safety Administration
400 Seventh Street, S.W.,
Washington, D.C. 20590 (202-426-2992)
SUPPLEMENTARY INFORMATION:
A. Background. At 42 FR 64628, December 27,
1977, NHTSA published an interim final rule
establishing 49 CFR Part 510, Information
gathering powers. That regulation set forth the
procedures to be followed by NHTSA in exercising
its information gathering powers. It was issued as
an interim final rule without prior notice or
opportunity for comment. This is permitted by 5
U.S.C. 553 (b) (3) (A), which allows rules which are
strictly procedural to be issued without the
normally required notice and opportunity for
comment. However, because of this agency's
policy of encouraging public participation in all
agency activities, Part 510 was issued as an
interim rule, and comments from interested
members of the public were solicited. On February
2, 1978, the comment period was extended for an
additional 20 days in response to a petition
requesting such an extension; see 43 FR 5516,
February 9, 1978. The agency received many
comments on Part 510 from members of the
automotive industry, automotive associations both
large and small, associations of automobile users
and consumers, and at least one private citizen
who did not indicate any affiliation. All comments
were considered and the most significant ones are
addressed below.
In response to the comments received, several
changes have been made to the interim rule.
However, most of these changes are for the
purpose of clarification or to make explicit what
had been implicit in the interim rule. The most
significant changes are outlined below.
B. Most significant changes. The following are
the most significant differences between the
interim rule and this final rule:
1. The final rule reorganizes the category of
"investigational hearing" contained in the interim
rule into two smaller categories. The first
reorganized category is the "information
gathering hearing", in which the agency can
compel a witness to appear and answer questions
under oath. The agency's rulemaking meetings are
the most common example of this type of
proceeding. Generally, these hearings will be
public, and questioning of the witness will be
limited to the presiding officer and any other
members of a panel. The other reorganized
category, which is derived from the interim rule's
investigational hearing, is the "administrative
deposition". This is used in investigations and is
modeled after a deposition under the Federal Rules
of Civil Procedure.
PART 510; PRE 1
2. The final rule requires that any process issued
under it recite the statutory authority under which
the process is issued.
3. The final rule requires that any process issued
under it contain a brief description of the
investigation or inquiry in connection with which it
is being issued.
4. The final rule adds a form of compulsory
process, the written request for the production of
documents and things. This was implicit in the
concept of the general or special order established
in the interim rule, but has been made explicit in
this final rule to avoid any confusion as to the
availability and proper uses of this form of process.
5. The final rule expands the right to counsel by
deleting the authority for the agency to exclude a
person as counsel if such person were counsel for a
number of other witnesses in the same
investigation or if such person had personally been
subpoenaed to testify.
6. The interim rule had not specifed any time
limitations on the duty to supplement responses to
compulsory process. This final rule includes the
following limitations: with respect to process
issued in connection with a rulemaking action, the
duty to supplement terminates when a final rule is
issued or the action is otherwise ended. With
respect to process issued in connection with an
enforcement investigation, the duty to supplement
responses terminates when the defect
investigation is closed. Finally, with respect to
process not issued in connection with a specific
rulemaking action or enforcement investigation,
the duty to supplement terminates 18 months after
the date of the original response to the process.
C. Discussion of comments.
1. Comments on the procedure followed for
issuing this rule. One commenter suggested that
the interim rule may be void because it was issued
without a prior notice of proposed rulemaking and
opportunity for public comment. Moreover, this
defect might not be cured by the publication of a
final rule after consideration of comments
received, according to this commenter, in which
case the final rule would also be void.
The commenter asserted that any rule which
substantially affects the rights of persons subject
to the authority of an agency must be promulgated
with notice and opportunity for comment, no
matter whether the rule is labeled substantive or
procedural. However, the authority cited by the
commenter does not support that assertion.
Instead, the cases suggest that when it is difficult
to determine whether a rule is substantive or
procedural, the court will consider the impact on
the regulated parties. If that impact is significant,
it is likely that the rule is substantive. Thus, in
Pickus V. United States Board of Parole, 507 F.2d
1107 (D.C. Cir. 1974), the board of parole argued
that its regulation was procedural, but the
regulation also established some criteria for parole
eligibility. In Pharmaceutical Manufacturers
Association v. Finch, 307 F. Supp. 858 (D.
Delaware 1970), the FDA established procedural
regulations which also set up the requirements
with which drug manufacturers would have to
comply to establish that a new drug was safe and
effective. And in National Motor Freight Traffic
Association v. United States, 268 F. Supp. 90
(D.D.C. 1967), aff'd, 393 U.S. 18 (1968), the
Interstate Commerce Commission's procedural
regulations also established a remedy for the
recovery of overcharges. In none of these cases did
the court find the regulation to be purely
procedural.
Numerous cases have upheld the validity of
procedural rules issued without notice and
opportunity for comments, even when the rules
had a major impact on the parties. See Eastern
Kentucky Welfare Rights Organization v. Simon,
506 F2d 1278 (D.C. Cir. 1974) vacated on other
grounds, 436 U.S. 26 (1976); Shell Oil Co. v.
Federal Power Commission, 491 F.2d 82 (5th Cir.
1974); Buckeye Cablevision, Inc. v. United States,
438 F.2d 948 (6th Cir. 1971). The agency believes
that Part 510 is purely procedural, since it does not
even arguably establish any criteria for obtaining
favorable consideration by the agency, nor does it
establish any remedies for violations of substantive
agency rules. Indeed, it appears to NHTSA that
the regulation does not substantially affect the
rights of any parties, since Part 510 only
implements information gathering powers and
remedies for violations of those powers granted to
NHTSA in various statutes, without adding to or
deleting from those powers and remedies in any way.
Furthermore, even if NHTSA accepts arguendo
the commenter's claim that the interim rule should
have been preceded by notice and opportunity for
comment, that failure would be cured by the
agency's solicitation of comments on the interim
rule and the issuance of this final rule in response
to the comments received. The commenter's
position that no "cure" is possible is based on four
PART 510; PRE 2
cited cases. Three of those cases involved a
situation where the agency involved never issued a
notice indicating that there had been any
consideration of the comments received and no
modifications of the rule were ever made. Hence,
the courts in Community Nutrition Institute v.
Butz, 420 F. Supp. 751 (D.D.C. 1976), NLRB v.
Wyman-Gordon Co., 394 U.S. 759 (1969), and
National Motor Freight Traffic Association v.
United States, supra, were not presented with the
issue of whether a defectively issued rule can be
cured by soliciting and considering comments.
The other case cited by the commenter for the
position that no cure is possible was City of New
York V. Diamond, 379 F. Supp. 503 (S.D.N.Y.
1974). In that case, the Department of Labor
published a rule as final without any prior notice or
opportunity for comment. There was a statement
in the rule that any comments received in response
thereto would be acted upon as though the rule
were a notice of proposed rulemaking. No final
rule showing some consideration of comments was
ever published.
The court held that this rule was void for failure
to comply with the requirements of the
Administrative Procedure Act. The rationale for
the decision is explained at 379 F. Supp. 517,
where the court said, "Permitting the submission
of views after the effective date is no substitute for
the right of interested persons to make their views
known in time to influence the rulemaking process
in a meaningful way." The court expressed doubts
that an after-the-fact opportunity to comment
would be meaningful since people would be
unlikely to submit comments and the agency would
be unlikely to consider changes after a fait
accompli.
This reasoning is inapposite in the instant
situation. There has been no claim by this or any
other commenter that they were not allowed to
make their views known in time to influence the
rulemaking process. The doubts that comments
would be submitted can be allayed with regard to
this interim rule. A total of 26 written comments
were submitted in response to the invitation for
comments in the interim rule, and many of these
were long and detailed. The comments have been
considered at length. Changes outlined above have
been made to the interim rule in response to the
comments received.
Further, the remedy for a defectively issued rule
is that the invalidly issued rule is void and the
agency must follow the notice and comment
procedures before promulgating any new rule on
the subject. In this case, voiding the permanent
rule and requiring the agency to solicit comments
is unnecessary. Detailed comments have already
been submitted by representatives of many
different segments of the interested public.
Reissuance of a proposal identical to the interim
rule would serve no useful purpose.
2. General comments. Several commenters
expressed concern that the issuance of Part 510
signalled an end to a relatively cooperative
relationship concerning the agency's information
gathering needs, and a beginning of a new, more
adversarial relationship. NHTSA believes this
concern is unfounded. The agency has always had
the power to compel the production of information,
and has in fact made numerous mandatory
requests for information before the issuance of
Part 510. Part 510 is simply an effort by the
agency to state its authority with regard to
information gathering, and set forth the
procedures it will follow in exercising that
authority, as well as setting forth the rights parties
have when confronted with compulsory process by
this agency.
The existence of this rule will not change the
agency's general reliance on the voluntary
submission of information. For its part, the agency
will continue where feasible to rely on persons and
entities to voluntarily provide the agency with
information if the party will do so. NHTSA
believes that most parties will continue to do so,
since it is in the interest of those persons, as well as
that of the agency and the public, for NHTSA to be
well informed in its activities.
There were also repeated concerns that the
information gathering powers in Part 510 are
potentially oppressive, and could violate the right
to privacy. The information gathering authority of
this agency has been used and will continue to be
used in a responsible manner.
Persons subject to the agency's information
gathering powers have protections more secure
than this agency's assurances of good intent.
Under the provision of Part 510, persons may
informally protest the exercise of the information
gathering powers and seek to informally negotiate
terms of compliance that would not be oppressive.
If the party chooses, there are more formal ways of
PART 510; PRE 3
protesting at the administrative level, such as
filing motions to quash or modify the process
before the Deputy Administrator. Finally, a person
who has been served with compulsory process and
exhausted the available administrative remedies
may raise any available defense in an action
brought by NHTSA to enforce the process in the
appropriate United States District Court.
A number of commenters, particularly those
representing small businesses, stated that
additional Federal paperwork requirements would
be unbearable. This agency is aware of the
problems caused business, especially smaller
businesses, by requirements which cause the
business to prepare more paperwork. As explained
above, issuance of this rule will not lead to a
significant change in the information gathering
practices of this agency.
One commenter inquired whether the agency
would seek out differing opinions in the
information gathering process. NHTSA has
always tried to obtain a variety of views in its
information gathering activities, particularly in
the area of rulemaking, where the policy issues
involved are best considered in the light of
contrasting opinion. The agency has in the past
sought information and views from various
persons and entities. Typically, voluntary requests
and compulsory process are sent to manufacturers,
since they are most likely to possess the type of
information needed by the agency. To inform the
public of these information gathering efforts,
copies of the process and requests are placed in the
dockets. This information gathering has been
supplemented at the notice and comment stage of
rulemaking by such means as inviting public
participation to ensure that a wide range of views
is represented.
Several commenters expressed the view that the
information gathering powers discussed in Part
510 were unnecessary, duplicative of the authority
of the National Transportation Safety Board, and
not contemplated by Congress. It is clear that
Congress has given the agency broad information
gathering powers. Before the 1974 amendments to
the Safety Act, NHTSA's investigative and
information gathering authority under that Act
was relatively circumscribed. In 1974, the
Congress amended the Safety Act to give the
agency broad authority similar to the authority it
already possessed under Title I of the Cost Savings
Act. With respect to the 1974 amendments, the
House Committee stated that the amendments
authorize:
the Secretary to conduct informational hearings
and to obtain evidence from any person who has
information relevant to the implementation of
the Act. Despite the vital importance of
information gathering to successful
implementation of the Act, the Secretary does not
possess general authority for this purpose. This
lack is anomalous in view of the extensive
information gathering authority in the property
damage reduction provisions of the Motor
Vehicle Information and Cost Savings Act. This
paragraph would give the Secretary similar
broad authority in the more important pursuit of
preventing highway deaths and injuries.
(emphasis added) H. Rep. 93-1191, 93rd Cong.,
2d Sess. at 36-37.
In connection with the agency's duties under
Title V of the Cost Savings Act, dealing with
automotive fuel economy. Congress granted
similar broad information gathering authority in
section 505. To assist NHTSA in its duties to
prevent odometer fraud, Congress also granted
the agency broad information gathering powers in
Title IV of the Cost Savings Act at section 414.
NHTSA's information gathering powers
complement, but do not duplicate those of the
National Transportation Safety Board (NTSB).
The functions and information needs of the two
agencies, even in the safety area, differ
significantly. The function of the NTSB is to
investigate significant transportation accidents,
whether on the highways, rails, sea, or air, to
determine the cause of those accidents. NTSB then
publicly reports the results of these investigations.
It also issues general recommendations for
reducing the risks of accidents and publishes
reports on the general transportation safety
consciousness of other government agencies.
The functions of NHTSA include issuing specific
rules to prevent highway deaths and injuries,
reduce property damage in the event of an
accident, increase the average fuel economy of
automobiles, and prevent odometer fraud. Any
validly issued rule which is violated subjects the
violator to civil penalties. These differing functions
illustrate why the two agencies have differing
information needs. Further NTSB does not obtain
PART 510; PRE 4
any information which could be used to assist
NHTSA in its fuel economy, damageability, or
odometer fraud activities. With respect to
NHTSA 's safety activities, this agency is
concerned with more than just the cause of an
accident. NHTSA must also obtain information
which could support the establishment of safety
standards in the area, establish that there has been
some noncompliance with such standards, or show
the existence of a safety-related defect.
3. Specific comments.
a. Recitation of authority. A commented
suggested that Part 510 require that any process
issued thereunder indicate the statute that
authorizes the particular process. The agency
agrees that this is a reasonable requirement, and
§510.3(b) (2) of the final rule includes this
requirement. The agency would like to note that
the practice under the interim rule has been to
indicate the statutory basis for the process issued
thereunder, although the interim rule did not
require this.
b. Statement of purpose. There were also a
number of comments suggesting that Part 510
/ should be amended to require that any compulsory
process contain a brief description of the purpose
and scope of the investigation in connection with
which the process is issued, so that a respondent or
a reviewing court would have a basis for
determining whether the process is reasonably
relevant to that investigation. This agency agrees
to change the interim rule to add a requirement in
§ 510.3 (b) (4) of the final rule that compulsory
process contain a brief description of the purpose
and scope of the agency's investigation. Again, the
agency notes that process issued under the interim
rule has routinely carried a brief description of the
purpose of the agency's investigation.
It must be kept firmly in mind that the agency
need not and will not go into a detailed and specific
discourse about any investigation to support
compulsory process. As stated by the Court of
Appeals for the District of Columbia Circuit in
Federal Trade Commission v. Texaco, 555 F.2d 864
(D.C. Cir.); cert, den., 431 U.S. 974 (1977):
... an investigating agency is under no
obligation to propound a narrowly focused
theory of a possible future case. Accordingly, the
relevance of the agency's subpoena requests may
be measured only against the general purposes
of its investigation. 555 F. 2d at 874 (emphasis in
original)
More recently, the District Court for the District
of Columbia decided a case dealing specifically
with the information gathering powers of NHTSA
m^lJy.ited States v. Firestone Tire and Rubber Co.,
455 F. Supp. 1072 (D.D.C 1978). The court there
addressed this issue saying:
The agency need not narrow its focus from the
beginning, and it is not for this court to
determine whether the information sought is
relevant to whatever eventual action the agency
might take. This court may look only to the
general purpose of the investigation and
determine if the information sought, however
broad, is relevant to that purpose. 455 F. Supp.
at 1083 (emphasis in original)
One commenter suggested that Part 510 be
amended to require that compulsory process
inform the respondent of the identity of the person
or entity under investigation. In most enforcement
investigations the agency now identifies the
persons subject to the investigation in its
information requests and compulsory process. The
agency must be free, however, to gather
information relevant to the general purpose of
investigations which are not yet focused on
potential violations and violators. There may also
be investigations in which nondisclosure of the
identity of those under investigation will be
necessary to prevent harm to the outcome of the
investigations or harm to informants. The
Supreme Court has said that it is a proper purpose
for an administrative subpoena "to discover and
procure evidence, not to prove a pending charge or
complaint, but upon which to make one if, in the
Administrator's judgment, the facts thus
discovered should justify doing so." Oklahoma
Press Publishing Co. v. Walling, 327 U.S. 186, at
201 (1946). In other words, agency investigations
and compulsory process issued in connection with
those investigations need not be focused on a
limited number of persons or entities, but can be
intended simply to determine if there are violations
of any standards; United States v. Morton Salt Co.,
338 U.S. 632 (1950). Adoption of the requirement
urgeu by this commenter in all cases would unduly
hamper NHTSA's ability to conduct these
authorized and proper types of investigations and
the comment is, therefore, rejected.
c. Production of documents. Interim Part 510
listed a subpoena duces tecum as the only form of
compulsory process through which this agency
PART 510; PRE 5
could compel the production of documents.
Although it was not specifically identified as such,
the authority to issue general or special orders
includes the authority to compel the production of
documents.
The agency's authority to issue a type of
compulsory process that required the production of
documents outside the context of a hearing, in
which a subpoena would be issued, was upheld in
United States v. Firestone Tire and Rubber Co.,
supra. In that case, NHTSA issued a special order
to Firestone commanding the company to produce
and provide information about a group of
documents. Firestone specifically challenged the
agency's authority to compel the production of
documents outside the context of a hearing.
NHTSA argued that section 112 (c) (2) of the
Safety Act (15 U.S.C. 1401 (c) (2)) gave the agency
this authority . The court analyzed the legislative
history of this section and found that Congress had
intended to give the agency broad investigatory
powers. In conclusion, the court said:
Following Firestone's argument would
emasculate these newly-granted investigatory
powers. As such, the court must read the
requirements of this Act within the context of
Congressional intent. The Secretary's
investigative power is broad enough to compel
the production of documents and the analysis
thereof. 455 F. Supp. at 1082.
It is clear from this analysis that NHTSA has the
power to compel the production of documents by
the use of general or special orders under the
Safety Act. Sections 104 (a)(2), 204(b), 414 (c) (2),
and 505 (b) (1) (B) of the Cost Savings Act (15
U.S.C. 1914 (a) (2), 1944 (b), 1990d (c) (2), and 2005
(b) (1) (B)) use language identical to that used in
section 112 (c) (2) of the Safety Act. The use of
identical language shows the same intent to give
NHTSA broad authority and necessarily grants
that broad authority.
To make it explicit in this final rule that the
agency may exercise this authority, a form of
compulsory process not specifically set forth in the
interim rule has been added to this rule. The
process is called a written request for the
production of documents and things. This process
may be issued alone or as a part of a general or
special order. A written request for the production
of documents and things is the functional
equivalent of a subpoena deces tecum.
d. Service of process; when and where returnable.
One commenter argued that service of compulsory
process should be effected only by personal
service, rather than allowing the agency the option
of mail service, as is permitted by section 510.3(c).
The reason offered for this requested change is
that personal service is the only permissible service
for process issued by the courts of the United
States in civil matters, as set forth in Rule 45 (c) of
the Federal Rules of Civil Procedure. Personal
service, of course, offers the greatest certainty
that the person named in the process received
actual notice thereof. However, a requirement of
personal service would add a great deal of cost,
time, and burden for the agency in connection with
the issuance of compulsory process.
The commenter cited no authority which would
prohibit the agency from effecting service by mail,
nor is the agency aware of any such authority. In
fact, many Federal agencies use mail service for
their compulsory process. See, e.g. ,16 CFR §4.4 (a)
(Federal Trade Commission); 17 CFR § 201.4(b) (3)
(Securities and Exchange Commission). The
judgment made by these agencies is that the
possibility of a party not receiving notice by mail
service is so slight that the additional expenditure
of taxpayers' money required to effect personal
service would not be justified. This agency concurs
with that determination and will, therefore, permit
service by registered or certified mail. If the
respondent does not receive the process when it is
served by mail, NHTSA will give that fact due
consideration when determining the appropriate
action to be taken in response to the respondent's
failure to comply.
The same commenter raised the question of
issuing compulsory process to foreign citizens or
nationals of foreign countries residing abroad who
are not served with process in the United States,
or who have not appointed an agent for the service
of process in the United States. The commenter
argued that subpoenas to such persons would have
to be considered requests, rather than commands,
because such persons would be beyond the
jurisdiction of the United States. The agency's
compulsory process is bounded by the
jurisdictional limits of the United States courts
where the process is enforceable. The agency has
no doubt, however, that a corporation or perosn
amenable to service can be required to produce
records located outside the territorial limits of the
United States.
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PART 510; PRE 6
Several commenters suggested that when
service is effected by mail, the date of service
should be the date the respondent receives the
process, rather than the date on which the service
is mailed, with three additional days allowed to
perform the required act, as is required by
§ 510.3(d). One commenter urged that the agency
could easily determine the date of receipt by using
return receipt mailing methods. The provision in
the interim rule was adopted directly from Rule 6
(e) of the Federal Rules of Civil Procedure. This
provision has not led to any difficulties or
unfairness in the Federal courts such as some
commenters suggested would result from this
provision in Part 510.
Return receipt mail would add costs for the
agency and could add delay and cause other
difficulties in delivering process. These burdens
would not be outweighed by being able to ensure
absolutely that the respondents actually had
available to them the period to respond to the
process which was stated in the process. The
agency will always entertain motions to extend the
return date of its process, if the respondent can
show that the period available to it was inadequate.
Since these motions can be filed for all process
issued by the agency, the benefit of using return
receipt mailing would be insubstantial.
One commenter suggested that Part 510 should
allow service of compulsory process to a business
to be made upon an agent designated to receive
service, as an alternative to the agent-in-charge.
NHTSA agrees with this suggestion, and the rule
has been modified to reflect this new provision.
Many commenters addressed the issue of the
amount of time which should be permitted to
respond to compulsory process. Generally, the
commenters indicated that compulsory process
should be returnable in a reasonable amount of
time. Although this was not specifically required
by the interim rule, NHTSA intends to continue its
policy of requiring that process be returnable in a
reasonable amount of time. Further, NHTSA
believes that the requirement for reasonable
amount of time to respond to compulsory process
is so fundamental that it need not be explicitly
stated in the final rule.
Some commenters suggested that a certain
period of time, such as 30 days, be presumed by the
agency to be a minimum reasonable time. Other
commenters noted special factors which should
lengthen the amount of time that could be
considered reasonable. Examples of these special
factors were language differences and the size of
the companies to which the process was directed.
NHTSA concurs with the implicit statement in
these latter comments that the determination of
what is a reasonable period of time to respond
must necessarily be an ad hoc one, which will of
necessity consider the facts involved in each
individual case. The agency notes that, in addition
to the burden imposed on the respondents, the
determination of what is a reasonable time period
in which to respond must also consider the
agency's need for the information so that it can
perform its functions in a timely manner.
However, the fact that a determination of what is a
reasonable period of time must, almost by
definition, be made on a case-by-case basis leads
the agency to conclude that the establishment of
even a presumptively reasonable amount of time in
which to respond would unnecessarily limit the
ability to consider the particular facts of each case.
In the past, NHTSA has been willing to grant
extensions of time for responses to compulsory
process where it appeared that such extensions
were necessary and consistent with the public
interest. No departure from that policy is
contemplated.
One commenter inquired where NHTSA's
compulsory process would be returnable. Although
most compulsory process will be returnable at the
offices of NHTSA, situations may arise where the
process would be returned at some other place.
This question of where process must be returned
should also be considered on a case-by -case basis.
e. Investigational hearings. The interim rule set
forth one section which was intended to cover all
agency hearings and which referred to all hearings
as investigational hearings. These hearings were
structured to be a mechanism with which to gather
facts, opinions or other data relevant to an agency
investigation, inquiry or rulemaking and were not
adjudicative or quasi-adjudicative procedures. The
presiding officer at these hearings would have had
the authority to rule on objections, "unless an
immediate ruling would be unwarranted, and
except where a refusal to answer was based upon
the privilege against self-incrimination." This
limitation was necessary because the presiding
officer would not be a judicial officer, and so would
not rule on any legal points.
PART 510; PRE 7
The problem which became apparent with this
formulation was that the differences between
hearings in connection with rulemaking and
hearings in connection with enforcement
proceedings make it impossible to decribe both
hearings in one section. Although the section in the
interim rule dealing with investigational hearings
did set forth all fundamental points of the two
types of hearings which the agency will hold, it was
not an entirely accurate description of either
hearing.
In this final rule, § 510.5 sets forth the
procedures for hearings in connection with
rulemaking, which are called "information
gathering hearings." Section 510.6 sets forth the
procedures for hearings held in connection with
enforcement investigations, and these are now
called "administrative depositions." By separating
these types of hearings, this final rule provides a
more accurate description of each.
The information gathering hearings will
generally be open to the public. Information
gathering hearings include hearings in connection
with pending rulemaking actions, hearings on an
initial determination by the agency of a safety-
related defect or noncompliance with an applicable
Federal motor vehicle safety standard, held
pursuant to the authority of section 152 of the
Safety Act (15 U.S.C. 1412), and hearings on
whether a manufacturer has reasonably met its
obligation to notify and remedy a defect or failure
to comply, which hearings are held pursuant to the
authority of section 156 of the Safety Act (15
U.S.C. 1416). In addition to the presiding officer,
one or more other persons may be designated as
members of the panel. The members of the panel
may question any witness. If any person not a
member of the panel wishes to pose a question to a
witness, that person may write down the question
and submit it to the panel. Any member of the
panel may then pose the question if that member
feels it appropriate to do so. The presiding officer
at an information gathering hearing runs the
hearing, and ensures that it proceeds in an orderly
fashion.
The administrative deposition, which is held in
connection with enforcement investigations, will
generally be closed to the public. This proceeding
has been adapted from the procedures for
deposition procedures set forth in the Federal
Rules of Civil Procedure. An officer authorized to
administer oaths will put the deponent under oath
and record the person's testimony. NHTSA will
examine the witness first and then the witness's
attorney may examine the witness.
A number of commenters argued that the right
to counsel provided in interim Part 510 was too
restrictive. One commenter stated that the
provisions of the interim rule, which allowed any
witness at an investigational hearing to be
accompanied by counsel, to confer with counsel,
and to allow counsel to raise and explain any
objections to any question asked of the witness was
a limitation on the right to counsel guaranteed in
the Administrative Procedure Act at 5 U.S.C. 555,
where a person compelled to appear in person
before an agency is entitled to be "accompanied,
represented and advised" by counsel. This
commenter stated that the words "accompanied",
"represented, " and "advised" have different
shades of meaning signifying varying rights under
the law. NHTSA agrees with this latter statement.
It is not clear to this agency, however, what the
words "accompanied, represented and advised"
mean in addition to the rights to have counsel
present, to confer with that counsel, and to have
that counsel raise and explain objections, which
were granted in the interim rule. Notwithstanding
this point, NHTSA has no objections to modifying
the language of Part 510 in this final rule to track
the language of the Administrative Procedure Act.
Another commenter suggested that the rights of
counsel to state and argue objections should be
expanded. The interim rule provided that counsel
could object to any quetion and state the basis for
that objection on the record. This commenter
believes that the right to counsel consists of, at a
minimum, the right to make objections on the
record and argue briefly the basis for the
objections. NHTSA does not believe that it would
be appropriate to modify the final rule to permit
counsel to argue objections. In the information
gathering hearings, the presiding officer will not
be ruling on legal points, so no useful purpose
would be served by airing legal points at length
during the course of the hearing. With respect to
the administrative depositions, the presiding
officer as set forth in the interim rule has been
replaced in this final rule by an officer authorized
to administer oaths, and this officer will not rule on
any objections. Accordingly, once the objection has
t
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PART 510; PRE 8
been stated and the basis therefor explained, no
purpose, other than delaying the deposition, would
be served by arguing the objection.
Several commenters urged that the final rule
should allow cross-examination of witnesses at
investigational hearings. Since the investigational
hearings in the interim rule have been divided into
information gathering hearings and administrative
depositions in this final rule, the comment has been
considered with respect to both forms of hearings.
At an information gathering hearing, there will be
more than one witness, and these witnesses will be
expressing differing views and opinions. If each of
these witnesses could be cross-examined the
hearing would be lengthened considerably.
Especially since interested persons may submit
questions to be asked by the presiding panel and
are typically permitted a chance to supplement
their comments after these hearings, the agency
concludes that the rule should not be amended to
permit cross-examination of witnesses.
Administrative depositions will focus on one
witness, and the testimony of that witness will be
considered by NHTSA in determining whether an
enforcement action is necessary. If the agency
decides to pursue an enforcement action it will be
important that the testimony of the witness be as
probative and accurate as possible. In this context,
examination of the witnesses will generally be
more administratively workable, because there will
be only a single witness. The final rule has been
accordingly modified to allow the witness's
attorney or representative to examine the witness
after NHTSA finishes its examination of the
witness. Following this examination, NHTSA may
reexamine the witness, and the witness's attorney
may then reexamine the witness, and so forth, as
appropriate.
Many objections were raised to the provision in
the interim rule which excluded persons who were
subpoenaed to testify at an investigational hearing
from acting as counsel or representative for any
other witnesses at that investigational hearing.
One commenter argues that this provision could
easily be abused by NHTSA to improperly exclude
a counsel or representative. After a consideration
of these comments and a reexamination of the
exclusion, the agency has determined that the final
rule should be modified.
The reason for including this authority was to
prevent a situation where a counsel or
representative advising a number of persons in the
same proceeding could interfere with the
investigation by, either consciously or
subconsciously, tailoring testimony to conform
with testimony already given. Several courts have
stated that this general purpose is legitimate, and
could support a decision to exclude a counsel or
representative in these circumstances. SEC v.
Csapo, 553 F.2d 7 (D.C. Cir. 1976); SEC v. Higashi,
359 F.2d 550 (9th Cir 1966). However, both these
cases indicate that authority to exclude counsel
must be kept within permissible limits. The
automatic exclusion of counsel has been deleted for
both the information gathering hearings and the
administrative depositions. For information
gathering hearings § 510.5 (e) of this final rule
retains authority for the Administrator to take
appropriate action if a counsel or representative
refuses to comply with the presiding officer's
directions or to adhere to reasonable standards of
orderly and ethical conduct. Appropriate actions
could include the exclusion of that counsel or
representative from the hearing.
For an administrative deposition, the rule does
not specifically provide for any exclusion,
regardless of the behavior or conduct of a counsel
or representative. In the event that it becomes
necessary to prevent annoyance, embarrassment,
oppression, or undue expense or delay to the
witness or the agency, NHTSA will file an action in
a United States District Court to seek an order to
enforce the subpoena and to end the annoyance,
embarrassment, oppression, or undue expense or
delay, pursuant to the provision of § 510.6 (c) (5).
This motion would be analogous to a motion for a
protective order, which could be filed under Rule
26 (c) of the Federal Rules of Civil Procedure.
As an adjunct to this modification, the agency is
changing the requirements of § 510.6(f) to provide
that NHTSA may, in a nonpublic investigation and
for good cause shown, decline to provide a copy of
the transcript of his or her testimony to the
witness. In those cases, the witness will be limited
to an inspection of the transcript of the deposition.
Such a limitation is explicitly authorized by the
Administrative Procedure Act; 5 U.S.C. 555 (c).
The purpose of this change is to prevent witnesses
from tailoring their testimony to conform to
testimony given by previous witnesses.
One commenter suggested that the provision in
Part 510 regarding the time in which a witness is
allowed to sign the transcript of his or her
testimony be made more flexible. The 30-day
PART 510; PRE 9
period included in the interim rule was drawn
directly from Rule 30(e) of the Federal Rules of
Civil Procedure, where experience has not shown
it to be inadequate. Nonetheless, the language in
§ 510.6 (d) has been modified to allow the agency to
designate some period other than 30 days as the
period by which the testimony must be signed. The
agency will allow a longer or shorter period as
appropriate in particular circumstances.
A section has been added to the final rule which
would also permit the agency to correct errors in
the transcript of the deposition. Upon receiving a
copy of the testimony given at the deposition,
NHTSA would note any errors it believed had
occurred in the transcription of the deposition, and
forward notice of the alleged errors to the witness
at the deposition, along with the transcript of the
deposition. This notice would ask the witness to
stipulate that the errors had occurred and agree to
the corrections. If the witness would not make this
stipulation, NHTSA would ask the presiding
officer to have the record of the testimony reflect
the dispute and show the NHTSA's version of the
testimony as well as the version signed by the
witness. The parties could then attempt to get an
affidavit from the stenographer as to which
version was most accurate, or take other steps to
try to verify their version as the most accurate.
f. Subsequent use of testimony. Several
commenters objected to the interim rule insofar as
it provided that testimony obtained pursuant to
NHTSA's information gathering authority may be
"used in any investigation or administrative or
judicial adjudicative proceeding." It was claimed
that that agency could not and should not attempt
to control what a Federal judge or an
administrative law judge would admit into
evidence in a proceeding before the judge. It was
further stated that the absence of certain
procedural rights in the investigational hearings,
such as the right to cross-examine witnesses,
would automatically preclude the use of the
testimony in a subsequent adjudicative proceeding.
NHTSA obviously cannot control, nor did it seek
to control, what a presiding judge will admit into
the record of the proceeding over which he or she
presides. The reason that this language appeared
in the interim rule was to put respondents on
notice that any information obtained under Part
510 could be considered and used by NHTSA in the
manner it deems most appropriate, including
offering such information into the record of an
administrative or judicial proceeding. Whether
such information would be allowed into the record
is, of course, a decision which must be made by the
presiding judge, in accordance with the applicable
rules of evidence.
g. Motions to modify, limit, or quash process. A
number of comments were received addressing
motions to quash compulsory process. After a
review of these comments, the agency has
determined that the interim rule's provisions
should be retained almost in their entirety.
Many commenters argued that the agency
should expand the availability of these motions, so
that a recipient of a general or special order could
file a motion to modify, limit, or quash that
process. Some of these commenters argued that
NHTSA was required to permit these motions for
general and special orders, if it chose to permit
them for subpoenas. This issue was before the
court in United States v. Firestone Tire and Rubber
Co., supra, and the court held that the interim
rule's provisions allowing motions to modify, limit,
or quash subpoenas, but not allowing such motions
for general or special orders, were legally
acceptable. 455 F. Supp. at 1080.
As a practical matter, NHTSA issues general
and special orders and written requests for the
production of documents and things far more
frequently than it does subpoenas. To require the
Deputy Administrator to consider all of the
possible objections to each of these forms of
compulsory process would place an overwhelming
burden on that office. Furthermore, the practice
under interim Part 510 and before of not allowing
formal objections to be filed to these types of
compulsory process has worked very satisfactorily
for both the agency and the respondents to its
compulsory process. Given the acceptability of the
present procedures and the fact that expansion of
motions to quash to include all forms of compulsory
process could readily be abused to delay
compliance for frivolous and insubstantial reasons,
the agency has determined that only subpoenas
should be the subject of motions to modify, limit, or
quash.
One commenter stated that respondents to the
agency's compulsory process should be permitted
to informally negotiate the terms of compliance
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PART 510; PRE 10
with that process. NHTSA believed that the
opportunity for informal negotiation of the terms
of compliance with process was implicit in the
interim rule. However, the agency has no objection
to modifying the final rule to state explicitly that
informal negotiations as to the terms of
compliance are permissible, so § 510.3 (f) now
states that the Chief Counsel is authorized to
negotiate the terms of compliance with any
process issued under Part 510.
As set forth in this final rule, motions requesting
some change to the terms of process will be
decided by the Deputy Administrator. If the
Deputy Administrator is not available, these
motions will be decided by the Associate
Administrator for Administration. In response to a
comment, the final rule makes explicit what the
agency had considered to be implicit in the interim
rule; i.e., the Deputy Administrator is free to
structure relief, through modifications or
limitations of the subpoena, to achieve the
resolution he or she believes is most appropriate.
The final rule has also been modified to require
• that any motions to modify, limit, or quash process
be filed not later than 15 days after service of the
process or five days before the return date of that
process, whichever is earher, except in the rare
event that the return date is less than five days
after the service of the process. This requirement,
similar to time limitations on these motions
suggested in several comments, will eliminate last
minute filings of these motions. The elimination of
last minute filings will serve two important
purposes. First, these motions will not be subject
to abuse as a means of delaying compliance.
Second, the prompt filing of these motions will
facilitate more reasoned responses by the NHTSA
to such motions.
It was suggested by many commenters that the
filing of a motion to modify, limit, or quash should
automatically toll the return date of the process.
NHTSA has not adopted that suggestion, since any
automatic tolling provision would be easily subject
to abuse as a dilatory tactic. However, the agency
will entertain requests to extend the return date of
any process, and will consider such requests on the
basis of the individual set of circumstances. The
pendency of a good faith objection would be given
due consideration.
One commenter suggested that the agency
catalog the grounds upon which process can be
modified, limited, or quashed. The rule has not
been changed in this way, since the agency does
not wish to foreclose any legitimate grounds for
protesting some process. NHTSA will state that it
believes that most objections will be based upon the
alleged burdensomeness of the process, some
assertion of privilege, or a question of the
relevance of the information. However, this is not
an exhaustive list of the possible objections, and
any objections will be considered on their merits.
Many commenters objected to the provision that
would have the Deputy Administrator deciding
motions to quash. These commenters believed that
the Deputy Administrator could not impartially
decide these motions, because the process would
have been issued by that individual, or with the
concurrence of that individual or a superior, such
as the Administrator. This situation was said to
establish an institutional bias in favor of the
validity of the process which, according to those
commenters, violates the due process
requirements of the Fifth Amendment.
NHTSA believes that this comment reflects a
serious misunderstanding of the purpose of this
agency level mechanism for considering objections
to the compulsory process. This mechanism will
not be and is not intended to be an adjudication of
the rights of the affected parties. The due process
rights to an impartial decisionmaker do not apply
outside the context of a determination of the rights
of the affected parties. The sole purpose of having
an agency review of any objections is to provide a
respondent with a means which guarantees that
senior agency officials will consider any objections
raised by respondents to compulsory process
issued by this agency. This ensures that any
position taken on the motion or objection is the
final agency position. Given this purpose, it is
perfectly proper to have an official as senior as the
Deputy Administrator personally consider the
respondent's objections and decide the validity
thereof. Any respondent desiring a hearing which
comports with the due process requirements and
determines the rights of the respective parties can
obtain this by resisting compulsory process and
raising its objections in an enforcement action in a
United States District Court.
h. Duty to supplement responses to process.
Several comments were received relating to the
duty to supplement responses to compulsory
PART 510; PRE 11
process based on after-acquired information. The
language in the interim rule which imposed the
duty to supplement responses was taken almost
verbatim from Rule 26 (e) of the Federal Rules of
Civil Procedure, which requires that a response be
supplemented when after-acquired information
shows that the response was incorrect when made
or the response, though correct when made, is no
longer correct, and the failure to amend the
response is a knowing concealment. Two basic
objections were raised to this requirement. First, it
was asserted that the duty to supplement was not
limited by any time period, and would therefore
impose a perpetual duty to provide the agency with
information. The commenters stated that this
result would be extremely burdensome to
respondents while yielding minimal benefits to the
agency, since much of the amended information
would concern investigations which had been
ended. These commenters pointed out that the
duty imposed by the Federal Rules ends when the
litigation ends.
NHTSA agrees with the commenters that the
duty to supplement should not be open-ended.
Accordingly, the final rule has modified the
requirements of the interim rule to specify a
limitation on the duty to supplement. If process is
issued in connection with a rulemaking action or
enforcement investigation, the duty to supplement
terminates with the issuance of a final rule or
termination of the rulemaking or with the closing
of the investigation, respectively. In the case of
process not issued in connection with a specific
rulemaking action or enforcement investigation,
the duty to supplement expires 18 months after the
date of the response.
It should be noted that this amendment does not
in any way diminish the agency's authority to
specifically require a respondent to update some
response after the duty under this part to
supplement has expired. Further, the authority of
the agency to require specific supplementation of
responses while the general duty to supplement is
in effect is not limited by that general duty.
The second basic objection to the duty to
supplement as set forth in the interim rule
concerned the burden imposed on respondents to
correct "trivial" or "minor" errors. One
commenter urged that the duty to supplement
should be limited to instances where there is a
"significant" change in the information originally
given to NHTSA. The agency has not adopted this
suggestion. Respondents are under a duty to give
accurate responses to compulsory process. Errors
which appear to be trivial or minor to a respondent
exercising the utmost good faith may not be so
judged by the agency in the context of all the
information gathered by the agency. NHTSA
believes that it must determine whether a change
is trivial. This requirement does impose any
significant added burden on respondents, because
it should typically be easier for a respondent to
write down the changed information and send it to
NHTSA than to inform a responsible agency
official of the change and have him or her examine
the change to determine whether it can properly be
deemed trivial. Since there is little additional
burden imposed in requiring the change to be
submitted to the agency and the information is
necessary for NHTSA to properly perform its
function of evaluating the significance of the
change, the final rule does not limit the duty to
supplement as suggested.
One frequent comment of the duty to supplement
was that it would be extremely burdensome for the
respondents to constantly check their responses
for accuracy, even if the requirement were not
open-ended. NHTSA disagrees with this assertion.
The duty to supplement can be wholly satisfied by
checking on a periodic basis with the sources
within respondent having knowledge of the area to
determine whether any new facts or information
have arisen which might trigger a duty to
supplement. If there are such new facts or
information the respondent promptly informs the
agency about them. NHTSA agrees that this
creates some burden for respondents, but does not
agree that the burden is excessive or substantial.
Moreover, NHTSA notes that much of the factual
information which is subject to change, such as
reports of warranty claims, is compiled for the
respondents' own purposes on a regular basis. In
those cases, the duty to supplement will be readily
satisfied by making the update promptly available
to the agency.
i. Confidentiality of information. Great concern
was expressed over the confidentiality of alleged
trade secret and confidential business information
obtained by the agency by using its information
gathering powers. NHTSA has published a notice
of proposed rulemaking on this general subject
entitled Part 512, Confidential business
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PART 510; PRE 12
information; 43 FR 22412, May 25, 1978. That
notice proposes a detailed scheme for the
treatment of confidential business information
received by NHTSA. The agency anticipates that
the final rule on this subject will soon be published.
When Part 512 is published, its requirements will
supersede those set forth in § 510.3 (e). Until that
time, however, NHTSA will follow the procedures
set forth in § 510.3 (e) for handling and evaluating
allegedly confidential information obtained by the
use of compulsory process. That paragraph
provides that any claims for confidentiality must
be made in writing, that information for which
confidential treatment is requested will be kept
confidential until the confidentiality claim is
evaluated, and that the agency will afford
reasonable advance notice to the submitter of the
information of the contemplated release of any
information for which the submitter requested
confidential treatment.
j. Fees. Several comments were received
addressing the issue of compensation by NHTSA
of persons or entities for expenses incurred in
connection with the responses to the agency's
compulsory process. One commenter suggested
that the agency make explicit that the term
"person", as used in the section which provides
reimbursement for the travel expenses of
"persons" subpoenaed to testify at hearings,
includes officers, agents, and employees of
corporations. NHTSA has amended the rule to
state that the term "person" as used in this and all
other sections of the rule includes agents, officers,
and employees of corporations in their individual
capacities.
One commenter stated that a witness compelled
to testify orally before the agency should not be
required to pay for a copy of his or her testimony.
The agency still finds it reasonable to require a
person who wishes to retain a copy of his or her
testimony at either an information gathering
hearing or an administrative deposition to pay for
that copy in most circumstances.
Copies of transcripts will be furnished without
charge or at a reduced charge if the Associate
Administrator for Administration determines that
a waiver or reduction of the fee is in the public
interest because furnishing the information can be
considered as primarily benefitting the general
public.
Any witness has the right to inspect the
transcript of his or her testimony at no charge, and
a provision is made in connection with
administrative depositions for the submission of a
copy of the witness's testimony to that witness for
his or her signature. Hence, NHTSA does not
believe that there is any financial barrier to the
opportunity of any witness to thoroughly review
his or her testimony.
Several commenters stated that respondents to
compulsory process should be reimbursed
completely for their expenses incurred in
complying with the process. The agency does not
believe that complete reimbursement is
appropriate. First, it must be noted that the
provision for reimbursement contained in
NHTSA's authorizing statutes allows the agency
to pay witnesses the same mileage and fees that
can be paid witnesses in the courts of the United
States. See section 112 (c) (5) of the Safety Act, 15
U.S.C. 1401 (c) (5) and sections 104(a) (5), 204 (e),
414 (c) (5), and 505 (b) (3) of the Cost Savings Act,
15 U.S.C. 1914 (a) (5), 1944 (e), 1990d (c) (5), and
2005(b) (3). Part 510.11 of this rule expressly
authorizes the payment of these fees.
NHTSA recognizes that the expense associated
with complying with compulsory process is a major
component of the burdensomeness of that process.
The question, however, is whether an undue
burden is imposed. If respondents believe the
burden to be undue, they can file a motion with
NHTSA to quash the process and can litigate this
issue if the agency does not resolve it to their
satisfaction.
k. Remedies for failure to comply with
compulsory process. Several commenters made
strenuous objection to the provision of the interim
rale which allows the agency to seek civil penalties
against a respondent which fails to comply with
NHTSA's compulsory process. The arguments
made were basically that the availability of civil
penalties for failure to comply was not
contemplated or authorized by the Cost Savings
Act or the Safety Act, and that if the penalties
were authorized, that authorization would be
unconstitutional. NHTSA rejects these
contentions for the reasons set forth below.
There were two primary arguments raised to
support the view that the agency does not have the
authority to seek the imposition of civil penalties
PART 510; PRE 13
for a failure to comply with compulsory process.
First, it was asserted that the authorizing statutes
provide judicial enforcement of compulsory
process in a United States District Court as an
exclusive remedy for the failure to comply with
compulsory process. With respect to Titles I, II,
and IV of the Cost Savings Act, this assertion is
plainly inaccurate. Sections 106 (a) (3), 206(1), and
416 of the Cost Savings Act (15 U.S.C. 1916(a) (3),
1946 (1), and 1990 (f) state that no person shall fail
to provide the information requested by the
agency. A violation of this prohibition subjects the
violator to civil penalties, which shall be assessed
by the agency. Sections 107 (a), 208 (a), and 412 (a)
of the Cost Savings Act; 15 U.S.C. 1917 (a) 1948 (a)
and 1990b (a).
The commenters specifically pointed to the fact
that the Safety Act at section 112 (c) (4), 15 U.S.C.
1401 (c) (4), and Title V of the Cost Savings Act at
section 505 (c) (2), 15 U.S.C. 2005 (c) (2), provide
that the agency may seek judicial enforcement in
the case of a failure to respond to compulsory
process. However, the commenters did not point
out that the respective Acts also authorize the
agency to impose civil penalties for a failure to
comply with any "rule, regulation, or order"
issued under the information gathering authority
contained in that title; section 108 (a) (1) (E) and
109 (a) of the Safety Act, 15 U.S.C. 1397 (a) (4) and
1398 (a), and section 507 (3) and 508 of the Cost
Savings Act, 15 U.S.C. 2007 (3) and 2008. No
commenter cited any language in the statutes
themselves or the relevant legislative history
which states that judicial enforcement was
intended to be the exclusive remedy for a failure to
comply.
NHTSA believes that the availablity of civil
penalties for a failure to comply with compulsory
process is a necessary complement to judicial
enforcement. If judicial enforcement were the sole
remedy for failure to comply with the agency's
compulsory process, a respondent could always fail
to comply with the agency's compulsory process
until such time as the agency began a judicial
enforcement proceeding. Then, at any time before
the court entered its order compelling compliance
with agency process, the respondent could comply
with the order, thereby mooting the enforcement
action. Any respondent would have available to it a
penalty-free mechanism for delaying compliance
with NHTSA's compulsory process. There is no
indication that Congress intended or sanctioned
such a mechanism. Considering "the vital
importance of information gathering to the
successful implementation of the Act," H.R. Rep.
93-1191, 93 Cong., 2d Sess. at 37, and the absence
of any indication whatsoever that judicial
enforcement was to be the sole remedy, NHTSA is
not persuaded by this argument.
The second argument raised to support the view
that the agency lacks authority to impose civil
penalties was that subpoenas and general and
special orders were not "orders" within the
meaning of section 108 (a) (1) (E) of the Safety Act
and section 507 (3) of the Cost Savings Act, the
violation of which can give rise to civil penalties.
The argument is that subpoenas are not "orders",
because both statutes discuss "order" and
"subpoena" in the disjunctive. Since a subpoena is
not an order, the argument concludes that general
and special orders are not "orders" either, because
general and special orders are the functional
equivalent of subpoenas.
This argument is not convincing. It is a well
established and accepted rule of statutory
construction that the words of a statute are to be
given their common meaning, absent some
indication of a contrary legislative intent. 2A
Sutherland, Statutory Construction, § 47.28 and
the cases cited therein (4th ed. 1973). The word
"order" is defined in Webster's Second
International Dictionary as "a rule or regulation
made by competent authority; also a command;
mandate; precept; direction". The Oxford English
Dictionary defines "order" as "an authoritative
direction, injunction, mandate; a command, oral or
written; an instruction." It is obvious that both
subpoenas and general and special orders fall
within this common meaning of the word "order",
and that the Acts must be construed in that
manner unless there is a contrary legislative
intent.
The only authority which has been cited by a
commenter to show a contrary intent is the
language in Section 112 (c) (4) of the Safety Act,
and section 505 (b) (2) of the Cost Savings (called
"the judicial enforcement sections" for the rest of
this discussion) giving the district court of the
United States authority to compel compliance with
any subpoena or order issued by NHTSA. General
and special orders are specifically referred to as
"orders" in these judicial enforcement sections.
t
%
t
PART 510; PRE 14
Sections 108 (a) (1) (E) and 109 of the Safety Act
and 507 (3) and 508 of the Cost Savings Act (called
the civil penalty sections for the rest of this
discussion) give NHTSA authority to impose civil
penalties for the violation of any "rule, regulation,
or order". There is no reason to believe that the
"order" referred to in the civil penalty sections
does not include the forms of process included
within the meaning of "order" in the judicial
enforcement sections. Congress has shown its
intent that the violation of general and special
orders issued by NHTSA would subject the
violator to possible civil penalties.
The reference to subpoenas and orders in the
disjunctive occurs in the judicial enforcement
sections, which provide that compliance with a
subpoena or an order can be mandated by a court.
NHTSA's authority to issue subpoenas and general
and special orders comes from two different grants
of authority, and so it is grammatically necessary
to use the disjunctive to indicate that compliance
with either can be mandated by a court. There is,
however, no indication in the Acts or the
m legislative history that Congress intended for
subpoenas and general and special orders to be
enforced differently. Indeed, the judicial
enforcement sections treat these forms of process
identically for enforcement purposes. Accordingly,
the agency concludes that the use of the disjunctive
in the judicial enforcement sections is not by itself
a sufficient showing of a Congressional intent that
subpoenas not be included within the meaning of
"order" as that term is used in the civil penalty
section, and so Congress intended that the word
"order" as used in the civil penalty sections have
its common meaning. The common meaning
embraces all compulsory process issued by
NHTSA, whether general or special orders,
subpoenas, or written requests for the production
of documents and things.
The commenters raised two Constitutional
arguments in support of the position that the civil
penalties could not be imposed for failure to
comply with the agency's compulsory process. The
first argument was that the agency could not
constitutionally impose civil penalties, since this
self-enforcement would give judicial power to
^ NHTSA, a grant Congress could not make. One
W commenter was concerned that NHTSA was
trying to set up a procedure where the agency
could hold a respondent in contempt. NHTSA has
never intended to hold a non-complying
respondent in contempt of the agency, and the
interim rule contained no such provision. To
enforce and collect any civil penalty will require
the agency to bring an action in a United States
District Court, requesting the court to enforce the
penalty. No question of self-enforcement arises in
connection with this procedure.
A more complex issue was raised by commenters
in the second Constitutional argument, which was
that a party desiring to mount a good faith
challenge to the validity of compulsory process
issued by the agency could do so only by refusing to
comply with that process. If the agency were to
impose a penalty for this refusal, the argument
runs, the respondent would have had a penalty
imposed on it for exercising its right to have a
judicial review of the validity of the process.
NHTSA agrees with the commenters' assertion
that there is a due process right to contest the
validity of a legislative or administrative order
without having to pay substantial penalties if the
suit is lost. However, this right does not mean that
penalties begin to accrue only upon a final
judgment in NHTSA's favor. In St. Regis Paper
Co. V. United States, 368 U.S. 208 (1961), the FTC
had ordered a company to file special reports with
that agency. Section 10 of the Federal Trade
Commission Act, 15 U.S.C. 50, specified a penalty
of $100 for each day a special report was overdue.
The company challenged this provision of the Act,
alleging that it had been denied its day in court to
challenge the validity of the underlying order to
file special reports. The company alleged that, in
effect, the order was not judicially reviewable
except if the company paid the civil penalty, and
that this scheme violated the due process
requirements.
The Supreme Court found this penalty scheme to
be consistent with due process, because the
petitioner had an opportunity for judicial review
without having to pay the penalty. Specifically, the
Court found that the company could have filed an
action for declaratory judgment and a concurrent
motion to stay the effective date of the FTC order
pending a ruling by the court on the validity of the
order. This opportunity for review is sufficient to
satisfy the requirements of due process. 368 U.S. at
225-227.
PART 510; PRE 15
This reasoning has been applied to the civil
penalty provisions for failure to comply with a
NHTSA order requiring a manufacturer to furnish
notification of a defect to owners, purchasers, and
dealers, and to remedy the defect without charge,
as specified in section 152 of the Safety Act (15
U.S.C. 1412). In Ford Motor Co. v. Coleman, 402 F.
Supp. 475 (D.D.C. 1975) affdA25 U.S. 927 (1976);
it was asserted that this statutory provision
violated the due process rights of the manufacturer
by forcing the manufacturer to either comply with
an erroneous order or risk a substantial civil
penalty if it lost its challenge to the order. The
court stated that this statutory provision did not
offend due process rights, since a manufacturer
which could present a substantial, nonfrivolous
challenge to the validity of NHTSA's
determination could obtain a preliminary
injunction against the enforcement of the order.
The court would have jurisdiction to issue a
temporary order restraining the imposition of the
penalties pending its determination of the motion
for preliminary injunction, and to issue a
preliminary injunction that would stay the accrual
of penalties until the completion of the de novo
enforcement proceedings in district court on the
underlying order. The civil penalties would begin
accumulating against the manufacturer only if the
manufacturer could not convince the court to issue
a preliminary injunction, i.e., if the manufacturer
could not show that it had reasonable and
substantial grounds for contesting the order.
According to the opinion, the due process right to a
judicial determination of the validity of the order
does not require that a manufacturer be permitted
to press a frivolous or insubstantial objection
without risk of a penalty.
Several commenters cited Reisman v. Caplin,
375 U.S. 440 (1964) as authority for the proposition
that the civil penalty scheme as set forth in the
interim rule would violate due process rights. That
case involved an order by the Commissioner of
Internal Revenue to a taxpayer to furnish certain
documents. The taxpayer contended that since he
had to risk a large fine and imprisonment for not
complying with the order, he had been effectively
denied the due process right to a judicial review of
the validity of the order. The Court disagreed with
this contention, stating that the statute
authorizing civil and criminal penalties for failure
to comply with an order must be read so as not to
apply while a respondent is making a good faith
challenge to the validity of the order. In this
agency's opinion, this reasoning is identical to that
used in St. Regis, supra, and Ford Motor Co. v.
Coleman, supra. The civil penalty provisions in the
interim rule do not restrict the right of a
respondent to process to obtain a judicial review of
the validity of that process without a civil penalty,
if the challenge is not insubstantial. Since this
complies with the requirements of due process, no
change has been made to the civil penalty section
of this rule from what was set forth in the interim
rule.
In consideration of the foregoing. Chapter V of
Title ,49, Code of Federal Regulations is amended
by adding a new Part 510, Information Gathering
Powers, to read as set forth below.
The attorney principally responsible for the
development of this final rule is Stephen Kratzke.
Issued on April 28, 1980.
Joan Claybrook
Administrator
t
<i
45 F.R. 29032
May 1, 1980
i
PART 510; PRE 16
PREAMBLE TO AN AMENDMENT TO PART 510
INFORMATION GATHERING POWERS
ACTION: Final Rule.
SUMMARY: This Notice incorporates a delegation of
authority to the Deputy Administrator and, in the
absence of the Administrator and the Deputy Admin-
istrator, to the Managing Director to exercise all
authority lawfully vested in the Administrator and
reserved to him or her, except where specifically
limited by law, order, regulation or instruction. This
Notice also makes technical revisions to the agency's
organization and delegation rules, including the correc-
tion of legal citations, updating to reflect recent
statutory enactments, and inclusion of materials which
had been inadvertently omitted in previous printings
of the Code of Federal Regulations.
DATE EFFECTIVE: July 12, 1988.
SUPPLEMENTARY INFORMATION: Due to internal
reorganization, the National Highway Traffic Safety
Administration is amending its delegation of author-
ity to allow the Deputy Administrator to exercise, in
the Administrator's absence, those authorities
previously reserved to the Administrator and to allow
the Managing Director to exercise those authorities
previously reserved to the Administrator in the absence
of both the Administrator and the Deputy
Administrator.
Additionally, because of internal agency reorganiza-
tion, the position of Executive Secretary is retitled the
Director of the Executive Secretariat and is assigned
the functions previously delegated to the Executive
Secretary, with the exception of subpoena authority.
This authority is transferred from the Director of the
Executive Secretariat to the Chief Counsel.
The amendment set forth below relates solely to the
organization and assignment of duties within the
agency, and has no substantive regulatory effect. Thus,
it is not covered by the notice and comment and effec-
tive date requirements of the Administrative Pro-
cedure Act or the requirements of Executive Order
12291 or the Department of Transportation's
regulatory policies and procedures. Notice and public
procedure are, therefore, not required, and the amend-
ment may be made effective in less than thirty days
after pubUcation.
Section 510.4 is revised to read as follows:
510.4 Subpoenas, generally.
NHTSA may issue to any person, sole proprietorship,
partnership, corporation, or other entity a subpoena
requiring the production of docimients or things (sub-
poena duces tecum) and testimony of witnesses (sub-
poena as testificandum), or both, relating to any mat-
ter under investigation or the subject of any inquiry.
Subpoenas are issued by the Chief Counsel. Then a per-
son, sole proprietorship, partnership, corporation, or
other entity is served with a subpoena ad testifican-
dum under this part, the subpoena will describe with
reasonable particularity the matters on which the
testimony is required. In response to a subpoena ad
testificandum, the sole proprietorship, partnership, cor-
poration, or other entity so named shall designate one
or more officers, directors, or managing agents, or
other persons who consent to testify on its behalf, and
set forth, for each person designated, the matters on
which he or she will testify. The person so designated
shall testify as to matters known or reasonably
available to the entity.
Diane K. Steed
Administrator
53 F.R. 26257
July 12, 1988
PART 510-PRE 17-18
(f
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PART 510— INFORMATION GATHERING POWERS
§ 510.1
§ 510.2
§ 510.3
§ 510.4
§ 510.5
§ 510.6
§ 510.7
§ 510.8
§ 510.9
Scope and purpose.
Definitions.
Compulsory process, the service thereof,
claims for confidential treatment, and
terms of compliance.
Subpoenas generally.
Information gathering hearings.
Administrative depositions.
General or special orders.
Written requests for the production of
documents and things
Motions to modify, limit, or quash process.
§ 510.10 Supplementation of responses to process.
§510.11 Fees.
§ 510.12 Remedies for failure to comply with
compulsory process.
§ 510.1 Scope and purpose.
This rule governs the use of the information
gathering powers of the National Highway Traffic
Safety Administration contained in section 112 of
the National Traffic and Motor Vehicle Safety Act
of 1966, as amended 15 U.S.C. 1401, and sections
104, 204, 414, and 505 of the Motor Vehicle
Information and Cost Savings Act, as amended 15
U.S.C. 1914, 1944, 1990d, and 2005.
§ 510.2 Definitions.
(a) "NHTSA" means the National Highway
Traffic Safety Administration.
(b) "Administrator" means the Administrator of
the National Highway Traffic Safety Administration.
(c) "Chief Counsel" means the Chief Counsel of
the National Highway Traffic Safety Administration.
(d) "Deputy Administrator" means the Deputy
Administrator of the National Highway Traffic
Safety Adminstration.
(e) "Person" includes agents, officers, and
employees of sole proprietorships, partnerships,
corporations, and other entities.
§ 510.3 Compulsory process, the service thereof,
claims for confidential treatment, and
terms of compliance.
(a) NHTSA may use any of the following means
to conduct investigations, inspections, or inquiries
to obtain information to carry out its functions
under the National Traffic and Motor Vehicle Safety
Act of 1966, as amended, 15 U.S.C. 1381 et seq., and
the Motor Vehicle Information and Cost Savings Act,
as amended, 15 U.S.C. 1901 et seq.:
(1) Subpoenas;
(2) Information gathering hearings;
(3) Administrative depositions;
(4) General or special orders; and
(5) Written requests for the production of
documents and things.
(b) A person, sole proprietorship, partnership,
corporation, or other entity served with compulsory
process under this part shall be provided with the
following information at the time of the service—
(1) The name of the person, sole proprietorship,
partnership, corporation, or other entity to which
the process is addressed;
(2) The statutory provision under which the
compulsory process is issued;
(3) The date, time, and place of return;
(4) A brief statement of the subject matter of the
investigation, inspection, or inquiry; and
(5) In the case of a subpoena duces tecum or a
written request for the production of documents
and things, a reasonably specific description of the
documents or things to be produced.
(c) Service of the compulsory processes specified
in paragraph (a) of this section is effected:
(1) By personal service upon the person, agent-
in-charge, or agent designated to receive process
under 15 U.S.C. 1399 (e) of the sole proprietorship,
partnership, corporation or other entity being
investigated, inspected, or inquired of; or
(2) By mail (registered or certified) or delivery to
the last known residence or business address of
such person or agent.
(d) The date of service of any compulsory process
specified in paragraph (a) of this section is the date
on which the process is mailed by the agency, or
delivered in person, as the case may be. Whenever a
period is prescribed for compliance with compulsory
process, and the process is served upon the party by
mail, 3 days are added to the period.
PART 510-1
(e)(1) Any person, sole proprietorship, partner-
ship, corporation, or other entity submitting infor-
mation or producing documents or things in
response to any compulsory process issued under
this part may request confidential treatment for all
or part of that information or for those documents
or things.
(2)(A) Except as provided in paragraph (e)(2)(B)
of this section, requests for confidentiality shall be
in writing, and addressed to the Chief Counsel.
(B) Requests for confidentiality made during an
information gathering hearing or an admin-
istrative deposition may be made orally to the
presiding officer. Any oral request for confiden-
tiality shall be supplemented by a written request,
and this written request must be addressed to the
Chief Counsel and received by NHTSA within five
days of the date of the oral request.
(C) A written request for confidentiality under
paragraph (e) of this section shall specify the infor-
mation, documents, or things which are to be kept
confidential, specify the groimds upon which the
claim is based, provide such information as may be
necessary to permit the NHTSA to determine
whether the claim is valid, and specify the period of
time for which confidential treatment is requested.
(f) The Chief Counsel, or his or her delegate, is
authorized to negotiate and approve the terms of
satisfactory compliance with any compulsory pro-
cess issued under this part.
§ 510.4 Subpoenas, generally.
NHTSA may issue to any person, sole pro-
prietorship, partnership, corporation, or other
entity a subpoena requiring the production of
documents or things (subpoena duces tecum) and
the testimony of witnesses (subpoena ad testifican-
dum), or both, relating to any matter under in-
vestigation or the subject of an inquiry. Subpoenas
are issued by the [Chief Counsel]. When a person,
sole proprietorship, partnership, corporation, or
other entity is served with a subpoena ad testi-
ficandum under this part, the subpoena will
describe with reasonable particularity the matters
on which the testimony is required. In response to
a subpoena ad testificandum, the sole proprietor-
ship, partnership, corporation, or other entity so
named shall designate one or more officers, direc-
tors, or managing agents, or other persons who
consent to testify on its behalf, and set forth,
for each person designated, the matters on which
he or she will testify. The person so designated
shall testify as to matters known or reasonably
available to the entity. [53 F.R. 26257— July 12, 1988.
Effective: July 12, 1988.]
§ 510.5 Information gathering hearings.
(a) NHTSA may issue a subpoena to compel any
person, sole proprietorship, partnership, corpora-
tion, or other entity to provide information at an
information gathering hearing. The subpoenas are
used for the purpose of obtaining testimony from a
witness under oath and obtaining relevant docu-
ments and things. The Administrator, or a NHTSA
employee designated by the Administrator,
presides at the hearing. Information gathering
hearings are open to the public unless the presiding
officer rules otherwise, and the hearings are
stenographically reported.
(b) In addition to the presiding officer, one or
more other persons may comprise the panel. Each
member of the panel may question any witness at
the hearing. No person who is not a member of the
panel may ask questions of a witness. However,
any person may submit to the panel, in writing,
proposed questions to be asked of a witness. A
member of the panel may pose these questions to
the witness if that member deems the questions
useful and appropriate. Proposed questions may be
submitted to the panel at any time before or during
the course of the hearing.
(c) The stenographic record of each witness's
testimony will be available to the public, unless the
testimony was not given publicly and the witness
requests confidential treatment for some or all of
his or her testimony. When an oral request for con-
fidential treatment is made during the course of a
witness's testimony, the presiding officer may order
the hearing closed to the public at that point and
continue the questioning of the witness, or may note
the request for confidentialify and direct the
witness not to answer the question at that time, but
require the witness to answer the question in
writing within some specified period, or take such
other action as the presiding officer deems ap-
propriate. If a request for confidential treatment is
made, the release of the record is governed by the
applicable laws or regulations relating to the handl-
ing of allegedly confidential information. To the ex-
tent that some or all of a witness's testimony is not
publicly available, that witness may procure a copy
of his or her testimony as recorded upon payment of
lawfully prescribed costs.
«
#
(Rev. 7/12/88)
PART 510-2
(dXl) Any person who is required by subpoena
or designated by an entity that is required by
subpoena to provide information at an information
gathering hearing conducted under this section
may be accompanied, represented, and advised by
counsel. Any member of the bar of a Federal court
or the courts of any State or Territory of the
United States, the Commonwealth of Puerto Rico,
or the District of Columbia, and any
representative, official, or employee of the sole
proprietorship, partnership, corporation or other
entity under subpoena may act as counsel.
(2) A witness appearing in response to a
subpoena my confer in confidence with his or her
counsel or representative concerning any
questions asked of the witness. If such witness,
counsel, or representative objects to a question,
her or she shall state the objection and basis
therefor on the record
(e) The presiding officer at an information
gathering hearing takes all necessary action to
regulate the course of the hearing, to avoid delay,
and to assure that reasonable standards of orderly
and ethical conduct are maintained. In any case in
which counsel for or a representative of a witness
has refused to comply with the presiding officer's
directions, or to adhere to reasonable standards of
orderly and ethical conduct in the course of a
hearing, the presiding officer states on the record
the reasons given, if any, for the refusal and, if the
presiding officer is someone other than the
Administrator, immediately reports the refusal to
the Administrator. The Administrator thereupon
takes such action as the circumstances warrant.
(f) Where appropriate, the procedures
established in this subsection may be utilized in
informal hearings conducted by NHTSA pursuant
to its authority under sections 152 and 156 of the
Safety Act (15 U.S.C. 1412, 1416) to receive data,
views and arguments concerning alleged safety-
related defects. The rights accorded to witnesses
in this subsection may also be accorded to
witnesses who appear voluntarily at such hearings.
§ 510.6 Administrative depositions.
(a) NHTSA may issue a subpoena to compel any
person, sole proprietorship, partnership,
corporation or other entity to provide information
as a witness at an administrative deposition. These
depositions are for the purpose of obtaining
information from the witness under oath and
receiving documents and things relevant to an
agency investigation. These depositions shall be
taken before an officer authorized to administer
oaths by the laws of the United States or of the
place where the deposition is taken. Unless
otherwise ordered by the Administrator,
administrative depositions are closed to the pubUc.
(b) Any person who is required by subpoena or
designated by an entity that is required by
subpoena to produce documents or things or to
give testimony as a witness at an administrative
depostion conducted under this section may be
accompanied, represented, and advised by counsel.
Any member of the bar or a Federal court or the
courts of any State or Territory of the United
States, the Commonwealth of Puerto Rico, or the
District of Columbia and any representative,
official, or employee of the person, sole
proprietorship, partnership, corporation, or other
entity under subpoena may act as counsel.
(c) During an administrative deposition:
(1) The presiding officer before whom the
deposition is to be taken puts the witness on oath
and personally, or by someone acting under his or
her direction and in his or her presence, records
the testimony of the witness. The testimony is
stenographically reported.
(2) After NHTSA has examined the witness at
the deposition, that witness's counsel or
representative may examine the witness. NHTSA
may then reexamine the witness and the
witnesses' counsel or representative may
reexamine the witness and so forth, as
appropriate.
(3) A witness appearing in response to a
subpoena may confer in confidence with his or her
counsel or representative concerning any
questions asked of the witness. If such witness,
counsel, or representative objects to a question, he
or she shall state the objection and the basis
therefor on the record.
(4) Objections to the qualifications of the officer
taking the deposition, or to the manner of taking
it, or to the evidence presented, and any other
objection to the proceedings shall be noted by the
officer on the record, and shall be treated as
continuing. Evidence objected to shall be taken
subject to the objections. Errors and irregularities
occurring at a deposition in the manner of the
taking of the deposition, in the form of questions or
PART 510-3
#
answers, or in the oath or affirmation, and errors
of any kind which might be obviated, removed, or
cured if promptly presented shall be deemed to be
waived unless reasonable objection is made thereto
at the taking of the deposition.
(5) If the witness refuses to answer any question
or answers evasively, or if the witness or his or her
counsel engages in conduct likely to delay or
obstruct the administrative deposition, such
refusal, evasive answer or conduct shall be a
failure to comply with the subpoena issued to the
witness.
(6) Upon completion of the examination of a
witness, the witness may clarify on the record any
of his or her answers.
(d) The transcript of the testimony of a witness
who testified in response to a subpoena at an
administrative deposition is submitted to the
witness for signature, unless the witness waives
the right to sign the transcript. If a witness desires
to make any changes in the form or substance
contained in the transcript, the witness shall
submit, together with the transcript, a separate
document setting forth the changes and stating the
reasons for such changes. If the deposition is not
signed by the witness within 30 days of its
submission to the witness, or such other period as
the NHTSA may designate, the officer before
whom the deposition was taken or a NHTSA
employee signs the transcript and states on the
record the fact of the waiver of the right to sign or
the fact of the witness's unavailability or inability
or refusal to sign together with the reasons, if any,
given therefor.
(e) The transcript of the testimony of a witness
will be inspected by NHTSA to determine if there
are any errors in the transcription of the questions
posed to the witness and the testimony in response
to those questions. If NHTSA discovers any
errors, it notes that fact and forwards the notation
of errors together with the transcript to the
witness, requesting the witness to stipulate that
the transcript is in error and that the corrections
made by NHTSA are accurate. If the witness will
not make this stipulation, NHTSA may make a
motion to the presiding officer to include its
notation of error and its corrections in the record
along with the version of the testimony signed by
the witness.
(f)(1) Upon payment of lawfully precribed costs,
any person who is required by subpoena or
designated by a sole proprietorship, partnership.
corporation, or other entity that is required by
subpoena to appear as a witness at an
administrative deposition may procure a copy of
the deposition as recorded, except that in a
nonpublic investigatory proceeding, the witness
may, for good cause, be limited to an inspection of
the record of the deposition.
(fX2) A copy of the record of the deposition may
be furnished to the witness without charge or at a
reduced charge if the Associate Administrator for
Administration determines that waiver of the fee
is in the public interest because furnishing the copy
can be considered as primarily benefitting the
general public. Any witness who seeks a waiver of
the copying charge may apply in writing to the
Associate Administrator for Administration, and
shall state the reasons justifying waiver of the fee
in the application.
(g) The testimony obtained in an administrative
deposition may be used or considered by the
NHTSA in any of its activities, and may be used or
offered into evidence in any administrative
proceeding in accordance with the provisions of 5
U.S.C. 554, or in any judicial proceeding.
§ 510.7 General or special orders.
The NHTSA may require by the issuance of
general or special orders any person, sole
proprietorship, partnership, corporation, or other
entity to file with the NHTSA, in such form as
NHTSA may prescribe, periodic or special reports
or answers in writing to specific questions. The
responses to general or special orders will provide
NHTSA with such information as it may require,
including, but not limited to, information relating
to the organization of that person, sole
proprietorship, partnership, corporation, or other
entity, its business, conduct, practices,
management, and relation to any other person or
entity. General or special orders which are
required to be answered under oath are issued by
the Chief Counsel. Any general or special order
issued under this section contains the information
specified in section 510.3 (b). Reports and answers
filed in response to general or special orders must
be made under oath, or otherwise, as NHTSA may
prescribe.
§ 510.8 Written requests for the production of
documents and things.
The NHTSA may, by the issuance of a written
request for the production of documents and
«
#
PART 510-4
things, require any person, sole proprietorship,
partnership, corporation, or other entity to
produce documents or things. A written request
for the production of documents and things may be
issued alone, or as a part of a general or special
order issued under section 510.7. Written requests
for the production of documents and things are
issued by the Chief Counsel. Any written request
for the production of documents and things issued
under this section shall contain the information
specified in section 510.3(b).
§ 510.9 Motions to modify, limit, or quash process.
(a)(1) Any person, sole proprietorship,
partnership, corporation, or other entity served
with a subpoena issued under section 510.4 may
file with the Deputy Administrator a motion to
modify, limit, or quash that subpoena. If there is no
Deputy Administrator, or the Deputy
Administrator is not available, such motions shall
be filed with and decided by the Associate
Administrator for Administration. A motion to
modify, limit, or quash must be filed not later than
15 days after the service of the process or five days
before the return date specified in the process,
whichever is earlier, except that, if the process is
served within five days of its return date, such
motion may be filed at any time before the return
date. Any motion must set forth the grounds and
theories of why and how the party believes the
process should be modified, limited, or quashed
and must contain all facts and arguments which
support those grounds and theories.
(2) The Deputy Administrator may, upon
receiving a motion filed pursuant to paragraph
(aXl) of this section—
(A) Deny the motion;
(B) Modify the return date of the subpoena;
(C) Modify, limit or quash the subpoena;
(D) Condition granting the motion upon certain
requirements; or
(E) Take any other action he or she believes to
be appropriate in the circumstances.
(3) The Office of the Deputy Administrator
serves the decision on the motion on the moving
party or the counsel or representative of the
moving party. This service may be made by
personal service, by registered or certified mail, or
by reading a copy of the decision to the moving
party or the counsel or representative of the
moving party.
(4) A denial of any motion properly filed under
this section shall be in writing, and shall contain a
brief statement of the facts involved and the
conclusions drawn from those facts by the Deputy
Administrator.
(b) The Deputy Administrator's decision on the
motion to modify, limit, or quash, filed under
paragraph (a) of this section is not subject to
reconsideration by NHTSA.
§ 510.10 Supplementation of responses to process.
(a) A person, sole proprietorship, partnership,
corporation, or other entity which has provided
NHTSA with information under this part, which
information was complete and accurate at the time
the information was given to NHTSA, is not
required to supplement that information in the
light of after acquired information, except:
(1) The person or entity to whom the process is
addressed shall supplement the response with
respect to any question directly addressed to the
identity and location of persons having knowledge
of information obtainable under this part.
(2) The person or entity to whom the process is
addressed shall seasonably amend a prior response
if that person or entity obtains information upon
the basis of which the person or entity knows that
response was incorrect when made or the person
or entity knows that the response, though correct
when made, is no longer true and the
circumstances are such that a failure to amend the
response is in substance a knowing concealment.
(b) The requirement to supplement information
set forth in paragraph (a) of this section terminates
when:
(1) The compulsory process stated that it was
issued in connection with a contemplated
rulemaking action, and a final rule is issued on that
subject or a notice is issued announcing that the
rulemaking action has been suspended or
terminated.
(2) The compulsory process stated that it was
issued in connection with an enforcement
investigation, and the investigation is closed.
(3) The compulsory process does not state that it
is issued in connection with a specific rulemaking
action or enforcement investigation, and 18
months have passed since the date of the original
response.
PART 510-5
(c) This section in no way limits NHTSA's
authority to obtain supplemental information by
specific demands through the means specified in
section 510.3.
§510.11 Fees.
Any person compelled to appear in person in
response to a subpoena issued under this part at an
information gathering hearing or an
administrative deposition is paid the same
attendance and mileage fees as are paid witnesses
in the courts of the United States, in accordance
with Title 28, United States Code, Section 1821.
§510.12 Remedies for failure to comply with
compulsory process.
Any failure to comply with compulsory process
authorized by law and issued under this part is a
violation of this part. In the event of such failure to
comply, NHTSA may take appropriate action
pursuant to the authority conferred by the
National Traffic and Motor Vehicle Safety Act or
the Motor Vehicle Information and Cost Savings
Act, as appropriate, including institution of judicial
proceedings to enforce the order and to collect civil
penalties.
45 F.R. 29032
May 1, 1980
#
H
#
PART 510-6
PREAMBLE TO PART 511 -ADJUDICATIVE PROCEDURES
(Docket No. 78-15; Notice 2)
ACTION: Final rule.
SUMMARY: This rule establishes procedures that
will be followed in adjudications to enforce Title V
of the Motor Vehicle Information and Cost Savings
Act (dealing with automotive fuel economy). These
regulations supersede interim regulations estab-
lished in 1978. They are necessary to carry out
the authority vested in the Secretary of Transpor-
tation to enforce the automotive fuel economy
standards, gas mileage guide availability, report-
ing, and other requirements of that title and
regulations established thereunder. These regula-
tions are intended to enable a full, fair, and ex-
peditious hearing in all cases of alleged violations
of these requirements.
DATE: This regulation is effective 30 days after its
publication in the Federal Register.
FOR FURTHER INFORMATION CONTACT:
Roger Fairchild, Office of Chief Counsel,
National Highway Traffic Safety
Administration,
400 Seventh Street, S.W., Washington, D.C.
20590, (202) 426-2992.
SUPPLEMENTARY INFORMATION: On October 6,
1978, in 43 PR 47507, the National Highway Traffic
Safety Administration (NHTSA) established in-
terim procedures for conducting enforcement pro-
ceedings under Title V of the Motor Vehicle Infor-
mation and Cost Savings Act, 15 U.S.C. 2001 et
seq. Because of the anticipated need to have en-
forcement procedures in place as soon as possible
and because of the procedural nature of the rules,
the interim procedures were made effective 30
days after their publication. See 5 U.S.C. 553(b).
Although the use of notice and comment rulemak-
ing procedures was not legally required to estab-
lish these rules, the agency deemed it desirable to
obtain the views of interested individuals and
organizations on the procedures. Therefore,
NHTSA included an invitation in the preamble to
the interim procedures for the public to comment
on those procedures while they were in effect to
assist in developing a final rule.
Only limited comment was received on the inter-
im procedures. The only detailed comments sub-
mitted were those of the Motor Vehicle Manufac-
turers' Assocation (MVMA). Ford Motor Company
and General Motors submitted brief comments
which incorporated and reiterated the comments
of MVMA. No automobile dealers (who are poten-
tially subject to the regulations), dealer organiza-
tions, public interest groups, or other individuals
or organizations commented on the interim pro-
cedures. The comments received expressed
general approval for the interim procedures, sug-
gesting only relatively minor revisions.
Therefore, the agency is establishing final ad-
judicative procedures for fuel economy-related
cases, with only minor differences from the inter-
im procedures. A detailed discussion of the fea-
tures of the selected procedures is contained in the
preamble to the interim procedures and will not be
repeated here. Generally, the rule established full,
trial-type procedures in accordance with sections
554, 556, and 557 of Title V of the United States
Code (the Administrative Procedure Act), due to
the requirement in section 508(a) (2) of the Cost
Savings Act for a hearing "on the record" in fuel
economy enforcement cases. The specific pro-
cedures adopted were based largely on those
employed by the Consumer Product Safety Com-
mission (16 CFR Part 1025) and the Federal Rules
of Civil Procedure. Departures from those models
have been made in certain instances to accom-
modate specific requirements under the Cost Sav-
ings Act.
PART 511 -PRE 1
Most Significant Changes
to the Interim Procedures
The most significant change to the interim pro-
cedures is the deletion of a "two-tier" system (in-
terveners and non-party participants) for partici-
pation in enforcement hearings by individuals or
organizations other than the agency and the
respondent, in favor of a single "participant"
status. Also, some changes are made to the
language used in certain areas of the regulation
(particularly with respect to discovery) to make
the language more consistent with the Federal
Rules of Civil Procedure. The final procedures also
recognize the privileged status of attorney's "work
product" with respect to the discovery process.
Comments Received
on the Interim Procedures
The first point raised by MVMA and GM relates
to the issue of whether the assessment of civil
penalties for each day of violations of section 507(3)
of the Act should run from the time of the alleged
illegal conduct or from the end of the required
hearing on the alleged violation. This issue was not
addressed in the interim procedures. In the case of
a refusal by a manufacturer to respond to a special
order issued under section 505(b) of the Act, for
example, the commenters would argue that civil
penalties of up to the authorized $10,000 per day
should not begin accruing until after the comple-
tion of a hearing, rather than from the date on
which the response to the order was due. MVMA
bases its argument on its interpretation of the
relevant statutory language and on constitutional
due process guarantees. Specifically, MVMA ar-
gues that, under the Act, no violation has occurred
until there has been a complete adjudication.
The agency cannot accept these arguments.
MVMA strains the meaning of the term "violation"
by attempting to make the completion of an adjudi-
cation an element of the unlawful conduct. Section
507(3) specifies the conduct which is to be con-
sidered unlawful as "the failure of any person (A)
to comply with any provision of this part appli-
cable to such person. . . ." The requirement for a
public hearing established in section 508(a)(2) is a
prerequisite to the assessment of civil penalties,
but if, after the completion of the hearing, the
agency's view that a violation has occurred is vin-
dicated, then penalties may properly be assessed
for each day since the violation (i.e., unlawful con-
duct) first occurred. Any other reading of the
statute would encourage those subject to the re-
quirements of the Act to delay in complying with
those requirements.
MVMA's argument is essentially identical to the
one it made with respect to the agency's interim
rule on Information Gathering Powers, 42 FR
64628, December 27, 1977, and rejected at the time
a final rule on that subject was established. See 45
FR 29032. The preamble to that rule discusses
cases decided under statutes with statutory
language similar to Title V of the Act. That discus-
sion concludes that penalties should accrue from
the date of the actual unlawful conduct, and that
legal remedies exist to prevent penalties from add-
ing up during the course of a non-frivolous
challenge to the enforcement action. However, to
remove any ambiguity in the regulations, the time
when civil penalties begin accruing has been
clarified in the final procedures, as requested by
MVMA.
MVMA also raises several objections about the
provisions in the interim procedures for interven-
tion. These objections are generally based on the
concern that interveners might cause "un-
necessary confusion and delay" and thereby
adversely affect the rights of respondents. The
Act permits "any interested person" to participate
in enforcement proceedings, but does not specify
the nature of that "participation" right.
A number of authorities apparently support
limiting the extent of the participation in these en-
forcement proceedings to the "non-intervener"
status established in the interim procedures.
According to the Administrative Conference of the
United States,
Intervention or other participation in enforce-
ment or license revocation proceedings should
be permitted when a significant objective of the
adjudication is to develop and test a new policy
or remedy in a precise factual setting or when
the prospective intervener is the de facto charg-
ing party. Public participation in enforcement
proceedings, license revocations or other adjudi-
cations where the issue is whether the charged
respondent has violated a settled law or policy
should be permitted only after close scrutiny of
the effect of intervention or other participation
on existing parties.
Recommendations of the Administrative Conference
of the United States 1 CFR 301.71-6. Support for this
i
PART 511 -PRE 2
view is contained in Cramton, "The Why, Where,
and How of Broadened Public Participation in the
Administrative Process," 60 Georgetown Law
Journal 525 (1972) and Gellhorn, "Public Participa-
tion in Administrative Proceedings," 81 Yale Law
Journal 159 (1972). The scope of participation
should depend on "the nature of the issues, the in-
tervener's interests, its ability to present relevant
evidence and arguments, and the number, inter-
ests and capacities of the other parties." Adminis-
trative Conference, id.
The agency concurs with these authorities and
believes that the rights accorded "non-interven-
ers" under the interim procedures are sufficient
for all public participants. The non-interveners
were authorized to make a written or oral state-
ment of position, file proposed findings of fact, con-
clusions of law and a post hearing brief, and file an
appellate brief if an appeal is taken. Typical of the
issues which are likely to be raised in an enforce-
ment proceeding under the Act are questions
relating to the agency's authority to compel the
submission of information. Issues of this type
would likely be resolved on the basis of written
briefs and oral arguments by all parties in the pro-
ceeding, and all participants have the right to
make this type of submission. Issues involving
EPA test procedures and data are expected to be
resolved before that agency, and results of hear-
ings on those issues before EPA would be accepted
by NHTSA. For hearings involving purely factual
disputes, such as whether an automobile dealer
properly displayed gas mileage booklets, it is
unlikely that there will be any great interest in
participation in any capacity, much less as a full
party.
Therefore, the agency is limiting participation in
enforcement proceedings by individuals and
organizations other than the agency and the
respondent to the rights given "participants"
under the interim procedures. .A m?/one who desires
to participate in these proceedings may do so in
this manner.
MVMA also raises several issues relating to set-
tlement of cases involving alleged violations of the
requirements of Title V. Their first objection
relates to the extent to which NHTSA may com-
promise or settle cases involving violations of fuel
economy standards. MVMA interprets the regula-
tions to prohibit settlements even where, after
commencement of a proceeding, a clear error is
discovered in the basis for the action. In such
cases, the agency agrees that completion of the
proceeding on the basis of erroneous information
would be inappropriate. The regulations permit
"confession of error" type settlements through an
amended complaint. See section 511.13.
MVMA also suggests that criteria be added to
section 511.26 of the regulations to provide
guidance about the manner in which the agency
would exercise its discretion to settle non-stand-
ard cases. MVMA suggests that such factors as the
gravity of a violation and any good faith efforts to
comply be considered. The agency agrees that
these are relevant factors to be considered in set-
tling such a case, and the regulations have been
amended accordingly.
MVMA objects to NHTSA's characterization of
the authority to compromise standards-enforce-
ment cases as "discretionary," suggesting rather
that when any of the situations specified in section
508(b)(3) exists (bankruptcy, strike, fire, etc.), an
offset in the amount of the assessed civil penalty
should be automatic. MVMA fails to explain Con-
gress' use of discretionary, rather than mandatory,
language in that provision, however. Therefore,
the agency remains of the view that, when the
public interest so requires, the agency may not ac-
cept an offer of settlement based on one of the
enumerated criteria. In attempting to determine
whether the public interest requires the agency to
accept a particular offer of compromise, the agen-
cy needs, contrary to MVMA's assertion, informa-
tion on any steps a manufacturer has taken to
mitigate the effect of factors such as a fire or a
strike, financial documents assessing the manufac-
turer's ability to pay civil penalties, and the basis
for any FTC certification that payment of penal-
ties would result in a "substantial lessening of
competition." This information would be used by
NHTSA to assess the good faith of the manufactur-
er in seeking the compromise and the probability
that harm would result from payment of penalties.
Similarly, the imposition of conditions on a settle-
ment is specifically authorized by section 508(b)(3),
and the agency has elected to require conditions
(usually some not otherwise specifically required
action to promote improved automotive fuel econ-
omy) in most cases. This is done to help assure that
the settlement is in the public interest and that the
manufacturer has in fact acted in good faith by tak-
ing all reasonable actions to increase the average
PART 511 -PRE 3
#
fuel economy of its fleet of automobiles. Also, sec-
tion 511.26(e) is revised to clarify that the
Presiding Officer is to transmit all settlement
proposals to the Administrator.
MVMA argues that the interim procedures
should be amended to require that the Admin-
istrator provide a discussion of the basis for any
denial of a settlement offer. The regulations cur-
rently require such a discussion whenever a set-
tlement is allowed. The agency agrees that such a
requirement is appropriate to provide the public
with an explanation of the basis for the agency's
refusal to exercise its discretionary authority to
reduce civil penalties.
MVMA raises two points with respect to the
application of earned monetary credits to civil
penalties assessed for violations of fuel economy
standards. First, it is noted that the regulations
fail to acknowledge the existence of the credit
scheme established in section 508 of the Act, and
it is recommended that the regulations be amend-
ed to do so. NHTSA has no objection to making
such an addition to the current procedures.
MVMA and GM also argue that the reduction of
civil penalty liabilities in cases where one of the
events specified in section 508(b)(3)(B) occurs (fire,
strike, act of God) should be made without cor-
responding reduction of a monetary credit which
may exist for that manufacturer in another model
year. The Act authorizes the Secretary of
Transportation to reduce a civil penalty for a par-
ticular model year if that penalty was due in
whole or part to one of the specified fortuitous
events which affected that year's fleet of vehicles.
Nothing in the statute requires that another
year's earned credits would be affected by such a
reduction, and the agency does not contemplate
requiring that credits be used in such a situation.
MVMA's final major objection relates to the
manner in which test related issues will be raised
in enforcement hearings. That organization notes
in its comments that the preamble to the interim
procedures indicated that official notice might be
taken of EPA fuel economy test results in some
circumstances. It was not the agency's intention
to imply that test related issues would not be
challengeable by a manufacturer. Indeed, the
agency recognizes that the main factual questions
involved in a standards-enforcement case may
involve the acceptance or rejection of manufac-
turer-supplied fuel economy data, and other
issues such as the comparability of results of test
procedures used for measuring fuel economy to
results obtained under 1975 test procedures (see
section 503(d) of the Act). However, the agency
anticipates that issues involving aspects of the
fuel economy program which are administered by
EPA will be raised before that agency, not
NHTSA. MVMA suggests that NHTSA adopt
some form of compulsory joinder provision in the
regulations, whereby EPA would be made a party
in any hearing in which test related issues are
implicated. However, NHTSA knows of no prece-
dent for such a provision, and has doubt about the
existence of any authority for one Federal agency
to compel the participation of another agency in
the former's proceedings.
Although the agency is not at this time making
any changes in the regulations dealing with pro-
cedures for resolving test procedure related ques-
tions, it is considering seeking public comment on
an amendment to these rules which would require
that those issues be raised before EPA. EPA cur-
rently has a procedure for resolving disputes on
these matters (see 40 CFR 600.009) which should
satisfy the requirements of the Act for deter-
mination "on the record" of violations of fuel
economy requirements. Further, that agency is
best equipped by reason of its expertise to
resolve these technical issues under the statutory
division of responsibilities within the govern-
ment. Ideally, test related issues would be re-
solved solely before the EPA, with the results of
EPA's hearings being accepted by NHTSA as res
judicata. This approach would avoid any duplica-
tion of effort resulting from hearings on the same
issues before two different agencies.
Also suggested by MVMA are a number of
technical amendments to the regulations, which
are intended to make the language used more con-
sistent with that used in the Federal Rules of
Civil Procedure (FRCP) and the Federal Rules of
Evidence. The main advantage of relying on the
language used in these judicial rules is that
reference can be made to a body of a case law con-
struing that language where it is ambiguous,
while interpreting new language might involve
dealing with a series of cases of first impression.
It was mainly for that reason that the agency
relied in part on the Federal Rules of Civil Pro-
cedure as a model for certain provisions in the
interim procedures. See 49 FR 47508.
i
i
PART 511 -PRE 4
First, MVMA suggests changing the criterion
for permitting joinder of proceedings from the
"similar issues" requirement of the interim pro-
cedures, to a requirement of a "common question
of law or fact," as specified in Rule 42(a) of the
FRCP. Also, MVMA suggests permitting joinder
where to do so would "tend to avoid unnecessary
costs or delay" as required under Rule 42(a),
rather than "to such extent and upon such terms
as may be deemed proper," as the interim pro-
cedures permitted. In addition, MVMA recom-
mends the addition of a provision like that in Rule
42(b) which would permit separate hearings where
doing so would promote economy or convenience
or would avoid prejudice to a party. Since adopting
these suggestions would help clarify the pro-
cedures, the final rule has been amended accord-
ingly.
A number of changes to the interim procedures
in the area of discovery are also suggested by
MVMA. First, MVMA suggests that the discovery
procedures be modeled more closely after Rule 26
of the FRCP, for reasons of ease of application (as
discussed earlier) and fairness. The interim pro-
cedures provided that all relevant material is
discoverable, with the only stated exception being
documents accompanying the agency staffs
recommendation as to whether a complaint should
issue. The Rule 26 procedure would exclude at-
torney's work product, the mental impressions,
conclusions, and opinions of a party's attorney,
and would permit discovery of materials prepared
in anticipation of litigation only on a showing of
need and the inability to obtain the same material
in some other manner. Considerations of fairness
militate in favor of making this change. The factual
portions of documents accompanying the agency
staffs recommendations on a complaint would be
made available to all parties, as part of the com-
plaint, and the opinion portions of that material
would be protected under Rule 26-type procedure.
Further, the privileged status of attorney's work
product is well established in both judicial and ad-
ministrative contexts. Therefore, the final pro-
cedures adopt this recommendation.
MVMA also recommends that only those ex-
perts who may be called to testify should be sub-
ject to discovery. The agency cannot accept this
suggestion. It may be that certain experts within a
corporation may hold opinions which are highly
relevant to a proceeding, but those experts may
not be called as witnesses by the corporation.
Without the opportunity for opposing parties to
obtain information on the identity and views of
these individuals through discovery, it would be
impossible for those parties to determine whether
the experts should be called as witnesses, and
relevant information and qualified opinions could
be lost. Therefore, the provision in the interim
procedures is retained in the final procedures.
The interim procedures could be interpreted to
require that the person who answered each in-
dividual written interrogatory must sign that
answer and MVMA recommends clarifying this
point to permit a single representative of a cor-
porate party to sign. The agency is adopting this
suggestion. MVMA also suggests that the 20 day
period for responding to a request for production
of documents be extended to 30 days. However,
the interim procedures already permit the 20 day
period to be extended, when necessary. Therefore,
in the interest of expediting proceedings, this
recommendation was not adopted in the final pro-
cedures. MVMA's recommendation that testimony
of any party or its representatives be permitted as
soon as an answer is filed has been adopted, to
make that provision consistent with the rest of the
discovery provisions in the regulation. The interim
procedures vested substantial control over such
testimony in the Presiding Officer, and this control
is retained in the final procedures. The Presiding
Officer can assure that parties do not abuse the
right to have such testimony taken to create delay,
or where written forms of discovery would be
more appropriate. The interim procedures have
also been amended to permit parties to preserve
the testimony of any witness, not just the parties'
own witnesses. However, the reference in the
MVMA comments to perpetuation of testimony
pursuant to Rule 27 of the FRCP is not applicable
to the provision found in section 511.35(h). This
provision is intended to permit the taking and
preservation of testimony from a witness who is
expected to be unable to attend the hearing, but
not prior to the commencement of the proceeding
as is permitted by Rule 27. Because administrative
law judges will not ordinarily be appointed until
after proceedings begin, it will be impracticable to
obtain leave of the Presiding Officer to perpetuate
testimony in anticipation of a complaint not yet
issued. Moreover, adjudicative proceedings under
the Act are unlikely to present issues of fact deter-
PART511-PRE 5
minable exclusively upon the testimony of unique
witnesses who might be available to testify only
at times before the commencement of proceed-
ings. Therefore the agency does not perceive a
need for proving a procedure for perpetuation of
testimony fully analogous to that found in Rule 27
of the FRCP.
Also in accord with the decision to conform as
much as practicable with the language of the
FRCP where a similar procedure is intended, the
prescribed uses of deposition testimony found in
511.35(i) are amended to parallel Rule 32 of the
FRCP.
MVMA also argues that some of the sanctions
specified in the interim procedures for failure to
comply with a discovery order are too extreme,
have no counterpart in the FRCP, and should be
eliminated. The cited sanction, excluding all mat-
ter obtained in discovery or excluding the
recalcitrant party, does in fact have a counterpart
in the FRCP (see Rule 37(b)(1)(B) and (C) which
permit prohibitions on introducing "designated
matters in evidence" and "rendering a judgment
by default against the disobedient party") and
would only be applied where "just," as in the
FRCP. Therefore, no change to the interim pro-
cedures is made with respect to this point. Nor
has the agency adopted MVMA's suggestion that
sanctions be imposed immediately or not at all.
The significance of a failure to comply with a
discovery order may not become fully apparent
until well after the failure to comply.
Modifications to the procedure for motions to
quash or limit subpoenas were also suggested by
MVMA. MVMA suggests that provision be made
for extending the time to respond to the subpoena
or the motion to quash, that an appeal procedure
be added, that denials of motions to quash be
made on the record, and that the Presiding Of-
ficer be permitted to modify subpoenas. Section
511.15 of the interim procedures already provides
for time extensions, when necessary. Interlocu-
tory appeals are permitted on these matters
where confidential information is involved or
where compliance with the subpoena somehow in-
volves a controlling question of law or policy. The
time limit for the filing of an application for in-
terlocutory appeal has been clarified to make it
applicable to all such applications and not just
those advancing one of the grounds set forth in
section 511.24(b)(1). Appeals are also permitted
after a final decision under the interim pro-
cedures. Allowing appeals in other cases would
unnecessarily delay the proceeding. The agency
has adopted suggestions by MVMA that reasons
for denials of motions to quash be provided on the
record and that "modifications" of a subpoena be
authorized.
MVMA further suggests elimination of "confu-
sion of issues" as grounds for excluding evidence.
As MVMA notes, this factor appears in the
Federal Rules of Evidence primarily to apply to
jury trials, where jurors might be unable to deal
with certain complex issues. This factor is deleted
in the final procedures since it is not fully rele-
vant and tends to duplicate the criteria of rele-
vance, undue delay, and the needless presenta-
tion of cumulative evidence.
The final group of objections raised by MVMA
involve the handling of in camera or confidential
materials. First, it is argued that certain informa-
tion beyond that protected under the Freedom of
Information Act 5 U.S.C. 552, should be entitled
to in camera treatment in an enforcement hear-
ing. Among this type of material would be
material which might be embarrassing or other-
wise sensitive, but which would not qualify as a
trade secret or fall within any of the other
exempt classes of information in the Freedom of
Information Act. The agency cannot accept this
contention since section 505(d)(1) of the Cost
Savings Act requires the agency to disclose any
fuel economy related information to the public,
except in the case of trade secret information.
The procedures have been clarified to permit
interlocutory appeals of a ruling of the Presiding
Officer denying in camera treatment for infor-
mation claimed to be confidential. The interim
procedures permitted an immediate appeal on
rulings requiring the production of documents
claimed to be confidential, but not explicitly in
the similar situation involving a denial of in
camera treatment. All such rulings are auto-
matically stayed for 10 days, permitting the ag-
grieved party to appeal.
MVMA has suggested that advance determina-
tions of confidentiality be made by the agency
(i.e., a submitter of information would be permit-
ted to withdraw that information if a request for
in camera treatment is denied). The agency will
address this question in detail in its forthcoming
final rule on Confidential Business Information.
f
4
I
PART 511 -PRE 6
Until that rule is issued, the agency will abide by
its proposed procedures which do not provide for
advance determinations (due to concerns about
consistency with the Freedom of Information
Act). See 43 FR 22412 (May 25, 1978).
MVMA requests that criteria and procedures
be established for denying requests for in camera
treatment. The interim procedures specified that
the criteria and procedures to be used are those
for determining whether information is entitled
to confidential treatment under the Freedom of
Information Act, as noted above. Those criteria
and procedures are spelled out in that Act, in the
case law under that Act, and in the agency's pro-
posed confidentiality regulations cited in the
previous paragraph. Therefore, no change to the
interim procedures is being made in this area.
MVMA also argues that reference must be
made in the regulations to 44 U.S.C. 3508, which
provides generally that when an agency receives
confidential information from another govern-
ment agency, employees of the receiving agency
are fully liable for any unauthorized release of
that information. In this regard, MVMA claims
that the provisions of 44 U.S.C. 3508 govern and
"take precedence over" any decision by the agen-
cy to release the information. If the implication of
this comment is that NHTSA is bound by the
determination of the agency that provides the in-
formation that the information is confidential, or
that NHTSA's discretionary authority to release
confidential information does not apply to infor-
mation obtained from another agency, then
NHTSA cannot agree that 44 U.S.C. 3508 compels
that result. NHTSA agrees that the statutory
provision in question applies to an unauthorized
release of confidential information obtained from
another agency, but no conflict between that pro-
vision and the current procedures is apparent.
Therefore, no change to the regulation is required
on this point.
At the request of MVMA, the interim proce-
dures have been clarified to assure that the grant-
ing of motions for access to in camera materials
will be done on the record. This was implicit in
the regulation, since the granting of such a
motion must be accompanied by a protective
order preventing unnecessary disclosure of the
information.
MVMA also recommends that sanctions be
specified in the regulations for the unauthorized
release by a party of in camera materials. Sug-
gested sanctions include denial of the right to con-
tinue as a party of participant and the denial of
access to other in camera materials. Section
511.76 of the interim procedures permits the ex-
clusion of a party, participant, or one of their rep-
resentatives in such a case. The agency agrees
that it is appropriate to add the second sanction
mentioned above to the regulations, and will do so
in the final procedures. However, the agency fails
to see how MVMA's recommendation that per-
sons seeking access to confidential information be
required to agree in writing and in advance to
comply with the terms of a protective order will
have any added impact on a party or other person
who is unwilling to comply with the order.
MVMA's final comment notes that the agency
should not lightly use its discretionary authority
to release confidential information. To date, the
agency has rarely used this authority under sec-
tion 505(d)(1) of the Cost Savings Act, and has
taken steps to minimize the impact of such a
release on the submitter of the information when
the authority has been used. This policy will
continue.
A small number of further minor changes have
been made to the regulations in the interest of
reducing unnecessary burdens on parties or par-
ticipants in proceedings and on the agency itself.
First, the interim procedures imply that a full
scale hearing is held each time a complaint is
issued, whether the respondent wants the full
hearing or not. The final procedures permit
respondents to request a full hearing (and such
requests will always be honored) or permits the
respondent to make its case solely on written sub-
missions or otherwise, if it desires. Also, some
requirements as to the size of paper on which
documents are printed, the size of margins, and
the type of print to be used have been deleted.
Finally, the requirement that a copy of the entire
complaint in every enforcement case (including
dealer-mileage guide cases) be printed in the
Federal Register has been deleted in favor of a
more limited requirement that a notice be pub-
lished generally describing the proceeding and
providing information on public participation in
the proceeding.
The agency has determined that the establish-
PART 511 -PRE 7
f
ment of these procedures does not constitute a Issued on December 3, 1980.
"major Federal Action significantly affecting the
environment," and therefore, an environmental
impact statement is not required. Nor should
these procedures establish any additional costs Z 7^. T T
beyond those imposed by the Cost Savings Act . , ...
•X If mi. r n 1 4. A i ■ • Admmistrator
itself. Therefore, no Regulatory Analysis is re-
quired to be prepared under Executive Order 45 FR 81574
12221. December 11, 1980
I
I
PART 511 -PRE 8
PREAMBLE TO AN AMENDMENT TO PART 511— ADJUDICATIVE PROCEDURES;
AUTOMOTIVE FUEL ECONOMY ENFORCEMENT
ACTION: Final rule; Technical amendment.
SUMMARY: Since the National Highway Traffic
Safety Administration promulgated 49 DFR Part
511, its regulation governing adjudicative proceeding
pursuant to section 508(a) of the Motor Vehicle
Information Cost Savings Act (15 U.S.C. 2008(a)),
there has been established within the Department of
Transportation an Office of Hearings which has the
authority to conduct proceedings under section 508.
The purpose of this rule is to amend Part 511 solely to
reflect the fact that the Office of Hearings in the
Department of Transportation will now be
responsible for the appointment of the Presiding
Officer at such proceedings, and that the Docket
Section of the Office of the Secretary of
Transportation shall be responsible for performing
the duties which Part 511 formerly assigned to the
Executive Secretary of the National Highway Traffic
Safety Administration, and for maintaining the
docket of proceedings brought pursuant to section
508.
EFFECTIVE DATE: May 3, 1988.
SUPPLEMENTARY INFORMATION:
Section 508(a) of the Motor Vehicle Information
and Cost Savings Act (15 U.S.C. 2008(a)) provides
that there is a right to an agency hearing on the
record prior to a determination that a manufacturer
has violated a fuel economy standard or that any
person has violated section 507(a)(3) of the Act. 15
U.S.C. 2007(a)(3). The procedures governing the
conduct of an adjudicative hearing under section
508(a) are set forth at Part 511 of the regulations of
the National Highway Traffic Safety Administration.
49 CFR Part 511.
When NHTSA adopted Part 511, there was no
office within the Department of Transportation with
responsibility for appointment of hearing officers to
conduct adjudicative proceedings, and for carrying
out administrative functions associated with such
hearings. Accordingly, Part 511 provided that the
presiding officer at adjudicative proceedings would be
appointed by the Director of the Office of
Administrative Law Judges, Office of Personnel
Management. 49 CFR 511.3(9). The rule assigned the
various administrative functions, such as the filing of
pleadings and other documents, to the Executive
Secretary of the National Highway Traffic Safety
Administration, and provided that the docket for such
proceedings would be maintained in NHTSA' s docket
section.
There is now within the Department of
Transportation an Office of Hearings, which is
authorized to conduct formal proceedings under the
Motor Vehicle Information and Cost Savings Act.
Therefore, it is no longer necessary to request
appointment of a presiding officer for such a
proceeding through the Office of Administrative Law
Judges of the Office of Personnel Management. In
addition, because the Office of Hearings will be
responsible for appointing the presiding officer that
office should also be responsible for the other
administrative fimctions formerly vested in the
Executive Secretary of NHTSA, and for maintaining
the docket of the proceedings. Centralizing these
functions in one office will best ensure the efficient
conduct of these proceedings.
This technical amendment merely conforms
NHTSA's regulation governing adjudicative
proceedings to a change in the organization of the
Department of Transportation which now permits the
administration of such proceedings to be centralized
in one office within the Department. It affects only
the agency's internal procedures, and imposes no
obligations or responsibilities on any party, nor does
it alter any existing obligations. Accordingly,
NHTSA finds for good cause that notice and
opportunity for comment are unnecessary, and this
technical amendment is effective on the date this
notice is published.
The amendments to Part 511, set forth below,
relate solely to procedures for the conduct of
PART 511-PRE 9
proceedings that are governed by Sections 556 and
557 of Title 5, United States Code, and thus are not
covered by Executive Order 12291 and the
Department of Transportation's regulatory
procedures. For the same reasons, NHTSA has
determined that this technical amendment will not
significantly affect the human environment, after
consideration in accordance with the National
Environmental Policy Act. Likewise, I hereby certify
that this technical amendment will not have a
significant impact on a substantial number of small
entities, after making the evaluations required by the
Regulatory Flexibility Act. Finally, NHTSA has
analyzed this action in accordance with the principles
the criteria contained in Exective Order 12612, and
has determined that the final rule does not have
sufficient preparation of a Federalism Assessment.
List of Subjects in 49 CFR Part 511
Administrative practice and procedure, Investiga-
tions, Penalties.
In consideration of the foregoing, 49 CFR Part 511
is amended as set forth below:
1. The authority citation for Part 511 is revised to
read as follows:
Authority: 15 U.S.C. 2002; delegation of authority at 49
CFR 1.50.
2. Section 511.3(a)(9) and (11) are revised, and
(a)(13) and (14) are added to read as follows:
§511.3 Definitions.
(a) * * *
(9) The term "Presiding Officer" means the person
who conducts an adjudicative hearing under this part,
who shall be an administrative law judge qualified
under title 5, U.S.C, section 3105 and assigned by
the Chief Administrative Law Judge, Office of
Hearing, United States Department of Trans-
portation.
Ht * * * *
(11) The term "Office of Hearings" means the
Officer of Hearing, Department of Transportation.
*****
(13) The term "Chief Administrative Law Judge"
means of the Chief Administrative Law Judge of the
Office of Hearings, Department of Transportation.
(14) The term Docket sections means the Docket
Section, Office of the Secretary of Transportation.
3. Section 511.14(a) is revised to read as follows:
§ 511.14 Form and filing of documents.
(a) Filing. Except as otherwise provided, all
documents submitted to the Administrator or a
Presiding Officer shall be filed with the Docket
Section, Office of the Secretary, Department of
Transportation, Room 4107, 400 Seventh Street,
SW., Washington, D.C. 20590. Documents may be
filed in person or by mail and shall be deemed filed on
the day of filing or mailing.
*****
4. Section 511.16(a) is revised to read as follows:
§51 1.1 6(a) Service.
(a) Mandatory service. Every document filed with
the Office of Hearings shall be served upon all parties
and participants to a proceeding, i.e., Complaint
Counsel, respondent(s), and participants, and upon
the Presiding Officer.
*****
5. Section 511.17 is revised to read as follows:
§ 511.17 Public participation.
Participation Status. Any person interested in a
proceeding commenced pursuant to § 511.11 who
desires to participate in the proceeding, shall file with
the Docket Section a notice of intention to participate
in the proceeding and shall serve a copy of such notice
on each party to the proceeding. A notice of intention
to participate shall be filed not later than the
commencement of the hearing. Untimely filings will
not be accepted absent a determination by the
Presiding Officer that the person making the request
has made a substantial showing of good cause for
failure to file on time. Any person who files a notice to
participate in the proceedings as a nonparty shall be
known as a "participant" and shall have the rights
specified in § 511.41(d).
6. Section 511.26(h) is revised to read as follows:
§511.26 Settlement.
(h) Rejection. If the Administrator rejects an offer
of settlement, the Administrator shall give written
notice of that decision and the reasons therefor to the
parties and the Presiding Officer. Promptly
thereafter, the Presiding Officer shall issue an order
notifying the parties of the resumption of the
proceedings, including any modifications to the
schedule resulting from the stay of the proceedings.
%
PART 511-PRE 10
7. Section 511.31(h) is revised to read as follows:
§ 511.31 General provisions regarding discovery.
*****
(h) Service and filing of discovery. All discovery
requests and written responses, and all notices of the
taking of testimony shall be filed with the Docket
Section and served on all parties and the Presiding
Officer.
*****
8. Section 511.35(e)(2) is revised to read as follows:
§511.35 Testimony upon oral examination.
*****
(e) Transcription and filing of testimony—
*****
(2) Certification and filing. The official reporter
shall certify on the transcript that the witness was
duly sworn and that the transcript is a true record of
the testimony given and corrections made by the
witness. The official reporter shall then seal the
transcript in an envelope endorsed with the title and
docket number of the action and marked "Testimony
of [name of witness]" and shall promptly file the
transcript with the Docket Section. The Presiding
Officer shall notify all parties of the filing of the
transcript and the Docket Section shall furnish a copy
of the transcript to any party or to the witness upon
payment of reasonable charges therefor.
*****
9. Section 511.38(b) is revised to read as follows:
§511.38 Subpoenas.
*****
(b) Form. A subpoena shall identify the action
with which it is connected; shall specify the person to
whom it is addressed and the date, time and place for
compliance with its provisions; and shall be issued by
order of the Presiding Officer and signed by the Chief
Administrative Law Judge or by the Presiding
Officer. A subpoena duces tecum shall specify the
books, papers, documents or other materials or data-
compilations to the produced.
*****
10. Section 511.42(e) is revised to read as follows:
§511.42 Powers and duties of Presiding Officer.
(e) Disqualification of Presiding Officer. (1) When
a Presiding Officer deems himself or herself
disqualified to preside in a particular proceeding, he
or she shall withdraw by notice on the record and
shall notify the Chief Administrative Law Judge of
the withdrawal.
(2) Whenever, for any reason, any party shall deem
the Presiding Officer to be disqualified to preside, or
to continue to preside, in a particular proceeding,
that party may file with the Chief Administrative
Law Judge a motion to disqualify and remove,
supported by affidavit(s) setting forth the alleged
grounds for disqualification. A copy of the motion and
supporting affidavit(s) shall be served by the Chief
Administrative Law Judge on the Presiding Officer
whose removal is sought. The Presiding Officer shall
have ten (10) days from service to reply in writing.
Such motion shall not stay the proceeding unless
otherwise ordered by the Presiding Officer or the
Administrator. If the Presiding Officer does not
disqualify himself or herself, the Administrator will
determine the validity of the grounds alleged, either
directly or on the report of another Presiding Officer
appointed to conduct a hearing for the purpose, and
shall in the event of disqualification take appropriate
action, by assigning another Presiding Officer or
requesting assignment of another Administrative
Law Judge through the Office of Hearings.
11. Section 511.48 is revised to read as follows:
§511.48 Official docket.
(a) The official docket in adjudicatory proceedings
will be maintained in the Docket Section, Office of the
Secretary , Room 4107, 400 Seventh Street S.W.,
Washington, D.C. 20590, and will be available for
inspection during normal working hours (9:00
a.m. -5:00 p.m.) Monday through Friday.
(b) Fees for production or disclosure of records
contained in the official docket shall be levied as
prescribed in the Department of Transportation's
regulations on Public Availability of Information (49
CFR Part 7),
12. Section 511.67 is revised to read as follows:
§511.67 Settlement order.
If, in accordance with this subpart, the
Administrator allows a settlement of a case of
violation of an average fuel economy standard, an
order of settlement shall be issued, setting out the
terms of the settlement, and containing a brief
discussion of the factors underlying the exercise of
PART 511-PRE 11
the Administrator's discretion in allowing the
settlement, including a discussion of comments
received under § 511.65. If the Administrator rejects
a petition and the reasons for the rejection to the
parties and the Presiding Officer.
13. Section 511.73(b) is revised to read as follows:
§511.73 Written appearances.
*****
(b) Any person who has previously appeared in a
proceeding may withdraw his or her appearance by
filing a written notice of withdrawal of appearance
with the Docket Section. The notice of withdrawal
shall state the name, address, and telephone number
(including area code) of the person withdrawing the
appearance, for whom the appearance was made, and
the effective date of the withdrawal of the
appearance, and such notice of withdrawal shall be
filed with five (5) days of the effective date of the
withdrawal of the appearance.
14. Section 511.75(a) is revised to read as follows:
§ 511.75 Persons not attorneys.
(a) Any person who is not an attorney at law may
be admitted to appear in an adjudicative proceeding if
that person files proof to the satisfaction of the
Presiding Officer that he or she possesses the
necessary legal, technical or other qualifications to
render valuable service in the proceeding and is
otherwise competent to advise and assist in the
presentation of matters in the proceedings. An
application by a person not an attorney at law to
appear in a proceeding shall be submitted in writing
to the Docket Section, not later than thirty (30) days
prior to the hearing in the proceedings. The
applications to appear in the proceedings.
15. Section 511.78 (e)(1), (2)(ii), (3), (4) and (5) are
revised to read as follow:
§ 511.78 Prohibited communications.
maker to the Docket Section. If the circumstances in
which a prohibited ex parte written communication
was made are not apparent from the communication
itself, a statement describing those circumstances
shall be forwarded with the communication.
(2) Prohibited oral ex parte communication. * * *
(ii) In the event of a prohibited oral ex parte
communication, the decisionmaker shall forward to
the Docket Section a dated statement containing such
of the following information as is known to him/her:
(A) The title and docket number of the proceeding;
(B) The name and address of the person making
the communication and his/her relationship (if any) to
the parties to the proceeding;
(C) The date and time of the communication, its
duration, and the circumstances (telephone call,
personal interview, etc.) under which it was made;
(D) A brief statement of the substance of the
matters discussed;
(E) Whether the person making the communi-
cation persisted in doing so after being advised that
the communication was prohibited.
(3) All communications and statements forwarded
to the Docket Section under this section shall be
placed in the public file which shall be associated with,
but not made a part of the record of the proceedings,
to which the communication or statement pertains.
(4) Service on parties. The Administrator shall
serve a copy of each communication and statement
forwarded under this section on all parties to the
proceedings. However, if the parties are numerous,
or if other circumstances satisfy the Administrator
that service of the communication or statement would
be unduly burdensome, he or she may, in lieu of
service, notify all parties in writing that the
communication or statement has been made and filed
and that its is available for inspection and copying.
(5) Service on maker. The Administrator shall
forward to the person who made the prohibited ex
parte communication a copy of each communication
or statement filed under this section.
(e) Procedures for handling prohibited ex parte
communication. (1) Prohibited written ex parte
communication. To the extent possible, a prohibited
written ex parte communication received by any
NHTSA employee shall be forwarded to the Docket
Section rather than to a decisionmaker. A prohibited
written ex parte communication which reaches a
decisionmaker shall be forwarded by the decision-
Issued on April 29, 1988.
Diane K. Steed,
Administrator
53 F.R. 15782
May 3, 1988
PART 511-PRE 12
PREAMBLE TO AN AMENDMENT TO PART 511— ADJUDICATIVE PROCEDURES;
AUTOMOTIVE FUEL ECONOMY ENFORCEMENT
ACTION: Final rule.
SUMMARY: This Notice incorporates a delegation of
authority to the Deputy Administrator and, in the
absence of the Administrator and the Deputy
Administrator, to the Managing Director to exercise
all authority lawfully vested in the Administrator and
reserved to him or her, except where specifically
limited by law, order, regulation or instruction. This
Notice also makes technical revisions to the agency's
organization and delegation rules, including the
correction of legal citations, updating to reflect
recent statutory enactments, and inclusion of
materials which had been inadvertently omitted in
previous printings of the Code of Federal
Regulations.
EFFECTIVE DATE: July 12, 1988.
SUPPLEMENTARY INFORMATION:
Due to internal reorganization, the National
Highway Traffic Safety Administration is amending
its delegation of authority to allow the Deputy
Administrator to exercise, in the Administrator's
absence, those authorities previously reserved to the
Administrator and to allow the Managing Director to
exercise those authorities previously reserved to the
Administrator in the absence of both the
Administrator and the Deputy Administrator.
Additionally, because of internal agency
reorganization, the position of Executive Secretary is
retitled the Director of the Executive Secretariat and
is assigned the function previously delegated to the
Executive Secretary, with the exception of subpoena
authority. This authority is transferred from the
Director of the Executive Secretariat to the Chief
Counsel.
The amendment set forth below relates solely to the
organization and assignment of duties within the
agency, and has no substantive regulatory effect.
Thus, it is not covered by the notice and comment and
effective date requirements of the Administrative
Procedure Act or the requirements of Executive
Order 12291 or the Department of Transportation's
regulatory policies and procedures. Notice and public
procedure are, therefore, not required, and the
amendment may be made effective in less than thirty
days after publication.
Section 511.38 is revised to read as follows:
(b) Form. A subpoena shall identify the action with
which it is connected; shall specify the person to
whom it is addressed and the date, time and place for
compliance with its provisions; and shall be issued by
order of the Presiding Officer and signed by the Chief
Counsel, or by the Presiding Officer. A subpoena
duces tecum shall specify the books, papers,
documents, or other materials or data-compilations to
be produced.
« * * * «
(d) Issuance of a subpoena. The Presiding Officer
shall issue a subpoena by signing and dating, or
ordering the Chief Counsel to sign and date, each
copy in the lower right-hand corner of the document.
The "duplicate" and "triplicate" copies of the
subpoena shall be transmitted to the applicant for
service in accordance with these Rules; the "original"
copy shall be retained by or forwarded to the Chief
Counsel for retention in the docket of the proceeding.
* * » * *
(f) Return of service. A person serving a subpoena
shall promptly execute a return of service, stating the
date, time and manner of service. If service is
effected by mail, the signed return receipt shall
accompany the return of service. In case of failure to
make service, a statement of the reasons for the
failure shall be made. The "triplicate" of the
subpoena, bearing or accompanied by the return of
service, shall be returned forthwith to the Chief
Counsel after has been completed.
Issued on May 27, 1988.
Diane K. Steed,
Administrator
53 F.R. 26257
July 12, 1988
PART 511-PRE 13-14
>i
%
PART 511— Adjudicative Procedures
Subpart A— Scope of Rules; Nature of
Adjudicative Proceedings,
Definitions
511.37
511.38
511.39
Sec.
511.1
511.2
511.3
Scope of the rules.
Nature of adjudicative proceedings.
Definitions.
Subpart B— Pleadings; Form; Execution;
511.41
511.42
Service of Documents
511.11 Commencement of proceedings.
511.43
511.44
511.45
511.12 Answer.
511.46
511.13 Amendments and supplemental pleadings.
511.47
511.14 Form and filing of documents.
511.48
511.15 Time.
511.49
511.16 Service.
511.17 Public participation.
511.18 Joinder of proceedings.
511.51
Subpart C— Prehearing Procedures; Motions:
511.52
511.53
Interlocutory Appeals; Summary
511.54
Judgment; Settlement
511.21 Prehearing conferences.
511.55
511.22 Prehearings briefs.
511.56
511.23 Motions.
511.57
511.24 Interlocutory appeals.
511.25 Summary decision and order.
Subpe
511.26 Settlement.
Subpart D— Discovery; Compulsory Process
511.61
511.31 General provisions governing discovery.
511.62
511.32 Written interrogatories to parties.
511.63
511.33 Production of documents and things.
511.64
511.34 Requests for admission.
511.65
511.35 Testimony upon oral examination.
511.66
511.36 Motions to compel discovery.
511.67
PART
511-1
Sanctions for failure to comply with order.
Subpenas.
Orders requiring witnesses to testify or
provide other information and granting
immunity.
Subpart E— Hearings
General rules.
Powers and duties of presiding officer.
Evidence.
Expert witnesses.
In camera materials.
Proposed findings, conclusions, and order.
Record.
Official docket.
Fees.
Subpart F— Decision
Initial decision.
Adoption of initial decision.
Appeal from initial decision.
Review of initial decision in absence of
appeal.
Final decision on appeal or review.
Effective date of order.
Effective date of order.
Subpart G— Settlement Procedure in Cases
of Violation of Average Fuel
Economy Standards
Purpose.
Definitions.
Criteria for settlement.
Petitions for settlement; timing; contents.
Public comment.
Confidential business information.
Settlement order.
Subpart H— Appearances; Standards
of Conduct
[Authority: 15 U.S.C. 2002; delegation of
authority at 49 CFR 1.50.1 (53 F.R. 15782— May 3,
1988. Effective: May 3. 1988)
Subpart A— Scope of Rules; Nature of
Adjudicative Proceedings, Definitions
§ 511.1 Scope of the rules.
This part establishes rules of practice and pro-
cedure for adjudicative proceedings conducted pur-
suant to section 508(a)(2) of the Motor Vehicle
Information and Cost Savings Act (15 U.S.C. Pub.
L. 94-163, 89 Stat. 911, Sec. 2008(a)(2)), which are
required by statute to be determined on the record
after opportunity for a public hearing.
§ 511.2 Nature of adjudicative proceedings.
Adjudicative proceedings shall be conducted in
accordance with title 5, United States Code, sec-
tions 551 through 559 and this part. It is the policy
of the agency that adjudicative proceedings shall
be conducted expeditiously and with due regard to
the rights and interests of all persons affected, and
to the public interest. Therefore, the presiding
officer and all parties shall make every effort at
each stage of a proceeding to avoid unnecessary
delay.
§ 511.3 Definitions.
(a) As used in this part:
(1) The term "application" means an ex parte
request by a party for an order that may be
granted or denied without opportunity for
response by any other part.
(2) The term "NHTSA" means the National
Highway Safety Administration.
(3) The term "Administrator" means the
Administrator of the National Highway Safety
Administration.
(4) The term "Complaint Counsel" means
prosecuting for the NHTSA.
(5) The term "motion" means a request by a
party for a ruling or order that may be granted or
denied only after opportunity for response by each
affected party.
(6) The term "party" means the NHTSA, and
any person named as a respondent in a proceeding
governed by this part.
(7) The term "person" means any individual,
partnership, corporation, association, public or
private organization, or Federal, State or
municipal governmental entity.
(8) The term "petition" means a written re-
quest, made by a person or a party and addressed
to the Presiding Officer or the Administrator, that
the addressee take some action.
(9) The term "Presiding Officer" means the
person who conducts an adjudicative hearing
under this part, who shall be an administrative law
judge qualified under title 5, United States Code,
section 3105 and assigned by the [Chief
Administrative Law Judge, Office of Hearings,
United States Department of Transportation.) (53
F.R. 15782— May 3, 1988. Effective: May 3. 1988)
(10) The term "Respondent" means any per-
son against whom a complaint has been issued.
(11) [The term "Office of Hearings" means
the Officer of Hearings, Department of Transpor-
tation.] (53 F.R. 15782— May 3, 1988. Effective: May
3, 1988)
(12) The term "staff means the staff of the
National Highway Traffic Safety Administration.
[(13) The term "Chief Administrative Law
Judge" means the Chief Administrative Law
Judge of the Office of Hearings, Department of
Transportation.
(14) The term Docket sections means the
Docket Section, Office of the Secretary of
Transportation.) (53 F.R. 15782— May 3, 1988. Ef-
fective: May 3, 1988)
Subpart B— Pleadings; Form; Execution;
Service of Documents
§ 511.11 Commencement of proceedings.
(a) Notice of institution of an enforcement pro-
ceeding. An adjudicative proceeding under this
part is commenced by the issuance of a complaint
by the NHTSA.
(b) Form and content of complaint. The com-
plaint shall be signed by the Complaint Counsel
and shall contain the following:
(1) Recital of the legal authority for instituting
the proceeding, with specific designation of the
statutory provisions involved in each allegation.
#
Rev. 5/3/88
PART 511-2
(2) Identification of each respondent.
(3) A clear and concise statement of the
charges, sufficient to inform each respondent with
reasonable definiteness of the factural basis of the
allegations of violation. A list and summary of
documentary evidence supporting the charges
shall be attached.
(4) A statement of the civil penalty which the
Complaint Counsel believes is in the public in-
terest, or which is required by law. In the case of
civil penalties assessed for violations of section
507(3) of the Motor Vehicle Information and Cost
Savings Act (15 U.S.C. 2007(3)), the amount of
such penalty shall be calculated from the time of
the alleged violation. In the case of civil penalties
assessed for violations of section 507(1) and (2) of
that Act, any monetary credits available to offset
those civil penalties shall be specified.
(5) The right of the respondent to a hearing on
the alleged violations.
(c) Notice to the Public. Once a complaint is
issued, notice of it shall be immediately submitted
to the Federal Register for publication. The notice
in the Federal Register shall briefly describe the
nature of the proceeding and state that permits to
participate in the proceeding must be filed no later
than the first prehearing conference.
§ 511.12 Answer.
(a) Time for filing. A respondent shall have
twenty (20) days after service of a complaint within
which to file an answer.
(b) Content of answer. An answer shall conform
to the following:
(1) Reqtcest for hearing. Respondent shall
state whether it requests a full, adjudicatory hear-
ing or whether it desires to proceed on the basis of
written submissions. If a hearing is requested,
respondent shall specify those issues on which a
hearing is desired.
(2) Contested allegations. An answer in which
the allegations of a complaint are contested shall
contain:
(i) Specific admission or denial of each
allegation in the complaint. If the respondent
is without knowledge or information sufficient
to form a belief as to the truth of an allegation,
respondent shall so state. Such a statement
shall have the effect of a denial. Denials shall
fairly meet the substance of the allegations
denied. Allegations not thus answered shall be
deemed to have been admitted.
(ii) A concise statement of the factual and/
or legal defenses to each allegation of the
complaint.
(3) Admitted allegations. If the respondent
admits or fails to deny any factual allegation, he or
she shall be deemed to have waived a hearing as to
such allegation.
(c) Default. Failure of the respondent to file an
answer within the time provided (or within an
extended time, if provided), shall be deemed to con-
stitute a waiver of the right to appear and contest
the allegations set forth in the complaint and to
authorize the Presiding Officer to make such
findings of fact, as are reasonable under the
circumstances.
§ 511.13 Amendments and supplemental pleadings.
Whenever determination of a controversy on the
merits will be facilitated thereby, the Presiding Of-
ficer upon motion, may allow appropriate amend-
ments and supplemental pleadings which do not
unduly broaden the issues in the proceeding or
cause undue delay.
§ 511.14 Form and filing of documents.
(a) Filing. [Except as otherwise provided, all
documents submitted to the Administrator or a
Presiding Officer shall be filed with the Docket
Section, Office of the Secretary of Transportation,
Room 4107, 400 Seventh Street, S.W.,
Washington, D.C. 20590. Documents may be filed
in person or by mail and shall be deemed filed on
the day of filing or mailing.l (53 F.R. 15782— May
3, 1988. Effective: May 3. 1988)
(b) Caption. Every document shall contain a
caption setting forth the name of the action in con-
nection with which it is filed, the docket number,
and the title of the document.
(c) Copies. An original and nine (9) copies of all
documents shall be filed. Documents may be
reproduced by printing or any other process, pro-
vided that all copies filed are clear and legible.
(d) Signature. (1) The original of each docu-
ment filed shall be signed by a representative of
record for the party; or in the case of parties not
represented, by the party; or by a partner, officer,
or regular employee of any corporation, partner-
ship, or association, who files an appearance on
behalf of the party.
(Rev. 5/3/88)
PART 511-3
(2) The act of signing a document constitutes a
representation by the signer that the signer has
read it; that to the best of the signer's knowledge,
information and behef, the statements made in it
are true; and that it is not filed for purposes of
delay.
§ 511.15 Time.
(a) Computation. In computing any period of
time prescribed or allowed by the rules in this part,
the day of the act, event, or default from which the
designated period of time begins to run shall not be
included. The last day of the period so computed
shall be included, unless it is a Saturday, a Simday,
or a legal holiday, in which event the period runs
until the end of the next day which is not a Satur-
day, a Sunday, or a legal holiday. When the period
of time prescribed or allowed is less that 7 days,
intermediate Saturdays, Sundays, and legal
holidays shall be excluded in the computation. As
used in this part, "legal holiday" includes New
Year's Day, Washington's Birthday, Memorial
Day, Independence Day, Labor Day, Columbus
Day, Veteran's Day, Thanksgiving Day, Christmas
Day, and any other day appointed as a holiday by
the President or the Congress of the United
States.
(b) Additional Time After Service by Mail.
Whenever a party is required or permitted to do an
act within a prescribed period after service of a
document and the document is served by mail,
three (3) days shall be added to the prescribed
period.
(c) Extensions. For good cause shown, the
Presiding Officer may extend any time limit
prescribed or allowed under this part or by order of
the Administrator or the Presiding Officer, except
those governing the filing of interlocutory appeals
and appeals from Initial Decisions and those
expressly requiring the Administrator's action.
Except as otherwise provided by law, the Ad-
ministrator, for good cause shown, may extend any
time limit prescribed under this part, or by order of
the Administrator or the Presiding Officer. A
party or participant may petition the Presiding
Officer or the Administrator, as appropriate, for
an extension under this paragraph. Such a petition
shall be filed prior to the occurrence of the time
limit which is the subject of the petition.
§ 511.16 Service.
(a) Mandatory service. Every document filed
with the [Office of Hearings] shall be served upon
all parties and participants to a proceeding, i.e..
Complaint Counsel, respondent(s), and par-
ticipants, and upon the Presiding Officer. (53 F.R.
15782— May 3, 1988. Effective: May 3, 1988)
(b) Service of complaint, ruling, order, decision,
or subpena. Service of a complaint, ruling, order,
decision, or subpena may be effected as follows:
(1) By registered or certified mail. A copy of
the document shall be addressed to the person,
partnership, corporation or unincorporated
association to be served at his or its residence or
principal office or place of business; registered or
certified; and mailed; or
(2) By delivery to an individual. A copy of
the document may be delivered to the person to be
served; or to a member of the partnership to be
served; or to the president, secretary, or other ex-
ecutive officer, or a director of the corporation or
unincorporated association to be served; or to an
agent authorized by appointment or by law to
receive service; or
(3) By delivery to an address. A copy of the
document may be left at the principal office or
place of business of the person, partnership, cor-
poration, unincorporated association, or author-
ized agent with an officer, a managing or general
agent; or it may be left with a person of suitable
age and discretion residing therein, at the
residence of the person or of a member of the part-
nership or of an executive officer, director, or
agent of the corporation or unincorporated
association to be served.
(c) Service of documents with prescribed response
periods. When service of a document starts the
rimning of a prescribed period of time for the sub-
mission of a responsive document or the occur-
rence of an event, the document shall be served as
provided in paragraph (b) of this section.
(d) Service of other documents. All documents
other than those specified in paragraph (c) of this
section may be served as provided in paragraph (b)
of this section, or by ordinary first-class mail,
properly addressed, postage prepaid.
(e) Service on a representative. When a party
has appeared by an attorney or other represen-
tative, service upon that attorney or other represen-
tative shall constitute service on the party.
f
#
(Rev. 5/3/88)
PART 511-4
(f) Certificate of service. The original of every
document filed with the agency and required to be
served upon all parties to a proceeding shall be
accompanied by a certificate of service signed by
the party making service, stating that such service
has been made upon each party to the proceeding.
Certificates of service may be in substantially the
following form:
Dated at this
day of , 19 .
(Signature)
For
(g) Date of Service. The date of service of a
document shall be the date on which the document
is deposited in the United States mail or is
delivered in person.
§511.17 Public participation.
Participant Status. Any person interested in a
proceeding commenced pursuant to § 511.11 who
desires to participate in the proceeding, shall file
with the [Docket Section! a notice of intention to
participate in the proceeding and shall serve a copy
of such notice on each party to the proceeding. A
notice of intention to participate shall be filed not
later than the commencement of the hearing. Un-
timely filings will not be accepted absent a deter-
mination by the Presiding Officer that the person
making the request has made a substantial show-
ing of good cause for failure to file on time. Any
person who files a notice to participate in the pro-
ceeding as a nonparty shall be known as a "partici-
pant" and shall have the rights specified in
§ 511.41(d). (53 F.R. 15782— May 3, 1988. Effective:
May 3, 1988)
§511.18 Joinder of proceedings.
Two or more matters which have been scheduled
for adjudicative proceedings, and which involve
one or more common questions of law or fact, may
be consolidated for the purpose of hearing, appeal
or the Administrator's review. A motion for con-
solidation for purpose of hearing may be filed with
the Presiding Officer by any party to such pro-
ceedings not later than thirty (30) days prior to the
hearing. A motion for consolidation for the pur-
pose of appeal may be filed by any party to such
proceedings within 10 days after issuance of the
Initial Decision. A motion to consolidate shall be
served upon all parties to all proceedings whose
joinder is contemplated. The proceedings may be
consolidated where to do so would tend to avoid
unnecessary costs or delay. Such consolidation
may also be ordered upon the initiative of the
Presiding Officer or the Administrator, as
appropriate. The Presiding Officer may order
separate hearings on any issue where to do so
would promote economy or convenience or would
avoid prejudice to a party.
Subpart C— Prehearing Procedures;
Motions; Interlocutory Appeals;
Summary Judgment; Settlement
§511.21 Prehearing conferences.
(a) When held. (1) A prehearing conference
shall be held in person or by conference telephone
call, except in unusual circumstances, approxi-
mately fifty (50) days after publication in the
Federal Register of the complaint, upon ten (10)
days notice to all parties and participants, to con-
sider any or all the following:
(i) Motions for consolidation of proceedings;
(ii) Identification, simplification and
clarification of the issues;
(iii) Necessity or desirability of amending
the pleadings;
(iv) Stipulations and admissions of fact and
of the content and authenticity of documents;
(v) Oppositions to notices of oral examination;
(vi) Motions for protective orders to limit or
modify discovery;
(vii) Issuance of subpenas to compel the
appearance of witnesses and the production of
documents;
(viii) Limitation of the number of witnesses,
particularly the avoidance of duplicate expert
witnesses;
(ix) Matter of which official notice will be
taken and matters which may be resolved by
reliance upon findings of other Federal agen-
cies; and
(x) Other matters which may expedite the
conduct of the hearing.
§ 511.22 Prehearing briefs.
Not later ten (10) days prior to the hearing, the
parties shall, except when ordered otherwise by
the Presiding Officer in unusual circumstances,
simultaneously serve and file prehearing briefs,
which shall set forth (a) a statement of the facts
(Rev. 5/3/88)
PART 511-5
expected to be proved, and of the anticipated order
of proof; (b) a statement of the issues and the legal
argument in support of the party's contentions
with respect to each issue; and (c) a table of
authorities with a designation by asterisk of the
principal authorities relied upon.
§ 511.23 Motions.
(a) Presentations and dispositions. During the
time a proceeding is before a Presiding Officer, all
motions, whether oral or written, except those filed
under § 511.42(e), shall be addressed to the Pre-
siding Officer, who shall rule upon them promptly
after affording an opportunity for response.
(b) Written motions. All written motions shall
state the particular order, ruling, or action desired
and the grounds therefore. If a motion is supported
by memoranda, affidavits or other documents,
they shall be served and filed with the motion. All
motions shall contain a proposed order setting
forth the relief sought. AU written motions shall be
filed with the Executive Secretary and served on
all parties, and all motions addressed to the
Administrator shall be in writing.
(c) Responses. Within ten (10) days after serv-
ice of any written motion or petition or within such
longer or shorter time as may be designated by
these Rules or by the Presiding Officer or the
Administrator, the opposing party or parties shall
file a written response to such motion. Where a
motion would affect only a single party, or an iden-
tifiable group of parties, the Presiding Officer or
Administrator may limit the response to the
motion to the affected party or parties. Failure to
respond to a written motion may, in the discretion
of the Presiding Officer be deemed as consent to
the granting of the relief sought in the motion. The
moving party shall have no right to reply, except as
permitted by the Presiding Officer or the
Administrator.
(d) Rulings on motions for dismissal. When a
motion to dismiss a complaint or motion for other
relief is granted with the result that the proceeding
before the Presiding Officer is terminated, the
Presiding Officer shall issue an Initial Decision and
Order thereon in accordance with the provisions of
§ 511.51. If such a motion is granted as to all issues
alleged in the complaint in regard to some, but not
all, the respondents, or is granted as to any part of
the allegations in regard to any or all the
respondents, the Presiding Officer shall enter an
order on the record and consider the remaining
issues in the Initial Decision. The Presiding Officer
may elect to defer ruling on a motion to dismiss
until the close of the case.
§511.24 Interlocutory appeals.
(a) General. Rulings of the Presiding Officer
may not be appealed to the Administrator prior to
the Initial Decision, except as provided herein.
(b) Exceptions— (1) Interlocutory appeals to
Administrator. The Administrator may, in his or
her discretion, entertain interlocutory appeals
where a ruling of the Presiding Officer:
(i) Requires the production or disclosure of
records claimed to be confidential;
(ii) Requires the testimony of a supervisory
official of the agency other than one especially
cognizant of the facts of the matter in
adjudication;
(iii) Excludes an attorney from participation
in a proceeding pursuant to § 511.42(b).
(2) Procedures for interlocutory appeals. Within
ten (10) days of issuance of a ruling, any party may
petition the Administrator to entertain an in-
terlocutory appeal on a ruling in the categories
enumerated above. The petition shall not exceed
fifteen (15) pages. Any other party may file a
response to the petition within ten (10) days of its
service. The response shall not exceed fifteen (15)
pages. The Administrator shall thereupon act upon
the petition, or the Administrator shall request
such further briefing or oral presentation as he
may deem necessary.
(3) Interlocutory appeals from all other rul-
ings—(\) Grounds. Interlocutory appeals from
all other rulings by the Presiding Officer may
proceed only upon motion to the Presiding
Officer and a determination by the Presiding
Officer in writing, with justification in support
thereof, that the ruling involves a controlling
question of law or policy as to which there is
substantial ground for differences of opinion
and that an immediate appeal from the ruling
may materially advance the ultimate termina-
tion of the litigation, or that subsequent review
will be an inadequate remedy.
(ii) Form. If the Presiding Officer deter-
mines, in accordance with paragraph (bX3Xi) of
this section that an interlocutory appeal may
(C
i
PART 511-6
proceed a petition for interlocutory appeal may
be filed with and acted upon by the
Administrator in accordance with paragraph
(bX2) of this section.
(c) Proceedings not stayed. A petition for in-
terlocutory appeal under this part shall not stay
the proceedings before the Presiding Officer unless
the Presiding Officer shall so order, except that a
ruling of the Presiding Officer requiring the pro-
duction of records claimed to be confidential shall
be automatically stayed for a period of (10) days
following the issuance of such ruling to allow an
affected party the opportunity to file a petition for
an interlocutory appeal pursuant to § 511.24(bX2).
The filing of such a petition shall automatically
extend the stay of such a ruling pending the
Administrator's action on such petition.
§511.25 Summary decision and order.
(a) Motion. Any party may move, with a sup-
porting memorandum, for a Summary Decision
and Order in its favor upon all or any of the issues
in controversy. Complaint Coimsel may so move at
any time after thirty (30) days following issuance
of a complaint, and any other party may so move at
any time after issuance of a complaint. Any such
motion by any party shall be filed at least twenty
(20) days before the date fixed for the adjudicatory
hearing.
(b) Response to motion. Any other party may,
within ten (10) days after service of the motion, file
a response thereto with a supporting memorandimi.
(c) Grounds. A Summary Decision and Order
shall be granted if the pleadings and any testimony
upon oral examination, answers to interrogatories,
admissions, and /or affidavits show that there is no
genuine issue as to any material fact and that the
moving party is entitled to a Summary Decision
and Order as a matter of law.
(d) Legal effect. A Summary Decision and
Order upon all the issues being adjudicated shall
constitute the Initial Decision of the Presiding
Officer, and may be appealed to the Administrator
in accordance with § 511.53. A Summary Decision,
interlocutory in character, may be rendered on
fewer than all issues and may not be appealed prior
to issuance of the Initial Decision, except in accord-
ance with § 511.24.
(e) Case not fully adjudicated on motion. A
Summary Decision and Order that does not dispose
of the whole case shall include a statement of those
material facts as to which there is no substantial
controversy, and of those material facts that are
actually and in good faith controverted. The Sum-
mary Order shall direct such further proceedings
as are just.
§ 511.26 Settlement.
(a) Applicability. This section applies only to
cases of alleged violations of section 507(3) of the
Motor Vehicle Information and Cost Savings Act,
Pub. L. 94-163, 89 Stat. 911 (15 U.S.C. Section
2007(3)). Settlement in other cases may be made
only in accordance with Subpart G of this part.
(b) Availability. Any party shall have the
opportimity to submit an offer of settlement to the
Presiding Officer.
(c) Form. Offers of settlement shall be in the
form of a consent agreement and order, shall be
signed by the party submitting the offer or his
representative, and may be signed by any other
party. Each offer of settlement shall be accom-
panied by a motion to transmit to the Administrator
the proposed agreement and order, outlining the
substantive provisions of the agreement, and the
reasons why it should be accepted.
(d) Contents. The proposed consent agreement
and order which constitute the offer of settlement
shall contain the following:
(1) An admission of all jurisdictional facts;
(2) An express waiver of further procedural
steps, and of all rights to seek judicial review or
otherwise to contest the validity of the order:
(3) A description of the alleged non-
compliance, or violation;
(4) Provisions to the effect that the allegations
of the complaint are resolved by the proposed con-
sent agreement and order;
(5) A listing of the acts or practices from
which the respondent shall refrain;
(6) A detailed statement of the corrective ac-
tion(s) which the respondent shall execute and the
civil penalty, if any, that respondent shall pay.
(e) Transmittal. The Presiding Officer shall
transmit to the Administrator for decision all offers
of settlement and accompanying memoranda that
meet the requirements enumerated in paragraph
PART 511-7
(d) of this section. The Presiding Officer may, but
need not, recommend acceptance or rejection of such
offers. Any party or participant, may object to a pro-
posed consent agreement by filing a motion and sup-
porting memorandum with the Administrator.
(f) Stay of proceedings. When an offer of settle-
ment has been agreed to by the parties and has
been transmitted to the Administrator, the pro-
ceedings shall be stayed until the Administrator
has ruled on the offer. When an offer of settlement
has been made and transmitted to the Administra-
tor but has not been agreed to by all parties, the
proceedings shall not be stayed pending the
Administrator's decision on the offer.
(g) Administrator's ruling. The Administrator
will rule upon all transmitted offers of settlement. If
the Administrator accepts the offer, the Adminis-
trator shall issue an appropriate order. The order
shall become effective upon issuance. In deter-
mining whether to accept an offer of settlement, the
Administrator will consider the gravity of the al-
leged violation, and any good faith efforts by the
respondent to comply with applicable requirements.
(h) Rejection. If the Administrator rejects an
offer of settlement, the [Administrator] shall give
written notice of that decision and the reasons
therefor to the parties and the Presiding Officer.
Promptly thereafter, the Presiding Officer shall
issue an order notifying the parties of the resump-
tion of the proceedings, including any modifica-
tions to the schedule resulting from the stay of the
proceedings. (53 F.R. 15782— May 3, 1988. Effec-
tive: May 3, 1988)
(i) Effect of rejected offer. Rejected offers of set-
tlement shall not be admissible in evidence over the
objection of any signatory, nor shall the fact of the
proposal of the offer be admissible in evidence.
Subpart D— Discovery; Compulsory Process
§ 511.31 General provisions governing discovery.
(a) A-pplicahilty. The discovery rules established
in this subpart are applicable to the discovery of
information among the parties to a proceeding. Par-
ties seeking information from persons not parties
may do so by subpena in accordance with § 511.38.
(b) Discovery methods. Parties may obtain
discovery by one or more of the following methods:
(1) Written interrogatories; (2) requests for pro-
duction of documents or things; (3) requests for
admissions; (4) testimony upon oral examination.
Unless the Presiding Officer otherwise orders
under paragraph (d) of this section, the frequency
of use of these methods is not limited.
(c) Scope of discovery. The scope of discovery is
as follows:
(1) In general. Parties may obtain discovery
regarding any matter not privileged, which is rele-
vant to the subject matter involved in the pro-
ceedings, whether it relates to the claim or defense
of the party seeking discovery or to the claim or
defense of any other party. It is not ground for
objection that the information sought will be inad-
missible at the hearing if the information sought
appears reasonably calculated to lead to the
discovery of admissible evidence.
(2) Exception. Parties may not obtain
discovery of documents which accompanied the
staff's recommendation as to whether a complaint
should issue or of documents or portions thereof
which would be exempt from discovery under Rule
26(b)(3) of the Federal Rules of Civil Procedure.
(3) Hearing preparation,: Experts. A party
may obtain discovery of facts known and opinions
held by experts, regardless of whether they are
acquired or developed in anticipation of or for
litigation. Such discovery may be had by any of the
methods provided in paragraph (b) of this section.
(d) Protective orders. Upon motion by a party
or person and for good cause shown, the Presiding
Officer may make an order which justice requires
to protect such party or person from annoyance,
embarrassment, competitive disadvantage,
oppression or undue burden or expense, including
one or more of the following: (1) That the discovery
shall not be had; (2) that the discovery may be had
only on specified terms and conditions, including a
designation of the time and /or place; (3) that the
discovery shall be had only by a method of
discovery other than that selected by the party
seeking discovery; (4) that certain matters shall
not be inquired into, or that the scope of discovery
shall be limited to certain matters; (5) that
discovery shall be conducted with no one present
except persons designated by the Presiding
•
(Rev. S/3/88)
PART 511-8
Officer; (6) that a trade secret or other confidential
research, development, or commercial information
shall not be disclosed or shall be disclosed only in a
designated way or only to designated parties; and
(7) that responses to discovery shall be placed in
camera in accordance with § 511.45.
If a motion for a protective order is denied in
whole or in part, the Presiding Officer may, on
such terms or conditions as are just, order that any
party provide or permit discovery.
(e) Sequence and timing of discovery. Discovery
may commence at any time after filing of the
answer. Unless otherwise provided in these Rules
or by order of the Presiding Officer, methods of
discovery may be used in any sequence and the fact
that a party is conducting discovery shall not
operate to delay any other party's discovery.
(f) Supplementation of responses. A party who
has responded to a request for discovery shall sup-
plement the response with information thereafter
acquired.
(g) Completion of discovery. All discovery shall
be completed as soon as practical but in no case
longer than one hundred fifty (150) days after
issuance of a complaint unless otherwise ordered
by the Presiding Officer in exceptional cir-
cumstances and for good cause shown. All
discovery shall be served by a date which affords
the party from whom discovery is sought the full
response period provided by these Rules.
(h) Service and filing of discovery. All discovery
requests and written responses, and all notices of
the taking of testimony, shall be filed with the
[Docket Section) and served on all parties and the
Presiding Officer. (53 F.R. 15782— May 3, 1988.
Effective: May 3, 1988)
(i) Control of discovery. The use of these
discovery procedures is subject to the control of
the Presiding Officer, who may issue any just and
appropriate order for the purpose of ensuring their
timely completion.
§ 511.32 Written interrogatories to parties.
(a) Availability; procedures for use. Any party
may serve upon any other party written inter-
rogatories to be answered by the party served or, if
the party served is a public or private corporation
or a partnership or association or governmental
agency, by any officer or agent, who shall furnish
such information as is available to the party. Inter-
rogatories may, vdthout leave of the Presiding
Officer, be served upon any party after filing of the
answer.
(b) Procedures for response. Each interrogatory
shall be answered separately and fully in writing
under oath, unless it is objected to, in which event
the reasons for objection shall be stated in lieu of an
answer. The answers are to be signed by a responsi-
ble representative of the respondent and the objec-
tions signed by the respresentative making them.
The party upon whom the interrogatories have been
served shall serve a copy of the answers, and objec-
tions if any, within 30 days after service of the inter-
rogatories. The Presiding Officer may allow a
shorter or longer time for response. The party sub-
mitting the interrogatories may move for an order
under § 511.36 with respect to any objection to or
other failure to answer an interrogatory.
(c) Scope of interrogatories. Interrogatories may
relate to any matters which can be inquired into
under § 511.31(c)(1), and the answers may be used
to the extent permitted under this part. An inter-
rogatory otherwise proper is not objectionable
merely because an answer to the interrogatory
would involve an opinion or contention that relates
to fact or to the application of law to fact, but the
Presiding Officer may order that such an inter-
rogatory need not be answered until a later time.
(d) Option to produce business records. Where
the answer to an interrogatory may be derived or
ascertained from the business records of the party
upon whom the interrogatory has been served, or
from an examination, audit or inspection of such
business records, or from a compilation, abstract or
summary based thereon, and the burden of deriving
the answer is substantially the same for the party
serving the interrogatory as for the party served, it
is a sufficient answer to the interrogatory to specify
the records from which the answer may be derived
or ascertained and to afford to the party serving the
interrogatory reasonable opportunity to examine,
audit or inspect such records and to make copies,
complications, abstracts, or summaries.
§ 511.33 Production of documents and things.
(a) Scope. Any party may serve upon any other
party a request (1) to produce and permit the party
making the request, or someone acting on behalf of
the party, to inspect and copy any designated
documents (including writings, drawings, graphs,
(Rev. 5/3/88)
PART 511-9
charts, photographs, phono-records, and any other
data-compOation from which information can be
obtained, translated, if necessary, by the party in
possession into reasonably usable form), or (2) to
inspect and copy, test or sample tangible things
which constitute or contain matters within the
scope of § 511.31(c)(1) and which are in the posses-
sion, custody or control of the party upon whom
the request is served.
(b) Procedure for request. The request may be
served at any time after the filing of the answer
without leave of the Presiding Officer. The request
shall set forth the items to be inspected either by
individual item or by category, and shall describe
each item or category with reasonable particularity.
The request shall specify a reasonable time, place
and manner for making the inspection and
performing the related acts.
(c) Procedure for response. The party upon
whom the request is served shall serve a written
response within twenty (20) days after service of
the request. The Presiding Officer may allow a
shorter or longer time for response. The response
shall state, with respect to each item or category
requested, that inspection and related activities
will be permitted as requested, unless the request
is objected to, in which event the reasons for objec-
tion shall be stated. If objection is made to only
part of an item or category, that part shall be so
specified. The party submitting the request may
move for an order under § 511.36 with respect to
any objection to or other failure to respond to the
request or any part thereof, or to any failure to
permit inspection as requested.
§511.34 Requests for admission.
(a) Procedure for request. A party may serve
upon any other party a written request for the ad-
mission, for the purposes of the pending proceeding
only, of the truth of any matters within the scope of
§ 511.31(c)(1) set forth in the request that relate to
statements or opinions of fact or if the application of
law to fact, including the genuineness of documents
described in the request. Copies of documents shall
be served with the request unless they have been, or
are otherwise, furnished or made available for
inspection and copying. The request may, without
leave of the Presiding Officer, be served upon any
party after filing of the answer. Each matter as to
which an admission is requested shall be separately
set forth.
(b) Procedure for response. The matter as to
which an admission is requested is deemed
admitted unless within thirty (30) days after
service of the request, or within such shorter or
longer time as the Presiding Officer may allow, the
party to whom the request is directed serves upon
the party requesting the admission a written
answer or objection addressed to the matter,
signed by the party or the party's representatives.
If objection is made, the reasons therefore shall be
stated.
The answer shall specifically admit or deny the
matter or set forth in detail the reasons why the
answering party cannot truthfully admit or deny
the matter. A denial shall fairly meet the substance
of the requested admission. When good faith
requires that a party qualify an answer or deny
only a part of the matter as to which an admission
is requested, the party shall specify the portion
that is true and qualify or deny the remainder. An
answering party may not give lack of information
or knowledge as a reason for failure to admit or
deny, unless the party states that he or she has
made reasonable inquiry and that the information
known or readily available to him or her is insuffi-
cient to enable him or her to admit or deny. A party
who considers that a matter as to which an admis-
sion has been requested presents a genuine issue
for hearing may not, on that ground alone, object
to the request but may deny the matter or set forth
reasons why the party cannot admit or deny it. The
party who has requested an admission may move
to determine the sufficiency of the answer or objec-
tion thereto in accordance with § 511.36. If the
Presiding Officer determines that an answer does
not comply with the requirements of this section,
he or she may order that the matter be deemed
admitted or that an amended answer be served.
(c) Effect of admission. Any matter admitted
under this section is conclusively established unless
the Presiding Officer on motion permits
withdrawal or amendment of such admission. The
Presiding Officer may permit withdrawal or
amendment when the presentation of the merits of
the action will be served thereby and the party that
obtained the admission fails to satisfy the
Presiding Officer that withdrawal or amendment
will prejudice that party in maintaining an action
or defense on the merits.
(fli
PART 511-10
i^
§ 511.35 Testimony upon oral examination.
(a) When testimony may be taken. At any time
after the answer is filed under § 511.12, upon leave
of the Presiding Officer and under such terms and
conditions as the Presiding Officer may prescribe,
any party may take the testimony of any other
party, including the agents, employees, con-
sultants or prospective witnesses of that party at a
place convenient to the witness. The attendance of
witnesses and the production of documents and
things at the examination may be compelled by
subpena as provided in § 511.38.
(b) Notice of oral examination.— (1) Examina-
tion of a party. A party desiring to examine
another party to the proceeding shall, after obtain-
ing leave from the Presiding Officer, serve written
notice of the examination on all other parties and
the Presiding Officer at least ten (10) days before
the date of the examination. The notice shall state
(i) the time and place for making the examination;
(ii) the name and address of each person to be
examined, if known, or if the name is not known, a
general description sufficient to identify him; and
(iii) the subject matter of the expected testimony.
If a subpena diices tecum is to be served on the
person to be examined, the designation of the
materials to be produced, as set forth in the
subpena, shall be attached to or included in the
notice of examination.
(2) Examination of a nonparty. A party
desiring to examine a person who is not a party to
the proceeding shall make application for a
subpena, in accordance with § 511.38, to compel
the attendance, testimony and /or production of
documents by such person who is not a party. The
party desiring such examination shall serve
written notice of the examination on all other
parties to the proceeding, after issuance of the
subpena by the Presiding Officer of a designated
alternate.
(3) Opposition to notice. A person served
with a notice of examination may, within 3 days of
the date of service, oppose, in writing, the
examination. The Presiding Officer shall rule on
the notice and any opposition and may order the
taking of all noticed examinations, upon a showing
of good cause therefore. The Presiding Officer
may, for good cause shown, enlarge or shorten the
time for the taking of an examination.
(c) Persons before whom examinations may be
taken. Examinations may be taken before any
person authorized to administer oaths by the laws
of the United States or of the place where the ex-
amination is held. No examination shall be taken
before a person who is a relative or employee or
attorney or representative of any party, or who is a
relative or employee of such attorney or represen-
tative, or who is financially interested in the action.
(d) Procedure.— (1) Examination. Each
witness shall be duly sworn, and all testimony shall
be duly recorded. All parties or their represen-
tatives may be present and participate in the
examination. Examination and cross-examination
of witnesses may proceed as permitted at the hear-
ing. Questions objected to shall be answered sub-
ject to the objections. Objections shall be in short
form, and shall state the grounds relied upon. The
questions propounded and the answers thereto,
together with all objections made, shall be
recorded by the official reporter before whom the
examination is made. The original or a verified
copy of all documents and things produced for
inspection during the examination of the witness
shall, upon a request of any party present, be
marked for identification and annexed to the
record of the examination.
(2) Motion to terminate or limit examination.
At any time during the examination, upon motion
of any party or of the witness, and upon showing
that the examination is being conducted in bad
faith or in such manner as unreasonably to annoy,
embarrass or oppress the witness or party, the
Presiding Officer may, upon motion, order the party
conducting the examination to terminate the ex-
amination, or may limit the scope and manner of
the examination as provided in § 511.31(d).
(3) Participation by parties not present. In
lieu of attending an examination, any party may
serve written questions in a sealed envelope on the
party conducting the examination. That party shall
transmit the envelope to the official reporter, who
shall unseal it and propound the questions con-
tained therein to the witness.
(e) Transcription and filing of testimony.— {!)
Transcription. Upon request by any party, the
testimony recorded at an examination shall be tran-
scribed. When the testimony is fully transcribed,
the transcript shall be submitted to the witness for
examination and signing, and shall be read to or
PART 511-11
by the witness, unless such examination and
signature are waived by the witness. Any change
in form or substance which the witness desires to
make shall be entered upon the transcript of the
official reporter with a statement of the reasons
given by the witness for making them. The
transcript shall then be signed by the witness,
unless the parties by stipulation waive the signing,
or the witness is ill or cannot be found or refuses to
sign. If the transcript is not signed by the witness
within thirty (30) days of its submission to him, the
official reporter shall sign it and state on the
record the fact of the waiver of signature or of the
illness or absence of the witness or the fact of the
refusal to sign, together with a statement of the
reasons therefor. The testimony may then be used
as fully as though signed, in accordance with
paragraph (i) of this section.
(2) Certification and filing. The official
reporter shall certify on the transcript that the
witness was duly sworn and that the transcript is a
true record of the testimony given and corrections
made by the witness. The official reporter shall
then seal the transcript in an envelope endorsed
with the title and docket number of the action and
marked "Testimony of (name of witness)" and
shall promptly file the transcript with the [Docket
Section]. The [Presiding Officer] shall notify all
parties of the filing of the transcript and [Docket
Section] shall furnish a copy of the transcript to
any party or to the witness upon payment of
reasonable charges therefor. (53 F.R. 15782— May
3, 1988. Effective: May 3. 1988)
(f) Costs of examination. The party who notices
the examination shall pay for the examination. The
party who requests transcription of the examina-
tion shall pay for the transcription.
(g) Failure to attend or to serve subpena;
expenses. If a party who notices an examination
fails to attend and proceed therewith and another
party attends in person or by a representative pur-
suant to the notice, the Presiding Officer may
order the party who gave the notice to pay the
attending party the reasonable expenses incurred.
If a party who notices an examination fails to serve
a subpena upon the witness and as a result the
witness does not attend, and if another party
attends in person or by a representative because
that party expects the examination to be made, the
Presiding Officer may order the party who gave
notice to pay the attending party the reasonable
expenses incurred.
(h) Examination to preserve testimony—
(1) When available. By leave of the Presiding
Officer, a party may examine a witness for the
purpose of perpetuating the testimony of that
witness. A party who wishes to conduct such an ex-
amination shall obtain prior leave of the Presiding
Officer by filing a motion. The motion shall include
a showing of substantial reason to believe that the
testimony could not be presented at the hearing. If
the Presiding Officer is satisfied that the perpetua-
tion of the testimony may prevent a failure of
justice or is otherwise reasonably necessary, he or
she shall order that the deposition be taken.
(2) Procedure. Notice of an examination to
preserve testimony shall be served at least fifteen
(15) days prior to the examination. The examina-
tion shall be taken in accordance with the provi-
sions of paragraph (d) of this section. Any
examination taken to preserve testimony shall be
fully transcribed and filed in accordance with
paragraph (e) of this section.
(i) Use of testimony obtained under this
section. At the hearing or upon a motion or an
interlocutory proceeding, any part or all of a
deposition, so far as admissible under the rules of
evidence applied as though the witness were then
present and testifying, may be used against any
party who was present or represented at the
taking of the deposition or who had reasonable
Notice thereof, in accordance with any of the
following provisions:
(1) Any deposition may be used by any party
for the purpose of contradicting or impeaching the
testimony of deponent as a witness.
(2) The deposition of a party or of a person
who at the time of the taking of his testimony was
an officer, director or managing agent of a party
may be used against that party for any purpose.
(3) The deposition of a witness, whether or not a
party, may be used by any party for any purpose if the
Presiding Officer finds: (i) that the witness is dead; or
(ii) that the witness is at a greater distance than 100
miles from the place or the hearing, or is out of the
United States, unless it appears that the absence of
the witness was procured by the party offering the
deposition; or (iii) that the witness is unable to attend
or testify because of age, illness, infirmity.
f
•
(Rev. 5/3/88)
PART 511-12
or imprisonment; or (iv) that the party offering the
deposition has been unable to procure the attend-
ance of the witness by subponea; or (v) upon
application and notice, that such exceptional cir-
cumstances exist as to make it desirable, in the
interest of justice and with due regard to the
importance of presenting the testimony of
witnesses orally in open court, to allow the deposi-
tion to be used.
(4) If only part of a deposition is offered in
evidence by a party, an adverse party may require
him to introduce any other part which ought in
fairness to be considered with the part introduced,
and any party may introduce any other parts.
§511.36 Motions to compel discovery.
If a party fails to respond to discovery, in whole
or in part, the party seeking discovery may move
within twenty (20) days for an order compelling an
answer, or compelling inspection or production of
documents, or otherwise compelling discovery. For
purposes of this subsection, an evasive or in-
complete response is to be treated as a failure to
respond. If the motion is granted, the Presiding
Officer shall issue an order compelling discovery.
If the motion is denied in whole or in part, the
Presiding Officer may make such protective order
as it would have been empowered to make on a
motion pursuant to § 511.31(d). When making oral
examinations, the discovery party shall continue
the examination to the extent possible with respect
to other areas of inquiry before moving to compel
discovery.
§ 511.37 Sanctions for failure to comply with order.
If a party fails to obey an order to provide or
permit discovery, the Presiding Officer may take
such action as is just, including but not limited to
the following:
(a) Infer that the admission, testimony, docu-
ment of other evidence would have been adverse to
the party;
(b) Order that for the purposes of the pro-
ceeding, the matters regarding which the order
was made or any other designated facts shall be
taken to be established in accordance with the
claim of the party obtaining the order;
(c) Order that the party withholding discovery
not introduce into evidence or otherwise rely, in
support of any claim or defense, upon the
documents or other evidence withheld;
(d) Order that the party withholding discovery
not introduce into evidence or otherwise use at the
hearing, information obtained in discovery;
(e) Order that the party withholding discovery
not be heard to object to introduction and use of
secondary evidence to show what the withheld ad-
mission, testimony documents, or other evidence
would have shown;
(f) Order that a pleading, or part of a pleading,
or a motion or other submission by the party, con-
cerning which the order was issued, be stricken, or
that decision on the pleadings be rendered against
the party, or both; and
(g) Exclude the party or representative from
proceedings, in accordance with § 511.42(b).
Any such action may be taken by order at any
point in the proceedings.
§ 511.38 Subpenas.
(a) Availability. A subpoena shall be addressed
to any party or any person not a party for the
purpose of compelling attendance, testimony and
production of documents at a hearing or oral
examination.
(b) Form. A subpoena shall identify the action
with which it is connected; shall specify the person
to whom it is addressed and the date, time and
place for compliance with its provisions; and shall
be issued by order of the Presiding Officer and
signed by the (Chief Counsel] or by the Presiding
Officer. A subpoena duces tecum shall specify the
books, papers, documents, or other materials or
data-compilation to be produced. (53 F.R.
26257— July 12, 1988. Effective: July 12, 1988)
(c) How obtained— {!) Content of application.
An application for the issuance of a subpoena
stating reasons shall be submitted in triplicate to
the Presiding Officer.
(2) Procedure of application. The original
and two copies of the subpoena, marked
"original," "duplicate" and "triplicate," shall ac-
company the application. The Presiding Officer
shall rule upon an application for a subpoena ex
parte, by issuing the subpoena or by issuing an
order denying the application.
(Rev. 7/12/88)
PART 511-13
(d) Issuance of a subpoena. The Presiding
Officer shall issue a subpoena by signing and
dating, or ordering the [Chief Counsel] to sign and
date, each copy in the lower right-hand corner of
the document. The "duplicate" and "triplicate"
copies of the subpoena shall be transmitted to the
applicant for service in accordance with these
Rules; the "original" copy shall be retained by or
be forwarded to the [Chief Counsel) for retention
in the docket of the proceeding. (53 F.R.
26257— July 12, 1988. Effective: July 12, 1988)
(e) Service of a subpoena. A subpoena may be
served in person or by certified mail, return receipt
requested, as provided in § 511.16(b). Service shall
be made by delivery of the signed "duplicate" copy
to the person named therein.
(f) Return of service. A person serving a sub-
poena shall promptly execute a return of service,
stating the date, time and manner of service, if
service is effected by mail, the signed return
receipt shall accompany the return of service. In
case of failure to make service, a statement of the
reasons for the failure shall be made. The
"triplicate" of the subpoena, bearing or accom-
panied by the return of service, shall be returned
forthwith to the [Chief Counsel] after service has
been completed. (53 F.R. 26257— July 12, 1988. Ef-
fective: July 12, 1988)
(g) Motion to quash or limit subpoena. Within
five (5) days of receipt of a subpoena, the person
against whom it is directed may file with the
Presiding Officer a motion to quash, modify, or
limit the subpoena, setting forth the reasons why
the subpoena should be withdrawn or why it should
be modified or limited in scope. Any such motion
shall be answered within five (5) days of service,
and shall be ruled on immediately thereafter. The
order shall specify the date, if any, for compliance
with the specifications of the subpoena and the
reasons for the decision.
(h) Consequences of failure to comply. In the
event of failure to comply with a subpoena, the
Presiding Officer may take any of the actions
enumerated in § 511.37 or may order any other
appropriate relief to compensate for the withheld
testimony, documents, or other materials. If in the
opinion of the Presiding Officer such relief is in-
sufficient, the Presiding Officer shall certify to the
Administrator a request for judicial enforcement
of the subpoena.
§ 511.39 Orders requiring witnesses to testify or
provide other information and granting
immunity.
(a) A party who desires the issuance of an order
requiring a witness to testify or provide other
information upon being granted immunity from
prosecution under title 18, United States Code,
section 6002, may make a motion to that effect.
The motion shall be made and ruled on in accord-
ance with § 511.22, and shall include a showing:
(1) That the testimony or other information
sought from a witness or prospective witness may
be necessary to the public interest; and
(2) That such individual has refused or is likely
to refuse to testify or provide such information on
the basis of that individual's privilege against self-
incrimination.
(b) If the Presiding Officer determines that the
witness' testimony appears necessary and that the
privilege against self-incrimination may be
invoked, he or she may certify to the
Administrator a request that he or she obtain the
approval of the Attorney General of the United
States for the issuance of an order granting
immunity.
(c) Upon application to and approval of the
Attorney General of the United States, and after
the witness has invoked the privilege against self-
incrimination, the Presiding Officer shall issue the
order granting immimity unless he or she deter-
mines that the privilege was improperly invoked.
(d) Failure of a witness to testify after a grant of
immunity or after a denial of the issuance of an
order granting immunity shall result in the imposi-
tion of appropriate sanctions as provided in
§ 511.37.
Subpart E— Hearings
§ 511.41 General rules.
(a) Public hearings. All hearings pursuant to
this Part shall be public unless otherwise ordered
by the Presiding Officer. Notice of the time and
location of the hearing shall be served on each
party and participant, and published in the Federal
Register.
i
(Rev. 7/12/88)
PART 511-14
(b) Expedition. Hearings shall proceed with all
reasonable speed, and insofar as practicable and
with due regard to the convenience of the parties
and shall continue without suspension until con-
cluded, except in unusual circumstances.
(c) Rights of parties. Every party shall have the
right of timely notice and all other rights essential
to a fair hearing, including, but not limited to, the
rights to present evidence, to conduct such cross-
examination as may be necessary in the judgment
of the Presiding Officer for a full and complete
disclosure of the facts, and to be heard by objec-
tion, motion, brief, and argument.
(d) Rights of participants. Every participant
shall have the right to make a written or oral state-
ment of position, file proposed findings of fact,
conclusions of law and a posthearing brief, in
accordance with § 511.17(b).
(e) Rights of witnesses. Any person compelled
to testify in a proceeding in response to a subpena
may be accompanied, represented, and advised by
counsel or other representative, and may obtain a
transcript of his or her testimony at no cost.
§ 511.42 Powers and duties of Presiding Officer.
(a) General. A Presiding Officer shall have the
duty to conduct full, fair, and impartial hearings,
to take appropriate action to avoid unnecessary
delay in the disposition of proceedings, and to
maintain order. He or she shall have all powers
necessary to that end, including the following
powers:
(1) To administer oaths and affirmations;
(2) To compel discovery and to impose
appropriate sanctions for failure to make
discovery;
(3) To issue subpenas;
(4) To rule upon offers of proof and receive
relevant and probative evidence;
(5) To regulate the course of the hearings and
the conduct of the parties and their represen-
tatives therein;
(6) To hold conferences for simplification of
the issues, settlement of the proceedings, or any
other proper purposes;
(7) To consider and rule, orally or in writing,
upon all procedural and order motions appropriate
in an adjudicative proceeding;
(8) To issue initial decisions, rulings, and
orders, as appropriate;
(9) To certify questions to the Administrator
for determination; and
(10) To take any action authorized in this Part
or in conformance with the provisions of title 5,
United States Code, sections 551 through 559.
(b) Exclusion of parties by Presiding Officer. A
Presiding Officer shall have the authority, for good
cause stated on the record, to exclude from
participation in a proceeding any party, partici-
pant, and /or representative who shall violate
requirements of § 511.76. Any party, participant
and /or representative so excluded may appeal to
the Administrator in accordance with the provi-
sions of § 511.23. If the representative of a party
or participant is excluded, the hearing shall be
suspended for a reasonable time so that the party
or participant may obtain another representative.
(c) Substitution of Presiding Officer. In the
event of the substitution of a new Presiding Officer
for the one originally designated, any motion
predicated upon such substitution shall be made
within five (5) days of the substitution.
(d) Interference. In the performance of
adjudicative functions, a Presiding Officer shall
not be responsible to or subject to the supervision
or direction of the Administrator or of any officer,
employee, or agent engaged in the performance of
investigative or prosecuting functions for NHTSA.
All directions by the Administrator to a Presiding
Officer concerning any adjudicative proceeding
shall appear on and be made a part of the record.
(e) Disqualification of Presiding Officer. (1)
When a Presiding Officer deems himself or herself
disqualified to preside in a particular proceeding,
he or she shall withdraw by notice on the record
and shall notify the [Chief Administrative Law
Judge of the withdrawal.) (53 F.R. 15782— May 3,
1988. Effective: May 3, 1988)
(2) Whenever, for any reason, any party
shall deem the Presiding Officer to be disquali-
fied to preside, or to continue to preside, in a
particular proceeding, that party may file with
the [Chief Administrative Law Judge] a motion to
disqualify and remove, supported by affidavit(s) set-
ting forth the alleged grounds for disqualification. A
copy of the motion and supporting affidavit(s)
(Rev. 5/3/88)
PART 511-15
shall be served by the [Chief Administrative Law
Judge] on the Presiding Officer whose removal is
sought. The Presiding Officer shall have ten (10)
days from service to reply in writing. Such motion
shall not stay the proceeding unless otherwise
ordered by the Presiding Officer or the Admin-
istrator. If the Presiding Officer does not dis-
qualify himself or herself, the Administrator will
determine the validity of the grounds alleged,
either directly or on the report of another
Presiding Officer appointed to conduct a hearing
for that purpose, and shall in the event of dis-
qualification take appropriate action, by assigning
another Presiding Officer or requesting loan of
another Administrative Law Judge through the
[Office of Hearings]. (53 F.R. 15782— May 3, 1988.
Effective: May 3, 1988)
§ 511.43 Evidence.
(a) Applicability of Federal Rules of
Evidence. The Federal Rules of Evidence shall
apply to proceedings held under this part only as a
general guide. The Presiding Officer may admit
any relevent and probative evidence.
(b) Burden of proof. (1) Complaint counsel shall
have the burden of sustaining the allegations of
any complaint.
(2) Any party who is the proponent of a legal
and/ or factual proposition shall have the burden of
sustaining the proposition.
(c) Presumptions. A presumption imposes on
the party against whom it is directed the burden of
going forward with evidence to rebut or meet the
presumption, but does not shift to such party the
burden of proof in the sense of the risk of nonper-
suasion, which remains throughout the hearing
upon the party on whom it was originally cast.
(d) Admissibility. All relevant and reliable
evidence is admissible, but may be excluded if its
probative value is substantially outweighed by
unfair prejudice or by considerations of undue
delay, waste of time, immateriality, or needless
presentation of cumulative evidence.
(e) Official notice— (1) Definition. Official
notice means use by the Presiding Officer of extra-
record facts and local conclusions drawn from
those facts. An officially noticed fact or legal con-
clusion must be one not subject to reasonable
dispute in that it is either (i) generally known
within the jurisdiction of the Presiding Officer or
(ii) known by the Presiding Officer in areas of his
or her expertise; or (iii) capable of accurate and
ready determination by resort to sources whose
accuracy cannot reasonably be questioned.
(2) Method of taking official notice. The
Presiding Officer may at any time take official
notice upon motion of any party or upon its own
initiative. The record shall reflect the facts and
conclusions which have been officially noticed.
(3) Opportunity to challenge. Any party may
upon application in writing rebut officially noticed
facts and conclusions by supplementing the record.
The Presiding Officer shall determine the permis-
sible extent of this challenge; that is, whether to
limit the party to presentation of written materials,
whether to allow presentation of testimony,
whether to allow cross-examination, or whether to
allow oral argument. The Presiding Officer shall
grant or deny the application on the record.
(f) Objections and exceptions. Objections to
evidence shall be timely interposed, shall appear on
the record, and shall contain the grounds upon
which they are based. Rulings on all objections,
and the bases therefore, shall appear on the record.
Formal exception to an adverse ruling is not
required to preserve the question for appeal.
(g) Offer of proof. When an objection to prof-
fered testimony or documentary evidence is
sustained, the sponsoring party may make a
specific offer, either in writing or orally, of what
the party expects to prove by the testimony or the
document. When an offer of proof is made, any
other party may make a specific offer, either in
writing or orally, of what the party expects to
present to rebut or contradict the offer of proof.
Written offers of proof or of rebuttal, adequately
marked for identification, shall accompany the
record and be available for consideration by any
reviewing authority.
§ 511.44 Expert witnesses.
(a) Definition. An expert witness is one who,
by reason of education, training, experience, or
profession, has peculiar knowledge concerning the
matter of science or skill to which his or her
testimony relates and from which he or she may
draw inferences based upon hypothetically stated
facts or from facts involving scientific or technical
knowledge.
I
«
(Rev. 5/3/88)
PART 511-16
(b) Method of presenting testimony of expert
witness. Except as may be otherwise ordered by
the Presiding Officer, a detailed written statement
of the elements of the direct testimony of an expert
witness shall be filed on the record and exchanged
between the parties no later than 10 days
preceding the commencement of the hearing. The
statement must contain a full explanation of the
methodology underlying any analysis, and a full
disclosure of the basis of any opinion. The direct
testimony of an expert witness shall not include
points not contained in the written statement. A
party may waive direct examination of an expert
witness by indicating that the written statement be
considered the testimony of the witness. In such a
case, the written testimony shall be incorporated
into the record and shall constitute the testimony
of the witness.
(c) Cross-examination and redirect examination
of expert witness. Cross-examination, redirect ex-
amination, and re-cross-examination of an expert
witness will proceed in due course based upon the
written testimony and any amplifying oral
testimony.
(d) Failure to file and/ or to exchange written
statement. Failure to file and /or to exchange the
written statement of an expert witness as provided
in this section shall deprive the sponsoring party of
the use of the expert witness and of the conclusions
which that witness would have presented.
§511.45 In camera materials.
(a) Definition. In camera materials are
documents, testimony, or other data which by
order of the Presiding Officer or the Ad-
ministrator, as appropriate under this Part, are
kept confidential and excluded from the public
record. Only materials exempt under the Freedom
of Information Act may be kept confidential and
excluded from the public record. Pursuant to 49
CFR Part 512, the Chief Counsel of the NHTSA is
responsible for determining whether an alleged
confidential business record is exempt from the
Freedom of Information Act. The right of the
Presiding Officer, the Administrator and re-
viewing courts to order disclosure of in camera
materials is specifically reserved.
(b) In Camera Treatment of documents and
testimony. The Presiding Officer or the Admin-
istrator, as appropriate under this part, shall have
authority, when good cause is found on the record,
to order documents or testimony offered in
evidence, whether admitted or rejected, to be
received and preserved in camera. The order shall
specify the length of time for in camera treatment
and shall include:
(1) A description of the documents and/or
testimony;
(2) The reasons for granting in camera treat-
ment for the specified length of time.
(c) Access and disclosure to parties. (1) The
Administrator and Presiding Officer, and their im-
mediate advisory staffs shall have complete access
to all in camera materials. All other parties shall
also have complete access to all in camera
materials, except that these parties may seek access
only in accordance with paragraph (c)(2) of this sec-
tion when:
(i) The in camera materials consist of infor-
mation obtained by the government from per-
sons not parties to the proceeding; or
(ii) The in camera materials consist of
information provided by one of the parties to
the proceeding which is confidential as to the
other parties to the proceeding.
(2) Any party desiring access to and/ or disclosure
of the in camera materials specified in paragraph
(c)(1) (i) and (ii) of this section for the preparation
and presentation of that party's case shall make a
motion which sets forth the justification therefore.
The Presiding Officer or the Administrator, as
appropriate under this part, may grant such motion
on the record for substantial good cause shown and
shall enter a protective order prohibiting un-
necessary disclosure and requiring other necessary
safeguards. The Presiding Officer or the Admin-
istrator, as appropriate, may examine the in camera
materials and excise portions thereof before dis-
closing the materials to the moving party.
(d) Segregation of in camera materials. In
camera materials shall be segregated from the
public record and protected from public view.
(e) Public release of in camera materials. In
Camera materials constitute a part of the confi-
dential records of the NHTSA and shall not be
released to the public until the expiration of in
camera treatment.
PART 511-17
(f) Reference to in camera materials. In the sub-
mission of proposed findings, conclusions, briefs,
or other documents, all parties shall refrain from
disclosing specific details of in camera materials.
Such refraining shall not preclude general
references to such materials. To the extent that
parties consider it necessary to include specific
details of in camera materials, the references shall
be incorporated into separate proposed findings,
briefs, or other documents marked "CONFIDEN-
TIAL, CONTAINS IN CAMERA MATERIAL,"
which shall be placed in camera and become part of
the in camera record. These documents shall be
served only on parties accorded access to the in
camera materials in accordance with paragraph
(c)(2) of this section.
§ 511.46 Proposed findings, conclusions, and
order.
Within a reasonable time after the closing of the
record and receipt of the transcript, all parties and
participants may, simultaneously, file post-hearing
briefs, including proposed findings of facts, conclu-
sions of law and a proposed order, together with
reasons therefore. The Presiding Officer shall
estabhsh a date certain for the filing of the briefs,
which shall not exceed 45 days after the close of
the record except in unusual circumstances. The
briefs shall be in writing, shall be served upon all
parties, and shall contain adequate references to
the record and authorities relied on. Replies shall
be filed within fifteen (15) days of the date for the
liling of briefs unless otherwise established by the
Presiding Officer. The parties and participants
may waive either or both submissions.
§ 511.47 Record.
(a) Reporting and transcription. Hearings
shall be recorded and transcribed under the super-
vision of the Presiding Officer by a reporter ap-
pointed by the Administrator. The original
transcript shall be a part of the record and the of-
ficial transcript. Copies of transcripts are available
from the reporter at a cost not to exceed the max-
imum rates fixed by contract between the NHTSA
and the reporter.
(b) Corrections. Corrections of the official
transcript may be made only when they involve
errors affecting substance and then only in the
manner herein provided. The Presiding Officer
may order corrections, either on his or her own
motion or on motion of any party. The Presiding
Officer shall determine the corrections to be made
and so order. Corrections shall be interlineated or
otherwise inserted in the official transcript so as
not to obliterate the original text.
§ 511.48 Official docket.
[(a) The official docket in adjudicatory proceed-
ings will be maintained in the Docket Section, Office
of the Secretary , Room 4107, 400 Seventh Street
S.W., Washington, D.C. 20590, and will be available
for inspection during normal working hours (9:00
a . m . -
5:00 p.m.) Monday through Friday.
(b) Fees for production or disclosure of records
contained in the official docket shall be levied as
prescribed in the Department of Transportation's
regulations on Public Availability of Information
(49 CFR Part 7).1(53 F.R. 15782— May 3, 1988. Effec-
tive: May 3, 1988)
§ 511.49 Fees.
(a) Witnesses. Any person compelled to appear
in person in response to a subpena or notice of oral
examination shall be paid at least the same attend-
ance and mileage fees as are paid witnesses in the
courts of the United States, in accordance with
Title 28, United States Code, Section 1821.
(b) Responsibility. The fees and mileage
referred to in this section shall be paid by the party
at whose instance witnesses appear.
Subpart F— Decision
§ 511.51 Initial decision.
(a) When filed. The Presiding Officer shall
endeavor to file an Initial Decision with the
Administrator within sixty (60) days of the close of
the record, the filing of post-hearing briefs, or the
filing of replies thereto, whichever is latest.
(b) Content. The Initial Decision shall be based
upon a consideration of the entire record and it
shall be supported by reliable, probative, and
substantial evidence. It shall include:
(1) Findings and conclusions, as well as the
reasons or bases therefore, upon the material ques-
tions of fact, material issues of law, or discretion
presented on the record, and should, where prac-
ticable, be accompanied by specific page citations
to the record and to legal and other materials
relied upon.
(2) An appropriate order.
(Rev. 5f3/88)
PART 511-18
(c) By whom made. The Initial Decision shall be
made and filed by the Presiding Officer who pre-
sided over the hearing, unless otherwise ordered
by the Administrator.
(d) Reopening of proceeding by presiding officer;
termination of jurisdiction. (1) At any time prior
to or concomitant with the filing of the Initial Deci-
sion, the Presiding Officer may reopen the pro-
ceedings for the reception of further evidence.
(2) Except for the correction of clerical errors,
the jurisdiction of the Presiding Officer is ter-
minated upon the filing of the Initial Decision,
unless and until the proceeding is remanded to the
Presiding Officer by the Administrator.
§ 511.52 Adoption of initial decision.
The Initial Decision and Order shall become the
Final Decision and Order of the Administrator forty
(40) days after issuance unless an appeal is noted
and perfected or unless review is ordered by the
Administrator. Upon the expiration of the fortieth
day, the Executive Secretary shall prepare, sign
and enter an order adopting the Initial Decision and
Order.
§ 511.53 Appeal from initial decision.
(a) Who may file notice of intention. Any party
may appeal an Initial Decision to the Adminis-
trator provided that within ten (10) days after
issuance of the Initial Decision such party files and
serves a notice of intention to appeal.
(b) Appeal brief. The appeal shall be in the form
of a brief, filed within forty (40) days after service
of the Initial Decision, duly served upon all parties
and participants. The appeal brief shall contain, in
the order indicated, the following:
(1) A subject index of the matters in the brief,
with page references, and a table of cases
(alphabetically arranged), textbooks, statutes, and
other material cited, with page references thereto;
(2) A concise statement of the case;
(3) A specification of the position urged;
(4) The arguments, presenting clearly the
points of fact and law relied upon in support of the
position on each question, with specific page
references to the record and the legal or other
material relied upon; and
(5) A proposed form of order for the Adminis-
trator's consideration in lieu of the order contained
in the Initial Decision.
(c) Answering brief. Within thirty (30) days
after service of the appeal brief upon all parties
and participants, any party may file an answering
brief which shall also contain a subject index, with
page references, and a table of cases (alphabetically
arranged), textbooks, statutes, and other material
cited, with page references thereto. Such brief
shall present clearly the points of fact and law
relied upon in support of the position taken on each
question, with specific page references to the
record and legal or other material relied upon.
(d) Participant's brief. Within thirty (30) days
after service of the appeal brief upon all parties
and participants, any participant may file an
appeal brief which should contain a subject index,
with page references, and a table of authorities
being relied upon. Such brief shall present clearly
the position taken by the participant on each ques-
tion raised by the appellant(s).
(e) Cross appeal. If a timely notice of appeal is
filed by a party, any other party may file a notice of
cross-appeal within ten (10) days of the date on
which the first notice of appeal was filed. Cross-
appeals shall be included in the answering brief
and shall conform to the requirements for forms,
content and filing specified in paragraph (c) of this
section. If an appeal is noticed but not perfected,
no cross-appeal shall be permitted and notice of
cross-appeal shall be deemed void.
(f) Reply brief. A reply brief shall be limited to
rebuttal of matters in answering briefs, including
matters raised in cross-appeals. A reply brief shall
be filed and within fourteen (14) days after service
of an answering brief, or on the day preceding the
oral argument, whichever comes first.
(g) Oral argument. The purpose of an oral
argument is to emphasize and clarify the issues.
Any party may request oral argument. The Admin-
istrator may order oral argument upon request or
upon his or her own initiative. All oral arguments
shall be reported and transcribed.
§ 511.54 Review of initial decision in absence of
appeal.
The Administrator may, by order, review a case
not otherwise appealed by a party. Thereupon the
parties shall and participants may file briefs in ac-
cordance with § 511.53(b), (c), (d), (e), and (f) except
that the Administrator may, in his or her discretion,
PART 511-19
establish a different briefing schedule in his or her
order. Any such order shall issue within forty (40)
days of issuance of the Initial Decision. The order
shall set forth the issues which the Administrator
will review.
§ 511.55 Final decision on appeal or review.
(a) Upon appeal from or review of an Initial Deci-
sion, the Administrator shall consider such parts of
the record as are cited or as may be necessary to
resolve the issues presented and, in addition, shall,
to the extent necessary or desirable, exercise all the
powers which it could have exercised if he or she
had made the Initial Decision.
(b) In rendering his or her decision, the Admin-
istrator shall adopt, modify, or set aside the find-
ings, conclusions, and order contained in the Initial
Decision, and shall include in his or her Final Deci-
sion a statement of the reasons or bases for his or
her action. The Administrator shall issue an order
reflecting his or her Final Decision.
§ 511.56 Reconsideration.
Within twenty (20) days after issuance of a Final
Decision and Order, any party may file with the
Administrator a petition for reconsideration of
such decision or order, setting forth the relief
desired and the grounds in support thereof. Any
party desiring to oppose such a petition shall file an
answer thereto within ten (10) days after service of
the petition. The filing of a petition for recon-
sideration shall not stay the effective date of the
Decision and Order or toll the running of any
statutory time period affecting the decision or
order unless specifically so ordered by the
Administrator.
§511.57 Effective date of order.
(a) Consent orders. An order which has been
issued following acceptance of an offer of settle-
ment in accordance with § 511.26 becomes effec-
tive upon issuance.
(b) Litigated orders. All other orders become
effective upon the expiration of the statutory
period for court review specified in Section
508(c)(1) of the Motor Vehicle Information and
Cost Savings Act, Title 15, United States Code
Section 2008(c)(1), Pub. L. 94-163, 89 Stat. 911,
or, if a petition for review has been filed, upon
court affirmance of the Administrator's order.
Subpart G— Settlement Procedure in Cases
of Violation of Average Fuel
Economy Standards
§ 511.61 Purpose.
This subpart establishes the procedures and
requirements necessary to obtain a settlement of a
case of violation of section 507 (1) and (2) of the
Motor Vehicle Information and Cost Savings Act,
as amended. Pub. L. 94-163, 89 Stat. 911 (15
U.S.C. Section 2007(1)(2)). No settlement of such
cases may be had except as in accordance with this
subpart.
§ 511.62 Definitions.
"Average fuel economy standard" means an
average fuel economy standard established by or
pursuant to the Motor Vehicle Information and
Cost Savings Act.
"Insolvency" means the inability to meet ex-
penses when due.
"Settlement" means a compromise, modifica-
tion, or remission of a civil penalty assessed under
this Part for a violation of an average fuel economy
standard.
§511.63 Criteria for settlement.
Settlement of a case of violation of an average
fuel economy standard is discretionary with the
Administrator. The Administrator will consider
settlement only to the extent—
(a) Necessary to prevent the insolvency or
bankruptcy of the person seeking settlement, or
(b) That the violation of the average fuel economy
standard resulted, as shown by the person seeking
settlement, from an act of God, a strike, or fire, or
(c) That modification of a civil penalty assessed
under this part is necessary to prevent lessening of
competition, as determined and as certified by the
Federal Trade Commission under section 508(b)(4)
of the Motor Vehicle Information and Cost Savings
Act, Pub. L. 94-163, 89 Stat. 911 (15 U.S.C. sec.
2008(b)(4)).
§ Petitions for settlement; timing, contents.
(a) A petition seeking settlement under this sub-
part must be filed within 30 days after the issuance
of a final order assessing a civil penalty for a viola-
tion of an average fuel economy standard.
PART 511-20
(b)(1) A petition for settlement should be suffi-
cient to allow the Administrator to determine that
at least one of the criteria set out in § 511.63 is
satisfied, and that the public interest would be
served by settlement.
(2) A petition asserting that settlement is
necessary to prevent bankruptcy or insolvency
must include:
(i) Copies of all pertinent financial records,
auditors reports, and documents that show
that the imposition of a civil penalty would
cause insolvency, or would cause a company to
do an act of bankruptcy, and
(ii) A payment schedule that would allow the
petitioner to pay a civil penalty without
resulting in insolvency or an act of bankruptcy.
(3) A petition asserting that the violation of
the average fuel economy standard was caused by
an act of God, fire, or strike must describe correc-
tive and ameliorative steps taken to mitigate the
effects of the act of God, fire, or strike.
(4) A petition based on a certification by the
Federal Trade Commission that modification of the
civil penalty assessed is necessary to prevent a
substantial lessening of competition must include a
certified copy of:
(i) The application to the Federal Trade
Commission for a certification under section
508(b)(4) of the Motor Vehicle Information and
Cost Savings Act, Pub. L. 94-163, 89 Stat. 911
(15 U.S.C. Sec. 2008(b)(4)), and materials sup-
porting the application.
(ii) The administrative record of any Federal
Trade Commission proceeding held in regard
to the application, and
(iii) The certification by the Federal Trade
Commission.
(c) It is the policy of the National Highway
Traffic Safety Administration that unconditional
settlements of violations of average fuel economy
standards are not in the public interest, and absent
special and extraordinary circumstances, will not
be allowed. All petitions for settlement shall con-
tain a section proposing conditions for settlement.
Conditions for settlement can be specific acts
designed to lead to the reduction of automotive
fuel consumption, which the petitioner is not other-
wise required to perform pursuant to any statute,
regulation, or administrative or judicial order, such
as sponsoring public education programs,
advertising, accelerating commercial application
of technology, accelerating technology develop-
ment programs, or making public the results of
privately performed studies, surveys, or research
activities.
§ 511.65 Public comment.
Notice and opportunity for comment are pro-
vided to the public in regard to settlements under
this part. Subject to § 511.66, notice of receipt of a
petition for settlement is published in the Federal
Register, and a copy of such petitions and any
supporting information is placed in a public docket.
Any settlement agreed to by the Administrator
shall be placed in the public docket for 30 days so
that interested persons may comment thereon. No
settlement is binding until the completion of that
thirty day period.
§ 511.66 Confidential business information.
The Administrator shall have authority to
segregate from the public docket and to protect
from public view information in support of a peti-
tion for settlement which has been determined to
be confidential business information. The provi-
sions of 15 U.S.C. 2005(d) pertaining to discre-
tionary release by the Administrator of and to
limited disclosure of information determined to be
confidential business information shall apply to
this section.
§511.67 Settlement order.
If, in accordance with this subpart, the
Administrator allows a settlement of a case of
violation of an average fuel economy standard, an
order of settlement shall be issued, setting out the
terms of the settlement, and containing a brief
discussion of the factors underlying the exercise of
the Administrator's discretion in allowing the
settlement, including a discussion of comments
received under § 511.65. If the Administrator
rejects a petition for settlement, the [Ad-
ministrator] shall give written notice of the rejec-
tion and the reasons for the rejection to the parties
and the Presiding Officer. (53 F.R. 15782— May 3,
1988. Effective: May 3, 1988)
(Rev. 5/3/88)
PART 511-21
Subpart H— Appearances; Standards
of Conduct
§511.71 Who may make appearances.
A party or participant may appear in person, or
by a duly authorized officer, partner, regular
employee, or other agent of this party or partici-
pant, or by or with counsel or other duly qualified
representative, in any proceeding under the part.
§ 511.72 Authority for representation.
Any individual acting in a representative capacity
in any adjudicative proceeding may be required by
the Presiding Officer or the Administrator to show
his or her authority to act in such capacity. A
regular employee of a party who appears on behalf
of the party shall be required by the Presiding
Officer or the Administrator to show his or her
authority to so appear.
§ 511.73 Written appearances.
(a) Any person who appears in a proceeding
shall file a written notice of appearance with the
Executive Secretary or deliver a written notice of
appearance to the reporter at the hearing, stating
for whom the appearance is made and the name,
address, and telephone number (including area
code) of the person making the appearance and the
date of the commencement of the appearance. The
written appearance shall be made a part of the
record.
(b) Any person who has previously appeared in a
proceeding may withdraw his or her appearance by
filing a written notice of withdrawal of appearance
with the (Docket Section). The notice of
withdrawal of appearance shall state the name,
address, and telephone number (including area
code) of the person withdrawing the appearance,
for whom the appearance was made, and the effec-
tive date of the withdrawal of the appearance, and
such notice of withdrawal shall be filed within five
(5) days of the effective date of the withdrawal of
the appearance. (53 F.R. 15782— May 3, 1988.
Effective: May 3, 1988)
§ 511.74 Attorneys.
An attorney at law who is admitted to practice
before the Federal courts or before the highest
court of any State, the District of Columbia, or any
territory or Commonwealth of the United States,
may practice before the NHTSA. An attorney's
own representation that he or she is in good
standing before any of such courts shall be suffi-
cient proof thereof, unless otherwise ordered by
the Presiding Officer or the Administrator.
§ 511.75 Persons not attorneys.
(a) Any person who is not an attorney at law
may be admitted to appear in an adjudicative pro-
ceeding if that person files proof to the satisfaction
of the Presiding Officer that he or she possesses
the necessary legal, technical, or other qualifica-
tions to render valuable service in the proceeding
and is otherwise competent to advise and assist [in
the presentation of matters] in the proceedings.
An application by a person not an attorney at law
[. . .1 to appear in a proceeding shall be submitted
in writing to the [Docket Section], not later than
thirty (30) days prior to the hearing in the pro-
ceedings. The application shall set forth in detail
the applicant's qualifications to appear in the pro-
ceedings. (53 F.R. 15782— May 3, 1988. Effective:
May 3, 1988)
(b) No person who is not an attorney at law and
whose application has not been approved shall be
permitted to appear in the Administration's
proceedings. However, this provision shall not
apply to any person who appears before the
NH'TSA on his or her own behalf or on behalf of
any corporation, partnership, or association of
which the person is a partner, officer, or regular
employee.
§ 511.76 Qualifications and standards of conduct.
(a) The NHTSA expects all persons appearing in
proceedings before it to act with integrity, with
respect, and in an ethical manner. Business trans-
acted before and with the NHTSA shall be in good
faith.
(b) To maintain orderly proceedings, the
Presiding Officer or the Administrator, as appro-
priate under this part, may exclude parties, par-
ticipants, and their representatives for refusal to
comply with directions, continued use of dilatory
tactics, refusal to adhere to reasonable standards
of orderly and ethical conduct, failure to act in
good faith, or violation of the prohibition against
certain ex parte communications. The Presiding
Officer may, in addition to the above sanctions,
deny access to additional in camera materials
when a party or participant publicly releases such
materials without authorization.
(Rev. S/3/88)
PART 511-22
Il
(c) An excluded party, participant, or represen-
tative thereof may petition the Administrator to
entertain an interlocutory appeal in accordance
with § 511.24. If, after such appeal, the represen-
tative of a party or participant, is excluded, the
hearing shall, at the request of the party or partici-
pant, be suspended for a reasonable time so that
the party or participant may obtain another
representative.
§ 511.77 Restrictions as to former members and
employees.
The postemployee restrictions applicable to
former Administrators and NHTSA employees, as
set forth in 18 U.S.C. 207, shall govern the
activities of former Administrators and NHTSA
employees in matters connected with their former
duties and responsibilities.
§ 511.78 Prohibited communications.
(a) Applicability. This section is applicable
during the period commencing with the date of
issuance of a complaint and ending upon final
NHTSA action in the matter.
(b) Definitions. (1) "Decision-maker" means
those NHTSA personnel who render decisions in
adjudicative proceedings under this part, or who
advise officials who render such decisions,
including:
(i) The Administrator,
(ii) The Administrative Law Judges;
(2) "Ex parte communications" means:
(i) Any written communication other than a
request for a status report on the proceeding
made to a decisionmaker by any person other
than a decisionmaker which is not served on all
parties.
(ii) Any oral communication other than a re-
quest for a status report on the proceeding
made to a decisionmaker by any person other
than a decisionmaker without advance notice
to the parties to the proceeding and opportunity
for them to be persent.
(c) Prohibited ex parte communications. Any
oral or written ex parte communication relative to
the merits of a proceeding under this part is a pro-
hibited ex parte communication, except as provided
in paragraph (d) of this section.
(d) Permissible ex parte communications. The
following communications shall not be prohibited
under this section:
(1) Ex parte communications authorized by
statute or by this part.
(2) Any staff communication concerning
judicial review or judicial enforcement in any matter
pending before or decided by the Administrator.
(e) Procedures for handling prohibited ex parte
communication. (1) Prohibited written ex parte
communication. To the extent possible, a pro-
hibited written ex parte communication received
by any NHTSA employee shall be forwarded to the
[Docket Section) rather than to a decisionmaker.
A prohibited written ex parte communication
which reaches a decisionmaker shall be forwarded
by the decisionmaker to the (Docket Section) . If
the circumstances in which a prohibited ex parte
written communication was made are not apparent
from the communication itself, a statement
describing those circumstances shall be forwarded
with the communication. (53 F.R. 15782— May 3,
1988. Effective: May 3, 1988)
(2) Prohibited oral ex parte communication.
(i) If a prohibited oral ex parte communica-
tion is made to a decisionmaker, he or she shall
advise the person making the communication
that the communication is prohibited and shall
terminate the discussion.
(ii) In the event of a prohibited oral ex parte
communication, the decisionmaker shall for-
ward to the [Docket Section) a dated statement
containing such of the following information as
is known to him/her: (53 F.R. 15782— May 3,
1988. Effective: May 3, 1988)
(A) The title and docket number of the
proceeding;
(B) The name and address of the person
making the communication and his/her
relationship (if any) to the parties to the
proceeding;
(C) The date and time of the communica-
tion, its duration, and the circumstances
(telephone call, personal interview, etc.) under
which it was made;
(D) A brief statement of the substance of
the matters discussed;
(E) Whether the person making the com-
munication persisted in doing so after being
advised that the communication was prohibited.
(Rev. 5/3/88)
PART 511-23
(3) Filing. All communications and state-
ments forwarded to the [Docket Section] under
this section shall be placed in a public file which
shall be associated with, but not made a part of, the
record of the proceedings, to which the com-
munication or statement pertains. (53 F.R.
15782— May 3, 1988. Effective: May 3, 1988)
(4) Service on parties. The lAdministratorJ
shall serve a copy of each communication and
statement forwarded under this section on all par-
ties to the proceedings. However, if the parties are
numerous, or if other circumstances satisfy the
[Administrator! that service of the communication
or statement would be unduly burdensome, he or
she may, in lieu of service, notify all parties in
writing that the communication or statement has
been made and filed and that it is available for in-
spection and copying. (53 F.R. 15782— May 3, 1988.
Effective: May 3, 1988)
(5) Service on maker. The [Administrator!
shall forward to the person who made the pro-
hibited ex parte communication a copy of each
communication and /or statement filed under this
section. (53 F.R. 15782— May 3, 1988. Effective:
May 3, 1988)
(f) Effect of ex parte communications. No pro-
hibited ex parte communication shall be considered
as part of the record for decision unless introduced
into evidence by a party to the proceedings.
(g) Sanctions. A party or participant who
makes a prohibited ex parte communication, or
who encourages or solicits another to make any
such communication, may be subject to any
appropriate sanction or sanctions, including but
not limited to, exclusion from the proceeding and
adverse rulings on the issues which are the subject
of the prohibited communication.
(Rev. 5/3/88)
PART 511-24
APPENDIX I— Final Prehearing Order
Case Caption
Final Prehearing Order
A prehearing conference was held in this matter
pursuant to Rule 21 of the Administration's Rules
of Practice for Adjudicative Proceedings, on the
day of , 19 ,
at o'clock — M.
Counsel appeared as follows:
For the Administration staff:
For the Respondent(s):
Others:
1. NATURE OF ACTION AND JURISDICTION.
This is an action for
and the jurisdiction of the Administration is involved
under Section of Title
U.S.C. The jurisdiction of the Administration is
(not) disputed. The questions of jurisdiction was
decided as follows:
2. STIPULATIONS AND STATEMENTS.
The following stipulations and statements were
submitted, attached to, and made a part of this
order:
(a) A comprehensive written stipulation or
statement of all uncontested facts;
(b) A concise summary of the ultimate facts as
claimed by each party. (Complaint Counsel must
set forth the claimed facts, specifically; for
example, if violation is claimed. Complaint Counsel
must assert specifically the acts of violation com-
plained of; each respondent must reply with equal
clarity and detail.)
(c) Written stipulations or statements setting
forth the qualifications of the expert witnesses to
be called by each party;
(d) A written list or lists of the witnesses whom
each party will call, a written list or lists of the
additional witnesses whom each party may call,
and a statement of the subject on which each
witness will testify;
(e) An agreed statement of the contested issues
of fact and of law, and/ or separate statements by
each party or any contested issues of fact and law
not agreed to;
(f) A list of all depositions to be read into
evidence and statements of any objections thereto;
(g) A list and brief description of any charts,
graphs, models, schematic diagrams, and similar
objects that will be used in opening statements or
closing arguments, but will not be offered in
evidence. If any other such objects are to be used
by any party, they will be submitted to opposing
counsel at least three days prior to hearing. If
there is then any objection to their use, the dispute
will be submitted to the Presiding Officer at least
one day prior to hearing;
(h) Written waivers of claims or defenses which
have been abandoned by the parties.
The foregoing were modified, at the pretrial con-
ference as follows:
(To be completed at the conference itself. If none,
recite "none")
3. COMPLAINT COUNSEL'S EVIDENCE.
3.1 The following exhibits were offered by Com-
plaint Counsel, received in evidence, and marked
as follows:
(Identification number and brief description of
each exhibit)
The authenticity of these exhibits has been
stipulated.
PART 511-25
3.2 The following exhibits were offered by the
Complaint Counsel and marked for identification.
There was reserved to the respondent(s) and party
intervenors, if any, the right to object to their
receipt in evidence on the grounds stated:
(Identification number and brief description of
each exhibit. State briefly ground of objection,
e.g., competency, relevancy, materiality)
4. RESPONDENT'S EVIDENCE.
4.1 The following exhibits were offered by the
respondent(s), received in evidence, and marked as
herein indicated:
(Identification number and brief description of
each exhibit)
The authenticity of these exhibits has been
stipulated.
4.2 The following exhibits were offered by the
respondent(s) and marked for identification. There
was reserved to Complaint Counsel and party
intervenors, if any, the right to object to their
receipt in evidence on the grounds stated:
(Identification number and brief description of
each exhibit. State briefly ground of objection,
e.g., competency, relevancy, materiality)
5. ADDITIONAL ACTIONS.
The following additional action was taken:
(Amendments to pleadings, agreements of the
parties, disposition of motions, separation of issues
of liability and remedy, etc., if necessary)
6. LIMITATIONS AND RESERVATIONS.
6.1 Each of the parties has the right to further
supplement the list of witnesses not later than ten
(10) days prior to trial by furnishing opposing
counsel with the name and address of the witness
and general subject matter of his or her testimony
and filing a supplement to this pretrial order.
Thereafter additional witnesses may be added only
after application to the Presiding Officer, for good
cause shown.
6.2 Rebuttal witnesses not listed in the exhibits to
this order may be called only if the necessity of their
testimony could not reasonably be foreseen ten (10)
days prior to trial. If it appears to counsel at any
time before trial that such rebuttal witnesses will be
called, notice will immediately be given to opposing
counsel and the Presiding Officer.
#
6.3 The probable length of hearing is
The hearings will be commenced on the _
, 19 , at o'clock — M. at
(location)
_ days.
. day of
6.4 Prehearing briefs will be filed not later than
5:00 p.m. on (Insert date not later than
ten (10) days prior to hearing.) All anticipated legal
questions, including those relating to the ad-
missibility of evidence, must be covered by
prehearing briefs.
This prehearing order has been formulated after a
conference at which counsel for the respective
parties appeared. Reasonable opportunity has been
afforded counsel for corrections or additions prior
to signing. It will control the course of the hearing,
and it may not be amended except by consent of the
parties and the Presiding Officer, or by order of the
Presiding Officer to prevent manifest injustice.
(Presiding Officer's Name)
(Presiding Officer's Title)
APPROVED AS TO FORM AND SUBSTANCE
Date:
Complaint Counsel.
Attorney for Respondent(s).
Note: Where intervenors appear pursuant to § 511.17
the prehearing order may be suitably modified; the inital
page may be modified to reflect the intervention.
45 F.R. 81574
December 11, 1980
PART 511-26
PREAMBLE TO AMENDMENT TO PART 512
Confidential Business Information
(Docket No. 78-10; Notice 3)
ACTION: Final rule.
SUMMARY: This notice establishes the procedures
by which the National Highway Traffic Safety Ad-
ministration (NHTSA) considers claims for the
confidential treatment of business information.
Proposed procedures were published May 25,
1978. This notice sets forth the procedures for
asserting a claim for confidentiality and specifies
the circumstances under which the agency may
disclose information which is claimed to be con-
fidential. The notice further establishes several
presumptive class determinations relating to con-
fidentiality. This notice clarifies and expedites the
processing of confidentiality determinations and
responds to the problems posed by the increasing
number of confidentiality requests.
DATE: The regulation becomes effective April 9,
1981.
FOR FURTHER INFORMATION CONTACT:
Roger Tilton, Office of Chief Counsel,
National Highway Traffic Safety
Administration, 400 Seventh Street, S.W.,
Washington, D.C. 20590, (202-426-9511)
SUPPLEMENTARY INFORMATION: The NHTSA has
determined that the increasing number of re-
quests for confidentiality necessitate the publica-
tion of the procedures under which the agency will
determine the confidentiality of business informa-
tion. This regulation responds to that need by mak-
ing public procedures for submitting requests for
confidential treatment of business information.
The regulation also details the content of the sub-
missions that are required to substantiate a con-
fidentiality request. This regulation imposes re-
quirements upon the submitters of the information
and upon the agency to respond to those requests
in the time and manner established herein. Fur-
ther, the regulation explains those limited in-
stances in which confidential information will be
released. Through this regulation, submitters of
information will be better able to ensure that their
confidentiality requests are properly substan-
tiated, thus facilitating confidentiality determina-
tions. This improvement of the existing handling
of the requests will benefit both the agency and
the submitter.
The notice proposing the confidential informa-
tion regulation was published May 25, 1978 (43 FR
22412). In response to that notice, the agency
received many comments from vehicle and equip-
ment manufacturers, their representatives, and
public interest groups.
General Comments
Several commenters objected to the provision in
the confidehtiality procedures requiring initial
determinations relating to confidentiality to be
made prior to an actual Freedom of Information
Act (FOIA) request. These commenters alleged
that the agency would be overburdened by the
necessary review of material to ascertain its con-
fidentiality when, in fact, the information might
never be required to be released. Commenters
pointed with approval to the confidentiality regu-
lations of the Environmental Protection Agency
(EPA) which allow the determination of confiden-
tiality to be made at the time of an FOIA request
(40 CFR 2.205). These same commenters also cited
the Congressional Report of the Committee on
Government Operations concerning FOIA re-
quests (FOIA Report) (H. Rept. No. 95-1382) as
discouraging advance determinations of confiden-
tiality. In summation, it was suggested that the
agency assume the confidentiality of information
submitted to it, when a claim for confidentiality is
concurrently submitted, until such time as release
PART 512 - PRE 1
of the information is requested or required for
agency purposes.
The NHTSA disagrees with arguments indi-
cating that the issuance of immediate determina-
tions of confidentiality are burdensome and con-
trary to existing procedures in other agencies. In
fact, the agency considers immediate determina-
tions of confidentiality to be within accepted
governmental practice and to be beneficial to both
the submitter of the information and the agency.
The commenters cited EPA regulations as in-
dicative of a governmental reluctance toward the
use of immediate determinations of confidentiality.
However, the Securities and Exchange Commis-
sion (17 CFR 250.24b-2) and the Nuclear
Regulatory Commission (10 CFR 2.790) both have
procedures for the immediate determination of
confidentiality. Therefore, government agencies
have developed and are continuing to implement
different approaches to the treatment of confiden-
tial information dependent upon the nature of the
individual agency and its programs. The NHTSA
considers the immediate determination approach
to be, for the most part, the approach best suited
to this agency given its function and need for infor-
mation.
The submitter of confidential information will
be aided by the policy of immediate determina-
tions. A determination of confidentiality made
upon receipt of information will automatically
result in the protection of the confidential informa-
tion. Confidential information will be clearly iden-
tified within the agency and will be accorded treat-
ment designed to preserve its confidentiality. The
agency believes that this should improve the abili-
ty of the NHTSA to maintain the confidentiality of
information that merits such treatment. Without
making an immediate determination, the agency
might be deluged with information for which con-
fidentiality determinations have been requested
and which the submitter would have the NHTSA
presume confidential. Such massive quantities of
information are difficult to control and are more
susceptible to accidental disclosure. The NHTSA
is confident that the immediate determination pro-
cedure will reduce the amount of confidential in-
formation. With this more manageable amount of
information, the agency can better ensure its
protection.
The public is also benefited by immediate deter-
minations of confidentiality. These determinations
result in immediate public access to information
that is not confidential. The public should not be
denied access to information that is "presumed
confidential," but which is in fact not confidential.
Commenters citing the FOIA Report have mis-
interpreted the recommendations of that report as
it pertains to the immediate determination of con-
fidential information. The Report indicates that it
is the opinion of the Committee that immediate
determinations of confidentiality might not be the
most efficient way to handle confidential informa-
tion. However, the FOIA Report at page 38 with-
holds comment on any recommendation with
respect to this aspect of confidentiality pro-
cedures. In reviewing the proposed regulations of
the FTC, the Committee indicated their intention
to await the outcome of those new regulations
before reaching a definitive recommendation with
respect to the issue.
The FOIA Report should also be considered in
its proper perspective. This Report is the prelimi-
nary thinking of the Congressional Committee. As
such, the agency considers it a useful tool in the
development of confidentiality regulations. How-
ever, this report is very preliminary and some of
its recommendations could change before legisla-
tion, if any, can be produced affecting the status of
confidential information. Therefore, the agency
cannot rely entirely upon the Committee state-
ments in this report for the development of con-
fidentiahty regulations and must exercise its own
judgment given the statutory mandates under
which it operates.
The allegations that immediate review will
overload the agency with unnecessary work are
unfounded. There are compelling reasons for mak-
ing determinations upon receipt of information
beyond those mentioned above. For the most part,
information is submitted to the agency in connec-
tion with rulemaking or investigations, or is sub-
mitted under a reporting requirement. With
respect to information furnished pursuant to
rulemaking, the Administrative Procedure Act (5
U.S.C. 101 et seq.) requires that informal rulemak-
ing be conducted in the notice and comment for-
mat. To provide adequate information upon which
comments can be based, the agency must make
public the information upon which a decision is
made unless that information comes under some
confidentiality provision. Accordingly, rulemaking
is facilitated by making confidentiality determina-
PART 512 -PRE 2
tions upon receipt of the information. This pro-
cedure has been used in the past, and this regula-
tion merely incorporates an ongoing procedure. As
such, it will not increase the workload of the
agency.
Information submitted pursuant to an investiga-
tion or through required reports to the agency also
can have confidential determinations made upon
submission without overtaxing the resources of
the agency. Information gathered pursuant to
either of these devices is usually made public at
some point. Accordingly, a confidentiality determi-
nation will be required at that time. This regula-
tion merely requires that the determination be
made upon receipt of the information.
The instances when immediate determinations
are to be made were carefully selected on the basis
of the eventual likelihood that the information
would customarily be made public if not deter-
mined to be confidential. The agency concluded
that it is received. Further, immediate determina-
tions result in early public access to information
that is rightfully in the public domain. Information
that is not likely to be made public in the future
will not have an immediate determination made
concerning its confidentiality (§512.6(d)). Accord-
ingly, the agency concludes that the comments in-
dicating that the NHTSA will be overburdened by
confidentiality determinations are without merit
and that the agency will, in fact, be making approx-
imately the same number of determinations as are
made under existing practices.
The Freedom of Information Clearinghouse
stated that they supported the regulation but in-
dicated that they considered it necessary to
review information again when a FOIA request is
submitted to ensure that information previously
determined to be confidential still falls within the
parameters defining confidential information. The
agency agrees that it will be necessary to briefly
review the information at the time a FOIA request
is submitted, but this review should be made sig-
nificantly easier by the earlier confidentiality
determination and would merely require updating
a previous determination.
Several commenters disagreed with the
NHTSA's policy relating to the use of confidential
information. Volkwagen indicated that the
agency's statutes require the agency to protect
confidential information more than this regulation
contemplates. Other commenters recommended
that the agency return confidential information
when it is through with it and return all voluntari-
ly submitted information if the agency determines
that it is not confidential.
In response to Volkswagen's comments on the
statutory protection of confidential information,
the agency agrees that the statutes do provide
protection for confidential business information.
The agency has recognized that protection in this
regulation and intends by this regulation to
achieve that statutory mandate. The statutes also
provide, however, for limited disclosure of con-
fidential information when such disclosure is in the
public interest. This regulation balances a submit-
ter's interest in the confidentiality of its informa-
tion with the public's need for the information. It
should be remembered that the agency has
historically had the right to make confidentiality
determinations, and to release confidential infor-
mation as allowed by the National Traffic and
Motor Vehicle Safety Act (15 U.S.C. 1381 et seq.)
and Titles I and V of the Motor Vehicle and Cost
Savings Act (15 U.S.C. 1901 et seq.) (the Acts). The
agency has exercised both of these rights in the
past.
The NHTSA has not routinely released confi-
dential information. Release has occurred only
when the public interest so demanded. This policy
is unchanged by this regulation. The NHTSA fully
intends to honor the confidentiality of appropriate
information unless circumstances compel its dis-
closure. In such disclosure instances, all efforts
will be made to make disclosure in a manner to
minimize any adverse effects while still serving
the public interest. The commenters who sug-
gested the return of confidential information after
its use and the return of voluntarily submitted con-
fidential information base this approach on the
practices of some other agencies. The NHTSA con-
siders it inappropriate to return information upon
which agency decisions may have been based even
if the agency is otherwise finished with that infor-
mation. Agency decisions are subject to challenge
and change as time passes, and frequently it is
necessary to have all of the information upon
which the initial decision was based either to sup-
port that decision or to aid in the justification of its
change.
The suggested return of voluntarily submitted
information that is determined not to be confiden-
tial presents another question. The NHTSA
PART 512 -PRE 3
realizes that some agencies, the EPA is one,
return such voluntarily submitted information
after an adverse confidentiality determination.
The agency notes, however, that the FOIA Report
was skeptical about the advisability of this prac-
tice. That Report indicated that denial of FOIA re-
quests for this information during presubmission
review may be illegal. The NHTSA is concerned
about the potential legal problems involved with
presubmission review and concludes that this ap-
proach is not appropriate for the NHTSA.
Several commenters indicated that the agency
would be hindered in obtaining voluntary informa-
tion if it refuses to return it when the agency
determines that it is not confidential. The NHTSA
disagrees. Information is voluntarily submitted
frequently because the submitter has something to
gain through its submission. For example, a sub-
mitter might be requesting an exemption from a
requirement or might be attempting to alter
rulemaking in its favor by its submission. The
agency has always received such information even
though the NHTSA has never returned it. The ex-
isting procedure had a negligible effect upon the
ability of the agency to secure voluntary informa-
tion. Moreover, the ability of the agency to secure
much information through compulsory process
acts as a final encouragement to the voluntary sub-
mission of information. Accordingly, the agency
disagrees with arguments indicating that volun-
tarily submitted information should be returned to
the submitter and will continue to retain this infor-
mation.
Volkswagen indicated that the agency should
consider the issuance of this regulation with the
promulgation of the regulation on compulsory
process. Their major argument was that the com-
pulsory process regulation imposes very short
time limits on the production of information pur-
suant to a subpoena or special order. The problems
with a short response time, they argued, would be
further exacerbated by requiring elaborate sub-
stantiation of confidentiality requests.
The agency acknowledges that its compulsory
process devices are usually issued with a limited
response time. Time limits may sometimes be
short because the agency has an immediate need
for information. The NHTSA concludes that there
is sufficient time, however, to substantiate a confi-
dentiality request. The amount of information re-
quired for that substantiation is significant, but
not overwhelming as some commenters have
argued. The specific requirements for substantiat-
ing confidentiality requests are discussed later in
this preamble. In establishing the reasonable time
period for responding to compulsory process
orders, the agency considers the amount of time
necessary to substantiate confidentiality requests.
The Motor and Equipment Manufacturers
Association (MEMA) commented that the agency
had not done a sufficient analysis of the costs
resulting from this regulation. The agency has con-
sidered the potential costs of the regulation and
concluded that they are so minimal as not to war-
rant a full evaluation.
Several equipment manufacturers indicated
that the regulation does not address the problems
of the equipment manufacturer. They indicated,
for example, that the regulation developed classes
of information that are presumed confidential but
that those classes applied only to vehicle manufac-
turers. It is true that the existing classes of
presumed confidential information do not apply to
equipment manufacturers. This does not mean
that as time goes by that such classes will not be
developed. It simply means that at this time the
agency has insufficient information upon which to
base specific classes applicable to equipment
manufacturers. Equipment manufacturers, none-
theless, can avail themselves of the processes
existing in the remainder of the rule for confiden-
tiality determinations. Further, equipment manu-
facturers are free to suggest additional classes
they regard to be appropriate.
In a final general comment, it was suggested
that the agency wait until the outcome of the
Supreme Court decision in Chrysler Corp. v.
Schlesinger, 565 F.2d 1172 (3rd Cir. 1977), which
was being argued this term. The Supreme Court
decided the Chrysler case on April 18, 1979
(Chrysler v. Brownj. That decision has little impact
upon the procedures established by the regulation,
and to the extent it does affect this regulation, it
confirms the agency's positions.
Information Supporting a
Claim for Confidentiality
Several commenters complained generally
about the amount of information that the agency
requires to be filed in support of a request for con-
fidential treatment of information. These com-
menters argued that the NHTSA's requirements
PART 512 -PRE 4
go beyond the regulations of other agencies that
require support for confidentiality requests and go
beyond existing case law with respect to proving
the confidentiality of information.
Suggestions were made that the NHTSA pat-
tern its regulation after that of the U.S. Inter-
national Trade Commission (USITC) (19 CFR
201.6(b)(3)). That regulation provides for the sub-
stantiation of confidentiality by specifying the pro-
vision of three pieces of information: (1) description
of the confidential information, (2) justification for
confidential treatment, and (3) a written certifica-
tion under oath that the information is not avail-
able to the public. Although this regulation is less
detailed than the NHTSA's, it essentially requires
similar submissions. The NHTSA's regulation
merely states in more detail the information that
is required to justify confidential treatment. The
agency has incorporated into its regulation the
latest court test for substantiating confidentiality.
Although the USITC regulation does not spe-
cifically refer to this test, the NHTSA believes
that it would be necessary for a submitter to make
a similar showing to them in support of confiden-
tial treatment of information.
The Motor Vehicle Manufacturers Association
(MVMA) alleged that the agency's regulation ex-
ceeded the requirement of existing judicial preced-
ent that governs this area. It suggested that the
information required by section 512.4(b) para-
graphs (2), (3), and (4) requiring submitters to sup-
port the fact that they have not released informa-
tion goes beyond the test in Natiovul Parks and
Conservation Association v. Morton, 498 F.2d 765
(D.C. Cir. 1974). National Parks requires, in part,
that confidential information be that which is not
customarily released. MVMA alleges that this
does not require NHTSA to mandate by regulation
that a company check every possible source of pub-
lication of information claimed to be confidential.
Although quoted in National Parks, the "cus-
tomarily not released to the public" language is
not the only test imposed by the court in National
Parks. That language is an excerpt of the Senate
Report on the Freedom of Information Act (5
U.S.C. 552) (S. Rep. No. 813, 89th Cong. 1st. Sess. 9
(1965)). The courts have attempted to use and fur-
ther refine this Congressional language. The Na-
tional Parks case in particular illustrates the
court's dissatisfaction with the "customarily not
released" test when it stated that a finding that
information is not customarily released would not
alone justify confidential treatment. Rather, the
court imposed a two-pronged test that measures
the substantial competitive harm resulting from
disclosure of information or the impairment of the
Government's ability to obtain future information
if similar information is released.
It is axiomatic that the "customarily not re-
leased" test in and of itself could never be con-
clusive of information's confidentiality absent
other considerations. The fact that information is
customarily not made public does not mean that
the specific information for which confidentiality is
requested has not been made public. If that infor-
mation has in fact been made public, it does not
merit confidential status under the National Parks
test. Accordingly, some showing that information
for which confidential treatment is requested has
not been previously made public is a prerequisite
to determining confidentiality.
Assuming the validity of the above- re-
quirements, the MVMA and others argue,
nonetheless, that it is too burdensome, because it
requires companies to investigate all possible in-
stances where information may have been made
public. They suggest that a submitter will be re-
quired to interview every employee to ensure that
information has not been leaked.
The agency has imposed a reasonable burden
upon a manufacturer to take some limited steps to
check that its so-called confidential information
has not been disclosed. As the preamble to the
notice of proposed rulemaking indicated, it is not
the intention of the agency that submitters ensure
that information has never been accidentally
disclosed. Rather, the agency demands that a sub-
mitter ensure that to its knowledge there have
been no accidental or purposeful disclosures of the
information. This requires only that a diligent ef-
fort be made by the submitter to take minimal
steps ensuring that its information is actually con-
fidential. The agency concludes that this is not a
major burden upon a submitter of information.
With respect to the requirements of paragraphs
(2) and (3) of section 512.4 (b), Wagner Electric Co.
suggested that disclosures of information to par-
ent companies or to wholly owned subsidiaries not
fall within those groups to whom disclosures must
be reported to the agency. The NHTSA disagrees
with this position. The agency wants to know of
such a disclosure, but a disclosure to a parent or
PART 512 -PRE 5
wholly owned subsidiary does not necessarily
mean that the information has been made public,
which might deny the information confidential
treatment. A submitter can explain, under the pro-
visions of paragraph (3), that disclosure to a parent
or subsidiary does not compromise the confidential
nature of the information.
General Motors (GM) indicated that it consid-
ered overly burdensome the requirement that it
indicate what steps had been taken to assure the
confidentiality of the submitted information in its
possession (512.4(b) (2)). It argued that this require-
ment would require it to detail its plant security
system or other security measures that could in
turn jeopardize its future security.
The NHTSA has no interest in the specific inter-
nal security devices of any manufacturer's facili-
ties. The NHTSA simply wants the manufacturer
to briefly indicate, pursuant to paragraph (2), that
proper precautions were taken to preserve the
confidentiality of this information. The objective of
this paragraph is to make sure that the submitter
has treated this information differently from the
ordinary information in its possession. If, on the
other hand, the submitter has taken no measures
to safeguard its own information, its claim for con-
fidential treatment by the Government is some-
what diminished.
The MVMA asserted that the requirement of
documenting every possible authorized and
unauthorized disclosure of information would be
burdensome. Such documentation, it argued,
would require submitters to interview every per-
son that might have access to the information to
ascertain possible disclosures as well as monitor
the press for possible unauthorized leaks.
The NHTSA does not consider it unreasonable
to ask the submitter of information to list all of the
recipients of information other than the submitter.
In most instances, truly confidential information
will not have been supplied to excessive numbers
of individuals or entities beyond the submitter.
The NHTSA concludes that information that is
really confidential will be protected by the submit-
ter. The agency is confident that any submitter
with such information would know to whom, out-
side its organization, it has given that information.
In fact, most submitters should have this informa-
tion readily available. Any submitter that is
unaware of outside organizations in possession of
its confidential information may have to do more
extensive research, but the need for such research
itself may be indicative of meager internal controls
of so-called confidential information and may imply
that the information is really not confidential.
As to the allegations that submitters must
monitor all trade newspapers to discover possible
unauthorized disclosures, these are exaggerations
of the effects of this rule. Paragraph (4) of Part
512.4(b) requires notification to the agency of
known authorized and unauthorized public
disclosures. Submitters are under no obligation to
ensure that there have been no unauthorized
releases of their information. Their duty is simply
to report those instances of disclosure of which
they are aware. The NHTSA believes that most
unauthorized disclosures of confidential informa-
tion that are subsequently reported in trade
papers or newspapers are likely to be brought to
the submitter's attention.
Several commenters complained about the re-
quirement in paragraph (5) of section 512.4(b).
That paragraph requires submitters of informa-
tion to notify the agency of existing confidentiality
determinations made by the NHTSA, other agen-
cies, or the courts relating to the confidentiality of
the information or similar information. Submitters
of information complained that the NHTSA was in
better position to canvass court decisions relating
to confidentiality and to review all of the decisions
of other agencies. They argued that it was overly
burdensome for submitters to do all of this
research.
These comments indicate a misunderstanding of
the requirements of this section. The agency does
not intend that the submitter of information pro-
vide the agency with the latest judicial and agency
opinions regarding the confidentiality of similar in-
formation of other submitters. This paragraph
simply requires the submitter of information to
supply the NHTSA with determinations respect-
ing the confidentiality of its own similar or identi-
cal information. A submitter of information should
be aware of these determinations without need to
do any research whatsoever. Accordingly, the
burden of this requirement upon the submitter of
information is minimal. To clarify the agency's
intention with respect to this paragraph, the
NHTSA is modifying the language somewhat to
make it clear that a submitter is responsible only
for determinations relating to its own information.
The Motor Vehicle Equipment Manufacturers
i
PART 512 -PRE 6
Association (MEMA) suggested that paragraph (8)
was unnecessary. That paragraph requires infor-
mation as to the effect of a disclosure of voluntari-
ly submitted confidential information upon the
ability of the NHTSA to obtain future voluntary
information. The MEMA indicated that it could see
no reason to raise this inquiry since it is the
manufacturers' interests in confidentiality that
will be harmed by disclosure not necessarily the
agency's. The paragraph (8) requirement was in-
cluded to provide information as to the potential
harm that disclosure might impose upon the abili-
ty of the NHTSA to obtain information through
voluntary means. This inquiry is one of the two
pronged tests employed in National Parks, supra.
and is frequently cited as being the appropriate
test for confidentiality of voluntarily submitted
information. Therefore, the agency does not agree
with the MEMA's comments that this information
is unnecessary.
Paragraph (9) requires a submitter of informa-
tion to indicate the amount of time for which con-
fidentiality is requested. The MEMA complained
that in the instance of trade secrets no time limit is
appropriate. The agency does not agree that trade
secrets are always permanently confidential. Some
trade secrets may become common knowledge
within a certain amount of time. Nonetheless,
paragraph (9) permits a submitter of information
to request and justify an indefinite time period for
maintaining the confidentiality of its information.
Many commenters suggested that the informa-
tion submitted in support of their confidentiality
requests would in turn be confidential and, if
released, could cause them competitive harm.
They suggested that submitters might fear to sup-
port their claims for confidentiahty since the sup-
port information could in some instances be even
more harmful, if disclosed, than would the disclo-
sure of the originally submitted information. Com-
menters, therefore, argued that the agency should
at least return any information submitted in sup-
port of a confidentiality request if that request is
subsequently denied.
The agency intends by this regulation to
establish a procedure where specious requests for
confidentiality are discouraged while those re-
quests that are meritorious can be handled effi-
ciently. The agency concludes that a submitter of
information who believes that disclosure of its in-
formation will result in competitive harm will sup-
port its request with necessary information. Infor-
mation submitted in support of a claim of confiden-
tiality can also be requested for confidential treat-
ment. Consequently, the agency does not expect
that this provision will discourage appropriate
confidentiality requests. For the reasons stated
earlier in this preamble, the agency disagrees with
arguments favoring the return of information sub-
mitted to the NHTSA and will not undertake such
an approach.
Paragraph (h) of Part 512.4 requires submitters
to update their confidentiality requests if inter-
vening events would change the confidentiality
determination. Commenters objected to this re-
quirement as being unnecessary and costly. For
example, they argued that since decisions are
made immediately with respect to confidentiality,
updating the information is unnecessary.
Not all decisions respecting confidentiality are
made immediately. As stated earlier, most con-
fidential information that would otherwise subse-
quently be made public will have an immediate
determination of confidentiahty. However, infor-
mation that is not customarily made public by the
agency pursuant to one of the agency's established
procedures will not have a confidentiality deter-
mination made with respect to it until such time as
a FOIA request is received. For this reason, it is
necessary that information submitted by manufac-
turers for which confidentiality is requested be up-
dated when circumstances change that request. If,
for example, a company voluntarily disclosed infor-
mation in the interim before the agency deter-
mined confidentiality, the NHTSA should be made
aware of this fact since the disclosure would make
the confidentiality determination moot.
Updating of previous confidentiality requests
also applies even after confidentiality has been
granted. In certain instances, termination of con-
fidentiality is conditioned upon the occurrence of a
particular event. In such cases, the agency should
be informed that the event has occurred so that
the confidential status of the information can be
discontinued. Moreover, there are times when in-
formation will become disclosed or other events
will make its continued confidentiality unnec-
essary. In these instances, the agency should be
informed of the disclosure in order to correct its
determination. In conclusion, the agency does not
agree that the updating provision is unnecessary.
The agency concludes that the updating provi-
PART512-PRE7
sion will not be costly. The requirement merely
states that a company shall inform the agency of
any changes pertaining to the information. The up-
dating responsibility is triggered when the submit-
ter knows that the initial submission is incorrect
or the information given in that submission has
changed. It is not required that a submitter con-
stantly monitor all information submitted pursu-
ant to a confidentiality determination as suggested
by GM. A submitter is only charged with the
responsibility of an update when it knows that the
information previously submitted was erroneous.
If by accident or mistake, the submitter does not
know or realize the initial error or changed cir-
cumstances, there is no duty upon it to make the
amendment. Therefore, the agency concludes that
this is a reasonable burden to place upon the sub-
mitter of information.
Commenters objected to paragraph (it of Part
512.4 which states that a submitter may lose its
claim of confidentiality through failure to comply
with the requirements of paragraph (b). Paragraph
(i) establishes times when a noncompliance may be
deemed a waiver of the confidentiality claim and
times when a noncompliance will waive the con-
fidentiality request. The times when confidentiali-
ty will be lost are few: (1) failure to file the re-
quired certificate, (2) failure to request confidential
treatment, and (3) failure to establish the necessity
for confidentiality. These failures will result in the
loss of confidential treatment for the information.
In other instances where technical insufficiencies
in the required submissions exist, the agency may
deem a claim of confidentiality to have been
waived. On the other hand, the agency may allow
the submitter to perfect its submission.
The discretionary waiver aspect of paragraph (i)
allows the agency the necessary latitude to deal
with all possible circumstances. For example, if a
submitter is knowingly delaying or otherwise in-
terfering with the determination process by fail-
ure to supply complete information, and the agen-
cy needs that information immediately, the
NHTSA must have the authority to deny the claim
of confidentiality. To do otherwise would jeopard-
ize the public welfare while permitting submitters
to avoid the agency's regulations. In most in-
stances, however, where a submitter merely
neglects to include a minor part of the required
material and the oversight is not deemed to be
intentional, the agency would normally grant the
submitter additional time to substantiate its claim. .
The agency will exercise reasonable discretion in
determining whether a submitter's confidentiality
request has been waived.
Commenters disagreed with the regulation in
section 512.4(i) to the extent that it allows the use
of criminal and civil penalties for failure to amend
confidentiality requests when the initial informa-
tion has changed or an error has been discovered
in the initial filing. These commenters challenged
the authority and the wisdom of invoking either of
these penalties.
The NHTSA has the authority to enforce its
regulations through civil penalties (15 U.S.C,
1917, 1948, 1989, and 2008). This authority is nec-
essary to encourage adherence to the agency's
regulations. The NHTSA will retain the civil pen-
alty provision of this paragraph. However, the
agency has considered the comments submitted to
it and concludes that the imposition of criminal
penalties is unnecessary in the enforcement of this
requirement.
Determining Confidentiality
The Automobile Importers Association (AIA)
complained that Part 512.5 was very complex and
should be clarified. For example, the AIA indi-
cated that the lengthy set of phrases connected by
disjunctives and conjunctives was beyond easy
comprehension. Further, the AIA indicated that
the definition of "voluntarily submitted informa-
tion" in this section should be amended. Currently,
the section defines "voluntarily submitted infor-
mation" as that information that could not be com-
pelled by compulsory process. The AIA would
have the agency define voluntarily submitted in-
formation as all information submitted to the agen-
cy voluntarily regardless of the fact the informa-
tion could have been compelled by the NHTSA.
Responding first to the comment that the
language is confusing, the agency has concluded
that the language of this provision is somewhat
unclear. Proposed paragraphs (1) through (4) state
that information is accorded confidential treat-
ment if it is a trade secret or commercial or finan-
cial information that has not been previously
disclosed and whose disclosure would likely result
in substantial competitive harm to the submitter.
Proposed paragraph (5) establishes a somewhat
different test for voluntarily submitted informa
tion that is a trade secret or confidential business
PART 512 -PRE 8
information. These two tests conform to the
guidelines established by the National Parks case.
The agency is amending this section by con-
solidating several of the paragraphs to clarify the
tests for determining confidentiality.
The AIA also recommended that the agency
adopt a different definition of "voluntarily submit-
ted information." The purpose of proposed para-
graph (a) (5) was to establish a test for preserv-
ing the confidentiality of information that the
agency could not compel by compulsory process. If
the agency were to release such information and
such release were to discourage the submission of
information that the agency could not otherwise
obtain, then the NHTSA might be hindered in
fulfilling its mandate. Accordingly, the agency
needs to be sure that it does not discourage the
flow of this information. The AIA suggestion
would expand the category of voluntarily submit-
ted information to include even that which could
be produced by compulsory process but which a
submitter has decided to submit voluntarily. The
NHTSA disagrees with the AIA's suggestion.
Since the NHTSA can compel much of the informa-
tion currently submitted voluntarily, the real
distinction in information submitted to the agency
is whether or not it can be compelled. The agency
continues to believe that information that can be
compelled by it should not be subject to the same
standards as that information which is freely given
to the agency and which the agency could not
compel.
The AIA objected to the requirements of section
512.6(d) that allow the NHTSA to delay confiden-
tiality determinations for some information until
10 days after the receipt of a FOIA request. The
AIA believed that this requirement would overly
burden submitters of information since they would
be required under Part 512.4(h) to update their
confidentiality requests if changes occur even
though in these instances confidentiality deter-
minations would not be made upon receipt of the
information, but upon the receipt of a FOIA re-
quest. Earlier in this preamble, the agency stated
that the burden of updating information for which
confidentiality was requested is reasonable and
necessary, particularly when responding to FOIA
requests. It would be improper under the FOIA for
the agency to withhold information that should be
made available. If information previously deter-
mined to be confidential subsequently loses its con-
fidentiality, that information might be subject to
release under FOIA. Accordingly, the agency must
require that submitters update this information
when necessary to ensure full compliance with ex-
isting laws relating to the release of information.
With respect to the other time periods for deter-
mining confidentiality, the agency is increasing
them from 10 to 30 days as a result of the increased
volume of confidentiality requests.
The AIA complained that the provision in sec-
tion 512.6(e) that permits the agency to extend the
time periods applicable to making determinations
under various sections of the regulation render
those time limits meaningless. It suggested that
the NHTSA only has to prove good cause to itself
that an extension is warranted.
The purpose of this provision is to provide for
those instances in which a determination cannot
occur within the normally established time frame.
It is the intention of the agency to conform to the
time requirements imposed upon it unless unusual
circumstances prohibit timely determinations. For
example, in certain rulemaking actions manufac-
turers wait until the last day before submitting
comments. If many comments arrived simultane-
ously with confidentiality requests, the agency
might be unable to make all the determinations
with the specified time limits. Therefore, the agen-
cy needs some discretion to extend time limits.
Paragraph (e) places a burden upon the agency to
establish "good cause" for an extension. These
reasons must be set out in writing and provided to
the submitter. Therefore, the submitter will have
the opportunity of contesting the agency's "good
cause" determination. As a further safeguard
against abuse of the extension provision, the agen-
cy has indicated in this section that the extension
as it applies to FOIA requests will be done in com-
pliance with 5 U.S.C. 552. The NHTSA has deter-
mined that these procedures will preserve the
necessary latitude required by the agency to deal
with all possible contingencies while preventing
routine abuse of the extension provision.
Several commenters objected to paragraph (f) of
section 512.6 which specifies that the NHTSA will
notify a submitter of the determination respecting
its confidentiality request. The regulation in-
dicates that this notification will provide, in the
case of denials, that the information will be made
public not less than 10 working days after the sub-
mitter of the information has received notice. The
PART 512 -PRE 9
provision further states that the 10-working day
requirement can be modified if it is in the public
interest that the information be made available
earlier. Commenters objected to the 10-working
day requirement some indicating that foreign sub-
mitters are particularly disadvantaged by such a
short time period.
The time periods provided for the release of in-
formation are short for a number of reasons. First,
in the cases of FOIA requests, the agency must
respond to the request within a relatively short
time frame. The agency cannot, as some com-
menters suggest, permit submitters of information
extensive periods of time to react to the agency's
determinations in FOIA cases. Second, informa-
tion frequently will be needed for rulemaking or
other agency needs that would otherwise be
delayed by a lengthy interval between a confiden-
tiality determination and release of the informa-
tion. The agency also must have the authority to
reduce the time periods even further if the cir-
cumstances indicate that the public interest
demands the immediate release of this informa-
tion. Even under emergency release conditions,
however, a submitter will be given some notifica-
tion of the pending release of its information even
though such notice might be short. Within even an
abbreviated time frame, a submitter would have
the opportunity to seek whatever judicial remedy
is available to it. Accordingly, the agency con-
cludes that the time provisions of this section meet
the needs of the agency for making information
available in the shortest possible time while still
permitting the submitter of the information to
seek whatever recourse it chooses when its con-
fidentiality request has been denied.
The AIA pointed out that nothing in paragraph
(f) indicates that the notification of the determina-
tion will be made immediately. They were con-
cerned that the NHTSA might make a determina-
tion in some instances and not notify a submitter
for some time. To prevent this from occurring, the
AIA suggested some modification in the language
of the provision to ensure that the agency is re-
quired to give immediate notification of a deter-
mination. Since this has always been the intention
of the NHTSA, the agency agrees with the modifi-
cation suggested by the AIA and changes this pro-
vision accordingly.
General Motors stated that section 512.6(f) (2)
was insufficient because, although it indicates that
a submitter of information will receive notice of
some sort, it does not indicate that the notice of
denial will state the reasons for such a denial. The
section states that the submitter will be notified in
writing of the denial of its confidentiality request.
The agency intends that this written notice will
state the reasons for the denial. To clarify this, the
NHTSA is modifying this section to indicate that a
statement of the reasons for denial will be part of
the written notice.
A few commenters were troubled by paragraph
(g) of section 512.6. This paragraph allows submit-
ters whose requests for confidentiality have been
denied to petition for a reconsideration of that
denial. Dunlop Tire and Rubber Co. indicated that
a petition for reconsideration was a waste of effort
since the same office would be making a deter-
mination of the reconsideration petition as had
made the initial denial. Accordingly, Dunlop pro-
posed that a submitter be permitted to go directly
to court without recourse to the reconsideration
process.
The NHTSA disagrees with the Dunlop position
that reconsideration is a futile effort. A petition
for reconsideration allows a submitter of informa-
tion to further emphasize a portion of its request
that it may feel has been insufficiently considered
by the agency. The reconsideration process allows
all parties the opportunity to discover and rectify
possible errors without recourse to costly and
time-consuming litigation. The agency notes that it
has used petitions for reconsideration in the area
of rulemaking for many years and those petitions
have frequently resulted in amendments of agency
rulemaking actions. Therefore, the NHTSA con-
cludes that the reconsideration process is a mean-
ingful check upon the agency's actions and will con-
tinue to allow it when making confidentiality
determinations. However, the regulation states
that a submitter may petition for reconsideration.
A submitter is not required to file such a petition
and may instead seek judicial review.
Volkswagen argued that the petition for recon-
sideration process was rendered meaningless
since it was possible that the information for which
confidentiality was claimed could be released
pending a determination on the petition for recon-
sideration. The paragraph states that the Chief
Counsel may postpone the release of information
pending a decision on the petition for reconsidera-
tion. This implies, however, that release may not
#
#
(#
PART 512 -PRE 10
be postponed in some cases. It is contemplated
that in the majority of instances material will not
be released until a final determination on the issue
of confidentiality is made. Therefore, material
generally will not be made public during the recon-
sideration process. In exigent circumstances, how-
ever, the agency does retain the discretion to
release information if the public interest so dic-
tates. Even in these unusual circumstances, a sub-
mitter of the information would be informed of the
pending release of the information and would be
able to then seek an immediate judicial interven-
tion prior to the release of the information.
The AIA suggested that the agency adopt a
review procedure for the denials of requests for
confidentiality that would allow a submitter to
petition someone in the Office of the Secretary of
the Department of Transportation for a review of
the confidentiality request. The NHTSA has estab-
lished its own internal review of denials through
the petition for reconsideration process. A sub-
mitter that is still dissatisfied with the agency's
action can seek a judicial remedy. Although the
Secretary of the Department has authority over
agency functions, that office does not review
routine agency decisionmaking and does not have
sufficient resources to act as a review board for
every agency action. The NHTSA notes that the
need for Secretarial review of these decisions is
not apparent. Accordingly, the agency declines to
adopt AIA's suggested modification.
General Motors objected to section 512.7(a) (2)
which indicates that a confidentiality determina-
tion remains in effect until, among other things, a
change occurs in applicable law. GM suggested
that this was impermissibly vague. It stated that
some remote lower court might make an adverse
ruling on an issue of confidentiality while the
Supreme Court may have decided otherwise in
another case. It feared the NHTSA would follow
the rule of the lower court.
The agency disagrees with GM that this provi-
sion is impermissibly vague. A change in applica-
ble law might include a statutory change or a
change in judicial interpretation of existing
statutes. However, as GM must well know, the
Supreme Court is the ultimate authority with
respect to judicial interpretation of statutes.
Accordingly, the agency would not terminate a
confidentiality determination when a lower court
issued a decision that might be in conflict with
existing pronouncements from the Supreme
Court. The agency does not consider every lower
court decision to indicate a change in the appli-
cable law, but it does consider the pronouncements
of major courts as indicative of changes in the
status of the law and may review confidentiality
determinations in the light of those pronounce-
ments. In any event, if the agency responded to a
change in law by determining to reverse a previ-
ous finding of confidentiality, it would provide
notice of that determination and the reason there-
for before releasing the information in question.
Disclosure of Confidential Information
Sections 512.8 and 512.10 of this regulation
elicited many comments that were for the most
part opposed to the release of information that has
been determined to be confidential. Many com-
menters suggested that these two provisions be
deleted entirely or, in the alternative, modified to
limit severely the right of the agency to release
confidential information. Commenters expressed
the erroneous belief that these provisions would
combine to undermine the confidentiality of infor-
mation that is normally classified as confidential.
The comments indicate a need for explanation of
the agency's intentions, its statutory powers and
limitations, and the judicial precedents that gov-
ern the area of discretionary release of informa-
tion determined to be confidential.
In section 512.8, the agency established separate
criteria for the release of different types of confi-
dential information. These criteria are recitations
of the various statutory sections which permit the
agency to disclose such information. Section 113 of
the National Traffic and Motor Vehicle Safety Act
of 1966 (the Act) (15 U.S.C. 1401) states that "in-
formation received pursuant to Title I of the Act
relating to trade secrets or other matters referred
to in 18 U.S.C. 1905 shall be confidential but may
be disclosed when relevant in any proceeding
under this title." This statutory language is incor-
porated into section 512.8 (a) (1).
Section 158(a) (2) (B) of the Act (15 U.S.C. 1419)
specifies that confidential information obtained
under Part B of the Act may be released if "nec-
essary to carry out the purposes of this title."
This language is adopted in section 512.8(a) (2).
Finally, section 512.8(a) (3) permits the release of
confidential information obtained under Parts I
and V of the Motor Vehicle and Cost Savings Act
PART 512 -PRE 11
i
(15 U.S.C. 1901 et seq.) if the information is rele-
vant to any proceeding under the title under which
the information was obtained. The authority for
this release is found in 15 U.S.C. 1914 and 2005.
Accordingly, comments to the agency that any
release of confidential information is contrary to
the agency's statutory authority are entirely
without merit.
Commenters argued that regardless of any pos-
sible statutory authority granted to the agency in
its various Acts to release confidential informa-
tion, 18 U.S.C. 1905 states that information
relating to trade secrets and other areas of
business confidentiality cannot be released. This
comment indicates a misunderstanding of section
1905. Section 1905 states that certain information
should be confidential and not released. However,
section 1905 further states that the information
outlined in that section shall not be released
"except as provided by law." Any release of con-
fidential information made pursuant to the
agency's validly enacted enabling Acts is a release
provided by law and, therefore, permissible under
section 1905. Therefore, the agency declines to
delete the discretionary release provisions of the
regulation that permit the release of information
under the tests established by the Act and incor-
porated in Part 512.8.
Some commenters argued that although the
release of confidential information might be per-
missible under existing legal authority, the agency
should not release the information. They sug-
gested that such release will jeopardize future
cooperation between the agency and the industry.
Further, they argued release will invite litigation
increasing the adversarial relationship between
the agency and the industry.
When considering the consequences of the
release of confidential information, the submitters
of that information should examine existing
agency practice. The agency for years has been
operating under the statutory provisions permit-
ting release of confidential information. This
regulation simply formalizes the release proce-
dures used by the agency but does not increase the
existing authority of the agency to release infor-
mation. During the time that the agency has ope-
rated with this authority, some releases of con-
fidential information have been made when the
agency determined such releases to fall within the
parameters prescribed by the applicable statutory
authority. However, for the most part, confidential
information has not been released. The NHTSA
does not intend by this regulation to alter this
practice. The agency realizes the importance to
the competitive process of maintaining the con-
fidentiality of business information. Accordingly,
the agency will not release confidential informa-
tion unless the release of such information meets
all of the statutory requirements for release and is
deemed to be in the public interest.
Commenters suggested that when the release of
confidential information is necessary it should be
made in the least offensive form. For example,
they suggested that aggregate information or
unidentified information might sometimes meet
the need for public release. The agency agrees
with these comments and will try to release as
little information as is necessary and will attempt
to do it in an inoffensive manner. The NHTSA
believes that such an approach reflects existing
judicial decisions such as Penmoil v. FPC, 534 F.2d
627 (5th Cir. 1976) which indicated that agencies
should examine alternative, less damaging meth-
ods of public disclosure.
Most commenters suggested that the 10-work-
ingday discretionary release requirement was un-
necessarily short. Many suggested longer time
periods prior to release to permit the submitter
time to take action to preserve the confidentiality
of its information. Further, commenters objected
to the provision that allows the administrator to
waive the 10-day notice requirement if the public
interest will be served by such waiver. At the
least, they argued, a 10-day minimum is required.
Some even suggested that any time period less
than 10 days would violate due process.
The existing notice provision is in accordance
with other notification provisions in this regula-
tion. As stated earlier in this preamble, the agency
has concluded that this time period provides an
adequate opportunity for submitters of informa-
tion to seek whatever recourse they feel may be
necessary to preserve their rights. Accordingly, to
prevent the possibility of delay in the release of in-
formation that the agency considers necessary to
its functions, the NHTSA will not amend the
10-day notification provision.
With respect to the Administrator's discretion
to waive the notification provision when the public
interest demands, the agency concludes that this
discretion is necessary. The exigencies of the
#
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PART 512 -PRE 12
agency's regulatory activities may, on rare occa-
sions, necessitate such waiver. For example, the
Acts under which the agency operates grant the
agency broad powers to protect the public safety.
These powers include the right to act quickly to
save lives. If the agency were to establish an in-
flexible minimum 10-day notice provision, it would
be restricting its validly granted statutory
authority. This would undesirably limit our ability
to meet our responsibilities to the public as stated
in the Acts, and in their legislative histories.
Accordingly, the agency will not limit the Ad-
ministrator's discretionary powers to respond to
emergencies. Further, the agency notes that the
courts and the FOIA Report substantiate the
agency's position that minimum time limits must
be flexible. The agency concludes that allegations
of a due process violation when minimum time
limits are not established are without merit and do
not reflect current judicial thinking. The agency
will always seek to provide lO-working days
notification to the submitter of information. In
those instances where this notice is not practicable
the agency will provide sufficient time for the sub-
mitter to seek judicial recourse if it so desires.
The MVMA went so far as to suggest that prior
to the release of confidential information the
agency is required to have a formal adversarial
hearing. For their support, they cited Mathews v.
Eldridge, 424 U.S. 319 (1976). This case held only
that some form of reasonable opportunity to be
heard must be granted prior to the deprivation of a
property right. The court, however, stated that
full adversarial proceeding was unnecessary and
that "[t]he judicial model of an evidentiary hearing
is neither a required, nor even the most effective
method of decisionmaking in all circumstances"
(424 U.S. at 348). In fact, only in the rarest of cir-
cumstances have the courts required a full adver-
sarial hearing prior to the termination of property
rights. Goldberg v. Kelly, (397 U.S. 254 (1970)). In
that case, the court required a hearing prior to the
termination of welfare benefits since to do other-
wise would impose an undue hardship upon the
recipient which might, in fact, endanger the recip-
ient's life. In many similar cases that are less life-
threatening courts have not required formal pre-
termination hearings. Certainly the release of con-
fidential information does not pose the danger to
life itself that warranted the Goldberg approach,
and accordingly, its release does not require
formal hearings. The NHTSA concludes that its
provision allowing the opportunity to comment
prior to any release provides ample opportunity to
be heard in compliance with existing judicial deter-
minations.
The MVMA further argued that if the agency
intends to continue with its informal procedures
as outlined above it should at least indicate that it
will consider the comments received and a writ-
ten determination as to why the release is being
made and upon what grounds the public interest
is served. As stated earlier, the reasons for the
release will be supplied in the first notice to the
submitter. Responding to the MVMA's concern
that the comments received may not be con-
sidered, all timely submitted comments will be
considered prior to release of the information.
Volkswagen and several other commenters
suggested that the agency better define the term
"public interest." They suggested that the agency
adopt a definition similar to that of the EPA (40
CFR 2.205(g)) which permits the EPA to act ex-
peditiously when it determines that it "would be
helpful in alleviating a situation posing an immi-
nent danger to public health or safety. . . "
The NHTSA considers that the existing
wording of the regulation adequately details the
necessary findings of the agency that permit the
immediate disclosure of confidential information
when it is in the public interest. The agency con-
siders it unnecessary to further define by regula-
tion what constitutes the public interest. At-
tempts to define terms such as public interest are
usually unsuccessful, because these terms em-
brace very broad, diverse, and often-changing
concepts. Public interest is something than can
only be determined in the context of specific facts
and their potential ramifications.
Although the agency will not define "public in-
terest" in the regulation, submitters can be
assured that the agency will release information
only after making some showing that such release
truly benefits the public. Existing case law
clearly reflects the fact that certain findings must
be made by an agency more than the mere recita-
tion that the release of information is in the
public interest. For example, in Pennzoil v. FPC,
534 F.2d 627 (5th Cir. 1976), the Court did not in-
validate the public interest test, but stated that
the FPC had not examined all of the relevant
criteria that should go into the making of the
PART 512 -PRE 13
public interest determination. The court sug-
gested that the agency consider whether: (1) the
disclosure would aid the agency, (2) the disclosure
would harm the public, and (3) there are alter-
natives to disclosure that will work equally well
(i.e., disclosure of aggregated or summarized infor-
mation). Agency discretion exercised pursuant to a
general public interest authority has been upheld
in many other instances. Administrator, FAA et
al V.Robertson, 422 U.S. 255 (1975); Westinghouse
Electric Corp. v. NRC, 555 F.2d 82 (3rd Cir. 1977).
The AIA suggested that Part 512.8(b) should
specify more than just the reasons for the need for
release of confidential information. They sug-
gested that the agency require more specific infor-
mation to be stated in the Administrator's notice
to the submitter. The agency realizes that releases
of confidential information may be contested by
the submitter. Accordingly, the NHTSA will en-
sure that the record of the decisionmaking process
and reasons for the final determination are fully
established to facilitate judicial review. However,
for purposes of this regulation, the agency con-
cludes that it is sufficient to indicate that the Ad-
ministrator will clearly establish all of the reasons
for releasing information.
Several commenters objected to the possible
releases of information under section 512.10 of this
regulation. As proposed, this section permitted
the disclosure of confidential information (1) to the
Congress or the Comptroller General, (2) pursuant
to court order, (3) to the Office of Secretary of the
Department of Transportation (DOT), (4) with the
consent of the submitter, (5) to other Federal agen-
cies in accordance with applicable law, and (6) to
contractors if necessary.
The agency does not fully understand the theory
on which the objectors to this provision base their
claims. Generally, NHTSA does not have authority
to withhold information of any sort from the Con-
gress, review or oversight offices within the Exec-
utive branch, or the courts pursuant to a court
order. Nor can the NHTSA deny information to
the Secretary of the DOT, since the agency derives
its authority from that official. Further, the
agency is not at liberty to interfere with any other
law that would expressly or impliedly require the
agency to yield information to another Federal
agency. The only provisions of this section that the
agency can really affect are those relating to the
release of information with the consent of the
submitter, with which the agency assumes no one
argues, and to the submission of information to
contractors. In the latter case, the agency has in-
dicated in the regulation that the contractors will
be required to maintain the confidentiality of the
information or be responsible to the parties for the
consequences of its release. Therefore, in this sec-
tion of the regulation, the agency has merely in-
dicated the two instances when it will release in-
formation and has indicated that there will be
safeguards for the information in those instances.
The other parts of this section indicate those occa-
sions when the NHTSA is obliged to disclose infor-
mation pursuant to higher authorities. With
respect to the release of information to higher
authorities, the NPRM neglected to include the
release of information to offices in the Executive
branch that have review or oversight authority.
The regulation has been amended to correct this
omission, and has been reorganized for clarity.
The MEMA argued that any release of informa-
tion under this section should only be made as re-
quired by law. As stated previously, that is mostly
what this section does. Further, the MEMA sug-
gested that the agency impose regulations that
would safeguard the secrecy of the information in
the hand of another agency or the Congress that is
the recipient of the information.
The agency can not impose requirements upon
the Congress or other administrative agencies.
The NHTSA cannot require the Congress, for
example, to promise to keep information confiden-
tial. It is assumed that the Congress or any other
agency will treat confidential information with the
care that it deserves. The agency, however, at-
tempts to safeguard the information to the extent
possible by ensuring that the requests for con-
fidential information are valid and authorized and
by indicating to the recipient at the time the infor-
mation is released that it is confidential and should
be treated accordingly. Further, the agency
typically obtains a written agreement from a re-
questing agency that it will release the informa-
tion only if required by law to do so and will con-
sult with NHTSA regarding any FOIA requests
that the requesting agency receives for the infor-
mation. The agency has amended this section of
the regulation to effect some of these practices.
Some commenters criticized the provision in the
regulation that permits the agency to supply con-
fidential information obtained pursuant to the
i
#
f
PART 512 -PRE 14
agency's compulsory process devices to other
agencies that do not have such powers to compel
information. These commenters indicated that
they thought that such a transfer of information
would be contrary to the rights of a submitter.
The NHTSA agrees that access by other agen-
cies to such confidential information possessed by
the agency should be limited. However, some ac-
cess to confidential information by other agencies
is legitimate and necessary. When the agency is
expressly or impliedly required to provide infor-
mation pursuant to applicable law, the NHTSA
must supply the information. Other requests for
information will be closely scrutinized by the
NHTSA. The NHTSA will only release informa-
tion that it has received through compulsory proc-
ess to agencies that can compel the information
directly from the submitter or that are otherwise
authorized by law to obtain it. The agency con-
cludes that such a transfer of information is in the
best interest of the government and the submitter.
Through this sharing of information, a submitter is
spared the expense of compiling and submitting in-
formation that is already available to the govern-
ment. However, agencies that are not expressly or
impliedly authorized to obtain information from
the NHTSA and that cannot obtain information
from the submitter directly will not be able to ob-
tain information from the NHTSA that the agency
has received through compulsory process. If Con-
gress had intended those agencies to have the
right to such information, it would have given
them the right to receive it from other agencies or
the power to obtain it.
The MEMA requested that a submitter be given
notice of the government's release of information
pursuant to this section. The agency cannot always
give advance notice of releases in these cir-
cumstances because to do so could put the agency
in the position of interfering with a valid and ex-
igent investigation by the Congress, with a court
proceeding, or with other Executive branch
review or oversight of agency actions. The Con-
gress has the authority, for example, to demand
some information immediately. Accordingly, the
agency might not be able to provide advance
notice to a submitter that its information is being
disclosed. In a recent case, EXXON et al v. FTC,
589 F.2d 582 (D.C. Cir. 1978) the court indicated
that a mandatory advance notice of release of con-
fidential information to Congress was not required
unless the agency promised to give such a notice.
The agency concludes that this recent decision con-
firms its position that releases of information in
these instances that are required by law and which
do not constitute the public disclosure of informa-
tion are not the type of releases requiring advance
notification.
The NHTSA has reviewed the existing law with
respect to the disclosure of information to other
government agencies and contractors and con-
cludes that the question of whether advance notice
of such disclosures is required remains unsettled.
The agency believes that providing advance notice
to submitters in these cases is not presently re-
quired by law nor always in the best interest of the
agency, but will do so where appropriate. In the
case of contractors, the agency notes that informa-
tion will not be released to contractors if it would
result in a conflict of interest for that contractor.
The AIA in a general comment about the release
of confidential information expressed their con-
cern that such a release might be considered a tak-
ing of private property for public use entitling the
submitter of the information to compensation.
They base this argument on the Constitution's
Fifth Amendment protection of property rights
from uncompensated public takings. In support of
their argument, AIA cited two cases. Continental
Oil Company v. FPC, 519 F.2d 31 (5th Cir. 1975),
cert den'd sub nom. Superior Oil v. FPC, 425 U.S.
971 (1976); and Westinghouse Electric Corp. v.
Nuclear Regulatory Commission, 555 F.2d 82 (3rd
Cir. 1977), in which the issue of a compensable tak-
ing has been mentioned involving the release of
confidential information. Unfortunately, neither of
these judicial pronouncements have yet clarified
this area of the law.
In Continental Oil, the court never reached the
question of compensation, deciding the case on
other issues. In Westinghouse, the court reached
the issues of taking but determined that a taking
could not occur where the information had been
voluntarily given to the government. In dictum,
the court indicated that a compelled production of
confidential information which was subsequently
released might result in a compensable taking.
This issue was before the courts again in Polaroid
Corp. V. Costk (Civil Action No. 78-113-S) in the
U.S. District Court of the District of Massachu-
setts. However, that case was settled prior to
reaching the merits of this issue. Therefore, there
PART 512 -PRE 15
is no legal precedent of which the NHTSA is aware
indicating that such a release would constitute a
taking, and the agency concludes that a taking will
not occur as a result of such a release.
Miscellaneous Comments
A few commenters considered the affidavit
requirement unnecessary. The MVMA alleged
that it served no useful purpose and that its aim
was to force people into compliance with the
requirements. The MVMA further asserted that
the requirement to state that the person has con-
tacted those in authority to release confidential in-
formation and ascertained that the information
had not been released necessitated the person's
giving hearsay.
The above comments to this section are unwar-
ranted by the relatively innocuous provisions of
the affidavit. The affidavit simply requires a
responsible official of the submitter of information
to attest under oath to the accuracy of certain
statements. First, the official attests to his
authority. Second, the official attests to the
confidentiality of the information. Since the sub-
mitter is asking the agency to make a confidential-
ity determination, it is proper to ask that the sub-
mitter attest to the fact that the information is
confidential. Third, the authorized official must at-
test that he or she has contacted responsible of-
ficials who in the normal course of business may
release information to determine whether the in-
formation has been released. This is the provision
that the MVMA characterizes as requiring "use-
less hearsay." The purpose of this provision is not
to prove conclusively that information was never
released. This provision simply requires that the
official attest to the fact that he or she has checked
with the officials to discover any such disclosure.
Since the provision goes to proving that the official
checked with responsible personnel not to the
truth of the statements of those personnel, it does
not require hearsay. When the previous require-
ment is coupled with paragraph (4) of the affidavit,
it is clear that the attesting official only attests to
the fact that to the best of his knowledge informa-
tion has not been released. In sum, the require-
ments of this provision are minimal and simply
assure that the official has complied with the in-
quiry provisions of the regulation and has pro-
vided the agency with the information acquired
through the inquiry.
The NHTSA received numerous comments sug-
gesting additional classes of information that the
industry would have the agency include within the
classes of information presumed to be confidential.
Almost every commenter suggested some classes
for inclusion within the existing list. The effect of
these comments, if adopted, would be to make
almost every piece of information submitted to the
agency presumptively confidential. Such an out-
come would not serve the public interest nor
would it comply with existing statutes granting
the public access to governmental information.
The agency chose the existing classes because
they were narrow enough to include only the infor-
mation that the agency customarily finds confiden-
tial. The NHTSA concludes that such classes of
information presumed to be confidential must be
very limited and must not include information that
is not normally considered confidential.
The NHTSA concludes that the existing list of
classes of presumptively confidential information
is sufficient for the present. The agency is experi-
menting with the class determination approach as
a means to reduce the workload in making con-
fidentiality determinations. At this time, however,
the NHTSA does not have sufficient experience in
the use of these classes to warrant an expansion of
them. As soon as the agency becomes more famil-
iar with this process, changes to the classes might
be made increasing the information presumed to
be confidential. This can only be done, however,
after the agency evaluates the class determination
procedure and further reviews the other types of
information for which confidentiality is requested
and which normally deserves confidential treat-
ment. Accordingly, the agency declines to adopt
the classes suggested by the manufacturers and
other commenters at this time, but it will retain
these comments for possible future inclusion
within the regulation when experience indicates
that such inclusion would be appropriate.
This regulation was reviewed under Executive
Order 12044 and determined to be significant
based upon the anticipated public comments on the
proposed version of the regulation. However,
voluntary implementation of the regulation during
the past two years has demonstrated that initial
concerns about having to submit significantly
increased justification to support confidentiality
requests and about increases in the release of con-
fidential information have not been borne out.
#
PART 512 -PRE 16
Further discussion of these issues is provided
above in this notice. No regulatory analysis or
evaluation has been prepared for this notice since
it imposes little or no additional cost on persons
making confidentiality claims. The primary effect
of the regulation is to codify existing agency prac-
tices in implementing statutory and case law
regarding confidential information.
The principal author of this regulation is Roger
Tilton of the Office of Chief Counsel.
In consideration of the foregoing, Title 49 of the
Code of Federal Regulations is amended by the ad-
dition of a new Part 512, Confidential Business
Information.
(Sec. 9, Pub. L. 89-670, 80 Stat. 931 (49 U.S.C.
1657); sec. 112, Pub. L. 89-563, 80 Stat. 725, amend-
ed Pub. L. 91-265, 84 Stat. 262 (15 U.S.C.
1401); sec. 119, Pub. 89-563, 86 Stat. 950 (15 U.S.C.
1914); sec. 204, Pub. 92-513, 86 Stat. 957; (15 U.S.C.
1944); sec. 408, Pub. L. 92-513 as added Pub. L.
94-364, 90 Stat. 985 (15 U.S.C. 1990d), sec. 505 Pub.
L. 94-163, 89 Stat. 908 (15 U.S.C. 2005), delegation
of authority at 49 CFR 1.50.)
Issued on December 30, 1980.
Joan Claybrook
Administrator
46 FR 2049
January 8, 1981
PART 512-PRE 17-18
•
#
PREAMBLE TO AN AMENDMENT TO PART 512
Confidential Business Information
(Docket No. 78-10; Notice 10)
RIN 2127-AC95
ACTION: Final Rule.
SUMMARY: This notice revises and reissues the
existing regulation contained in 49 CFR Part 512—
Confidential Business Information. Revisions to the
existing regulation are necessary to ensure efficient
processing and proper protection of business infor-
mation received by the National Highway Traffic
Safety Administration (NHTSA). This action is in-
tended to clarify certain provisions, to revise certain
sections to conform to statutory and case law, to
include additional class determinations and to add a
presumptive class determination.
EFFECTIVE DATE: November 28, 1989. "Confi-
dential Business Information," as a final rule on
June 7, 1982, 47 FR 24587. This regulation has not
been amended or revised since that time. The agency
% believes that the procedures for submitting confiden-
tial business information have generally worked
well since 1982, but practical experience in process-
ing this information has shown that some improve-
ments and clarifications are advisable. The proposed
modifications were published in the Federal Register
on July 7, 1989 (54 FR 28696) (the NPRM).
Six organizations responded to the agency's solic-
itation for public comments. Although five minor
revisions have been made in the final regulation in
response to comments, the comments generally re-
flect approval of the proposed changes. NHTSA has
also modified Appendices A and B and §5 12.5(b) to
make clarifications in response to comments.
Discussion of Comments
The agency's proposals for which commenters ex-
pressed support or no opinion have not been included
in the Discussion of Comments. The explanation of
such proposals contained in the NPRM is incorpo-
rated by reference for the purposes of this Notice.
Impairment of Protectable Government Interests
The revision in §512.5 relating to the impairment
of protectable government interests attracted the
attention of Ford Motor Company. While basically
^^ agreeing with need for a change, Ford suggested
^^ expanding this section to include the concept that
confidentiality should be granted if disclosure was
likely to impair a "private interest." Ford proposed
to accomplish this by inserting the words "or pri-
vate" after "government" in §512.4(bX3Xviii) and
§5 12.5(c) in recognition of dicta in cases cited in the
NPRM. The agency is reluctant to make this change
in the absence of clear judicial decisions which
determine that the disclosure of confidential infor-
mation causes a private harm other than a substan-
tial harm to the competitive position of the submit-
ter. The addition of §512.5(c) and §512.4(bX3Xviii) in
the NPRM responds to a genuine need for protection
of government interests that are not otherwise rec-
ognized, i.e., the impairment of program effective-
ness or compliance. However, the agency believes
that the regulation sufficiently covers private inter-
ests in §5 12.4(g) and §5 12.5(a), and therefore will not
incorporate Ford's proposed amendment.
Submitter's Supporting Certification
Volkswagen of America, Inc., and Ford requested
changes to the certification in Appendix A. Volkswa-
gen wanted Appendix A to include both the form of
the affidavit and the form of the certification if the
agency was truly willing to accept either format. By
expressing willingness in the NPRM to accept affi-
davits which contain the statements contained in
the proposed Appendix A, the agency did not intend
to formally create an optional format. NHTSA is
satisfied with one format, but a certification in that
format, that is also notarized, will not be rejected as
insufficient.
Ford asserted that the qualifying words "to the
best of my information, knowledge and belief,"
which were deleted from paragraph (6) of the certi-
fication, should be retained. Ford also questioned
whether it was possible for a busy company execu-
tive to make the "personal inquiry" indicated in
paragraph (3) of the certification without the use of
such qualifying language. NHTSA agrees to correct
this oversight by adding the words "information and
belief," after "knowledge" in paragraph (4). The
agency believes that this will adequately address
Ford's concern for fairness to the declarant who may
PART 512; PRE 19
use subordinates to aid him in his inquiries, and yet,
not interfere with the statutory requirements of 28
use §1746 and 18 USC §1001 concerning unsworn
declarations to the government under penalty of
perjury.
New Class Determinations
All of the commenters provided suggestions con-
cerning the class determinations listed and proposed
for listing in Appendix B. If the agency determines
that public release of a particular class of informa-
tion typically would result in substantial competi-
tive harm and publishes that determination in Ap-
pendix B, a rebuttable presumption is created about
the likelihood of such harm if information of that
type were publicly released. This presumption has
the effect of eliminating the requirement that the
submitter initially demonstrate the elements con-
tained in §512.4(bX3Xvi).
The commenting automobile manufacturers gener-
ally supported the General Motors Corporation's peti-
tion for the agency to make a class determination
about cost information. General Motors offered an
amendment to its original draft limiting "cost" to
"manufacturer's cost." Volkswagen suggested that the
presumptive determination include "future actual as
well as estimated cost." Ford asked that the agency
craft a presumption that includes the kinds of cost
data that the agency generally has withheld. Chrysler
Motors Corporation asserted that no distinction should
be made between general cost estimates, ranges of
costs and specific actual cost data relating to a product
because all could be damaging if disclosed.
However, these suggestions do not adequately ad-
dress the concern of the agency that a highly inclu-
sive presumption may erroneously encompass costs
that under certain circumstances are not entitled to
confidential protection. Public Citizen and the Free-
dom of Information Clearinghouse echoed this con-
cern, stating that it is difficult to draft a determina-
tion relating to cost that is not overbroad. While the
presumption would be rebuttable, NHTSA wants to
avoid confusion, misunderstanding and wasteful ef-
fort considering claims involving, for example,
meaninglessly overbroad estimates of future costs or
cost elements which may have inadvertently been
introduced into the public domain. NHTSA does not
believe that it will suffer an impaired ability to
obtain cost information without the presumption, as
one commenter suggested, nor does it believe that
the evidence on cost submissions is clear enough to
permit the drafting of a sufficiently narrow provi-
sion at this time. The agency therefore has decided
that a new class determination relating to costs is
not advisable. General Motors' suggested class de-
termination is, therefore, not adopted.
Three companies made comments on NHTSA's
proposed amendments to paragraphs (2) and (3) of
the current class determinations in Appendix B.
General Motors and Volkswagen suggested that
"model year" be clarified to mean the vehicle pro-
duction period. Ford proposed that product plans be ^k
protected until the date on which the last of the !■
specific models to which the product plans pertain is
first offered for sale.
All of these comments demonstrate the necessity
for clarification of the terminology "product plans"
and "model year." The phrase "first offered for sale"
is more precise than "the beginning of the model
year" in paragraph (2). Also the concept of "pro-
duction period" is better suited for explaining the
presumption in paragraph (3). NHTSA believes that
paragraphs (2) and (3) have been simplified and more
correctly stated by the adoption of these changes.
In addition, Volkswagen wanted model plans pro-
tected to the end of the production period, not the
beginning, because certain specific products or fea-
tures are scheduled for introduction some time after
such period begins. The agency does not agree with
Volkswagen's suggestion to protect model plans until
the end of the model production period. If there is a
specific change that is scheduled to take place relating
to a certain model vehicle after production of such
model begins, it should be pointed out by the submitter
when such change will be offered to the public. The
specific change can then be protected until it is offered
to the public, while the remainder of the information ^
pertaining to that vehicle will be released when the W^
vehicle is first offered to the public.
Miscellaneous Provisions
The amendment relating to voluntary submis-
sions in §512.5 was the subject of comments from
both Ford and General Motors. Ford suggested that
this section be expanded to include the concept that
confidentiality should be granted if disclosure was
likely to impair the ability of NHTSA to obtain
necessary similar information in the future, even
though NHTSA could compel disclosure of such
information. General Motors made the point that
material that is ostensibly obtainable via compul-
sory process might be considered, in some instances,
the equivalent of a voluntary submission. However,
as was stated in the NPRM on page 28698 and by
General Motors in its comments, whether future
submissions of information could be compelled is
only a factor to be considered in deciding if govern-
mental access to information will be impaired by
disclosure, but it is not necessarily dispositive. Pub-
lic Citizen Health Research Group v. FDA, 704 F.2d
1280, 1291 n. 29 (D.C. Cir 1983); Washington Post
Ca V. HHS, 690 F2d 252 (D.C. Cir. 1982). Moreover,
the agency recognizes that courts have given great ^^
weight to agency determinations that the release of ^^
PART 512; PRE 20
information will not cause impairment. General
Electric Ca v. NRC, 750 F.2d 1394, 1402 (7th Cir.
1984); AT&T Information Systems v. GSA 627 F.
Supp. 1396, 1401 (D.D.C. 1986), reversed and re-
manded on procedural grounds, 810 F.2d 1233 (D.C.
Cir. 1987).
The changes proposed in the NPRM were intended
to reflect more accurately the established case law
but not to enumerate every factor to be considered
when deciding whether information should be pro-
tected from disclosure. Furthermore, this regulation
is intended to be procedural, and not substantive.
Because of these factors, the agency believes that it
is inappropriate to attempt to amend the regulation
according to the ongoing judicial development of
highly specific disclosure exceptions under the Free-
dom of Information Act. Consequently, the agency is
satisfied that the regulation should provide broad
categories and a flexible framework based upon well
established judicial precedent. In order to respond to
the concerns expressed by Ford and General Motors
and to avoid future confusion about voluntary sub-
missions of information as outlined in recent judicial
decisions, the regulation has been modified to delete
entirely the references to voluntary submissions in
§512. 5(b). The agency will, however, make no change
to §512.4(bX3Xvii) which permits the submitter to
explain impairment when the information is submit-
ted voluntarily. This modification of the proposal
also accommodates precisely the issues raised by
General Motors and Ford, reflects accurately the
established case law and maintains a broad, flexible
framework for submitters using the regulation.
Public Citizen and the Freedom of Information
Clearinghouse expressed concern about the timing
of NHTSA's confidentiality determinations. On this
point, the NPRM did not propose any substantive
changes from the original regulation. Nevertheless,
these commenters suggested that the agency should
decide on and publish a date certain by which
confidentiality determinations will be made. Tten
days were recommended to be a reasonable period of
time. The commenters said that without further
clarification, §512. 6(b), which requires placing in
the public file copies of documents from which infor-
mation claimed to be confidential or privileged has
been deleted pending resolution of such claim, is
likely to mislead the public.
The agency does not agree that the procedures in
§512. 6(b) are misleading. All persons having an
interest in files from which information has been
redacted, may, and frequently do, make further in-
quiries about additional information pursuant to the
Freedom of Information Act. In these situations,
NHTSA's practical experience with the regulation
has been excellent, as explained below, and the
agency is satisfied that the public has pursued
information under this statute in instances where
more information was wanted. In such instances, as
noted in §512.6(c), the agency must respond within
the statutory time periods. It is also important to
point out that because of practical manpower re-
straints, the agency would not always be able to
meet a self-imposed deadline for redacted informa-
tion about which there was no expressed public
interest and also fulfill its obligations to persons
requesting information under statutory deadlines.
Moreover, the agency believes that the processing of
voluminous files for which confidential treatment
has been requested has been expeditious and orderly
under the applicable provisions of the existing reg-
ulation. Accordingly, the agency declines to make
the suggested changes.
Public Citizen and the Freedom of Information
Clearinghouse also objected to the proposed change
in §512.4(j) (currently §512.4(i)). In this section, the
agency proposed to replace the provision requiring
the denial of confidential claims when information is
submitted without the certification required by
§512. 4(e) with a provision making it discretionary to
deny or accept such claims. General Motors com-
mented in support of the change, noting that the
automatic denial of confidential treatment is "an
unnecessarily harsh penalty for what may be an
inadvertent omission."
The provisions of §512.4(e) mandate that the sub-
mitter's certification be included with every request
to the agency for the confidential protection of infor-
mation. The agency continues to believe that the
certification is the best method by which a submitter
can demonstrate compliance with the requirements
of the Freedom of Information Act. Furthermore,
NHTSA is prepared to deny claims which do not
reasonably comply with §512.4(e). However, it is not
justifiable for the agency to be compelled to deny a
claim for confidential treatment which includes no
certification but which is clearly exempt from disclo-
sure pursuant to the Freedom of Information Act, 5
U.S.C. 552(bX4). In circumstances where the agency
is absolutely satisfied that a submitter has made a
serious claim for confidential protection of informa-
tion, the information has not been released to the
public, and the information is properly protectable
under Exemption 4, the agency should not require
itself to disclose the information. The proposed mod-
ification realistically retains the certification re-
quirement without creating the potentially im-
proper technical conflict between the regulation's
procedures and the demands of the Freedom of
Information Act. For this reason, NHTSA believes
that this comment lacks merit. Accordingly, the
proposed change has been adopted.
General Motors questioned whether documents
submitted under a claim of confidentiality would be
PART 512; PRE 21
adequately protected until the Chief Counsel has
made a determination and suggested that the regu-
lation provide appropriate safeguards to prevent
inadvertent disclosure of documents. NHTSA is sat-
isfied that this concern is covered by the regulation
in §512.6(h) which provides that no information will
be released prior to the time that the Chief Counsel
makes a decision under the regulation. Further-
more, the purpose of this rule is to establish proce-
dures to consider claims of confidentiality and not to
specify internal agency procedures for document
protection. Consequently, no change is being made
in the Final Rule.
Ford raised an issue relating to the whether
§512.4(jXl) should reference paragraph (a) or sub-
paragraphs (aXl), (aX2) and (aX3) of this section. The
agency considered this suggestion, but believes that
all of the subparagraphs of paragraph (a) are suffi-
ciently inter-related to justify the reference to the
entire paragraph. The agency believes that the sub-
mitter should be responsible for providing a cor-
rectly sanitized second copy of information in accor-
dance with subparagraphs (aX4) and (aX5), or suffer
the consequences of waiver arising out of an inad-
vertent disclosure. NHTSA cannot agree to be re-
sponsible for finding errors in such second copies,
and believes that waiver of the claim is fair and is
the proper result of such submitter error.
Finally, Ford suggested that in §5 12.9(a) the word
"and" be replaced with "or" in the series "§§512.4,
512.6 and 512.7" because such sections would never
be invoked simultaneously in claiming or determin-
ing confidentiality. The agency agrees with this
comment and has adopted it in this Final Rule.
In consideration of the foregoing, 49 C.F.R. Part
512 is revised to read as follows:
PART 512— CONFIDENTIAL BUSINESS
INFORMATION
Sec.
512.1 Purpose and scope.
512.2 Applicability.
512.3 Definitions.
512.4 Asserting a claim for confidential treatment of
information.
512.5 Substantive standards for affording confiden-
tial treatment.
512.6 Determination of confidential treatment.
512.7 Petitions for reconsideration upon denial of a
request for confidential treatment.
512.8 Modification of confidentiality determinations.
512.9 Release of confidential business information.
512.10 Class determinations.
Appendix A to P&rt 512— Certificate In Support of
Request for Confidentiality.
Appendix B to Part 512— Class Determinations.
Appendix C to Part 512-OMB Clearance.
Authority: 49 U.S.C. 322; 5 U.S.C. 552; 15 U.S.C.
1401; 15 U.S.C. 1402; 15 U.S.C. 1407; 15 U.S.C.
1418; 15 U.S.C. 1914; 15 U.S.C. 1944; 15 U.S.C.
1990d; 15 U.S.C. 2005; 15 U.S.C. 2029; delegation of
authority at 49 C.FR. 1.50. ^
§512.1 Purpose and scope.
The purpose of this part is to establish the proce-
dvu-e by which NHTSA will consider claims that
information submitted to the agency, or which the
agency otherwise obtains, is confidential business
information, as described in 5 U.S.C. 552(bX4).
§512.2 Applicability.
(a) This part applies to all information which is
submitted to NHTSA, or which NHTSA otherwise
obtains, except as provided in paragraph 0)) of this
section.
(b) Information received as part of the procure-
ment process is subject to the Federal Acquisition
Regulation, 48 CFR, Chapter 1, as well as this part.
In any case of conflict between the Federal Acquisi-
tion Regulation and this part, the provisions of the
Federal Acquisition Regulation prevail.
§512.3 Definitions.
"Administrator" means the Administrator of the
National Highway Traffic Safety Administration.
"Chief Counsel" means the Chief Counsel of the
National Highway Traffic Safety Administration. ^
"Confidential business information" means infor- t^
mation described in 5 U.S.C. 552(bX4).
"NHTSA" means the National Highway Traffic
Safety Administration.
"Substantial competitive harm" encompasses
"significant competitive damage" under Title V of
the Motor Vehicle Information and Cost Savings Act,
15 U.S.C. 2001 et seq.
§512.4 Asserting a claim for confidential treatment
of information.
(a) Any person submitting information to NHTSA
and requesting that the information be withheld
from public disclosure as confidential business infor-
mation shall:
(1) Stamp or mark "confidential," or some other
term which clearly indicates the presence of informa-
tion claimed to be confidential, on the top of each page
containing information claimed to be confidential.
(2) On each page marked in accordance with
paragraph (aXD of this section, mark each item of
information which is claimed to be confidential with
brackets "[ ]".
(3) If an entire page is claimed to be confidential,
indicate clearly that the entire page is claimed to be
confidential. ^k
(4) Submit two copies of the documents containing ^^
PART 512; PRE 22
allegedly confidential information (except only one
copy of blueprints) and one copy of the documents
from which information claimed to be confidential
has been deleted to the Office of Chief Counsel,
National Highway Traffic Safety Administration,
Room 5219, 400 Seventh Street, S.W., Washington,
D.C. 20590. Include the name, address, and tele-
phone number of a representative for receipt of a
response from the Chief Counsel under this part.
(5) If a document containing information claimed
to be confidential is submitted in connection with an
investigation or proceeding, a rulemaking action, or
pursuant to a reporting requirement, for which there
is a public file or docket, simultaneously submit to
the appropriate NHTSA official a copy of the docu-
ment from which information claimed to be confi-
dential has been deleted. This copy will be placed in
the public file or docket pending the resolution of the
claim for confidential treatment.
(bXl) When submitting each item of information
marked confidential in accordance with paragraph
(a) of this section, the submitter shall also submit to
the Office of the Chief Counsel information support-
ing the claim for confidential treatment in accor-
dance with paragraph (bX3) and paragraph (e) of this
section.
(2) If submission of the supporting information is
not possible at the time the allegedly confidential
information is submitted, a request for an extension
of time in which to submit the information, accom-
panied by an explanation describing the reason for
the extension and the length of time needed, must be
submitted. The Chief Counsel shall determine the
length of the extension. The recipient of an exten-
sion shall submit the supporting information in
accordance with the extension determination made
by the Chief Counsel and subparagraph (3) of this
section.
(3) The supporting information must show:
(i) That the information claimed to be confidential
is a trade secret, or commercial or financial informa-
tion that is privileged or confidential.
(ii) Measures taken by the submitter of the infor-
mation to ensure that the information has not been
disclosed or otherwise made available to any person,
company, or organization other than the submitter
of the information.
(iii) Insofar as is known by the submitter of the
information, the extent to which the information has
been disclosed, or otherwise become available, to per-
sons other than the submitter of the information, and
why such disclosure or availability does not compro-
mise the confidential nature of the information.
(iv) Insofar as is known by the submitter of the
information, the extent to which the information has
appeared publicly, regardless of whether the submit-
ter has authorized that appearance or confirmed the
accuracy of the information. The submitter must
include citations to such public appearances, and an
explanation of why such appearances do not compro-
mise the confidential nature of the information.
(v) Prior determinations of NHTSA or other Fed-
eral agencies or Federal courts relating to the confi-
dentiality of the submitted information, or similar
information possessed by the submitter including
class determinations under this part. The submitter
must include any written notice or decision con-
nected with any such prior determination, or a
citation to any such notice or decision, if published
in the Federal Register.
(vi) Whether the submitter of the information
asserts that disclosure would be likely to result in
substantial competitive harm, what the harmful
effects of disclosure would be, why the effects should
be viewed as substantial, and the causal relationship
between the effects and disclosure.
(vii) If information is voluntarily submitted, why
disclosure by NHTSA would be likely to impair
NHTSA's ability to obtain similar information in the
future.
(viii) Whether the submitter of the information
asserts that disclosure would be likely to impair
other protectable government interests, what the
effect of disclosure is likely to be and why disclosure
is likely to impair such interests.
(ix) The period of time for which confidentiality is
claimed (permanently or until a certain date or until
the occurrence of a certain event) and why earlier
disclosure would result in the harms set out in
paragraph (bX2Xvi), (vii) or (viii) of this section.
(c) If any element of the showing to support a claim
for confidentiality required under paragraph (bX3) of
this section is presumptively established by a class
determination, as issued pursuant to §512.10, affect-
ing the information for which confidentiality is
claimed, the submitter of information need not es-
tablish that element again.
(d) Information in support of a claim for confiden-
tiality submitted to NHTSA under paragraph (b) of
this section must consist of objective data to the
maximum extent possible. To the extent that opin-
ions are given in support of a claim for confidential
treatment of information, the submitter of the infor-
mation shall submit in writing to NHTSA the basis
for the opinions, and the name, title and credentials
showing the expertise of the person supplying the
opinion.
(e) The submitter of information for which confi-
dential treatment is requested shall submit to
NHTSA with the request a certification in the form
set out in Appendix A from the submitter or an
agent of the submitter that a diligent inquiry has
been made to determine that the information has
not been disclosed, or otherwise appeared publicly,
PART 512; PRE 23
except as indicated in accordance with paragraphs
(bX3Xiii) and (iv) of this section.
(f) A single submission of supporting information, in
accordance with paragraph (b) of this section, may be
used to support a claim for confidential treatment of
more than one item of information claimed to be
confidential. However, general or nonspecific asser-
tions or analysis may be insufficient to form an ade-
quate basis for the agency to find that information
may be afforded confidential treatment, and may re-
sult in the denial of a claim for confidentiality.
(g) Where confidentiality is claimed for informa-
tion obtained by the submitter from a third party,
such as a supplier, the submitter of the information
is responsible for obtaining all information and a
certification from the third party necessary to com-
ply with paragraphs (b), (d) and (e) of this section.
(h) Information received by NHTSA that is identi-
fied as confidential and whose claim for confidenti-
ality is submitted in accordance with this section
will be kept confidential until a determination of its
confidentiality is made under section 512.6 of this
part. Such information will not be publicly disclosed
except in accordance with this part.
(i) A submitter of information shall promptly
amend supporting information provided under para-
graphs (b) or (e) of this section if the submitter
obtains information upon the basis of which the
submitter knows that the supporting information
was incorrect when provided, or that the supporting
information, though correct when provided, is no
longer correct and the circumstances are such that a
failure to amend the supporting information is in
substance a knowing concealment.
(j) Noncompliance with this section may result in a
denial of a claim for confidential treatment of infor-
mation. Noncompliance with paragraph (i) of this
section may subject a submitter of information to
civil penalties.
(1) If the submitter fails to comply with paragraph
(a) of this section at the time the information is
submitted to NHTSA so that the agency is not aware of
a claim for confidentiality, or the scope of a claim for
confidentiality, the claim for confidentiality may be
waived unless the agency is notified of the claim before
the information is disclosed to the public. Placing the
information in a public docket or file is disclosure to
the public within the meaning of this part, and any
claim for confidential treatment of information dis-
closed to the public may be precluded.
(2) If the submitter of the information does not
provide all of the supporting information required in
paragraphs (bX3) and (e) of this section, or if the
information is insufficient to establish that the
information may be afforded confidential treatment
under the substantive tests set out in §512.5, a
request that such information be afforded confiden-
tial protection may be denied. The Chief Counsel
may notify a submitter of information of inadequa-
cies in the supporting information, and may allow
the submitter additional time to supplement the
showing, but is under no obligation to provide either
notice or additional time to supplement the showing.
§512.5 Substantive standards for affording confi-
dential treatment.
Information submitted to or otherwise obtained by
NHTSA may be afforded confidential treatment if it
is a trade secret, or commercial or financial informa-
tion that is privileged or confidential. Information is
considered to be confidential when:
(a) Disclosure of the information would be likely to
result in substantial competitive harm to the sub-
mitter of the information; or
(b) Failure to afford the information confidential
treatment would impair the ability of NHTSA to
obtain similar information in the future; or
(c) Disclosure of the information would be likely to
impair other protectable government interests.
§512.6 Determination of confidential treatment.
(a) The decision as to whether an item of informa-
tion shall be afforded confidential treatment under
this part is made by the Office of Chief Counsel.
(b) Copies of documents submitted to NHTSA
under §512.4(aX5), from which information claimed
to be confidential or privileged has been deleted, are
placed in the public file or docket pending the
resolution of the claim for confidential treatment.
(c) When information claimed to be confidential or
privileged is requested under the Freedom of Infor-
mation Act, the determination of confidentiality is
made within ten working days after NHTSA receives
such a request, or within twenty working days in
unusual circumstances as provided under 5 U.S.C.
552(aX6).
(d) For information not requested pursuant to the
Freedom of Information Act, the determination of
confidentiality is made within a reasonable period of
time at the discretion of the Chief Counsel.
(e) The time periods prescribed in paragraph (c) of
this section may be extended by the Chief Counsel
for good cause shown on the Chief Counsel's own
motion, or on request from any person. An extension
is made only in accordance with 5 U.S.C. 552, and is
accompanied by a written statement setting out the
reasons for the extension.
(0 If the Chief Counsel believes that information
which a submitter of information asserts to be
within a class of information set out in Appendix B
is not within that class, the Chief Counsel:
(1) Notifies the submitter of the information that
the information does not fall within the class as
claimed, and briefly explains why the information
does not fall within the class; and
PART 512; PRE 24
(2) Renders a determination of confidentiality in
accordance with paragraph (g) of this section.
(g) A person submitting information to NHTSA
with a request that the information be withheld
from public disclosure as confidential or privileged
business information is given notice of the Chief
Counsel's determination regarding the request as
soon as the determination is made.
(1) If a request for confidentiality is granted, the
submitter of the information is notified in writing of
that determination and of any appropriate limitations.
(2) If a request for confidentiality is denied in
whole or in part, the submitter of the information is
notified in writing of that decision, and is informed
that the information will be made available to the
public not less than ten working days after the
submitter of the information has received notice of
the denial of the request for confidential treatment,
if practicable, or some earlier date if the Chief
Counsel determines in writing that the public inter-
est requires that the information be made available
to the public on such earlier date. The written
notification of a denial specifies the reasons for
denying the request.
(h) There will be no release of information proc-
essed pursuant to this section until the Chief Coun-
sel advises the appropriate office(s) of NHTSA that
the confidentiality decision is final according to this
section, §512.7 or §512.9.
§512.7 Petitions for reconsideration upon denial of
a request for confidential treatment.
(a) A submitter of information whose request for
confidential treatment is denied may petition for
reconsideration of that denial. Petitions for reconsid-
eration must be addressed to and received by the
Office of Chief Counsel prior to the date on which
the information would otherwise be made available
to the public. The determination by the Chief Coun-
sel upon such petition for reconsideration shall be
administratively final.
(b) If submission of a petition for reconsideration is
not feasible by the date on which the information
would otherwise be made available to the public, a
request for an extension of time in which to submit
a petition, accompanied by an explanation describ-
ing the reason for the request and the length of time
needed, must be received by the Office of Chief
Counsel by that date. The Chief Counsel determines
whether to grant or deny the extension and the
length of the extension.
(c) Upon receipt of a petition or request for an
extension, the Chief Counsel shall postpone making
the information available to the public in order to
consider the petition, unless the Chief Counsel de-
termines in writing that disclosure would be in the
public interest.
(d) If a petition for reconsideration is granted, the
petitioner is notified in writing of that determina-
tion and of any appropriate limitations.
(e) If a petition for reconsideration is denied in
whole or in part or a request for an extension for
additional time to submit a petition for reconsider-
ation is denied, the petitioner is notified in writing
of that denial, and is informed that the information
will be made available to the public not less than ten
working days after the petitioner has received notice
of the denial of the petition, if practicable, or some
earlier date if the Chief Counsel determines in
writing that the public interest requires that the
information be made available to the public on such
earlier date. The written notification of a denial
specifies the reasons for denying the petition.
§512.8 Modification of confidentiality determinations.
(a) A determination that information is confiden-
tial or privileged business information remains in
effect in accordance with its terms, unless modified
by a later determination based upon:
(1) Newly discovered or changed facts,
(2) A change in the applicable law,
(3) A class determination under §512.10, or
(4) A finding that the prior determination is
clearly erroneous.
(b) If NHTSA believes that an earlier determina-
tion of confidentiality should be modified based on
one or more of the factors listed in paragraphs (aXD
through (aX4) of this section, the submitter of the
information is notified in writing that NHTSA has
modified its earlier determination and of the reasons
for that modification, and is informed that the
information will be made available to the public in
not less than ten working days from the date of
receipt of notice under this paragraph. The submit-
ter may seek reconsideration of the modification
pursuant to §512.7.
§512.9 Release of confidential business information.
(a) Information that has been claimed or deter-
mined to be confidential business information under
§§512.4, 512.6 or 512.7 may be disclosed to the
public by the Administrator notwithstanding such
determination or claim if disclosure would be in the
public interest as follows:
(1) Information obtained under Part A, Subchapter
I of the National Traffic and Motor Vehicle Safety
Act, relating to the establishment, amendment, or
modification of Federal motor vehicle safety stan-
dards, may be disclosed when relevant to a proceed-
ing under that part.
(2) Information obtained under Part B, Subchapter
I of the National Traffic and Motor Vehicle Safety
PART 512; PRE 25
Act, relating to motor vehicle safety defects, and
failures to comply with applicable motor vehicle
safety standards, may be disclosed if the Adminis-
trator determines that disclosure is necessary to
carry out the purposes of the Act.
(3) Information obtained under Title I, V or VI of
the Motor Vehicle Information and Cost Savings Act
may be disclosed when that information is relevant
to a proceeding under the title under which the
information was obtained.
(b) No information is disclosed under this section
unless the submitter of the information is given
written notice of the Administrator's intention to
disclose information under this section. Written no-
tice is normally given at least ten working days
before the day of release, although the Administra-
tor may provide shorter notice if the Administrator
finds that such shorter notice is in the public inter-
est. The notice under this paragraph includes a
statement of the Administrator's reasons for deter-
mining to disclose the information, and affords the
submitter of the information an opportunity to com-
ment on the contemplated release of information.
The Administrator may also give notice of the con-
templated release of information to other persons,
and may allow these persons the opportunity to
comment. When a decision is made to release infor-
mation pursuant to this section, the Administrator
will consider ways to make the release with the least
possible adverse effects to the submitter.
(c) Notwithstanding any other provision of this
part, information which has been determined or
claimed to be confidential business information,
may be released:
(1) lb Congress;
(2) Pursuant to an order of a court with valid
jurisdiction;
(3) To the Office of the Secretary, United States
Department of Transportation and other Executive
branch offices or other Federal agencies in accord-
ance with applicable laws;
(4) With the consent of the submitter of the
information;
(5) lb contractors, if necessary for the performance
of a contract with the Administration. In such in-
stances, the contract limits further release of the
information to named employees of the contractor
with a need to know and provides that unauthorized
release constitutes a breach of the contract for which
the contractor may be liable to third parties.
§512.10 Class determinations.
(a) The Chief Counsel may issue a class determi-
nation relating to confidentiality under this section
if the Chief Counsel determines that one or more
characteristics common to each item of information
in that class will in most cases necessarily result in
identical treatment of each item of information
under this part, and that it is appropriate to treat all
such items as a class for one or more pxuT)oses under
this part. The Chief Counsel obtains the concurrence
of the Office of the General Counsel, United States ^
Department of Transportation, for any class deter- ™
mination that has the effect of raising the presump-
tion that all information in that class is eligible for
confidential treatment. Class determinations are
published in the Federal Register.
(b) A class determination clearly identifies the
class of information to which it pertains.
(c) A class determination may state that all of the
information in the class:
(1) Is or is not governed by a particular section of
this part, or by a particular set of substantive
criteria under this part.
(2) Fails to satisfy one or more of the applicable
substantive criteria, and is therefore ineligible for
confidential treatment,
(3) Satisfies one or more of the applicable substan-
tive criteria, and is therefore eligible for confidential
treatment, or
(4) Satisfies one of the substantive criteria during
a certain period of time, but will be ineligible for
confidential treatment thereafter.
(d) Class determinations will have the effect of
establishing rebuttable presumptions, and do not
conclusively determine any of the factors set out in
paragraph (c) of this section.
Appendix A to Part 512— Certificate in Support
of Request for Confidentiality
Certificate in Support of Request for Confidentiality
I, , pursuant to the provi-
sions of 49 C.F.R. 512, state as follows:
(1)1 am (official) and I am authorized by (company)
to execute documents on behalf of (company):
(2) The information contained in (pertinent docu-
ment[s]) is confidential and proprietary data and is
being submitted with the claim that it is entitled to
confidential treatment under 5 U.S.C. §552(bX4)
(as incorporated by reference in and modified by
the statute under which the information is being
submitted.)
(3) I have personally inquired of the responsible
(company) personnel who have authority in the nor-
mal course of business to release the information for
which a claim of confidentiality has been made to
ascertain whether such information has ever been
released outside (company).
(4) Based upon such inquiries, to the best of my
knowledge, information and belief the information
for which (company) has claimed confidential treat-
ment has never been released or become available
outside (company) except as hereinafter specified:
(5) I make no representations beyond those con-
#
#
PART 512; PRE 26
tained in this certificate and in particular I make no
representations as to whether this information may
become available outside (company) because of un-
authorized or inadvertent disclosure except as stated
in Paragraph 4; and
(6) I certify under penalty of perjury that the
foregoing is true and correct. Executed on this the
. (If executed outside of the
United States of America: I certify under penalty of
perjury under the laws of the United States of
America that the foregoing is true and correct.)
(signature of official)
only until the date on which the specific model to
which the plan pertains is first offered for sale);
(3) Future vehicle production or sales figures for
specific models (to be protected only until the termi-
nation of the production period for the model year
vehicle to which the information pertains).
Appendix C to Part 512— 0MB Clearance
The 0MB Clearance number for this regulation is
2127-0025.
Issued on November 21, 1989.
Appendix B to Part 512— Class Determinations.
The Administration has determined that the fol-
lowing types of information would presumptively be
likely to result in substantial competitive harm if
disclosed to the public:
(1) Blueprints and engineering drawings contain-
ing process of production data where the subject
could not be manufactured without the blueprints or
engineering drawings except after significant re-
verse engineering;
(2) Future specific model plans (to be protected
Jeffrey R. Miller
Acting Administrator
National Highway Traffic
Safety Administration
54 F.R. 48892
November 28, 1989
PART 512; PRE 27-28
#
I
PART 512— CONFIDENTIAL BUSINESS INFORMATION
(Docket No. 78-10; Notice 3)
§512.1 Purpose and Scope.
The purpose of this part is to establish the pro-
cedure by which NHTSA will consider claims that
information submitted to the agency, or which the
agency otherwise obtains, is confidential business in-
formation, as described in 5 U.S.C. 552(b)(4).
§512.2 Applicability.
(a) This part applies to all information which is
submitted to NHTSA, or which NHTSA otherwise
obtains, except as provided in paragraph (b) of this
section.
(b) Information received as part of the procure-
ment process, is subject to the Federal Acquisition
Regulations, 48 CFR, Chapter 1, as well as this part.
In any case of conflict between the Federal Acquisi-
tion Regulations and this part, the provisions of the
Federal Acquistion Regulations prevail.
§ 512.3 Definitions.
"Administrator" means the Administrator of the
National Highway Traffic Safety Administration.
"Chief Counsel" means the Chief Counsel of the
National Highway Traffic Safety Administration.
"Confidential business information" means infor-
mation described in 5 U.S.C. 552(b)(4).
"NHTSA" means the National Highway Traffic
Safety Administration.
("Substantial competitive harm" encompasses
"significant competitive damage" under Title V of
the Motor Vehicle Information and Cost Savings Act
15 U.S.C 2001 et seq. (54 F.R. 48892— November 28,
1989. Effective: November 28, 1989)1
§ 512.4 Asserting a claim for confidential treatment
of information.
(a) Any person submitting information to NHTSA
and requesting that the information be withheld
from public disclosure as confidential business infor-
mation shall—
(1) Stamp or mark "confidential" or some other
term which clearly indicates the presence of informa-
tion claimed to be confidential, on the top of each page
containing information claimed to be confidential.
(2) On each page marked in accordance with
paragraph (a)(1) on this section, mark each item of
information which is claimed to be confidential with
brackets "[ ]".
(3) If an entire page is claimed to be confidential,
indicate clearly that the entire page is claimed to be
confidential.
(4) [Submit two copies of the documents contain-
ing allegedly confidential information (except only one
copy of blueprints) and one copy of the documents
from which information claimed to be confidential has
been deleted to the Office of Chief Counsel, National
Highway Traffic Safety Administration, Room 5219.
400 Seventh Street, S.W., Washington, D.C. 20590.
Include the name, address, and telephone number of
a representative for receipt of a response from the
Chief Counsel under this part. (54 F.R. 48892—
November 28, 1989. Effective: November 28, 1989)1
[(5) If a document containing information claim-
ed to be confidential is submitted in connection with
an investigation or proceeding, a rulemaking action,
or pursuant to a reporting requirement, for which
there is a public file or docket, simultaneously sub-
mit to the appropriate NHTSA official a copy of the
document from which information claimed to be con-
fidential has been deleted. This copy will be placed
in the public file or docket pending the resolution of
the claim for confidential treatment.
(b)(1) When submitting each item of information
marked confidential in accordance with paragraph (a)
of this section, the submitter shall also submit to the
Office of the Chief Counsel information supporting
the claim for confidential treatment in accordance
with paragraph (bX3) and paragraph (e) of this section.
(2) If submission of the supporting information
is not possible at the time the allegedly confidential
information is submitted, a request for an extension
of time in which to submit the information, accom-
panied by an explanation describing the reason for
(Rev. 11/28/89)
PART 512-1
the extension and the length of time needed, must
be submitted. The Chief Counsel shall determine the
length of the extension. The recipient of an exten-
sion shall submit the supporting information in ac-
cordance with the extension determination made by
the Chief Counsel and subparagraph (3) of this
section.
(3) The supporting information must show:
(i) That the information claimed to be con-
fidential is a trade secret, or commercial or finan-
cial information that is privileged or confidential.
(ii) Measures taken by the submitter of the in-
formation to ensure that the information has not
been disclosed or otherwise made available to any
person, company, or organization other than the sub-
mitter of the information.
(iii) Insofar as is known by the submitter of
the information, the extent to which the informa-
tion has been disclosed, or otherwise become
available, to persons other than the submitter of the
information, and why such disclosure or availabil-
ity does not compromise the confidential nature of
the information.
(iv) Insofar as is known by the submitter of
the information, the extent to which the informa-
tion has appeared publicly, regardless of whether the
submitter has authorized that appearance or con-
firmed the accuracy of the information. The submit-
ter must include citations to such public ap-
pearances, and an explanation of why such ap-
pearances do not compromise the confidential nature
of the information.
(v) Prior determinations of NHTSA or other
Federal agencies or Federal courts relating to the
confidentiality of the submitted information, or
similar information possessed by the submitter in-
cluding class determinations under this part. The
submitter must include any written notice or deci-
sion connected with any such prior determination,
or a citation to any such notice or decision, if pub-
lished in the Federal Register.
(vi) Whether the submitter of the information
asserts that disclosure would be likely to result in
substantial competitive harm, what the harmful
effects of disclosure would be, why the effects should
be viewed as substantial, and the causal relationship
between the effects and disclosure.
(vii) If information is voluntarily submitted,
why disclosure by NHTSA would be likely to impair
NHTSA's ability to obtain similar information in the
future.
(viii) Whether the submitter of the informa-
tion asserts that disclosure would be likely to impair
other protectable government interests, what the
effect of disclosure is likely to be and why disclosure
is likely to impair such interests.
(ix) The period of time for which confidential-
ity is claimed (permanently or until a certain date
or until the occurrence of a certain event) and why
earlier disclosure would result in the harms set out
in paragraph (b)(2Xvi), (vii) or (viii) of this section.
(c) If any element of the showing to support a
claim for confidentiality required under paragraph
(b)(3) of this section is presumptively established by
a class determination, as issued pursuant to
§ 512.10, affecting the information for which con-
fidentiality is claimed, the submitter of information
need not establish that element again.
(d) Information in support of a claim for confiden-
tiality submitted to NHTSA under paragraph (b) of
this section must consist of objective data to the
maximum extent possible. To the extent that opi-
nions are given in support of a claim for confiden-
tial treatment of information, the submitter of the
information shall submit in writing to NHTSA the
basis for the opinions, and the name, title and
credentials showing the expertise of the person sup-
plying the opinion.
(e) The submitter of information for which con-
fidential treatment is requested shall submit to
NHTSA with the request a certification in the form
set out in Appendix A from the submitter or an
agent of the submitter that a diligent inquiry has
been made to determine that the information has not
been disclosed, or otherwise appeared publicly,
except as indicated in accordance with paragraphs
(b)(3)(iii) and (iv) of this section.
(f) A single submission of supporting information,
in accordance with paragraph (b) of this section, may
be used to support a claim for confidential treatment
of more than one item of information claimed to be
confidential. However, general or nonspecific asser-
tions or analysis may be insufficient to form an ade-
quate basis for the agency to find that information
may be afforded confidential treatment, and may
result in the denial of a claim for confidentiality.
(g) Where confidentiality is claimed for informa-
tion obtained by the submitter from a third party,
such as a supplier, the submitter of the information
is responsible for obtaining all information and a cer-
tification from the third party necessary to comply
with paragraphs (b), (d) and (e) of this section.
#
t
PART 512-2
(h) Information received by NHTSA that is iden-
tified as confidential and whose claim for confiden-
tiality is submitted in accordance with this section
will be kept confidential until a determination of its
confidentiality is made under section 512.6 of this
part. Such information will not be publicly disclosed
except in accordance with this part.
(i) A submitter of information shall promptly
amend supporting information provided under
paragraphs (b) or (e) of this section if the submitter
obtains information upon the basis of which the sub-
mitter knows that the supporting information was
incorrect when provided, or that the supporting in-
formation, though correct when provided, is no
longer correct and the circumstances are such that
a failure to amend the supporting information is in
substance a knowing concealment.
(j) Noncompliance with this section may result in
a denial of a claim for confidential treatment of in-
formation. Noncompliance with paragraph (i) of this
section may subject a submitter of information to
civil penalties.
(1) If the submitter fails to comply with
paragraph (a) of this section at the time the infor-
mation is submitted to NHTSA so that the agency
is not aware of a claim for confidentiality, or the
scope of a claim for confidentiality, the claim for con-
fidentiality may be waived unless the agency is
notified of the claim before the information is dis-
closed to the public. Placing the information in a
public docket or file is disclosure to the public within
the meaning of this part, and any claim for confiden-
tial treatment of information disclosed to the public
may be precluded.
(2) If the submitter of the information does not
provide all of the supporting information required
in paragraphs (b)(3) and (e) of this section, or if the
information is insufficient to establish that the in-
formation may be afforded confidential treatment
under the substantive tests set out in § 512.5, a
request that such information be afforded confiden-
tial protection may be denied. The Chief Counsel
may notify a submitter of information of inade-
quacies in the supporting information, and may allow
the submitter additional time to supplement the
showing, but is under no obligation to provide either
notice or additional time to supplement the showing.
54 F.R. 48892— November 28. 1989. Effective:
November 28, 1989)1
§ 512.5 Substantive standards for affording
confidential treatment.
Ilnformation submitted to or otherwise obtained
by NHTSA may be afforded confidential treatment
if it is a trade secret, or commercial or financial
information that is privileged or confidential.
Information is considered to be confidential when:
(a) Disclosure of the information would be likely
to result in substantial competitive harm to the sub-
mitter of the information; or
(b) Failure to afford the information confidential
treatment would impair the ability of NHTSA to
obtain similar information in the future; or
(c) Disclosure of the information would be likely
to impair other protectable government interests.
(54 F.R. 48892— November 28, 1989. Effective:
November 28, 1989)1
§ 512.6 Determination of confidential treatment.
[(a) The decision as to whether an item of infor-
mation shall be afforded confidential treatment
under this part is made by the Office of Chief
Counsel.
(b) Copies of documents submitted to NHTSA
under § 512.4(a)(5) from which information claimed
to be confidential or privileged has been deleted, are
placed in the public file or docket pending the resolu-
tion of the claim for confidential treatment.
(c) When information claimed to be confidential
or privileged is requested under the Freedom of In-
formation Act, the determination of confidentiality
is made within ten working days after NHTSA
receives such a request, or within twenty working
days in unusual circumstances as provided under 5
U.S.C. 552(aK6).
(d) For information not requested pursuant to the
Freedom of Information Act, the determination of
confidentiality is made within a reasonable period
of time at the discretion of the Chief Counsel.
(e) The time periods prescribed in paragraph (c)
of this section may be extended by the Chief Counsel
for good cause shown on the Chief Counsel's own
motion, or on request from any person. An exten-
sion is made only in accordance with 5 U.S.C. 552,
and is accompanied by a written statement setting
out the reasons for the extension.
(f) If the Chief Counsel believes that information
which a submitter of information asserts to be within
a class of information set out in Appendix B is not
within that class, the Chief Counsel:
(1) Notifies the submitter of the information
that the information does not fall within the class
as claimed, and briefly explains why the information
does not fall within the class; and
(2) Renders a determination of confidentiality
in accordance with paragraph (g) of this section.
(Rev. 11/28/89)
PART 512-3
(g) A person submitting information to NHTSA
with a request that the information be withheld from
pubHc disclosure as confidential or privileged
business information is given notice of the Chief
Counsel's determination regarding the request as
soon as the determination is made.
(1) If a request for confidentiality is granted, the
submitter of the information is notified in writing
of that determination and of any appropriate
limitations.
(2) If a request for confidentiality is denied in
whole or in part, the submitter of the information
is notified in writing of that decision, and is informed
that the information will be made available to the
public not less than ten working days after the sub-
mitter of the information has received notice of the
denial of the request for confidential treatment, if
practicable, or some earlier date if the Chief Counsel
determines in writing that the public interest re-
quires that the information be made available to the
public on such earlier date. The written notification
of a denial specifies the reasons for denying the
request.
(h) There will be no release of information pro-
cessed pursuant to this section until the Chief
Counsel advises the appropriate office(s) of NHTSA
that the confidentiality decision is final according to
this section, § 512.7 or § 512.9. (54 F.R.
48892— November 28, 1989. Effective: November 28,
1989)]
§ 512.7 [Petitions for reconsideration upon denial
of a request for confidential treatment.
(a) A submitter of information whose request for
confidential treatment is denied may petition for
reconsideration of that denial. Petitions for recon-
sideration must be addressed to and received by the
Office of Chief Counsel prior to the date on which
the information would otherwise be made available
to the public. The determination by the Chief
Counsel upon such petition for reconsideration shall
be administratively final.
(b) If submission of a petition for reconsideration
is not feasible by the date on which the information
would otherwise be made available to the public, a
request for an extension of time in which to submit
a petition, accompanied by an explanation describ-
ing the reason for the request and the length of time
needed, must be received by the Office of Chief
Counsel by that date. The Chief Counsel determines
whether to grant or deny the extension and the
length of the extension.
(c) Upon receipt of a petition or request for an ex-
tension, the Chief Counsel shall postpone making the
information available to the public in order to con-
sider the petition, unless the Chief Counsel deter-
mines in writing that disclosure would be in the
public interest.
(d) If a petition for reconsideration is granted, the
petitioner is notified in writing of that determina-
tion and of any appropriate limitations.
(e) If a petition for reconsideration is denied in
whole or in part or a request for an extension for
additional time to submit a petition for reconsidera-
tion is denied, the petitioner is notified in writing
of that denial, and is informed that the information
will be made available to the public not less than ten
working days after the petitioner has received notice
of the denial of the petition, if practicable, or some
earlier date if the Chief Counsel determines in
writing that the public interest requires that the in-
formation be made available to the public on such
earlier date. The written notification of a denial
specifies the reasons for denying the petition. (54
F.R. 48892— November 28, 1989. Effective: November
28, 1989)1
§ 512.8 {IVIodification of confidentiality
determinations.
(a) A determination that information is confiden-
tial or privileged business information remains in ef-
fect in accordance with its terms, unless modified
by a later determination based upon:
(1) Newly discovered or changed facts,
(2) A change in the applicable law,
(3) A class determination under § 512.10, or
(4) A finding that the prior determination is
clearly erroneous.
(b) If NHTSA believes that an earlier determina-
tion of confidentiality should be modified based on
one or more of the factors listed in paragraphs (a)(1)
through (aX4) of this section, the submitter of the
information is notified in writing that NHTSA has
modified its earlier determination and of the reasons
for that modification, and is informed that the in-
formation will be made available to the public in not
less than ten working days from the date of receipt
of notice under this paragraph. The submitter may
seek reconsideration of the modification pursuant
to § 512.7. 54 F.R. 48892— November 28, 1989. Effec-
tive: November 28, 1989.)]
I
#
(Rev. 11/28/89)
PART 512-4
§ 512.9 [Release of confidential business
information.
(a) Information that has been claimed or deter-
mined to be confidential business information under
§ 512 4. 512 6 or 512.7 may be disclosed to the public
by the Administrator notwithstanding such deter-
mination or claim if disclosure would be in the public
interest as follows:
(1) Information obtained under Part A, Sub-
chapter I of the National Traffic and Motor Vehicle
Safety Act, relating to the establishment, amend-
ment, or modification of Federal motor vehicle
safety standards, may be disclosed when relevant
to a proceeding under that part.
(2) Information obtained under Part B, Sub-
chapter I of the National Traffic and Motor Vehicle
Safety Act, relating to motor vehicle safety defects,
and failures to comply with applicable motor vehi-
cle safety standards, may be disclosed if the
Administrator determines that disclosure is
necessary to carry out the purposes of the Act.
(3) Information obtained under Title 1, V or VI
of the Motor Vehicle Information and Cost Savings
Act may be disclosed when that information is rele-
vant to a proceeding under the title under which the
information was obtained.
(b) No information is disclosed under this section
unless the submitter of the information is given writ-
ten notice of the Administrator's intention to
disclose information under this section. Written
notice is normally given at least ten working days
before the day of release, although the Admin-
istrator may provide shorter notice if the Admin-
istrator finds that such shorter notice is in the public
interest. The notice under this paragraph includes
a statement of the Administrator s reasons for deter-
mining to disclose the information, and affords the
submitter of the information an opportunity to com-
ment on the contemplated release of information.
The Administrator may also give notice of the con-
templated release of information to other persons,
and may allow these persons the opportunity to com-
ment. When a decision is made to release informa-
tion pursuant to this section, the Administrator will
consider ways to make the release with the least
possible adverse effects to the submitter.
(c) Notwithstanding any other provision of this
part, information which has been determined or
claimed to be confidential business information, may
be released:
(1) To Congress;
(2) Pursuant to an order of a court with valid
jurisdiction;
(3) To the Office of the Secretary, United States
Department of Transportation and other Executive
branch offices or other Federal agencies in accor-
dance with applicable laws;
(4) With the consent of the submitter of the
information;
(5) To contractors, if necessary for the perfor-
mance of a contract with the Administration. In such
instances, the contract limits further release of the
information to named employees of the contractor
with a need to know and provides that unauthorized
release constitutes a breach of the contract for which
the contractor may be liable to third parties. (54 F.R.
November 28,1989. Effective: November 28, 1989)1
§ 512.10 [Class determinations.
(a) The Chief Counsel may issue a class determina-
tion relating to confidentiality under this section if
the Chief Counsel determines that one or more
characteristics common to each item of information
in that class will in most cases necessarily result in
identical treatment of each item of information
under this part, and that it is appropriate to treat
all such items as a class for one or more purposes
under this part. The Chief Counsel obtains the con-
currence of the Office of the General Counsel,
United States Department of Transportation, for
any class determination that has the effect of rais-
ing the presumption that all information in that class
is eligible for confidential treatment. Class deter-
minations are published in the Federal Register.
(b) A class determination clearly identifies the
class of information to which it pertains.
(c) A class determination may state that all of the
information in the class:
(1) Is or is not governed by a particular section
of this part, or by a particular set of substantive
criteria under this part.
(2) Fails to satisfy one or more of the applicable
substantive criteria, and is therefore ineligible for
confidential treatment,
(3) Satisfies one or more of the applicable
substantive criteria, and is therefore eligible for con-
fidential treatment, or
(4) Satisfies one of the substantive criteria dur-
ing a certain period of time, but will be ineligible for
confidential treatment thereafter.
(d) Class determinations will have the effect of
establishing rebuttable presumptions, and do not
conclusively determine any of the factors set out in
paragraph (c) of this section. (54 F.R.
48892— November 28, 1989. Effective: November 28,
1989)1
PART 512-5-6
#
I
I
APPENDIX A
Certificate in Support of Request for
Confidentiality
United States of America: I certify under penalty
of perjury under the laws of the United States of
America that the foregoing is true and correct.)
I,
pursuant to the
provicions of 49 C.F.R. 512 state as follows:
(1) I am (official) and I am authorized by (com-
pany) to execute documents on behalf of (company).
(2) The information contained in (pertinent
document/ s J) is confidential and proprietary data and
is being submitted with the claim that it is entitled
to confidential treatment under 5 U.S.C. 552(b)(4)
[as incorporated by reference in a modified by
§ 505(d)(1) of Title 5 of Motor Vehicle Information
and Cost Savings Act.]
(3) I have personally inquired of the responsi-
ble (company) personnel who have authority in the
normal course of business to release the information
for which a claim of confidentiality has been made
to ascertain whether such information has ever been
released outside {company.
(4) Based upon such inquires, to the best of my
knowledge, informaton for which (company) has
claimed confidential treatment has never beem
release or become available outside (company) ex-
cept as hereinafter specified.
(5) I make no representation beyond those con-
tained in this certificate and in particular I make no
representations as to whether this information may
become available outside (company) because of
unatuhorized or inadvertent disclosure except as
stated in Paragraph 4; and
(6) [I certify under penalty of perjury that the
foregoing is true and correct. Executed on this the
. (If executed outside of the
(Official)
APPENDIX B
Class Determination
The Administration has determined that the
following types of information would presumptively
result in significant competitive damage or would
presumptively be likely to result in substantial com-
petitive harm if desclosed to the public—
[(1) Blueprints and engineering drawings con-
taining process of production data where the sub-
ject could not be manufactured without the
blueprints or engineering drawings except after
significant reverse engineering;
(2) Future specific model plans (to be protected
only until the date on which the specific model to
which the plan pertains is first offered for sale);
(3) Future vehicle production or sales figures
for specific models (to be protected only until the ter-
mination of the production period for the model year
vehicle to which the information pertains). (54 F.R.
48892— November 28, 1989. Effective 28, 1989.)]
APPENDIX C
0MB Clearance
The 0MB clearance number for this regulation is
2127-10025].
(Rev. 11/2S/89)
PART 512-7-8
I
€
Effective: November 4, 1975
PREAMBLE TO PART 520— PROCEDURES FOR CONSIDERING
ENVIRONMENTAL IMPACTS
[Docket No. 73-32; Notice 2]
The purpose of this amendment to Title 49 of
the Code of Federal Regulations is to add a new
Part 520 establishing procedures for considering
environmental impacts.
A notice of proposed procedures on this sub-
ject was published on December 21, 1973 (38
FR 35018). Two comments were received on the
proposed procedures : one, from the United States
Environmental Protection Agency, supported
the proposal and considered it to be responsive
to the National Environmental Policy Act of
1969 (NEPA) and the NEPA guidelines pre-
pared by the Council on Environmental Quality ;
the second, from General Motors Corporation,
had some objections which have been carefully
considered in this issuance of final procedures.
In view of some of GM's comments, the issuance
of the Department of Transportation (DOT)
Order 5610.1B, "Procedures for Considering
Environmental Impacts," (39 FR 35234), and
further consideration within the NHTSA, the
final procedures have been slightly modified.
Defiiitions. In order to differentiate a written
environmental analysis submitted to the agency
by its grantees or contractoi-s from that under-
taken by the agency itself, the meaning of the
term "environmental assessment" has been
changed from an internal agency evaluation pro-
cess to an evaluation process external to the
agency, and the term "environmental review" has
been added to denote the written environmental
analysis undertaken by the agency.
Applicability. "Consolidation of statements,"
section 520.4(f), allowing actions which have sub-
stantially similar environmental impacts to be
covered by a single impact statement or environ-
mental review culminating in a negative declara-
tion is included in this final issuance.
GM commented that the increase in costs illus-
tration used as an example for the project
amendments exception in section 520.4(d)(5)
(herein renumbered as 520.4(e) (5) ) is ambiguous
and could also permit a circumvention of the
initial environmental evaluation process. In re-
sponse to this, the section has been revised to
make it clear that only project amendments with
no environmental consequences are excepted from
the review process. The criteria for determining
which project amendments are excepted is in-
tended to match that for excepting minor agency
actions (§ 520.4)e) (6)).
Section 520.4(d)(6) of the proposed proce-
dures was erroneously included and is accord-
ingly deleted.
Guidelines. The general guidelines have been
reworded, upon GM's request, to clarify that an
environmental impact statement or negative de-
claration is to be prepared for any of the three
situations enumerated under this general cate-
gory.
Section 520.5(b), Specif c guidelines, has been
modified to reflect GM's comments, revised DOT
Order 5640.1, and further determinations within
the NHTSA. Subparagraphs (7)-(12) have
been added and the original subparagraph (7)
has been renumbered as (13). The agency has
determined that these additional classes of actions
should be enumerated in order to better identify
those typical areas of environmental concern the
NHTSA's activities may impact.
Research activities. In accordance with section
4 of final DOT Order 5610.1B, proposed imple-
menting instructions for assessing the environ-
mental consequences of research activities will be
prepared by the Assistant Secretary of Systems
Development and Technology', with the concur-
rence of the NHTSA. Until these final proce-
PART 520— PRE 1
Effective November 4, 1975
dures are promulgated, however, the guidelines
set forth on this subject in the proposed proce-
dures will be followed.
Procedures. The procedures subpart includes
a number of additions and modifications. With
respect to certain actions enumerated in Subpart
A which may have an environmental significance,
the official responsible for the action will prepare
reviews that are much more comprehensive than
the assessments proposed by the previous notice.
He will conclude his review with a brief written
report, to be included in the proposed or ongo-
ing action, in which he will either recommend
that a draft environmental impact statement
(DEIS) be prepared to determine the environ-
mental impact involved, or declare that the action
would not have a significant effect on the quality
of the environment. A review report that
concludes with a "negative declaration" is not
required to go through the extensive comment
and review process provided for the DEIS, but
it will be retained by the agency and made avail-
able to the public upon request.
Once an Associate Administrator, the Chief
Counsel, or a Regional Administrator (in con-
sultation with his Governor's Representative)
determines, that an agency action under his juris-
diction requires the preparation of a DEIS, he
will transmit a "notice of intent" to prepare the
DEIS to the appropriate Federal, State, and
local agencies and publish the notice in the
Federal Register. In addition, a schedule of
procedures and review will be developed in each
case to assure completion of the DEIS before
the first significant point of decision in the pro-
gram or project development process. Once the
I
DEIS is circulated for review and comment, not
less than 45 days in any case will be allowed for
comment. A public hearing on a DEIS will be
held when appropriate, and notice of the hearing
will be issued in the Federal Register at least
30 days before the hearing. Final environmental
impact statements (FEIS) will be prepared and
distributed as soon as practicable after the ex-
piration of the comment and hearing process.
In accordance with the final DOT order
5610.1B, a new section 520.34 has been added,
establishing procedures for the review of environ-
mental statements prepared by other agencies.
Four attachments having a direct bearing on
the preparation of impact statements have been
added to this issuance of the final rule and will
be followed by this agency.
Effective date: November 4, 1975.
In consideration of the foregoing, a new Part
520, "Procedures for Considering Environmental
Impacts," is added as § 520 of Title 49, Code of
Federal Regulations. . . .
(Sees. 102(2) (A), 102(2) (C), Public Law 91-
190, 83 Stat. 853 (42 U.S.C. 4332); sees. 2(b),
4(f), Public Law 89-670, 80 Stat. 931 (49 U.S.C.
1651(b), 1653(f)); Executive Order 11514, 35
FR 4247; 40 CFR Part 1500; DOT Order
5610.1B, 39 FR 35234; delegations of authority
at 49 CFR 1.45, 1.51.)
Issued on Nov. 4, 1975.
James B. Gregory
Administrator
40 F.R. 52395
November 10, 1975
I
t
PART 520— PRE 2
PART 520— PROCEDURES FOR CONSIDERING ENVIRONMENTAL IMPACTS
Sec.
520.1
520.2
520.3
520.4
520.5
520.21
SUBPART A-GENERAL
Purpose and scope.
Policy.
Definitions.
Applicability.
Guidelines for identifying major actions
significantly affecting the environment.
SUBPART B— PROCEDURES
Preparation of environmental reviews,
negative declarations, and notices of
intent.
520.22 IVIaintenance of list of actions.
520.23 Preparation of draft environmental im-
pact statements.
520.24 Internal processing of draft environmental
impact statements.
520.25 External review of draft environmental
impact statements.
520.26 Public hearings.
520.27 Legislative actions.
520.28 Preparation of final environmental impact
statements.
520.29 Internal review of final environmental
impact statements.
520.30 Availability of final environmental im-
pact statements.
520.31 Amendments or supplements.
520.32 Emergency action procedures.
520.33 Timing of proposed NHTSA actions.
520.34 Review of environmental statements pre-
pared by other agencies.
Attachment 1 — Form and content of statement.
Attachment 2— Areas of environmental impact
and Federal agencies and Fed-
eral-State agencies with jurisdic-
tion by law or special expertise
to comment thereon.
Attachment 3— Offices within Federal Agencies
and Federal-State agencies for in-
formation regarding the agencies'
NEPA activities and for receiving
other agencies' impact statements
for which comments are requested.
Attachment 4— State and local agency review of
impact statements.
SUBPART A— GENERAL
§ Purpose and scope.
(a) Section 102(2) (C) of the National En-
vironmental Policy Act of 1969 (83 Stat. 853;
42 U.S.C. 4332(2) (C)), as implemented by Ex-
ecutive Order 11514 (3 CFR, 1966-1970 Comp.,
p. 902) and the Council on Environmental
Quality's Guidelines of April 23, 1971 (36 F.R.
7724), requires that all agencies of the Federal
Government prepare detailed environmental
statements on proposals for legislation and other
major Federal actions significantly affecting the
quality of the human environment. The purpose
of the Act is to build into the agency decision-
making process careful consideration of all en-
vironmental aspects of proposed actions.
(b) This part specifies National Highway
Traffic Safety Administration (NHTSA) pro-
cedures for conducting environmental assess-
ments and reviews, and for the preparation of
environmental impact statements on proposals
for -iegislation and other major agency actions
significantly affecting the quality of the human
environment.
§ 520.0 Policy.
The agency will strive to carry out the full
intent and purpose of the National Environ-
mental Policy Act of 1969 and related orders and
statutes, and take positive steps to avoid any
PART 520-1
f
action which could adversely affect the quality
of the human environment.
§ 520.3 Definitions.
(a) "Environmental assessment" is a written
analysis describing the environmental impact of
a proposed or ongoing agency action, submitted
to the agency either by its grantees or contractors,
or by any person outside the agency as part of
any program or project proposal within the scope
of activities listed in § 520.4(b).
(b) "Environmental review" is a formal evalu-
ation undertaken by the agency, culminating in
a brief document (the environmental review re-
port), to determine whether a proposed or on-
going NHTSA action may have a significant
impact on the environment. The review docu-
ment will be included in the proposed or ongoing
agency action, and either support a negative de-
claration or recommend the preparation of a
draft environmental impact statement.
(c) "Draft environmental impact statement"
(DEIS) means a preliminary statement on the
environmental impact of a proposed or ongoing
NHTSA action which is circulated for comment
and review within and outside NHTSA.
(d) "Final environmental impact statement"
(FEIS) means a detailed statement which, pur-
suant to section 102(2) (C) of the National En-
vironmental Policy Act, identifies and analyzes
the anticipated environmental impact of a pro-
posed or ongoing NHTSA action.
(e) "Negative declaration" means a statement
prepared subsequent to an environmental review,
which states that a proposed or ongoing NHTSA
action will have no significant environmental
impact and therefore does not require a draft or
final environmental impact statement.
§ 520.4 Applicability.
(a) Scope. This part applies to all elements
of NHTSA, including the Regional Offices.
(b) Actions covered. Except as provided in
subparagraph (e) below, this part applies to the
following agency actions and such actions and
proposals as may be sponsored jointly with an-
other agency:
(1) New and continuing programs and proj-
ects; budget proposals; legislative proposals
by the agency; requests for appropriations; re-
ports on legislation initiated elsewhere where
the agency has primary responsibility for the
subject matter involved; and any renewals or
reapprovals of the foregoing;
(2) Research, development, and demonstra-
tion projects; formal approvals of work plans;
and associated contracts;
(3) Rulemaking and regulatory actions, in-
cluding Notices of Proposed Rulemaking
(NPRM); requests for procurement (RFP);
requests for grants (Annual Work Programs);
and contracts;
(4) All grants, loans or other financial
assistance for use in State and Community
projects;
(5) Annual State Highway Safety Work
Programs;
(6) Construction; leases; purchases; opera-
tion of Federal facilities; and
(7) Any other activity, project, or action
likely to have a significant effect on the en-
vironment.
(c) Continuing actions. This part applies to
any action enumerated in subsection (b) above,
even though such action arise from a project or
program initiated prior to enactment of the
National Environmental Policy Act on January
1, 1970.
(d) Environmental assessments. Within the
scope of activities listed in § 520.4(b), any
person outside the agency submitting a program
or project proposal may be requested to prepare
an environmental assessement of such proposed
action to be included in his submission to the
agency.
(e) Excerptions.
(1) Assistance in the form of general reve-
nue sharing funds, distributed under the State
and Local Fiscal Assistance Act of 1972, 31
U.S.C. 1221, with no control by the NHTSA
over the subsequent use of such funds;
(2) Personnel actions;
(3) Administrative procurements (e.g., gen-
eral supplies) and contracts for personal serv-
ices;
(4) Legislative proposals originating in
another agency and relating to matters not
#
#
PART 520-2
within NHTSA's primary areas of responsi-
bility;
(5) Project amendments (e.g., increases in
costs) which have no environmental signifi-
cance; and
(6) Minor agency actions that are deter-
mined by the official responsible for the actions
to be of such limited scope that they clearly
will not have a significant effect on the quality
of the human environment.
(f) Consolidation of statements. Proposed
actions (and alternatives thereto) having sub-
tantially similar environmental impacts may be
covered by a single environmental review and
environmental impact statement or negative de-
claration.
§ 520.5 Guidelines for identifying major actions
significantly affecting the environment.
(a) General guidelines. The phrase, "major
Federal actions significantly affecting the quality
of the human environment," as used in this part,
shall be construed with a view to the overall,
cumulative impact of the actions, other Federal
projects or actions in the area, and any further
contemplated or anticipated actions. Therefore,
an environmental impact statement should be pre-
pared in any of the following situations:
(1) Proposed actions which are localized in
their impact but which have a potential for
significantly affecting the environment;
(2) Any proposed action which is likely to
be controversial on environmental grounds;
(3) Any proposed action which has unclear
but potentially significant environmental con-
sequences.
(b) Specific guidelines. While a precise defini-
tion of environmental significance that is valid
in all contexts is not possible, any of the follow-
ing actions should ordinarily be considered as
significantly affecting the quality of the human
environment:
(1) Any matter falling under section 4(f)
of the Department of Transportation Act (49
U.S.C. 1653(f)) and section 138 of Federal-
aid highway legislation (23 U.S.C. 138), re-
quiring the use of any publicly owned land
from a park, recreation area, or wildlife and
waterfowl refuge of national. State, or local
significance as determined by the Federal, State,
or local officials having jurisdiction thereof,
or any land from an historic site of national.
State, or local significance;
(2) Any matter falling under section 106 of
the National Historic Preservation Act of 1966
(16 U.S.C. 470(f)), requiring consideration of
the effect of the proposed action on any build-
ing included in the National Register of
Historic Preservation to comment on such
action;
(3) Any action that is likely to affect the
preservation and enhancement of sites of his-
torical, architectural, or archaeological signifi-
cance;
(4) Any action that is likely to be highly
controversial regarding relocation housing;
(5) Any action that (i) divides or disrupts
an established community, disrupts orderly,
planned development, or is inconsistent with
plans or goals that have been adopted by the
community in which the project is located; or
(ii) causes significantly increased congestion;
(6) Any action that (i) involves inconsis-
tency with any Federal, State, or local law or
administrative determination relating to the en-
vironmental; (ii) has a significantly detri-
mental impact on air or water quality or on
ambient noise levels for adjoining areas; (iii)
involves a possibility of contamination of a
public water supply system; or (iv) affects
ground water, flooding, erosion, or sedimenta-
tion;
(7) Any action that may directly or indi-
rectly result in a significant increase in noise
levels, either within a motor vehicle's closed
environment or upon nearby areas;
(8) Any action that may directly or indi-
rectly result in a significant increase in the
energy or fuel necessary to operate a motor
vehicle, including but not limited to the follow-
ing: (i) actions which may directly or indi-
rectly result in a significant increase in the
weight of a motor vehicle; and (ii) actions
which may directly or indirectly result in a
significant adverse affect upon the aerodymanic
drag of a motor vehicle;
PART 520-3
(9) Any action that may directly or indi-
rectly result in a significant increase in the
amount of harmful emissions resulting from
the operation of a motor vehicle;
(10) Any action that may directly or indi-
rectly result in a significant increase in either
the use of or the exposure to toxic or hazardous
materials in the manufacture, operation, or
disposal of motor vehicles or motor vehicle
equipment.
(11) Any action that may directly or indi-
rectly result in a significant increase in the
problem of solid waste, as in the disposal of
motor vehicles or motor vehicle equipment;
(12) Any action that may directly or indi-
rectly result in a significant depletion of scarce
natural resources associated with the manu-
facture or operation of motor vehicles or motor
vehicle equipment; and
(13) Any other action that causes significant
environment impact by directly or indirectly
affecting human beings through adverse im-
pacts on the environment.
(c) Research activities.
(1) In accordance with DOT Order 5610. IB,
the Assistant Secretary for Systems Develop-
ment and Technology (TST) will prepare,
with the concurrence of the NHTSA, proposed
procedures for assessing the environmental con-
sequences of research activities. Until final
procedures are promulgated, the following
factors are to be considered for periodic evalua-
tion to determine when an environmental state-
ment is required for such programs:
(i) The magnitude of Federal invest-
ment in the program;
(ii) The likelihood of widespread appli-
cation of the technology;
(iii) The degree of environmental impact
which would occur if the technology were
widely applied; and
(iv) The extent to which continued invest-
ment in the new technology is likely to
restrict future alternatives.
(2) The statement or environmental review
culminating in a negative declaration must be
written late enough in the development process
to contain meaningful information, but early
enough so that this information can practically
serve as an input in the decision-making
process. Where it is anticipated that an en-
vironmental impact statement may ultimately
be required but its preparation is still pre-
mature, the office shall prepare a publicly avail-
able record briefly setting forth the reasons
for its determination that a statement is not
yet necessary. This record shall be updated
at least quarterly, or as may be necessary when
siginificant new information becomes available
concerning the potential environmental impact
of the program. In any case, a statement or
environmental review culminating in a nega-
tive declaration must be prepared before
research activities have reached a state of
investment or commitment to implementation
likely to determine subsequent development or
restrict later alternatives. Statements on tech-
nology research and development programs
shall include an analysis not only of alterna-
tive forms of the same technology that might
reduce any adverse environmental impacts but
also of alternative technologies that would
serve the same function as the technology
under consideration. Efforts shall be made to
involve other Federal agencies and interested
groups with relevant expertise in the prepara-
tion of such statements because the impacts
and alternatives to be considered are likely to
be less well defined than in other types of
statements.
Subpart B— Procedures
§ 520.21 Preparation of environmental reviews,
negative declarations, and notices of
intent.
(a) General responsibilities.
(1) Associate Administrators and Chief
Counsel. Each Associate Administrator and
the Chief Counsel is responsible for determin-
ing, in accordance with Subpart A, whether
the projects and activities under his jurisdic-
tion require an environmental review, and for
preparing all such reviews, negative declara-
tions, and notices of intent.
f
€
PART 520-4
(2) Regional Administrators. Each Re-
gional Administrator, in consultation with the
Governor's Representative, is responsible for
determining, in accordance with Subpart A,
whether proposed State activities in his Region,
as stated in Annual Work Programs, require
an environmental review, and for the prepa-
ration of all such reviews, negative declara-
tions, and notices of intent.
(3) Associate Administrator for Planning
and Evaluation. The Associate Administrator
for Planning and Evaluation may request in
accordance with the requirements of this order,
that the appropriate Associate Administrator
or Regional Administrator prepare an envi-
ronmental review or environmental impact
statement for any proposed or continuing
NHTSA action, or comment on any environ-
mental statement prepared by other agencies.
(b) Coordination. Coordination with appro-
priate local. State and Federal agencies should
be accomplished during the early stages by the
responsible official to assist in identifying areas
of significance and concern. Existing procedures,
including those established under the Office of
Management and Budget (0MB) Revised Cir-
cular A-95, should be used to the greatest extent
practicable to accomplish this early coordination.
(c) Applicants.
(1) Each applicant for a grant, loan, or
other financial assistance for use in State and
community projects may be requested to sub-
mit, with the original application, an environ-
mental assessment of the proposed project.
(2) Under 0MB Revised Circular A-95,
"Evaluation, Review, and Coordination of
Federal Assistance Programs and Projects,"
and DOT 4600.4B, "Evaluation, Review and
Coordination of DOT Assistance Programs
and Projects," dated February 27, 1974, a grant
applicant must notify the clearinghouse of its
intention to apply for Federal program assist-
ance. The notification must solicit comments
on the project and its impacts from appro-
priate State and local agencies. Since it is the
NHTSA's policy to assure that (i) interested
parties and Federal, State, and local agencies
receive early notification of the decision to pre-
pare an environmental impact statement, and
(ii) their comments on the environmental
effects of the proposed Federal action are soli-
cited at an early stage in the preparation of
the draft impact statement, this early notifica-
tion requirement may be met by a grant appli-
cant by sending the notification to interested
parties and agencies at the same time it is sent
to the clearinghouse.
(d) Consultants. Consultants may prepare
background or preliminary material and assist
in preparing a draft or final environmental state-
ment for which the NHTSA takes responsibilty.
Care should be exercised in selecting consultants,
and in reviewing their work, to insure complete
and objective consideration of all relevant project
impacts and alternatives, particularly if the con-
sultant may expect further contracts, based on
the outcome of the environmental decision.
(e) Environmental review report. The en-
vironmental review shall culminate in a brief
written report of the same title, which shall be
included in the proposed or ongoing agency
action, and which—
(1) Describes the proposed or ongoing
NHTSA action, the environment affected, and
the anticipated benefits;
(2) Evaluates the potential environmental
impact, including those adverse impacts which
cannot be avoided, should the proposal be im-
plemented or the action continued;
(3) Assesses the alternatives to the proposed
or ongoing action and their potential environ-
mental impact.
(4) Evaluates the cumulative and long-term
environmental effects of the proposed or on-
going action;
(5) Describes the irreversible and irretriev-
able commitments of resources involved in the
proposal's implementation or the action's con-
tinuance;
(6) Identifies any known or potential con-
flicts with State, regional, or local plans and
programs;
(7) Weighs and analyzes the anticipated
benefits against the environmental and other
costs of the proposed or ongoing action in a
manner which reflects similar comparisons of
reasonably available alternatives; and
PART 520-5
(8) Concludes with a negative declaration
or recommends the preparation of a DEIS.
(f ) Negative declarations.
(1) If the responsible official judges that
the environmental impact of a proposed or on-
going action under his jurisdiction will not
significantly affect the quality of the human
environment, the following declaration will be
included in the environmental review report:
"It is the judgment of this agency, based on
available information, that no significant en-
vironmental impact will result from execu-
tion of this action."
(2) A DEIS may be changed to a negative
declaration if the public review process indi-
cates that the proposal or ongoing action will
not have a significant effect upon the environ-
ment.
(3) An index of all negative declarations
and a copy of each environmental review re-
port shall be retained by the responsible official
under whose jurisdiction it was prepared and
shall be made available for public inspection
upon request.
(g) Notice of intent to prepare a draft en-
vironmental impact statement. If the responsible
official under whose jurisdiction an environ-
mental review is prepared determines that the
proposed or ongoing action could have a poten-
tially significant effect on the quality of the
environment, he shall: coordinate with the Asso-
ciate Administrator for Planning and Evaluation
and the Chief Counsel, transmit to appropriate
Federal, State and local agencies and have pub-
lished in the Federal Register a notice of intent
to prepare an environmental statement as soon
as is practicable after the determination to pre-
pare such a statement.
§ 520.22 Maintenance of a list of actions.
(a) The Associate Administrator for Planning
and Evaluation shall be responsible for the prep-
aration and maintenance of a list of actions for
which draft or final environmental impact state-
ments have been or are to be prepared. This
list shall be on file with the Associate Admin-
istrator for Planning and Evaluation and shall
be available for public inspection in the Docket
Section upon request. A copy of the initial list
and its updatings at the end of each calendar
quarter shall be transmitted by the Associate
Administrator for Planning and Evaluation to
the Assistant Secretary of Transportation for
Environmental and Safety (TES) and to CEQ.
(b) If a determination is made that an en-
vironmental statement is not necessary for a pro-
posed action (1) which has been identified as
normally requiring preparation of a statement,
(2) which is similar to actions for which a sig-
nificant number of statements have been pre-
pared, (3) which the agency has previously
announced would be the subject of a statement,
or (4) for which the official responsible for such
proposal has made a negative determination in
response to a request from the CEQ, a record
briefly setting forth the decision and the reasons
for that determination shall be prepared by the
responsible official. Such a record of negative
determinations and any evaluations made pur-
suant to § 520.21 which conclude that preparation
of a statement is not yet timely shall be prepared
by the responsible official, submitted to the Asso-
ciate Administrator for Planning and Evalua-
tion, and made available by the Associate
Administrator for Planning and Evaluation in
the same manner as provided in paragraph (a)
of this section for lists of statements under prep-
aration.
§ 520.23 Preparation of draft environmental im-
pact statements.
(a) Planning stage.
(1) When a DEIS is to be prepared, the
responsible official shall promptly initiate its
preparation and develop a schedule in consulta-
tion with the Associate Administrator for
Planning and Evaluation, to assure completion
prior to the first significant point of decision
in the program or project development process.
(2) The environmental impacts of proposed
activities should be initially assessed concur-
rently with the initial technical and economic
studies.
(3) Section 102(2) (A) of NEPA requires
each Federal agency to utilize a "systematic,
interdisciplinary approach" to plans and pro-
gams affecting the environment. To assure
that all environmental impacts are identified
f
PART 520-6
and assessed, all relevant disciplines should be
represented. If the necessary disciplines are
not represented on the staff of the applicant or
NHTSA, it is appropriate to use professional
services available in other Federal, State or
local agencies, universities, or consulting firms.
The use of the interdisciplinary approach
should not be limited to the environmental
statement. This approach should also be used
in the early planning stages to help assure a
systematic evaluation of reasonable alternative
courses of action and their potential social,
economic, and environmental consequences.
(b) Form and content requirements. Attach-
ment 1 of this order prescribes the form and con-
tent requirements to be followed for each draft
and final environmental impact statement. The
DEIS must fulfill and satisfy, to the fullest ex-
tent possible at the time it is prepared, the re-
quirements established for final statements.
(c) ''Lead agency". CEQ guidelines provide
that when more than one Federal agency (1)
directly sponsors an action, or is directly in-
volved in an action through funding, licenses, or
permits, or (2) is involved in a group of actions
directly related to each other because of their
functional interdependence and geographical
proximity, consideration should be given to pre-
paring one statement for all the Federal actions
involved. Agencies in such cases should consider
the designation of a single "lead agency" to as-
sume supervisory responsibility for preparation
of a joint statement. Where a lead agency pre-
pares the statement, the other agencies involved
should provide assistance with respect to their
areas of jurisdiction and expertise. The state-
ment should contain an evaluation of the full
range of Federal actions involved, should reflect
the views of all participating agencies, and
should be prepared before major or irreversible
actions have been taken by any of the partici-
pating agencies. Some relevant factors in deter-
mining an appropriate lead agency are: the time
sequence in which the agencies become involved,
the magnitude of their respective involvement,
and their relative expertise with respect to the
project's environmental effects.
Questions concerning "lead agency" decisions
should be raised with CEQ through TES. For
projects serving and primarily involving land
owned by or under the jurisdiction of another
Federal agency, that agency may be the appro-
priate lead agency.
(d) Applicants. Where the agency requests
an applicant for financial assistance or other
agency approval to submit an environmental
assessment, the responsible official will (1) assist
the applicant by outlining the information re-
quired, and (2) in all cases make his own evalua-
tion of the environmental issues involved and
take responsibility for the scope and content of
draft and final environmental statements.
§ 520.24 Internal processing of draft environ-
mental impact statements. Before circulating a
DEIS for external review, the official responsible
for the DEIS shall (1) receive the concurrence
of the Associate Administrator for Planning and
Evaluation and the Chief Counsel; and (2) pre-
pare a memorandum for approval by the Admin-
istrator which shall—
(a) Set forth the basis on which is was deter-
mined that a potentially significant environ-
mental effect exists;
(b) Attach the DEIS;
(c) Identify the Federal, State, and local agen-
cies and private sources from which comments
on the DEIS are proposed to be solicited (see
Attachment 2); and
(d) Include a recommendation on whether a
public hearing on the proposed action should be
held.
§ 520.25 External review of draft environmental
impact statements.
(a) Requirements. The official responsible for
the DEIS shall-
(1) Transmit 5 copies of the DEIS to the
CEQ and 2 copies to TES;
(2) Solicit comments from all Federal,
State, and local agencies which have jurisdic-
tion by law or special expertise with respect
to the possible environmental impact involved,
and from the public (see Attachment 2); and
PART 520-7
(3) Inform the public and interested parties
of the availability of the DEIS and provide
copies as appropriate; and
(4) Allow a comment period of not less than
45 days from the Friday of the week follow-
ing receipt of the draft impact statement by
CEQ. Requests for extensions shall be granted
whenever possible, and particularly when war-
ranted by the magnitude and complexity of
the statement or the extent of citizen interest.
(b) Procedures.
(1) Federal and Federal-State agency re-
view.
(i) The DEIS shall be circulated for re-
view to the Federal and Federal-State
agencies with special expertise or jurisdic-
tion by law with regard to the potential
environmental impact involved. These agen-
cies and their relevant areas of expertise are
identified in Attachment 2.
(ii) For actions within the jurisdiction
of the Environmental Protection Agency
(air or water quality, solid wastes, pesticides,
radiation standards, noise), the DEIS shall
be sent to EPA.
(iii) For actions which would affect any
property that is included in the National
Register of Historic Preservation, the DEIS
should be sent to the Advisory Council on
Historic preservation and the State Liaison
Office for Historic Preservation.
(2) State and local review. Where a review
of the proposed action by State and local
agencies authorized to develop and enforce en-
vironmental standards is relevant, comments
are to be solicited directly from such agencies
with known responsibilities in environmental
matters, and shall be obtained as follows:
(i) Where review of direct Federal de-
vevelopment projects, and of projects assisted
under programs listed in Attachment D to
revised 0MB Circular A-95 (as imple-
mented by DOT 4600.4B "Evaluation, Re-
view and Coordination of DOT Assistance
Programs and Projects", dated February 27,
1974), takes place prior to preparation of
an environmental statement, comments of
the reviewing agencies on the environmental
effects of the proposed project are inputs to
the environmental statement. These com-
ments shall be attached to the draft state-
ment when it is circulated for review and
copies of the draft shall be sent to those
who commented. A-95 clearinghouses or
other agencies designated by the (jovernor
may also secure comments on environmental
statements. In all cases, copies of the draft
environmental statements shall be sent to
clearinghouses and to the applicant whose
project is the subject of the statement.
(ii) Comments shall be directly obtained
from appropriate State and local agencies,
except where review is secured by agreement
through A-95 clearinghouses, unless the
Governor of the appropriate State has des-
ignated some other point for obtaining his
review. Instructions for obtaining the views
of such agencies are contained in the joint
OMB-CEQ memorandum (see Attachment
4). Comments shall be solicited from muni-
cipalities and counties on all projects located
therein.
(iii) State and local review of NHTSA
procedures, regulations, and policies for ad-
ministering Federal progams of assistance
to State and local governments shall be ob-
tained pursuant to procedures established by
0MB Circular No. A-85.
(iv) Generally, environmental statements
on legislative and budget proposals may be
excluded from State and local review.
(3) General public receive.
At the time the DEIS is circulated to
Federal, State, and local agencies, pubHc
availability of the DEIS for comment and
review will be announced by the CEQ in the
Federal Register. Copies of the DEIS
should be sent to known interested parties,
and press releases should be sent to local
news media advising where the DEIS is
available and how copies may be obtained.
The Office of Public Affairs and Consumer
Services shall maintain a list of groups, in-
cluding conservation organizations and
motor vehicle manufacturers, known to be
interested in the agency's activities, and di-
rectly notify such groups of the availability
of the DEIS or send them a copy as soon
as it has been prepared.
I
(I
PART 520-8
(ii) A DEIS should be available to the
public at least 30 days prior to the time of
a public hearing on the DEIS.
(iii) Copies of the DEIS will be made
available at the NHTSA Docket Section,
Room 5108, 400 Seventh Street, S.W., Wash-
ington, D.C. 20590, and, where appropriate,
NHTSA Regional Offices, at the offices of
any applicants of grantees, at appropriate
State, regional, and metropolitan clearing
houses, and local public libraries, and fur-
nished to public and private organizations
and individuals with special expertise with
respect to the potential environmental im-
pact involved, and to those with an interest
in the action who request an opportunity
to comment. Copies to be made available to
the public shall be provided without charge
to the extent practicable, or at a fee which
is not more than the actual cost of repro-
ducing copies required to be sent to other
Federal agencies, including the CEQ.
(iv) A copy of the DEIS should in all
cases be sent to any applicant whose project
is the subject of the statement.
(v) If a DEIS is changed to a negative
declaration as a result of the public review
process, all agencies and individuals that
received copies and/or commented on the
DEIS must be informed that a negative de-
claration was substituted for the DEIS and
given a brief explanation of the reason for
such substitution.
(c) Utilization of Comments.
Comments received on the draft statement, and
inputs (in summary form, if appropriate) from
the processes for citizen participation, shall
accompany the environmental statement through
the normal internal project or program review
process.
hearing is appropriate, the responsible official
should consider—
(1) The magnitude of the proposal in terms
of economic costs, the geographic area in-
volved, and the uniqueness or size of the com-
mitment of the resources involved.
(2) The degree of interest in the proposal,
as evidenced by requests from the public and
from Federal, State, and local authorities that
a hearing be held;
(3) The likelihood that information will be
presented at the hearing which will be of
assistance to the agency in fulfilling its respon-
siblities under the NEPA;
(4) The extent to which public involvement
already has been achieved through other means,
such as earlier public hearings, meetings with
citizen representatives, and/or written com-
ments on the proposed action; and
(5) The extent of potential environmental
impact.
(b) If it is determined that a public hearing
is to be held in accordance with paragraph (a)
of this section, the official responsible for the
action shall both announce the hearing through
newspaper articles, direct notification to inter-
ested parties, and clearinghouses, and cause a
notice to be issued in the Federal Register at
least 30 days prior to the time of such hearing—
(1) Identifying the subject matter of the
hearing;
(2) Announcing the date, time, and place of
the hearing and the procedures to be followed;
and
(3) Announcing the availability of the
DEIS and any other information, as appro-
priate, for public inspection at one or more
locations in the area affected by the action.
§ 520.26 Public hearings.
(a) A public hearing on a proposed or on-
going action covered by a DEIS shall be held
upon the determination by the official responsible
for such action, in consultation with the Associate
Administrator for Planning and Evaluation, that
a public hearing would be appropriate and in
the public interest. In deciding whether a public
§ 520.27 Legislative actions.
(a) A DEIS on both legislative proposals and
reports for which NHTSA either develops the
Departmental position or originates the legis-
lation will be cleared with TES, filed with CEQ,
and submitted to the Office of Management and
Budget through the normal DOT and NHTSA
legislative process.
PART 520-9
Effective: November 4, 1975
(b) The preparation, circulation, and filing of
the environmental statement shall be in accord-
ance with 0MB Bulletin 72-6, "Proposed Fed-
eral Actions Affecting the Environment."
(c) A DEIS and any comments that have been
received should be available to the Congress and
to the public for consideration in connection with
the proposed legislation or report on proposed
legislation. In cases where the scheduling of
Congressional hearings on recommendations or
reports on proposals for legislation which the
Department has forwarded to the Congress does
not allow adequate time for the completion of
a FEIS, a DEIS may be furnished to the Con-
gress and made available to the public pending
transmittal of the comments as received and the
final text.
§ 520.28 Preparation of final environmental
impact statements.
(a) If the action is to go forward and the
DEIS has not been changed to a negative decla-
ration, as soon as practicable after the expira-
tion of the comment period and hearing process,
if any, the official responsible for the action shall
prepare a final environmental impact statement
(FEIS), taking into account all comments re-
ceived and issues raised during such period and
process.
(b) The FEIS shall conform to the guidelines
for form and content in Attachment 1.
(c) The FEIS shall then be submitted to the
Chief Counsel by the official responsible for the
action, for determination of legal sufficiency.
§ 520.29 Internal review of final environmental
impact statements.
(a) Upon completion of the review for legal
sufficiency of the FEIS, the Chief Counsel shall
transmit 2 copies of the FEIS to TES for con-
currence. Unless other notification is provided
within 2 weeks after receipt in TES, the state-
ment will be considered concurred in by TES.
(b) After concurrence by TES, the FEIS
will be transmitted by the Chief Counsel to the
Administrator for approval.
(c) If an action requires the personal approval
of the Secretary or Deputy Secretary pursuant
to a request by them or by TES, TGC, or the
NHTSA office originating the action, the final
environmental statement shall be accompanied
by a brief cover memorandum requesting the
Secretary's or Deputy Secretary's approval of the
action.
(1) The memorandum shall have signature
lines for the concurrence of the Assistant Sec-
retary for Environment, Safety, and Consumer
Affairs, the General Counsel, and the Deputy
Secretary, and for the approval of the Secre-
tary or Deputy Secretary.
(2) TES, in conjunction with the Executive
Secretary, is responsble for informing the
Assistant Secretary for Congressional and
Intergovernmental Affairs and the Office of
Public Affairs of the Secretary's decisions so
that they, in coordination with the operating
administrations or other Secretarial Offices in-
volved, may take the appropriate actions.
§ 520.30 Availability of final environmental
impact statements.
(a) Pending final approval and filing with
CEQ, a proposed FEIS may be made available
to the public and Federal, State, or local agencies
if it carries a notation that it is not approved
and filed.
(b) After approval by the Administrator, the
Associate Administrator for Planning and
Evaluation will send 5 copies of the FEIS (to-
gether with comments) to the CEQ; individual
copies with comments attached to the EPA and
all Federal, State, and local agencies and mem-
bers of the public who submitted comments on
the DEIS or requested copies of the FEIS. If
the length of the statement or the number of
comments make this distribution requirement
highly impractical, TES should be consulted to
consider an alternative arrangement.
(c) Copies of the FEIS will be made avail-
able in the NHTSA Docket Section, Room 5109,
400 Seventh Street, S.W., Washington, D.C.
20590, and, where appropriate, NHTSA Regional
Offices, at the offices of any applicants or grantees,
and at appropriate State, regional, and metro-
politan clearinghouses and, where the impact is
localized, public libraries.
PART 520-10
t
(d) The official responsible for the action
shall, upon request, make available copies of the
FEIS and substantive comments received on the
DEIS w^ithout charge to the extent practicable,
or at a fee which is not more than the actual cost
or reproducing copies.
§ 520.31 Amendments or supplements. A draft
or final environmental impact statement may be
amended or supplemented. Supplements or
amendments should be considered when substan-
tial changes are made in the proposed or ongoing
action that will introduce a new or changed
environmental effect of significance to the quality
of the environment, or significant new informa-
tion becomes available concerning its environ-
mental aspects. In such cases, the supplement
or amendment shall be processed in consultation
with TES with respect to the need for, or desir-
ability of, recirculating the statement for the
appropriate period. TES concurrence must be
secured before issuance.
§ 520.32 Emergency action procedures. The
CEQ Guidelines allow modification of require-
ments in case of a national emergency, a disaster
or similar great urgency. The processing times
may be reduced, or if the emergency situation
warrants, preparation and processing of a DEIS,
FEIS, or negative declaration may be abbre-
viated. Such procedural changes, however,
should be requested only for those projects where
the need for immediate action requires processing
in other than the normal manner.
§ 520.33 Trimming of proposed NHTSA actions. To
the maximum extent practicable, no administra-
tive action (i.e., any proposed action to be taken
by the agency other than agency proposals for
legislation to Congress, budget proposals, or
agency reports on legislation) subject to this
part and covered by an environmental impact
statement shall be taken sooner than 90 days
after a DEIS has been circulated for comment,
furnished to the CEQ, and made public. Neither
shall such administrative action be taken sooner
than 30 days after the FEIS (together with
comments) has been filed with CEQ, and made
available to commenting agencies and tue public.
If the FEIS is filed within 90 days after a DEIS
has been circulated for comment, furnished to
the CEQ and made public, the 30-day period
and 90-day period may run concurrently to the
extent that they overlap. The 90-day time period
is measured from the date of publication in the
Federal Register of the list of weekly filings of
environmental impact statements with the CEQ,
but the 30-day period is computed from the date
of receipt by the CEQ.
§ 520.34 Comments on environmental statements
prepared by other agencies.
(a) All requests for NHTSA's views on a
DEIS or a proposed action undergoing environ-
mental review by another agency will be trans-
mitted to the Associate Administrator for
Planning and Evaluation for action or referral
to TES where appropriate. Offices within
NHTSA may be requested by the Associate
Administrator for Planning and Evaluation to
supply any pertinent information and comments
for a coordinated agency response.
(b) NHTSA's comments and the comments of
any offices responding to a request by the Asso-
ciate Administrator for Planning and Evaluation
should be organized in a manner consistent with
the structure of an environmental review set out
in § 520.21(e). NHTSA programs that are en-
vironmentally related to the proposed action
under review should be identified so interrela-
tionships may receive due consideration.
(c) Copies of NHTSA's comments on environ-
mental statements prepared by other agencies
shall be distributed as follows:
(1) The original and 1 copy to the request-
ing agency;
(2) 1 copy to TES-70; and
(3) 5 copies to CEQ.
(d) Requests by the public for copies should
be referred to the agency originating the state-
ment.
PART 520-11
ATTACHMENT 1
FORM AND CONTENT OF STATEMENT
1. Form. a. Each statement will be headed as
follows:
DEPARTMENT OF
TRANSPORTATION
NATIONAL HIGHWAY TRAFFIC
SAFETY ADMINISTRATION
(Draft) Environmental Impact Statement
Pursuant to section 102(2) (C), Pub. L. 91-190;
83 Stat. 853; 42 U.S.C. 4332(2) (C).
b. The heading specified above shall be modi-
fied to indicate that the statement also covers
sections 4(f) of the DOT Act or 106 of the
National Historic Preservation Act, when
appropriate.
c. Each statement will, as a minimum, con-
tain sections corresponding to paragraph 3
herein, supplemented as necessary to cover
other matters provided in this Attachment.
d. The format for the summary to accom-
pany draft and final environmental statements
is as follows:
SUMMARY
(Check one) ( ) Draft ( ) Final
Department of Transportation, National High-
way Traffic Safety Administration. Name,
address, and telephone number of individual
who can be contacted for additional informa-
tion about the proposed action or the statement.
(Note: DOT Order 2100.2 prescribed proce-
dure for reporting public contacts in rulemak-
ing.)
(1) Name of Action. (Check one) ( )
Administrative Action. ( ) Legislative
Action.
(2) Brief description of action indicating
what States (and counties) are particularly
affected.
(3) Summary of environmental impact
and adverse environmental effects.
(4) List alternatives considered.
(5) (a) (For draft statements) List all
Federal, State, and local agencies from which
comments have been requested.
(b) (For final statements) List all Federal,
State, and local agencies and other sources
from which written comments have been re-
ceived.
(6) Dates the draft statement and the
final statement, if issued, were made available
to the Council on Environmental Quality
and the public.
2. Guidance as to content of statement. The
following paragraphs of this Attachment are
intended to be considered, where relevant, as
guidance regarding the content of environmental
statements. This guidance is expected to be sup-
plemented by research reports, guidance on
methodology, and other material from the litera-
ture as may be pertinent to evaluation of relevant
environmental factors.
3. General content. The following points are
to be covered:
a. A description of the proposed Federal
action (e.g., "The proposed Federal action is
approval of a grant application to con-
struct * * *"), a statement of its purpose, and
a description of the environment affected, in-
cluding information, summary technical data,
and maps and diagrams where relevant, ade-
quate to permit an assessment of potential
environmental impact by commenting offices
and the public.
(1) Highly technical and specialized
analyses and data should generally be
avoided in the body of the draft impact
statement. Such materials should be appro-
priately summarized in the body of the en-
vironmental statement and attached as
appendices or footnoted with adequate biblio-
graphic references.
(2) The statement should succinctly de-
scribe the environment of the area affected
as it exists prior to a proposed action, includ-
ing other related Federal activities in the
area, their interrelationships, and cumulative
environmental impact. The amount of de-
tail provided in such descriptions should be
commensurate with the extent and expected
impact of the action, and with the amount
of information required at the particular
level of decision making (planning, feasi-
bility, design, etc.). In order to insure ac-
PART 520-12
curate descriptions and environmental con-
siderations, site visits should be made where
appropriate.
(3) The statement should identify, as
appropriate, population and growth char-
acteristics of the affected area and any
population and growth assumptions used to
justify the project or program or to deter-
mine secondary population and growth
impacts resulting from the proposed action
and its alternatives (see paragraph 3c(2)).
In discussing these population aspects, the
statement should give consideration to using
the rates of growth in the region 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 Agri-
culture (the OBERS projection).
(4) The sources of data used to identify,
quantify, 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. Where
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
environment as those listed in Attachment 2,
and in section 520.5(b), supra. Primary atten-
tion should be given in the statement to discus-
sing those factors most evidently impacted by
the proposed action.
(2) Secondary and other foreseeable ef-
fects, as well as primary consequences for the
environment, 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 primary 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 alternatives 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 effects, 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
quality or have less detrimental effects. Ex-
amples of such alternatives include: the al-
ternative of not taking action or of postponing
action pending further study; alternatives re-
quiring actions of a significantly different
nature which would provide similar benefits
with different environmental impacts, e.g., low
capital intensive improvements, mass transit
alternatives 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 be sufficiently
detailed to reveal comparative evaluation of
the environmental benefits, costs, and risks of
the proposed action and each reasonable al-
ternative. Where an existing impact statement
already contains such an analysis its treatment
of alternatives may be 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 be avoided (such as water
or air pollution, noise, undesirable land use
PART 520-13
patterns, or impacts on public parks and recrea-
tion areas, wildlife and waterfowl refuges, or
on historic sites, damage to life systems, traffic
congestion, threats to health, or other conse-
quences adverse to the environmental goals set
out in section 101(b) of NEPA). This should
be a brief section summarizing in one place
those effects discussed in paragraph 3c that are
adverse and unavoidable under the proposed
action. Included for purposes of contract
should be a clear statement of how all adverse
effects will be mitigated. Where 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 vice 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 and 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 the 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-
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 environmental
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 environmental 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
voluminious) should oe attached to the final
statement, whether or not such comment is
thought to merit individual discussion in the
text of the statement.
j. Draft statements should indicate at appro-
priate points in the text any underlying studies,
reports, and other irformation obtained and
considered in preparing the statement, includ-
ing 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 be 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
being understood by the reader without the
need for undue cross reference.
4. Publicly owned parklands, recreational
areas, wildlife and waterfowl refuges 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 historic 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) Where 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 the 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, provisions 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
section 4(f) property regarding the action
proposed and the measures planned to minimize
harm.
f. If Federally-owned properties are in-
volved in highway projects, the final statement
shall include the action taken or an indication
of the expected action after filing 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
February 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-
randum of Agreement and the comments of the
Council are found in 36 CFR Part 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 thereof 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
6. Impacts of the proposed action on the hu-
man environment involving community disrup-
include a description.
a. The statement should include a descrip-
tion of probable impact sufficient to enable an
understanding of the extent of the environ-
mental and social impact of the project alter-
natives and to consider whether relocation
problems can be properly handled. This would
include the following information obtainable
by visual inspection of the proposed affected
area and from secondary sources and commu-
nity sources when available.
(1) An estimate of the households to be
displaced including the family characteristics
(e.g., minorities, and income levels, tenure,
the elderly, large families).
(2) Impact on the human environment of
an action which divides or disrupts an estab-
lished community, including where pertinent,
the effect of displacement on types of fam-
ilies and individuals affected, effect of streets
cut off, separation of residences from com-
munity facilities, separation of residential
areas.
(3) Impact on the neighborhood and hous-
ing to which relocation is likely to take place
(e.g., lack of sufficient housing for large fam-
ilies, doublings up).
(4) An estimate of the businesses to be
displaced, and the general effect of business
dislocation on the economy of the community.
(5) A discussion of relocation housing in
the area and the ability to provide adequate
relocation housing for the types of families
to be displaced. If the resources are in-
sufficient to meet the estimated displacement
needs, a description of the actions proposed
to remedy this situation including, if neces-
sary, use of housing of last resort.
(6) Results of consultation with local offi-
cials and community groups regarding the
impacts to the community affected. Reloca-
tion agencies and staff and other social agen-
cies can help to describe probable social
impacts of this proposed action.
(7) Where necessary, special relocation ad-
visory services to be provided the elderly,
handicapped and illiterate regarding inter-
pretations of benefits, assistance in selecting
replacement housing and consultation with
respect to acquiring, leasing, and occupying
replacement housing.
b. This data should provide the preliminary
basis for assurance of the availability of relo-
cation housing as required by DOT 5620.1, Re-
placement Housing Policy, dated June 24, 1970,
and 49 CFR 25.53.
7. Considerations relating to pedestrians and
bicyclists. Where appropriate, the statement
should discuss impacts on, and consideration to be
given in the development of the project to pedes-
trian and bicycle access, movement and safety
within the affected area, particularly in medium
and high density commercial and residential
areas.
8. Other social impacts. The general social
groups specially benefitted or harmed by the pro-
posed action should be identified in the statement
including the following:
a. Particular effects of a proposal on the
elderly, handicapped, non-drivers, transit de-
pendent, or minorities should be described to
the extent reasonably predictable.
b. How the proposal will facilitate or inhibit
their access to jobs, educational facilities, re-
ligious institutions, health and welfare services,
recreational facilities, social and cultural fa-
cilities, pedestrian movement facilities, and
public transit services.
9. Standards as to noise, air, and water pollu-
tion. The statement shall reflect sufficient analysis
of the effects of the proposed action on attain-
ment and maintenance of any environmental
standards established by law or administrative
determination (e.g., noise, ambient air quality,
water quality) including the following docu-
mentation:
a. With respect to water quality, there
should be consultation with the agency respon-
sible for the State water pollution control
program as to conformity with standards and
regulations regarding storm sewer discharge
sedimentation control, and other non-point
source discharges.
b. The comments or determinations of the
offices charged with administration of the
State's implementation plan for air quality as
PART 520-17
to the consistency of the project with State
plans for the implementation of ambient air
quality standards.
c. Conformity to adopted noise standards,
compatible if appropriate, with different land
uses.
10. Energy supply and natural resources de-
velopment. Where applicable, the statement
should reflect consideration of whether the project
or program will have any effect on either the
production or consumption of energy and other
natural resources, and discuss such effects if they
are significant.
11. Flood hazard evaluation. When an alterna-
tive under consideration encroaches on a flood
plain, the statement should include evidence that
studies have been made and evidence of consulta-
tions with agencies with expertise have been
carried out. Necessary measures to handle flood
hazard problems should be described. In com-
pliance with Executive Oder 11296, and Flood
Hazard Guidelines for Federal Executive Agen-
cies, promulgated by the Water Resources Coun-
cil, or how such requirements can be met during
project development.
12. Considerations relating to wetlands or
coastal zones. Where wetlands or coastal zones
are involved, the statement should include:
a. Information on location, types, and extent
of wetlands areas which might be affected by
the proposed action.
b. An assessment of the impacts resulting
from both construction and operation of the
project on the wetlands and associated wild-
life, and measures to minimize adverse impacts.
c. A statement by the local representative of
the Department of the Interior, and any other
responsible officials with special expertise, set-
ting forth his views on the impacts of the
project on the wetlands, the worth of the
particular wetlands areas involved to the com-
munity and to the Nation, and recommendations
as to whether the proposed action should pro-
ceed, and, if applicable, along what alternative
route.
d. Where applicable, a discussion of how the
proposed project relates to the State coastal
zone management program for the particular
State in which the project is to take place.
13. Construction impacts. In general, adverse
impacts during construction will be of less im-
portance than long-term impacts of a proposal.
Nonetheless, statements should appropriately ad-
dress such matters as the following, identifying
any special problem areas:
a. Noise impacts from construction and any
specifications setting maximum noise levels.
b. Disposal of spoil and effect on borrow
areas and disposal sites (include specifications
where special problems are involved).
c. Measures to minimize effects on traffic and
pedestrians.
14. Land use and urban growth. The state-
ment should include, to the extent relevant and
predictable:
a. The effect of the project on land use, de-
velopment patterns, and urban growth.
b. Where significant land use and develop-
ment impacts are anticipated, identify public
facilities needed to serve the new development
and any problems or issues which would arise
in connection with these facilities, and the com-
ments of agencies that would provide these
facilities.
^
PART 520-18
ATTACHMENT 2
AREAS OF ENVIRONMENTAL IMPACT AND FED-
ERAL AGENCIES AND FEDERAL-STATE AGENCIESi
WITH JURISDICTION BY LAW OR SPECIAL EXPER-
TISE TO COMMENT THEREON^
AIR
Air Quality
Department of Agriculture-
Forest Service (effects on vegetation)
Atomic Energy Commission (radioactive sub-
stances)
Department of Health, Education, and Welfare
Environmental Protection Agency
Department of the Interior-
Bureau of Mines (fossil and gaseous fuel com-
bustion)
Bureau of Sport Fisheries and Wildlife (effect
on wildlife)
Bureau of Outdoor Recreation (effect on recrea-
tion)
Bureau of Land Management (public lands)
Bureau of Indian Affairs (Indian lands)
National Aeronautics and Space Administration
(remote sensing, aircraft emissions)
Department of Transportation-
Assistant Secretary for Systems Development
and Technology (auto emissions)
Coast Guard (vessel emissions)
Federal Aviation Administration (aircraft
emissions)
' River Basin Commissions (Delaware, Great Lakes,
Missouri, New England, Ohio, Pacific Northwest, Souris-
Red-Rainy, Susquehanna, Upper Mississippi) and similar
Federal-State agencies should be consulted on actions
affecting the environment of their specific geographic
jurisdictions.
^ In all cases where a proposed action will have sig-
nificant international environmental effects, the Depart-
ment of State should be consulted, and should be sent a
copy of any draft and final impact statement which
covers such action.
Weather Modification
Department of Agriculture-
Forest Service
Department of Commerce
National Oceanic and Atmospheric Administra-
tion
Department of Defense-
Department of the Air Force
Department of the Interior
Bureau of Reclamation
Water Resources Council
WATER
Water Quality
Department of Agriculture-
Soil Conservation Service
Forest Service
Atomic Energy Commission (radioactive sub-
stances)
Department of the Interior-
Bureau of Reclamation
Bureau of Land Management (public lands)
Bureau of Indian Affairs (Indian lands)
Bureau of Sport Fisheries and Wildlife
Bureau of Outdoor Recreation
Geological Survey
Office of Saline Water
Environmental Protection Agency
Department of Health, Education, and Welfare
Department of Defense-
Army Corps of Engineers
Department of the Navy (ship pollution con-
trol)
National Aeronautics and Space Administration
(remote sensing)
Department of Transportation-
Coast Guard (oil spills, ship sanitation)
Department of Commerce-
National Oceanic and Atmospheric Administra-
tion
Water Resources Council
River Basin Commissions (as geographically ap-
propriate)
PART 520-19
Marine Pollution, Commercial Fishery
Conservation, and Shellfish Sanitation
Department of Commerce-
National Oceanic and Atmospheric Administra-
tion
Department of Defense-
Army Corps of Engineers
Office of the Oceanographer of the Navy
Department of Health, Education, and Welfare
Department of the Interior—
Bureau of Sport Fisheries and Wildlife
Bureau of Outdoor Recreation
Bureau of Land Management (outer conti-
nental shelf)
Geological Survey (outer continental shelf)
Department of Transportation-
Coast Guard
Environmental Protection Agency
National Aeronautics and Space Administration
(remote sensing)
Water Resources Council
River Basin Commissions (as geographically ap-
propriate)
Waterway Regulation and Stream
Modification
Department of Agriculture-
Soil Conservation Service
Department of Defense-
Bureau of Reclamation
Army Corps of Engineers
Department of the Interior-
Bureau of Sport Fisheries and Wildlife
Bureau of Outdoor Recreation
Geological Survey
Department of Transportation—
Coast Guard
Environmental Protection Agency
National Aeronautics and Space Administration
(remote sensing)
Water Resources Council
River Basin Commissions (as geographically ap-
propriate)
FISH AND WILDLIFE
Department of Agriculture
Forest Service
Soil Conservation Service
Department of Commerce-
National Oceanic and Atmospheric Administra-
tion (marine species)
Department of the Interior-
Bureau of Sport Fisheries and Wildlife
Bureau of Land Management
Bureau of Outdoor Recreation
Environmental Protection Agency
SOLID WASTE
Atomic Energy Commission (radioactive waste)
Department of Defense-
Army Corps of Engineers
Department of Health, Education, and Welfare
Department of the Interior—
Bureau of Mines (mineral waste, mine acid
waste, municipal solid waste, recycling)
Bureau of Land Management (public lands)
Bureau of Indian Affairs (Indian lands)
Geological Survey (geologic and hydrologic
effects
Office of Saline Water (demineralization)
Department of Transportation-
Coast Guard (ship sanitation)
Environmental Protection Agency
River Basin Commissions (as geographically ap-
propriate)
Water Resources Council
NOISE
Department of Commerce-
National Bureau of Standards
Department of Health, Education, and Welfare
Department of Housing and Urban Development
(land use and building materials aspects)
Department of Labor-
Occupational Safety and Health Administra-
tion
•
#
I
PART 520-20
Department of Transportation-
Assistant Secretary for Systems Development
and Technology
Environmental Protection Agency
Federal Aviation Administration, Office of
Noise Abatement
National Aeronautics and Space Administration
RADIATION
Atomic Energy Commission
Department of Commerce-
National Bureau of Standards
Department of Health, Education, and Welfare
Department of the Interior-
Bureau of Mines (uranium mines)
Mining Enforcement and Safety Administra-
tion (uranium mines)
Environmental Protection Agency
HAZARDOUS SUBSTANCES
Toxic Materials
Atomic Energy Commission (radioactive sub-
stances)
Department of Agriculture-
Agricultural Research Service
Consumer and Marketing Service
Department of Commerce-
National Oceanic and Atmospheric Administra-
tion
Department of Defense
Department of Health, Education, and Welfare
Environmental Protection Agency
Food Additives and Contamination of
Foodstuffs
Department of Agriculture-
Consumer and Marketing Service (meat and
poultry products)
Department of Health, Education, and Welfare
Environmental Protection Agency
Pesticides
Department of Agriculture-
Agricultural Research Service (biological con-
trols, food and fiber production)
Consumer and Marketing Service
Forest Service
Department of Commerce-
National Oceanic and Atmospheric Administra-
tion
Department of Health, Education, and Welfare
Department of the Interior-
Bureau of Sport Fisheries and Wildlife (fish
and wildlife effects)
Bureau of Land Management (public lands)
Bureau of Indian Affairs (Indian lands)
Bureau of Reclamation (irrigated lands)
Environmental Protection Agency
Transportation and Handling of Hazardous
Materials
Atomic Energy Commission (radioactive sub-
stances)
Department of Commerce-
Maritime Administration
National Oceanic and Atmospheric Administra-
tion (effects on marine life and the coastal
zone)
Department of Defense-
Armed Services Explosive Safety Board
Army Corps of Engineers (navigable water-
ways)
Department of Transportation
Federal Highway Administration, Bureau of
Motor Carrier Safety
Coast Guard
Federal Railroad Administration
Federal Aviation Administration
Assistant Secretary for Systems Development
and Technology
Office of Hazardous Materials
Office of Pipeline Safety
Environmental Protection Agency
PART 520-21
ENERGY SUPPLY AND NATURAL RESOURCES
DEVELOPMENT
Electric Energy Development, Generation,
and Transmission, and Use
Atomic Energy Commission (nuclear)
Department of Agriculture-
Rural Electrification Administration (rural
areas)
Department of Defense-
Army Corps of Engineers (hydro)
Department of Health, Education, and Welfare
(radiation effects)
Department of Housing and Urban Development
(urban areas)
Department of the Interior-
Bureau of Indian Affairs (Indian lands)
Bureau of Land Management (public lands)
Bureau of Reclamation
Power Marketing Administrations
Geological Survey
Bureau of Sport Fisheries and Wildlife
Bureau of Outdoor Recreation
National Park Service
Environmental Protection Agency
Federal Power Commission (hydro, transmission,
and supply)
River Basin Commissions (as geographically ap-
propriate)
Tennessee Valley Authority
Water Resources Council
Petroleum Development, Extraction,
Refining, Transport, and Use
Department of the Interior-
Office of Oil and Gas
Bureau of Mines
Geological Survey
Bureau of Land Management (public lands
and outer continental shelf)
Bureau of Indian Affairs (Indian lands)
Bureau of Sport Fisheries and Wildlife (effects
on fish and wildlife)
Bureau of Outdoor Recreation
National Park Service
Department of Transportation (Transport and
Pipeline Safety)
Environmental Protection Agency
Interstate Commerce Commission
Natural Gas Development, Production,
Transmission, and Use
Department of Housing and Urban Development
(urban areas)
Department of the Interior-
Office of Oil and Gas
Geological Survey
Bureau of Mines
Bureau of Land Management (public lands)
Bureau of Indian Affairs (Indian lands)
Bureau of Sport Fisheries and Wildlife
Bureau of Outdoor Recreation
National Park Service
Department of Transportation (transport and
safety)
Environmental Protection Agency
Federal Power Commission (production, trans-
mission, and supply)
Interstate Commerce Commission
Coal and Minerals Development, Mining,
Conversion, Processing, Transport, and Use
Appalachian Regional Commission
Department of Agriculture-
Forest Service
Department of Commerce
Department of Interior-
Office of Coal Research
Mining Enforcement and Safety Administra-
tion
Bureau of Mines
Geological Survey
Bureau of Indian Affairs (Indian lands)
Bureau of Land Management (public lands)
Bureau of Sport Fisheries and Wildlife
Bureau of Outdoor Recreation
National Park Service
Department of Labor-
Occupational Safety and Health Administra-
tion
Department of Transportation
Environmental Protection Agency
Interstate Commerce Commission
Tennessee Valley Authority
•
0
PART 520-22
Renewable Resource Development, Production,
Management, Harvest, Transport, and Use
Department of Agriculture-
Forest Service
Soil Conservation Service
Department of Commerce
Department of Housing and Urban Development
(building materials)
Department of the Interior-
Geological Survey
Bureau of Land Management (public lands)
Bureau of Indian Affairs (Indian lands)
Bureau of Sport Fisheries and Wildlife
Bureau of Outdoor Recreation
National Park Service
Department of Transportation
Environmental Protection Agency
Interstate Commerce Commission (freight rates)
Energy and Natural Resources Conservation
Department of Agriculture-
Forest Service
Soil Conservation Service
Department of Commerce-
National Bureau of Standards (energy effi-
ciency)
Department of Housing and Urban Develop-
ment-
Federal Housing Administration (housing
standards)
Department of the Interior-
Office of Energy Conservation
Bureau of Mines
Bureau of Reclamation
Geological Survey
Power Marketing Administration
Department of Transportation
Environmental Protection Agency
Federal Power Commission
General Services Administration (design and op-
eration of buildings)
Tennessee Valley Authority
Federal Energy Administration
LAND USE AND MANAGEMENT
Land Use Changes, Planning and Regulation
or Land Development
Department of Agriculture-
Forest Service (forest lands)
Agricultural Research Service (agricultural
lands)
Department of Housing and Urban Development
Department of the Interior-
Office of Land Use and Water Planning
Bureau of Land Management (public lands)
Bureau of Indian Affairs (Indian lands)
Bureau of Sport Fisheries and Wildlife (wild-
life refuges)
Bureau of Outdoor Recreation (recreation
lands)
National Park Service (NPS units)
Department of Transportation
Environmental Protection Agency (pollution
effects)
National Aeronautics and Space Administration
(remote sensing)
River Basins Commissions (as geographically ap-
propriate)
PuJ)lic Land Management
Department of Agriculture-
Forest Service (forests)
Department of Defense
Department of the Interior-
Bureau of Land Management
Bureau of Indian Affairs (Indian lands)
Bureau of Sport Fisheries and Wildlife (wild-
life refuges)
Bureau of Outdoor Recreation (recreation
lands)
National Park Service (NPS units)
Federal Power Commission (project lands)
General Services Administration
National Aeronautics and Space Administration
(remote sensing)
Tennessee Valley Authority (project lands)
PART 520-23
#
Protection of Environmentally Critical Areas
Dunes, Unstable Soils, Steep Slopes,
Aquifer Recharge Areas, etc.
Department of Agriculture-
Agricultural Stabilization and Conservation
Service
Soil Conservation Service
Forest Service
Department of Commerce-
National Oceanic and Atmospheric Admin-
istration (coastal areas)
Department of Defense-
Army Corps of Engineers
Department of Housing and Urban Development
(urban and floodplain areas)
Department of the Interior-
Office of Land Use and Water Planning
Bureau of Outdoor Recreation
Bureau of Reclamation
Bureau of Sport Fisheries and Wildlife
Bureau of Land Management
Geological Survey
Environmental Protection Agency (pollution ef-
fects)
National Aeronautics and Space Administration
(remote sensing)
River Basins Commissions (as geographically ap-
propriate)
Water Resources Council
Land Use in Coastal Areas
Department of Agriculture-
Forest Service
Soil Conservation Service (soil stability, hy-
drology)
Department of Commerce-
National Oceanic and Atmospheric Administra-
tion (impact on marine life and coastal zone
management)
Department of Defense-
Army Corps of Engineers (beaches, dredge and
fill permits. Refuse Act permits)
Department of Housing and Urban Develop-
ment (urban areas)
Department of the Interior-
Office of Land Use and Water Planning
Bureau of Sport Fisheries and Wildlife
National Park Service
Geological Survey
Bureau of Outdoor Recreation
Bureau of Land Management (public lands)
Department of Transportation-
Coast Guard (bridges, navigation)
Environmental Protection Agency (pollution ef-
fects)
National Aeronautics and Space Administration
(remote sensing)
Redevelopment and Construction in
Built-Up Areas
Department of Commerce-
Economic Development Administration (desig-
nated areas)
Department of Housing and Urban Development
Department of the Interior-
Office of Land Use and Water Planning
Department of Transportation
Environmental Protection Agency
General Services Administration
Office of Economic Opportunity
Density and Congestion Mitigation
Department of Health, Education, and Welfare
Department of Housing and Urban Development
Department of the Interior-
Office of Land Use and Water Planning
Bureau of Outdoor Recreation
Department of Transportation
Environmental Protection Agency
Neighborhood Character and Continuity
Department of Health, Education, and Welfare
Department of Housing and Urban Development
National Endowment for the Arts
Office of Economic Opportunity
i
♦
PART 520-24
Impacts on Low-Income Populations
Department of Commerce-
Economic Development Administration (desig-
nated areas)
Department of Health, Education, and Welfare
Department of Housing and Urban Development
Office of Economic Opportunity
Historic, Architectural, and Archeological
Preservation
Advisory Council on Historic Preservation
Department of Housing and Urban Development
Department of the Interior-
National Park Service
Bureau of Land Management (public lands)
Bureau of Indian Affairs (Indian lands)
General Services Administration
National Endowment for the Arts
Soil and Plant Conservation and
Hydrology
Department of Agriculture-
Soil Conservation Service
Agriculture Service
Forest Service
Department of Commerce-
National Oceanic and Atmospheric Administra-
tion
Department of Defense-
Army Corps of Engineers (dredging, aquatic
plants)
Department of Health, Education, and Welfare
Department of the Interior
Bureau of Land Management
Bureau of Sport Fisheries and Wildlife
Geological Survey
Bureau of Reclamation
Environmental Protection Agency
National Aeronautics and Space Administration
(remote sensing)
River Basin Commissions (as geographically ap-
propriate)
Water Resources Council
outdoor recreation
Department of Agriculture
Forest Service
Soil Conservation Service
Department of Defense-
Army Corps of Engineers
Department of Housing and Urban Development
(urban areas)
Department of the Interior-
Bureau of Land Management
National Park Service
Bureau of Outdoor Recreation
Bureau of Sport Fisheries and Wildlife
Bureau of Indian Affairs
Environmental Protection Agency
National Aeronautics and Space Administration
(remote sensing)
River Basin Commissions (as geographically ap-
propriate)
Water Resources Council
PART 520-25
ATTACHMENT 3
ENVIRONMENTAL PROTECTION AGENCY^
OFFICES WITHIN FEDERAL AGENCIES AND FED-
ERAL-STATE AGENCIES FOR INFORMATION RE-
GARDING THE AGENCIES' NEPA ACTIVITIES
AND FOR RECEIVING OTHER AGENCIES' IM-
PACT STATEMENTS FOR WHICH COMMENTS
ARE REQUESTED
ADVISORY COUNCIL ON HISTORIC PRESERVATION
Office of Architectural and Environmental Pres-
ervation, Advisory Council on Historic Pres-
ervation, Suite 430, 1522 K Street N.W., Wash-
ington, D.C. 20005 254-3974.
Regional Administrator, I, U.S. Environmental
Protection Agency, Room 2303, John F. Ken-
nedy Federal Bldg., Boston, Mass. 02203 (617)
223-7210.
Regional Administrator, II, U.S. Environmental
Protection Agency, Room 908, 26 Federal
Plaza, New York, New York 10007 (212) 264-
2525.
Regional Administrator, III, U.S. Environ-
mental Protection Agency, Curtis Bldg., 6th &
Walnut Sts., Philadelphia, Pa. 19106 (215)
597-9801.
Regional Administrator, IV, U.S. Environmental
Protection Agency, 1421 Peachtree Street, N.E.,
Atlanta, Ga. 30309 (404) 526-5727.
Regional Administrator, V, U.S. Environmental
Protection Agency, 1 N. Wacker Drive, Chi-
cago, Illinois 60606 (312) 353-5250.
Regional Administrator, VI, U.S. Environmental
Protection Agency, 1600 Patterson Street, Suite
1100, Dallas, Texas 75201 (214) 749-1962.
Regional Administrator, VII, U.S. Environ-
mental Protection Agency, 1735 Baltimore Ave-
nue, Kansas City, Missouri 64108 (816) 374-
5493.
Regional Administrator, VIII, U.S. Environ-
mental Protection Agency, Suite 900, Lincoln
Tower, 1860 Lincoln Street, Denver, Colorado
80203 (303) 837-3895.
Regional Administrator, IX, U.S. Environmental
Protection Agency, 100 California Street, San
Francisco, California 94111 (415) 556-2320.
Regional Administrator, X, U.S. Environmental
Protection Agency, 1200 Sixth Avenue, Seattle,
Washington 98101 (206) 442-1220.
Connecticut, Maine, Massachusetts, New Hamp-
shire, Rhode Island, Vermont
New Jersey, New York, Puerto Rico, Virgin
Islands
Delaware, Maryland, Pennsylvania, Virginia,
West Virginia, District of Columbia
Alabama, Florida, Georgia, Kentucky, Missis-
sippi, North Carolina, South Carolina, Ten-
nessee
Illinois, Indiana, Michigan, Minnesota, Ohio
Wisconsin
Arkansas, Louisiana, New Mexico, Texas, Okla-
homa
Iowa, Kansas, Missouri, Nebraska
Colorado, Montana, North Dakota, South Dakota,
Utah, Wyoming
Arizona, California, Hawaii, Nevada, American
Samoa, Guam, Trust Territories of Pacific Is-
lands, Wake Island
Alaska, Idaho, Oregon, Washington
DEPARTMENT OF AGRICULTURE^
Office of the Secretary, Attn: Coordinator, En-
vironmental Quality Activities, U.S. Depart-
ment of Agriculture, Washington, D.C. 20250
447-3965.
' Contact the Office of Federal Activities for environ-
mental statements concerning legislation, regulations,
national program proposals, or other major policy issues.
For all other EPA consultation, contact the Regional
Administrator in whose area the proposed action (e.g.,
highway or water resource construction projects) will
take place. The Regional Administrators will coordinate
the EPA review. Addresses of the Regional Admin-
istrators, and the areas covered by their regions are as
follows:
Director, Office of Federal Activities, Environmental
Protection Agency, 401 M Street, S.W., Washington,
D.C. 20460 755-0777.
^ Requests for comments or information from indi-
vidual units of the Department of Agriculture, e.g.. Soil
Conservation Service, Forest Service, etc. should be sent
to the Office of the Secretary, Department of Agriculture,
at the address given above.
(#
I
PART 520-26
APPALACHIAN REGIONAL COMMISSION
Office of the Alternate Federal Co-Chairman,
Appalachian Regional Commission, 1666 Con-
necticut Avenue, N.W., Washington, D.C. 20235
967-4103.
DEPARTMENT OF THE ARMY (CORPS OF ENGINEERS)
Executive Director of Civil Works, Office of the
Chief of Engineers, U.S. Army Corps of En-
gineers, Washington, D.C. 20314 693-7168.
ATOMIC ENERGY COMMISSION
For nonregulatory matters: Office of Assistant
General Manager for Biomedical and Environ-
mental Research and Safety Programs, Atomic
Energy Commission, Washington, D.C. 20345
973-3208.
For regulatory matters: Office of the Assistant
Director for Environmental Projects, Atomic
Energy Commission, Washington, D.C. 20545
973-7531.
DEPARTMENT OF COMMERCE
Office of the Deputy Assistant Secretary for En-
vironmental Affairs, U.S. Department of Com-
merce, Washington, D.C. 20230 967-4335.
DEPARTMENT OF DEFENSE
Office of the Assistant Secretary for Defense
(Health and Environment), U.S. Department
of Defense, Room 3E172, The Pentagon, Wash-
ington, D.C. 20301 697-2111.
DELAWARE RIVER BASIN COMMISSION
Office of the Secretary, Delaware River Basin
Commission, Post Office Box 360, Trenton, N.J.
08603 (609) 883-9500.
FEDERAL POWER COMMISSION
Commission's Advisor on Environmental Quality,
Federal Power Commission, 825 N. Capitol
Street, N.E. Washington, D.C. 20426 386-6084.
GENERAL SERVICES ADMINISTRATION
Office of Environmental Affairs, Office of the
Deputy Administrator for Special Projects,
General Services Administration, Washington,
D.C. 20405 343-4161.
GREAT LAKES BASIN COMMISSION
Office of the Chairman, Great Lakes Basin Com-
mission, 3475 Plymouth Road, P.O. Box 999,
Ann Arbor, Michigan 48105 (313) 769-7431.
DEPARTMENT OF HEALTH, EDUCATION
AND WELFARE 3
For information with respect to HEW actions
occurring within the jurisdiction of the Depart-
ments' Regional Directors, contact the appro-
priate Regional Environmental Officer:
Office of Environmental Affairs, Office of the As-
sistant Secretary for Administration and Man-
agement, Department of Health, Education
and Welfare, Washington, D.C. 20202 963-4456.
Region I, Regional Environmental Officer, U.S.
Department of Health, Education and Welfare,
Room 2007B, John F. Kennedy Center, Boston,
Massachusetts 02203 (617) 223-6837.
Region H, Regional Environmental Officer, U.S.
Department of Health, Education and Welfare,
Federal Building, 26 Federal Plaza, New York,
New York 10007 (212) 264-1308.
Region HI, Regional Environmental Officer, U.S.
Department of Health, Education and Welfare,
P.O. Box 13716, Philadelphia, Pennyslvania
19101 (215) 597-6498.
Region IV, Regional Environmental Officer, U.S.
Department of Health, Education and Welfare,
Room 404, 50 Seventh Street, N.E. Atlanta,
Georgia 30323 (404) 526-5817.
Region V, Regional Environmental Officer, U.S.
Department of Health, Education and Welfare,
433 West Van Buren Stret, Chicago, Illinois
60607 (312) 353-1644.
DEPARTMENT OF HOUSING AND URBAN
DEVELOPMENT*
Regional Administrator II, Environmental Clear-
ance Officer, U.S. Department of Housing and
Urban Development, 26 Federal Plaza, New
York, New York 10007 (212) 264-8068.
5 Contact the Office of Environment Affairs for in-
formation on HEW's environmental statements concern-
ing legislation, regulations, national program proposals
or other major policy issues, and for all requests for
HEW comment on impact statements of other agencies.
" Contact the Director with regard to environmental
impacts of legislation, policy statements, program regula-
tions and procedures, and precedent-making project deci-
sions. For all other HUD consultation, contact the HUD
Regional Administrator in whose jurisdiction the project
lies, as follows:
Regional Administrator I, Environmental Clearance Of-
ficer, U.S. Department of Housing and Urban Develop-
PART 520-27
Regional Administrator III, Environmental
Clearance Officer, U.S. Department of Housing
and Urban Development, Curtis Building,
Sixth and Walnut Street, Philadelphia, Penn-
sylvania 19106 (215) 597-2560.
Regional Administrator IV, Environmental
Clearance Officer, U.S. Department of Housing
and Urban Development, Peachtree-Seventh
Building, Atlanta, Georgia 30323 (404) 526-
5585.
Regional Administrator V, Environmental Clear-
ance Officer, U.S. Department of Housing and
Urban Development, 360 North Michigan Ave-
nue, Chicago, Illinois 60601 (312) 353-5680.
Director, Office of Community and Environ-
mental Standards, Department of Housing and
Urban Development, Room 7206, Washington,
D.C. 20410 755-5980.
DEPARTMENT OF THE INTERIOR^
Director, Office of Environmental Project Review,
Department of the Interior, Interior Building,
Washington, D.C. 20240 343-3891.
INTERSTATE COMMERCE COMMISSION
Office of Proceedings, Interstate Commerce Com-
mission, Washington, D.C. 20423 343-6167.
ment, Room 405, John F. Kennedy Federal Building,
Boston, Mass 02203 (617) 223-4066.
Region VI, Regional Environmental Officer, U.S. Depart-
ment of Health, Education and Welfare, 1114 Com-
merce Street, Dallas, Texas 75202 (214) 749-2236.
Region VII, Regional Environmental Officer, U.S. De-
partment of Health, Education and Welfare, 601 East
12th Street, Kansas City, Missouri 64106 (816) 374-
3584.
Region VIII, Regional Environmental Officer, U.S. De-
partment of Health, Education and Welfare, 9017
Federal Building, 19th and Stout Streets, Denver,
Colorado 80202 (303) 837-4178.
Region IX, Regional Environmental Officer, U.S. De-
partment of Health, Education and Welfare, 50 Fulton
Street, San Francisco, California 94102 (415) 556-1970.
Region X, Regional Environmental Officer, U.S. Depart-
ment of Health, Education and Welfare, Arcade Plaza
Building, 1321 Second Street, Seattle, Washington
98101 (206) 442-0490.
^ Requests for comments or information from indi-
vidual units of the Department of the Interior should
be sent to the Office of Environmental Project Review at
the address given above.
DEPARTMENT OF LABOR
Assistant Secretary for Occupational Safety and
Health, Department of Labor, Washington,
D.C. 20210 961-3405.
MISSOURI RIVER BASINS COMMISSION
Office of the Chairman, Missouri River Basins
Commission, 10050 Regency Circle, Omaha,
Nebraska 68114 (402) 397-5714.
NATIONAL AERONAUTICS AND
SPACE ADMINISTRATION
Office of the Comptroller, National Aeronautics
and Space Administration, Washington, D.C.
20546 755-8440.
NATIONAL CAPITAL PLANNING COMMISSION
Office of Environmental Affairs, Office of the
Executive Director, National Capital Planning
Commission, Washington, D.C. 20576 382-7200.
NATIONAL ENDOWMENT FOR THE ARTS
Office of Architecture and Environmental Arts
Program, National Endowment for the Arts,
Washington, D.C. 20506 382-5765.
NEW ENGLAND RIVER BASINS COMMISSION
Office of the Chairman, New England River
Basins Commission, 55 Court Street, Boston,
Mass. 02108 (617) 223-6244.
Regional Administrator VI, Environmental
Clearance Officer, U.S. Department of Housing
and Urban Development, Federal Office Build-
ing, 819 Taylor Street, Fort Worth, Texas
76102 (817) 334-2867.
Regional Administrator VII, Environmental
Clearance Officer, U.S. Department of Housing
and Urban Development, 911 Walnut Street,
Kansas City, Missouri 64106 (816) 374-2661.
Regional Administrator VIII, Environmental
Clearance Officer, U.S. Department of Housing
and Urban Development, Samsonite Building,
1051 South Broadway, Denver Colorado 80209
(303) 837-4061.
Regional Administrator IX, Environmental
Clearance Officer, U.S. Department of Housing
and Urban Development, 450 Golden Gate
Avenue, Post Office Box 36003, San Francisco,
California 94102 (415) 556-4752.
#
#
#
PART 520-28
Regional Administrator X, Environmental
Clearance Officer, U.S. Department of Housing
and Urban Development, Room 226, Arcade
Plaza Building, Seattle, Washington 98101
(206) 583-5415.
OFFICE OF ECONOMIC OPPORTUNITY
Office of the Director, Office of Economic Oppor-
tunity, 1200 19th Street, N.W., Washington,
D.C. 20506 254-6000.
OHIO RIVER BASIN COMMISSION
Office of the Chairman, Ohio River Basin Com-
mission, 36 East 4th Street, Suite 208-20, Cin-
cinnati, Ohio 45202 (513) 684-3831.
PACIFIC NORTHWEST RIVER BASINS
COMMISSION
Office of the Chairman, Pacific Northwest River
Basins Commission, 1 Columbia River, Van-
couver, Washington 98660 (206) 695-3606.
SOURIS-RED-RAINY RIVER BASINS COMMISSION
Office of the Chairman, Souris-Red-Rainy River
Basins Commission, Suite 6, Professional
Building, Holiday Mall, Moorhead, Minnesota
56560 (701) 237-5227.
DEPARTMENT OF STATE
Office of the Special Assistant to the Secretary
for Environmental Affairs, Department of
State, Washington, D.C. 20520 632-7964.
SUSQUEHANNA RIVER BASIN COMMISSION
Office of the Executive Director, Susqhehanna
River Basin Commission, 5012 Lenker Street,
Mechanicsburg, Pa. 17055 (717) 737-0501.
TENNESSEE VALLEY AUTHORITY
Office of the Director of Environmental Re-
search and Development, Tennessee Valley Au-
thority, 720 Edney Building, Chattanooga,
Tennessee 37401 (615) 755-2002.
DEPARTMENT OF TRANSPORTATION^
Director, Office of Environmental Quality, Office
of the Assistant Secretary for Environment,
* Contact the Office of Environmental Quality, Depart-
ment of Transportation, for information on DOT's en-
vironental statements concerning legislation, regula-
tions, national program proposals, or other major policy
issues.
Safety, and Consumer Affairs, Department of
Transportation, Washington, D.C. 20590 426-
4357.
For information regarding the Department of
Transportation's other environmental statements,
contact the national office for the appropriate ad-
ministration:
U.S. Coast Guard
Office of Marine Environment and Systems, U.S.
Coast Guard, 400 7th Street, S.W., Washing-
ton, D.C. 20590 426-2007.
Federal Aviation Administration
Office of Environmental Quality, Federal Avia-
tion Administration, 800 Independence Avenue,
S.W., Washington, D.C. 20591 426-8406.
Federal Highway Administration
Office of Environmental Policy, Federal High-
way Administration, 400 7th Street, S.W.,
Washington, D.C. 20590 426-0351.
Federal Railroad Administration
Office of Policy and Plans, Federal Railroad
Administration, 400 7th Street, S.W., Wash-
ington, D.C. 20590 426-1567.
Urban Mass Transportation Administration
Office of Program Operations, Urban Mass Trans-
portation Administration, 400 7th Street, S.W.,
Washington, D.C. 20590 426-4020.
For other administration's not listed above,
contact the Office of Environmental Quality, De-
partment of Transportation, at the address given
above.
For comments on other agencies' environmental
statements, contact the appropriate adminis-
tration's regional office. If more than one
administration within the Department of Trans-
portation is to be requested to comment, contact
the Secretarial Representative in the appropriate
Regional Office for coordination of the Depart-
ment's comments:
SECRETARIAL REPRESENTATIVE
Region I Secretarial Representative, U.S. De-
partment of Transportation, Transportation
Systems Center 55 Broadway, Cambridge,
Massachusetts 02142 (617) 494-2709.
PART 520-29
Region II Secretarial Representative, U.S. De-
partment of Transportation, 26 Federal Plaza,
Room 1811, New York, New York 10007 (212)
264-2672.
Region III Secretarial Representative, U.S. De-
partment of Transportation, Mall Building,
Suite 1214, 325 Chestnut Street, Philadelphia,
Pennsylvania 19106 (215) 597-0407.
Region IV Secretarial Representative, U.S. De-
partment of Transportation, Suite 515, 1720
Peachtree Rd., N.W., Atlanta, Georgia 30309
(404) 526-3738.
Region V Secretarial Representative, U.S. De-
partment of Transportation, 17th Floor, 300 S.
Wacker Drive, Chicago, Illinois 60606 (312)
353-4000.
Region VI Secretarial Representative, U.S. De-
partment of Transportation, 9-C-18 Federal
Center, 1100 Commerce Street, Dallas, Texas
75202 (214) 749-1851.
Region VII Secretarial Representative, U.S. De-
partment of Transportation, 601 E. 12th Street,
Room 634, Kansas City, Missouri 64106 (816)
374-2761.
Region VIII Secretarial Representative, U.S.
Department of Transportation, Prudential
Plaza, Suite 1822, 1050 17th Street, Denver,
Colorado 80225 (303) 837-3242.
Region IX Secretarial Representative, U.S. De-
partment of Transportation, 450 Golden Gate
Avenue, Box 36133, San Francisco, California
94102 (415) 556-5961.
Region X Secretarial Representative, U.S. De-
partment of Transportation, 1321 Second Ave-
nue, Room 507, Seattle, Washington 98101
(206) 442-0590.
FEDERAL AVIATION ADMINISTRATION
New England Region, Office of the Regional Di-
rector, Federal Aviation Administration, 154
Middlesex Street, Burlington, Massachusetts
01803 (617) 272-2350.
Eastern Region, Office of the Regional Director,
Federal Aviation Administration, Federal
Building, JFK International Airport, Jamaica,
New York 11430 (212) 995-3333.
Southern Region, Office of the Regional Director,
Federal Aviation Administration, P.O. Box
20636, Atlanta, Georgia 30320 (404) 526-7222.
Great Lakes Region, Office of the Regional Di-
rector, Federal Aviation Administration, 2300
East Devon, Des Plaines, Illinois 60018 (312)
694-4500.
Southwest Region, Office of the Regional Di-
rector, Federal Aviation Administration, P.O.
Box 1689, Fort Worth Texas 76101 (817) 624-
4911.
Central Region, Office of the Regional Director,
Federal Aviation Administration, 601 E. 12th
Street, Kansas City, Missouri 64106 (816) 374-
5626.
Rocky Mountain Region, Office of the Regional
Director, Federal Aviation Administration,
Park Hill Station, P.O. Box 7213, Denver,
Colorado 80207 (303) 837-3646.
Western Region, Office of the Regional Director,
Federal Aviation Administration, P.O. Box
92007, World Way Postal Center, Los Angeles,
California 90009 (213) 536-6427.
Northwest Region, Office of the Regional Di-
rector, Federal Aviation Administration, FAA
Building, Boeing Field, Seattle, Washington
98108 (206) 767-2780.
FEDERAL HIGHWAY ADMINISTRATION
Region 1, Regional Administrator, Federal High-
way Administration, 4 Normanskill Boulevard,
Delmar, New York 12054 (518) 472-6476.
Region 3, Regional Administrator, Federal High-
way Administration, Room 1621, George H.
Fallon Federal Office Building, 31 Hopkins
Plaza, Baltimore, Maryland 21201 (301) 962-
2361.
Region 4, Regional Administrator, Federal High-
way Administration, Suite 200, 1720 Peachtee
Road, N.W., Atlanta, Georgia 30309 (404) 526-
5078.
Region 5, Regional Administrator, Federal High-
way Administration, Dixie Highway, Home-
wood, Illinois 604030 (312) 799-6300.
Region 6, Regional Administrator, Federal High-
way Administration, 819 Taylor Street, Fort
Worth, Texas 76102 (817) 334-3232.
Region 7, Regional Administrator, Federal High-
way Administration, P.O. Box 7186, Country
Club Station, Kansas City, Missouri 64113
(816) 361-7563.
#
i
i
PART 520-30
Region 8, Regional Administrator, Federal High-
way Administration, Room 242, Building 40,
Denver Federal Center, Denver, Colorado
80225.
Region 9, Regional Administrator, Federal High-
way Administration, 450 Golden Gate Avenue,
Box 36096, San Francisco, California 94102
(415) 556-3895.
Region 10, Regional Administrator, Federal
Highway Administration, Room 412, Mohawk
Building, 222 S.W. Morrison Street, Portland,
Oregon 97204 (503) 221-2065.
URBAN MASS TRANSPORTATION ADMINISTRATION
Region I, Office of the UMTA Representative,
Urban Mass Transportation Administration,
Transportation Systems Center, Technology
Building, Room 277, 55 Broadway, Boston,
Massachusetts 02142 (617) 494-2055.
Region H, Office of the UMTA Representative,
Urban Mass Transportation Administration,
26 Federal Plaza, Suite 1809, New York, New
York 10007 (212) 264-8162.
Region HI, Office of the UMTA Representative,
Urban Mass Transportation Administration,
Mall Building, Suite 1214, 325 Chestnut Street,
Philadelphia, Pennyslvania 19106 (215) 597-
0407.
Region IV, Office of the UMTA Representative,
Urban Mass Transportation Administration,
1720 Peachtree Road, Northwest Suite 501,
Atlanta, Georgia 30309 (404) 526-3948.
Region V, Office of the UMTA Representative,
Urban Mass Transportation Administration,
300 South Wacker Drive, Suite 700, Chicago,
Illinois 60606 (312) 353-6005.
Region VI, Office of the UMTA Representative,
Urban Mass Transportation Administration,
Federal Center, Suite 9E24, 1100 Commerce
Street, Dallas, Texas 75202 (214) 749-7322.
Region VII, Office of the UMTA Representative,
Urban Mass Transportation Administration,
c/o FAA Management Systems Division, Room
1564D, 601 East 12th Street, Kansas City,
Missouri 64106 (816) 374-5567.
Region VIII, Office of the UMTA Representative,
Urban Mass Transportation Administration,
Prudential Plaza, Suite 1822, 1050 17th Street.
Denver, Colorado 80202 (303) 837-3242.
Region IX, Office of the UMTA Representative,
Urban Mass Transportation Administration,
450 Golden Gate Avenue, Box 36125, San Fran-
cisco, California 94102 (415) 556-2884.
Region X, Office of the UMTA Representative,
Urban Mass Transportation Administration,
1321 Second Avenue, Suite 5079, Seattle, Wash-
ington (206) 442-0590.
DEPARTMENT OF THE TREASURY
Office of Assistant Secretary for Administration,
Department of the Treasury, Washington,
D.C. 20220 964-5391.
UPPER MISSISSIPPI RIVER BASIN COMMISSION
Office of the Chairman, Upper Mississippi River
Basin Commission, Federal Office Building,
Fort Snelling, Twin Cities, Minnesota 55111
(612) 725-4690.
WATER RESOURCES COUNCIL
Office of the Associate Director, Water Resources
Council, 2120 L Street, N.W., Suite 800, Wash-
ington, D.C. 20037 254-6442.
PART 520-31
ATTACHMENT 4
STATE AND LOCAL AGENCY REVIEW
OF IMPACT STATEMENTS
1. OBM Revised Circular No. A-95 through
its system of clearinghouses provides a means for
securing the views of State and local environ-
mental agencies, which can assist in the prepara-
tion of impact statements. Under A-95, review
of the proposed project in the case of federally
assisted projects (Part I of A-95) generally
takes place prior to the preparation of the impact
statement. Therefore, comments on the environ-
mental effects of the proposed project that are
secured during this stage of the A-95 process
represent inputs to the environmental impact
statement.
2. In the case of direct Federal development
(Part II of A-95), Federal agencies are required
to consult with clearinghouse at the earliest
practicable time in the planning of the project
or activity. Where such consultation occurs
prior to completion of the draft impact state-
ment, comments relating to the environmental
eflfects of the proposed action would also repre-
sent inputs to the environmental impact state-
ment.
3. In either case, whatever comments are made
on environmental effects of proposed Federal or
federally assisted projects by clearinghouses, or
by State and local environmental agencies
through clearinghouses, in the course of the A-95
review should be attached to the draft impact
statement when it is circulated for review. Copies
of the statement should be sent to the agencies
making such comments. Whether those agencies
then elect to comment again on the basis of the
draft impact statement is a matter to be left
to the discretion of the commenting agency de-
pending on its resources, the significance of the
project and the extent t« which its earlier com-
ments were considered in preparing the draft
statement.
4. The clearinghouses may also be used, by mu-
tual agreement, for securing reviews of the draft
environmental impact statement. However, the
Federal agency may wish to deal directly with
appropriate State or local agencies in the review
of impact statements because the clearinghouses
may be unwilling or unable to handle this phase
of the process. In some cases, the Governor may
have designated a specific agency, other than the
clearinghouse, for securing reviews of impact
statements. In any case, the clearinghouses
should be sent copies of the impact statement.
5. To aid clearinghouses in coordinating State
and local comments, draft statements should in-
clude copies of State and local agency comments
made earlier under the A-95 process and should
indicate on the summary sheet those other agen-
cies from which comments have been requested,
as specified in Attachment 1.
40 F.R. 52395
November 10, 1975
f
f
PART 520-32
EfFecMve: July 28, 1977
PREAMBLE TO PART 523— VEHICLE CLASSIFICATION
(Docket No. FE76-05; Notice 3)
Title V of the Motor Vehicle Information and
Cost Savings Act (the Act) specifies that certain
vehicles vi'ith a gross vehicle weight rating
(GVWR) of not more than 6,000 pounds are
automobiles, and, therefore, subject to the fuel
economy provisions of the Act. This rule adds
passenger cais with a GVWR of more than 6,000
pounds and less than 10,000 pounds to the auto-
mobile category. The rule also specifies which
automobiles are passenger automobiles and which
are nonpassenger automobiles. Separate fuel
economy standards have been established under
the Act for those automobile subcategories.
Effective Date : July 28. 1977.
For Further Information, Contact:
Douglas Pritchard
Office of Automotive Fuel Economy
National Highway Traffic Safety
Administration
Department of Transportation
Washington, D.C. 20.590
(202) 75;V9384
Supplementary Information: The es.sential fea-
tures of this rule were first outlined in the notice
of proposed I'ulemaking issued by this agency on
petitions for reduction of the average fuel econ-
omy standards for model year 1978-1980 passen-
ger automobiles (41 FR 46878, October 26, 1976).
A notice of pi'oposed rulemaking (XPRM) deal-
ing directly with classification appeared at 41 FR
.5.")368 (m December 20. 1976. The NPRM fol-
lowed the ()\itlines in tlie proposal for reductio7i
petitions. The NPRM proposed classifying all
passenger cars with a gross veliicle weight rating
(GVAA'R) of less than 10.000 pounds as passen-
ger automobiles. Pickup trucks, recreational ve-
hicles, vans, general purpose vehicles, and othei'
similar vehicles with a GVWR of not more than
6,000 pounds were classified as nonpassenger auto-
mobiles. All comments on tliat proposal have
been considered and the most significant ones are
discussed below.
S.ufrxjnary of major differences between pro-
posed and fnal rules. The only significant
change in the rule is in the method for measuring
the interior vohmie of certain automobiles for
the purpose of determining whether those auto-
mobiles have greater cargo-carrying volume than
passenger-carrying volume. If they do. they are
a type of nonpassenger automobile. The method
proposed in the NPRM differed slightly from
the method used by the Environmental Protection
Agency (EPA) for determining comparable
classes of passenger automobiles under its fuel
economy labeling program. The final rule adopts
the EPA method in all respects for passenger
automobiles.
Scope of rule. Under this rule, the passenger
automobile and nonpassenger automobile sub-
categories consist of the same types of vehicles
proposed to be included in each category in the
NPRM.. The only vehicles that are potentially
subject to regiilation under the Act and that are
not classified as automobiles by this notice are
pickup trucks, recreational vehicles, vans, and
general purpose vehicles with a GVWR of more
than 6,000 pounds and less than 10,000 pounds.
The agency is contemplating initiating rulemak-
ing late this summer to expand the nonpassenger
automobile subcategory by raising the upper
GVWR limit of the subcategory to at least 8,500
pounds. That proposal would make the expan-
sion effecti\e for the 1980 model year. Thus, the
vehicles brought into the nonpassenger automo-
l)ile subcategory by that proposal would become
sui)ject to average fuel economy standards be-
ginning in that model year.
PART 023— PRE 1
■fFeclive: July 28, 1977
International Harvester commented that, al-
ihouph tlie preamble to the classification NPRM
ndicated that the nonpassenger automobile sub-
lategory was intended to include only vehicles
with a GVWR of not more than 6,000 pounds,
:he proposed rule itself could be interpreted as
classifying vehicles which have a GVWR of more
than 6,000 pounds and less than 10,000 pounds
and have 4 of the 5 ground clearance character-
istics specified in the rule as automobiles capable
of off-highway operation. Since an automobile
capable of off-highway operation is a type of
nonpassenger automobile, this conmienter be-
lieved that the rule would yield a result contrary
to the stated intention of the preamble.
This is a misinterpretation of the rule. The
provisions in the rule relating to passenger auto-
mobiles and nonpassenger automobiles, including
automobiles capable of off-highway operation,
have been drafted so that they set forth how any
vehicle with a GVWR of less than 10,000 pounds
be subcategorized if it were first categorized as
an automobile. As noted above, this rule does
not categorize as automobiles all vehicles that
can potentially be so categorized. Under the
statute, all such vehicles with a GVWR of not
more than 6,000 pounds are automatically auto-
mobiles. Section 523.3(b) of this rule adds pas-
senger cars with a GVWR greater than 6,000
pounds and less than 10,000 pounds to that cate-
gory. The rule states how these automobiles are
subcategorized. Yet to be included in the auto-
mobile category are pickup trucks, vans, recrea-
tional vehicles, general purpose vehicles and
other similar vehicles with a GVWR greater than
6,000 pounds and less than 10,000 poiuids. The
rule states how these vehicles would be subcate-
gorized when and if they are first categorized as
automobiles. Thus, the crucial point to bear in
mind is that a vehicle cannot fall within some
subcategory of automobiles, such as automobiles
capable of olf-highway operation, unless it first
falls within the automobile category. Since no
vehicle which has a GVWR greater than 6,000
pounds and less than 10,000 pounds and has 4
or 5 of the ."> ground clearance characteristics is
an automobile under this rule, no such vehicle
can be an automobile capable of off-highway op-
eration under this rule. Such vehicles may be
what one might call vehicles capable of off-
highway operation, but they are not yet auto-
mobiles capable of off -highway operation.
In a related comment the General Services
Administration (GSA) stated that it did not
understand why this agency had proposed to list
a GVWR of more than 6,000 pounds as one cri-
terion for classification of an automobile as an
automobile capable of off-highway operation.
The proposed and final rules include in the auto-
mobile category any vehicle that has a GVWR
of less than 6,000 pounds and has 4 or 5 of the
ground clearance characteristics specified in the
rule. Any such automobile is an automobile
capable of off-highway operation. GSA correctly
interpreted the proposed rule as excluding, how-
ever, a vehicle from the automobile category if the
vehicle has a GVWR greater than 6,000 pounds
and less than 10,000 pounds and 4 or 5 of the 5
ground clearance characteristics. To clarify this
exclusion, GSA suggested the deletion of having
a GVWR of greater than 6,000 pounds as one
criterion for classification of an automobile as
one capable of off-highway operation.
The confusion discussed by International Har-
vester and GSA could be eliminated if having a
GVAVR of greater than 6,000 pounds and less
than 10,000 pounds were not viewed as an indi-
cation of a capability of off-highway operation
in the same vein as 4-wheel drive or ground
clearance. Section 501(3) of the Act might have
been more clearly understood if it had been
drafted to provide that automobiles with a
GVWR of not more than 6,000 pounds had to
have 4-wheel drive and another feature related
to off-higliway capability to be classified as an
automobile capable of off-highway operation, and
that automobiles with a GVWR greater than
6,000 pounds and less than 10,000 pounds had to
have only some feature, other than 4-wheel drive,
related to off-highway capability to be so classi-
fied. Since that .section was not so drafted and
since the agency deems it desirable to follow
statutory language in drafting its criteria in the
regulation, the agency has decided to adopt the
criteria for classification as automobiles capable
of off-liighway operation as proposed.
(#
t
PART 523— PRE 2
EffacHve: July 26, 1977
Subclassif cation of nonpassenger automobiles.
Ford and International Harvester urged that the
nonpassenger automobile subcategory be subdi-
vided. International Harvester urged the crea-
tion of subcategories, one for automobiles capable
of off-highway operation and another for all
other nonpassenger automobiles. Ford also pro-
posed a subcategory for automobiles capable of
off-highway operation and urged that the remain-
ing nonpassenger automobiles be divided into
those with a GVWR of not more than 6,000
pounds and those with a G\'1VR greater than
6,000 pounds and less than 10,000 pounds. In
its notice of proposed rulemaking (November 26,
1976, 41 FR .52087) on the average fuel economy
standard for 1979 nonpassenger automobiles, the
agency stated that it was not prepared to ad-
dress fully the subclassification of nonpassenger
automobiles. Based on comments by interested
persons, a small subclass of nonpassenger auto-
mobiles was created for general purpose vehicles
such as the AMC Jeep. The question of further
subclassification of nonpassenger automobiles will
be considered in connection with rulemaking to
be initiated late this summer.
Definitions. The XPRM defined "axle clear-
ance", one of the criteria for classifying automo-
biles as automobiles capable of off-highway
operation, as follows:
"Axle clearance" means the distance from
the level surface on wliicli an automobile is
standing to the lowest point on the axle
differential of the automobile.
International Harvester commented that this
definition did not provide for the possibility that
automobiles intended for off-highway operation
might be equipped with indei)en(lent suspension.
To accommodate s>ich automobiles, the company
urged that the definition be rewritten to read as
follows:
"Axle clearance" means the distance from
the level surface on which an automobile is
standing to the lowest point on the axle
differential or otJier component more than
18 inches inboard of the wheels in either the
front or rear of the automobile.
The reason for this change would be that the
differential on independently suspended automo-
biles could be higher than portions of tlie axles
on those automobiles. In contrast, the lowest
portion of the differential on nonindependently
suspended automobiles is typically lower than all
portions of the axles of those automobiles. Thus,
use of the differential as the reference point for
measuring axle clearance could overstate the ob-
stacle clearance capabilities of independently
suspended automobiles.
The NHTSA generally agrees with this obser-
vation, but is unaware of any standardized
ground clearance criteria which would consider
all the factors involved in ground clearance. For
instance, the definition proposed by International
Harvester does not address the width of the ve-
hicle being measured or the size and shape of the
obstacle being negotiated. These factors are also
important in determining a vehicle's obstacle
clearance capabilities.
Nevertheless, the important points to be noted
are that the definition of axle clearance proposed
in the NPRM is a measure of ground clearance
recognized by the Society of Automotive ("Engi-
neers and presently reported by the Motor Ve-
hicle Manufacturers Association and the indi-
vidual manufacturers and that use of the proposed
definition adequately serves its purpose and does
not disadvantage any vehicle, regardless of its
axle configuration or suspension system. Accord-
ingly, in the interests of avoiding unnecessary
complexity in this rule, the definition proposed
in the NPRM is adopted. If a need arises in the
future to amend this definition, the NHTSA will
initiate rulemaking.
A number of comments were addressed to the
interior volume measurement technique used in
detei-mining whether an automobile had greater
cargo-carrying volume than passenger-carrying
• olume and thus was a nonpassenger automobile.
I h( NPRM ['ioposed to use a technique that
diftcred slightly from that used by the EPA in
its fuel economy labeling regulation (40 CFR
600.31.T; November 10, 1976, 41 FR 49752) with
respect to station wagons and hatchbacks. Inter-
national Harvester, Ford Motor Company, and
Volkswagen of America all stated that this
agency should use the EPA measurement tech-
nicjue to avoid the possibility of requiring the
manufacturers to measure the interior volume of
certain automobiles in two different ways. None
of the inee companies coinmeni^'d on whether
PART 523— PRE 3
Effective: July 28, 1977
different techniques were necessary. Ford com-
mented also that publication of two different in-
terior volume measurements for the same
automobile would unnecessarily confuse consum-
ers. Conversely, General Motors stated that the
measurement techniques used by the two agencies
need not be identical.
In the NPRM, this agency stated that use of a
single measuring technique that differed slightly
from the techniques used by the EPA for various
types of automobiles appeared to be necessary.
The EPA has one technique for station wagons
and a slightly different one for hatchbacks.
There is no EPA technique for vans.
After consideration of the comments and a
reevaluation of the problem of differentiating
between certain passenger automobiles and non-
passenger automobiles, this agency has decided
to use the EPA measuring techniques for station
wagons and hatchbacks. The differences between
the technique proposed in the NPRM and the
techniques used by the EPA are minor and do
not result in different classification of any auto-
mobiles as passenger automobiles or nonpassenger
automobiles. Since the results of the different
techniques are the same, there appears to be no
reason for burdening the manufacturers with the
possibility of having to measure the interior
space of the same automobile in two different
manners. Further, use of the same techniques
will avoid the possibility of consumers being
confused by some advertisements about interior
space based on one technique and other adver-
tisements based on the other technique.
The adoption of the EPA techniques for meas-
uring intei'ior volume of station wagons and
hatchbacks meets a number of concerns that
various manufacturers had raised about the pro-
posed techniques for measuring the interior space
of station wagons. Ford and Chrysler com-
mented that the proposed technique was not
suited to 3-seated wagons whose third seat was
side or rear facing. The adopted EPA tech-
nique measures the third seat area with the seat
down in the cargo-carrying position.
Chrysler noted that the proposed definition of
"passenger-carrying volume" did not clearly pro-
vide dimensions for measuring the volumes of
third seats. This could be a problem in passen-
#
ger vans. The reference in the proposed defini-
tion to "rear seats" was intended to encompass
all seats behind the front seat. The definition
has been amended to provide that the dimensions
for second seats be used for any seats to the rear
of the second seats also.
Ford urged that certain changes be made in
the EPA technique for measuring interior width
and front seat leg room and that under-floor
(hidden) storage space be included in determin-
ing station wagon cargo volume. These com-
ments should be addressed to the EPA, which has
the responsibility under the Act for these tech-
niques.
The measurement technique proposed in the
NPRM is adopted for use with respect to all
automobiles, e.g., vans, for which the EPA does
not specify a measurement technique. This pro-
vision is necessary so that a measurement tech-
nique will be specified for every type of
automobile.
Automobiles. Several commenters stated cer-
tain vehicles with off-highway capability were
not automobiles and thus were not subject to
average fuel economy standards under the Act.
AMC contended that its Jeep CJ is designed,
manufactured, and marketed primarily for off-
highway operation. AMC stated that Jeeps are
"built with low and medium speed capability and
accommodate many off-road work-performing
equipment accessories". AMC concluded that the
Jeep cannot be an automobile since it is not, in
that company's view, "manufactured primarily
for use on the public streets, roads, and high-
ways." Ford made a similar argument. It stated
that vehicles having all of the following features
are not manufactured primarily for highway use:
(1) 4-wheel drive, (2) high ground clearance as
evidenced by certain approach, breakover, and
departure angles and by certain running and axle
clearances, (3) engine oil systems capable of op-
eration on inclines having up to a 60 percent
grade, (4) relatively high axle ratios and heavy
duty axle and suspension components, and (5)
relatively high frontal area. The GSA took no
position on the treatment of vehicles capable of
off-highway operation but noted what appeared
to it as an inconsistency between a statement on
p. 90 in the House report on the Act regarding
i
#
PART 523— PRE 4
EITtcNve: July 28, 1977
vehicles manufactured primarily for off-road use
and the portion of the proposed rule relating to
automobiles capable of oiT-hiphway operation.
NHTSA cannot accept 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. These arguments
have already been considered by the \HTSA and
rejected in the preamble to the rule establishing
average fuel economy standards for nonpassenger
automobiles produced during the 1973 model
year; 42 FR 13807, March 14. 1977. The discus-
sion that follows is a shortened version of that
earlier discussion. This discussion also demon-
strates that the inconsistency perceived by GSA
does not exist.
The characteristics identified by the comment-
ers are merely characteristics of vehicles which
are capable of off-highway operation. There was
no claim that the vehicles had characteri.stics
that made them incapable of highway use. More
importantly, neither manufacturer claimed that
the vehicles were not intended or expected to
spend a substantial portion of their operating
lives on the public streets, roads, or liighways.
Therefore, \HTSA believes that Congress in-
tended these vehicles to be automobiles within
the meaning of Section .501 of Title V. and sub-
ject to fuel economy standards as nonpassenger
automobiles.
This rule and section 501(1) of the Act define
an automobile as "any 4-wheeled vehicle pro-
pelled by fuel which is manufactured primarily
for use on public streets, roads, and highways . . ."
The manufacturers' claims rest on an interpreta-
tion of the word "primarily" as meaning "cluefly"
in the above-quoted definition of "automobile".
Tt is a common principle of statutoiy construc-
tion that the woi-ds of a statute are to be given
their ordinary, everyday meanings, unless there
is evidence on the face of the statute that the
ordinary, everyday meaning is not applicable and
that application of the ordinary, everyday mean-
ing would frustrate the legislative intent. Malat
V. Riddel 38,3 U.S. r>69. .■)71-.-)72 (1966). How-
ever, the word "primarily" has two ordinary,
everyday meanings in legal u.sage — "chiefly" and
"substantially". See Board of Governors of the
Federal Reserve System v. Agnew, 329 U.S. 441,
446 (1947) ; 33A Words and Phrases 206 et seg.
Hence, the NHTSA must determine which of
these two meanings the Congress intended to be
applicable in the definition of "automobile".
The NHTSA interprets the word "primarily"
as used in the definition of automobile to mean
"substantially" for the reasons set forth below.
Thus, even if a vehicle is manufactured chiefly
for off-highway use, if highway use is a substan-
tial use of the vehicle, it is manufactured pri-
marily for both highway and off-highway use,
and is therefore an automobile subject to Title V.
Congress clearly intended that vehicles capable
of off-highway operation be subject to fuel econ-
omy standards as nonpassenger automobiles;
S. Rep. No. 516, 94th Cong., 1st Sess. 153 (1975).
Thus, a manufacturer must show more than an
off-highway capability in order to establish that
a vehicle is beyond the scope of Title V.
The phrase "manufactured primarily for use
on the public streets, roads, and highways" 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
Information and Cost Savings Act (15 U.S.C.
1901(15)). "Automobile" under Title V, and
"motor vehicle" under both the Vehicle Safety
Act and the Cost Savings Act, do not completely
overlap (for instance, "automobiles" are limited
to four-wheeled vehicles, while "motor vehicles"
are not so limited). However, with respect to a
vehicle's identity as an on-road or an oflf-road
vehicle, the terms "motor vehicle" and "automo-
bile" seem to refer to the same vehicles. From
the experience with regidating these vehicles un-
der the Motor Vehicle Safety Act and the Cost
Savings Act, it is clear that the vehicles referred
to by AMC and Ford are on-road vehicles with a
capability for off-highway operation.
.Vfter more than a decade of regulation under
the Vehicle Safety Act. both Ford and AMC
have acted consistently with the view that ve-
hicles referred to here are "motor vehicles". In-
deed. AMC admits that the vehicles are designed
to meet the Federal safety standards applicable
to motor vehicles. Moreover, the legislative his-
tory of the Cost Savings Act specifically con-
FART 523— PRE 5
Effective: July 28, 1977
templates that Jeeps are subject to that Act.
S. Kept. 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.
There is nothing in the legislative history of
Title V which indicates that the intent of Con-
gress was that the Title have a narrower scope
than that given by the NHTSA's interpretation
in the NPRM. In its comment to the NPRM,
Ford quotes the following passage on p. 90 of the
House report on Title V in support of its claim
that vehicles with all the features suiting it for
off-road use which Ford discussed were not manu-
factured 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 nmniifactured primarily for off -road
rather than highway use. (Emphasis sup-
plied by Ford.)
Although this language gives some examples of
the kinds of vehicles which Congress intended
not to be subject to fuel economy standards under
the Title, e.g., agricultural equipment and con-
struction equipment, those vehicles are not char-
acterized by the features which are claimed by
the manufacturers to establish that a vehicle was
not manufactured primarily for highway use.
Furthermore, the language which Ford under-
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 runway fire apparatus, are some
vehicles which are not manufactured primarily
for highway use. A fuller discussion of the
relevant legislative history is set forth below in
the section on passenger and nonpassenger auto-
mobiles.
Finally, the purpose of the Title dictates that
its provisions, especially regarding the scope of
its applicability, be given a liberal construction.
Congress enacted Title V in response to the en-
ergy shortage. 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 excluding an
entire class of vehicles from regulation under the
Title must be firmly based in the language of the
Title or its legislative history. Neither AMC nor
Ford has shown a clear expression of Congres-
sional intent that the vehicles with the character-
istics they described, making them suitable for
off-road operation, 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.
Passenger automobiles and nonpassenger auto-
mobiles. This rule separates vehicles classed as
automobiles into two subcategories — "passenger
automobiles" and "nonpassenger automobiles".
The definition of "passenger automobile" in this
rule is taken directly from Section 501(2) of the
Act. The "nonpassenger automobile" category is
a residual subcategory, consisting of all automo-
biles which are not passenger automobiles.
Chrysler and General Motors commented that
the separation of automobiles into passenger
automobiles and nonpassenger automobiles is
proper under the Act, and that the NPRM placed
all vehicle types in the proper category.
The types of automobiles to be included in
these subcategories depend upon the interpreta-
tion given to "primarily" in the definition of
"passenger automobile". An explanation of this
agency's interpretation should serve to eliminate
any remnants of the ambiguity which GSA per-
ceived in the NPRM regarding the automobiles
capable of off-highway operation. If "primarily"
were interpreted to mean "substantially", as it
is in the definition of "automobile" discussed
supra, then almost every automobile would be a
passenger automobile, since a substantial func-
tion of almost all automobiles is to transport at
least two persons. The only nonpassenger auto-
mobiles under this interpretation would be those
specifically excluded by the definition of passen-
ger automobile; i.e., automobiles capable of off-
highway operation and automobiles manufactured
primarily for use in the transportation of more
than 10 individuals. If, on the other hand,
"primarily" is interpreted to mean "chiefly" or
"predominantly", then all automobiles not manu-
factured chiefly for use in the transportation of
#
I
PART 523— PRE
Effective: July 28, 1977
individuals would be nonpassenger automobiles,
as well as the two types of automobiles excluded
from the passenj^er automobile category by defi-
nition.
The NHTSA interprets the word "primarily"
in the definition of "passenger automobile" to
mean "chiefly". Based on the discussion below
of that definition and its legislative history,
Congress clearly intended that "passenger auto-
mobile" include only those vehicles traditionally
regarded as passenger cars, i.e., vehicles whose
major design features, including body style, re-
flect the purpose of carrying passengers. Ex-
amples of the design features which singly or in
combination indicate that an automobile is not a
passenger automobile are an open bed for carry-
ing cargo, heavy duty suspension, and greater
cargo-carrying than pas.senger-carrying volume.
As discussed in the above section entitled
Automobiles, the use of "primarily" in the defi-
nition of "automobile" must be considered against
a legislative backdrop of other .statutes using the
identical phrase, and the remedial purposes of
the Act justifying a broad interpretation of those
definitions which delineate the scope of its ap-
plicability. However, the use of "primarily" in
the definition of "passenger automobile" brings
other considerations into play. First, the reme-
dial purposes of the Act do not require a broad
interpretation of the definition "passenger auto-
mobile". Section 502 (b) of the Act requires the
NHTSA to set average fuel economy standards
for noni)assenger automobiles at the maximum
feasible level. Accordingly, the fuel efficiency
of these vehicles will be improved regardless of
whether they are classified as passenger or non-
pa.ssenger automobiles.
Second, interpreting "passenger automobile" as
this rule does permits the XHTSA to make the
passenger automobile and nonpas.senger automo-
bile categories under the Act parallel the vehicle
classification scheme established under the Na-
tional Traffic and Motor \^ehicle Safety Act of
1966, 15 U.S.Cl 1381 et seq. ("passenger car",
"multipurpose passenger vehicle", and "truck"),
and very similar to the scheme established under
the Clean Air Act, 42 U.S.C. 1857 rt ^rq. ("liglit
duty vehicle" and "light duty truck"). Similar
classification of vehicles for all three regulatory
purposes will serve to minimize the possibility
of inconsistent regulatory requirements. Addi-
tionally, the manufacturers can quickly determine
the class of their automobiles for fuel economy
purposes by examining the classification of these t
vehicles under existing regulatory schemes.
Third, placing pickup trucks and vans in the
passenger automobile category would be contrary
to the intent of Congress, as discussed below.
In the House of Representatives, the automo-
bile fuel economy provisions of H.R. 7014 were
derived almost verbatim from the Sharp floor
amendment to H.E. 6860. That amendment con-
tained the following sections :
Section 301(a)(3) The term "passenger
automobile" means any automobile which
has as its primary intended function the
transportation of not more than ten indi-
viduals.
Section 301(a)(4) The term "light-duty
truck and multipurpose passenger vehicle"
means any automobile which is not a pas-
senger automobile.
By calling the category of automobiles other than
passenger automobiles "light-duty trucks and
multipurpose passenger vehicles", the bill did not
draw on new, amorphous concepts, but, instead,
chose terms with existing definitions under other
Acts. Under the Clean Air Act, the EPA de-
fined the term "light duty truck" at that time as
"any motor vehicle rated at 6,000 pounds GVW
or less, which is designed primarily for purposes
of transportation of property or is a derivative
of such a vehicle, or is available with special
features enabling off-street or off-highway opera-
tion and use"; 40 CFR § 85.202(a) (5). Under
the Vehicle Safety Act, the NHTSA at the time
of the adoption of the Sharp amendment defined
a "nmltipurpose passenger vehicle" as "a motor
vehicle with motive power, except a trailer, de-
signed to carry 10 persons or less which is con-
structed either on a truck chassis or with special
features for occasional off-road operation"; 49
CFR § 571.3. In the Cost Savings Act, Congress
itself defined "multipurpose passenger vehicle"
in the same way as the NHTSA had in the above
(juoted regulation; 15 U.S.C. 1901(2).
PART 523— PRE 7
Effacllve: July 28, 1977
Vehicles similar to AMC's Jeeps had been re-
garded by both the EPA and the NHTSA as
automobiles with special features enabling off-
highway use. The EPA had classified pickup
trucks and cargo vans as light duty trucks, be-
cause EPA detennined that these types of vehicles
were designed primarily to transport property.
Passenger vans and recreational vehicles, such as
campers, had also been classed with light duty
trucks, since these types of vehicles were deriva-
tives of cargo vans and pickup trucks. The
NHTSA made the same classification under the
Vehicle Safety Act based on the fact that these
vehicles were constructed on a truck chassis.
Station wagons, on the other hand, have never
been classified as light duty trucks by the EPA.
The EPA determined that station wagons, which
are built on passenger car chassis with passenger
car-type springs and suspension systems, are de-
signed primarily to transport people, with a sub-
sidiary ability to transport property. The
NHTSA reached the same result, since station
wagons are built on a passenger car chassis. By
using existing terms with existing applications.
Congress gave a clear indication of the types of
automobiles that were intended to be treated
separately from passenger automobiles. If the
word "primarily" in the definition of "passenger
automobile" is interpreted to mean "chiefly",
those types of automobiles would be treated sepa-
rately from passenger automobiles. It seems
clear that the House intended H.R. 6860 to be so
interpreted.
The class "light duty trucks and multipurpose
passenger vehicles" was deleted from H.R. 7014
when reported from Committee. However, the
Committee Report states :
"Part A to Title V of H.R. 7014 as reported
is (with one exception) substantively identi-
cal to Part I of Title III of H.R. 6860 as
passed by the House." H.R. Rep. 94-340
at 87.
The exception noted in the report referred to
the procedure for modifying the average fuel
economy standards for passenger automobiles,
which does not affect this discussion. The above
statement in the House Report indicates that the
.substitution of an untitled residual category of
automobiles for the "light duty truck and multi-
purpose passenger vehicle" category was not in-
tended to broaden the scope of the passenger
automobile so as to include vehicles designed
principally for use in the transportation of prop-
erty, or derivatives thereof. Hence, the House
intended the word "primarily" in the definition
of "passenger automobile" in H.R. 7014 to mean
"chiefly".
The bill originally passed by the Senate deal-
ing with automobile fuel economy standards was
S. 1883. That bill set up two categories of ve-
hicles, automobiles and light duty trucks, to
wliich average fuel economy standards were ap-
plicable.
The "automobile" category in S. 1883 was iden-
tical to the "passenger automobile" category in
the Act. The other category of vehicles, "light
duty trucks", was defined exactly as the EPA
defined it. The Senate thus manifested its intent
to treat vehicles which had been classed as light
duty trucks by EPA, specifically, vans, pickup
trucks, general purpose vehicles, campers, and
other similar vehicles, separately from the ve-
hicles classified as "automobiles" under this bill,
such as sedans, coupes, and station wagons. The
language of S. 1883 was incorporated verbatim
into the Senate version of S. 622.
Thus, both houses of Congress had expressed
an intent that vehicles classed by EPA as light
duty trucks be subject to average fuel economy
standards separate from the standards imposed
on passenger cars. Both houses presumably un-
derstood which types of vehicles had been classed
as light duty trucks by EPA. There was, there-
fore, nothing for the conference to resolve on this
point, since the House and Senate bills were in
agreement. The adoption of the House language
no more suggests a change from the Senate bill
than the language in the House bill suggested a
change from the Sharp amendment.
The conference report accompanying S. 622,
the bill which became the Act, explains the clas-
sification of automobiles thusly:
"Automobiles are divided into two broad
categories for purposes of prescribing fuel
economy standards: passenger automobiles,
and automobiles which are not passenger
automobiles (e.g., certain light duty trucks,
recreational vehicles, and other multipurpose
#
♦
PART 523— PRE 8
E«tacHv«: July 28, 1977
vehicles). Automobiles capable of off-hiofh-
way operation . . . are specifically desip^iated
for inclusion in the latter category." S. Rep.
No. 94-516, H.R. Rep. No. 94-700 (94th
Cong., 1st Sess.) at 153.
This discu.ssion gives no indication that the
types of vehicles intended to be nonpassenger
automobiles changed. Indeed, the types of ve-
hicles intended by both houses of Congress to be
nonpassenger automobiles are listed as examples
of the kinds of vehicles which are not passenger
automobiles under the Act. The NHTSA must
interpret the word "primarily" in the definition
of "pas.senger automobile" in the way that will
effectuate the legislative intent. In light of the
clear indications given by Congress about the
types of vehicles intended to be nonpassenger
automobiles, "primarily" must be interpreted to
mean "chiefly".
Under this interpretation, there are four types
of nonpassenger automobiles. The fii-st, and most
obvious, type of nonpassenger automobile is an
automobile designed priniarily to transport more
than 10 persons. An example is a van with
more than 10 seating positions. This type of
automobile is excluded from the passenger auto-
mobile category by the Act.
The second type of automobile classed as a
iionpassenger automobile by this rule is an auto-
moi.iit designe<J primarily, i.e., chiefly, for pur-
poses of transportation of property. Section
5^3.5(a)(3) and (4) of tiie rule lists two differ-
ent ways of determining when an automobile is
designed i)rinuirily for use in the transportation
of proi>erty. An automobile which can transport
property on an open bed is not manufactured
diiefly to transport individuals, since well ovei'
half of the available space on those automobiles
consists of the cargo bed, which is exclusively
cargo-carrying area. Further, this type of auto-
mobile is (lesigiu'd to carry lieavy loads.
Automobiles classed as nonpassenger automo-
biles by this feature are pickup trucks and some
passenger car derivatives with open cargo beds,
such as the Chevrolet El Camino and the Ford
Ranchero. El Caniinos and Rancheros have been
permanently altered so that they have much less
passenger-carrying capacity and nuich more
property-carrying capacity than the passengei-
cars from which they are derived. The similarity
of these vehicles to pickup trucks built on a
truck chassis is indicated by their cla.ssification
in the EPA/FEA 1977 Gas Mileage Guide as
"standard pickup trucks". These considerations i'
appear to the NHTSA to indicate that these
vehicles are man>ifactured chiefly for use in the
transportation of property, so the classification
of these vehicles proposed in the NPRM is
adopted in this rule.
Ford connnented that it agreed that its Ranch-
ero should be classified as a nonpassenger auto-
mobile. However, Ford urged that the Ranchero
should continue to be tested under the passenger
automobile test procedures, rather than the non-
passenger automobile procedures. EPA, in con-
sultation with the NHTSA, agrees with Ford
that the additional testing would be unnecessary,
and so the Ranchero will be tested as a passenger
automobile. This determination will appear in a
rule specifying nonpassenger automobile fuel
economy test procedures to be published by EPA
in August.
An automobile which provides greater cargo-
carrying than passenger-carrying volume is also
an automobile 'designed primarily for purposes
of transportation of property. Since more of the
space inside the vehicle has been dedicated to
transporting cargo, and such vehicles are typic-
ally designed to carry heavy loatls, this agency
concludes that the chief consideration in design-
ing the vehicle was the ability to transport prop-
erty. Automobiles that are classed as nonpas-
senger automobiles on the basis of this feature
include cargo vans and multi.stop vehicles.
The third type of nonpaissenger automobile
under this rule is a derivative of an automobile
designed primarily for the transportation of
property. Section 523.5(a) (2) and (5) addresses
this type of nonpassengei' automobile. An auto-
mobile in which tlie cargo-carrying area has been
converted to provide temporary living quarters
is typically a derivative of a cargo van or pickup
truck. Automobiles that are classified as non-
passenger automobiles on the basis of this feature
include crtnn)ers.
The other common derivative of an automobile
designed primarily for the transportation of
property is the passenger van. In essence, it is a
PART 523— PRE it
Effective: July 28, 1977
cargo van in which readily removable seats have
been installed in the cargo-carrying area. This
derivative can be easily converted back into an
automobile with greater cargo-carrying than
passenger-carrying volume, i.e., a cargo van, by
removing these seats with means installed by the
manufacturer for that purpose or with simple
tools, such as a screwdriver or a wrench.
Although station wagons built on passenger
car chassis have a convertibility feature, fold-
down rear seats, this characteristic is not sufficient
to exclude them from the passenger automobile
category. Like the passenger van with removable
seats, the station wagon with its seats folded
down is easily converted back into the basic in-
terior arrangement. Indeed, the conversion is
easier since no tools are i-equired. However, it is
not the convertibility factor alone which results
in passenger vans being classified as nonpassenger
automobiles. It is that factor together with the
derivative nature of those vans. Neither passen-
ger vans nor station wagons have been perma-
nently alteied from the parent vehicles, as the
El Camino/Ranchero vehicles have. Therefore,
since a passenger van is designed with the same
chassis, springs, and suspension system as a cargo
van, it is treated in the same way as a cargo van.
A station wagon is designed with the same chassis,
springs, and suspension system as a sedan, and
so is placed in the same category as a sedan.
The fourth and final type of nonpassenger
automobile under this rule is an automobile
capable of off-highway operation.
Ford and International Harvester commented
that the 5 ground clearance measurements pro-
posed in the NPRM would adequately serve to
distinguish automobiles capable of off-highway
operation from other automobiles. The GSA
commented that all of these measurements relate
solely to vertical obstacle negotiation potential,
and suggested that NHTSA consider other fac-
tors, such as slope-climbing potential, vegetation
override potential, and swimming potential,
which would also make an automobile capable of
off-highway operation. The XHTSA considered
incorporating some of tiiese other factors in the
NPRM, but discovered that every vehicle with a
GVWR under 6,000 pounds which had one of '
these other features also had four of the five
characteristics listed in the rule. Therefore, in
the interest of avoiding unnecessary complexity,
NHTSA has decided to list only the five char-
acteristics given in the NPRM. If a need arises
in the future to establish additional criteria, the
NHTSA will initiate rulemaking.
Vehicles toith a OVWR hetween 6,000 and
10,000 pounds. The Act classifies as an automo-
bile any 4-wheeled vehicle propelled by fuel
which is manufactured primarily for use on pub-
lic streets, roads, and highways (except any ve-
hicle operated exclusively on a rail or rails)
which has a GVWR of not more than 6,000
pounds. Such a vehicle with a GVWR between
6,000 and 10,000 pounds may be clas.sified as an
automobile if the Administrator makes two find-
ings. First, the Administrator must determine
that average fuel economy standards are feasible
for that type of vehicle. Second, the Adminis-
trator must also determine that either average
fuel economy standards for this type of vehicle
will result in significant energy conservation or
that this type of vehicle is used for substantially
the same purposes as a vehicle type with a
GVWR of not more than 6,000 pounds.
The NPRM set forth the Administrator's pro-
posed determination that average fuel economy
standards are feasible for passenger cars with a
GVWR between 6,000 and 10,000 pounds, and
that these cars are used for substantially the
same purposes as passenger cars with a GVWR
of not more than 6,000 pounds. Chrysler, Ford,
and General Motors commented that this deter-
mination was appropriate.
International Hai-vester expressed no view on
the merits of the determination, but suggested
that the determination should be made in a sepa-
rate notice. Since a proposed determination has
been published and comments received thereon, it
would be unnecessarily burdensome and seem-
ingly purposeless to request commenters to ad-
dress the same proposal again. Moreover,
delaying publication of a determination which
can he made final now would serve no useful
purpose.
PART 523— PRE 10
EfFecHve: July 28, 1977
The Automobile Club of Southern California
urged that station wagons with a GVWR of
greater than 6,000 pounds be classified as non-
passenger automobiles. The basis for this sug-
gested disparate treatment is that station wagons
can carry more passengers or more cargo than
other passenger cars. It was noted that when
the large wagon is carrying nine passengers, the
passenger miles per gallon can be the same as
that of an automobile with a higher fuel economy
carrying fewer passengers. When carrying cargo,
the wagon is, according to the Automobile Club,
serving the same purposes as other nonpassenger
automobiles. Notwithstanding these observations,
they would also be applicable to station wagons
with a GVWR of not more than 6,000 pounds.
Therefore, this agency does not perceive sufficient
basis in the Automobile Club's comments for
changing its treatment of station wagons with a
GVWR greater than 6,000 pounds.
In light of the foregoing, Title 49, Code of
Federal Regulations, is amended by adding a
new Part 523, Vehicle Classification, to read as
set forth below.
The program official and attorney principally
responsible for the development of this rule are
Douglas Pritchard and Stephen Kratzke. re-
spectively.
Issued in Washington, D.C., on July 21, 1977.
Joan Claybrook
Administrator, National Highway
Traffic Safety Administration
42 F.R. 38362
July 28, 1977
PART 523— PRE 11-12
f
t
PREAMBLE TO PART 523— VEHICLE CLASSIFICATION
(Docket No. FE-77-05; Notice 4)
This notice establishes average fuel economy
standards for light trucks (pickup trucks and
vans, generally) manufactured in model years
1980 and 1981. This notice also extends the
applicability of light truck fuel economy stand-
ards and labeling requirements to vehicles with
gross vehicle weight ratings (GVWR) from 6,001
to 8,500 pounds beginning in model year 1980.
The issuance of these standards is required by
section 502(b) of the Motor Vehicle Information
and Cost Savings Act, as amended ("the Act").
The standards are intended to result in the sav-
ings of approximately 8 billion more gallons of
gasoline over the life of the light trucks manu-
factured in these 2 years than would be saved if
the standards were set at the estimated model
vear 1979 fuel economy levels for these vehicles.
Date: These standards will apply in model years
1980 and 1981.
Fo)' fiirther information contact :
]\rr. George L. Parker, National Highway
Traffic Safety Administration, 400 Seventh
Street. S.W., Washington. D.C. 20590 202-
472-6902.
■Supplement a )y itifoi motion :
I. Background Infokmatiox
Title V of the Act provides for the establish-
ment of average fuel economy standards for
various types of automobiles. Under section
.^01(1) of the Act, the term "automobile" is de-
fined to include "any 4-wheel vehicle propelled
by fuel which is manufactured primarily for use
on public streets, roads, and highways. . . ." and
which either has a gross vehicle weight rating
of 6000 pounds or less or which is rated betwe-en
6000 and 10.000 pounds and meets certain addi-
tional requirements (described below), as deter-
mined by the Secretary of Transportation. Auto-
mobiles manufactured primarily for use in the
transportation of not more than 10 individuals
are defined as "passenger automobiles" under
section 501(2), and are subject to fuel economy
standards established in or pursuant to section
502(a). The I'esidual category comprised of all
automobiles other than passenger automobiles is
subject to f\iel economy standards established
pursuant to section 502(b) of the Act. They in-
clude most pickup trucks, vans, and light utility
vehicles. Automobiles in this rapidly growing
residual category were previously called "non-
passenger automobiles" in rulemaking to estab-
lish fuel economy standards, but will henceforth
be called "light trucks," to more closely reflect
the common terminology used to describe the
affected vehicles. This change is strictly one of
name; it has no substantive significance.
Section 502(b) of the Act provides that fuel
economy standai'ds for light trucks must be estab-
lished by the Secretary of Transportation be-
ginning with the 1979 model year and for each
model year thereafter. Authority to conduct
the automotive fuel economy program was dele-
gated by the Secretary of Transportation to the
Administrator of the Xational Highway Traffic
Safety Administration (NHTSA) in 41 F.R.
25015, June 22, 1976. The standards are average
fuel economy standards. As long as the average
fuel economy of the entire fleet of automobiles
subject to a standard meet or exceed the standard,;
the fuel economy of some individual vehicles
may be below the standard. Standards are re-
quired to be set at the "maximum feasible average
fuel economy level" for each year, considering
technological feasibility, economic practicability,
the effect of other Federal motor vehicle stand-
ards on fuel economy, and the need of the Nation
to conserve energy. See section 501 (e). On March
14, 1977, standards for light trucks manufactured
PART 523— PRE 13
in model year 1979 were published in 42 F.E.
13807. This notice establishes standards for light
trucks manufactured in model years 1980 and
1981.
The starting point for this rulemaking pro-
ceeding was the information gathered during
the rulemaking for model year 1979 conducted
between March 1976 and March 1977. In March
1977, the agency issued a 29-page questionnaire
(DX-OOl) to the major light truck manufacturers
to obtain information relating to the light trucks
currently produced by those companies and their
capabilities to improve tlie average fuel econ-
omy of their light truck fleet for 1980 and 1981.
During June 1977, the agency met with each
of the domestic respondents to discuss their re-
sponses to the questionnaire. Because the re-
sponses to the questionnaire did not adequately
discuss all of the manufacturer's capabilities for
improving fuel economy, the agency sent special
orders in August 1977 to the light truck manu-
factures to obtain additional information regard-
ing those capabilities. These were followed in
September with special orders to component man-
ufactures and material suppliers to obtain their
views and data regarding various technological
methods for improving fuel economy.
On December 15, 1977, in 42 F.R. 63184, a
notice of proposed rulemaking (NPRM) was
published. It was based on the extensive material
submitted in response to the information-gather-
ing initiatives discussed in the preceding para-
graph and on other information available to the
agency. In addition to proposing standards for
the 1980 and 1981 model years, the notice also
proopsed extending the applicability of the light
truck fuel economy standards for the first time
to certain vehicles with G"\nVRs between 6,001
and 8,500 pounds.
It should be noted that a truck's GVA\Tl is
the weight of the vehicle when loaded to maxi-
mum rated capacity. The curb weight of a light
truck is typically much less than its GVIVR.
For example, a pickup truck with a G\1VR
of 5,600 pounds can weigh about 3,600 pounds,
almost 1,200 pounds less than a full-size sedan.
DX-067, App. V, Ex. D (Ford). A large van
with a GVWR of 9,500 pounds (which would
not be subject to these standards) can weigh
slightly less than that same 4,800 pound full-size
sedan. Id.
In addition, the XPRM generally discussed
the problems of captive imports, i.e., those pro-
duced outside the United States and Canada and
imported by a domestic company for sale here,
and set foi'th in detail two out of a wide range
of possible alternative schedules for imposing a
requirement that a company's "captive import"
light tracks not be counted together with that
company's domestic light trucks in the calcula-
tion of its average fuel economy for standards
compliance purposes. The notice also proposed
requiring fuel economy labeling of light trucks
with GVWR's between 6.001 and 8,500 pounds
Ijeginning with the 1979 model year. Currently,
consumers are not consistently provided with
any reliable information regarding the fuel econ-
omy of these vehicles.
The XPRM also announced a public hearing
to be held in "Washington, D.C., on January 16
and 17, 1978, and invited applications for finan-
cail assistance from individuals or organizations
which desired to participate in the rulemaking
but which were financially unable to do so. Four
applications by public interest groups for assist-
ance were granted.
Concurrent with the issuance of the XPRM,
the agency released three documents wliich dis-
cussed the basis for and impacts of the proposed
standards. The first document, titled "Rulemak-
ing Support Paper for the 1980 and 1981 Model
Year Xonpassenger Automobile Fuel Economy
Standards" (hereafter called the PSP), de-
scribed the teclmical and economic basis for the
proposed standards. The second document, titled
"Preliminary Impact Assessment of the Xon-
passenger Automobile Fuel Economy Standards
for Model Years 1980 and 1981" (hereafter called
the PIA), further discussed the economic im-
pacts of the proposed standards on the manu-
facturers and on customers and certain alterna-
tives to the proposal. The third document was
a draft environmental impact statement.
The January 16-17 public hearing was not
one required by statute, but was held to pro\ade
interested parties an additional opportunity to
present their views on the proposal. The XHTSA
Administrator and Deputy Administrator pre-
t
PART 523— PRE 14
sided over the hearing. Thirty-one organizations
or officials, including all the major domestic light
truck manufacturers, several parts and materials
suppliers, four Congressmen, labor union repre-
sentatives, and several community organizations
and public interest groups testified at the hearing.
Representatives of the Environmental Protection
Agency (EPA) and the Department of Energy
(DOE) participated on the panel of officials
which queried the witnesses.
A similarly wide range of individuals and
organizations, including most of the hearing par-
ticipants, provided written comments on the pro-
posal. The NPRM established a deadline of
January 30, 1978, for the submission of written
comments on the proposal. A limited extension
of this deadline was granted in 43 F.R. 3600
(January 26, 1978) for submission of supple-
mental material. However, in keeping with the
agency's policy of considering later submissions
to the extent practicable (DN-38, ^1,-43) addi-
tional material provided by participants up to
the time of final drafting of this notice was also
considered.
Material contained in the ESP and the PIA,
together with written submissions from interested
persons, hearing statements, special order re-
sponses, and other relevant material were all con-
sidered in developing the standards promulgated
in this notice. More detailed information on the
technical and economic bases for these stand-
ards are contained in the Supplement to the Rule-
making Support Paper (hereafter called ESPS)
and Final Impact Assessment (FIA). Copies
of these documents will be available soon from
the Office of Automotive Fuel Economy Stand-
ards, NHTSA, 400 Seventh Street, S.W.,
Washington, D.C. 20590.
II. Principal Changes Made in the
Final Rule
As a result of new information generated by
the vehicle manufacturers and others and sub-
mitted in response to the NPRM, substantial
changes to the proposed regulations have been
made. The most common comment was that the
proposed standards were too stringent and would
result in reduced production and employment.
These comments were generally based upon in-
formation from the light truck manufacturers
that was not available to the agency until after
the issuance of its proposal. The standards have
been established at levels significantly above the
projected model year 1979 levels, but substantially
below the proposed levels. Also, the agency
has established a separate class for "captive im-
port" light trucks beginning with the 1980 model
year to prevent the standards from encouraging
the increased importation of these vehicles and
exportation of domestic jobs. A separate class
with a lower fuel economy standard is also estab-
lished for light trucks manufactured by com-
panies which do not produce passenger automo-
biles and thus have limited access to passenger
automobile engine and emission control tech-
nology. This latter class was adopted to take
into account the difficulties of International Har-
vester Corporation in meeting fuel economy
standards. Finally, the proposed requirement
that light trucks with GVWRs of 6,001-8,500
pounds have fuel economy labels beginning with
the 1979 model year was delayed at the request
of EPA until the 1980 model year.
III. COMSIENTS ON THE NPRM AND
NHTSA's Assessment
a. INFORMAL RULEMAKING PROCESS
The response of many commenters to the
NPRM suggest it would be useful to recite sev-
eral aspects of the theory of informal rulemaking,
i.e., the process by which the fuel economy stand-
ards are developed. Informal rulemaking is
essentially like the legislative process in which
there is extensive, continuous gathering of infor-
mation and adjustment of proposals. Many com-
menters appeared to regard the NPRM more as
the culmination of the agency fact gathering
process than as a further step in that process.
The agency attempted to make the tentative na-
ture of the proposal and the need for additional
information as plain as possible. The agency
itemized a variety of issues on which further
comment and data were desired. It was expressly
noted that such additional information could
substantially affect the level of the final stand-
ards. (42 F.R. 63195.)
PART 523— PRE 15
b. SCOPE AND APPLICABILITY OF THE STANDARD
Some commenters suggested that there was no
forewarning that light trucks above 6000 pounds
G"V1\TI might be regulated in model years 1980-
81. Neither the statute nor events support this
contention. Given the well-known urgent need
to conserve energy and the equally well-known
bases for finding under section 501(1) of the Act
that fuel economy standards should be extended
for these vehicles, such extension should have
been anticipated since the passage of the Act for
these reasons alone. There were, moreover, far
more direct reasons for anticipating the exten-
sion. The notice of proposed rulemaking (41
F.E. 52087, at 52088; November 26, 1976) for 1979
light truck fuel economy standards stated that
the agency was considering regulating these
higher rated light trucks beginning in model year
1980. The agency's March 1977 questionnaire
made this intention clearer still by requesting in-
formation for these vehicles. Any remaining
doubt was removed by the agency deputy ad-
ministrator's prepared statement for a July 1977
Congressional hearing on fuel economy legisla-
tion. He announced that the agency would issue
standards covering 1980-81 light trucks with
GVWRs up to 8,500 pounds.
International Harvester Corporation (IH) ar-
gued that NHTSA lacks the authority to estab-
lish fuel economy standards for light trucks in
the 6,001-8,500 pound G^HVE range. DN-097, p.
2. Tliis extension of the "automobile" category
was proposed primarily because of the potential
energy savings. The G"\n\Tl ratings of many
light trucks have been raised over the past six
years, resulting in the number of light trucks
in the 6,001-8,500 pound range increasing from
approximately a one-third share of total 0-8,500
pound GV^VR sales to approximately a two-
thirds share in 1977 and continuing into 1978.
This trend was due in part to the fact that more
stringent emission standards have been applied
to vehicles with GVlVRs up to 6,000 pounds,
with the attendant need for catalytic converters
and unleaded gas, DN-055, p. 11-11. Ford Motor
Company (Ford) endorses the extension of fuel
economy standards up to the 8,500 pound G^^^'R
level (DN-067, p. 15), and General Motors Cor-
poration (GM) found the 8,500 pound G\^WE
level to be an appropriate limit for fuel economy
standards and "a reasonable cut off between the
commercial and mixed personal/commercial use
vehicles." DN-096, p. 7.
International Harvester disputed NHTSA's
tentative conclusions that significant energy sav-
ings are achievement for the 6,001-8,500 pound
GVWR light trucks, and that those light trucks
are used substantially for the same purposes as
the 0-6,000 pound GVAVR fleet. Under the stat-
ute, the extension of the "automobile" category
could be based on either of these findings.
NHTSA reaffirms both of those findings. As
noted in the preceding paragraph, there are cur-
rently almost twice as many light trucks being
sold in the 6,001-8,500 pound G"\nVR range as in
the 0-6,000 pound G^'1^^R range. The agency's
technical assessment (as set forth in the supple-
ment to the agency's Rulemaking Support. Paper)
demonstrated that the over-6,000 ix)und GVWR
trucks had as much fuel economy improvement
potential as did the 0-6,000 pound G"V1VR light
tnicks on a per-vehicle basis. Congress found
the fuel saving potential associated with the 0-
6,000 pound G'V'IVR light trucks so significant
that it required that those vehicles be subject to
fuel economy standards. Since the fuel sa\dng
potential of the latter vehicles is "significant,"
then the fuel sa^^ng potential for the 6,001-8,500
pound GVWR vehicles is significant too, a
fortiori.
The matter is clearer still when it is considered
that, as the NPRM noted, a 10 percent improve-
ment in the fuel economy of the 6,001-8,500 pound
G"\"\VR light trucks would save about 1.4 billion
gallons of gasoline per year over the lifetime of
one model year's production, a savings closely
approximating that resulting from the 1979 stand-
ard for 0-6,000 pound GVWR light trucks.
With respect to the question of the usage of
all these light trucks, it is instructive to note the
personal and recreational uses for which the
tnicks are frequently advertised. The Center for
Auto Safety reviewed various periodicals going
back to 1960 and concluded that the emphasis
in light truck advertising has shifted from com-
mercial capabilities to the sale of trucks as pas-
senger car substitutes. DN-095, p. 12. This
advertising trend is consistent with infonnation
submitted by the manufacturers which indicates
PART 523— PRE 16
a mixture of commercial and personal usage for
light trucks up to 8,500 pounds GT\VR. DN-096,
App. A, Figure A.l (GM) ; DN-067, App. V. p. 5
(Ford) ; DX-120, App. M (Chrysler). See also
DX-156 (Recreation Vehicle Industry Associa-
tion).
The Public Interest Campaign argued that
limiting the extension of the light truck category
to 8500 pound GVIVR may not end the problem
created when manufacturers increase the GVWR
of their vehicles to avoid the applicability of
standards. DN-160, p. 22. This problem is in-
herent whenever a regulatory line is drawn. It
is likely that some light trucks which currently
have GV^A'^R's just below 8,500 pounds will in the
future be rated by their manufacturers just above
that point. However, the agency does not expect
any circumvention of this type to be as prevalent
as the shift in GVTl^R across the previous 6,000
pound dividing line. This expectation is based
on the fact that relatively few light trucks are
currently sold in the 8,000-8.500 pound G"\^T?
range, compared to the number rated just below
6,000 pounds prior to the imposition of emission
standards up to that level. Further, vehicles
rated much above 7,000 pounds are equipped with
hea\'7 duty suspensions and other components
which make them unattractive for personal uses
Thus, greater owner sacrifices would be required
to shift over the 8,500 pound G\^WR line than
was the case for a shift over the 6,000 pound
G^nVR line. However, if the agency's projection
in this regard proves to be incorrect, the light
truck category could be further expanded to
avoid circumvention of the fuel economy stand-
ards.
American Motors Corporation (AM) requested
that liglit trucks sold to the Government for
military' use be exempted from the fuel economy
standard. AM argues that such vehicles are not
designed for use primarily on roadways, and are
therefore not "automobiles" as that term is de-
fined in section 501(1) of the Act. The Act
contains no specific provision for exemption of
military vehicles. The vehicles in question, the
M-151 Jeep, are subject to emission standards
under the Clean Air Act, despite the existence
of such an exemption provision in that statute,
42 U.S.C. 1857f-2 (b)(1). The existence of this
emission data provides a potential source of fuel
economy data to determine compliance with fuel
economy standards. The sales of these vehicles
have historically not constituted a large enough
portion of AM's light track sales to substantially
affect that company's fuel economy average. All
information currently available to the agency
indicates that the use of these vehicles differs in
no significant respect from the use of nonmilitary
Jeeps, which have previously been determined
to be subject to fuel economy standards. 42 F.R.
38364, July 28, 1974. Therefore, based on this
information, the militai-y Jeeps are subject to
fuel economy standards. In any event, the
agency would be very cautious in projecting
changes to those vehicles which might impair
their fimctional attributes. The agency would
consider any further submissions by AM or any
otlier interested party relating to the extant to
which the uses of these military Jeeps differ from
the uses for which publicly marketed Jeeps are
manufactured.
Two possible changes in the proposed classifica-
tion scheme for light trucks were suggested in
the comments. Ford argued that manufacturers
be given the option of complying with a com-
bined standard applying to all light trucks or
with the proposed separate 2-wheel drive and
4-wheel drive standards. The combined stand-
ard would be set at a level between the 2-wheel
drive and 4-wheel drive standards, with the exact
level depending on the relative sales levels of
those two classes of light trucks for a particular
manufacturer. DN-067, p. 13. Chrysler and
Toyota supported this option. DN-120, p. 7;
DX-088, p. 7. International Harvester argued
for a separate classification and standard for
4-wheel drive light trucks with GVWRs between
6,001 and 8.500 pounds, and 2-wheel drive light
trucks which are derived from those vehicles.
All of IH's light trucks would fall in that class.
The Public Interest Economics Foundation made
a similar proposal. DN-173, p. 5.
With respect to the Ford proposal, the three
largest domestic light truck manufacturers and
Toyota have all argued at some point in this
proceeding for a single standard applicable to
all light tracks. DN-001-02, p. 4 (Ford) ; DN-
001-05, p. 9 (Chrysler); DN-096, p. 4 (GM) ;
DN-088, p. 7 (Toyota). The main advantage
of a single, all-inclusive standard is that it pro-
PART 523— PRE 17
vides the greatest flexibility for a manufacturer
with a broad product line to select among pos-
sible methods for achieving a given level of fuel
economy improvement. For example, where
separate classes exist, a manufacturer is required
to make certain improvements to vehicles in each
class in order to comply with the separate stand-
ards. On the other hand, if a single, all
inclusive standard were established, a manu-
facturer would have the option of concentrat-
ing its available resources on making major
improvements (such as a total vehicle redesign)
to certain classes of vehicles. See 42 F.R. 63186.
However, the smaller manufacturers with more
limited product lines may be disadvantaged under
a single-standard approach, since the larger man-
ufacturers may be able to avoid making changes
to their vehicles in the same classes as the smaller
manufacturers' vehicles, through the judicious
use of the previously described flexibility. The
smaller manufacturers would have to undertake
product changes to their vehicles. This would
increase the price of the small manufacturers'
vehicles compared to the price of the similar ve-
hicles of the large manufacturer. DN-098, p. 2
(AM). For example, AM and IH both manu-
facture primarily 4-wheel drive vehicles. Under
a single-standard approach, the larger manufac-
turers could focus their fuel economy improve-
ment efforts on their 2-wheel drive vehicles, an
option imavailable to AM or IH. AM and IH
would have to change their 4-wheel drive ve-
hicles, possibly placing those vehicles at a com-
petitive disadvantage vis-a-vis the 4-wheel drive
vehicles of the larger manufacturers.
Although recognizing that the Ford proposal
has some merit, the agency is extremely con-
cerned that the classification of automobiles for
fuel economy standards purposes not have a
major anti-competitive effect. AM and IH rely
extensively on the sale of 4-wheel drive vehicles
to generate profits, to a much greater extent than
do the larger companies. The agency observes
that an optional combined standard could permit
the companies with full product lines to obtain
price and possibly performance advantages over
AM and IH for comparable 4-wheel drive ve-
hicles, through the mechanism described in the
preceding paragraph. These competitive factors
did not present as serious a problem in the
agency's 1979 light truck rulemaking, where
standards were set at levels more in line with
manufacturer's planned fuel economy levels.
Therefore, in consideration of these advantages
and the effect of the small manufacturers on level
of the combined standard, the agency is not
adopting the Ford proposal.
Nor can the agency accept IH's proposal, which
might tend to exacerbate the trend toward higher
GVWRs that has occurred over the past five
years and which was due at least in part to
different Federal standards above and below the
6,000 pound GV^VR dividing line. However, the
agency recognizes that IH has unique problems
given its limited sales volume, restricted product
line, and the fact that its engines are derivatives
of medium duty truck (above 10,000 pounds
GV"\^Tl) engines. Further, IH has not had ex-
perience with state-of-the-art emission control
technology, which the other manufacturers have
obtained in the passenger automobile market.
Therefore, NHTSA is establishing a separate
class and fuel economy standard pursuant to
section 502(b) of the Act for all light trucks
manufactured by a manufacturer whose light
truck fleet is powered by basic engines which
are not used in passenger automobiles. This
separate class is established for only two model
years' duration. The agency concludes that IH
should be able to achieve levels of fuel efficiency
in line with the other manufacturers by the 1982
model year either through purchasing engines
from outside sources or by making improve-
ments to current engines. This resolution of the
separate classification question satisfies the con-
cerns expressed by IH in recommending a sep-
arate standard for 4-wheel drive vehicles with
G^'lVRs over 6,000 pounds, without perpetuating
the incenttive for increasing light truck GVWRs
above the 6,000 pound level or maintaining
G"\nVRs at those levels.
An issue on which the agency requested com-
ment in the NPRM (42 F.R. 63187) is whether
a manufacturer's "captive import" light trucks
should be permitted to be counted together with
its domestic light trucks in the calculation of
that manufacturer's fuel economy average for
compliance purposes, or whether those trucks
should be treated separately as are captive im-
(
PART 523— PRE 18
port, passenger automobiles under passenger auto-
mobile fuel economy standards. The former
approach would encourage importation of foreign
produced, captive import light trucks and the
exportation of domestic jobs. The latter ap-
proach would prevent the standards from en-
couraging domestic manufacturers from taking
these steps. The agency discussed in detail two
of the many possible resolutions of the issue in
the NPEM. One suggestion was to provide for
separate treatment of captive imports beginning
with the 1980 model year. The other suggestion
permitted manufacturers to include captive im-
ports for 1980 and 1981 (with separate treatment
begimiing with the 1982 model year) in their
calculation of domestic fuel economy averages,
but to limit the number of includable captive
imports to 6 percent of the total number of light
trucks manufactured in each class for each model
year.
The first suggestion was supported by the
United Auto Workers (DN-093) ; General Motors
(DN-096, p. 15, Section III) ; and the Center
for Auto Safety (DN-056, p. 115). The UAW
(DN-056, p. 587) and the Center for Auto
Safety base their suggestions on the belief that
separate treatment of captive imports would en-
courage the earliest possible domestic production
of these smaller, more fuel efficient trucks. On
the other hand, Chrysler, Ford, and Toyo Kogyo
argue that tlie Act provides no legal authority
for requiring separate treatment of captive im-
ports, and that such a requirement would pro-
mote neither domestic employment nor maximum
fuel conservation (DN-120, p. 14 (Chrysler) ;
DN-149, App. VIII, Tab. B (Ford) ; DN-103,
p. 2 (Toyo Kogyo).) Alternatively, Chrysler
argues that a requirement for separate treatment
of captive imports should be delayed until such
time as sales levels justify and lead-time permits
their domestic production. DN-056, p. 373.
NHTSA believes that a requirement for the
separate treatment of captive import light trucks
would produce desirable results from the point
of view of promoting enei'gy conservation, pre-
serving competition within the automobile in-
dustry, and promoting domestic employment.
The agency also disagrees with the arguments
that it lacks adequate authority to impose such
a requirement. After reviewing the comments
of the various participants in the rulemaking
proceeding, NHTSA finds no substantial reason
to delay any longer the effective date for a re-
quirement of separate compliance of captive im-
port light trucks. Therefore, the regulations
promulgated herein establish such a requirement
beginning with the 1980 model year.
The importation of captive import trucks posed
a threat to domestic employment similar to that
posed by the importation of captive import pas-
senger automobiles. The agency's authority to
require that captive import light trucks comply
separately with fuel economy standards is the au-
thority to establish "separate standards for dif-
ferent classes" of light trucks in section 502(b)
of the Act. Ford and Chrysler argue that this
classification authority is restricted to classes
based on attributes of a vehicle, such as size or
intended use. However, these arguments over-
look the broad meaning of "class" as defined in
various dictionaries. Further, nothing in section
502(b) establishes the sort of limitation argued
for by Ford and Chrysler. In fact, the Act's
legislative history shows that a broad reading
of the term is intended. The Conference Report
(S. Rep. 94-516, 94th Cong., 1st Sess., at p. 155)
states, in discussing the classification authority,
that separate classes "could be based on func-
tional classifications or other factors." (Em-
phasis added).
Ford and Chrysler also argued that the defini-
tions of "manufacture" and "manufacturer" in
section 501 of the Act include both domestically
produced and imported automobiles, and there-
fore conclude that a fuel economy standard must
apply to both categories or classes of vehicles.
In fact, these definitions establish only that both
of these classes of automobiles are to be regu-
lated. They do not establish how the vehicles
are to be classified for that purpose. They could
be placed in the same or separate classes.
Ford also claimed that language on page 91
of the House Report, which contemplates the
establishment of "similar" procedures for treat-
ing captive import light trucks as those specified
for captive import passenger automobiles under
section 503(b) (1) of the Act, requires that some
transition period be established between model
years when captive imports are fully includable
PART 523— PRE 19
and fully excluded from domestic fuel economy
average calculations. However, a "similar" re-
quirement need not be identical in every respect.
The separate classification was not immediately
applied, but delayed one year to 1980. The man-
ufactui'ers have been on notice for a substantial
period of time that a requirement of this general
nature was being seriously considered by the
agency, permitting them to make their i^lans ac-
cordingly. 42 F.R. 13810-11; March 14, 1977.
Ford also pointed out that if a separate class
were established for captive import light trucks,
that class would be required to have a standard
set at the maximum feasible level for that class.
Ford argued that the agency had failed to set
the standard for the captive import, class at that
level in the XPRM. However, XHTSA con-
cludes that the maximum feasible average fuel
economy level for the captive import class is the
same as for the residual class of all other light
trucks. That reference point is the same one
suggested in the NPRM for captive import light
trucks. Captive import light trucks currently
have higher fuel economy in general than do-
mestically manufactured light trucks, due to the
fact that the captive imports are typically more
compact in size. However, if the captive imports
were subject to a more stringent fuel economy
standard than all other light trucks, Wrtually
identical vehicles (such as the Ford Courier, a
captive import, and the Mazda pickup truck,
which is imported by Toyo Kogjo of Japan)
would be subject to different fuel economy stand-
ards. In that case, the captive import vehicle
might be required to make fuel economy improve-
ments (at some cost) which a similar vehicle
imported by a foreign company might not have
to make. Thus, the captive imports would be
placed at a competitive disadvantage, due to
the extra cost resulting from efforts to comply
with fuel economy standards. In that case,
where similar vehicles sell for different prices,
it would be expected that the sales of the
captive import vehicles would suffer, resulting
in less energy conservation than would other-
wise be the case. Therefore, the agency con-
cludes that imposing a more stringent standard
for captive import light trucks than is applicable
to all other light trucks would be inconsistent
with the "economic practicability" consideration
in section 502(e) of the Act.
Finally, Ford argues that a separate standard
for captive imports does not promote the general
purposes of the Act. The primary purpose of
the Act is energy conservation. However, section
503(b), the "runway plant" provision, unambig-
uously establishes that Congress regarded do-
mestic employment as a paramount consideration
with respect to captive imports. The agency con-
cludes that the separate standard for captive im-
ports will promote energy savings since it will
encourage greater efforts to improve the fuel
economy of domestically produced light trucks
and in the longer run will encourage use of an
additional method (domestic production of small
light tiiicks) for complying with fuel economy
standards at the option of the manufacturer.
Vigorous efforts to sell these domestic compact
trucks would produce a market shift and con-
comitant energy savings. As measured by rela-
tive degree of marketing effort, the attitude of
the major domestic producers toward smaller
trucks has not been markedly positive. It is
likely that it will take every available method
or incentive to change this view and thus promote
both energy savings and domestic employment.
See DN-056, p. 346 (Chiysler) and p. 355-6 (re-
marks by NHTSA Administrator Claybrook).
"With a provision for the separate compliance
of captive import, light trucks, NHTSA will be
able to base its fuel economy standards in future
model years on the projected domestic production
of these smaller trucks, providing a further in-
centive for switching from foreign to domestic
production. As noted above, a second purpose
of the statute is the promotion of domestic em-
ployment. Congressional Eecord H 5383, 5386
(daily ed.. June 12, 1975). To the extent the
captive import requirement provides an addi-
tional incentive to shift to domestic production
of vehicles which are currently produced abroad
and imported, domestic employment will benefit.
Therefore, the agency concludes that this require-
ment promotes the general purposes of the
statute.
It is important to note that the separate class
for captive import light trucks does not prohibit
the importation of such vehicles. It simply keeps
the fuel economy program from inducing manu-
^
t
PART 523— PRE 20
facturers to increase their importation of those
vehicles instead of producing those small vehicles
domestically or making improvements to their
larger domestic vehicles. Assuring that those im-
provements are made was one of the express
purposes of the sponsor of the "runway plant"
amendment, Congressional Record H 5386 (daily
ed., June 12, 1975). In view of the domestic man-
ufacturers' investment in captive import light
trucks, the profitability of those vehicles and com-
petition from foreign manufacturers of similar
vehicles, the agency anticipates that the domestic
companies will continue to market their captive
imports. If the foreign manufacturers improve
the fuel economy of their compact light trucks,
the domestic manufacturers will presumably
make similar improvements to remain competi-
tive.
b. FUEL ECONOMY PROJECTIOX METHODOLOGY
One of the problems which confronted the
agency in developing the proposed standards was
the absence of fuel economy test data for the
light trucks in the 6,001-8,500 pound G'VnVE
range. These trucks will be tested for emissions
in a manner which yields fuel economy data for
the first time beginning with the 1979 model
year. Initial test data for these vehciles are
just now becoming available. Therefore, the
agency utilized a regression equation which re-
lates vehicle characteristics such as engine dis-
placement, test weight, and drivetrain ratios to
measured fuel economy for passenger automobiles
and light trucks. The regi-ession equation was
used to extrapolate and interpolate from actual
test data to develop baseline fuel economy projec-
tions for vehicles which liave not yet been tested,
adjusting for differences in relevant vehicle char-
acteristics. DN-055; DN-152. Many of the
manufacturers objected to the use of this equa-
tion, but none offered a method before the is-
suance of the NPRM which the agency could
demonstrate to be superior to the one it had de-
veloped.
Since the issuance of the NPRM, some of the
manufacturers have begun testing prototype 1979
model year vehicles in the 6,001-8,500 pound
G"\nYR class and have submitted their test re-
sults to NHTSA. This data would clearly be
the best evidence of the actual fuel economy rat-
ings these vehicles will achieve in 1979, assuming
that this early testing of development vehicles
accurately reflects the fuel economy ratings those
vehicles will achieve in final testing for that year.
However, this may well not be the case, given
that major improvements in fuel economy typ-
ically occur between early development testing
and final emission certification and fuel economy
testing. DN-259 (GM). The use of the regres-
sion equation would take this phenomenon into
account, in that extrapolations and interpola-
tion are made from final test data, not from
early development vehicles. For this reason,
GM, which concluded that the agency was
"not too far off" in its baseline assessment,
recommended that the agency wait until the 1979
certification data become available, and then mod-
ify the projected baseline where necessary. DN-
056, p. 77. Ford, on the other hand, claims that
development data for its 1978 vehicles closely
approximated final certification values. DN-067,
App. IV, Ex. A, p. 2. Ford's conclusion, how-
ever, relates to a model year in which emission
standards were carried over from several prior
years, by which time calibrations would be ex-
pected to more closely approach full optimiz-
tion. This is not the case for the 1979 model
year, when new emission standards and several
test procedure amendments will apply for the
first time to these light trucks. Therefore, Ford's
1978 experience is not a valid indicator for 1979.
Despite Ford's protests that the agency's
methodology is inaccurate in projecting its fuel
economy for 1980-81 and that its test data
sliould be used instead to develop a baseline,
XHTSA cannot conclude that Ford's procedure
is superior. In fact, the agency has taken Ford's
pre-1979 data and attempted to reconcile it with
NHTSA's projections for Ford, and has con-
cluded that the results yielded by the two pro-
cedures can be fully reconciled (in terms of
projecting the same level of average fuel economy
for the light tiiick fleet). See RSP-S.
Only in the cases of GM and IH has the agency
been imable to reconcile completely the baseline
information submitted by the manufacturers with
NHTSA's projection. In these two cases,
XHTSA has based its fuel economy projections
on those manufacturers' supplied baselines. In
the case of IH, the discrepancy is likely due to
PART 523— PRE 21
the difference in engine efficiency between that
company's engines and those of the other manu-
facturers (see section III.c.3 of this notice). In
all other cases, the agency has used its originally
projected baseline as set forth in the NPRM.
with minor adjustments discussed in the RSPS-S.
C. METHODS FOR IMPROVING FUEL ECONOMY
The proposed standards were based on the use
of technology which is either currently being
used on some vehicles or which is under develop-
ment with commercial use planned by at least
some manufacturers in the 1980-81 time frame.
The technological changes are, in general, minor,
evolutionary changes which individually pro-
duce small Ijenefits, but which when taken
together can add up to a substantial fuel econ-
omy improvement. Although the manufacturers
generally agreed with NHTSA as to which
methods for improving fuel economy are feasible
for the 1980-81 model years (cf. bN-067, p. 4
(Ford)), there was not general agreement as to
the magnitude of the fuel economy benefit achieve-
able through the use of each item or the extent
to which the items could be used given the
leadtime remaining until the 1980 and 1981 model
years. The manufacturers' specific objections and
NHTSA's response are set forth in the sections
immediately following.
1. Weight reduction. The agency projected
weight reductions ranging from approximately
69 pounds to over 600 pounds for portions of
the individual manufacturer's fleets, averaging
nearly 400 pounds per vehicle by 1981, compared
to a 1977 base. 42 F.R. 63189. Between 200 and
300 pounds of this weight reduction was due to
the use of aluminum, plastics, and high strength
steel in certain specified light trucks, as substi-
tutes for current materials. The remainder of
the weight reduction was due to the introduction
of new, more efficiently designed truck models
which were either planned or being considered
by certain manufacturers. Under current fuel
economy test procedures, the benefit of this weight
reduction would be realized only to the extent
the reduction is great enough to place a particular
vehicle in a lower "inertia weight class." Be-
ginning with the 1980 model year, the width
of these inertia weight class bands vdll generally
be halved, thereby providing a greater incentive
for manufacturers to reduce the weight of their
vehicles. However, tlie new "test weight" class
changes may result in some vehicles being tested
at higher simulated weights than under the old
procedure, and other vehicles being tested at
lower weights. DN-096, p. 11 (GM). It appears
that the manufacturers have carefully targeted
the weights of their current vehicles to take
maximum advantage of the current inertia weight
classes, so that the test procedure change will re-
sult in a trend toward lower measured fuel econ-
omy. This anomaly was taken into account in
the methodology used to develop the proposed
standards.
The agency projected the introduction of new,
redesigned light trucks only where the manufac-
turers indicated, in response to a special order
(DX-OlO) issued under section 505(b)(1) of
the Act, that a new model was either planned
by the manufacturer or at a development stage
where introduction was judged feasible by
NHTSA in the 1980-81 period. This conserva-
tive approach to new model introduction was
taken by the agency despite the fact that addi-
tional new models would be expected for much
of the domestic light truck fleet in the 1980-81
time frame if historical vehicle redesign cycles
were followed (DISr-001-02, Att. 1, p. 1 (Ford)),
and despite the fact that the manufacturers have
been on notice since December 1975 that they
would be required to make maximum feasible
improvements in their light trucks beginning
with the 1979 model year, at least for tlieir trucks
in the 0-6,000 pound G"\nVR range. See section
502(b) of the Act. However, none of the manu-
facturers apparently plan to offer a new truck
model in the 1980-81 time which is designed to
achieve maximum feasible weight reduction.
Some of the manufacturers have projected
feasible weight reductions of a magnitude very
close to those projected by NHTSA. See, e.g.,
DN-097-A. p. 6 (IH); I)-010-02, p. 8 (AM).
Many of the manufacturers' projections of weight
reduction potential for 1980 and 1981 have in-
creased significantly during the course of the
rulemaking, indicating that leadtime may still not
limit this potential to currently planned weight
levels as claimed by the manufacturers. DN-001-
06, p. 7 (IH) ; DN-120, App. D, p. 2 (Chrysler) ;
DN-001-01, p. 26 (GM 50 to 100 pounds for
PART 523— PRE 22
1980) and DN-096, p. 11 (160 pounds). Ford's
weiglit reduction projections have also varied
considerably, and have become increasingly pes-
simistic. For example, Ford's projected average
inertia weight for 1979 model year 2-wheel drive
light trucks increased 123 poimds in five months,
and the similar 1980 figure increased by nearly
300 pounds, between Ford's responses to
NHTSA's August 10 special order (DN-010-02,
App. F) and its conunents on the NPRM (DN-
067, App. IV, Ex. J, p. 2). See also DN-149
Volume II, Addendum II, p. 10, where Ford cites
the "evolutionary" nature of its product plan-
ning in explaining how its projected average test
weight increased as much as 188 pounds over 5
months. Part of these changes is due to changes
in fuel economy test procedures, according to
Ford. Ford now claims that its new, lightweight
pickup truck, which will be introduced in the
1980 model year and will have a lower test weight
than the current pickup truck by 263-396 pounds,
will result in only a 1 percent fleet-wide fuel
economy benefit. Id. p. 1.
In order to obtain independent verification of
the weight reduction achievable through material
substitution, the agency issued special orders to
various aluminum, steel, and plastics suppliers.
DN-018. These companies indicated that weight
reductions in excess of those projected by
NHTSA will be technologically feasible in the
early 1980's, in some cases as much as 900 pounds
total. See, e.g., DN-018^4 (Kaiser Aluminum
Co.) and DN-018-60 (ALCOA).
The agency concluded on the basis of all this
information that although the ultimate weight
reduction potential for current light trucks is
greater than that initially projected by NHTSA,
reductions feasible in the near term (particularly
the 1980 model year) are more limited. Further,
it appears that in most cases, the weight reduc-
tions projected by the manufacturers differed
from NHTSA's projections primarly due to dis-
crepancies in estimated baseline inertia weights
and in the effect of the inclusion of optional
equipment on test vehicles. With respect to tlie
latter points, NHTSA has deferred to the man-
facturers' presumably better knowledge of their
current light truck fleets. The agency has also
not projected the redesign of some vehicle com-
ponents when a complete vehicle redesign is
planned by the manufacturer in 1982 or 1983.
Therefore, NHTSA has generally adopted man-
ufacturers' projected weight reduction plans in
the standard-setting analysis. However, NHSTA
has projected, based on statements by GM, that
GM could offer a redesigned pickup truck for
the 1981 model year (as a mid-model year entry)
resulting in an additional fleet average 250
pounds weight reduction for 2-wheel drive ve-
hicles in that model year. NHTSA has retained
its initial weight reduction projection for
Chrysler, in the absence of any information wliich
indicates that that projection is not feasible.
NHTSA has made relatively minor upward ad-
justments to Ford's 1981 2-wheel drive weight
reduction projection, and adopted Ford's other
projections. However, NHTSA has been un-
able to completely reconcile all of Ford's various
weight reduction projections, and remains skep-
tical, in view of the substantial weight reduction
potential, that Ford's 4-year program will result
in only the relatively small weight reduction
benefit it apparently projects for its new pickup
truck line.
2. Aerodynamic improveTnents. The proposed
fuel economy standards were based on improve-
ments in vehicle aerodynamic characteristics only
where a manufacturer planned to introduce a
new vehicle. In those cases, a 4 percent fuel
economy improvement was projected. 42 F.R.
63189. Information submitted by the manufac-
turers indicates that the agency's projections in
this area were pessimistic. On the basis of Ford's
planned redesign of its pickup trucks for 1980,
it appears that fuel economy can be improved
up to 5 to 6 percent through reductions in ve-
hicle frontal area and aerodynamic drag coeffi-
cient. Some of tlie manufacturers indicated that
aerodynamic improvements could be acliieved
without undertaking a complete vehicle redesign,
through minor body modifications such as the
addition of air dams and the use of smaller
mirrors. DN-001-01, p. 48, DN-096, App. B, p.
27 (GM); DN-120, App. G (Chrysler). There-
fore the agency adopted the fuel economy im-
provement achieved for Ford's new pickup truck,
and projects a fuel economy improvement of 2.3
percent for GM and approximately 1 percent for
Chrysler in the 1980 and 1981 model years for
minor aerodynamic improvements. (See RSP-
PART 523— PRE 23
S.) No improvements are projected for the other
manufacturers.
3. Engine efficiency improveTnents. In the
NPRM, the agency projected that engine effi-
ciency improvements on the order of 8 percent
were feasible for all manufacturers other than
AM, with AM capable of an improvement of
11 percent because of its currently less efficient
engines. 42 F.R. 63190. Among the methods for
obtaining this improvement are improved fuel
metering, redesigned combustion chambers, in-
creased expansion ratio and compression ratio,
reduced internal friction, intake system and valve
timing optimization, electronic spark advance,
and improved exhaust gas recirculation. The
percent fuel economy improvements projected
for each manufacturer were based on responses
to a detailed technical questionnaire (DN-001)
sent to each manufacturer, and in particular a
detailed response by Chrysler Corp. (DN-001-
05). Subsequent engine mapping studies of typi-
cal light tnick engines support the agency's
original projections. Chrysler indicated efficiency
improvements in the areas listed above would
result in improvements at least of the magnitude
projected in the NPRM. Improvements of this
magnitude were also projected by IH (DN-001-
06, p. 24) and were in fact experienced in the
past when engines were optimized. DN-149, Add.
2, sect. II.
However, at the Januaiy 16-17 public hearing,
Chrysler indicated that it could not support en-
gine efficiency improvements of the magnitude
which NHTSA concluded Chi-ysler had projected
as being feasible for 1980 in its questionnaire
response. Several reasons were given by Chrysler
at the hearing for this apparent change of posi-
tion, including that the Chrysler questionnaire
response information was merely "a gleam in the
eyes of the engineers" and did not have "the
highest level of corporate approval." DN-056,
pp. 370-1. Subsequently, Chrysler advanced
another theory for the apparent discrepancy be-
tween their questionnaire response and their
position at the public hearing, i.e., that it mis-
interpreted certain language in the questionnaire.
Chrysler argues that, in their interpretation,
technology is "applied" not when it is used on
production vehicles as NHTSA intended that
term in its questionnaire to be interpreted, but
when technology advances one stage in the re-
search and development process. DN-120, App.
Q, p. 7. In effect, Chrysler now argues that not
all of the technology in question will be available
for the 1980 or 1981 model years. Chrysler also
reduced some of its prior projections of expected
fuel economy improvements attributable to
technology.
Subsequent information submitted by the other
manufacturers indicated that much of the tech-
nolog;y' projected to be used in the NPRM was
either not feasible for 1980 or 1981, already be-
ing used and thus not a means available for
future improvement, or part of the advanced
emission control technology which would permit
the attainment of more stringent 1979 emission
standards with minimum reduction in fuel
economy, but would produce no net fuel economy
benefit." DN-067, App. IV, Ex. A, p. 2 (Ford).
GM indicated that no improvement in fuel
economy is expected from the use of electronic
engine controls, since mechanical systems can be
(and to some extent already have been) optimized
to pro\ade similar results. DN-146-A, pp. 47-
53. An analysis by the Department's Transpor-
tation Systems Center refutes this claim. DN-
283.
Several items of technology (other than im-
proved exhaust gas recirculation or optimized
engine calibrations) will be available for engine
efficiency improvements. GM indicates that it
will be making certain minor carburetor improve-
ments for 1980. DN-096, p. 11. In 1979, Ford
will be implementing certain engine efficiency
improvements, such as increased compression
ratio, for all light trucks with GVWRs between
6,001 and 8,500 pounds. DN-067, App. TV, Ex.
A, p. 2. This benefit is accounted for by the
use of the agency's regression equation, since
trucks in the 0-6,000 pound GVWR category
already have these improvements and those were
extrapolated for the 6,001-8,500 pound GVWR
trucks. However, two Ford engine families have
not yet been optimized through combustion
chamber I'evisions, but could be for 1980. Id.
at p. 4. Ford also states that it will begin using
some electronic engine controls beginning with
the 1978 model year, but has no plan to use these,
controls on tracks until 1981, and then only in
#
(
PART 523— PRE 24
California. Id. at 13-14. NHTSA sees no reason
why these electronics could not be more widely
applied in light trucks by Ford, especially since
Chrysler may begin using some of these electronic
controls as early as 1980 in trucks. DN-120,
App. J. Chiysler also plans improved intake
manifolds for two of its engines for 1980. Id.
AM indicates that improvements of up to 5.5
percent are feasible (DN-098, p. 1) and stated
at the hearing that improvements up to 8 percent
might be feasible. DN-056, p. 468. IH originally
projected substantial fuel economy improvements
for the use of electronics, heat inlet charge, and
combustion chamber and intake manifold re-
design (the latter for the 1979 model year).
DN-001-06, p. 24. IH's later submissions were
less optimistic on this point. The potential for
engine efficiency improvements by IH is high-
lighted by data submitted by that company (Id.
App. G) which indicate that its four cylinder
engines obtain the same or even slightly worse
fuel economy than its V-8, about 13 mpg. The
agency's analj'sis indicates that the IH V-8 en-
gine too could be improved since it obtains about
1 mpg less than a comparable engine from
Chrysler, Ford, or GM.
The agency concludes that fuel economy im-
provements up to the levels originally proposed
are technologically feasible, but probably cannot
be fully implemented in the 1980-81 period, be-
cause of competing demands (due to stringent
emission standards) from passenger automobiles.
Rather, the agency projects that manufacturers
will be able to optimize emission control systems
during this period to eliminate any fuel economy
penalty resulting from changes in emission stand-
ards. In the case of GM and Chrysler, more
extensive improvements are already planned, thus
avoiding the leadtime problem. Therefore, the
agency has incorporated those companies' projec-
tions of a net 2.4 percent (1.4 percent for 4-
wheel drive light trucks) fuel economy improve-
ment for Chrysler in 1981 and 1.2 percent for
GM in 1980, beyond the optimization of the emis-
sion system. For the other manufacturers, no
net improvement is projected (beyond emission
control system optimization).
4. Engine accessory efficiency improvements.
The agency originally projected that accessory
efficiency and accessory drive improvements
amounting to 2 percent could be acliieved. 42
F.E. 63189. The achievability of a 2-percent fuel
economy improvement through the use of im-
proved accessory drives was not generally chal-
lenged by the manufacturers. See, e.g., DN-001-
05, Table 4 (Chrysler) ; DN-067, App. IV, Ex.
E (Ford). However, questions were raised as
to whether the leadtime is sufficient to imple-
ment these improvements by the 1980-81 model
years. Id., Ford. The agency agrees that lead-
time may not be adequate to implement new
accessory drives by 1981, unless already planned.
A number of accessory efficiency improvements
appear feasible for the 1980-81 period, however,
such as improved water pumps and power steer-
ing pumps, reduced alternator loads, installing
viscous fan clutches, the use of flex fans, and the
optimization of accessory drive ratios. See, e.g.,
DN-096, App. B, p. 27 (GM). These efficiency
improvements are projected by NHTSA to obtain
a fuel economy improvement of approximately
1 percent by 1981.
5. Diesel enffines. None of the manufacturers
took major exception to the agency's projections
with respect to the use of diesel engines. The
agency's position on this matter was that until
the unknown potentially adverse health effects
associated with widespread use of diesel engines
are better quantified, the maximum feasible use
of these engines will not be projected. The
agency took the posture of acknowledging the
existence of any plans on the part of manufac-
turers to use diesels but did not base standards
on further dieselization beyond that currently
planned.
Citizens for Clean Air argues that the agency
should not rely on the projected use of diesel
engines to any extent until the issue of adverse
health affects is resolved. DN-056, p. 563. Con-
versely, the Public Interest Campaign argued
that the agency lacks authority to base fuel
economy standards on less than maximum feasible
use of diesels. DN-160, p. 6. That organization
argues that it is for EPA, not NHTSA, to deter-
mine whether any health problems are associated
with the use of diesel engines, and if a problem
does exist, to set an appropriate emission stand-
ard.
PART 523— PRE 25
The agency recognizes the danger in basing
administrative standards on extra-statutory con-
siderations. See, e.g., Union Electric Company v.
Train, 427 U.S. 246, 257 (1976). However,
NHTSA feels that there is at least a possibility
that EPA may determine that certain currently
unregulated emissions from diesel powered ve-
hicles must be regulated, and that control of these
enaissions to the required level may either be
impossible or may be achievable only with a fuel
economy penalty so substantial that the diesel
engine offers no net fuel economy benefit.
XHTSA, EPA, and DOE are jointly studying
these issues.
NHTSA deems it inappropriate to encourage
the manufacturers to make investments in tool-
ing for diesel engines when the use of those en-
gines may not be tolerated in the future. There-
fore, the final fuel economy standards for 1980-81
will not be based on any projected use of diesel
engines, even when they are currently offered
or planned. This will permit reduction of any
current manufacturer plans to offer diesels if a
health problem is found. This should not be
viewed as a determination by the agency that
unavoidable adverse health effects would result
from widespread dieselization.
6. Variable displacement engine technology.
NHTSA projected limited use of variable or dual
displacement engine technology (based on the
Eaton valve selector system) for the 1980 and
1981 model years. This technology would per-
mit engines to operate on a portion of their
cylinders during light load operating modes such
as idle and cruising at constant speed.
The agency projected that a 10 percent fuel
economy benefit would be achievable by vehicles
using this technology. DX-056, p. 419 (Eaton) ;
DN-001-05, Table IV (Chrysler); DN-001-06,
p. 24 (IH). Ford indicated plans to use this
technology as early as the 1978 model year (DN-
001-02, Att. 14, p. 2) and IH stated that use was
expected by the 1981 model year (IH, id).
Since the issuance of the NPEM. the prospects
for use of this technology' have apparently dete-
riorated considerably. Ford planned to use this
system on its 300 CID, six cylinder engine, de-
spite warnings from the system's developer that
that particular engine was the worst possible
candidate for dual displacement. DN-056, p. 406
(Eaton). As Eaton had warned, rough running
and lack of reserve power made the system
unworkable in the six cylinder engine, resulting
in the termination of that particular program.
DX-067, Supp. App. IV, Ex. C (Ford). Ford
now plans to imj)lement the technology first on
eight cylinder passenger cars, despite the fact that
any drivability problems associated with the
teclmolog>- would be more likely tolerated by
truck owners than by passenger car owners. Id.
GM (DX-096, App. B, p. 30) and Chrj-sler (DN-
120, App. F.) have also experienced a variety
of problems with the technology, although GM
still targets usage of variable displacement en-
gines for the 1981 model year (DN-146-A, p.
143).
In view of the uncertain future of this par-
ticular item of technology, NHTSA is not basing
the 1980-81 fuel economy standards on the pro-
jected use of variable displacement engine tech-
nology. Rather, it is recognized that technical
problems remain to be solved, and if those
problems can be solved, the use of variable dis-
placement engines will provide the manufacturers
with some degree of flexibility in meeting the
standards.
7. Turiochargers. The agency did not base its
proposed standards on the projected use of tur-
bochargers. Turbochargers, when used with
spark ignition engines, do not directly improve
fuel economy, but rather increase engine horse-
power, thereby pennitting the substitution of
smaller displacement engines in a given appli-
cation. '\^nien used with diesel engines, turbo-
chargers apparently i-esult in additional benefits,
including direct improvements in engine fuel
efficiency and reduced particulate emissions.
(DX-146-A, p. 143). The reasons for not bas-
ing the proposed standards on the use of turbo-
chargers were primarily that in order to take
optimal advantage of turbocharging, shifts in
small engine production capacity would be neces-
sary, and the smaller engines should be initially
designed with turbocharging in mind. See 42
F.R. 63190. Leadtime was judged insufficient to
accomplish this.
PART 523— PRE 26
Althougrh the a<rency's projected 10 percent fuel
econom_y benefit from turbocharging was sup-
ported by participants in the rulemaking pro-
ceeding, so were the reasons supporting the need
for substantial leadtime for any high production
volume turbocharging program. DN-067, App.
IV, Ex. D (Ford), DN-056, p. 715 (Schwitzer) ;
DN-096, p. 32 (GM— with respect to leadtime
issue). Therefore, the agency is not basing the
1980-81 fuel economy standards on the projected
use of turbochargers, in conjunction with smaller
displacement engines. However, at least one
manufacturer apparently plans to use a limited
number of turbochargers on light trucks in the
1980-81 time frame, and it is possible that others
will as well. Therefore, turlx)chargers, along
with variable displacement and diesel engines, are
options that may be available to at least some
of the manufacturers to provide the flexibility
of additional methods for meeting the fuel
economy standards.
8. Automatic transmission improvem,ents. The
agency projected that a 3.5 percent fuel economy
improvement could be achieved for the portion
of the fleet which uses automatic transmissions
through the addition of lockup clutches to those
transmissions. In addition, based on the indi-
cated plans of Ford, it was projected that limited
use of that manufacturer's integral overdrive
automatic transmission could occur as early as
the 1980 model year, producing a 10 percent bene-
fit where applied. The 3.5 percent benefit from
the use of the lockup clutch was based primarily
on information from Chi-ysler. DN-001-05.
Table IV. GM and Ford also supported the
magnitude of that improvement. DX-096, App.
B, p. 23 (GM) ; DN-067, App. IV, Ex. G (Ford).
An additional area of automatic transmission
improvement is minor transmission efficiency im-
provements through the use of larger torque con-
verters. Ford attributes a 0.5 percent fuel
economy increase to these improvements (id.)
and GM projects 2 percent, although that benefit
is not fully additive to the 3.5 percent benefit for
the use of the lockup clutch.
By the time of the January 16-17 public hear-
ing, some of the manufacturers had reduced their
preproposal projections of planned usage and
expected fuel economy benefit from the various
automatic transmission improvements. Ford in-
dicated that no integral overdrive transmissions
would be available for 1980 model year light
trucks, since it claimed that all those transmis-
sions would be necessary for passenger car appli-
cation. DN-067, App". IV, Ex. G, p. 2. No
detailed information to support this claim was
provided. Chrysler, which had originally
claimed that the benefit associated with lockup
clutch is 3.5 percent, and had raised that estimate
on one occasion, subsequently claimed that the
benefits were reduced to 3 percent, because of a
reported need to mitigate drivability problems.
DN-120, App. B, p. 1. Ford also claimed that
it is unreasonable to expect it to implement the
lockup clutch for 1980 and 1981, given that it is
in the process of implementing the integral over-
drive transmission, albeit over an extended period
of years. Id., App. G, p. 2. With regard to
the latter point, it should be noted that the other
companies are also developing advanced trans-
missions similar to the Ford integral overdrive,
but are planning on implementing the lockui)
clutch as an interim measure.
The agency concludes that by implementing
lockup clutches, minor transmission efficiency im-
provements, and advanced transmissions like the
integral ovei-drive to the maximum feasible ex-
tent, fuel economy improvements of 3.5 percent
for the automatic transmission portion of the
fleets of GM and Chrysler in 1980, and of AM
and IH in 1981, are feasible. In the case of Ford,
a transmission efficienc}' improvement of 0.5 per-
cent is projected for 1980. For 1981, the agency
has adopted Ford's projection that its FIOD
transmission will be available for approximately
18 percent of its light trucks. However, NHTSA
finds no basis for concluding that the fuel
economy benefit of that transmission will be less
than the originally projected 10 percent, in the
absence of any tests by Ford. In addition,
NHTSA projects that Ford could offer a lockup
clutch or other equivalent improvement on the
remainder of its automatic transmission-equipped
light trucks, in the absence of any any plan by
Ford to make a complete switch to FIODs in
the foreseeable future.
PAET 523— PRE 27
9. Improved manual transmissions. The
agency projected the substitution of overdrive or
wide ratio manual transmissions or manual trans-
missions with additional driven gears for cur-
rent (primarily 3-speed) manual transmissions
beginning with the 1980 model year. These trans-
missions have generally been available as options
at extra cost on passenger automobiles for several
years. A 5 percent fuel economy benefit was
projected for these transmissions. GIM supported
this figure (DN-096, App. B, p. 24). Chrysler
projected a 4 percent improvement (DX-120,
App. L, p. 5), and Foi-d found the 5 percent
figure to be at the upper end of the expected
range. DN-067, App. IV, Ex. G. However,
objections were raised as to the extent of the
projected usage of these transmissions.
Beginning with the 1981 model year, GM ap-
parently plans to make these more fuel efficient
transmissions standard equipment on their light
trucks. DN-146-A, p. 126. With GM talring this
action, the other manufacturers would likely fol-
low suit for competitive reasons, to the extent
production capacity permits. Indications are
that, at least by the 1981 model year, additional
production capacity for improved manual trans-
missions will be available for Ford and Chrysler.
DN-067, App. IV, Ex. G, p. 8 (Ford— additional
capacity available for 1981); DN-G56. p. 345
(Chrysler — current constraint on increased usage
is marketing, not production capacity, and in-
creased marketing efforts will be undertaken in
the future). With respect to AM and IH, trans-
missions are supplier items, so that marketability
is likely to be the only possible major constraint
to the change to improved manual transmissions.
Therefore, the agency has adopted the manufac-
turers' projections for the usage levels of these
improved transmissions in 1980, and has revised
upward by a moderate amount the projections
of the companies with respect to the 19S1 usage,
where feasible. See RSP-S. The initially pro-
jected 5 percent fuel economy benefit per affected
vehicle was retained from the XPRM.
10. Improved i-wheel drive transfer cases.
Another item of technology which was not in-
cluded in the projections on which the proposed
standards were based is the use of "part-time"
4-wheel drive, where "full-time" 4-wheel drive
transfer cases are currently used. These new
transfer cases, whicli permit reduction of fric-
tional losses by minimizing the number of trans-
fer case components which are moving in the
2-wheel drive mode, should result in fuel economy
improvements of 4 to 8 percent for those 4-wheel
drive light trucks which currently use full-time
4-wheel drive. DN-184, Table B-la (GM) ;
DN-120, Att. B, p. 27 (Chrysler). Part of AM's
and Ford's 4-wheel drive fleet also uses full-time
4-wlieel drive currently, and NHTSA concludes
that both could use this new transfer case. There-
fore, fuel economy improvements projections
have been included in the analysis for the final
standards.
11. Improved crankcase, rear axle, and trans-
mission luhri.cants. The agency projected fuel
economy improvements of 2 percent for 1980 and
6 percent for 1981 through the use of a variety
of improved lubricants. The principal lubricants
expected to be available to achieve these benefits
are lower viscosity real axle lubricants (1 per-
cent benefit) and friction modified motor oils
such as those currently offered by Exxon and
Arco in the aftermarket (5 percent benefit).
The vehicle manufacturers raised three major
objections to the agency's projections in this area.
First, it was argued that on the basis of the ve-
hicle manufacturers' tests of these improved lu-
bricants, the fuel economy benefits attributed to
the lubricants were overstated. Second, the
manufacturers noted that EPA approval of some
of these lubricants (friction modified or synthetic
base motor oils) would be necessary to use these
lubricants in fuel economy testing, and that
approval had previously been withheld. Third,
it was argued that extensive durability tests of
these lubricants would be necessary before they
could be used as factory fill lubricants and recom-
mended for use thereafter.
With respect to the first point, Exxon and Arco
both supported the agency's 5 percent projection
for friction modified motor oils. DN-056, p. 157
(Exxon — 51/4 percent on the EPA test) ; Id., p.
516 (Arco — 4.85 percent, based on road tests of
147 vehicles). Arco indicated that an additional
2 i>ercent benefit (or a total of 7 percent for
motor oils alone) was expected in less than 2
years, when that company expects to offer a lower
viscosity version of its friction modified oil. Id.,
p. 534. Many other oil companies will be offer-
c
PART 523— PRE 28
ing lubricants of this general type in the near
future. DN-113. GM projected fuel economy
improvements of 3-6 percent from improved
crankcase and axle lubricants (up to 4 percent
with friction modified crankcase oils) but claimed
that these improvements would not be feasible
until the 1982 model year or later. DN-096, pp.
10-11.
GM, Ford, and Chrysler all submitted data
showing lesser fuel economy improvements than
shown by the oil companies. GM submitted data
on the fuel economy benefit associated with low
viscosity engine lubricants (DN-184, p. 2), which
showed a lower fuel economy benefit than would
be expected through the use of friction modified
oils. DN-056, p. 516 (Arco). GM also sub-
mitted data on tests (generally 2-3 tests each)
of various unspecified lubricants compared to an
unspecified base oil, and found fuel economy
improvements of up to 3.8 percent. Chrysler
conducted a series of test on both the Arco and
Exxon lubricants, and found fuel economy im-
provements of up to approximately 3 percent.
DN-120, Att. B, p. 21. Most of these tests were
conducted with reference to a 10W30 base oil
(the Arco and Exxon lubricants are both 10W40),
thereby possibly reducing the benefit which would
be achieved had viscosity been held constant in
the testing. Further, there appears to be no rea-
son why 10W30 versions of these improved lubri-
cants could not be made available for use by the
manufacturers by 1980, which should result in
fuel economy improvements in line with the
Exxon and Arco data, which compared 10W40
oils. DN-056, p. 536, DN-185 (Arco). In addi-
tion, Chrysler's tests were conducted at low
mileage, and showed a trend toward greater fuel
economy improvement at higher mileage. Exxon
indicated that the fuel economy benefit achieved
by their lubricant would appear primarily after
2,000 miles, beyond the mileage at which
Chrysler's tests were conducted. DN'-056, p. 171.
Talcing these factors into account, Chrysler's
data are not inconsistent with that of the oil
companies.
Ford's test program for friction modified
lubricants also showed low fuel economy im-
provements. DN-067, App. IV., Ex. K, p. 9.
Tests were conducted on the Exxon oil and
another blend (not Arco), and the base oil for
comparison purposes was 10W30, creating the
same problem of comparability as the Chrysler
tests. The Ford data consisted of tripicate tests
of four vehicles using each type of lubricant.
With respect to improved rear axle and trans-
mission lubricants, tests of Mobil's synthetic axle
lubricant support an improvement of 1 percent.
DN-109, DN-056, p. 695-6. GM projects an
improvement of 0.7 percent for lower viscosity
axle lubricants. DN-096, App. B, p. 8. Ford's
tests of lower viscosity axle lubricants showed
no fuel economy benefit, and it has not tested
friction modified axle lubricants yet. DN-149,
App. IV, Ex. K, p. 13. Ford claims that SAE
papers on the subject indicate that no fuel
economy improvement, rather than a 1 percent
improvement, would show up on the current fuel
economy test from the use of friction modified
axle lubricants, but NHTSA finds nothing in
the cited paper to support Ford's reading.
Chrysler also found "no significant improvement"
when switching to lower viscosity axle lubricant.
DN-120, App. H, p. 3.
Ford projects that manual transmission ve-
hicles will begin using lower viscosity automatic
transmission fluid as a lubricant. DN-149, App.
IV, Ex. K, p. 17. NHTSA's analysis indicates
that such a change could, because of the similarity
to using improved axle lubricants, result in a fuel
economy improvement of 1 percent by 1981.
As to the second point, EPA has not previously
approved the use of the improved crankcase
lubricants in fuel economy and emission testing
because of its valid concern that the lubricants
may not be used in actual service by consumers.
If the lubricants were used in EPA testing but
not in actual service, the EPA tests results would
be unrepresentative of actual driving experience,
overstating actual fuel economy and thereby pos-
sibly misleading consumers. EPA is also con-
cerned that some lubricant additives may reduce
emission control system durability. Therefore,
EPA has indicated that it would not approve the
use of friction modified and synthetic engine
lubricants until it received reasonable assurances
that the lubricants would likely be used by con-
sumers. Possible methods for demonstrating this
likelihood are competitive retail prices, wide-
spread commercial availability, and the existence
PART 523— PRE 29
of a generic definition for these lubricants so that
the vehicle manufacturers can identify them and
encourage their use. DN-120, App. H, Att. B.
EPA has recently taken the position that fric-
tion modified and synthetic engine lubricants
could be used in dui-ability testing for 1980 model
year emission certification. DN-195. Further,
it appears very likely that remaining impedi-
ments to that use of these lubricants in fuel
economy testing will be removed in time to per-
mit full use of these lubricants as factory-fill for
the 1980 model year. One previous impediment,
the lack of a procedure to define these oils gen-
erically, is expected to be removed by December
of this year, when the American Society for Test-
ing Materials (ASTM) is scheduled to complete
development of such a procedure. DN-056, p.
175.
The general availability of these lubricants in
time for the 1980 model year, another require-
ment for their permitted use in fuel economy
testing, also seems assured, given the expanding
activity of the oil companies in this field. DX-
056, p. 523, DN-112, 113. Current selling prices
of many of these lubricants appear to be ade-
quate to satisfy EPA's concern that it be likely
that consumers will in fact use these lubricants.
These latter two requirements are necessary to
provide an assurance that the lubricants will be
used as replacement lubricants, not just for fuel
economy testing. Therefore, it is quite likely
that these lubricants can be used by the 1980
model year in fuel economy testing. See also
DN-160, p. 7 (Public Interest Campaign). How-
ever, neither this agency nor EPA can predict
with complete certainty when approval of those
lubricants will become possible.
With respect to the vehicle manufacturers'
third objection, the agency concludes that the
manufacturers should be able to complete all
necessary durability testing of these friction
modified lubricants by the 1980 model year. DN-
096, p. 10 (GM). Judging from the data sub-
mitted by the manufacturers, the agency believes
that testing of these lubricants has already
progressed significantly. The oil companies
which produce these improved lubricants have
already conducted substantial testing of the lubri-
cants before they were first marketed. DN-056,
p. 175-6 (Exxon). In fact, the oil companies
argue that one of the major advantages of using
the friction modified lubricants is that engine
wear is reduced. Id., p. 535 (Arco). Since these
oils also meet American Petroleum Institute
Criteria for SE grade lubricants, engine dur-
ability should be improved. The oil companies
found no reason to expect any adverse impacts
from switching to these oils, which are of the
same viscosity, come from the same base stock,
and have most of the same additives as current
factory fill oils. Id., p. 175 (Exxon). In fact,
it appears that a less extensive durability pro-
gram would be necessary in switching to friction
modified oils than in switching to a lower vis-
cosity oil, wliich GM indicates could be done by
1980. See also id., p. 296 (Ford). Ford ap-
parently was willing to use these lubricants as
early as the 1978 model year. DN-149, App.
IV, Ex. K, p. 2. In fact, GM's oil durability test
requirements which were provided to NHTSA
recently refer only to tests for lower viscosity
engine oils, not friction modified oils. DN-184,
p. 4.
Therefore, the agency projects that a total fuel
economy benefit of at least 3 percent is achievable
through the use of improved lubricants (crank-
case and axle). To assure ample time for the
approval of these lubricants for use in vehicle
fuel economy testing by EPA, NHTSA will not
project their use prior to the 1981 model year.
It should be noted that it is possible that, by that
model year, further improvements in crankcase
lubricants may result in additional fuel economy
improvements, considering the agency's conserva-
tive projection of the currently achievable bene-
fit. Also, the use of improved manual transmis-
sion lubricants may expand in 1981. This could
provide a further safety margin for the manu-
facturers. However, since the eventual approval
of these lubricants is beyond the agency's con-
trol, alternative fuel economy standards for the
1981 model year will be established. In the un-
likely event that EPA has not yet approved the
use of these improved lubricants by January 1,
1980, a lower fuel economy standard, excluding
the projected use of the lubricants, will be in
effect. If, as the agency expects, this approval
is given by then, a higher (by 0.5 mpg) standard
will apply. NHTSA expects that the manufac-
I
t
PAKT 523— PRE 30
turers will still have a strong incentive to seek
the expeditious approval of those lubricants, in
order to use the lubricants in passenger auto-
mobiles as well as for light trucks.
12. Reduced rolling resistance. The agency
projected that a fuel economy improvement of
4.5 percent would be achieveable by the 1980
model year through the use of current or ad-
vanced radial tires on all light trucks, rather
than the bias ply and bias belted tires currently
used. This improvement was based on measured
differences (using the tire companies' own test
procedures) in tire rolling resistance between
radial and bias tires and the known relationship
between rolling resistance and fuel economy for
passenger automobiles. See, e.g., DN-018-28,
Table I (Goodyear); DN-018-49, p. 1 (Fire-
stone); DN-018-46, p. 2 (Uniroyal). Further
significant reductions in tire rolling resistance
through increased tire inflation pressure and
other means were anticipated for the near future.
r)N-018-28, p. 4 (Goodyear) ; DN-018-46, p. 2
(Uniroyal) ; DN-018-t9, p. 2 (Firestone). Good-
year indicated that there is a possibility that
their new elliptic tire, for which they project a
fuel economy benefit of up to 6 percent compared
to current radial tires, could be available for
use on a portion of those light trucks which
use passenger car type tires (primarily those un-
der 6,400 pounds (GVWR) by the 1980 model
year. DN-145; DN-146-A, p. 106-7. GM in-
dicated that the same benefits achievable with the
elliptic tire would be achievable with more con-
ventional tires by increasing inflation pressure.
Id.
After the issuance of the NPRM, it became
increasingly clear that the fuel economy benefits
associated solely with a switch to current radial
tires would not equal 5 percent. A number of
participants in the proceeding indicated that
radial tires were inappropriate for use on off-
road vehicles, due to the greater vidnerability of
radial tires to sidewall damage. DN-056, p. 190
(Goodyear) ; DN-097, p. 5 (IH) ; DN-098, p. 1
(AM) ; DN-096, p. 9 (GM). In addition, prob-
lems exist in measuring the radial-bias tire fuel
economy differential on current EPA fuel econ-
omy test procedures. Current test procedures
apparently accurately simulate the characteristics
of radial tires but overestimate the fuel economy
characteristics of bias tires. DN-067, App. IV,
Ex. F (Ford) ; DN-018-49 (Firestone) ; DN-145
(Goodyear). The light tire manufacturers gen-
erally projected fuel economy improvements in
the range of 2 percent for the portion of their
fleets which use passenger car type tires, assuming
that the optional "coast-down" test procedure
could be used to measure the fuel economy benefit
of switching to radial tires. DN-120, App. C
(Chrysler— 21/2 percent) ; DN-906, p. 9 (GM—
11/2 percent) ; DN-067, App. IV, Ex. F (Ford) ;
DN-088, p. 4 (Toyota).
In view of this new infoiTnation submitted
after the issuance of the NPRM, the agency has
re-analyzed the potential for fiiel economy im-
provements from switching to radial tires. On
the basis of this detailed analysis of the tires
currently used by the manufacturers on light
trucks and current recommended inflation pres-
sures, the agency now projects that fuel economy
improvements ranging from 1.6 to 2.5 percent
can be achieved for approximately 80 percent of
the light truck fleet (excluding off-road applica-
tions) by switching to radial tires and by making
minor inflation pressure increases. See RSP-S.
It should be noted that to the extent new tire
concepts such as the elliptic tire become available
for use in light trucks in the 1980-81 period,
the manufacturei-s will have additional flexibility
in meeting the fuel economy standards. It is
possible that the agency's originally projected
fuel economy benefit will be achieved with these
advanced tire concepts.
13. Engine displacement or drive ratio reduc-
tions. The agency projected that reductions in
average engine displacement or drive ratios (gear
ratios or axle ratios) or both could be imple-
mented by the 1980 model year for each manu-
facturer. Specifically, it was projected that the
product of engine displacement multiplied by
total drivetrain ratio (CID x N/V) could be
reduced 10 percent from 1977 levels for each
manufacturer, in addition to reductions made in
conjimction with weight reduction, to maintain
constant vehicle performance. Drive ratio
changes can be accomplished with relatively
short lead time. Such reductions were projected
to result in fuel economy improvements of ap-
proximately 4 percent. Reductions in engine
displacement or drive ratio tend to diminish a
PART 523— PRE 31
vehicle's acceleration and grade-climbing ability,
thereby limiting the extent to which these re-
ductions can be implemented without impairing
the vehicle's functional capabilities.
It should be noted that these reductions are
projections of reductions in average engine dis-
placement or drivetrain ratio, and not every
vehicle would be expected to achieve such a re-
duction. For example, vehicles incorporating
overdrive transmissions would not be expected
to fully implement such reductions and other
vehicles would be expected to achieve reductions
greater than 10 percent. The 10 percent figure
was based on an analysis by the Department of
Transportation which indicated that much
larger reductions, i.e., as high as 30 percent, could
be achieved without violating any of the mini-
mum performance criteria specified by the manu-
facturers. DN-036, App. B. The agency used a
10 percent reduction instead of the 30 percent
reduction projected in the document based on
the agency's judgment that major reductions in
acceleration performance occurring over a rela-
tively short period of time might result in con-
sumer dissatisfaction and possibly reduced sales,
notwithstanding the ability of the vehicles to
satisfy minimum performance requirements.
The manufacturers and many other partici-
pants in the rulemaking expressed concern as to
whether the proposed standards could be achieved
while still maintaining acceptable levels of light
truck performance and utility. However, no
participant advanced any specific vehicle per-
fonnance criteria different from those previously
analyzed by the agency, and no specific informa-
tion was presented which contradicted the orig-
inal conclusion as to the feasibility of a 10
percent reduction in engine displacement or
drivetrain ratio or both. In fact, it appears that
all of the manufacturers except Chrysler and IH
have presented information which indicates that
the 10 percent reduction is feasible and in some
cases currently planned. DN-096, App. B, p. 25
(GM) ; DN-149, App. IV, Ex. I (Ford) ; DN-
010-02, p. 10 (AM). Chrysler is apparently in-
vestigating certain specific approaches for reduc-
ing engine displacement or drive ratio. DN-120,
Att. B, p. 25. Further, it appears that even with
a 10 percent reduction in CID x N/V, Chrysler's
average performance level for a given test weight
would be higher than those of many of the other
manufacturers. See RSP-S.
An example of the difference between the argu-
ments made at the January 16-17 hearing or in
written comments and the actual manufacturer
plans and capabilities relating to this issue is
the position taken by Ford. At various times in
the rulemaking. Ford stated on one hand that
it could not reduce average engine displacement
because of production capacity constraints (DN-
149, App. IV, Ex. I, p. 2) and because such re-
ductions might be fatal to their truck's func-
tional capacities, but on the other hand that
reductions in CID alone of more than 10 per-
cent were planned. DN-010-02, App. F; DN-
149, App. IV, Ex. I, p. 1. Ford similarly raised
numerous objections to NHTSA's projections of
feasible reductions in N/V ratio (DN-149, App.
IV, Ex. 1), despite the fact that significant re-
ductions of that parameter are also planned by
Ford. DN-149, App. IV, Ex. I, p. 1. Thus,
Ford objected strenuously to the feasibility of
NHTSA's projections of CID x 1^/Y reductions,
despite the fact that it plans to make even
greater reductions than those projected by the
agency. With respect to the issue of whether
these reductions will improve fuel e<!onomy by
the amount projected by NHTSA, Ford's own
test data for 1979 light trucks supports improve-
ments of at least the level projected. See RSP-S.
Therefore, the reductions in engine displace-
ment or drivetrain ratio projected initially by
the agency have been retained, except where the
manufacturers' plans exceed those projections.
In the latter cases, the final projections were
based on the manufacturers' plans. However, the
agency projects a more limited 7 percent reduc-
tion for Chrysler in 1980. The agency projects
that Chrysler may need an additional year to
phase-in maximum reductions, given its limited
current plans to make these changes and its past
reliance on high performance levels as a market-
ing technique.
14. A/ix shifts. For the 1980-81 model years,
the agency projected negligible shifts in the 1977
product mix of the manufacturers beyond those
projected by the manufacturers, or, looked at
another way, the agency projected that the man-
ufacturers would take such actions as necessary
to assure that product sales would not shift to-
f
((
(
PART 523— PRE 32
■ward the higher test weight classes. The one
exception to this statement is that the agency
proje<:ted the sale of a limited number of "mini-
vans" and other new truck concepts by General
Motors in the 1980-81 model years. GM now
indicates that sales of the mini-van, at least in
a light truck configuration, are not planned.
DN-056, p. 51-3. Because of the limited variety
of market class offerings currently available in
the light truck market, as compared to passenger
automobiles, mix shifts could occur in the future
primarily through new product offerings. New
offerings which are not currently planned are not
feasible in the limited time left before the 1980
and 1981 model years.
However, the agency projects that one limited
type of mix shift is feasible for the 1980 model
year. Because of recent changes in the fuel
economy and emissions test procedures by EPA,
optional equipment must be included on test ve-
hicles if it is projected to be sold on 33 percent
of the vehicles in a particular "car line." Under
the previous test procedures, optional equipment
was included only if it was projected to be sold
on 33 percent of the vehicles in a particular
"engine family." An "engine family" is, gen-
erally, a combination of basic engine and emis-
sion control systems, independent of the vehicle
in which the engine is placed. This test proce-
dure revision would be expected to have a random
impact on the manufacturers, with no trend to-
ward either higher or lower test weights. How-
ever, it appears that the manufacturei"s have
carefully targeted the availability of optional
equipment to take maximum advantage of the
option rule (e.g., restricting options on some
engine families to 30 percent usage), so that the
change to the "car line" test will initially in-
crease average test weights. However, given time
between the test procedure change and the 1980
model year, there is no reason to believe that
the manufacturers will not be able to reallocate
their option offerings among engine families
(e.g., restricted option sales to 30 percent for
some car lines which currently have option sales
levels of just 33 percent) to offset the effect of
the rule change. In fact, it appears that such
efforts are already planned. D\-146-A, p. 26-8.
No net reduction in the total number of options
sold for all light tracks need result from such
actions.
d. ECONOMY PRACTICABILITT
Relatively few objections were raised with
respect to the costs attributed by the agency to
various technological improvements. None of
the comments suggested that the cost of imple-
menting the technologies upon which the pro-
posed standards were based would exceed the
bounds of economic practicability. However, the
manufacturers and others did argue that com-
pliance with standards at the levels of the pro-
posal, with to those commenters implied taking
st«ps beyond implementing the projected tech-
nologies, would be economically impracticable.
With respect to the latter issue, the difference
between the agency's position and that of the
manufacturers resulted from differences in the
projected fuel economy benefit achievable with
the various technological improvements and the
extent to which these improvements could be
implemented by a particular model year, and
from the consequent assumption by the manu-
facturers that compliance measures beyond those
specified in the proposal would be necessary.
These differences have been discussed in section
III.c above, and the final standards are estab-
lished at levels closer to what the manufacturers
projected than the proposed standards.
The increase in capital expenditures necessary
for individual manufacturers to comply with the
1980 and 1981 standards is not large, either
absolutely or relatively. Almost no increase in
capital investment will be necessary for the manu-
facturers to achieve the standards instead of their
lower recommended levels of average fuel econ-
omy. Typically, the difference between the
standards and the recommended levels consisted
of low capital measures such as performance re-
ductions and lubricants. The capital investment
necessary to make up this difference is not the
full investment attributable to the standard. A
portion, but not all, of the capital investment
necessaiy to achieve the manufacturer's recom-
mended levels is also attributable to the stand-
ards. The reason for not attributing all of this
latter investment to the standards is that the
agency anticipates that the need to remain com-
petitive with other manufacturers and the mar-
PART 523— PRE 33
ketability of increased fuel economy would have
led the manufacturers to voluntarily make fuel
economy improvements even if there were no fuel
economy standards. The legislative record for
the fuel economy provisions of the Act is replete
with statements supporting the reasonableness of
anticipating that result. Even if the entire
capital investment for raising average fuel econ-
omy to the level of the standards were attributed
to the standards, the increase in business-as-
usual capital expenditures would be negligible, on
the order of 3 percent. That small figure may
be an overstatement because it is based on the
pessimistic assumption that none of the capital
investments could be offset through normal busi-
ness expenditures.
"With respect to the issue of the specific types
of analysis which should be undertaken in a
determination of economic practicability. GM
and Ford argued that NHTSA should consider
the impact of fuel economy standards on the
economy as a whole, not just the industry itself.
DN-067, App. V, p. 1 (Ford) ; DN-096, App.
D, p. 1, DN-056, p. 93 (GM). NHTSA recog-
nizes the need to consider such factors as the
impacts of standards on employment in the auto
industry and its suppliers, inflation, vehicle sales,
and the trade balance, and the agency did so in
its impact assessment. DN-067, App. V, p. 1
(Ford). These matters are, of course, inter-
related, in that product changes which are not
accepted by some consumers will reduce industry
sales, at least in the short term, with resulting
deceases in employment and industry profitabil-
ity. However, the agency believes that limited
visible or otherwise preceptible product changes
that may be necessary to comply with these
standards will be accepted by consumers.
Several of the manufacturers urged that the
economic practicability of the fuel economy
standards be determined in the context of the
other Federal vehicle standards which the manu-
facturers must meet. The assumption of these
commenters appeared to be that it would be suf-
ficient in making such an analysis simply to Imow
the expenditures necessitated by the various
Federal vehicle regulatory programs. The short-
comings of such an analysis are obvious. A
definitive analysis of the sort urged by these
commenters implies the availability of extensive
information regarding all of the manufacturers'
resources and demands on those resources. None
of these commenters provided or offered to pro-
vide such information.
Ford argues that greater emphasis should be
placed on cost-benefit analysis in determining
economic practicability. Id. Ford states that
greater reliance should be placed on the language
of section 325(a) of title III of the Act, relat-
ing to appliance energy efficiency and not auto-
motive fuel efficiency. That section clearly en-
visions substantial reliance on cost-benefit analysis
in setting standards. However, section 325 also
goes to great lengths to differentiate between the
concepts of "feasibility" and whether standards
are "economically justified," with cost-benefit
analysis being tied to the latter concept only.
Since the language in section 502 of the Act is
expressed in terms of "feasibility" and "practi-
cability," the agency remains of the view that
Congress intended that these terms be interpreted
consistently in different sections of the same
statute. See 42 F.R. 33537. Nevertheless, the
agency notes that the benefits of the technology
projected by NHTSA to be used in meeting the
1980-81 fuel economy standards would meet a
cost-benefit test. This result could change de-
pending on the retail price increases which the
various manufacturers elect to impose, and de-
pending on whether the manufacturers elect to
purchase technology from outside sources or
produce it themselves. See FIA.
No slowdown in the growth of the light truck
market should occur as a result of these stand-
ards. Of all the projected methods for improv-
ing fuel economy, only engine displacement or
drive ratio reductions and the use of diesel en-
gines have the potential to be viewed by con-
sumers as having adverse impacts on the utility
of light trucks despite their contributions to in-
creased fuel economy. In both cases, NHTSA
projected changes no more stringent than those
already contemplated by the manufacturers. The
implanned production of new, downsized trucks
is not projected due to leadtime constraints and
is not necessary to meet the standards promul-
gated herein. The other projected changes will
hardly be preceived by vehicle owners, except
with respect to slight initial vehicle price changes
and significant fuel economy improvements.
i
PAET 523— PRE 34
The possibility of adverse sales and employ-
ment impacts resulting from retail price increases
can be roughly projected through the use of
economic models. Since the retail price increases
associated with this rule are expected to be small,
absolutely as well as compared to the fuel sav-
ings, compliance with these standards should not
result in any significant sales or employment
effects. See Final Impact Assessment. Similarly,
the vehicle and price changes should not lead to
retention by owners of older veliicles instead of
buying the new more efficient ones.
GM argues that the fuel savings associated
with the proposed standards are small in com-
parison to the risks associated witli compliance
with those standards. DN-096, App. D. GM's
comment about risks clearly applies to standards
set at the proposed levels. Since the final stand-
ards have been reduced as a result of new infor-
mation received since the proposal and are near
the levels recommended by the manufacturers,
they presumably do not present the risks men-
tioned by GM. Because of changes in the base-
line pursuant to manufacturers' comments,
however, the sa^^ngs are similar to those for the
proposed standards. Those methods of improv-
ing fuel economy which involve possible market-
ing risk, such as engine displacement reductions,
have been established at levels equal to GM's
own projections. "With respect to the magnitude
of the potential energy savings associated with
these standards, the light truck fuel economy
standards should not be considered in a vacuum,
but rather must be viewed in the context of the
entire national energy conservation program. If
each element of that program were to be cut back
or eliminated on the grounds that the savings
achievable with that element is small in com-
parison to the total energy problem, then the
overall program could not be successful.
Ford objected to the exclusion of the cost for
their new pickup truck line in the agency's
economic analysis. This cost was not included
in the agency's Preliminary Economic Impact
Assessment because the new truck series was not
an extraordinary cost associated with these fuel
economy standards. The introduction of these
new models is consistent with Ford's historic re-
design cycle, and would have occuiTed at approxi-
mately the planned time regardless of the
existence of standards. DN-001-02, Att. 1, p. 1.
Ford began work on the new truck prior to the
enactment of the Act, and Ford stated that the
fuel economy standards were only one factor
considered in the design. DN-056, p. 225.
Further, it is apparent from the other factors
specified by Ford that the standards were not
the only reason for making fuel economy im-
provements. The fact that the fuel economy
standards were one of the concerns in planning
that truck does not necessarily imply that addi-
tional costs were associated with that concern.
Ford submitted no information which would in-
dicate that the cost of introducing a new light
truck for general marketing, competitive, and
compliance purposes is any greater than the cost
of introducing a new light truck for marketing
and competitive purposes alone. Therefore, no
costs associated with this new light truck, other
than those for the technological improvements
discussed in this notice (e.g., improved lubricants,
radial tires, etc.) have been attributed to this
rulemaking.
Ford also argued that the cost of electronic
engine controls and three-way catalysts is so high
that their use is unjustifiable for light trucks in
1980-81. DN-067, App. IV, Ex. A, p. 15. The
agency has never suggested that three-way catal-
ysts be used on all light trucks for 1980-81. With
respect to the use of electronic engine controls
for spark advance, air-to-fuel ratio, and exhaust
gas recirculation rate. Ford submmited only "re-
tail price equivalents" for the cost of those items,
which includes an unspecified mark-up. Infor-
mation currently available to the agency from
suppliers of electronic components indicates that
the cost of these items on a high volume, per
unit basis would not justify retail price increases
to the level specifietl by" Ford ($128). It is
impossible for the agency to analyze Ford's ob-
jection as to the cost for variable displacement
engine technology, which Ford also provides in
terms of a retail price equivalent. Id, App. V,
p. 13. Ford's objection to the agency's projected
cost for engine displacement and/or drive ratio
reductions (Id, App. V, p. 12) is based on Ford's
assumption that it would have to introduce a new
line of engines beyond its current plans. That
assumption is unfounded. See section III.c.13
of this notice. Ford's objection to the cost of
PART 523— PRE 35
weight reduction is also based on its assumption
that product changes beyond those projected by
NHTSA would be necessary to achieve the fuel
economy benefit specified by the agency. As
discussed in section III.c.l of this notice, the
agency's revised weight reduction projection for
Ford is based on the agency's best estimate of
the benefit achievable from Ford's planned new
truck line and other actions such as option re-
strictions which have no associated cost.
Chrysler (DN-120, App. N) and IH (DN-
097-A, App. J) objected to the costs used by
the agency for weight reduction by material
substitution. Although Chrysler provided no
basis for its estimate of a 35(|; per pound cost
penalty for weight reduction by material sub-
stitution, and IH failed to provide any detailed
information (such as breakdowns of material
and fabrication costs) in support of its claimed
costs for various component substitutions, from
other information it appears that the agency's
cost projections for some components were too
low. Alcoa (DN-018-60) provided detailed cost
information for aluminum components, and other
material suppliers provided similar information
for various plastic and high strength steel items.
Therefore, the cost estimate for weight reduc-
tion by material substitution has been adjusted
in accordance with this newly supplied informa-
tion. See Final Impact Assessment.
Chrysler also objected to the cost associated
with diesel engines. Since the agency has not
projected any use of diesel engines, the cost of
dieselization is not attributable to these fuel
economy standards, and is therefore not included
in the agency's analysis. However, Chrj'sler cor-
rectly points out that the agency's cost estimate
for diesel engines was based on the cost resulting
from conversion of a current engine production
facilitj' to produce a dieselized version of an
existing engine, and high volume sales of that
engine. Docket FE-76-01-GR-003, Document 3,
App. B. This scenario accurately reflects the
dieselization program of only GM among the
domestic manufacturers, at the present time.
If a manufacturer were to purchase engines from
an outside source, the cost of dieselization to the
consumer would be much higher. DX-120, App.
N. Chrysler and IH both plan to continue pur-
chasing diesel engines, at least for the near
future.
Perhaps the most frequent comment in the
entire rulemaking involved the concern expressed
by the light truck industiy, Congressmen, com-
munity groups, and others that the proposed
standards would result in substantial unemploy-
ment. Based on the post-proposal statements
of the manufacturers, many commenters assumed
that the agency had given insufficient considera-
tion to the possible employment impacts of its
proposal. Tliis is manifestly not so. The agency
sought, based on the information available to it,
to propose standards that could be met without
any significant employment impact. The anal-
ysis of that information indicated that no un-
planned major design changes, new engines or
new models would be necessary to meet the pro-
posed standards.
In their post-proposal comments, the light
truck manufacturers submitted new information
which contradicted or clarified previous submis-
sions or which filled previous infonnation gaps.
The new infonnation showed that some tech-
nology would not yield the degree of fuel econ-
omy improvement indicated by the pre-proposal
information and that some technology could not
be used to the extent previously indicated by
agency anah'sis. Some manufacturers noted that
the technological projections underlying the pro-
posal would not yield the proposed levels of
average fuel economy and imputed to the agency
an intent to require the manufacturers to make
technological changes not feasible within the
available leadtime or to make drastic reductions
in product offerings. Neither the proposal nor
its supporting documents were based on such an
intent.
As noted above, the agency sought to propose
standards that would not adversely affect em-
ployment. The agency continues to embrace that
goal.
AVith respect to the issue raised by Ford and
others, NHTSA has made adjustments to the
proposed fuel economy standards in light of in-
formation submitted after the issuance of the
XPR^VI in December. On the basis of all this
information, NHTSA concludes that the fuel
economy standards established herein can be met
i
PART 523— PRE 36
without elimination of any current product offer-
ings, and without any necessaiy loss in employ-
ment. By making the various relatively minor
technological improvements discussed in this
notice, NHTSA projects that each manufacturer
can achieve the final standards. The impact
on employment of making these vehicle improve-
ments may well be positive. DN-160, pp. 16-18
(Public Interest Campaign), and FIA. The final
standards are set at levels significantly lower
than the proposed standards, due to the post-
proposal submissions, comments, and data from
a wide range of participants in the proceeding.
Such revisions are entirely consistent with the
informal rulemaking process, in which an agency
makes a proposal based on the best information
it then has available, solicits additional informa-
tion from all interested individuals and organi-
zations, and then establishes a final rule based
on all available information, including changes
based on comments on the proposal. See 5 U.S.C.
553, "International Harvester v. Ruckleshaus,"
478 F. 2d 615, 632.
Chrysler responded to the proposal by announc-
ing that it was delaying the conversion of its
Jefferson Avenue assembly plant in Detroit from
the production of full-size passenger cars to van
production. DN-120, p. 13. Chrysler stated
further that issuance of final standards at the
proposed level would lead to a closing of the
plant permanently. Subsequently, the company
indicated that the plant would definitely remain
open if the standards were established at a much
lower level specified by Chrysler. However,
Chrysler declined to state the maximum level of
standards which could be set without that com-
pany's deciding to close the plant. Therefore,
the agency issued a special order under sec-
tion 505(b) of the Act to Chrysler to obtain
information related to Chrysler's statements, e.g.,
information about current and future van sales
and production capacity. DN-191. Chrysler
did not respond, or provided incomplete answers
to several crucial questions and requests for docu-
ments in the special order, particularly those
items bearing on the relationship of the proposed
standards and decision to delay the conversion.
DX-191, 191-A.
The final standards established by this notice
should not cause or pose the possibility of plant
closings. They reflect the agency's consideration
of all of the post-proposal information submitted
by the manufacturers regarding the fuel economy
improvements to be gained from particular tech-
nologies and the extent to which those technol-
ogies can be implemented in 1980-81. Significant
changes have been made to the agency's original
projections concerning these matters. There is
ample leadtime for modest departures required
from the manufacturer's plans for 1980 and the
only slightly less modest extra effort necessary
for" 1981.
e. THE EFFECT OF OTHER FEDERAL MOTOR
\TEHICLE STANDARDS
A number of changes in Federal emission
standards and associated test procedures will
occur between 1977 (the base year for our cal-
culations) and 1980-81. The major change is
the tightening of the light truck emission stand-
ards from 2 grams per mile of hydrocarbons
(HC), 20 grams per mile of carbonmonoxide
(CO), and 3.1 grams per mile of oxides of ni-
trogen (XOx) for 0-6,000 pound G^^^^l trucks
only to levels of 1.7/18/2.3, respectively, for 1979
model year light trucks with GV WKs up to
8.500 pounds. The manufacturers claimed fuel
exjonomy penalties ranging from 3 to 5 percent
largely associated with the change in the NOx
standard, with changes in the other two stand-
ards apparently having much less effect. In the
1979 fuel economy standard nilemaking. the
same issue arose, and the agency took the position
that none of the manufacturers had demonstrated
the existence of an unavoidable penalty. 42 FR
13813-4. Only Chrysler and Ford have since
submitted additional data or arguments to sup-
port their claims of penalties.
Chrysler's argument for a 3 percent penalty is
based upon a comparison of 1978 data from the
CalifoiTiia light tmck fleet subject to standards
of 0.9/17/2.0 and the "49-state" fleet subject to
Federal standards. NHTSA finds a number of
serious en-ors in this comparison. First, the
California 1978 standards are more stringent than
the 1979 Federal standards. Chrysler assumes
that the differences between these two sets of
standards can be accounted for by making the
assumption that the fuel economy penalty re-
sulting from more stringent emission standards
PART 523— PRE 37
is linearly related to the change in the NOx
standard. Chrysler offers no basis for this as-
sumed relationship, and NHTSA knows of no
reason wliy such a relationship should exist, par-
ticularly when more advanced control technology
may be available for compliance with the more
stringent standard. Second, Chrysler compared
these standards based on 1978 technology, while
NHTSA methodology requires a comparison
based on 1977 versus 1980-81 emission control
technology. Therefore, under Chrysler's pro-
cedure, the fuel economy of vehicles subject to
Federal emission standards has the advantage
of one additional year of technology develop-
ment, wliile the fuel economy of California ve-
hicles is understated because it does not reflect,
as it should, the technological development that
will occur between 1977 and 1980-81. Thus,
the measured penalty was inappropriately in-
creased. In this rulemaking, NHTSA must de-
termine the fuel economy achievable in 1980-81
based on the technology available and the emis-
sion standards applicable in those years, com-
pared to the fuel economy that was achievable
in model year 1977 with 1977 emission standards
and control technology. Thus. Chrysler's anal-
ysis failed to account for advances in technology^
i)etween 1977 and 1980-81. Third, and perhaps
most significant, California experience has in
general not been a valid indicator of 49-state
experience with respect to emission standards
effects. The reason for the past unrepresenta-
tiveness of California experience is that manu-
facturers cannot devote the same level of effort
toward optimizing emission control systems and
engine calibrations to minimize the effect of more
stringent emission standards when those stand-
ards are applicable only to a small minority
(perhaps 10 percent) of their fleet as it does
when they are applicable to 90 percent of their
fleet. Therefore, lower fuel economy would be
expected if a particular set of (California) emis-
sions standards applied to a minority of tlie fleet,
and compliance was achieved by modifying a
portion of the fleet which was originally designed
to meet less stringent (Federal) standards.
Therefore, the agency is unpersuaded by
Chrysler's argument.
Ford attempted to demonstrate the existence
of an emission standard-related fuel economv
penalty by two methods. First, it used an ana-
lytical method, called "engine mapping", which
is designed to show the theoi-etical relationship
between fuel economy and NOx emissions at
various emission standard levels. This approach
showed that a penalty of approximately 1 per-
cent is theoretically achievable through optimal
use of proposed technology. DN-067, App. VI,
p. 2. Second, Ford submitted test data from 16
development vehicles which were calibrated to
meet 1979 standards, and compared those results
to 1978 emission certification data for identical
vehicles (in terms of engine, transmission, inertia
weight, and axle ratio). Under that procedure,
a fuel economy penalty of 4 percent was meas-
ured. Id., p. 5. NHTSA has a number of diffi-
culties in accepting the results of either of these
procedures and applying them to this rulemaking.
First, Ford's tests were conducted on develop-
ment vehicles at initial calibration settings. Sub-
stantial improvements are feasible after the first
testing of development vehicles, on a continuing
basis through 1980 and 1981. Ford's analysis
ignores this effect by comparing 1979 develop-
ment data against data for 1978 vehicles, which
have been subject to the same emission standards
for several j'eare, with ample opportunity to
more closely approach full optimization. Ford
denies the existence of such an improvement
effect between initial development testing and
final emission certification, but bases its argu-
ment on its experience in the 1978 model year,
a year in which the emission standards did not
change, and for which calibrations would be ex-
pected to more closely approach full optimiza-
tion.
Second. Ford's engine mapping procedure
does not measui'e the relevant fuel economy dif-
ferential for the purposes of NHTSA projec-
tions. Ford's procedure attempts to measure
fuel economy when meeting 1979 emission stand-
ards using 1979 emission control technology, and
compares that value to fuel economy achievable
using 1979 technology to meet 1977 model year
standards. DN-149, App. VI. This procedure
is patterned after that specified in section 502(d)
of the Act. NHTSA, on the otlier hand, under
section 502(e)(3) of the Act, must not only
assess the effect of the cliange in emission stand-
ards between 1977 and 1979 (and on to 1980
(
PART 523— PRE 38
and 1981, where standards M'ill remain the same)
but also consider the offsettinfr effect of differ-
ences between the technolojry and calibrations
actually used in 1977 and the technolofry and
calibrations which will be available for use in
1980-81. Thus, Ford's engine mapping analysis
failed to consider advances in emission control
technology between 1977 and 1979, and further
advances achievable through 1980 and 1981. In-
stead, technology and calibration optimization
were assiuned by Ford to be fixed at a particular
level. However, improvements in emission con-
trol technology have in fact occurred in this
1977-79 period. DN-067, App. IV, Ex. A, Att.
1. The small magnitude of the theoretical pen-
alty claimed by Ford (1 percent) and the fact
that advances in technology were not considered
in developing that penalty indicates that the ac-
tual 1977-79 combined effect of emission stand-
ards changes and technology advances may well
be an improvement in fuel economy, not a loss.
Third, it has been demonstrated that when
passenger automobile NOx emission standards
were made more stringent in 1977 (from 3.1 to
2.0 gram per mile), engine efficiency improve-
ment more than offset any adverse impacts of
the new emission standard, when various ex-
traneous factors affecting fuel economy were
disaggregated. SAE paper 760795. EPA ex-
pects that this historical effect should also be
applicable in the case of comparable reductions
in the light truck NOx emission standard. DN-
255, pp. 1-2.
Therefore, NHTSA reaffirms its position that
the 1979 change in Federal emission standards
has not been demonstrated to cause an adverse
impact on average fuel economy for light trucks.
Ford also argued that the agency has not ade-
quately accounted for the effect of California
emission standards, which are more stringent
than Federal standards. DN-067, App. VI, p.
9. Ford claims that the effect of these strndards
is 0.1 mpg, or less than 1 percent. As EPA
points out. Ford's analysis is based upon a com-
parison of 1978 California and 49-State vehicles,
and does not accurately reflect the types of tech-
nology which will be used in 1980-81 to comply
with California standards. Ford indicates that
it will be using electronic engine controls in con-
junction with three-way catalysts to meet these
more stringent California standards in 1981.
DN-149, App. IV Supp., Ex. A, p. 5. (Ford).
In fact. Ford has already begun using this type
of technology on its 1978 California passenger
cars. Vehicles using this technology are pro-
jected by Ford to achieve the same fuel economy
as a 49-State vehicle in the same model year.
NHTSA projects that, given current efforts to
develop these advanced emission control systems
for passenger car use, a sufficient number of
these systems could be applied to 1980-81 model
year California light trucks to eliminate the al-
most negligibly small effect of the California
standards.
Several manufacturers have also claimed that
EPA's recently issued advisory circular on
changes to the transmission shift schedule for
fuel economy and emission testing of manual
transmission vehicles will result in a fuel econ-
omy penalty. DN-097, p. 4 (IH) ; DN-096,
App. B, p. 25 (GM) ; DN-067, App. VI, p. 15
(Ford). Previously, the manufacturers have
been permitted to shift manual transmission ve-
hicles in fuel economy and emission testing ac-
cording to the shift schedule specified in the
owner's manual. According to EPA, some man-
ufacturers have taken advantage of this provision
by specifj'ing shift schedules in the owner's
manuals for certain vehicles which are not repre-
sentative of typical driving. These new shift
schedules have recommended shifting at ex-
tremely low engine speeds, or in some cases skip-
ping gears in the shift pattern, resulting in
artificially high fuel economy and low emissions.
DN-255, Advisory Circular Number 72, January
19, 1978. Under the new requirements, three
alternative shift patterns are permitted, either
shifting at 66, 65, and 57 percent of rated engine
speed into second, third, and fourth gears, re-
spectively, or shifting at 15, 25, and 40 miles per
hour into second, third, and fourth gears, respec-
tively, or some other shift pattern which the
manufacturer demonsti'ates to be representative
of actual driving experience. Id. In the first
two alternatives, skipping gears while shifting up
(e.g., first directly to third or fourth) is not
permitted.
The manufacturers have not yet had the oppor-
tunity to fully evaluate the effect of the change
in the EPA test procedure on fuel economy.
PAET 523— PEE 39
DN-149, App. VI, p. 16 (Ford) ; DN-146-A, pp.
127-8 (GM). Early submissions by tine manu-
facturers evaluated the impact of a requirement
of shifting at 66 percent of rated engine speed
for all gears, not the final EPA requirement.
D\-096, App. B, Table B-7 (GM) ; DX-067.
App. VI, p. 16 (Ford). Therefore, there is in-
sufficient data to justify NHTSA's making an
adjustment to the standards now. Although the
test procedure change was intended to have the
effect of reducing the measured fuel economy of
some vehicles, and make the measured fuel econ-
omy more representative of on-the-road fuel
economy, the manufacturers have as yet not
quantified the magnitude of this effect. To jus-
tify any reduction, the agency would be required
to determine the number of test vehicles which
were shifted in an unrepresentative manner in
1977, the specific shift schedule permitted under
the new requirements which would provide the
most favorable results for individual manufac-
turers, and the fuel economy impact for indi-
vidual vehicles of the change from 1977 shift
patterns to this most favorable new pattern.
This adjustment factor would be expected to vary
from manufacturer to manufacturer, depending
on the extent to which unrepresentative shift
schedules were specified in 1977. Therefore, the
agency will make no adjustment to the standards
to account for this effect in the current rule-
making, but will accept petitions from individual
manufacturers which attempt to justify a reduc-
tion in the standards because of the test proce-
dure change.
Ford also argued that changes in test proce-
dures for measuring evaporative emissions from
vehicle fuel tanks would cause a fuel economy
penalty. This new procedure, called the SHED
test, attempts to more accurately quantify the
total amount of hydrocarbons which escape from
the vehicle, other than as exhaust emissions.
Ford's argument for a penalty of 0.08 mile per
gallon is that the new test procedure will measure
more escaped vapors than the old one, thus re-
quiring the manufacturers to use more efficient
evaporative emission control systems. These
more efficient systems would, according to Ford,
result in more hydrocarbon vapors being retained
in the evaporative cannister and fed through the
carburetor. However, Ford assumes that none of
these vapors would be combusted and do work,
but instead would be sent straight out the exhaust
system. This additional hydrocarbon exhaust
would be measured on the fuel economy test as
fuel consiamed, however, according to Ford.
DX-149, App. VI, Ex. B. NHTSA cannot accept
this analysis for two reasons. First, there is no
reason to believe that all the extra gasoline vapors
retained in the gas tank and sent through the
carburetor would escape combustion. If some
portion of this extra gasoline vapor is combusted
and does work in moving the vehicle, then a
benefit in measured fuel economy should result.
Second, EPA indicates that improved evapora-
tive emission control systems are available which
make efficient use of the extra fuel which is re-
tained in the cannister rather than vented to the
atmosphere. Id. Therefore, NHTSA concludes
that Ford has not demonstrated that a fuel econ-
omy penalty exists due to its current evaporative
emission control system, and that no penalty need
exist if a more efficient design were adopted.
f . THE NEED OF THE NATIOX TO CONSERVE ENERGY
No detailed comments were received on this
consideration in establishing the "maximum
feasible average fuel economy level," other than
that made by GM- and addressed in section Ill.d
of this notice. The agency believes that the need
of the nation to conserve energy continues to be
very substantial. See also DN-160, p. 20 (Public
Interest Campaign).
g. BASIS FOR DETERMINING THE "MAXIMUM
FEASIBLE A\ERAGE FUEL ECONOMY" LEVEL
Many participants in the proceeding argued
that the agency had established fuel economy
standards at levels above those achievable by one
or more of the manufacturers, and that such a
procedure exceeds the agency's statutory author-
ity. DX-097, p. 8 (IH) ; DN-096, p. 12 (GM) ;
DX-149, App. VIII, Att. A (Ford) ; DN-120,
p. 9 (Chi-ysler) ; DN-056-05 (Congi-essman John
Dingell). On the other hand, the Center for
Auto Safety argued that standards cannot be
based on the "least capable manufacturer," citing
supportive language in the Conference Eeport
on the Act and the various provisions in the Act
for compromise or elimination of civil penalties
c
PART 523— PRE 40
in case of a failure to meet fuel economy stand-
ards. DN-155. See also DN-160, p. 8 (Public
Interest Campaign).
It should be noted at the outset that the ajjency
did not propose standards at levels which it con-
cluded could not be met by one or more of the
manufacturers. Rather, the ao;ency postulated
certain technological improvements, calculated
the resulting fuel economy for the various manu-
facturers, and then discussed certain additional
measures which could be undertaken by certain
manufacturers to achieve the higher level of fuel
economy at which the standards were set. 42 F.R.
63193. "Wliile it is true that the agency discussed
the ability of some of the manufacturers to pay
civil penalties in case of noncompliance, the pay-
ment of such penalties was viewed as an alterna-
tive (albeit an undesirable one) which some
manufacturers might adopt rather than making
all feasible fuel economy improvements. The
manufacturers uniformly stated at the January
16-17 public hearing and in their written sub-
missions that they would not opt for payment of
civil penalties rather than making feasible fuel
economy improvements, and the agency applauds
this policy.
As will be discussed in section V of this notice,
the final 1980-81 fuel economy standards are es-
tablished at levels which NHTSA projects to be
technologically feasible and economically prac-
ticable for all the manufacturers. Therefore,
NHTSA need not address the connnents relating
to this issue.
IV. Other Miscellaneous Comments
ON THE NPRM
AMC and Chrysler argued that fuel economy
labeling of light trucks in the 6001-8500 pound
GVWR range should not be required in the 1979
model year, as was proposed in the NPRM. AM
argues first that requiring the fuel economy test-
ing necessary to develop data for labeling would
impose an unacceptable burden on them and on
EPA. DN-098, p. 7. Both AM (id.) and
Chrysler (DN-120, Att. B, p. 31) argue further
that requiring labeling in 1979 will further im-
pair the credibility of the fuel economy data as a
valid representation of on-the-road driving ex-
perience. Chi-ysler bases its argument on the
fact that EPA's current labeling procedures for
light trucks do not distinguish between vehicles
which might be expected to fall into different
"car lines" (e.g.. Ford F-lOO and F-200 series
pickup trucks) since they are marketed as differ-
ent models. Instead, EPA has in the past in-
cluded all of a manufacturer's pickup trucks in a
single car line, potentially creating a situation
where a wide variety of vehicles with greatly
different fuel economy ratings would have the
same fuel economy rating on the labels.
NHTSA is of the view that defining "car line"
in a manner more consistent with the way that
term is used for passenger automobiles (i.e., de-
fining vehicles marketed as different models to
be different car lines, such as the F-lOO and
F-200) would solve much of this difficulty. How-
ever, to require fuel economy labeling for the
1979 model year, this problem would have to be
resolved almost immediately. EPA has informed
this agency earlier this month that it may not be
able to resolve this problem in time to make the
amendments effective for the 1979 model year.
Therefore, the fuel economy labeling requirement
will not be made applicable until the 1980 model
year.
NHTSA concluded that the fuel economy
labeling provision for 1979 was especially im-
portant in part because such a requirement
would result in the generation of fuel economy
data for vehicles with GVlVRs between 6,001 and
8,500 pounds, in addition to the benefit to con-
sumers of having this information. The Agency's
effort to compensate for the current absence of
that data was one of the manufacturers' primary
objections to NHTSA's standard-setting meth-
odology in this rulemaking. NHTSA deems it
important to have this information as soon as
possible to develop a fuel economy baseline based
on test data for the light truck standards for
model years after 1981. Therefore, NHTSA is
requesting by this notice that each of the manu-
facturers provide by April 15 information on the
extent to which they will provide NHTSA with
fuel economy data (city and highway driving
cycle) for their 1979 6,001-8,500 pound GVWR
light trucks, and the time by which this testing
could be accomplished. In view of the impor-
tance which the manufacturers understandably
attach to baselines based on test data, the agency
assumes that such data will be readily forthcom-
PART 523— PRE 41
ing from the manufacturers. To facilitate issu-
ance of the notice of proposed rulemaking for
1982 and thereafter, these tests should be avail-
able by sometime this fall. Voluntary provision
of this data by the manufacturers would obviate
the need for XHTSA to exercise its authority
under section 505(c) (1) of the Act to establish a
rule which requires this testing on an expedited
basis. Such a rule, if necessary, would likely
require the testing by the end of this fall of the
light truck configurations identified in 40 CFR
600.506(c).
NHTSA invited comment on the extent to and
manner in which monetary credits could be trans-
ferred between the 1979 and 1980 model yeai-s,
given the change in NHTSA's light truck classi-
fication scheme between 1979 and 1980. For 1979,
light trucks are classified as either a single group
or two groups, one consisting of "i-wheel drive
general utility vehicles," and the other of "all
other light trucks." For 1980, this classification
will be changed, with 2-wheel drive and 4-whe6l
drive classes being established. However, section
508(a)(3)(B) of the Act prohibits applying
credits generated by light trucks in one class to
civil penalties incurred by light trucks in a dif-
ferent class. The Center for Auto Safety con-
cludes that this requirement means that when the
classification system is changed between model
years, no carryover monetary credits can be ap-
plied unless the revised classes included identical
vehicles for a particular manufacturer. DX-155.
Ford, on the other hand, argues that manufac-
turers should not be penalized by the change in
the classification scheme, so that credits earned
by one class could be applied to penalties incurred
by any other class which overlaps the first, at the
manufacturer's option, between the 1979 and 1980
model years. DX-149, x\.pp. VIII, Att. C. Xo
other participant in the proceeding addressed the
issue in detail. Although XHTSA believes that
all manufactui'ers can meet the 1980 standards,
this issue may be of importance to some manu-
facturers in the 1980 model year. X^HTSA
wishes to give this issue further consideration
and invites interested individuals and organiza-
tions to submit further comments on the question
to XHTSA.
IH objected to the limited time available for
comment on the proposed standards. DX-097,
p. 2. The originally specified comment period of
45 days (42 FR 63184) was extended on a limited
basis for 10 days (DX-38-A, 43 FR 3600, Jan-
uary 26, 1978), at the request of IH among others
(DX-038), and IH took advantage of that exten-
sion. DX-97-A. Further, the agency let it be
known that it would consider late submissions to
the extent practicable, given the need to issue the
final standards as soon as possible. All comments
received before issuance of the final rule were
considered. DX-038-A. In fact, the agency has
affirmatively sought out additional information
relating to IH's capabilities to make fuel econ-
omy improvements to its light trucks after the
close of the extended comment period. In addi-
tion, it appears that the comment period for the
light truck manufacturers eifectively began some
five weeks prior to the publication of the XPRM,
when the Department of Commerce (without
authorization by this agency) provided copies of
a draft XPRM to the manufacturers, which pro-
vided the substance of the agency's proposal.
DX^-191, question 10. Therefore, IH effectively
had much more than the 90-day comment period
it requested.
AM claimed that the agency violated section
502(b) of the Act by failing to promulgate the
1980 model year standard at least 18 months
prior to the start of that model year. Section
501(12) defines "model year" to be "a manufac-
turer's annual production i^eriod (as defined by
the EPA Administrator) which includes January
1'" of the specified calendar year. If no annual
production period exists, then the model year
coincides with the calendar year. Id. AM states
that its 1980 annual production period begins in
July, 1979, and that the "18-month rule" there-
fore requires the issuance of the 1980 standard in
January, 1978.
EPA has yet to detemiine a single model year
for purposes of section 502(b) of the Act. In-
deed, annual production periods appear to run
from as early as that specified by AM to the
beginning of a calendar year for many of the
foreign companies. XHTSA has endeavored to
provide approximately 18 months notice to the
domestic manufactui'ers by the expeditious com-
pletion of this rulemaking. It is the agency's
view that issuance of these by mid-March satisfies
all statutoi'v requirements.
PART 523— PRE 42
Several of the manufacturers and other par-
ticipants in the rulemaking proceeding argued
that the percentage increase for the proposed
standards over 1979 levels was not consistent with
the one mile per gallon increments Congress es-
tablished for passenger automobile standards in
1978-80. It should first be noted that tlie final
standards have been set at levels which require
a lesser relative improvement over 1979 levels
than did the proposal. However, the fact that
Congress in 1975, with less and much older infor-
mation than NHTSA currently has available, set
standards for a different type of vehicle at par-
ticular levels has little bearing on the question of
what is the maximum feasible average fuel econ-
omy level for light trucks. If major improve-
ments in fuel economy are economically and
technologically feasible in a short time, then
NHTSA is statutorily required to set standards
at levels commensurate with those capabilities.
Several of the commenters made the related
suggestion that to require a large percentage
improvement in average fuel economy was pre-
sumptively inappropriate. The percentage
change in fuel economy standards is, by itself,
an unreliable indicator of the time and effort
necessary to meet the standards. This should be
obvious from the fact that some substantial fuel
economy improvements can be made quickly with
little or no additional capital investment while
some fairly minor improvements may take much
longer and require significant additional invest-
ment. Only by examining the technological
changes underlying the differences in fuel econ-
omy standards for different model years can any
meaningful judgment be made about the reason-
ableness and stringency of the standards.
V. Calculation of the 1980 and 1981
Standards
As discussed in section Ill.b of this notice, the
basic methodology on which the final standards
are based is unchanged from the proposal. Re-
visions have been made as noted above to the
projected benefit achievable with the various
items of technology, "\^^^en these revisions are
jected to be capable of achieving the following
taken into account, the manufacturers are pro-
levels of average fuel economy for their light
t rucks :
1980 1981
2-WD 4-WD 2-WD 4-WD
AM 23.6 15.1 24.1 16.2
Chrysler 16.4 14.4 18.0 15.8
Ford 16.6 14.6 18.7 16.3
GM 16.8 14.1 18.7 15.7
IH 14.1 14.0 15.2 15.3
Nissan 24.4 25.2
Toyo Kogyo 32.0 33.0
Toyota 25.8 17.5 26.6 18.4
Volkswagen 18.0 19.5
(1981 projpctions would be reduced by 0.5 mpg if
improved lultricants cannot l)e used in fuel economy
testing.)
As can be seen from the above information,
Chrysler has the lowest projected fuel economy
for 2-wheel-drive light trucks, and GM the lowest
for 4- wheel drive. IH would be subject to a sepa-
rate standard, as previously discussed.
Because the agency's fuel economy projections
for the major manufacturers fall within a rela-
tively narrow range, and because insufficient lead-
time exists for the manufacturers to make major
improvements beyond those described in this no-
tice, the agency finds it appropriate to establish
the 1980 and 1981 standards at levels no higher
than those projected foi- the manufacturer with
the lowest fuel economy level. In view of this
limited leadtime, the agency is making a slight
downward adjustment to some of the levels
projected for the "least capable" manufacturers
to provide a safety margin for compliance and to
create some additional flexibility for the manu-
facturers in meeting the standards. The maxi-
mum feasible average fuel economy levels, and
therefore the fuel economy standards, are estab-
lished as follows:
2-wli eel-
drive
4-wheel-
drlve
Limited
product line
light truck
1980
1981
16.0
*16.0
14.0
*15.5
14.0
*15.0
* The 1981 model year standards are 0.5 inpg lower
than the values specified above if approval of improved
lubricants for fuel economy testing is not granted by the
EPA by January 1, 1980.
PART 523— PRE 43
VI. Standards for 1982 and Later
Model Years
As discussed in section III of this notice, the
limited leadtime available before the 1980 model
year and slightly limited leadtime before 1981
model year have significantly restricted the ex-
tent to which the agency can project fuel econ-
omy improvements for the manufacturers. For
example, no completely new vehicles or engines
were projected by NHTSA unless those items
were already planned by manufacturers. There-
fore, the agency will issue in early 1979 a notice
of proposed rulemaking to establish fuel economy
standards for the 1982-1984 and possible 198.5
model years. The much greater leadtime for
these model years will, in turn, enable the agency
to project major improvements in fuel economy
beyond those set forth in this notice.
In virtually every technology categorj' dis-
cussed in section III of this notice, significant
potential exists for additional fuel economy im-
provements. For example, the agency projected
weight reductions of approximately 200 pounds
for the 1980-81 model years. Information avail-
able from material suppliers indicates that weight
reductions of up to 900 pounds are currently
feasible through substitution of lighter weight
materials. If such material substitutions were
undertaken in conjunction with a complete vehicle
redesign (including some downsizing), it is pos-
sible that the average weight of light trucks
could be reduced by a further 1,000 pounds, com-
pared to current levels. Weight reduction of this
magnitude could improve fuel economy by ap-
proximately 20 percent. Domestic production of
small pickup trucks could be begun.
Additional lubricant improvements of as high
as 5 percent were described above. Advanced
tires could provide an additional ^ percent fuel
economy improvement beyond 1981 levels. Turbo-
charged versions of smaller displacement engines
could maintain vehicle performance while im-
proving fuel economy by 10 percent. It is pos-
sible that fuither development work on variable
displacement engine technologj' will solve current
problems experienced by the truck manufactur-
ers, resulting in a fuel economy improvement of
10 percent. Widespread use of advanced auto-
matic transmissions similar to the FIOD should
result in a fuel economy improvement of 6.5
percent, beyond 1981 levels. Aerodynamic im-
provements should result in fuel economy im-
provements of at least 4 percent when current
light trucks are redesigned in the 1982-5 period.
A major area for potential fuel economy im-
provement is the use of diesel engines. Diesel
engines have traditionally been used in medium
and heavy duty trucks, and it is reasonable to
expect that light truck purchasers would accept
diesels in view of the fuel economy improvement
of at least 25 percent associated with their use.
Turbocharged diesel engines, which have ap-
peared on larger trucks in the past, offer even
greater improvements, while reducing particulate
emissions and improving acceleration capabilities.
However, questions relating to the effects on
health and potential for control of diesel emis-
sions must be resolved before NHTSA will base
fuel economy standards on the use of diesel en-
gines. Use of other engine types, such as the
Ford PROCO (programmed combustion) engine,
may also be feasible in the 1982-85 time frame.
VII. Impact of Standards on
Petroleum Consumption
The standards presented in section V of this
notice are projected to result in the savings of
about 8 billion gallons of gasoline over the life
of the light trucks produced in the 1980 and 1981
model years. Even gasoline savings of this mag-
nitude will not eliminate the nation's dependence
on foreign petroleum and the associated trade
deficit. However, these standards constitute a
significant part of the overall energy conservation
program which can gradually reduce this de-
pendence. See Final Impact Assessment.
The impact of our national dependence on im-
ported petroleum has become a matter of increas-
ing concern over the past several months. The
national trade deficit was over $26 billion for
1977, while the cost of imported petroleum was
almost $45 billion in that same year. The na-
tional cost of oil imports has been increasing at a
rate of over 30 percent per year since 1975. Pe-
troleum now constitutes about one-third of all
imports. The impact of this large trade deficit
on domestic inflation is substantial. Although
the light truck standards will not solve this prob-
PART 523— PRE 44
lem by themselves, they could reduce total pe-
troleum imports by $1 billion in 1985 and $2
billion in 1990. XHTSA deems this a significant
benefit for the nation, and an important step in
attempting to reduce the overall import problem.
VIII. Economic Impact of Standards
The economic impact of these standards was
evaluated. This evaluation concludes that retail
price increases in the range of sixty dollars total
are expected from the actions necessary to achieve
compliance with fuel economy standards for 1980
and 1981. This relatively small increase com-
pares to a lifetime operating cost reduction of
about 600 dollars per vehicle, due to the reduction
in gasoline consumption for these light trucks.
It is projected by NHTSA that light truck sales
and related employment in the light truck in-
dustry will be at higher levels in 1980-81 than
currently exist in the absence of some unrelated
and curren tlyunforeseen downard turn in the
national economy. The largest factor in this
trend toward higher sales and employment is the
underlying increasing consumer demand for these
vehicles. It is projected that improving the fuel
economy of light trucks will have a small effect
in improving sales levels, since good fuel economy
is a desirable vehicle attribute. Slightly higher
retail prices resulting from the fuel economy
standards might tend to slightly offset this trend
toward higher sales. However, the effects of
improved fuel economy and slightly higher retail
prices are small in comparison to the underlying
sales trend. Therefore, NHTSA concludes that
the manufacturers' efforts to comply with fuel
economy standards will at worst cause no loss in
sales or employment, and may result in slight
gains.
IX. EN^^RONMENTAL ImPACT or THE
Standards
The environmental impact of the standards
was also evaluated, in accordance with section
102 of the National Environmental Policy Act,
42 U.S.C. 4332. Copies of the agency's final
environmental impact statement are available
from the Office of Automotive Fuel Economy, at
the address set forth at the beginning of this
notice. That document sets forth the basis for
the agency's conclusion that the standards will
result in no significant adverse impacts on the
environment. In fact, the major environmental
impact of the standards, reduction in petroleum
consumption, should reduce current adverse im-
pacts resulting from high levels of petroleum
exploration, drilling, transportation and refining.
One type of technology which improves fuel
economy but which may have adverse environ-
mental effects is the use of diesel engines. Be-
cause of possible adverse environmental effects
associated with the use of diesel engines, the
agency set standards at levels which could be
met without the use of those engines.
Authority : Sec. 9, Pub. L. 89-670, 80 Stat. 981
(49 U.S.C. 1657); sec. 301, Pub. L. 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 lawyer principally
responsible for the development of this proposed
regulation are George L. Parker and Roger C.
Fairchild, respectively.
Issued on March 15, 1978.
Joan Claybrook
Administrator
43 F.R. 11995-12013
March 23, 1978
PART 523— PRE 45-46
f
PREAMBLE TO AMENDMENT TO PART 523— VEHICLE CLASSIFICATION
(Docket No. FE 77-05; Notice 7)
Action: Technical amendment.
Summa)^ : This notice amends the definition of
the term "automobile" as it appears in the
agency's fuel economy vehicle classification regu-
lations. The amendment is intended to clarify
the applicability of the light truck fuel economy
standards for model year 1980 and thereafter.
Elective date: This amendment is eflfective
January 15, 1979.
For further information contact :
Francis J. Turpin, Office of Automotive Fuel
Economy Standards, National Highway
Traffic Safety Administration, 400 Seventh
Street, S.W.,* Washington, D.C. 20590 (202)
472-6902).
Supplementary informMion : Section 501(1) of
the Motor Vehicle Information and Cost Savings
Act ("the Act"), 15 U.S.C. 2001(1), defines the
term "automobile" for purposes of establishing
the applicability of automotive fuel economy
standards and other fuel economy-related require-
ments. That definition includes within the scope
of that term any "4-wheeled vehicle propelled by
fuel which is manufactured primarily for use on
public streets, roads, and highways (except for
any vehicle operated exclusively on a rail or
rails), and which is rated at 6000 pounds gross
vehicle weight or less." That section also au-
thorizes the Secretary of Transportation to ex-
pand tlie "automobile" category and thereby
regulate additional vehicles if certain findings are
made. These findings relate to the feasibility of
standards for such vehicles, the energy savings
potential associated with regulating the vehicles,
and the usage of the vehicles.
On March 23, 1978, in 43 FE 11995, the Na-
tional Highway Traffic Safety Administration
(NHTSA) published the required findings with
respect to certain vehicles (called "light trucks")
with gross vehicle weight ratings between 6001
and 8500 pounds. The vehicles in the 6001 to
8500 pound GVAVR range wliich were excluded
from the expanded automobile category were a
relatively small number of vehicles with either
curb weights in excess of 6000 pounds or with
frontal areas of more tlian 46 square feet (prin-
cipally step-vans), or both. These vehicles were
excluded because of design features which would
largely preclude pei'sonal use thus making regu-
lation as heavy duty vehicles proper (41 FR
56316).
The Environmental Protection Agency (EPA),
which conducts fuel economy testing under the
Act, has recently informed NHTSA of an error
encountered in measuring the frontal area of
some of the step-vans. It appears that in order
to exclude the intended larger-frontal area ve-
hicles, the regulatory dividing line must be re-
duced from 46 to 45 square feet. The number of
vehicles affected by this change is extremely
small in relation to the number of light trucks
in the 6001 to 8500 pound GVWR range. There-
fore, NHTSA is amending the appropriate regu-
latory language to connect this error.
Since this amendment is in the nature of a
technical correction and affects such a small nmn-
ber of vehicles, it is determined that a notice of
proposed rulemaking is unnecessary and contrarj-
to the public interest, M'ithin the meaning of 5
U.S.C. 553(b). Therefore, this notice will be
issued as a final rule.
NHTSA has also determined that this docu-
ment does not contain a significant regulation
requiring a regulatory analysis under Executive
Order 12044. Further, this action does not re-
quire an environmental impact statement under
the National Environmental Policy Act (49
U.S.C. 4321 etseq.).
PART 523— PRE 47
This amendment is effective immediately, since
its eflFect is to relieve a restriction. See 5 U.S.C.
553(d)(1).
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
authority at 41 FR 25015, June 22, 1976, and 43
FR 8525, March 2, 1978.
Issued on January 15, 1979.
Michael M. Finkelstein
Associate Administrator
for Rulemaking
44 F.R. 4492-4493
January 15, 1979
(
PART 523— PRE 48
PART 523— VEHICLE CLASSIFICATION
Sec.
523.1 Scope.
523.2 Definitions.
523.3 Automobiles.
523.4 Passenger automobiles.
523.5 Nonpossenger automobiles.
AUTHORITY: Sec. 301, Pub. L. 94-163, 80
Stat. 901 (15U.S.C. 2001).
§ 523.1 Scope.
This part establishes categories of vehicles that
are subject to Title V of the Motor Vehicle In-
formation and Cost Savings Act, 15 U.S.C. 2001
et. seq.
§ 523.2 Definitions.
"Approach angle" means the smallest angle, in
a plan side view of an automobile, formed by the
level surface on which the automobile is standing
and a line tangent to the front tire static loaded
radius arc and touching the underside of the
automobile forward of the front tire.
"Axle clearance" means the vertical distance
from the level surface on whicii an automobile is
standing to tlie lowest point on the axle differ-
ential of tlie automobile.
"Basic vehicle frontal area" is used as defined
in 40 CFR § 86.079-2.
"Breakover angle" means the supplement of
the largest angle, in tlie plan side view of an
automobile, that can be formed by two lines
tangent to the front and lear static loaded radii
arcs and intersecting at a point on the iindoiside
of the automobile.
"Cargo-carrying volume" means the luggage
capacity or cargo volume index, as appropriate,
and as those terms are defined in 40 CFR 600.315.
in the case of automobiles to which either of
those terms apply. With respect to automobiles
to which neither of those terms apply, "cargo-
carrying volume" means the total volume in cubic
feet rounded to the nearest 0.1 cubic feet of either
an automobile's enclosed nonseating space that is
intended primarily for carrying cargo and is not
accessible from the passenger compartment, or
the space intended primarily for carrying cargo
bounded in the front by a vertical plane that is
perpendicular to the longitudinal centerline of
the automobile and passes through the rearmost
point on the rearmost seat and elsewhere by the
automobile's interior surfaces.
"Curb weight" is defined the same as "vehicle
curb weight" in 40 CFR Part 86.
"Departure angle" means the smallest angle,
in a plan side view of an automobile, formed by
the level surface on which the automobile is
standing and a line tangent to the rear tire static
loaded radius arc and touching the underside of
the automobile rearward of the rear tire.
"Gross vehicle weight rating" means the value
specified by the manufacturer as the loaded
weight of a single vehicle.
"Pas.senger-carrying volume" means the sum of
the front seat volume and, if any, rear seat
volume, as defined in 40 CFR 600.315, in the case
of automobiles to wliich that term api)lies. With
respect to automobiles to which that term does
not apply, "passenger-carrying vohmie" means
the sum in cubic feet, rounded to the nearest 0.1
cubic feet, of the vohnue of a vehicle's front seat
and seats to the reai- of the fi'ont seat, as ap-
l)licable. calculated as follows with the head
room, shoulder room, and leg room dimensions
determined in accordance with the procedures
PART 523-1
outlined in Society of Automotive Engineers
Recommended Practice JllOOa, Motor Vehicle
Dimensions (Report of Human Factors Engi-
neering Committee, Society of Automotive Engi-
neers, approved September 1973 and last revised
September 1975.)
(a) For front seat volume, divide 1,728 into
the product of the following SAE dimensions,
measured in inches to the nearest 0.1 inches, and
round the quotient to the nearest 0.001 cubic feet.
(1) H61 — Effective head room — front.
(2) W3— Shoulder room— front.
(3) L34 — Maximum effective leg room — accel-
erator.
(b) For the volume of seats to the rear of the
front seat, divide 1,728 into the product of the
following SAE dimensions, measured in inches
to the nearest 0.1 inches, and round the quotient
to the nearest 0.001 cubic feet.
(1) H63 — Effective head room — second.
(2) W4 — Shoulder room — second.
(3) L51 — Minimum effective leg room — second.
"Running clearance" means the distance from
the surface on which an automobile is standing
to the lowest point on the automobile, excluding
unsprung weight.
"Static loaded radius arc" means a portion of
a circle whose center is the center of a standard
tire-rim combination of an automobile and whose
radius is the distance from that center to the
level surface on which the automobile is standing,
measured with the automobile at curb weight, the
wheel parallel to the vehicle's longitudinal cen-
terline, and the tire inflated to the manufactur-
er's recommended pressure.
"Temporary living quarters" means a space in
the interior of an automobile in which people
may temporarily live and which includes sleep-
ing surfaces, such as beds, and household con-
veniences, such as a sink, stove, refrigerator, or
toilet.
§ 523.3 Automobile.
(a) An automobile is any 4-wheeled vehicle
propelled by fuel which is manufactured primar-
ily for use on public streets, roads, and highways
(except any vehicle operated exclusively on a rail
or rails), and that either —
(1) Is rated at 6,000 pounds gross vehicle
weight or less; or
(2) Which—
(i) Is rated more than 6,000 pounds gross ve-
hicle weight, but less than 10,000 pounds gross
vehicle weight,
(ii) Is a type of vehicle for which the Admin-
istrator determines, under paragraph (b) of this
section, average fuel economy standards are
feasible, and
(iii) (A) Is a type of vehicle for which the
Administrator determines, under paragraph (b)
of this section, average fuel economy standards
will result in significant energy conservation, or
(B) Is a type of vehicle which the Adminis-
trator determines, under paragraph (b) of this
section, is substantially used for the same pur-
poses as vehicles described in paragraph (a) (1)
of this section.
(b) The following vehicles rated at more than
6,000 pounds and less tlian 10,000 pounds gross
vehicle weight are determined to be automobiles :
(1) Vehicles which would satisfy the criteria
in § 523.4 (relating to passenger automobiles)
but for their gross vehicle weight rating.
(2) Vehicles which would satisfy the criteria
in § 523.5 (relating to light trucks) but for their
gross vehicle weight rating, and which
(i) Have a basic vehicle frontal area of 45
square feet or less.
(ii) Have a curb weight of 6,000 pounds or
less.
(iii) Have a gross vehicle weight rating of
8,500 pounds or less, and
(iv) Are manufactured during the 1980 model
year or thereafter.
§ 523.4 Passenger automobile.
A passenger automobile is any automobile
(other than an automobile capable of off-highway
operation) manufactured primarily for use in the
transportation of not more than 10 individuals.
PART 523-2
§ 523.5 Light truck.
(a) A light truck is an automobile other than
a passenger automobile which is either designed
for off-highway operation, as described in para-
graph (b) of this section, or designed to perform
at least one of the following functions :
(1) Transport more than 10 persons;
(2) Provide temporary living quarters;
(3) Transport property on an open bed;
(4) Provide greater cargo-carrying than pas-
senger-carrying volume ; or
(5) Permit expanded use of the automobile for
cargo-carrying purposes or other nonpassenger-
carrying purposes through removal of .seats by
means installed for that purpose by the automo-
bile's manufacturer or with simple tools, such as
screwdrivers and wrenches, so as to create a flat,
floor level surface extending from the forward-
most point of installation of those seats to the
rear of the automobile's interior.
(b) An automobile capable of off-highway op-
eration is an automobile —
(1) (i) That has 4- wheel drive; or
(ii) Is rated at more than 6,000 pounds gross
vehicle weight; and
(2) That has at least four of the following
characteristics (see Figure 1) calculated when
the automobile is at curb weight, on a level sur-
face, with the front wheels parallel to the auto-
mobile's longitudinal centerline, and the tires
inflated to the manufacturer's recommended
pressure —
(i) Approach angle of not less than 28 degrees.
(ii) Breakover angle of not less than 14 de-
grees.
(iii) Departure angle of not less than 20 de-
grees.
(iv) Running clearance of not less than 8
inches.
(v) Front and rear axle clearances of not less
than 7 inches each.
42 F.R. 38362
July 28, 1977
FRONT
WHEELS
A - - APPROACH ANGLE
B -- BREAKOVER ANGLE
C -- DEPARTURE ANGLE
REAR
WHEELS
Fig. I
PART 523-3^
I
•
Effective: July 28, 1977
PREAMBLE TO PART 525— EXEMPTIONS FROM AVERAGE FUEL ECONOMY STANDARDS
(Docket No. FE 76-04; Notice 2)
This notice establishes the format and content
requirements for petitions which may be filed by
low volume manufacturers of passenger automo-
biles requesting exemption from average fuel
economy standards pursuant to section 502(c)
of the Motor Vehicle Infomiation and Cost Sav-
ings Act, as amended. The notice also establishes
the timing requirements for the filing of such
petitions, and describes the procedures that the
agency will follow in acting on petitions.
Effective Date : July 28, 1977.
For Further Information, Contact:
Douglas F. Pritchard
Office of Automotive Fuel Economy
National Highway Traffic Safety
Administration
Department of Transportation
Washington, D.C. 20590
(202) 755-9384
Supplementary Information :
Section 502(c) of the Motor Vehicle Informa-
tion and Cost Savings Act, as amended (the
Act), pi'ovides that a low volume manufacturer
of passenger automobiles may be exempted from
the average fuel economy standards for passen-
ger automobiles established by or under Section
502(a) if those standards are more stringent than
the maximum feasible average fuel economy for
the low volume manufacturer, and if the Admin-
istrator of the National Highway Traffic Safety
Administration (NHTSA) establishes an alter-
native standard for the low volume manufac-
turer. A low volume manufacturer under the
Act is one who manufactures less than 10,000
passenger automobiles in the model year for
which the exemption is sought (the affected
model year), and who produced less than 10,000
passenger automobiles in the second model year
preceding the affected model year. This final
rule adds a new Part 525 to NHTSA regulations,
and establishes the timing, content, and format
requirements of petitions for exemption, and sets
forth the procedure tliat the agency will follow
in acting on petitions.
This final rule was preceded by a notice of
proposed rulemaking (NPRM), 41 FR 53827,
December 9, 1976. The proposed rule provided
that petitions for exemptions for model year
1980 and subsequent model years must be sub-
mitted to the agency not later than 24 months
before the beginning of the affected model year.
Petitions for exemption for model year 1978 must
be submitted not less than three months before
the beginning of that model year, and petitions
for model year 1979 must be submitted not later
than 12 months before the beginning of that
model year. The petition would have to include
information showing that the petitioner was a
low volume manufacturer, and data, views, and
arguments that show that the petitioner's maxi-
mum feasible average fuel economy for the af-
fected model year is less than the level of the
otherwise applicable fuel economy standard. The
proposed rule sets out specific items of informa-
tion relating to the petitioner's claimed maximum
feasible average fuel economy wliich all petitions
must include.
The NPRM further proposed that the NHTSA
would publish in the Federal Register notice of
receipt of a petition for an exemption, and would
place the nonconfidential portions of the petitions
in the public docket. After considering the pe-
tition and other information available to it, the
NHTSA would publish a notice of proposed
rulemaking announcing its proposed decision on
the petition, and soliciting comments on the pro-
posed decision. After opportunity for comment,
and a consideration of any comments that might
PART 525— PRE 1
outlined in Society of Automotive Engineers
Recommended Practice JllOOa, Motor Vehicle
Dimensions (Report of Human Factors Engi-
neering Committee, Society of Automotive Engi-
neers, approved September 1973 and last revised
September 1975.)
(a) For front seat volume, divide 1,728 into
the product of the following SAE dimensions,
measured in inches to the nearest 0.1 inches, and
round the quotient to the nearest 0.001 cubic feet.
(1) H61 — Effective head room — front.
(2) W3 — Shoulder room — front.
(3) L34 — Maximum effective leg room — accel-
erator.
(b) For the volume of seats to the rear of the
front seat, divide 1,728 into the product of the
following SAE dimensions, measured in inches
to the nearest 0.1 inches, and round the quotient
to the nearest 0.001 cubic feet.
(1) H63 — Effective head room — second.
(2) W4 — Shoulder room— second.
(3) LSI— Minimum effective leg room — second.
"Running clearance" means the distance from
the surface on which an automobile is standing
to the lowest point on the automobile, excluding
unsprung weight.
"Static loaded radius arc" means a portion of
a circle whose center is the center of a standard
tire-rim combination of an automobile and whose
radius is the distance from that center to the
level surface on which the automobile is standing,
measured with the automobile at curb weight, the
wheel parallel to the vehicle's longitudinal cen-
terline, and the tire inflated to the manufactur-
er's recommended pressure.
"Temporary living quarters" means a space in
the interior of an automobile in which people
may temporarily live and which includes sleep-
ing surfaces, such as beds, and household con-
veniences, such as a sink, stove, refrigerator, or
toilet.
§ 523.3 Automobile.
(a) An automobile is any 4-wheeled vehicle
propelled by fuel which is manufactured primar-
ily for use on public streets, roads, and highways
(except any vehicle operated exclusively on a rail
or rails) , and that either —
(1) Is rated at 6,000 pounds gross vehicle
weight or less ; or
(2) Which—
(i) Is rated more than 6,000 pounds gross ve-
hicle weight, but less than 10,000 pounds gross
vehicle weight,
(ii) Is a type of vehicle for which the Admin-
istrator determines, under paragraph (b) of this
section, average fuel economy standards are
feasible, and
(iii) (A) Is a type of vehicle for which the
Administrator determines, under paragraph (b)
of this section, average fuel economy standards
will result in significant energy conservation, or
(B) Is a type of vehicle which the Adminis-
trator determines, under paragraph (b) of this
section, is substantially used for the same pur-
poses as vehicles described in paragraph (a) (1)
of this section.
(b) The following vehicles rated at more than
6,000 pounds and less than 10,000 pounds gross
vehicle weight are determined to be automobiles :
(1) Vehicles which would satisfy the criteria
in § 523.4 (relating to passenger automobiles)
but for their gross vehicle weight rating.
(2) Vehicles which would satisfy the criteria
in § 523.5 (relating to light trucks) but for their
gross vehicle weight rating, and which
(i) Have a basic vehicle frontal area of 45
square feet or less.
(ii) Have a curb weight of 6,000 pounds or
less.
(iii) Have a gross vehicle weight rating of
8,500 pounds or less, and
(iv) Are manufactured during the 1980 model
year or thereafter.
§ 523.4 Passenger automobile.
A passenger automobile is any automobile
(other than an automobile capable of off-highway
operation) manufactured primarily for use in the
transportation of not more than 10 individuals.
PART 523-2
! 523.5 Light truck.
(a) A light truck is an automobile other than
a passenger automobile which is eitlier designed
for off-highway operation, as described in para-
graph (b) of this section, or designed to perform
at least one of the following functions:
(1) Transport more than 10 persons;
(2) Provide temporary living quarters;
(3) Transport property on an open bed;
(4) Provide greater cargo-carrying than pas-
senger-carrying volume; or
(5) Permit expanded use of the automobile for
cargo-carrying purposes or otlier nonpassenger-
carrying purposes through removal of seats by
means installed for that purpose by the automo-
bile's manufacturer or with simple tools, such as
screwdrivers and wrenches, so as to create a flat,
floor level surface extending from the forward-
most point of installation of those seats to the
rear of the automobile's interior.
(b) An automobile capable of off-highway op-
eration is an automobile —
(1) (i) That has 4- wheel drive; or
(ii) Is rated at more than 6,000 pounds gross
vehicle weight ; and
(2) That has at least four of the following
characteristics (see Figure 1) calculated when
the automobile is at oirb weight, on a level sur-
face, with the front wheels parallel to the auto-
mobile's longitudinal centerline, and the tires
inflated to the manufacturer's recommended
pressure —
(i) Approach angle of not less than 28 degrees.
(ii) Breakover angle of not less than 14 de-
grees.
(iii) Departure angle of not less than 20 de-
grees.
(iv) Running clearance of not less than 8
niches.
(v) Front and rear axle clearances of not less
than 7 inches each.
42 F.R. 38362
July 28, 1977
FRONT
WHEELS
A -- APPROACH ANGLE
B -- BREAKOVER ANGLE
C -- DEPARTURE ANGLE
REAR
WHEELS
Fig. I
PART 523-3^
Effective: July 28, 1977
would liave insufficient data upon which to base
a projection of averajrc fuel economy.
The objection of Checker and Avanti to the
two year requirement raises a difficult problem
for the agency. The ajjency realizes that the low
volume manufacturers which purchase engines
for use in theii- vehicles must depend on their
engine suppliers foi- nuich information relating
to the engine, especially the effects of the engine
on fuel economy. JNIoreover, since General
Motors, the engine supplier for both Checker and
Avanti, has been continually developing engines
with improved fuel economy, it is likely that the
fuel economy effects of any particular size engine
will change over time. Therefore, even a low
volume manufacturer that traditionally buys
the same size engine and plans to continue
doing so will not necessarily know what effect a
future engine of that size will have on fuel econ-
omy. Also, the manufacturer of the engine may
be reluctant to tell the low volume manufacturer
what the likely fuel economy effects of a par-
ticular engine will be on the grounds that the
information is unknown, or is a trade secret.
Without data relating to the fuel economy of the
engine, the low volmne manufacturer will have
difficulty projecting the future fuel economy of
its automobiles.
Xevertheless, the agency wishes to avoid the
situation in which it must accept the low volume
manufactui-ers' planned fuel economy as the
maximum feasible le\el of average fuel economy
because there is insufficient leadtime to make fuel
economy improvements that the petitioner could
have made with more leadtime. Such situations
are likely to arise if the agency waits until just
before the beginning of the affected model year
to reach a decision on a petition for exemption,
as it must do if petitions are accepted up until
shortly before the affected model year. Further,
the agency wants to make its decision on a peti-
tion for exemption and alternative standard as
early as possible so that the low volume manu-
facturer will have a firm fuel economy target,
and enough leadtime to make whatever product
or marketing changes which uuiy be necessary to
meet the alternative standard, if the exemption
is granted, or the general standard if the exemp-
tion is not granted.
The agency has decided to retain the two year
requirement. Retention of this requirement is
more consistent with the basic energj' conserva-
tion purposes of the Act since it permits the
setting of standards that will require greater fuel
economy improvements by the exempted manu-
facturers. The agency believes also that it is
essential that the low volume manufacturers
know the fuel economy standard which they will
have to meet well in advance of the beginning of
the affected model year so that they may make any
necessary changes in their product plans with a
maximum of efficiency and a minimum of expense
and disruption. Allowing petitions for exemp-
tion to be filed six or seven months before the
beginning of the affected model year would barely
leave the agency time to reach a decision before
the manufacturer must begin production, and
would leave the manufacturer little time to make
any changes that may be necessary in light of the
decision on the petition.
Moreover, the agency believes that the lack of
engine data problem raised by Checker and
Avanti is not insurmountable. Although Checker
and Avanti have been unable to get the most
current engine performance data, neither com-
pany has experienced significant difficulty in ob-
taining an engine which they desired. Thus, the
low volume manufacturers know to a high degree
of certainty what engines will be available for
their use. With this knowledge, the low volume
manufacturers should be able to make reasonable
projections of the range of fuel economy which
they can expect to achieve. For example, if a
low volume manufacturer uses a 350 cubic inch
displacement engine in the year of application
(two years before the beginning of the affected
model year) and knows that it will be able to use
a 350 cubic inch engine in the affected model
year, the low volume manufacturer can assume
no improvement in fuel economy from the engine,
and can project fuel economy for the affected
model year from other aspects of the vehicle,
such as weight reduction or lowering the axle
ratio. The low volume manufacturer can also
project fuel economy improvement from using a
smaller engine in the affected model year, such
as a 305 cubic inch engine.
•
0
#
PART 525— PRE 4
»
t
•
Tn addition, the ajrency believes that the low
volume iiiaiHifaoturer may he ahle to ])roject in-
creases in fuel economy associated with particular
improvements in an enjjine. Both Avanti and
Checker indicated to the airency that General
Motors lias always been extremely helpful to
them in their product planning to allow them to
accommodate the General Motors enffines. As
the fuel economy performance of the engines be-
comes a more sifjnificant aspect of the product
planninir of the low volume manufacturers, they
may find tliat General Motors will be willing to
assist them by supplying advance engine infor-
mation relating to fuel economy. In addition,
the agency, through reporting requirements ap-
plicable to General Motors, or other engine sup-
pliers, or through subpoena, could obtain
information about the fuel economy effects of a
particidar engine. The agency would use this
information to evaluate the maximiun feasible
average fuel economy of the low volume manu-
facturer. In light of these considerations, the
agency has determined that the public interest in
energy' conservation, as well as the interest of the
low volume manufacturers, will be best served by
requiring petitions for exemption for model
years beyond 1980 to be filed not later than two
years before the beginning of the affected model
year.
Notwithstanding the foregoing, the agency has
determined to provide for situations where new
information obtained within two years of the
beginning of the affected model year can be
brought to the agency's attention, and possibly
modify the decision on a petition for an exemp-
tion. Therefore, section i525.11 of the final rule
allows a low volume manufacturer which has had
a petition denied to reapply, anytime before the
beginning of the affected model year, on the
basis of information that was unavailable despite
due diligence, at the time of the original applica-
tion. This change is intended to ensure that no
low volume manufacturer is deprived of an op-
portunity to make a complete showing of his
maximum feasible average fuel economy by the
requirement that petitions for exemptions for
model year beyond 1979 be filed not later than
two years before the beginning of the affected
model year.
EfFecHve: July 28, 1977
With respect to petitions for exemption foi-
model year 1978. the agency has decided to delete
the requirement that petitions be submitted not
later than three months before the beginning of
that model year. Under- the final i-ule, petitions
may be submitted at any time before the begin-
ning of the model year. This change was made
since less than three months i-emain befoi-e model
year 1978. The two low volume manufacturers
that have thus far indicated an interest in peti-
tioning for an exemption have previously been
advised tliat if they wish to submit petitions,
they could do so by following the format and
content requirements of the proposed rule.
The agency has made the following technical
and clarifying changes to the rule.
The phrase "content and format requirements
for petitions for exemptions" is substituted for
the term "guidelines" in section 525.2, to make
clear that the requirements of Part 525 are man-
datory and not merely advisory.
A new paragraph (b) is added to section
525.7, requiring petitioners to state whether the
petitioner controls, is controlled by, or is under
common control with another manufacturer of
passenger automobiles, and if so, to indicate the
number of passenger automobiles manufactured
by such other manufacturer in the second model
year immediately preceding the affected model
year. The agency interprets the term "control"
to include any stock ownership, credit relation-
ship or contractual arrangement which enables
one person, as a practical matter, to influence the
decisions of another person. Paragraphs (b)
through (g) are redesignated (c) through (h).
In addition, the paragraph that was 525.7(e)
in the NPRM is amended by substituting "40
CFR 600.506(a) (2)" for "40 CFR (a) (2)". This
amendment corrects a typographical error which
appeared in the NPRM and is not a substantive
change.
The subparagraph that appeared as 525.7(d)
(5) in the NPRM is amended to read "fuel
metering system, including the number of carbu-
retor barrels, if applicable". This change is not
substantive, but is made to make the subpara-
graph consistent with terminology in EPA regu-
lations in 40 CFR Part 600.
PART 525— PRE 5
EfFeclive: July 28, 1977
The subparagi'aph that appeared in the NPEM
as 525.7(g)(5) would have required petitioners
which are not considering means or strategies to
comply with applicable average fuel economy
standards for the affected model year to explain
their reasons for not doing so. This subparagraph
is amended to make it clear that the explanations
are to be comprehensive. As amended, the sub-
paragraph requires that the explanation include
discussion of weight reduction, straight-line ac-
celeration reduction, other technological changes
or improvements, and shifts in production mix.
This amendment will ensure that the agency re-
ceives economic and technological justification for
all major aspects of potential fuel economy im-
provement.
All references to "Part 522" are deleted. At
the time of the XPRM, the agency intended to
issue a procedural regulation. Part 522, that
would specify the informal rulemaking proce-
dures used by the agency in the fuel economy
area. The agency has since decided to continue
to use the procedures in 47 CFR 551-553.
#
In light of the foregoing. Title 49, Code of
Federal Regulations, is amended by adding a
new Part 525, Exemptions From Average Fuel
Ecanomy Standards. Because these rules are
procedural in nature, the agency has determined
that they shall become effective on the date of
publication in the Federal Register.
The program official and lawyer principally
responsible for the development of this regidation
are Douglas Pritchard and David Zisser, respec-
tively.
Issued on July 21, 1977.
Joan Claybrook
National Highway Traffic Safety
Administrator
42 F.R. 38374
July 28, 1977
#
t
PART 525— PRE 6
PREAMBLE TO AMENDMENTS TO PART 525-EXEMPTIONS FROM AVERAGE
FUEL ECONOMY STANDARDS
(Docket No. FE 76-04; Notice 4)
Action: Final rule.
Summary: This rule makes several amendments to
the requirements governing the contents of peti-
tions by manufacturers of fewer than 10,000
passenger automobiles annually for exemptions
from the generally applicable fuel economy
standards and in the procedures followed by the
National Highway Traffic Safety Administration
(NHTSA) in processing those petitions. These
amendments will require that petitions for exemp-
tion contain more information concerning the fuel
economy testing of the vehicles, but otherwise
simplify the general content requirements for
these petitions. In addition, the notice of receipt of
the petitions and the proposed decision on the peti-
tions will now be combined into one notice. These
changes will simplify and expedite the preparation
and processing of these petitions.
Effective date: This rule is effective with respect to
petitions for exemption for 1980 and subsequent
model years.
For further information contact:
William Devereaux, Office of Automotive Fuel
Economy Standards, National Highway
Traffic Safety Administration, Washington,
D.C. 20590 (202-755-9384).
Supplementary information:
Section 502(c) of the Motor Vehicle Information
and Cost Savings Act, as amended (the Act), pro-
vides that a low volume manufacturer of passenger
automobiles may be exempted from the generally
applicable average fuel economy standards for
passenger automobiles if those standards are more
stringent than the maximum feasible average fuel
economy for that manufacturer and if the NHTSA
establishes an alternative standard for the
manufacturer at its maximum feasible level. Under
the Act, a low volume manufacturer is one who
manufactures fewer than 10,000 passenger
automobiles in the model year for which the ex-
emption is sought (the affected model year) and
who manufactures fewer than 10,000 passenger
automobiles in the second model year preceding
the affected model year.
To implement section 502(c), NHTSA issued
Part 525, Exemptions From Average Fuel
Economy Standards. Part 525 prescribes the con-
tent of exemption petitions and sets forth the
agency procedures for processing those petitions.
In connection with the processing of petitions sub-
mitted by low manufacturers, several problems
with the process for handling exemption petitions
became apparent. The most obvious problems were
the amount of time needed to obtain a complete
petition from the petitioners and the amount of
time needed to publish a final decision on the peti-
tions. To reduce these problems, NHTSA pub-
lished a notice of proposed rulemaking to amend
Part 525 at 44 FR 21051; April 9, 1979.
Two comments were submitted in response to
this proposal. One comment addressed the issue of
the fuel economy improvements to be expected
from improved lubricants, but did not address any
of the issues raised in the notice. Accordingly, that
comment will not be discussed further in this
notice.
The other comment was submitted by Aston
Martin Lagonda, a low volume manufacturer.
Aston Martin suggested that the rule be amended
so that low volume manufacturers not be required
to submit petitions two years before the affected
model year. This suggestion has not been adopted.
For the same reasons set forth in the final rule
originally establishing Part 525 (42 FR 38374; July
28, 1977), NHTSA believes that retention of the
two year requirement is more consistent with the
energy conservation purposes of the Act. Early
PART 525-PRE 7
submission allows NHTSA to set standards at
levels that require maximum fuel economy
improvements by the exempted manufacturers.
The agency also believes that it is essential that
low volume manufacturers know the fuel economy
which they will have to meet as far in advance of
the affected model year as possible, so that the
manufacturers can make any necessary changes in
their product plans with a maximum of efficiency
and a minimum of expense and disruption.
Aston Martin went on to argue that it should not
be expected to make any significant alterations to
its vehicles. This does not relate to the issues
raised in the proposal, but on how NHTSA should
determine a manufacturer's maximum feasible
average fuel economy. As such, the comment is not
relevant to the issues raised in the notice.
Neither of these commenters responded to
NHTSA's request for comments as to means of
avoiding an annual submission and processing of
petitions for exemption, and the request for com-
ments on extending the duration of the exemption
from the current three year maximum to a longer
period. Since no commenter has raised any objec-
tion to the proposed amendments, they are being
adopted without change.
The agency has reviewed the impacts of this rule
and determined that they are minimal, and that the
rule is not a significant regulation with the mean-
ing of Executive Order 12044.
The program official and attorney principally
responsible for the development of this proposed
regulation are William Devereaux and Stephen
Kratzke, respectively.
In consideration of the foregoing, 49 CFR Part
525 is amended. . . .
Issued on September 19, 1979.
Joan Claybrook
Administrator
44 F.R. 55578
September 27, 1979
#
#
PART 525-PRE 8
PREAMBLE TO AN AMENDMENT TO PART 525— EXEMPTIONS FROM
AVERAGE FUEL ECONOMY 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-
f
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 525; PRE 9
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
1
46 F.R. 2063
January 8, 1981
#
PART 525; PRE 10
PART 525-EXEMPTIONS FROM AVERAGE FUEL ECONOMY STANDARDS
Sec.
525.1
525.2
525.3
525.4
525.6
525.7
525.8
525.9
525.10
525.11
525.12
525.13
Scope.
Purpose.
Applicability.
Definitions.
Requirements for petition.
Basis for petition.
Processing of petitions.
Duration of exemption.
Renewal of exemption.
Termination of exemption; amendment
of alternative average fuel economy
standard.
Public inspection of information.
Confidential information.
i
§ 525.1 Scope.
This part establishes procedures under section
502(c) of the Motor Vehicle Information and Cost
Savings Act, as amended (15 U.S.C. 2002), for the
submission and disposition of petitions filed by low
volume manufacturers of passenger automobiles to
exempt them from the average fuel economy
standards for passenger automobiles and to
establish alternative average fuel economy
standards for those manufacturers.
§ 525.2 Purpose.
The purpose of this Part is to provide content
and format requirements for low volume manufac-
turers of passenger automobiles which desire to
petition the Administrator for exemption from ap-
plicable average fuel economy standards and for
establishment of appropriate alternative average
fuel economy standards and to give interested per-
sons an opportunity to present data, views and
arguments on those petitions.
§ 525.3 Applicability.
This part applies to passenger automobile
manufacturers.
§ 525.4 Definitions.
(a) Statutory terms.
(1) The terms "fuel," "manufacture,"
"manufacturer," and "model year" are used as
defined in section 501 of the Act.
(2) The terms "average fuel economy," "fuel
economy," and "model type" are used as defined
in 40 CFR 600.002-77.
(3) The term "automobile" means a vehicle
determined by the Administrator under 49 CFR
523 to be an automobile.
(4) The term "passenger automobile" means
an automobile determined by the Administrator
under 49 CFR 523 to be a passenger automobile.
(5) The term "customs territory of the United
States" is used as defined in 19 U.S.C. 1202.
(b) Other terms.
(1) The terms "base level" and "vehicle con-
figuration" are used as defined in 40 CFR
600.002-77.
(2) The term "vehicle curb weight" is used as
defined in 40 CFR 85.002.
(3) The term "interior volume index" is used
as defined in 40 CFR 600.315-77.
(4) The term "frontal area" is used as defined
in 40 CFR § 86.129-79.
(5) The term "basic engine" is used as defined
in 40 CFR § 600.002-77(a)(21).
(6) The term "designated seating position" is
defined in 49 CFR § 571.3.
(7) As used in this Part, unless otherwise
required by the context—
"Act" means the Motor Vehicle Information and
Cost Savings Act (Pub. L. 92-513), as amended by
the Energy Policy and Conservation Act (Pub. L.
94-163);
"Administrator" means the Administrator of the
National Highway Traffic Safety Administration;
PART 525-1
"Affected model year" means a model year for
which an exemption and alternative average fuel
economy standard are requested under this Part;
"Production mix" means the number of
passenger automobiles, and their percentage of the
petitioner's annual total production of passenger
automobiles, in each vehicle configuration which a
petitioner plans to manufacture in a model year;
and
"Total drive ratio" means the ratio of an
automobile's engine rotational speed (in revolu-
tions per minute) to the automobile's forward
speed (in miles per hour).
§ 525.5 Limitation on eligibility.
Any manufacturer that manufactures (whether
or not in the customs territory of the United
States) 10,000 or more passenger automobiles in
the second model year preceding an affected model
year or in the affected model year, is ineligible for
an exemption for that affected model year.
§ 525.6 Requirements for petition.
Each petition filed under this part must—
(a) Identify the model year or years for which
exemption is requested;
(b) Be submitted not later than 24 months before
the beginning of the affected model year, unless
good cause for later submission is shown;
(c) Be submitted in three copies to: Administrator,
National Highway Traffic Safety Administration,
Washington, D.C. 20590;
(d) Be written in the English language;
(e) State the full name, address, and title of the
official responsible for preparing the petition, and
the name and address of the manufacturer;
(f) Set forth in full data, views and arguments of
the petitioner supporting the exemption and alter-
native average fuel economy standard requested
by the petitioner, including the information and
data specified by § 525.7 and the calculations and
analyses used to develop that information and
data. No documents may be incorporated by
reference in a petition unless the documents are
submitted with the petition;
(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. (46 PR 2063-January 8, 1981. Effective:
April 9, 1981)1
§ 525.7 Basis for petition.
(a) The petitioner shall include the information
specified in paragraphs (b) through (h) in its petition.
(b) Whether the petitioner controls, is controlled
by, or is under common control with another
manufacturer of passenger automobiles, and, if so,
the nature of that control relationship, and the total
number of passenger automobiles manufactured by
such other manufacturer or manufacturers.
(c) The total number of passenger automobiles
manufacutured or likely to be manufactured
(whether or not in the customs territory of the
United States) by the petitioner in the second model
year immediately preceding each affected model
year.
(d) For each affected model year, the petitioner's
projections of the most fuel efficient production mix
of vehicle configurations and base levels of its
passenger automobiles which the petitioner could
sell in that model year, and a discussion demon-
strating that these projections are reasonable. The
discussion shall include information showing that
the projections are consistent with—
(1) The petitioner's annual total production and
production mix of passenger automobiles manufac-
tured or likely to be manufactured in each of the
four model years immediately preceding that
affected model year;
(2) Its passenger automobile production
capacity for that affected model year;
(3) Its efforts to comply wit that average fuel
economy standard; and
(4) Anticipated consumer demand in the
United States for passenger automobiles during
that affected model year.
(e) For each affected model year, a description
of the following features of each vehicle configura-
tion of the petitioner's passenger automobiles to be
manufactured in that affected model year:
(1) Frontal area;
(2) Vehicle curb weight;
(3) Number of designated seating positions
and interior volume index;
(4) Basic engine, displacement, and SAE net
horsepower;
(5) Fuel metering system, including the
number of carburetor barrels, if applicable;
(6) Drive train configuration and total drive
ratio; and
(7) Emission control system;
(Rev. 1/9/81)
PART 525-2
(8) Dynamometer road load setting, deter-
mined in accordance with 40 CFR Part 86, and the
method used to determine that setting, including
information indicating whether the road load
setting was adjusted to account for the presence of
air conditioning and whether the setting was based
on the use of radial ply tires; and
(9) Use of synthetic lubricants, low viscosity
lubricants, or lubricants with additives that affect
friction characteristics in the crankcase, differen-
tial, and transmission of the vehicles tested under
the requirements of 40 CFR Parts 86 and 600.
With respect to automobiles which will use these
lubricants, indicate which one will be used and
explain why that type was chosen. With respect to
automobiles which will not use these lubricants,
explain the reasons for not so doing.
(f) For each affected model year, a fuel economy
value for each vehicle configuration specified in 40
CFR 600.506 (aX2), base level, and model type of
the petitioner's passenger automobiles to be
manufactured in that affected model year
calculated in accordance with Subpart C of 40 CFR
Part 600 and based on tests or analyses com-
parable to those prescribed or permitted under 40
CFR Part 600 and a description of the test
procedures or analytical methods.
(g) For each affected model year, an average
fuel economy figure for the petitioner's passenger
automobiles to be manufactured in that affected
model year calculated in accordance with 40 CFR
600.510(e) and based upon the fuel economy values
provided under paragraph (f) of this section and
upon the petitioner's production mix projected
under paragraph (d) of this section for the affected
model year.
(h) Information demonstrating that the average
fuel economy figure provided for each affected
model year under paragraph (g) of this section is
the maximum feasible average fuel economy
achievable by the petitioner for that model year,
including—
(1) For each affected model year and each of
the two model years immediately following the
first affected model year, a description of the
technological means selected by the petitioner for
improving the average fuel economy of its
automobiles to be manufactured in that model
year.
(2) A chronological description of the peti-
tioner's past and planned efforts to implement the
means described under paragraph (hXl) of this
section.
(3) A description of the effect of other Federal
motor vehicle standards on the fuel economy of the
petitioner's automobiles.
(4) For each affected model year, a discussion
of the alternative and additional means considered
but not selected by the petitioner that would have
enabled its passenger automobiles to achieve a
higher average fuel economy than is achievable
with the means described under paragraph (h)(1) of
this section. This discussion must include an
explanation of the reasons the petitioner had for
rejecting these additional and alternative means.
(5) In the case of a petitioner which plans to
increase the average fuel economy of its passenger
automobiles to be manufactured in either of the
two model years immediately following the first
affected model year, an explanation of the peti-
tioner's reasons for not making those increases in
that affected model year.
§ 525.8 Processing of petitions.
(a) If a petition is found not to contain the infor-
mation required by this Part, the petitioner is
informed about the areas of insufficiency and
advised that the petition will not receive further
consideration until the required information is sub-
mitted.
(b) The Administrator may request the peti-
tioner to provide information in addition to that re-
quired by this Part.
(c) The Administrator publishes a proposed deci-
sion in the Federal Register. The proposed decision
indicates the proposed grant of the petition and
establishment of an alternative average fuel
economy standard, or the proposed denial of the
petition, specifies the reasons for the proposal and
invites written public comment on the proposal.
(d) Any interested person may, upon written re-
quest to the Administrator not later than 15 days
after the publication of a notice under paragraph
(c) of this section, meet informally with an ap-
propriate official of the National Highway Traffic
Safety Administration to discuss the petition or
notice.
(e) After the conclusion of the period for public
comment on the proposal, the Administrator
publishes a final decision in the Federal Register.
The final decision is based on the petition, written
public comments, and other available information.
PART 525-3
The final decision sets forth the grant of the ex-
emption and establishes an alternative average
fuel economy standard or the denial of the petition,
and the reasons for the decision.
§ 525.9 Duration of exemption.
An exemption may be granted under this Part
for not more than three model years.
§ 525.10 Renewal of exemption.
A manufacturer exempted under this Part may
request renewal of its exemption by submitting a
petition meeting the requirements of §§ 525.6 and
525.7.
§ 525.11 Termination of exemption; amendment of
alternative average fuel economy standard.
(a) Any exemption granted under this Part for
an affected model year does not apply to a
manufacturer that is ineligible under § 525.5 for an
exemption in that model year.
(b) The Administrator may initiate rulemaking
either on his own motion or on petition by an
interested person to terminate an exemption
granted under this Part or to amend an alternative
average fuel economy standard established under
this Part.
(c) Any interested persons may petition the
Administration to terminate an exemption granted
under this Part or to amend an alternative average
fuel economy standard established under this Part.
§ 525.12 Public inspection of information.
1(a) Except as provided in paragraph (b), any
person 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 information 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.
(46 FR 2063-January 9, 1981. Effective: April 9,
1981)1
§525.13 [Deleted]
42 F.R. 38374
July 28, 1977
(Rev. 1/9/81)
PART 525-4
PREAMBLE TO AN AMENDMENT TO PART 526 and 533
Petitions Under the Automobile Fuel Efficiency Act of 1980;
Procedures Relating to Light Truck Fuel Economy Standards
(Docket No. 82-01; Notice 1)
ACTION: Interim final rule.
SUMMARY: The notice establishes requirements for
the contents of petitions filed under Automobile Fuel
Efficiency Act of 1980 ("the 1980 Act"). The 1980
Act authorizes the granting of relief from certain
requirements related to the automobile fuel economy
standards established under Title V of the Motor
Vehicle Information and Cost Savings Act ("the Cost
Savings Act"). This notice is being issued to inform
manufacturers about types of information which
must be submitted in support of the various types of
relief petitions and plans. This notice also explains
the flexibility of manufacturers in determining how to
group their vehicles for the purposes of compliance
with the MY 1982 light truck fuel economy standards.
EFFECTIVE DATE: February 18, 1982.
SUPPLEMENTARY INFORMATION:
The Automobile Fuel Efficiency Act of the 1980 (94
Stat. 1821) amended the fuel economy provisions of
the Motor Vehicle Information and Cost Savings Act
to assist the automobile manufacturers in complying
with fuel economy standards and to promote
employment in the U.S. automotive industry. To
obtain this relief, the 1980 Act requires manu-
facturers first to file petitions or plans with the
agency and make certain specified showings. This
notice establishes an interim final regulation
concerning the specific information which manu-
facturers must submit in their petitions and plans.
This notice addresses four different types of relief
authorized under the 1980 Act. The agency has
previously issued a rule under the 1980 Act relating
to the availability of monetary credits for exceeding
the light truck average fuel economy standards. See
45 FR 83233, December 19, 1980, and section 6(b) of
the 1980 Act.
The first set of requirements established in this
notice applies to the exemption provided by section
4(a) of the 1980 Act from the domestic content
requirement in section 503 of the Cost Savings Act.
The requirement specifies that if at least 75 percent
of the cost to the manufacturer of an automobile is
attributable to value added in the United States or
Canada, the automobile is considered domestically-
manufactured. If the percentage is below that level,
the automobile is considered to be foreign-
manufactured. See section 503(bX2XE). Under that
requirement, if a manufacturer produces cars both in
this country and abroad for sale in this country and it
raises the domestic content of the cars produced in
this country above 75 percent, it must ensure that its
domestically-produced cars and its foreign-produced
cars separately meet the fuel economy standards.
Thus, the manufacturer could not average high fuel
economy imported cars with lower fuel economy
domestically-manufactured cars as a strategy for
complying with the fuel economy standards.
The domestic content provision was originally
included in the Cost Savings Act to promote
employment in the U.S. automobile industry by
encouraging manufacturers to produce high fuel
economy vehicles in this country, instead of relying
on the importation of high fuel economy cars which
they produce or purchase abroad. However, the
requirement for separate compliance has had the
opposite effect on U.S. employment in its application
to foreign manufacturers. Foreign manufacturers
which seek or might seek to produce high fuel
economy cars in the U.S. are penalized under the
original domestic content provision. If they produce
their high fuel economy cars in the country and
PART 526-PRE 1
eventually exceed 75 percent domestic content, they
would lower the average fuel economy of their
remaining foreign-produced fleet. As a result, a
manufacturer's foreign fleet might not comply with
the fuel economy standards, although its combined
foreign and domestic fleet would probably exceed the
standard substantially.
To reduce this disincentive for foreign manu-
facturers to initiate production in this country and to
achieve high levels of domestic content. Congress
amended section 503(b) of the Cost Savings Act by
adding a new subsection (3). Under that provision, a
manufacturer which completes its first model year of
domestic production of automobiles between 1975
and 1985 may petition the agency for exemption from
the requirement for separate compliance so that it
does not apply when the domestic content of the U.S.
produced fleet exceeds 75 percent. Section 503 (bX3)
requires that the agency grant such a petition unless
it finds that doing so would "result in reduced
employment in the United States related to motor
vehicle manufacturing." Employment reductions
could occur if, for example, granting the petition
resulted in the petitioner's capturing increased sales
from current U.S. manufacturers whose vehicles
have a higher domestic content. The agency has
already granted a petition under this provision to
Volkswagen of America. (See 46 FR 54453;
November 2, 1981.) It appears that in most instances,
increasing U.S. content for one company should
produce net increases in overall U.S. employment.
To determine whether to grant a petition filed
under this provision, the agency needs information on
the magnitude of these possible adverse employment
effects, if any. The agency would also need to know
the magnitude of the positive employment effects
resulting from the decision to begin domestic
production or increase domestic content. Therefore,
the regulations or petitions and plans for relief set
forth below specifies that a petitioning manufacturer
submit information describing insofar as possible the
vehicles it plans to sell in the United States during the
exemption period, the projected sales of those
vehicles, the domestic content of those vehicles and
plans for obtaining components from domestic
sources. Information is also required on the extent, if
any, to which additional sales of the petitioner's
vehicles are expected to be gained at the expense of
current U.S. manufacturers, and the net employment
impact of the shift in sales. The petitioner must also
submit data on the yearly total employment related to
its U.S. production operations to give an overview of
the positive impact of granting petition. Finally,
information is required on the extent to which the
petitioner's product plan and component sourcing
decisions would be affected by the agency's granting
or denial of the petition.
The second relief provision added by the 1980 Act is
intended to encourage manufacturers to transfer
production of a foreign-produced vehicle to this
country. Section 503(b)(4) of the Coast Savings Act
authorizes a temporary exemption from the domestic
content requirement in section 503. Under that
requirement, an automobile whose domestic content
is less than 75 percent must be treated as a foreign-
produced automobile. This poses a problem
particularly if a manufacturer wishes to transfer
production of a high fuel economy car and average it
with its domestic fleet. The exemption is available to
any manufacturer which plans to phase-in domestic
production of a new vehicle by gradually increasing
its domestic content to 75 percent. A manufacturer
which satisfies the satutory requirements is
permitted to include up to 150,000 automobiles in its
domestic fleet if the automobiles have at least 50
percent domestic content initially and if the
manufacturer submits and the agency approves a
plan for achieving 75 percent domestic content by the
fourth year of the exemption.
In considering whether to approve a plan under this
provision, the agency must determine whether the
plan is adequate. To verify achievement of the 50 and
75 percent domestic content levels, the regulation
specifies that information must be provided on the
total manufacturing costs of the vehicles whose
production is to be transferred to this country. In
addition, information is required on the changes in
domestic content of the vehicles to be produced in this
country during each of the four years covered by the
plan, including information on the timing and nature
of the change.
The third relief provision relates to compliance with
fuel economy standards for 4-wheel drive light
trucks. This provision, which was added by the 1980
Act to the Coast Savings Act as section 502(k),
authorizes the agency to adjust the manner in which
average fuel economy is calculated for a petitioner's
4-wheel drive light truck fleet or to provide other
relief with respect to a fuel economy standard for
4-wheel light trucks. To obtain this relief, the
petitioner must show that it would be unable to
comply with such a standard "without causing service
economic impacts such as plant closings or reduction
PART 526-PRE 2
in employment in the United States related to motor
vehicle manufacturing." (Section 502(k)).
To enable the agency to assess the impacts on a
petitioning manufacturer of compliance with a fuel
economy standard for 4-wheel drive light trucks, the
regulation requires that information be submitted on
the changes planned by the manufacturer to achieve
compliance and the cost and fuel economy impacts of
each of those changes. The manufacturer must also
identify the particular compliance steps which the
manufacturer believes would cause "severe economic
impacts" and the nature of those impacts. This
information will permit the agency to determine what
level of rule economy the petitioner is capable of
achieving without experiencing "severe economic
impacts."
Information must also be submitted on monetary
credits likely to be earned in the three model years
preceding and the three model years following model
year for which relief is sought. This information will
permit the agency to assess the effect of available
credits on the need for relief. Credits are earned at the
rate of five dollars per vehicle for each tenth of a mile
per gallon by which a manufacturer's fleet exeeds a
average fuel economy standard. Earned credits may
be used to offset civil penalties (accrued at the same
rate) for the manufacturer's falling below a standard in
one or more of the three model years before or after
the model year in which the credit was earned.
Finally, the petitioner must specify the precise type
and extent of relief being sought.
The final relief provision is section 502(1) of the
Cost Savings Act which was added by section 6(b) of
the 1980 Act. Section 502(1) authorizes a
manufacturer which expects to fail to meet a fuel
economy standard in a particular model year to file a
plan with NHTSA regarding the prospects for
earning credits in the next three model years. The
plan must set forth the individual actions comprising
the plan and the schedule for accomplishing those
actions. If NHTSA approves the plan, the credits are
available immediately to offset the civil penalty for
the model year in which the manufacturer failed to
meet the standard. The benefit of having such a plan
approved is that the manufacturer can avoid ever
being deemed to have violated the fuel economy
standard for the model year if it actually earns the
projected credits. If such a manufacturer does not
obtain the agency's approval for a plan under section
502(1), the manufacturer may have to pay the civil
penalty and then seek a refund if credits are
subsequently earned.
Section 502(1) directs the agency to approve any
plan submitted by a manufacturer under that section
unless the agency determines that "it is unlikely that
the plan will result in the manufacturer earning
sufficient credits" to offset the civil penalty. The
agency might make such a finding if either the
technological or other steps planned by the
manufacturer will fail to produce the levels of
average fuel economy necessary to earn the credits.
Therefore, the regulation specifies that the manu-
facturer must submit information demonstrating the
feasibility of its plan. Among types of required
information are descriptions of planned product
actions which will affect fuel economy (e.g., the
introduction of a new model), and the effect of that
product action on the manufacturer's average fuel
economy.
In addition to establishing a regulation regarding
certain types of submissions under provisions added
to the Cost Savings Act by the 1980 Act, this notice
also adopts a simple change relating to how light
trucks are grouped for purposes of compliance with
the light truck fuel economy standards for model year
1982. The change would give manufacturers the same
latitude in grouping their light trucks in the model
year the they presently have for model years
1983-1985. On December 31, 1979, the NHTSA
published a proposal to establish separate standards
for 2-wheel drive and 4-wheel drive light trucks for
model years 1982-1985. Due to a statutory deadline
for issuing the model year 1982 standards, the agency
published them on March 31, 1980. The standards
were 16 miles per gallon for 4-wheel drive light trucks
and 18 miles per gallon for 2-wheel drive light trucks.
The NHTSA then sought further comment on the
model year 1983-1985 standards and expressly
focused public attention on the concept of a combined
standard. Whe the agency published its decision on
December 11, 1980, it provided manufacturers with
an option of complying with separate standards or a
single combined standard. The NHTSA did not,
however, then go back and provide the same option
for model year 1982.
Over the past year, the agency has been reviewing
its existing procedures and regulations pursuant to
E.O. 12291 to determine the need for any
amendments to eliminate ineffective or unnecessarily
burdensome or inflexible regulations. However, it
was only in December that the agency received
informaton indicating the value of increasing the
flexibility of the manufacturers in grouping their light
trucks for compliance purposes. In that month, the
PART 526-PRE 3
manufacturers submitted their semi-annual fuel
economy reports required by 49 CFR 537. The
agency's analysis of the information in those reports
revealed for the first time the value of giving
manufacturers the same flexibility in grouping their
light trucks for model year 1982 as they already have
for model years 1983-1985. By placing all of its light
trucks in a single group, a manufacturer has greater
freedom to choose how it allocates its efforts to
improve fuel economy between technology changes
and sales mix changes.
Accordingly, the agency has decided to provide
manufacturers with the option of complying with a
single, combined standard, in terms of required fuel
savings, the separate standards of 16 and 18 miles per
gallon are essentialy the equivalent of a single
standard of 17.5 miles per gallon for all light trucks
together. The single standard has therefore been set
at the level. The figure of 17.5 was calculated by
harmonically weighting the separate standards based
on the 75 percent/25 percent sales mix of 2-wheel
drive light trucks and 4-wheel drive light trucks used
in the 1983-1985 proceeding. This notice adopts that
combined standard of 17.5 miles per gallon. As noted
above, this action makes no change in the level of fuel
economy required of manufacturers, but does allow a
manufacturer the choice of placing all of its 2-wheel
drive and 4-wheel drive light trucks together in a
single group or maintaining two separate groups for
compliance purposes. It also provides an additional
method of compliance, i.e., selling larger numbers of
the higher fuel economy 2-wheel driven light trucks.
The actions taken by this notice are being issued as
an interim final rule because they are essentially
procedural and therefore notice and opportunity for
comment is not required by the Administration
Procedures Act. Neverless, the agency is providing
an opportunity to comment. Appropriate changes
warranted by the comments will be incorporated in
the permanent final rules.
The agency also notes and expressly finds there is
good cause for proceeding directly to an interim final
rule. As noted above, the need for their amendment
was identified by the agency as a result of its
evaluation of the recently submitted pre-model year
fuel economy reports. Those reports were submitted
to the agency last month. If manufacturers are to
have a meaningful opportunitiy to take advantange of
the change, it must be adopted now. Typical
production runs for 1982 light trucks of major
domestic manufactuers end in June 1982. That is only
about four months away. If the rule were not adopted
and made effective until after a comment period and
the issuance of another Federal Register, little or no
time would remain for the manufacturers to take
advantage of the additional flexibility being provided
through the combined standard. Extensive comment
has already been solicited and obtained on the
concept of an optional combined standard for the
immediately following model years. Applying the
concepts to model year 1982 does not appear to raise
any issues not considered in the rulemaking. For
these reasons and because this amendment relieves a
restriction, the agency finds good cause also for
making the amendment effective upon publication in
the Federal Register.
The petitions and plans regulation also is being
made effective immediately. The agency finds good
cause for doing so since it will facilitate the
submission of any requests for relief.
For the reasons set forth in the preamble, Chapter
V of Title 49, Code of Federal Regulation, is amended
as set forth below.
Issued on February 11, 1982.
(#
Raymond A. Peck, Jr.,
Administrator
33 F.R. 7245
February 18, 1982
PART 526-PRE 4
PREAMBLE TO AN AMENDMENT TO PART 526 and 533
Petitions Under the Automobile Fuel Efficiency Act of 1980;
Procedures Relating to Light Truck Fuel Economy Standards
(Docket No. 82-01; Notice 2)
ACTION: Final rule.
SUMMARY: This notice issues in final form certain
fuel economy procedural rules which were initially
implemented on an interim basis. Most of the
procedures relate to provisions in the Automobile
Fuel Efficiency Act of 1980 for granting relief to
manufacturers from automobile fuel efficiency
requirements. The balance relate to compliance with
light truck fuel economy standards. Since no
comments were received on the interim procedures,
this notice establishes final procedures identical to
the interim ones.
EFFECTIVE DATE: July 29, 1982.
SUPPLEMENTARY INFORMATION:
The Automobile Fuel Efficiency Act of the 1980 (94
Stat. 1821) amended the fuel economy provisions of
the Motor Vehicle Information and Cost Savings Act
to assist the automobile manufacturers in complying
with fuel economy standards and to promote
emplojmnent in the U.S. automotive industry. To
obtain this relief, the 1980 Act requires manu-
facturers first to file petitions or plans with the
agency and make certain specified showings. On
February 18, 1982, the agency published interim
procedures on the required contents of these petitions
and invited comment on those procedures. See 47 FR
7245. That notice also specified an optional procedure
for complying with 1982 light truck standards. Since
no comments were received on the interim pro-
cedures during the established public comment
period, the agency is now adopting those procedures
in final form without change.
Two of the petition procedures in the interim rules
relate to fuel economy domestic content require-
ments. The Cost Savings Act specifies that, in
general, each manufacturer's domestically manu-
factured (i.e., those with at least 75 percent U.S. or
Canadian content) and imported automobiles must
comply separately with average fuel economy
standards. This provision was originally enacted to
discourage domestic auto manufacturers from merely
importing increasing numbers of fuel efficient,
foreign produced vehicles to comply with standards,
thereby adversely affecting U.S. employment.
However, the original provision could, in certain
situations, penalize manufacturers which intended to
transfer production of a foreign automobile to the
United States or, in the case of a foreign
manufacturer, to begin U.S. production of an existing
model. Therefore, Congress enacted the previously
mentioned two exemption provisions.
The first provision applies to foreign manufacturers
which begin U.S. production. Such manufacturers
may be exempted from domestic content require-
ments if they submit, and NHTSA approves, a
petition demonstrating that granting the requested
relief would not adversely affect employment in the
U.S. automobile industry. The second provision
applies to the situation where a manufacturer
transfers a foreign produced automobile to U.S.
production. To obtain exemption from domestic
content requirements under that provision, a
petitioner must show (among other things) that it will
achieve at least 75 percent U.S. content with the
transferred automobiles by the fourth model year
after U.S. assembly begins. The interim procedures
specify the required contents for both types of
petitions.
The 1980 Act also authorized special relief for
manufacturers which plan to exceed fuel economy
standards for a year prior to that future one. Under
the current statutory scheme, manufacturers earn
credits for any model year in which they exceed a fuel
economy standard. These credits may be used to
offset civil penalties which would otherwise be
assessed for falling short of a standard in any of the
three prior or subsequent model years. The 1980 Act
PART 526-PRE 5
authorized these credits to be available in advance
where a manufacturer submits and the agency
approves a plan for earning the necessary credits in
the future. Approval of such a plan eliminates the
need for manufacturers to pay civil penalties and
subsequently apply for a refund when credits are
earned, and also eliminates any stigma associated
with being in violation of a standard.
The fourth provision of the 1980 Act authorizes
special relief for manufacturers which are unable to
comply with one or more of the four-wheel drive light
truck fuel economy standards in model years 1982-85.
Such manufacturers may petition the agency to
adjust the manner in which average fuel economy is
calculated for these truck. The 1980 Act requires
petitioning manufacturers to submit information on
their abilities to comply with the standard and the
economic consequences of their efforts to comply.
The final provision in the interim rule permitted
manufacturers to combine their two-wheel drive and
four-wheel drive light truck fleets in order to comply
with the 1982 model year fuel economy requirements
for light trucks. When those requirements were
originally established, 1982 model year light trucks
were required to comply with separate two-wheel
drive and four-wheel drive standards. Manufacturers'
fleets of two-wheel drive trucks were required to
comply with a standard of 18 miles per gallon, while
the average fuel economy of each company's four-
wheel drive trucks was required to be at least 16 miles
per gallon. When standards were later established for
the 1983-85 model years, the agency set separate
standards for each of these classes of trucks.
However, it also set an optional combined standard
for each manufacturer's entire light truck fleet. The
combined standard was intended to achieve
essentially the same overall fuel efficiency
improvement as the separate standards, while giving
manufacturers the flexibility of making greater
improvements to one class or the other. When the
1983-85 standards were established, the agency did
not make corresponding changes to the 1982
standards by adding a separate combined standard
option for that year. However, that conforming
change was made in the February 18 interim pro-
cediu-es, by establishing a 17.5 mile per gallon
optional combined standard.
Further information on the final procedures can be
fovmd at 47 FR 7245 with the actual text of the
procedures appearing at 47 FR 7248-50.
Since this notice makes final existing procedures, it
is effecive immediately
For the reasons set forth in the preamble, the
agency adopts as final the amendments made to
Chapter V of Title 49 , Code of Federal Regulation, in
47 FR 7248-50.
List of Subjects in 49 CFR Parts 526 and 533
Energy conservation
Gasoline
Imports
Motor vehciles
National Highway Traffic Safety Administration
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 and 2003); delegation of authority at 49
CFR 1.50.)
Issued on July 2, 1982.
Raymond A. Peck, Jr.,
Administrator
47 F.R. 32721
July 29, 1982
PART 526-PRE 6
PART 526— PETITIONS AND PLANS FOR RELIEF UNDER THE
AUTOMOBILE FUEL EFFICIENCY ACT OF 1980
§ 526.1 General provisions.
(a) Applicability. These regulations apply to peti-
tions and plans submitted under the Automobile Fuel
Efficiency Act of 1980, Pub. L. 96-425, as codified in
Title V of the Motor Vehicle Information and Cost
Savings Act, 15 U.S.C. 2001 et seq.
(b) Address. Each petition and plan submitted
imder the Automobile Fuel Efficiency Act of 1980
must be addressed to the Administrator, National
Highway Traffic Safety Administration, 400 Seventh
Street, S.W., Washington D.C. 20590.
(c) Authority and scope of relief. Each petition or
plan must specify the specific provision of the Act
under which relief is being sought. The petition or
plan must also specify the model years for which
relief is being sought.
§ 526.2 U.S. production by foreign manufacturer.
Each petition filed under section 4(a) of the Act
must contain the following information:
(a) For each model type (as defined by the En-
vironmental Protection Agency in 40 CFR Part 600)
planned by the petitioner to be sold in the United
States (regardless of place of manufacture), and for
each model year beginning with the year before the
first one for which relief is sought by the petition
through the last year covered by the petition, the
following information based on the petitioner's cur-
rent product plan and the assumption that the peti-
tion will be granted:
(1) A description of the model type, including car
line designation, engine displacement and type,
transmission type, and average fuel economy;
(2) U.S. sales projected for the model type;
(3) The average percentage of the cost to the
manufacturer of the model type which is at-
tributable to value added in the United States or
Canada, determined in accordance with 40 CFR
600.511-80, and the total manufacturing cost per
vehicle; and
(4) In the case of model types not offered for sale
in the United States before the first year for which
relief is sought in the petition or other model types for
which expansions in production capacity are planned
during the years covered by the petition, information
(including any marketing surveys) indicating from
where the additional sales will be captured. If sales
are projected to be captured from U.S. manufac-
turers the petition must provide an estimate of the
employment impact on those manufacturers of the
lost sales and the gain in employment for the peti-
tioner and its U.S. suppliers.
(b) The total number of persons employed in the
United States by the petitioner, excluding non-motor
vehicle industry related employees, for each model
year covered by the petition and for the model year
immediately prior to those years.
(c) A description of how the petitioner's responses
to paragraphs (a) and (b) of this section would differ if
the petition were denied.
§ 526.3 Transfer of vehicle from foreign to
U.S. production.
Each plan submitted under section 4(b) of the
Automotive Fuel Efficiency Act of 1980 must contain
the following information:
(1) A description of the model type, including
engine type and displacement, transmission class, car
line designation, and fuel economy;
(2) The projected U.S. sales of the model type;
(3) The average total manufacturing cost per vehi-
cle for the model type;
(4) The precentage of the cost to the manufacturer
attributable to value added in the United States or
Canada for the model type:
(b) For each year covered by the plan, a list of in-
dividual product actions (e.g., change from imported
engine to domestically manufactured engine) which
will increase the domestic content of the affected
vehicles. For each action, provide the model year in
which the action will take effect, a description of the
nature of the action, and the percentage change in
domestic content resulting from the action.
PART 526-1
§ 526.4 Adjustment of fuel economy standards for
4-wheel drive light trucks.
Each petition submitted under section 5 of the
Automobile Fuel Efficiency Act of 1980 must contain
the following information:
(a) For each configuration (as defined by the
Environmental Protection Agency in 40 CFR Part
600) of 4-wheel drive light trucks to be manufactured
by the petitioner and for each model year from the
year in which the petition is filed to the year for which
relief is sought:
(1) Model designation and type (e.g., K-15 pickup);
(2) Test weight;
(3) Gross vehicle weight rating;
(4) Engine displacement, cylinder configuration
and engine type;
(5) Transmission type;
(6) Fuel economy;
(7) Projected sales;
(8) Rear axle ratio; and
(9) N/V ratio.
(b) A list and full description of each planned
product action (e.g., new transmission, addition of
improved tires) which will affect the average fuel
economy of the petitioner's 4-wheel drive light trucks
beginning with the current model year and ending
with the model year for which relief is sought.
(c) An indication of which configurations specified
under paragraph (a) of this section are affected by
each product action specified under paragraph (b) of
this section.
(d) The fuel economy effect of each product action
specified under paragraph (b) of this section per
affected vehicle.
(e) The petitioner's actual or projected average fuel
economy for 4-wheel drive light trucks subject to fuel
economy standards for the model year for which
relief is sought, the three preceding model years and
the three following model years. For model years
1979 and 1982-85, also provide actual or projected
fuel economies for the combined fleet of 2-wheel drive
and 4-wheel drive light trucks, and the number of
vehicles in the combined fleet. For those same five
model years, provide the number of the vehicles in the
combined fleet which are subject to a fuel economy
standard for 4-wheel drive light trucks.
(f) The actions which the petitioner would
undertake to comply with the fuel economy standard
for 4-wheel drive light trucks in the model year for
which relief is sought and which the petitioner
believes would result in severe economic impacts.
(g) The economic effects (such as reduction in
employment or plant closings) which would result
from undertaking the actions specified under
paragraph (f) of this section. Provide information to
support the conclusion that these impacts would
result from attempted compliance. If reductions in
employment or plant closings are projected, identify
the plants which may be affected and the number of
employees at each plant which are involved in the
production of 4-wheel drive light trucks.
§ 526.5 Earning offsetting monetary credits in
future model years.
Each plan submitted under section 6(b) of the
Automobile Fuel Efficiency Act of 1980 must contain
the following information:
(a) Projected average fuel economy and production
levels for the class of automobOes which may fail to
comply with a fuel economy standard and for any
other classes of automobiles from which credits may
be transferred, for the current model year and for
each model year thereafter ending with the last year
covered by the plan. For light truck credit transfers
which may occur between different classes of light
trucks, provide the information specified in
§ 526.4(e).
(b) A list and full description of each planned
product action (e.g., new model, mix change) which
will effect the average fuel economy of the class of
automobiles subject to the credit earning plan, for
each model year beginning with the current model
year and ending with the last year covered by the
credit earning plan.
(c) The portion of the petitioner's fleet affected by
each product action (e.g., all K-cars with 6-cylinder
engines) and the number of affected vehicles.
(d) The fuel economy effect of each product action
specified under paragraph (b) of this section per
affected vehicle.
47 F.R. 32721
July 29, 1982
^
PART 526-2
PREAMBLE TO PART 527— REDUCTION OF PASSENGER AUTOMOBILE
AVERAGE FUEL ECONOMY STANDARDS
(Docket No. FE 76-2; Notice 2)
ACTION: Final rule.
SUMMARY: This regulation prescribes require-
ments for the contents and processing of petitions
by passenger automobile manufacturers to reduce
the average fuel economy standards applicable to
passenger automobiles produced in model years
1978, 1979, and 1980 to compensate for any adverse
fuel economy impact of more stringent Federal
motor vehicle emission, safety, noise, or
damageability standards in those years. Such
requirements and reductions are authorized by the
Motor Vehicle Information and Cost Savings Act.
This regulation is intended to provide notice to
passenger automobile manufacturers of the pro-
cedures to be followed in processing those petitions.
EFFECTIVE DATE: November 14, 1977.
FOR FURTHER INFORMATION CONTACT:
Mr. Theodore Bayler,
Office of Automotive Fuel Economy, (NFE-01),
National Highway Traffic Safety
Administration, 400 Seventh Street, S.W.,
Washington, D.C. 20590, 202-755-9384.
SUPPLEMENTARY INFORMATION:
I. Background Information
Title V of the Motor Vehicle Information and Cost
Savings Act, as amended (hereafter, "the Act"),
establishes average fuel economy standards ap-
plicable to manufacturers of passenger automobiles.
The term "passenger automobiles" generally in-
cludes four-wheeled vehicles manufactured primar-
ily for on-road use and for the transportation of ten
or fewer passengers, e.g., sedans and station
wagons. See 15 U.S.C. 2001(1) and (2) and 41 F.R.
55368. Compliance of a manufacturer with these
standards is to be determined by averaging the fuel
economy ratings of the various types of passenger
automobiles manufactured by the manufacturer in a
model year and comparing that number to the fuel
economy standard. The Act specifies fuel economy
standards of 18, 19, 20, and 27.5 miles per gallon for
model years 1978, 1979, 1980, and 1985, respec-
tively. Fuel economy standards for model years
1981-84 have been established administratively at
22 mpg for 1981, 24 mpg for 1982, 26 mpg for 1983,
and 27 mpg for 1984. Fuel economy values for the
various types of passenger automobiles are deter-
mined in accordance with procedures established by
the Environmental Protection Agency. See 40 CFR
Part 600.
The fuel economy achievable by a particular
passenger automobile may be adversely affected by
the technology adopted by the manufacturer in
order to comply with Federal motor vehicle emis-
sion, safety, noise, and damageability standards
(hereafter called "nonfuel economy standards") re-
quirements. The fuel economy standards for model
years 1978-80 were estabhshed at levels which took
into account the effects of the nonfuel economy
standards in effect in 1975. However, in order to
compensate for possible increases in the stringency
of the nonfuel economy standards and for any cor-
responding fuel economy impacts, an additional pro-
vision was included in the Act. Under Section 502(d)
of the Act, a manufacturer can petition for an ad-
justment of a fuel economy standard (called a
"Federal standards fuel economy reduction") due to
the impacts of these more stringent nonfuel
economy standards. The Act gives the Department
authority to publish regulations specifying the re-
quired content of these petitions; the regulations
published herein are based upon this authority.
These regulations were published in proposed
form on October 26, 1976. See 41 F.R. 46878. A
comment period of 60 days was established. A
docket was established for this rulemaking pro-
ceeding in the Department's headquarters offices in
Washington, D.C. Four domestic automobile com-
panies, two federal agencies, one manufacturer of
gasoline additives, one newspaper publishing
association, one "public interest" group, and three
PART 527-PRE-l
private individuals submitted written comments on
the proposal. All written comments, together with
certain other related material such as an economic
impact assessment were placed in the docket and
made available for public inspection. Finally,
copies of this notice were circulated to various
Federal agencies for their comment and review.
All of the various submissions, discussions referred
to above, and other available information were
considered in developing the final regulations pro-
mulgated herein.
Section 502(g) of the Act requires that petitions
for reduction be processed according to standard
informal rulemaking procedures, except for the
mandatory additional opportunity for oral presen-
tations. The Act also authorizes the consolidation
of petitions by more than one automobile manufac-
turer, to permit the conduct of a single proceeding
for all. See section 502(d) (4). As noted in the
preamble to the October 26 notice, NHTSA intends
to exercise this consolidation authority to the max-
imum extent possible, consistent with the other re-
quirements of the Act and the commonality of
issues raised by various petitioners. See 41 F.R.
46884. This will reduce the administrative burden
of processing petitions and will facilitate participa-
tion in the proceeding by less affluent individuals
and organizations, who might be unable to par-
ticipate in a series of completely separate pro-
ceedings.
These regulations require a manufacturer apply-
ing for a reduction to submit information on two
sets of passenger automobiles for the purpose of
calculating a reduction. The first set is the actual
set of passenger automobiles which the manufac-
turer plans to produce in the model year for which
the reduction is requested (hereafter called the "af-
fected model year"). The second set is the
hypothetical set of passenger automobiles which
the manufacturer would have produced had
1975-level standards in those nonfuel economy
categories for which a reduction is sought (e.g.,
emissions and damageability) still been in effect.
For each of these sets, information is requested on,
among other things, the distribution of vehicles
among the various vehicle categories expected to
be produced (called the "production mix"), the fuel
economy-related technology used in the vehicles,
and any available technology not used but which
would have reduced any loss of fuel economy and
improved the resulting vehicle fuel economy. From
all this information, the average fuel economy of
the two sets of vehicles can be calculated, and the
difference between the two averages gives an in-
dication of the fuel economy penalty associated
with the nonfuel economy standards. The required
information would also enable NHTSA to assure
that the manufacturer has used all available means
for complying with the nonfuel economy standards
so as to minimize or avoid entirely any reduction of
the fuel economy of its passenger automobiles. If a
manufacturer sustains its burden of demonstrating
that a reduction is warranted under the statute
and the regulations, the fuel economy standard ap-
plicable to that manufacturer for the affected
model year is reduced in accordance with Section
502(d) of the Act.
A more detailed description of this rule and
related statutory requirements can be foimd in the
Notice of Proposed Rulemaking published in 41
F.R. 46878 on October 26, 1976. ;,
II. Principal Changes In the Rule
As a result of the public comments and NHTSA's
further analysis, several changes were made to the
rule as proposed. Under the final rule, NHTSA will
grant confidential treatment to any portion of a
reduction petition only in the most exceptional cir-
cumstances. Based on comments expressly solic-
ited in the NPRM, the procedure for calculating a
reduction was revised to take into account the
possible interaction of efforts to comply with more
than one category of Federal standards. In addi-
tion, the format for submitting information on
each of a petitioner's vehicle configurations was
revised to make data submission less biu-densome.
The final rule revises the methodology for ad-
justing a petitioner's production mix when none of
the petitioner's passenger automobiles has a fuel
economy rating that equals or exceeds the fuel
economy standard. Also, several revisions to the
proposed procedures for holding hearings on peti-
tions were adopted. Each of these changes, as well
as requested changes that were not adopted, are
discussed in greater detail below.
III. Comments Received and the Final
Version of the Regulation
A. Required Contents of Petitions
Several commenters raised questions with
respect to the quantity of data and level of detail
required in petitions. The NPRM suggested that
the submission of particular items of data and in-
PART 527-PRE-2
formation would not be required, but that the peti-
tioner would be required to make various specified
showings by whatever means it deemed best. If the
means chosen by a manufacturer were inadequate,
its petition would be denied. The Administrator
retained the authority to require additional
supporting information at any time prior to a final
decision, however, and to suspend processing of
the petition until such information was submitted.
Ford Motor Co., in its comment on the NPRM,
argues that NHTSA should not refuse to consider a
petition on the basis of inadequacy "unless the
petition on its face fails to present any information
with respect to each of the items required under
the applicable regulations." This argument rests
on Ford's reading of "International Harvester v.
Ruckelshaus," 478 F.2d 615 (D.C. Cir. 1973).
However, the portion of that opinion which Ford
cites actually states that denial of a petition on the
grounds of incompleteness is improper where the
petitioner came forward "with all the data there
was to be had, and the Administrator did not ask
for more." 478 F.2d at 642. Therefore, NHTSA
reasserts its right to request additional relevant in-
formation where such information either presently
exists or can be generated and made avaOable, and
to refuse to further consider petitions which a peti-
tioner fails to supplement as required. Failure to
provide such information constitutes a failure to
satisfy the burden of persuasion in the proceeding.
Most of the automobile manufacturers which
responded to the NPRM cautioned NHTSA on the
potentially burdensome impact of the data submis-
sion requirements, particularly with respect to the
requirement for the submission of detailed infor-
mation on the technology used in each vehicle con-
figuration (as defined by EPA in 40 CFR 600.002-
77) of the petitioner's passenger automobiles. It is
NHTSA' s intent to minimize the data submission
burden on petitioners, consistent with our need for
detailed information in order to calculate reduc-
tions. However, the EPA average fuel economy
calculation procedure, which is also applicable to
our reduction calculations, requires fuel economy
values for most large-selling vehicle configura-
tions. Each data point in the average fuel economy
calculation may affect the reduction calculation
and must therefore be reviewed by NHTSA in our
analysis of petitions for reduction. To reduce this
burden, the regulations permit the incorporation
by reference of material contained elsewhere in the
petition. For example, a petitioner could first list
all technology which is used throughout its entire
product line, then list additional technology which
is common to an individual car line but which dif-
fers from other car lines, and so on with similar
listings for each model type within that car line,
each base level, and finally each configuration.
This approach should reduce the amount of
duplication involved in presenting the required in-
formation.
Chrysler Corporation suggested two additional
methods for reducing this burden. First, it sug-
gests that petitioners should be permitted to sub-
mit copies of reports containing quarterly vehicle
production data which are submitted to EPA pur-
suant to 40 CFR 86.077-36 and 86.078-37 in order
to satisfy the need for information on its past pro-
duction mix and totals. Second, it suggests that the
requirement that petitions continually be updated
as new information becomes available should be
revised to permit periodic updates. Both sugges-
tions have merit. To the extent that reports re-
quired to be submitted to EPA or to any other
agency present the information required under
this regulation in a straightforward manner, not
requiring extensive culling of useful information
from surrounding material irrelevant to a section
502(d) proceeding, copies of those reports may be
submitted. The EPA reports cited by Chrysler may
satisfy the product mix submission requirements.
With respect to the question of updating petitions,
Chrysler correctly points out that much of the re-
quired data, such as projected production mix and
total, will be in a state of flux at the time the
manufacturer submits its petition. The regulation
has, therefore, been changed to require the submis-
sion of revised information within 30 days after the
revision. This permits petitioners to submit new in-
formation either as it becomes available or to sub-
mit monthly updates including more than one
change. Allowing more than 30 days for submis-
sion of updated information (Chrysler suggested
90 days) would prejudice NHTSA's ability to
evaluate petitions quickly and accurately.
In contrast to the above comments, the Center
for Auto Safety argues that the data required to be
submitted under the proposed regulations is inade-
quate to evaluate petitions. That organization sug-
gests requiring the submission of additional infor-
mation similar to that required in EPA emission
standard suspension proceedings, principally in-
PART 527-PRE-3
volving the manufacturer's research and develop-
ment program resources and its efforts to develop
alternative technology. NHTSA has concluded
that it would be inappropriate to routinely require
the submission of all of this information as part of
every petition for a reduction. However, to the ex-
tent that this type of information is relevant to a
particular reduction proceeding, it is expected that
it would normally be submitted to NHTSA as part
of the manufacturer's petition for a reduction.
Much of the suggested information seems more
relevant to an evaluation of a manufacturer's max-
imum feasible fuel economy improvements in a
standard-setting proceeding than to a reduction
proceeding. Compliance with applicable fuel
economy standards is not a prerequisite to qualify-
ing for a reduction. Both manufacturers which
greatly exceed and manufacturers which fail to
meet the fuel economy standards may still qualify
for a reduction if they can demonstrate that their
fuel economy suffered as a result of their efforts to
comply with nonfuel economy standards, not-
withstanding the use of a "reasonably selected
technology." For the purpose of submitting a peti-
tion, it is not even necessary for a manufacturer to
actually have used reasonably selected technology
in its vehicles, since a petition must be granted if a
fuel economy penalty would have resulted had the
petitioner used such a technology. See section
502(d) (2) (B) (ii) of the Act.
B. Reasonably Selected Technology
A difference of opinion in the comments arose
with respect to the determination of whether a par-
ticular technology is "reasonably selected." Ford
argues that this should be an individualized deter-
mination, with the reasonableness of a given
technology depending on the particular manufac-
turer's circumstances. On the other hand, the
Coimcil on Wage and Price Stability contends that
the regulations would have an anticompetitive ef-
fect unless the same criteria were applied to all
technological assessments for all manufacturers.
In the Council's view, the regulation should not
tolerate the use of less energy efficient technology
by financially weaker manufacturers, since to do so
would reward inefficiencies in management, pro-
duction, or marketing which a competitive market
would penalize. Although recognizing merit in the
Council's argument, NHTSA cannot contravene
the clear Congressional intent that an individual-
ized evaluation be performed. Section 502(d) of
House bill H.R. 7014, the direct precursor to the
reduction provisions in section 502(d) of the Act,
required that "emission standards penalties" be
calculated on the basis of "all passenger automo-
biles to be manufactured in a model year," not
limiting consideration to a particular manufac-
turer's fleet. The House Report on H.R. 7014 (H.
Rep. No. 94-340, 94th Cong., 1st Sess. 90 (1975))
states that the determination of an emission stand-
ards penalty should be on "an industry-wide basis,
rather than a manufacturer-by-manufacturer
basis." However, the version of that provision
which came out of the Conference Committee con-
tained significantly different language. Under the
conference substitute, reductions are to be based
on "the reduction in a manufacturer's average fuel
economy in a model year." (Emphasis added.) Sec-
tion 502(d) of the Act is replete with references to
the petitioning manufacturer's unique cir-
cumstances. For example, in evaluating various
technological options to determine whether the
petitioner applied a reasonably selected
technology, the Administration must, under the
Act, consider the manufacturer's cost and lead-
time requirements. Also, only fuel economy values
for the petitioning manufacturer are to be con-
sidered in calculating a reduction. Therefore, the
Council's position cannot be accepted. It should be
noted, however, that beyond 1980, fuel economy
standards will be the same for all manufacturers,
and any anticompetitive pressures generated by
these procedures will no longer exist.
The Council also suggests that a "cost-
effectiveness" analysis be performed when
evaluating various technological options. The Act
requires that NHTSA evaluate the additional costs
and fuel savings associated with these options. It is
NHTSA' s intent to compare the costs of techno-
logical improvements with the value of their
associated fuel economy benefits. This would be ac-
complished by placing a dollar value on the
gasoline saved. As noted by the Council, it may be
appropriate to assume a number of different
gasoline prices in conducting this analysis, since
the present pimip price cannot be expected to
reflect the average pump price prevailing over the
lifetime of the vehicles produced in the affected
model years, nor does it reflect the "social cost" of
gasoline. The results of these analyses would be
factors considered by the Administration in deter-
PART 527-PRE-4
mining whether a particular technology is
"reasonably selected."
C. Adjustment and Selection of
Production Mix
In certain instances, a petitioner's projected pro-
duction mix for the affected model year would not
be used in calculating reductions. This would occur
whenever the petitioner's average fuel economy at
the projected mix failed to meet the standard for
that model year, even if its vehicles were modified
to meet 1975-level nonfuel economy standards. In
such cases, the petitioner's projected production
mix would be adjusted according to the procedure
set forth in section 527.11 of the regulations.
Ford notes that the use of this slightly arbitrary
adjustment procedure may result in the use, for
calculation purposes, of a production mix which
would have been infeasible for the manufacturer to
implement. However, NHTSA remains convinced
that the proposed adjustment procedure is gener-
ally appropriate. Section 502(d) (3) (E) of the Act
requires the use in reduction calculation of a pro-
duction mix which would have resulted in com-
pliance with fuel economy standards. An adjusted
mix is used only if the manufacturer would fail to
meet the fuel economy standards with its planned
production mix, even if the manufacturer's
vehicles were designed to meet 1975 nonfuel
economy standards in all four categories. If a mix
existed which was feasible for the manufacturer
and which would have resulted in meeting the fuel
economy standard, the manufacturer presumably
would have used it rather than risk the substantial
civil penalties associated with noncompliance. Fur-
thermore, if no adjustment methodology were
specified in advance, petitioners would have an in-
centive to postulate increased production of those
vehicle configurations with a large nonfuel
economy standard-related gas mileage penalty. It
was deemed necessary, therefore, to use a uniform
adjustment methodology. In most instances, the
methodology adopted results in reasonable types
of adjustments which a manufacturer might well
decide to employ in order to comply with the fuel
economy standards.
The Center for Auto Safety objected to the ad-
justment procedure used when no mix of a peti-
tioner's automobiles would meet the applicable fuel
economy standard. This situation would arise if the
petitioner did not manufacture even a single vehi-
cle configuration whose fuel economy met or ex-
ceeded the standard. Under the proposal, such a
petitioner would use its projected mix in
calculating the reduction, even though that mix
failed to satisfy the requirements of section
502(d) (3) (E). The Center recommends using that
mix which would come closest to meeting the
standard, to wit, all vehicles produced being of that
configuration with the highest fuel economy. This
suggested revision has been incorporated in the
final rule. Since in this situation the section
502(d) (3) (E) requirement cannot be met by any
mix vehicles, it is reasonable to come as close as
possible to complying with that requirement,
which the Center's approach does. As a practical
matter, however, it should be noted that it is ex-
tremely unlikely that this provision will ever apply
to a petitioner. NHTSA is aware of no vehicle
manufacturer subject to fuel economy standards
which would not qualify for a low-volume exemp-
tion under section 502(c) of the Act and which fails
to manufacture at least one vehicle configuration
whose fuel economy equals or exceeds even the
most stringent standard applicable in the 1978-80
period, the 1980 standard of 20 mpg.
Ford also argues that in those instances where a
petitioner can demonstrate that its production mix
would differ from that projected if 1975-level non-
fuel economy standards remained in effect, it
should use that revised mix in its set 2 calculation.
However, as discussed in the preamble to the
NPRM at 41 F.R. 46882, section 502(d) (3) (E) of
the Act requires the use of the same production
mix for set 1 and set 2 passenger automobiles.
Ford did not specifically dispute this statutory con-
struction in its comment. Therefore, the regula-
tions continue to require the use of a single produc-
tion mix.
D. Fuel Economy Reduction
Calculation Procedures
The most fundamental issue raised with respect
to calculation procedures involves the use of
analytical methods as an alternative to fuel
economy tests in petitions. The notice of proposed
rulemaking permitted the use of such methods.
General Motors Corp. and Ford argued that such
analyses are appropriate and should be permitted.
Chrysler, on the other hand, argued that such
analyses are inappropriate, at least for deriving
the majority of the required fuel economy values.
The need to use alternatives to actual fuel economy
PART 527-PRE-5
testing arises because of three incompatibilities
between EPA's fuel economy testing requirements
and the procedures for processing reduction peti-
tions. First, EPA test results may not be available
for all specified vehicle configurations in time for
inclusion in a manufacturer's petition. Section
502(d) (1) of the Act permits manufacturers to sub-
mit reduction petitions at any time within the
twenty-four months before the beginning of the af-
fected model year. Petitioners would, as a practical
matter, hope to file petitions and obtain a final
decision as early as possible, in order to obtain
maximum leadtime in planning production ad-
justments which may be necessary depending on
the level of the applicable average fuel economy
standard. However, required EPA testing may not
be completed until just prior to the required date
for the manufacturer's preliminary determination
of its fuel economy average, 10 days prior to its
public introduction date. See 40 CFR 600.506-78
(a). Second, the EPA tests can only provide data
with respect to set 1 vehicles, and then only to the
extent that the planned production vehicles employ
a reasonably selected technology. Third, an incom-
patibility arises where the projected production
mix must be adjusted for purposes of calculating a
reduction, and different configurations are re-
quired to be tested under the EPA regulations at
the adjusted mix than would be required under the
projected mix. In each of these cases, EPA test
data may not be available for inclusion in the peti-
tion for reduction.
The maximum use of actual test data is clearly
desirable from the point of view of accuracy in
calculating reductions, and is indeed mandated by
section 502(d) (2) (A). However, it must be
recognized that imposing substantial additional
test requirements upon the manufacturers would
be extremely burdensome, given the cost of con-
ducting those tests (estimated by Ford at a
minimum of $3,000 per test). Therefore, NHTSA
will continue to permit the use of appropriate
analytical methods in limited situations. Whether a
given method is appropriate will be determined in
the context of individual reduction proceedings.
The regulations promulgated herein permit the
submission of petitions based on analytical
methods, subject to certain conditions. First, the
petition must contain all available data from EPA
fuel economy testing and the petitioner's own in-
house testing program which has been completed
by the time the petition is submitted. Second, the
petitioner must schedule its fuel economy testing
so that as much testing is completed by the time of
submission as is reasonably practicable. Third, to
the extent practicable, testing should be scheduled
so that those vehicle configurations with the
largest projected sales are tested first, so that this
important data may be included in the petition.
Fourth, the previously discussed monthly updates
of petitions must include all additional test data
which becomes available. Finally, if set 1 data is
based in whole or significant part upon analytical
methods, the decision made by NHTSA on the peti-
tion will be an "interim decision," subject to revi-
sion if there are significant disparities between
subsequently obtained EPA test data and the
analyses submitted in the petition. See pp. 156-7 of
the Conference Report (S. Rep. No. 94-516, 94th
Cong., 1st Sess. (1975)). To avoid situations in
which the submitted non-test data consistently
overstates the reduction shown through actual test
results, and to take into accoimt variability in test
procedures, the "significance" of disparities be-
tween EPA and analytically generated data will be
determined with reference to the aggregate im-
pact of all disparities. In other words, large dif-
ferences between interim and final fuel economy
values for individual configurations would not re-
quire revision of the interim decision if the dif-
ferences did not reflect systematic bias in the
analytical procedure used by the petitioner.
"Significant disparities" will be defined as those
which, when taken together, would result in a dif-
ference of 0.1 mpg or more in the calculated
average, the level of precision specified in section
503(e) of the Act for fuel economy calculations.
Relatively large but nonsystematic errors would
tend to cancel each other out in the overall calcula-
tion. The approach adopted in this regulation will
permit early processing of petitions and will give
the petitioner the advantage of greater leadtime,
but will place the risk of using inaccurate analytical
methods on the advocate of those methods.
As previously noted, it is unlikely that any test
data for set 2 vehicles would be generated unless
additional tests were run specifically for the pur-
poses of providing data for a reduction petition. In
this regard, Chrysler has suggested conducting
tests on prototype vehicles in each of the peti-
tioner's largest-selling vehicle configurations
which comprise a total of seventy percent of the
PART 527-PRE-6
petitioner's sales, then modifying each vehicle
tested to comply with 1975-level nonfuel economy
standards and retesting the same vehicle.
Presumably, analytical methods could be used to
provide set 2 data for the other configurations
which were not tested, and EPA-approved data
would satisfy other set 1 requirements, although
Chrysler does not specifically suggest this. This ap-
proach would appear to be an entirely appropriate
method for generating data for a petition.
However, NHTSA will not attempt to establish
generally applicable minimum testing re-
quirements for all manufacturers. Manufacturers
may submit petitions in which set 2 data is based
entirely upon analytical methods. However, such
manufacturers should recognize that data based
upon analytical methods will not be given the same
probative weight as actual test data in NHTSA's
review of petitions. As previously noted, particular
types of analytical methods may be found to be
completely inadequate for predicting fuel economy
values, and a petition based on such analyses could
not be granted.
Where it becomes necessary to obtain fuel
economy data for particular vehicle configurations
solely because of required adjustments to the pro-
duction mix, NHTSA would accept appropriate
non-test data for both set 1 and set 2. These con-
figurations would generally not have large sales
fractions, even under the adjusted production mix,
and would not be tested otherwise.
Ford has suggested that, in calculating a reduc-
tion due to emission standards, vehicles subject to
the more stringent California emission standards
should be included in set 1 but excluded from set 2.
This approach would have the effect of lowering
set 1 average fuel economy with respect to that of
set 2, and thereby increasing the reduction
granted, because of the generally lower fuel
economy of vehicles subject to California emission
standards.
Ford bases its argument on its reading of H.R.
7014, which contained the House version of Title
V, and its view of the assumptions on which Con-
gress based the reduction provisions. First, Ford
points out that section 502(d) (3) (C) (i) of the Act
specifies the first step in calculating a Federal
standards fuel economy reduction is determining
"the reduction in a manufacturer's average fuel
economy in a model year which results from the ap-
plication of a category of Federal standards ap-
plicable to such model year, and which would not
have occurred had Federal standards of such
category applicable to model year 1975 remained
the only standards of such category in effect." Sec-
tion 502(d) (3) (D) lists several "categories of
Federal standards," the first of which, emission
standards, specifically includes the more stringent
California standards. Ford concludes from this
that the reference in section 502(d) (3) (C) (i) to the
average fuel economy resulting from the applica-
tion of a "category of Federal standards" for the
affected model year, which corresponds to set 1
fuel economy under the regulations, must include
California vehicles because of the definition of
"category of Federal standards" in section 502(d)
(3)(D).
However, in Ford's view, the reference to
"Federal standards of such category applicable to
model year 1975" in section 502(d) (3) (C) (i), which
corresponds to set 2 fuel economy under the
regulations, is not subject to the same definition,
despite the use of the words "such category" and
"Federal standards." Rather, in Ford's view, the
standards on which set 2 fuel economy is to be
based are to be determined by referring to section
502(d) of H.R. 7014, which bases the calculation of
an emission standards fuel economy penalty on the
1975-level 49-state emission standards. Ford's sec-
ond argument is that reductions must be calculated
in a manner consistent with the procedure Con-
gress used to project the 1980 fuel economy stand-
ard, which was based on the level of fuel economy
achieved at 1975-level 49-state emission standards,
again referring to H.R. 7014 and its legislative
history.
NHTSA is unable to accept this argument. The
language of section 502(d) of the Act is unam-
biguous on its face in this respect. Reductions are
to be calculated on the basis of changes in strin-
gency in a "category of Federal standards," and,
in the case of emission standards, the category was
defined to include the more stringent California
standards. The differences in the language of the
phrases "category of Federal standards" and
"Federal standards of such category" are too
minor to justify giving them completely different
meanings, especially when the latter phrase clearly
refers to the former. If the meaning of a statute is
unambiguous on its face, the generally accepted
rules of statutory construction prohibit reference
to the legislative history to seek a different
meaning.
PART 527-PRE-7
Even assuming arguendo that Ford's reading of
H.R. 7014 is correct, it does not follow that the
Conference Committee necessarily adopted the
House provision in total. Ford argues that the Con-
ference Committee lacked authority to amend the
House version since, under 2 U.S.C. 190c(a), a Con-
ference Committee can amend a provision only
where the House and Senate versions disagree. If
Ford's reading of the House bill is correct, the two
bills must be viewed as being inconsistent. Under
section 504 of S. 1883, baseline fuel economy was
established at the "industrywide average fuel
economy level for model year 1974," which must
be read to include California vehicles. Fuel
economy standards were to be established taking
into account "the impact of other Federal stand-
ards." See § 504(a) (3) of S. 1883. The product of
the Conference Committee would necessarily,
therefore, be viewed as a "germane modification
of subjects in disagreement" between the two bOls.
2 U.S.C. 190c(a).
Furthermore, to the extent that the reduction
procedure and the 1978 fuel economy standards set
forth in H.R. 7014 were drafted with an assumed
baseline of 1975 49-state emission standards in
mind, the manufacturers will not suffer under the
Conference substitute from any increased strin-
gency due to the inclusion of California vehicles.
The Conference substitute decreased each of the
fuel economy standards applicable in model years
1978 to 1980 by 0.5 mile per gallon and reduced the
amount by which the calculated average fuel
economy penalty must be diminished when
calculating the allowable reduction from 1.0 to 0.5
mile per gallon per category of standards.
Ford's approach is also inconsistent with the pur-
pose of section 502(d). If the intent of that provi-
sion is to first measure the impact on fuel economy
of affected model year nonfuel economy standards
with respect to 1975-level standards and to give
the manufacturers partial credit for that impact,
the Ford approach would overstate the actual fuel
economy penalty experienced. In fact, it is theoret-
ically possible under Ford's approach for a
manufacturer to obtain an emission standards
reduction where affected model year and 1975
emission standards are identical in stringency. The
more stringent California emission standards had
a measurable impact upon average 50-state vehicle
fuel economy in 1975. Congress recognized that
fact in adopting section 502(d), and the final
regulations must also take that fact into account.
Chrysler Corporation stated that the NPRM was
unclear regarding the methodology to be used for
revising the 1978 or 1979 standard for domestic
passenger automobiles with includable captive im-
ports when a manufactiu-er requests the reduction
of the standard as it applies to those vehicles, but
not as it applies to the residual, nonincludable
group of captive imports. Under the reduction
regulations, the manufacturer is to provide for its
captive imports the same type of technological in-
formation that it is required to provide for its
domestically manufactured vehicles. The fuel
economy calculations are to be performed in ac-
cordance with EPA procedures in 40 CFR Part
600. With respect to the treatment of captive im-
ports in model years 1978 and 1979, 40 CFR
600.511-78 restates the requirements of section
503(b) of the Act. Under § 600.511-78, the peti-
tioner separately calculates, using the projected
production mix, the average fuel economy of its
planned imports for the affected model year. Next,
the petitioner divides its planned imports into its
"includable base import volume" and into a
residual group of planned imports. Both groups are
deemed to have the same average fuel economy as
the manufacturer's overall volume of planned im-
ports. In calculating a reduction, as in calculating
an overall fuel economy average for standards
compliance purposes, the "includable" imports are
treated as a single model type with a sales volume
equal to the includable base import volume. That
model type is added to the model types of
domestically manufactured passenger automo-
biles. The residual group is not included in the
calculation. Corresponding technological informa-
tion and fuel economy calculations are required to
be provided for the set 2 vehicles with the technol-
ogy modified to reflect the assumption of
1975-level nonfuel economy standards in those
categories for which a reduction is sought.
The NPRM raised the issue of how to take into
account possible interactions between technology
used by a manufacturer to comply with different
categories of nonfuel economy standards. Such in-
teractive effects might appear if, for example,
compliance with a vehicle damageability standard
required the addition of relatively heavy biunpers
to a vehicle and the additional weight made com-
PART 527-PRE-8
pliance with emission standards more difficult.^
The procedure set forth in the NPRM would have
calculated a reduction by separately assessing the
impacts of the two standards, if reductions for both
damageability and emission standards were re-
quested. The damageability standards reduction
would have been calculated by subtracting the
average fuel economy of the vehicles designed to
comply with all categories of affected model year
standards (set 1) from the average fuel economy of
those vehicles at 1975-level damageability stand-
ards and affected model year standards in all other
categories (set 2), less 0.5 mile per gallon. The 0.5
mile per gallon per category of standards is sub-
tracted as required by section 502(d) (3) (C) of the
Act. See Table 1.
Table 1
Emission
standards
Safety
standards
Noise
standards
Damageability
standards
Setl
AMY'
AMY
AMY
AMY
AMY
AMY
Set 2
... AMY
75 MY
' AMY = affected model year
Similarly, under the procedure in the NPRM, the
reduction attributable to more stringent emission
standards would be calculated by subtracting the
same set 1 fuel economy as in Table 1 from the
average fuel economy of those vehicles designed to
meet 1975-level emissions standards and affected
model year standards in all other categories of
standards, less 0.5 mile per gallon. See Table 2.
Table 2
Emission
standards
Safety
standards
Noise
standards
Damageability
sundards
Set 1
AMY'
AMY
AMY
AMY
AMY
AMY
Set 2
.... 75 MY
AMY
' A MY = affected model year
The total reduction would have been calculated by
summing the two numbers calculated above. This
sum may not reflect the actual fuel economy pen-
alty suffered by the petitioner due to the interac-
' It is also possible that compliance with more stringent stand-
ards in one category may facilitate compliance with more strin-
gent standards in another category. For example, a safety
requirement relating to high-sf)eed crash survivability might re-
quire the use of "soft" vehicle front ends, which reduce vehicle
weight and might, therefore, make compliance with emission
standards easier.
tion problem. This becomes apparent when one
considers that the comparison in Table 1 would
measure not just the damageability standards
penalty, but also an emission standards impact
resulting from the ability of set 2 vehicles to use
less extensive emission controls, due to their
lighter weight. The impact of emission standards
could be partially "double counted" in the above
example.
Ford has suggested an alternative method for
calculating reductions which avoids the interaction
problem by not attempting to apportion the total
fuel economy penalty incurred among the various
categories of standards for which a reduction is
sought. Under Ford's approach, the same set 1
vehicles would be used as above. However, set 2
would include vehicles designed to meet 1975-level
standards in all categories for which a reduction is
sought. In the example above, where reductions
for both emission and damageability standards
were sought, the two sets would be defined as set
forth in Table 3.
Table 3
Emission
standards
Safety
standards
Noise
standards
Damageability
standards
Set 1
AMY '
AMY
AMY
AMY
AMY
AMY
Set 2
. . . . 75 MY
75 MY
' AMY = affected model year
In calculating a reduction, the difference in fuel
economy of the two sets would be calculated, and
0.5 mile per gallon would be subtracted for each
category of standards for which a reduction is
sought. Thus, in the example above, 1.0 mile per
gallon would be subtracted from the fuel economy
difference between the two sets.
The Ford approach greatly reduces the data re-
quirements and simplifies calculations where
reductions for more than one category of stand-
ards are sought. In addition, the Ford procedure is
mathematically equivalent to that specified in the
Act, merely rearranging and reassociating the
terms in the overall summation. Where interac-
tions are present, the Ford procedure measures
the true total impact on fuel economy, while the
procedure specified in the NPRM, as the NPRM
preamble noted, could either overstate or
understate that effect. The fact that the Ford pro-
cedure does not assign a fuel economy penalty to
each of the separate categories of standards is un-
PART 527-PRE-9
important, since the total penalty is the critical
number in adjusting the fuel economy standard.
The only possible inaccuracy in the Ford procedure
would occur if, for example, one of the categories
of standards had an associated fuel economy dif-
ference between the two vehicle sets of less than
0.5 mile per gallon. Under the NPRM approach,
the fact that the difference for category A was less
than 0.5 mOe per gallon would have no effect on
the calculation of the applicable fuel economy
reduction for category B. The only significance of
the fact would be that no applicable fuel economy
reduction would be allowed for category A. Under
the Ford approach, there would be such an effect
since the differences for the two categories are
added together and then 1.0 mile per gallon (0.5
mile per gallon for each category) is subtracted
from the total difference. To the extent that 0.5
mile per gallon was greater than the difference for
category A, it would be subtracted from the poten-
tial reduction obtainable under category B. A peti-
tioner could avoid this penalty, however, by simply
not applying for a reduction in that category.
Although the statute defines separate reductions
for each category of standards, nothing in the
statute requires that these numbers be separately
calculated.
Therefore, the NHTSA has revised the final
regulations to incorporate the Ford proposal. The
regulations no longer provide for the separate
calculation of "applicable fuel economy reduc-
tions" as in § 527.10 of the proposed rule, and cor-
responding revisions have been made in other
sections.
American Motors Corporation raised two issues
relevant to the manner in which reductions are
calculated. First, it suggested that uniform reduc-
tions be promulgated for all manufacturers where
changes in stringency of nonfuel economy stand-
ards occur and where the impact of those changes
is similar for all manufacturers. Although it is not
inconceivable that such a situation could arise,
NHTSA is unaware of any cases of this type, and
does not anticipate promulgating uniform reduc-
tions at this time. In order to grant a reduction
NHTSA must evaluate the technology actually
used by a manufacturer and other technology
which might have been reasonably selected. Both
of these determinations are necessarily individual-
ized, necessarily made in the context of an in-
dividual manufacturer's situation, and the overaO
determination would not, therefore, lend itself to
uniform treatment. See discussion of reasonably
selected technology in section Illb. AMC's second
point was that changes in nonfuel economy test
procedures which affect the stringency of those
standards should be treated the same as changes in
the numerical level of the standards. NHTSA
agrees that where a test procedure change has this
effect, the change should be treated the same as a
revision to the standard for purposes of calculating
a reduction. However, whether particular test pro-
cedure changes will be deemed to have such an ef-
fect must be determined in individual reduction
proceedings, since the precise effect of such
changes may differ for the various automobile
manufacturers. Changes in the emission test pro-
cedures which impact measured fuel economy
values (the emission and city fuel economy test pro-
cedures are the same) for 1978, 1979, or 1980
would be evaluated for comparability under section
503(d) (1) of the Act. Changes in nonfuel economy
test procedures or standards which occur after
1980 would be reflected in possible amendments to
the fuel economy standards, under section 502(f).
Ford raised the issue of whether petitioners
would be permitted to base their analyses on their
need to build vehicles in such a way that the
vehicles will have a high probability of meeting ap-
plicable nonfuel economy standards. Ford main-
tains it must "target" its production process to the
achievement of an effectively more stringent
standard, in order to take into account product
variabOity and, in the case of emissions, perform-
ance deterioration of control technology. To the
extent that a petitioner can demonstrate that its
projected design targeting is reasonable and con-
sistent with past practice, such level may be taken
into account in petitions. However, NHTSA will
carefully scrutinize any purported lower design
targets to assure that assumed safety margins are
reasonable in light of methods available to
manufacturers to reduce these margins without
undue risk and its own past practices. Among
these methods might be retesting failed vehicles,
certifying several versions of individual models in-
tended for sale, and avoiding recertification of a
previous year's vehicles which met a subsequent
year's more stringent nonfuel economy standards.
The Ethyl Corporation argued that all fuel
economy calculations must take into account the
different amounts of energy needed to produce a
PART 527-PRE-lO
gallon of leaded or unleaded gasoline. The need for
unleaded gasoline was generated in part by the
adverse impact of lead additives on some emission
control devices. However, the determination of the
equivalence of various types of automobile fuels is
the responsibility of EPA under section 503(d) (2)
of the Act and it would be improper for NHTSA to
attempt to decide the matter in this proceeding.
E . Hearing Procedures and Processing of
Petitions
Several comments were received with respect to
the question of the proper format for reduction
proceedings. Since some of those comments
resulted from misunderstandings of or ambiguities
in the NPRM, it is worthwhile to restate and
clarify the intended procedures. The proceeding
would commence with the submission of a petition
by a manufacturer. The Administrator would then
evaluate the petition to assure that it meets each of
the requirements of §§ 527.5 through 527.12 of the
regulations. If the petition is deemed to be in-
complete, the Administrator would so notify the
petitioner, specifying the additional material needed.
Once a complete petition is received, it is placed in
a public docket, and a copy of the petition is
transmitted to the Federal agency responsible for
the administration of the category of standards for
which a reduction is sought for that Agency's
evaluation. For example, in the case of a petition
for an emission standards reduction, a copy of the
petition would be sent to the Environmental Pro-
tection Agency. Simultaneously, the Administra-
tor would publish a notice of receipt in the
Federal Register. The notice would state that a
petition had been received, identify the petitioner,
cite the reduction requested and summarize the
petitioner's rationale therefor, state the Adminis-
trator's options for disposition of the petition and
list the criteria to be applied in evaluating the peti-
tion. The notice would also identify the location of
copies of the petition available for public inspection
and solicit comment on the petition. Once com-
ments are received from interested parties and
Federal agencies and evaluated, a proposed deci-
sion or, as appropriate, set of alternative decisions
would be published. In the latter case, the proposal
would set forth reasonable alternative dispositions
of the issues, granting, denying, or denying in part
the reduction. The alternatives could range from
complete denial to complete granting of petitions.
but neither of these extreme positions would be
proposed unless NHTSA concluded that those
levels could be supported by available data and in-
formation and were based on reasonable assump-
tions and judgments. This will permit advocates of
either granting or denying the petition to focus
their comments on attacking the undesirable alter-
native or alternatives and supplementing the data
base for the desired one. The proposal would set
forth the data, analyses, and methodology on
which each alternative disposition is based, and
would request comments from the public. The
notice also establishes a time and place for a public
hearing. Following the hearing, and subsequent
comment period, the entire record for the pro-
ceeding is reviewed and an interim or final decision
is published. An interim decision is subject to read-
justment when EPA test data becomes available,
after an opportunity for public comment on the
readjustment.
EPA's Office of Mobile Source Air Pollution
Control (OMSAPC) and the Center for Auto Safety
have suggested that proceedings held pursuant to
this regulation be patterned after those held in the
past by EPA on the suspension of automotive emis-
sion standards. Under the suggested EPA pro-
cedure, a notice of receipt would be published con-
taining the same information as the notice of
receipt in the NHTSA procedure, plus information
about the required hearing. OMSAPC and the
Center for Auto Safety suggest eliminating the
proposed decision from the NHTSA procedure.
They propose holding the public hearing after the
issuance of the notice of receipt and then pro-
ceeding to a final notice. OMSAPC argues that this
procedure is legally sufficient and superior from a
policy standpoint to the NHTSA procedure.
With respect to the first point, it is true that in-
itial notices which do not provide detailed informa-
tion on every aspect of the final rule adopted are
appropriate in some cases. See, e.g., "Ethyl Corp.
V. EPA," 541 F.2d 1, at 48. However, courts may
be less tolerant of such "general" notices in
rulemaking proceedings which have significant ad-
judicatory aspects. In such cases, the inclusion of a
requirement for opportunity for oral comment in
addition to the usual opportunity for submission of
written comments may evince a Congressional
policy of encouraging greater "give-and-take" in
the rulemaking proceeding, which may in turn re-
quire a more detailed description of the "subjects
PART 527-PRE-ll
and issues involved." See, e.g., "International
Harvester," supra at 632, where the court ex-
presses diffidence with respect to the opportunity
for full public comment provided in the EPA pro-
cedure. Also, the statutory requirements under
which NHTSA proceedings will be held differ in
two respects from those under which EPA oper-
ated. First, no statutory time constraint is
specified for the completion of a reduction pro-
ceeding, as was the case under the Clean Air Act.
The court in "International Harvester" frequently
cited the Clean Air Act "60 day requirement" as a
basis for tolerating certain procedural "short-
cuts." 478 F.2d at 629, 631, 632. Second, unlike
EPA, NHTSA rulemaking, under section 502(d) is
subject to the "substantial evidence test" in any
subsequent judicial review. 15 U.S.C. 2004(a).
Although the courts are still grappling with the
question of the effect of combining informal
rulemaking under 5 U.S.C. 553, normally subject
to the less stringent "arbitrary and capricious"
test of 5 U.S.C. 706(2) (A), with the substantial
evidence test, at least one court has concluded that
such a combination necessitates additional pro-
cedural safeguards to assure the opportunity for a
full dialogue between the agency and interested
parties. "Mobil Oil Corp. v. FPC, " 483 F.2d 1238,
1257-1263 (D.C. Cir. 1973). This may also necessi-
tate the presentation of a more precise statement
of the agency's views at a time prior to the for-
mulation of a final rule. NHTSA does not conclude
from this discussion that a procedure such as
EPA's is necessarily inadequate in the context of
section 502(d), but rather that substantial legal
questions may exist with respect to the appro-
priateness of that procedure.
OMSAPC also argues that its procedures would
avoid shifting the burden of proof in a proceeding
away from the petitioner. However, under the
EPA procedure, once the petitioner makes its
prima facie case, the burden is shifted to anyone,
including the agency, which seeks to apply a dif-
ferent methodology to reach a different result. See
"International Harvester," supra at 643. The only
effect of the proposed decision in the NHTSA pro-
cedure is to clarify where the burden of proof lies
at that time, by either advancing one or more alter-
native methodologies or concurring in the peti-
tioner's.
In addition, NHTSA disagrees with the policy
arguments made by OMSAPC. The original intent
of the regulations has been clarified to require that
the notice of receipt will solicit comments from the
general public. (See letter from Stephen Wood,
Assistant Chief Coimsel, NHTSA, to Eric Stork,
Deputy Assistant Administrator for Mobile Source
Air Pollution Control, EPA, dated November 17,
1976, Docket FE 76-2, No. lA.) Taken together
with our prior statement that the views of other af-
fected Federal agencies would be solicited (41 F.R.
46884) and formal interagency review require-
ments for rulemaking, it appears that OMSAPC's
objections regarding NHTSA taking a position on
a petition prior to receiving any outside input have
been met. Furthermore, it is NHTSA's view that
the use of a proposed decision will achieve a signifi-
cant improvement over the EPA procedure, by
soliciting public comment on not only Agency
methodology (it is not clear from the OMSAPC
comment that they even recommended this, the
"International Harvester" requirement for such
comment notwithstanding), but also on the applica-
tion of that methodology. While the law may not
require such a full opportunity for comment,
NHTSA deems it appropriate to provide more than
the bare minimum which the Administrative Pro-
cedure Act requires. In light of this, NHTSA can-
not conclude that the EPA procedure is clearly
superior to that set forth in this regulation from a
policy standpoint.
With respect to the issues of the desirability of
permitting "two cycles of notice and comment" on
complex matters and making public the agency's
views on matters important to the final rulemaking
at a time prior to the final decision, "in order to
enhance the usefulness of further comments," the
positions adopted in this regulation appear to be
supported by a recent recommendation of the Ad-
ministrative Conference of the United States. See
Recommendation No. 76-3, 1 CFR 305.76-3, also
published in 41 F.R. 29654, July 19, 1976.
There is some merit in the points raised by
OMSAPC and the Center for Auto Safety, in
regard to the likelihood that an agency which pro-
poses a specific rule has a natural tendency to
resist changes to the rule. Efforts to minimize this
acknowledged phenomenon conflict with NHTSA's
need to provide a full opportunity for public com-
ment by clearly detailing the relevant considera-
tions in the proceeding. NHTSA has attempted to
balance these conflicting considerations by pro-
viding in the regulation that the proposed decision
will, when appropriate, contain alternatives which
establish a reasonable range of justifiable reduc-
PART 527-PRE-12
tions, or denial of the petition. Therefore, the pro-
posed procedure, as clarified, has been retained.
Several commenters raised the issue of the need
for NHTSA to act on petitions as expeditiously as
possible. Recognizing the importance of an early
decision to the petitioning manufacturer, NHTSA
will endeavor to complete the entire decision pro-
cess within 180 days from the time a complete peti-
tion is received. If complying with that goal proves
impossible, NHTSA will still make every effort to
expedite the decision, albeit by a later date.
Several changes to the procedures for the public
hearing on petitions were adopted. As suggested
by EPA, individuals other than NHTSA officials
may serve on the hearing panel. In order to em-
phasize the need for complete and accurate presen-
tations at the hearing, all testimony will be made
under oath. In addition, any participant in the pro-
ceeding may petition NHTSA to use its authority
under section 505(b) of the Act to compel the ap-
pearance and testimony at the hearing of any in-
dividual shown to have relevant information
necessary to an informed decision in the pro-
ceeding. The agency may well use that authority
on its own initiative to secure the testimony of
automobile manufacturers and suppliers of
automobile components. Notice of the public hear-
ing will be given through the issuance of a press
release by NHTSA, in addition to a Federal
Register notice, in order to inform the public at
large.
F. Treatment of Confidential
Information
Several commenters discussed the question of
how NHTSA should handle petitioners' requests
for confidential treatment of information included
in petitions for reduction. In such cases, the
public's need to obtain access to the information in
order to make informed comments on the petition
runs counter to the manufacturer's desire to pre-
vent disclosure of information which may be of
some benefit to its competitors. This same conflict
appears in most of NHTSA's rulemaking activities
under Title V of the Act. In recognition of the im-
portance of these issues, NHTSA published a
notice requesting comment on how these requests
for confidential treatment should be handled. 42
F.R. 3240 (January 17, 1977).
After evaluating comments submitted on this
issue in the context of this proceeding and the
January 17 notice, NHTSA deems it appropriate to
alert potential petitioners to the agency's intention
to grant confidential treatment to information sub-
mitted as part of reduction petitions only in excep-
tional circumstances. This approach is taken under
the authority of section 505(d) (1) of the Act which
permits the release of trade secret information
where relevant to any administrative or judicial
proceedings. NHTSA does this for several reasons.
First, Congress has expressed its intent that the
1976-80 fuel economy standards established in sec-
tion 502(a) (1) of the Act should be entitled to a
strong presumption of validity and should be
modified only on a clear showing by a petitioner
and after a broad opportunity for public participa-
tion in the reduction proceeding. Unlike most other
rulemaking under the Motor Vehicle Information
and Cost Savings Act, Congress specified that sec-
tion 502(d) rulemaking would be subject to the
more stringent "substantial evidence" test in any
subsequent judicial review, and that participants in
the rulemaking proceeding would be entitled to
make oral presentations, in addition to the usual
opportunity for written comment. See 15 U.S.C.
2002(g) and 2004(a). In view of the manufacturer-
specific nature of reduction proceedings (see sec-
tion Illb above), the ability of participants in the
proceeding to effectively comment on all relevant
issues would be limited unless they have access to
the entire petition. This is a greater problem in the
context of reduction proceedings than in most
rulemaking proceedings, where industry-wide con-
siderations and long-term capabilities are of
greater relevance. The portions of a petition for
which a petitioner is most likely to request con-
fidential treatment, projected production mix and
technology to be employed or capable of being
employed in the affected model year, will be
critical to an informed analysis of the petition and
are likely to be central issues in NHTSA's final
decision. Second, no manufacturer is required to
submit a reduction petition, so that the potential
release of any confidential information is, in a
sense, voluntary on the part of the manufacturer.
Although manufacturers possess a statutory right
to petition for a reduction, it is not unreasonable
for NHTSA, in exercising its discretionary author-
ity under section 505(d) (1) to promote the goals of
Title V, to require manufacturers to balance their
PART 527-PRE-13
need for a reduction against the potential danger
from release of the contents ojf their petition.
Failure to obtain a reduction is unlikely to have
devastating consequences for a manufacturer. All
manufacturers other than those qualifying for
"low- volume" exemptions under section 502(c) of
the Act are expected to have average fuel
economies either closely approaching or exceeding
the applicable fuel economy standards for model
years 1978-80. Thus, even in the worst case, a
manufacturer which, without a reduction, would
fail by a small margin to meet the standard, could
elect to pay the civil penalty specified in section
508, which, because of the manufacturer's nearly
meeting the standard, would be relatively small on
a per-vehicle basis, compared to the price of the
automobile. On the other hand, such a manufac-
turer could elect to implement some of the tech-
nological improvements which would be necessary
to meet the next year's fuel economy standard in
any case, one year early in order to avoid paying
the penalties. Finally, the information submitted in
a petition would become public in a relatively short
time regardless. Petitions must be submitted
within two years of the start of the affected model
year under section 502(d) (1). In most cases, a com-
petitor would not have adequate leadtime to take
advantage of the information contained in the peti-
tion between the time of submission and the start
of the affected model year, when the information
necessarily becomes public through the sale of the
affected model year vehicles. For these reasons.
NHTSA will grant confidential treatment to infor-
mation contained in reduction petitions only in
exceptional, and presently unforeseen, cir-
cumstances.
IV. Economic and Environmental Impacts
The economic and environmental impacts of
these regulations were evaluated and found to be
minimal. The granting of denial of reductions
based on these regulations may have significant
impacts but those impacts will be individually
evaluated in the context of individual reduction
proceedings. No adverse environmental impacts
were found to be associated with this essentially
procedural regulation itself. The only economic im-
pacts would involve staff time spent in preparing
and evaluating petitions and perhaps a small
number of additional fuel economy tests. The addi-
tional costs attributable to the rule are expected to
be under three million dollars total for both the in-
dustry and the government, based on the submis-
sion of four petitions.
The program official and lawyer principally
responsible for the development of this regulation
are Ralph J. Hitchcock and Roger C. Fairchild,
respectively.
Issued on November 4, 1977.
Joan Claybrook
Administrator
42 F.R. 58938
November 14, 1977
PART 527-PRE-14
PART 527— REDUCTION OF PASSENGER AUTOMOBILE AVERAGE
FUEL ECONOMY STANDARDS
(Docket No. FE 76-2; Notice 2)
Sec.
527.1 Scope and purpose.
527.2 Applicability.
527.3 Definitions.
527.4 Eligibility.
527.5 Requirements for petition.
527.6 Technology.
527.7 Fuel economy.
527.8 Average fuel economy.
527.9 Federal standards fuel economy reduction.
527.10 Projected production total and mix.
527.11 Production mix for determining Federal
standards fuel economy reductions.
527.12 Calculation of fuel economy values and
average fuel economy.
527.13 Supplementary Information requirements.
527.14 Processing of petitions.
527.15 Public hearing.
527.16 Public Inspection of Information.
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 authority
at 41 FR 25015, June 22, 1976.
§ 527.1 Scope and purpose.
This part estabUshes procedures for the sub-
mission and disposition of petitions filed by
manufacturers of passenger automobiles to obtain
reduction of the applicable average fuel economy
standard for model year 1978, 1979, or 1980. These
reductions are intended to offset any loss of fuel
economy due to the application in that year to
passenger automobiles of Federal emission, safety,
noise, or damageability standards more stringent
ban those applicable in model year 1975. This part
also establishes procedures for holding public hear-
ings on those petitions.
§ 527.2 Applicability.
This part applies to manufacturers of passenger
automobiles.
§ 527.3 Definitions.
(a) Statutory terms. (1) The terms "Federal
standards fuel economy reduction," "fuel,"
"manufacturer," "model year," and "reasonably
selected technology" are used as defined in section
501 or 502 of the Act.
(2) The terms "average fuel economy," "fuel
economy," and "model type" are used in 40 CFR
600.002-77.
(3) The terms "automobile" and "passenger
automobile" are used as defined in section 501 of
the Act and in accordance with the determina-
tions in 49 CFR Part 523.
(b) Other terms. (1) The terms "base level" and
"vehicle configuration" are used as defined in 40
CFR 600.002-77.
(2) As used in this part, unless otherwise re-
quired by the context—
"Act" means the Motor Vehicle Information
and Cost Savings Act (Pub. L. 92-513), as
amended by the Energy Policy and Conservation
Act (Pub. L. 94-163).
"Administration" means the National
Highway Traffic Safety Administration.
"Affected model year" means the model year
for which a reduction of an average fuel economy
standard is requested under this part.
"Category of Federal standards" means any of
the following categories of motor vehicle stand-
ards and associated measurement procedures—
(1) Emissions standards issued imder section
202 of the Clean Air Act (42 U.S.C. 1857f-l), and
emissions standards applicable by reasons of sec-
tion 209(b) of that Act (42 U.S.C. 1857f-6a(b));
PART 527-1
Traffic and Motor Vehicle Safety Act of 1966 (15
U.S.C. 1381 et seq.);
(3) Noise emission standards issued under sec-
tion 6 of the Noise Control Act of 1972 (42 U.S.C.
4905); or
(4) Property loss reduction standards issued
under title I of the Act (15 U.S.C. 1911 et seq.).
"EPA Administrator" means the Administrator
of the Environmental Protection Agency.
"Modifications" means changes by a petitioner
in the technology of a passenger automobUe con-
sistent with the need of the Nation to improve
automobile fuel economy and with the energy sav-
ings, economic costs, and leadtime requirements
associated with the technologies that would have
been practicably available to the petitioner given
the applicability of the model year 1975 standards
in the category or categories of Federal standard
for which a reduction is sought.
"NHTSA Administrator" means the Adminis-
trator of the National Highway Traffic Safety
Administration.
"Production mix" means the number of
passenger automobiles, and the percentage of the
petitioner's annual total production of passenger
automobiles, in each vehicle configuration which a
petitioner plans to produce in a specified model
year.
"Set 1" means the set of passenger automobiles
which a petitioner will produce in the affected
model year.
"Set 2" means the set of passenger automobiles
which a petitioner would have produced in the af-
fected model year had the model year 1975 stand-
ards in all categories of Federal standards for
which a Federal standards fuel economy reduction
is sought been the only standards in those
categories.
§ 527.4 Eligibility.
Any manufacturer of passenger automobiles
may petition the NHTSA Administrator under this
part for a reduction of the average fuel economy
standard applicable to passenger automobiles for
model year 1978, 1979, or 1980.
Each petition filed under this part must:
(a) Request the reduction of an average fuel
economy standard for not more than one model
year;
(b) Identify the affected model year;
(c) Be submitted within the 24-month period im-
mediately preceding the beginning of the affected
model year;
(d) Be submitted in twenty copies to: Adminis-
trator, National Highway Traffic Safety Adminis-
tration, Washington, D.C. 20590;
(e) Be written in the English language;
(f) State the full name, address, and title of the
official responsible for the preparation of the peti-
tion; and
(g) Set forth in full the data, views, and
arguments of the petitioner supporting the
Federal standards fuel economy reduction re-
quested in its petition, including the information
and data specified in §§ 527.6 through 527.12 and
the calculations and analyses used to develop the
information and data. No documents may be incor-
porated by reference in a petition unless the
documents are submitted with the petition.
§ 527.6 Technology.
(a) The petitioner shall submit the following in-
formation as part of its petition—
(1) Set 1 technology. For each vehicle con-
figuration specified in 40 CFR 600.506(a) (2) (iii)
of the petitioner's passenger automobiles to be
produced in the affected model year, the infor-
mation specified in paragraph (a) (1) (i) and (ii) of
this section:
(i) A description of the technology that is in-
corporated in the vehicle configuration and
that either relates to the petitioner's efforts to
comply with any category of Federal stand-
ards or affects the fuel economy of the vehicle
configuration;
(ii) A description of any alternative or addi-
tional technology that was practicably avail-
able to the petitioner for incorporation in the
vehicle configuration and the use of which
would have enabled that vehicle configuration
to achieve higher fuel economy and would have
resulted in a smaller Federal standard fuel
economy reduction than the technology
described under paragraph (a) (1) (i) of this
region; and
PART 527-2
(iii) For each item of alternative technology
described under paragraph (a) (1) (ii) of this
section, a statement of the reasons for not in-
corporating the item, including a comparison
of the fuel savings, economic costs and lead-
time requirements of that item and of the
technology that was incorporated in the vehi-
cle configuration.
(2) Set 2 technology. A description of the
modifications that the petitioner would have
made to each vehicle configuration specified in
40 CFR 600.500(a) (2) (iii) had the model year
1975 standards in all categories of Federal stand-
£irds for which a Federal standards fuel economy
reduction is sought been the only standards in
those categories for the affected model year.
§ 527.7 Fuel economy of vehicle configurations and
model types.
The petitioner shall submit a fuel economy value
for each vehicle configuration specified in 40 CFR
600.506(a) (2) (iii) and for each model type of the
petitioner's set 1 and set 2 passenger automobiles.
§ 527.8 Average fuel economy.
The petitioner shall submit the average fuel
economy determined in accordance with
§ 527.12(c) of the petitioner's set 1 and set 2
passenger automobiles.
§ 527.9 Federal standards fuel economy reduction.
Federal standards fuel economy reductions shall
be calculated as follows:
(a) Subtract—
(1) Set 1 fuel economy determined under
S 527.8 from
(2) Set 2 fuel economy determined under
$ 527.8; and
(b) Subtract 0.5 miles per gallon from the result
obtained under paragraph (a) of this section for
each category of Federal standards for which a
Federal standards fuel economy reduction is
sought.
§ 527.10 Projected production total and mix.
(a) The petitioner shall submit its projections,
based on the average fuel economy standard for
passenger automobiles as specified in the Act for
the affected model year, of its total production and
production mix of all model types of its passenger
automobiles for the affected model year, and all
vehicle config^ations within each of those model
types, and information demonstrating that those
projections are reasonable. The information shall
include information showing that those projections
are consistent with the petitioner's mixes of
passenger automobiles produced or expected to be
produced in each model year from model year 1975
through the model year immediately preceding the
affected model year, its passenger automobile pro-
duction capacity for the affected model year, its ef-
forts to comply with that average fuel economy
standard, and the anticipated consumer demand
for passenger automobiles during that model year.
§527.11 Production mix for determining Federal
standards fuel economy reductions.
The production mix to be used for calculating
Federal standards fuel economy reductions shall
be the mix or mixes specified in paragraph (a), (b),
or (c) of this section, as appropriate.
(a) (1) The production mix to be used shall be the
mix projected imder § 527. 10 if either of the follow-
ing conditions are met:
(i) The average fuel economy determined in
accordance with § 527.12(c) of the petitioner's
passenger automobiles for the affected model
year, based upon the production mix projected
under § 527.10, equals or exceeds this ap-
plicable average fuel economy standard; or
(ii) The average fuel economy based on the
mix projected under §527.10 of the
petitioner's passenger automobiles to be pro-
duced in the affected model year with the
modifications that the petitioner would have
made to them had the standards in one or
more categories of Federal standards for
model year 1975 been the only standards in
that category or categories in effect during the
affected model year equals or exceeds the ap-
plicable average fuel economy standard.
(2) If the condition in paragraph (a) (1) (i) of
this section is not met but the condition in
paragraph (a) (1) (ii) of this section is met, the
petitioner shall provide the information specified
in §§ 527.6, 527.7, and 527.8 for the passenger
automobiles described in paragraph (a) (1) (ii).
(b) If the average fuel economy of no mix of
passenger automobiles for the affected model year
as modified under § 527.11(a) (1) (ii) equals or ex-
ceeds the applicable average fuel economy stand-
ard, the production mix to be used shall be that
PART 527-3
mix with production total equal to that total pro-
jected under $ 527.10 and with all vehicles being of
the vehicle configuration with the highest fuel
economy.
(c) The production mix to be used shall be that
mix calculated under this paragraph if none of the
criteria in paragraphs (a) or (b) of this section are
met. For the purposes of adjusting the production
mix pursuant to this paragraph, the following pro-
cedures shall be followed: '
(1) Assume initially that the modified
passenger automobiles specified in paragraph
(a) (1) (ii) of this section are to be produced in the
production total and mix projected under
§ 527.10.
(2) Keeping that total production constant, ad-
just that production mix as follows:
(i) For each model type of those modified
passenger automobiles whose fuel economy is
less than the average fuel economy standard
for passenger automobiles for the affected
model year, decrease the numbers of those
modified passenger automobiles in that model
type and in each vehicle configuration within
that model type by 0.1 percent.
(ii) For each model type of those modified
passenger automobiles whose fuel economy is
equal to or greater than that standard, in-
crease the numbers of those modified
passenger automobiles in that model type and
in each vehicle configuration within that model
type by that percentage which, in conjunction
with the decrease specified in paragraph
(c) (2) (i) of this section, will keep the total pro-
duction constant.
(3) Calculate the average fuel economy of the
production mix as adjusted under paragraph
(c) (2) of this section.
(4Xi) If the average fuel economy calculated
imder paragraph (c) (3) of this section equals or
exceeds the applicable fuel economy standard,
the mix as adjusted under paragraph (c) (2) of
this section shall be used for calculating Federal
standards fuel economy reductions.
(ii) If the average fuel economy calculated
under paragraph (c) (3) of this section is less
than the standard, adjust the projected pro-
duction mix further by repeating the pro-
cedure in paragraphs (c) (2) and (3) of this sec-
tion until the first production mix is reached
whose average fuel economy equals or exceeds
that standard.
§ 527.1 1 Calculation of fuel economy values and
average fuel economy.
For the purposes of this part, fuel economy
values shall be determined as follows:
(a) Determination of vehicle configuration fiiel
economy values. (1) For each vehicle configuration
for which a fuel economy value is required under 40
CFR 600.506(a) (2) (i) through (a) (2) (ui) and for
which a fuel economy value has been determined
and approved under 40 CFR Part 600, the peti-
tioner shall submit that fuel economy value.
(2) For each vehicle configuration for which a
fuel economy value is required under 40 CFR
600.506(a) (2) (iii) and for which an approved
value does not exist, the petitioner 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 procedures or analytical methods. Values
based on actual tests conducted in accordance
with procedures specified in Subpart B of 40
CFR Part 600, shall be entitled to greater pro-
bative weight in NHTSA's evaluation of peti-
tions than values based on analytical methods.
Values to be used in the average fuel economy
calculation in $ 527.8 and based on methods
other than such actual tests will be acceptable to
NHTSA only if the petitioner demonstrates in its
petition that—
(i) The petition contains all data previously
approved by EPA and all relevant fuel
economy test data from the petitioner's in-
house testing program;
(ii) To the maximum extent practicable, all
fuel economy testing required to be conducted
under 40 CFR Part 600, has been scheduled so
that as much testing as possible is completed
prior to the submission of the petition; and
(iii) To the maximum extent practicable,
testing required to be conducted under 40 CFR
Part 600, has been scheduled so that those
vehicle configurations with the largest pro-
jected sales are tested first.
(b) Determination of model type fuel economy
values. For each model type, the petitioner shall
submit a fuel economy value based on the values
determined in accordance with paragraph (a) of
PART 527-4
this section and calculated in the same manner as
model type fuel economy values are calculated for
use under Subpart F of 40 CFR Part 600.
(c) Determination of average fuel economy.
Average fuel economy shall be based upon fuel
economy values calculated under paragraph (b) of
this section for each model type and shall be
calculated in accordance with 40 CFR 600.506, ex-
cept that—
(1) The production mix determined under
S 527.11 shall be used in place of projected sales;
and
(2) Fuel economy values for running changes
implemented and for vehicle configurations
added are required only for those changes or ad-
ditions made before the submission of the peti-
tioner's petition. Data for subsequent running
changes and added vehicle configurations must
be included in reports submitted under
$ 527.13(c).
S 527.13 Supplementary Information requirements.
(a) The petitioner shall provide the NHTSA Ad-
ministrator with any revisions that it makes, after
submitting its petition and before a final decision is
rendered under § 527.14, to the production mix
and total provided under § 527.10. The petitioner
shall submit information demonstrating that the
revisions are reasonable, including the information
described in § 527.10.
(b) For each vehicle configuration of the peti-
tioner's passenger automobiles to be produced in
the affected model year for which a fuel economy
value is generated by the petitioner's in-house
testing program or approved by the EPA Ad-
ministrator under 40 CFR 600.506-78 after the
submission of the petition and before a final deci-
sion is rendered under § 527.14, the petitioner
shaU provide the NHTSA Administrator with that
value and a revised fuel economy value for that
vehicle configuration as modified under
$ 527.6(a) (2).
(c) All revisions required to be submitted under
5 527.13(a) or (b) shall be submitted within thirty
days of their availability to the petitioner. The peti-
tioner shall show the effect on the petition of all
revisions submitted.
1 527.14 Processing of petitions.
(a) On receipt of a petition, the petition is
evaluated for completeness. If a petition is found
not to contain the information required by this
part, the petitioner is informed about the areas of
insufficiency and advised that the petition will not
receive further consideration until the necessary
information is submitted.
(b) The NHTSA Administrator may request the
petitioner to provide relevant information in addi-
tion to that required by this part: Provided, That
such informaton either presently exists or can be
obtained by the petitioner without undue hardship.
(c)(1) After the NHTSA Administrator con-
cludes that a petition contains all the information
required under this part, a notice of receipt of the
petition is published in the Federal Register. The
notice of receipt provides the following informa-
tion:
(i) That a petition has been received;
(ii) The petitioner's identity;
(iii) The reduction requested and a brief
summary of the petitioner's rationale therefor;
(iv) NHTSA's options for disposition of the
petition;
(v) The criteria to be applied in evaluating
the petition;
(vi) The location of copies of the petition
available for public inspection; and
(vii) An invitation of comments from the
public and a deadline for submission of those
comments.
(2) At the same time the notice of receipt is
published, a copy of the petition is sent to the
Federal agency responsible for administering
the category of standards for which the Federal
standards fuel economy reduction is sought and
the comments of that agency are invited.
(d) The NHTSA Administrator requests the
EPA Administrator to provide him with fuel
economy values as they are approved by the EPA
for the petitioner's passenger automobiles to be
produced in the affected model year. These values
replace the corresponding unapproved values in all
calculations of average fuel economies.
(e) After all comments are received and
evaluated, the NHTSA Administrator publishes a
proposed decision or set of reasonable alternative
decisions in the Federal Register. The notice
specifies the reasons for each alternative, solicits
written comment on the proposal, and establishes
a date and place for a public hearing.
PART 527-5
(f) After the conclusion of the pubhc comment
period and hearing specified in paragraph (e) of
this section, the NHTSA Administrator pubHshes a
final decision in the Federal Register. The final
decision is based upon the petition, written and
oral comments, and other available information.
The final decision sets forth the grant or denial of
the petition in accordance with section 502(d) (2) of
the Act and the reasons for the decision. To the ex-
tent practicable, a final decision will be rendered
within 180 days of receipt of a complete petition.
(g) If fuel economy values approved by the EPA
Administrator cannot be obtained by the NHTSA
Administrator for most model types of the peti-
tioner's passenger automobiles to be produced in
the affected model year, the NHTSA Administra-
tor may rely on fuel economy values submitted pur-
suant to § 527.12(a)(2) and issue the notice
described in paragraph (f) of this section as an
interim determination. The notice, which is
published in the Federal Register, contains the in-
terim determination and the findings and analysis
upon which such determination is based. The in-
terim determination becomes final unless the
NHTSA Administrator determines, after notice
and opportunity for written and oral comment in
accordance with this section, that significant
disparities exist between the fuel economy values
upon which the interim determination was based
and fuel economy values subsequently approved by
the EPA Administrator or submitted by the peti-
tioner under § 527.13(b). Notice of the final deter-
mination with the adjusted reduction and of the
reasons therefor is published in the Federal
Register. For the purposes of this section,
disparities between approved and unapproved data
are deemed significant if, when all such disparities
are taken together, the total average fuel economy
calculate pursuant to § 527.8 would differ by 0.1
mile per gallon or more.
§527.15 Public hearing.
(a) Each hearing under $ 527.14(e) is a
legislative type hearing intended to provide in-
terested persons with an opportunity to state their
views or arguments, or to provide pertinent infor-
mation concerning the proposed reduction.
(b) (1) The NHTSA Administrator appoints one
or more employees of the Administration to serve
on the hearing panel and designates one of those
employees to be the presiding official. Other
Federal employees may be invited to serve on the
panel as well.
(2) The presiding official may:
(i) Limit the length of oral presentations;
(ii) Exclude irrelevant or redundant
material; and
(iii) Direct that corroborative material be
submitted in writing rather than presented
orally.
(c) Any person desiring to make an oral state-
ment at the hearing should file a notice of such in-
tention and, if practicable, five copies of his pro-
posed statement with the NHTSA Administrator
at least ten days prior to the hearing.
(d) (1) The NHTSA Administrator requires
representatives of the petitioner able to address all
matters raised in the petition to attend the hear-
ing.
(2) The NHTSA Administrator may, on his
own motion or at the request of a hearing partici-
pant, require any person who submits written
comments to the NHTSA Administrator on the
proposed reduction before the hearing or who
has relevant information necessary to an in-
formed decision in the proceeding to attend the
hearing at any time before its conclusion.
(3) The Administrator requires any person
who, under paragraph (d) (1) or (2) of this section
attends the hearing, to respond to questions
posed to him under paragraph (e) of this section.
(4) All testimony at the hearing is made under
oath.
(e) Any individual appointed under paragraph
(b) of this section may, on his own initiative or at
the request of any interested person attending the
hearing, propound questions to—
(1) Any person subject to paragraph (d) of this
section.
(2) Any person who makes an oral presenta-
tion at the hearing.
(f) Interested persons attending the hearing
may submit to the panel written questions to be
propounded to persons identified in paragraph (e)
of this section. Questions for a witness other than
those identified in paragraph (d) (1) of this section
may not be submitted to the panel after the com-
pletion of testimony by that witness.
t
PART 527-6
(g) A verbatim transcript of the proceeding is
made and copies are available from the reporter at
the expense of any person requesting them.
§ 527.16 Public Inspection of Information.
Any person 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
interested persons, the transcript of the public
hearing, and the notices regarding the petition, in
the Docket Section of the Administration. Except
as provided in $ 527.15(g) regarding transcripts of
the public hearings, any person may obtain copies
of the information available for inspection under
this paragraph in accordance with the regulations
of the Office of the Secretary of Transportation (49
CFR Part 7).
[FR Doc. 77-32887 Filed 11-11-77; 8:45 am]
Joan Claybrook
Administrator
42 F.R. 58938
November 14, 1977
$
$
PART 527-7
#
Effective: July 28, 1977
PREAMBLE TO PART 529— MANUFACTURERS OF MULTISTAGE AUTOMOBILES
(Docket No. FE 77-02; Notice 2)
The purpose of this notice is to establish a rule
for determining, in cases where more than one
person is the manufacturer of an automobile,
which person is to be treated as the manufacturer
for purposes of Title V of the Motor Vehicle
Information and Cost Savings Act, as amended
(15 U.S.C. 2001 et seq.), and its implementing
regulations. Section 501(8) of the Act requires
such rule to be issued. In most instances, the
rule makes the incomplete automobile manufac-
turer responsible for meeting the Title V require-
ments, including those relating to automobile
fuel economy standards, fuel economy labeling,
and reporting.
Effective Date : July 28, 1977.
For further information, contact :
Roy Dennison
National Highway Traffic Safety
Administration
Department of Transportation
400 Seventh Street, S.W.,
Washington, D.C. 20590
(202) 755-9384
Supplementary Information :
Section 501(8) of Title V requires the Admin-
istrator of the National Highway Traffic Safety
Administration (NHTSA) to prescribe rules for
determining, in cases where more than one pei-son
is the manufacturer of an automobile, which per-
son is to be treated as the manufacturer of that
automobile and thus responsible for compliance
with the requirements of Title V. The principal
requirements are those for complying with aver-
age fuel economy standards, submitting reports,
and placing fuel economy labels on new auto-
mobiles.
The general outlines of a rule to implement
section 501(8) were first discussed in the notice
of proposed rulemaking (November 26, 1976, 41
FR 52087) on average fuel economy standards
for model year 1979 nonpassenger automobiles.
That notice stated that the agency contemplated
issuing a proposal that would place compliance
responsibilities on incomplete automobile manu-
facturer in most instances. A notice of proposed
rulemaking (NPRM) dealing directly with multi-
stage automobiles was published on February 14,
1977 (42 FR 9040). Consistent with the No-
vember 26 notice, the NPRM proposed that in-
complete automobile manufacturers be made
responsible in most instances for complying with
the Title V requirements. The major exception
to this assignment of responsibility was when a
subsequent manufacturer, i.e., an intermediate or
final-stage manufacturer, altered an automobile
sufficiently to void the results of the fuel economy
testing of the automobile by the incomplete auto-
mobile manufacturer. In such an instance, the
subsequent manufacturer would become partially
or totally responsible for complying with Title V.
A relatively minor exception was provided in
the instance of a final-stage manufacturer that
completed manufacture of a multistage automo-
bile in a model year after the model year in
which the incomplete automobile manufacturer
finished its manufacturing operations on the
automobile and that marketed the automobile as
one manufactured in the latter model year. The
NPRM provided that the final-stage manufac-
turer would assume responsibility for compliance
in this circumstance also. Under either excep-
tion, the assumption of responsibility by the
subsequent manufacturer would permit the in-
complete automobile manufacturer to remove the
automobile from its fleet of automobiles subject
to the fuel economy standards.
Comments on the February 14, 1977 notice
were received from American Motors Corporation
(AMC), Chrysler, Ford, General Motors (GM)
PART 529— PRE 1
Effective: July 28, 1977
and the Automobile Club of Southern California
(Auto Club). All comments have been consid-
ered and the most significant ones are discussed
below.
Major differences hetween the proposed and
■final rules. The most significant differences be-
tween the proposed rule and the final rule estab-
lished by this notice are set forth below :
(1) The manufacturer which attaches the por-
tion of the automobile body containing the wind-
shield and front seat side windows to an
incomplete automobile is made responsible for
affixing the fuel economy label to that automobile.
(2) An incomplete automobile manufacturer
is responsible for submitting a partial semi-
annual report regarding its incomplete automo-
biles even if it ceases to be treated as their
manufacturer for purposes of standards and
labeling compliance. Xo report is required from
intermediate or final-stage manufacturers under
any circumstance.
(3) The final rule does not adopt the proposed
requirement that a final-stage manufacturer
which sells a multistage automobile as one manu-
factured in the model year in which it completed
its manufacturing operations must assume respon-
sibility for complying with Title V with respect
to that automobile if that model year is subse-
quent to the model year in which the incomplete
automobile manufacturer completed its manufac-
turing operations.
Assignment of responsibility. The NPRM as-
signed to incomplete automobile manufacturei's
the responsibility for complying with the require-
ments of Title V and its implementing regula-
tions that affect multistage automobiles. Ford
and Chrysler agreed with this assignment, noting
that the incomplete automobile manufacturer is
the manufacturer of a multistage automobile
if it designs and builds the chassis and power
train components that primarily determine the
fuel economy of the completed automobile. Ford
observed that incomplete automobile manufac-
turers generally have the engineering manpower
and test facilities necessary to perform fuel econ-
omy development and testing, wliile intermediate
and final-stage manufacturers seldom have these
resources. Neither AMC nor GM objected to this
assignment.
Ford and GM also stated that they did not
object to the proposed assignment of responsi-
bility because including their incomplete automo-
biles in their fleets for standards compliance
purposes would have a negligible effect on their
average fuel economy. This was said to be true
even if the fuel economy of their incomplete
automobiles wei-e based upon "worst case" testing.
Ford and Chrysler did, however, limit their
agreement with the proposed assignment of re-
sponsibility to those automobiles which had been
completed by the subsequent manufacturers
within the specifications of the incomplete auto-
mobile manufacturer. Ford and Chrysler urged,
as the agency had proposed, that if an interme-
diate or final-stage manufacturer exceeds the
maximum curb weight or maximum frontal area
specified by the incomplete automobile manufac-
turer, thus invalidating the fuel economy values
determined by the incomplete automobile manu-
facturer, that subsequent manufacturer should
become responsible for that automobile under
Title V.
Compliance with average fuel economy stand-
ards. The NPRM suggested alternative methods
of testing to determine the fuel economy of multi-
stage automobiles. It was noted that the practice
of "worst case" testing, while appropriate for
emissions certification, might not be suited for
use under Title V. For emissions standard en-
forcement purposes, the actual emissions levels
are not too important. "Wliat is important is
whether they exceed the maximum specified in
the emissions standards. However, the actual
tested level of performance is important under
the fuel economy program. The fuel economy
of each model type produced by a manufacturer
is used to calculate whether and to what extent
the average fuel economy of the manufacturer
has fallen below or exceeded the prescribed mini-
mum level of average fuel economy. The amount
of civil penalties and credits against civil penal-
ties are determined by the level of shortfall or
excess, respectively. The NPRM noted that if
an incomplete automobile manufacturer were re-
quired to determine the fuel economy of its fleet
based partially on " worst case" tested incomplete
automobiles, a manufacturer of a substantial
number of those automobiles could be at a dis-
advantage relative to a manufacturer of only
PART 529— PRE 2
Effective: July 28, 1977
single-stage automobiles in trying to comply with
the average fuel economy standards.
The comments suggest that there would be no
such disadvantage. GM said that it preferred
"worst case" testing because that approach mini-
mized GM's testing burden. Ford expressed no
preference, pointing out that the use of "best
case" testing instead of "worst case" testing or
vice versa would make no practical difference in
the resulting average fuel economy. Ford, GM.
and Chrysler all noted that the sale of incomplete
automobiles was such a small proportion of
their total sales that the effect of the incomplete
automobiles on their average fuel economy was
negligible. Ford stated that determining more
representative fuel economies would require ad-
ditional testing. In that company's view, that
additional testing was not justified because of
the insufficient effect on average fuel economj'.
The NPRM also noted that "worst case" test-
ing miglit be inappropriate for determining fuel
economy because the fuel economy value appear-
ing on the label would then be the lowest possible
value for that automobile. That is, the value
would be that for an automobile completed to the
maximum pemiissible curb weight and frontal
area specified by the incomplete automobile
manufacturer. Thus, a final-stage manufacturer
that completes an automobile with a curb weight
and frontal area significantly less than the max-
ima would not be rewarded by a commensurately
higher fuel economy value. Thus, there would
be reduced incentive for a final-stage manufac-
turer to attempt to minimize curb weight and
frontal area. Further, in competing with manu-
facturers of single-stage vehicles having a com-
parable size and function, the final-stage
manufacturer might be at a disadvantage due to
the comparatively low fuel economy that its
automobiles appear to be capable of achieving.
Xo final-stage manufacturer commented on this
or any other portion of the proposed rule.
Ford, GM, and Chrysler opposed additional
testing to determine the fuel economy of multi-
stage automobiles more accurately. They stated
that the cost and burden of additional testing
could cause an incomplete automobile manufac-
turer to eliminate or sharply curtail production
of those automobiles. In response to a question
posed in the NPRM, the costs stated by the
manufacturers for retesting an automobile after
having tested it and then reset the road load
would range from $200 to $400.
Chrysler stated that it believed that the fuel
economy values for multistage automobiles should
represent as accurately as possible the fuel econ-
omy that would result from testing the completed
automobile. For the reasons stated in the im-
mediately preceding paragraph, that company
said that there is no cost-effective way of ac-
curately establishing the fuel economy of com-
pleted multistage automobiles through testing.
However, Chrysler indicated that the cost of con-
ducting additional fuel economy tests should not
prevent developing a best estimate of the fuel
economy that could be achieved by the completed
multistage automobiles. Chrysler suggested a
method that might be used for determining a
best estimate of the fuel economy for those auto-
mobiles.
Under Chrysler's suggested method, the incom-
plete automobile would be tested in its "worst
case" condition. If the curb weight and frontal
area of the completed automobile incorporating
the incomplete automobile are less than the max-
ima specified for the incomplete automobile, then,
according to Chrysler, it should be possible to
estimate mathematically the fuel economy of the
incomplete automobile using the fuel economy
values for the completed automobile and incom-
plete automobile.
Ford and GM responded negatively to the sug-
gestion in the NPRM that a more accurate de-
termination of the fuel economy of multistage
automobiles might be possible through improved
communication between the incomplete and final-
stage manufacturers. These commenters stated
that there was no practicable means by which
they could learn about the final specifications of
the incomplete automobiles that they manufac-
ture. According to these commenters, incomplete
automobiles are sold to more than 1,000 different
intermediate and final-stage manufacturers and
converted into as many as 25 different types of
automobiles, with the final-stage manufacturer
having substantial latitude regarding body style
and shape and options.
All of the above comments regarding methods
for developing fuel economy values have been
referred to the Environmental Protection Agency
PART 529— PRE 3
Effective: July 28, 1977
(EPA). The EPA has the authority under sec-
tion 503 of Title V for specifying tlie procedures
for determining fuel economy.
Com.'plian.ce with laheUng requirements. Chrys-
ler, Ford, and GM recommended that the fuel
economy label values for multistage automobiles
be derived from the corresponding completed,
single-stage automobiles manufactured by the in-
complete automobile manufacturer. This com-
ment, like the other conunents on methods for
developing fuel economy values, has been referred
to EPA for consideration.
Chrysler, Ford, and GM also commented that
they were presently complying with the labeling
requirements in the same manner as for single-
stage automobiles. Ford noted that most fuel
economy labels for incomplete automobiles were
attached to the windshields or side windows. For
incomplete automobiles sold with no body, that
company recommended that the labels be enclosed
with the emissions certification and safety com-
pliance information furnished by the incomplete
automobile manufacturer to subsequent manufac-
turers. The NHTSA agrees with this recom-
mendation. The rule has been revised to provide
that while the incomplete automobile manufac-
turer would be responsible for preparing the fuel
economy label for those incomplete automobiles,
the responsibility for affixing the label would be
placed on the manufacturer that adds the body
to the automobile.
Ford commented that the XPRM did not com-
pletely and appropriately assign responsibility
for the fuel economy labels remaining affixed to
the multi-stage automobiles. That company
stated that when the incomplete automobile
manufacturer affixes the label to an incomplete
automobile, all subsequent manufacturers of the
automobile must assume responsibility and be
held accountable for maintaining the label. The
NHTSA agrees that there was incomplete as-
signment of this responsibility. The rule has
been revised to ensure an unbroken chain of
accountability for the fuel economy labels' re-
maining attached. If a manufacturer receives
an incomplete automobile that has the portion of
the body including the windshield and front seat
side windows and therefore should be labeled,
but does not have a fuel economy label, the
manufacturer is required to attach a label identi-
cal to the one that should be on the automobile.
The document containing the curb weight and
frontal area maxima and the addenda, if any,
to that document will identifj- the previous man-
ufacturer of that automobile which should have
prepared the missing label. Similarly, if a fuel
economy label is removed from an incomplete
automobile while it is in the possession of one of
its manufacturers, that manufacturer must re-
attach that label or obtain an identical one from
the manufacturer which prepared the removed
label. A manufacturer is not required to replace
a label that is removed in the circumstances of
the immediately preceding sentence if the manu-
factui'er has exceeded one of the maxima and
must prepare a new label with new fuel economy
values.
CoTnpliance ivith reporting requirements. The
NPEM assigned reporting responsibilities in the
same general manner as standards compliance
and labeling responsibilities, but stated that the
manner of assigning reporting responsibilities
would be addressed in greater detail in a subse-
quent notice of proposed nilemaking dealing
solely with reporting requirements. That subse-
quent notice was published April 11, 1977, 42 FR
18867. The question of multistage manufacturers
was addressed at 42 FR 18869. The reporting
XPRM provided that even when an intennediate
or final-stage manufacturer assumed full respon-
sibility for the compliance of an automobile with
the fuel economy standards, it would assume only
partial responsibility for compliance with the re-
porting requirements. In commenting on the
multistage XPRM, Chrysler, Ford, and GM
stated that an intermediate or final-stage manu-
facturer which exceeds the curb weight and
frontal area maxima should assume the reporting
responsibilities. However, in commenting on the
subsequent reporting NPRM, none of these man-
ufacturei-s objected to a proposal that the report-
ing responsibilities be divided between the
incomplete automobile manufacturer and one of
the subsequent manufacturers when the latter
manufacturer exceeds one of the maxima.
After considering these comments and the com-
ments discussed above about the degree of com-
munication between the incomplete automobile
manufacturers and subsequent manufacturers, the
X'HTSA has decided to make several relatively
PART 529— PRE 4
EfFeclive: July 28, 1977
minor changes in the reporting responsibilities
described in the reporting NPRM. First, the in-
complete automobile manufacturer would not be
required to provide information relating to cer-
tain aspects of completed multistage automobiles
manufactured from its incomplete automobiles.
These aspects would include items such as num-
ber of designated seating positions, body style,
and passenger and cargo carrying volumes. Based
on the comments regarding the lack of communi-
cations between the incomplete aiitomobile man-
ufacturers and the subsequent manufacturers,
information of this type would apparently not
be available to the incomplete automobile manu-
facturers. Second, intermediate and final-stage
manufacturers are not required to do any report-
ing under any circumstances, including any cir-
cumstance in which an intermediate or final-stage
manufacturer exceeds the maximum frontal area
or curb weight. Given the agency's expectation
that intermediate and final-stage manufacturers
will rarely exceed either of the maxima, these
manufacturers were unlikely to have been re-
quired to submit reports in any event. For the
same reason, incomplete automobile manufactur-
ers are unlikely to be required to submit more
information about their incomplete automobiles
than they would have been required to do under
the reporting NPRM. Further, exceeding the
maxima would not affect most of the information
that the incomplete automobile manufacturer is
required to submit.
Model year determination. The NPRM pro-
vided that the final-stage manufacturer would
have two options regarding the designation of
model year of a multistage automobile. The
manufacturer could choose to offer for sale or
sell the automobile as one manufactured in either
the model year in which the incomplete automo-
bile manufacturer completed its manufacturing
operations or the model year in which that final-
stage manufacturer completed its manufacturing
operations. It was proposed that if the final-
stage manufacturer chose to offer the automobile
for sale as one manufactured in the model year
in which the incomplete automobile manufacturer
completed its manufacturing operations, and if
no subsequent manufacturer had exceeded the
curb weight and frontal area maxima, the final-
stage manufacturer could rely on the fuel econ-
omy testing and label of the incomplete
automobile manufacturer. If, however, the final-
stage manufacturer completed the automobile in
a model year after the incomplete automobile
manufacturer completed its manufacturing op-
erations and if the final-stage manufacturer
elected to offer the automobile for sale as one
manufactured in the latter model year, the final-
stage manufacturer would become the manufac-
turer of the automobile for the purposes of Title
V and would be required to conduct fuel economy
testing and to comply with the fuel economy
standard and labeling requirements for that later
model year.
Chrysler initially commented that the model
year of a multistage automobile should be the
model year in which the incomplete automobile
manufacturer completed its manufacturing op-
erations. This comment was qualified in a sub-
sequent meeting and telephone conversation with
the NHTSA which were summarized in mem-
oranda placed in the docket. In that meeting
and conversation, Chrysler stated that its sugges-
tion regarding model year was merely meant to
indicate that a multistage automobile should be
subject to the average fuel economy standard for
the model year in which the incomplete automo-
bile manufacturer completes its manufacturing
operations on the automobile unless a subsequent
manufacturer exceeded either the maximum
frontal area or maximum curb weight in a sub-
sequent model year. With respect to the market-
ing of completed automobiles, Chrysler intended
to suggest that the final-stage manufacturer have
the option of marketing the completed multistage
automobile either as one manufactured in the
model year in which the manufacturer for stand-
ards compliance purposes completed its manu-
facturing operations or as one manufactured in
the model year in which the final-stage manufac-
turer completed its manufacturing operations.
Chrysler went further to urge that the final-stage
manufacturer's election of the latter model year
not cause that manufacturer to become the manu-
facturer of that automobile for the purposes of
Title V and to be compelled to comply with the
applicable fuel economy standard for that model
year. Chrysler's comments stemmed from a con-
cern that the NPRM would have motivated final-
stage manufacturers to order all of their
PART 529— PRE 5
Effective: July 28, 1977
incomplete automobiles for delivery early in each
model year to avoid having to market out-of-date
automobiles. That company stated that it had
discouraged such one-time ordering because large
block ordering was disruptive of its efforts to
spread orders evenly over each model year.
The NHTSA believes that the Chrysler com-
ments have merit. To avoid unnecessarily burden-
ing both the incomplete automobile manufacturers
and final-stage manufacturers, the rule has been
revised to eliminate the model-year-determination
provision. The elimination of that provision
leaves the manufacturer free under Part 529 to
designate the model year of its automobiles as it
desires. However, the fuel economy label will
bear tlie model year in which the manufacturer
for purposes of standard and labeling compliance
completed its manufacturing operations. Fur-
ther, other law may limit the discretion of the
manufacturer in designating a model year. See
the discussion below of the Auto Club comment.
The elimination of the provision on model year
determination makes it unnecessary to respond in
detail to an objection by GM to that provision.
That company interpreted that provision as
meaning that any multistage automobile that a
final-stage manufacturer completes after the
model year in which the incomplete automobile
manufacturer completes its manufacturing op-
erations would be subtracted from the incomplete
automobile manufacturer's fleet for that earlier
model year. That interpretation was wrong in
several respects. However, the essential point is
that the model year in which a multistage auto-
mobile is completed has no effect on the deter-
mination of which automobiles are to be counted
as being in the incomplete automobile manufac-
turer's fleet.
The Auto Club objected to the model-year-
determination proposal on the basis that it con-
flicted with California law. Section 11713.5 of
the California Vehicle Code prohibits a dealer or
manufacturer from offering for sale a motor ve-
hicle if the vehicle is represented to be of a model
year different from the model year designated at
the time of manufacture or assembly. The Auto
Club stated that "if the incomplete automobile
manufacturer, who is the manufacturer for pur-
poses of Federal law, designates a model year for
the incomplete automobile, then any final-stage
manufacturer licensed to do business in California
who attempts to sell that automobile under sub-
division (a) of Section 529.7 would be in viola-
tion of (the California Vehicle Code)."
The deletion of the model-year-determination
provision eliminates the problem perceived by
the Auto Club. The provision was eliminated in
response to the Chrysler comment discussed
above and to avoid the possibility of unnecessar-
ily interfering with California law. The agency
notes that the provision might not have caused
any interference. The determination under Part
529 of which manufacturer is to be treated as the
manufacturer of a multistage automobile is con-
trolling for the limited purposes of Title V only.
Under the National Traffic and Motor Vehicle
Safety Act (15 U.S.C. 1391 et seq.) and imple-
menting regulation in 49 CFE Part 568, the
final-stage manufacturer is treated as the manu-
facturer. These differing determinations of who
is to be treated as a manufacturer to serve dif-
ferent statutory purposes do not control the de-
termination of who is a manufacturer under
California law. California, not Federal, law
must be interpreted to determine which of the
manufacturei"s of a multistage automobile is the
manufacturer of the automobile for the purposes
of section 11713.5 of the California Vehicle Code.
Additional comments. Ford suggested that the
proposal be modified to include express reference
to importers of incomplete automobiles in the
definition of "incomplete automobile manufac-
turer". This agency does not believe that this
additional language is necessary. The term
"manufacture" is defined in section 501 to include
the importation of automobiles into the customs
territory of the United States.
Chrysler recommended that the NHTSA con-
sider exempting an incomplete automobile manu-
facturer from any responsibility under Title V
with respect to its complete automobiles if those
automobiles constitute less than 2 percent of the
total number of automobiles that the manufac-
turer produces in that class. This recommenda-
tion was based upon Chrysler's argiunents about
the negligible effects of those incomplete automo-
biles on the average fuel economy of the manu-
facturer. There is no authority under Title V
for adopting Chrysler's suggestion. Exemption
from standard compliance responsibilities are
PART 529— PRE 6
Effective: July 28, 1977
available only to low volume manufacturers of
passenger automobiles. Most multistage automo-
biles are nonpassenger automobiles. Further, the
exemptions are not complete. Alternative stand-
ards must be established for exempted manufac-
turers.
GM recommended that the midtistage automo-
bile rule be drafted to permit a final-stage manu-
facturer which manufactures less than 10,000
automobiles per year to petition for an exemption
under section 502(c) of Title V. That company
stated that when an exemption is granted for
multistage automobiles, their incomplete automo-
bile manufacturer should not have to include any
of them in its fleet. Section 502(c) provides for
the exemption of manufacturers which manufac-
ture less than 10,000 passenger automobiles per
year. As noted above, the exemptions can apply
to passenger automobiles only and can be granted
only if an alternative standard is established for
the exempted passenger automobiles. The eligi-
bility of a final-stage manufacturer to apply for
an exemption depends upon the number of pas-
senger automobiles it produces, assembles, or im-
ports and upon whether it is treated under this
rule as the manufacturer of those automobiles.
If the final-stage manufacturer produces a multi-
stage automobile but is not treated as its manu-
facturer, that final-stage manufacturer may not
obtain its exemption under section 502(c). An
exemption may be granted to a manufacturer for
automobiles under Title V only if the manufac-
turer can demonstrate that its maximum feasible
average fuel economy is less than the level of
average fuel economy specified in the standard
generally applicable to all manufacturers. An
automobile for whose fuel economy the final-stage
manufacturer has no responsibility has no bear-
ing upon its maximum feasible average. If the
final-stage manufacturer produces a multistage
automobile and is treated as its manufacturer,
that automobile is excluded by this rule from the
incomplete automobile manufacturer's fleet irre-
spective of any exemption. Thus, GM's comment
states no basis for changing the rule.
In light of the foregoing, Title 49, Code of
Federal Regulations, is amended by adding a new
Part 520, Manufacturers of Multistage Automo-
biles. . . .
The program official and lawyer principally
responsible for the development of this rule are
Roy Dennison and Kathy DeMeter, respectively.
Issued in Washington, D.C. on July 21, 1977.
Joan Claybrook
National Highway Traffic Safety
Administrator
42 F.R. 38369
July 28, 1977
PART 529— PRE 7-8
PART 529— MANUFACTURERS OF MULTISTAGE AUTOMOBILES
Sec.
529.1 Scope and purpose.
529.2 Applicability.
529.3 Definitions.
529.4 Requirements for incomplete automobile
manufacturers.
529.5 Requirements for intermediate manufac-
turers.
529.6 Requirements for final-stage manufac-
turers.
529.7 Determination of model year.
AUTHORITY: Sec. 301, Pub. L. 94-163, 80
Stat. 901 (15 U.S.C. 2001), delegation of author-
ity at 41 FR 25015, June 22, 1976.
§ 529.1 Scope and purpose.
This part determines, in cases where more than
one person is the manufacturer of an automobile,
which person is to be treated as the manufacturer
for purposes for compliance with Title V of the
Motor Vehicle Information and Cost Savings Act,
as amended (15 U.S.C. 2001 et seq.), and rules
issued thereunder.
§ 529.2 Applicability.
This part applies to incomplete automobile
manufacturers, intermediate manufacturers, and
final-stage manufacturers of automobiles that are
manufactured in two or more stages.
§ 529.3 Definitions.
(a) Statutory terms. (1) The term "automo-
bile" is used as defined in section 501 of the Act
and in accordance with the determinations in 49
CFR Part 523.
(2) The terms "manufacture," "manufac-
turer," and "fuel economy" are used as defined in
section 501 of the Act.
(b) Other terms. (1) "Act" means the Motor
Vehicle Information and Cost Savings Act (Pub.
L. 92-513), as amended by the Energy Policy
and Conservation Act (Pub. L. 94-163).
(2) "Completed automobile" means an auto-
mobile that requires no further manufacturing
operations to perform its intended function, other
than the addition of readily attachable compo-
nents, such as mirrors or tire and rim assemblies,
or minor finishing operations such as painting.
(3) "Curb weight" is defined the same as
"vehicle curb weight" in 40 CFR Part 86.
(4) "Final-stage manufacturer" means a
person who performs such manufacturing opera-
tions on an incomplete automobile that it becomes
a completed automobile.
(5) "Frontal area" is used as defined in 40
CFR § 86.079-2.
(6) "Incomplete automobile" means an as-
semblage consisting, as a minimum, of frame and
chassis structure, power train, steering system,
suspension system, and braking system to the ex-
tent that those systems are to be part of the
completed automobile, that requires further man-
ufacturing operations, other than the addition of
readily attachable components, such as mirrors
or tire and rim assemblies, or minor finishing
operations such as painting, to become a com-
pleted automobile.
(7) "Incomplete automobile manufacturer"
means a person who manufactures an incomplete
automobile by assembling components none of
which, taken separately, constitute a complete
automobile.
(8) "Intermediate manufacturer" means a
person, other than the incomplete automobile
manufacturer or the final-stage manufacturer,
who performs manufacturing operations on an
incomplete automobile.
§ 529.4 Requirements for incomplete automobile
manufacturers.
(a) Except as provided in paragraph (c) of
this section § 529.5 and § 529.6, each incomplete
automobile manufacturer is considered, with re-
spect to multistage automobiles incorporating its
PART 529-1
incomplete automobiles, the manufacturer of the
multistage automobiles for purposes of the re-
quirements of Title V and rules issued there-
under.
(b) Each incomplete automobile manufacturer
shall furnish with each of its incomplete automo-
biles, when it is delivered to the subsequent man-
ufacturer, (1) a document that contains the
following information—
(i) Name and mailing address of the in-
complete automobile manufacturer.
(ii) Month and year during which the in-
complete automobile manufacturer performed its
last manufacturing operation on the incomplete
automobile.
(iii) Identification of the incomplete auto-
mobile or group of incomplete automobiles to
which the document applies. The identification
may be by serial number or otherwise, but it
must be sufficient to enable a subsequent manu-
facturer to ascertain positively that the docuemnt
applies to a particular incomplete automobile even
if the document is not attached to that automo-
bile.
(iv) Fuel economy values determined by
the incomplete automobile manufacturer for the
automobile in accordance with 40 CFR Part 600
and a statement that a fuel economy label con-
taining those values has been prepared in accord-
ance with Environmental Protection Agency
regulation by the manufacturer identified in the
document.
(v) Maximum curb weight that may not
be exceeded by a subsequent manufacturer with-
out invalidating the fuel economy values deter-
mined by the incomplete automobile manufac-
turer.
(vi) Maximum frontal area that may not
be exceeded by a subsequent manufacturer with-
out invalidating the fuel economy values
determined by the incomplete automobile manu-
facturer.
(vii) Whether the fuel economy values
have been computed with the road load horse-
power set to take into account the presence of air
conditioning.
(2) A fuel economy label conforming with
40 CFR Part 600.
(c) (1) The incomplete automobile manufac-
turer shall either attach the document specified
in paragraph (b) (1) of this section to the in-
complete automobile in such a manner that it
will not be inadvertently detached or send that
document directly to the subsequent manufacturer
to which that automobile is delivered.
(2) (i) If the incomplete automobile manu-
facturer places the portion of the body including
the windshield and front seat side windows on
the incomplete automobile, the manufactiu-er
shall attach the fuel economy label specified in
paragraph (b) (2) of this section to that automo-
bile in accordance with 40 CFR Part 600. If the
incomplete automobile manufacturer does not
place that portion of the body on the incomplete
automobile, that manufacturer shall send that
label directly to the subsequent manufacturer to
which that automobile is delivered.
(ii) Upon request by an intermediate or
final-stage manufacturer for a copy of a fuel
economy label that is required by paragraph
(b) (2) to have been prepared by the incomplete
automobile manufacturer for one of its incom-
plete automobiles, identified by the requesting
manufacturer in the same fashion as in the docu-
ment specified in paragraph (b) (1) of this sec-
tion, the incomplete automobile manufacturer
shall send that manufacturer a copy of the label.
§ 529.5 Requirements for intermediate manufac-
turers.
(a) Except as provided in paragraph (d) of
this section and in § 529.6, each intermediate
manufacturer whose manufacturing operations
on an incomplete automobile cause it to exceed
the maximum curb weight or maximum frontal
area set forth in the document furnished it by
the incomplete automobile manufacturer under
§ 529.4(c) (1) or by a previous intermediate
manfacturer under paragraph (b) of this sec-
tion, as appropriate, is considered the manufac-
turer of the multistage automobile manufactured
from that automobile for the purpose of the re-
quirements of Title V and rules issued there-
under, other than that in Part 537, Fuel Economy
Reports.
(b) Each intermediate manufacturer of an in-
complete automobile shall furnish, in the manner
specified in § 529.4(c), to the subsequent manu-
PART 529-2
facturer of that automobile the document required
by § 529.4(b) regarding that automobile. If any
of the changes in the automobile made by the
intermediate manufacturer affect the validity of
the fuel economy values or other statements in
the document or any addendum attached to the
document by a previous manufacturer shall
furnish an addendum to the document that con-
tains its name and mailing address and an indi-
cation of all changes that should be made in the
document to reflect changes that it made in the
automobile.
(c) Each intermediate manufacturer that is
required by paragraph (b) of this section to
furnish an addendum to a document required by
§ 529.4(b) shall, within 10 days after completing
its manufacturing operations, send a copy of the
document and addendum to the Administrator
of the Environmental Protection Agency and to
the manufacturer previously considered under
this part to be the manufacturer of the automo-
bile.
(d) (1) If the intermediate manufacturer's
manufacturing operations on an incomplete auto-
mobile cause it to exceed the maximum curb
weight or maximum frontal area set forth in the
document furnished it by the incomplete automo-
bile manufacturer under § 529.4(c) (1) or a pre-
vious intermediate manufacturer under paragraph
(b) of this section, as appropriate, that manu-
facturer shall prepare a new fuel economy label
for that automobile in accordance with 40 CFR
Part 600.
(2) If neither the intermediate manufac-
turer of an incomplete automobile nor any pre-
vious manufacturer of that automobile has placed
the portion of the body including the windshield
and front seat side windows on that automobile,
the intermediate manufacturer shall send the fuel
economy label furnished it by the incomplete
automobile manufacturer under § 529.4(c) (2) (i)
or a previous intermediate manufacturer under
paragraph (d) (2) of this section or prepared by
it under paragraph (d) (1) of this section, as
appropriate, directly to the subsequent manufac-
turer to which that automobile is delivered.
(3) If the intermediate manufacturer places
the portion of the body including the windshield
and front seat side windows on the incomplete
automobile, that manufacturer shall attach the
fuel economy label furnished it under § 529.4(c)
(i) or paragraph (d) (2) of this section or the
fuel economy label prepared by it under para-
graph (d) (1) of this section, as appropriate, to
that automobile in accordance with 40 CFR Part
600.
(4) The intermediate manufacturer shall at-
tach to the incomplete automobile in accordance
with 40 CFR Part 600 a fuel economy label
identical to the label that is required under this
part to have been prepared by the manufacturer
considered under this part to be the manufac-
turer of that automobile if:
(i) The portion of the body including the
windshield and front seat side windows was
added to the incomplete automobile by a previous
manufacturer;
(ii) The intermediate manufacturer's man-
ufacturing operations do not cause that automo-
bile to exceed either of the maxima specified in
paragraph (d) (1) of this section; and
(iii) That label is not on that automobile
when received by the intermediate manufacturer
or is removed from that automobile while it is in
the possession of that manufacturer.
(5) Upon request by a subsequent interme-
diate manufacturer or by a final-stage manufac-
turer for a copy of a fuel economy label prepared
by the intermediate manufacturer under para-
graph (d) (1) of this section for one of its incom-
plete automobiles, identified by the requesting
manufacturer in the same fashion as in the docu-
ment specified in § 529.4(b) (1), the intermediate
manufacturer shall send that manufacturer a
copy of that label.
§ 529.6 Requirements for final-stage manufac-
turers.
(a) Except as provided in paragraph (c) of
this section, each final-stage manufacturer whose
manufacturing operations on an incomplete auto-
mobile cause the completed automobile to exceed
the maximum curb weight or maximum frontal
area set forth in the document specified in § 529.4
(b) and furnished it by the incomplete automo-
bile manufacturer under § 529.4(c) (1) or by the
last intermediate manufacturer under § 529.5(b),
as appropriate, is considered the manufacturer
of the completed automobile for the purpose of
PART 529-3
the requirements of Title V and rules issued
thereunder, other than those in Part 537, Fuel
Economy Reports.
(b) Each final-stage manufacturer that be-
comes the manufacturer of a multistage automo-
bile imder paragraph (a) of this section shall,
within 10 days after completing its manufactur-
ing operations on that automobile, send written
notification of its exceeding the curb weight or
frontal area maximum to the Administrator of
the Environmental Protection Agency and to the
manufacturer previously considered under this
part to be the manufacturer of the automobile.
(c) (1) If the final-stage manufacturer be-
comes the manufacturer of a multistage automo-
bile under paragraph (a) (1) of this section, that
manufacturer shall prepare a new fuel economy
label for that automobile in accordance with 40
CFR part 600.
(2) If the final-stage manufacturer places
the portion of the body including the windshield
and front seat side windows on the incomplete
automobile, that manufacturer shall attach the
fuel economy label furnished by the incomplete
automobile manufacturer under § 529.4(c) (2) or
by the last intermediate manufacturer under
§ 529.5(d) (2) or the fuel economy label prepared
by the final-stage manufacturer under paragraph
(c) (1) of this section, as appropriate, to that
automobile in accordance with 40 CFR Part 600.
(3) The final-stage manufacturer shall at-
tach to the completed automobile in accordance
with 40 CFR Part 600 a fuel economy label
identical to the label that is required under this
part to have been prepared by the manufacturer
considered under this part to be the manufacturer
of that automobile if:
(i) The portion of the body including the
windshield and front seat side windows was
added to the completed automobile by a previous
manufacturer;
(ii) The final-stage manufacturer's manu-
facturing operations do not cause that automobile
to exceed either of the maxima specified in para-
graph (c) (1) of this section; and
(iii) That fuel economy label is not on
that automobile when received by that manufac-
turer or is removed from that automobile while
it is in the possession of that manufacturer.
42 F.R. 38369
July 28, 1977
PART 529-4
Effective: Model Years 1981-1984
PREAMBLE TO PART 531— PASSENGER AVERAGE FUEL ECONOMY STANDARDS
(Docket No. FE 76-1; Notice 5)
This notice establishes average fuel economy
standards for passenger automobiles manufac-
tured in model years 1981-84. These standards
are 22 miles per gallon (mpg) for passenger
automobiles produced in model year 1981, 24 mpg
for 1982, 26 mpg for 1983, and 27 mpg for 1984.
These standards are promulgated to satisfy the
requirements of section .502(a)(3) of the Motor
Vehicle Information and Cost Savings Act, as
amended. The establishment of these standards
is intended to result in the consumption of ap-
proximately 41 billion fewer gallons of gasoline
(worth $19 billion, with gasoline valued at &5^
per gallon) over the life of the vehicles manu-
factured in 1981-84 than would be the case if the
average fuel economy of new passenger automo-
biles remained at the level of the 1980 fuel econ-
omy standard, 20.0 mpg.
Dates : These standards will apply to the model
years 1981 through 1984.
For further information contact :
Mr. Stanley R. Scheiner
National Highway Traffic Safety
Administration
Department of Transportation
400 7th Street, S.W.
Washington, D.C. 20590
(202-472-5906)
Supplementary Information :
I. Background information.
Title V of the Motor Vehicle Information and
Cost Savings Act, as amended (hereafter, "the
Act"), establishes average fuel economy standards
applicable to manufacturers of passenger auto-
mobiles. Title V was added to the Act by Part
A of Title III of the Energy Policy and Con-
servation Act (hereafter, "the Energy Act").
The term "passenger automobiles" generally in-
cludes four-wheeled vehicles manufactured pri-
marily for on-road use and for the transportation
of ten or fewer passengers, e.g., sedans, coupes,
and station wagons. See 15 U.S.C. 2001(1) and
(2), and 41 FR 55368, December 20, 1976. Com-
pliance of a manufacturer with these standards
is to be determined by computing the production-
weighted fuel economy average of the various
model types of passenger automobiles manufac-
tured by the manufacturer in a model year and
comparing that niunber to the fuel economy
standard. Fuel economy values for the various
model types of passenger automobiles are deter-
mined in accordance with procedures established
by the Environmental Protection Agency. See
41 FR 38675, September 10, 1976. The Act speci-
fies fuel economy standards of 18, 19, and 20 mpg
for model years 1978, 1979, and 1980, respectively,
and 27.5 mpg for 1985 and thereafter. Fuel
economy standards for model years 1981-84 are
to be established administratively by the Secre-
tary of Transportation not later than July 1,
1977. See section 502(a)(3) of the Act. This
notice establishes the latter standards.
Section 502(a) (3) imposes two substantive re-
quirements for the 1981-84 standards. That sec-
tion requires that the standards for each of those
model years be set at a level which (1) is the
maximum feasible average fuel economy level
and (2) will result in steady progress toward
meeting the 1985 standard. The statutorily-
established standard for 1985 and thereafter of
27.5 mpg may be adjusted either upward or
downward by the Secretary of Transportation if
he determines that the present standard does not
reflect the maximum feasible average fuel econ-
omy level for those years. If the Secretary
amends the standard for any model year to a
level above 27.5 mpg or below 26.0 mpg, that
amendment is subject to a veto by either House
of the Congress. See section 502(a)(4). In
determining maximum feasible average fuel
economy, the Secretary must, under section
PART 531— PRE 1
Effective: Model Years 1981-1984
502(e) of the Act, consider four factors: tech-
nological feasibility, economic practicability ; the
effect of other Federal motor vehicle standards
on fuel economy; and the need of the nation to
conserve energy.
Responsibility for the automotive fuel economy
progi'am was delegated by the Secretary of
Transportation to the Administrator of the
National Highway Traffic Safety Administration
(XHTSxV) in -tl FR 25015, June 22, 1976. Rule-
making under section 502(a)(3) was initiated
on September 23, 1976, when the NHTSA pub-
lished an advance notice of proposed rulemaking
(ANPRM). See 41 FR 41713. The ANPRM
solicited specific information on all subjects rele-
vant to the establishment of 1981-84 standards,
with particular emphasis on the four considera-
tions relating to the determination of maximum
feasible average fuel economy levels set forth
above. Six automobile manufacturers, two in-
dustry trade associations, one state and one fed-
eral energ\' agency, and one private individual
provided responses to the ANPRM. These re-
sponses were considered in developing tlie notice
of proposed rulemaking and supporting materials
discussed below. To encourage the representation
in the proceeding of interests and points of view
which have traditionally been underrepresented
due to the high costs of participation, NHTSA
invited applications for financial assistance from
individuals and groups which were financially
unable to participate. See 42 FR 5178, January
27, 1977. Five public interest organizations re-
ceived funding in this first action under the
Department's demonstration program for finan-
cial assistance, which was announced in 42 FR
2864, January 13, 1977.
On February 22, 1977, a notice of proposed
rulemaking and public hearing (NPRM) was
published in 42 FR 10321. Tliis notice discussed
in additional detail the issues which were deemed
relevant to the establishment of 1981-84 stand-
ards. The notice also announced the availability
of a document titled "Data and Analysis for
1981-84 Passenger Automobile Fuel Economy
Standards" (hereafter, the ''Support Docu-
ment"), which set forth the methodologj' and
data on which fuel economy improvement projec-
tions would be based. This document was re-
leased on March 1, 1977. As noted in the NPRM,
the Support Document projected potentially
achievable fuel economy levels which Avould re-
sult in steady progress toward meeting 27.5 mpg
by 1985. These projections were based on the
use of a limited class of technological improve-
ments, and were therefore not projections of
"maximum feasible average fuel economy levels."
See 42 FR 10322, and Tr-I, p. 87 (remarks of
Dr. Robert Sawyer).' However, such projections
were useful for demonstrating that average fuel
economy levels in the range to be considered in
this proceeding were achievable.
The NPRM also announced a public hearing
to commence on ilarch 22, 1977, to permit inter-
ested parties to make oral presentations in addi-
tion to their opportunity to make written
submissions. The hearing was not required by
the Act, but was held at the discretion of the
Secretary to augnxent the opportunity for public
participation in this important informal rule-
making action. The Secretary of Transportation
presided over the first day of the hearing, to-
gether with the Administrator of the Federal
Energy Administration and the Deputy Admin-
istrator of the Environmental Protection Agency.
Representatives of the latter agencies also par-
ticipated throughout the remainder of the hear-
ing. Eleven companies, groups and individuals
made presentations at the hearing, including five
passenger automobile companies and four funded
public interest groups. The NPR]\I established
a deadline of April 7, 1977, for the submission of
written comments on the NPRM and the Support
Document and on issues raised at the hearing.
This deadline was extended on April 1, 1977, to
April 12, 1977, at the request of Chrysler Cor-
poration,- to allow additional time for the pre-
0
' The abbreviation "Tr" refers to tlie transcript of tlie
fuel economy pulilic hearing, copies of which are in the
fuel economy docket. The roman numeral following the
abbreviation refers to the transcript volume, "I" being
the Tuesday, March 22 volume, "11" being the March 23
volume, and "III" iieing the March 24 volume. Refer-
ences to the transcript and other materials are intended
as an aid to per.sons dealing with the voluminous ma-
terials in this rulemaking, and may not be exhaustive.
'DN-25. The abbreviation "DN" followed by a num-
lier refers to the docket number of material in NHTSA
docket FE 76-01-NO3. This docket is located in Room
5108 of the Nassif Building, 400 Seventh Street, S.W.,
Washington, D.C., and is open to the pulilic during
normal business hours.
PART 531— PRE 2
Effective: Model Years 1981-1984
paration of responses to questionK for whicli the
hearin<r panel received no answer at tlie hearing.
Sec 42 FR 18413, April 7. 1977. To assure fully
responsive answers to certain important questions
asked at the public hearin<r, "special orders" were
issued on April 1. 1977, under section 505 (b) (1)
of the Act to the five automobile companies which
participated in the hearing. DN-7. In addition,
on April 21, similar special orders were issued to
certain foreign passenger automobile manufac-
turers to obtain information on their capabilities
to achieve high levels of average fuel economy-
DX-28. On April 20, special orders were sent to
five automobile equipment and material suppliers
to obtain information on the fuel economy im-
provement potential and cost associated with the
equipment and material they could supply to
passenger automobile manufacturers in the 1981-
84 period. DX-27. An additional special order
was issued on May 19 to the recipients of the
April 1 order to obtain further information on
the impact of the Administration's proposed
emission standards and energy plan on fuel
economy. DX-35. All comments and responses
have been considered and the most significant are
discussed below.
Material contained in the Support Document,
as supplemented or revised in light of material
submitted in response to the NPRM and special
orders, together with other relevant material,
were used in the development of the standards
l^romulgated herein. More detailed information
including more extensive data and analyses used
in the development of these standards is con-
tained in a Rulemaking Support Paper (here-
after, the "RSP"), copies of which will soon be
available from the Office of Automotive Fuel
Economy (NFE-01), Xational Highway Traffic
Safety Administration, 400 Seventh Street, S.W.,
Washington, D.C. 20590 or by calling 202-472-
5906. The data and analyses in that paper ap-
pear to justify average fuel economy standards
more stringent than 27.5 mpg by 1985. However,
the scope of notice limits this final rule to stand-
ards for 1981-84. Thus, the statutory standard
of 27.5 mpg for 1985 and thereafter cannot be
changed by this ndemaking. Further, standards
of 27.5 mpg or higher cannot be set for any year
before 1985 so long as the 1985 standard remains
at 27.5 mpg. This second limitation results from
the statutory requirement that the 1981-84 stand-
ards lead to steady progress toward tlie 1985
standard.
It should be noted that these limitations on the
1981-85 standards are only temporary. Shortly,
tlie Department intends to exercise its authority
under section 502(a)(4) of the Act to initiate
rulemaking to increase the average fuel economy
standards for 1985 and thereafter. At that time,
the relation between the new standard for 1985
and the standards for 1981-84 established herein
will be considered. A further discussion of this
topic is contained in section XII below.
II. Methodology on which standards are based.
A. The methodological approach .
In view of the statutory requirement for maxi-
mum feasible standards and of the nation's need
to conserve energy, the Department has attempted
to set fuel economy standards at the most strin-
gent possible level, consistent with other statutory
requirements. At least two approaches exist for
determining such maxinuim levels. One ap-
proach is to evaluate the most fuel efficient pas-
senger automobiles produced today in each of the
various market classes of automobiles, and to use
that evaluation to set improvement targets for
all other automobiles in the same class. This
approach has the advantage of providing a clear
basis for evaluating current technological capa-
bilities. However, to the extent that the best of
the present vehicles, or even existing prototype
vehicles, do not employ all available fuel econ-
omy-improving technology, this approach does
not truly measure even current maximum capa-
bilities. Further, it does not consider technologi-
cal improvements that will occur in time to be
incorporated in the 1981-84 passenger automo-
biles. Therefore, in developing 1981-84 fuel
economy standards, the Department has employed
a different approach. The adopted methodology
looks at present passenger automobiles and
projects the impact of applying current and ex-
pected future technology to those vehicles. This
approach has the disadvantage that no one has
actually built or tested a vehicle that combines
the technological attributes of the vehicles pos-
tulated in the analysis. However, the Depart-
ment is convinced that the individual technologi-
PART 531— PRE 3
Effective: Model Years 1981-1964
cal improvements considered in this analysis have
been sufficiently well demonstrated through engi-
neering analysis and other means that the com-
bined fuel economy projections provide a reliable
estimate of the achievable fuel economy of future
passenger automobiles.
The Department's analysis started with the
detailed schedules for downsizing, weight reduc-
tion through materials substitution and matching
of engines with vehicles by the four major do-
mestic manufacturers, as contained in the Sup-
port Document. Then the schedules for inertia
weight reduction over the period 1981-85 were
revised to reflect further information. The
projected fuel economy results for each manu-
facturer for each year were then revised to reflect
the new weight estimates as well as the Depart-
ment's assessment that an average 10 percent
reduction in acceleration performance could be
achieved by the 1981 model year to increase fuel
economy by an additional 4 percent.
Next, the percentage increases in fuel economy
due to technological improvements in transmis-
sions, aerodynamic drag, rolling resistance, engine
and vehicle accessories, and lubricants were eval-
uated and these technological improvements were
projected to be phased-in to the 1981-85 vehicles
at various rates for each manufacturer. The
phase-in schedules took into account differences
in capability for implementation among the
manufacturers.
The technologies and the associated increases
in fuel economy are :
Improved automatic transmission 10%
Improved manual transmission 5%
Improved lubricants 2%
Reduced accessory loads 2%
Reduced aerodynamic drag 4%
Reduced rolling resistance 3%
In addition, the assessment included a 1 percent
fuel economy penalty due to safety standards
necessary to assure adequate levels of crash sur-
vivability in the automobile fleet of the 1980's.
See RSP.
Finally, the distribution of car sizes for each
manufacturer was assumed to be approximately
the same as in 1976.
The diesel engine was also considered in the
assessment. It is available to manufacturers as an
alternative way to obtain increased fuel economy
and the Department concludes that manufactur-
ers potentially could achieve a 25 percent pene-
tration of diesel engine powered passenger
automobiles by 1985. Similarly, the Department
considered a shift in size distribution to 10 per-
cent large cars, 25 percent midsize, 25 percent
compact, and 40 percent subcompact by 1985 as a
way to obtain a further increase in fuel economy.
Diesel engines and mix shifts were placed in a
"safety margin" category of technologically
feasible means for the purposes of this rule-
making.
The economic practicability of the specific
technical approach to improving fuel economy
was examined in depth. The assessment consid-
ered the cost to the manufacturer of the needed
capital facilities and the variable costs associated
with the various technological improvements in
fuel economy. It projected price increases based
on those cost estinuites. It examined the overall
costs to the consumer due to changes in new car
prices, improvements in fuel economy, and
changes in maintenance costs over tiie life of the
car. It considered the impacts of price and fuel
economy changes upon new car sales. It exam-
ined in some depth the capability of the four
domestic manufacturers to finance the capital
facilities and equipment out of revenue.
This approach results in a demonstration of
one feasible path for attainment of the fuel econ-
omy standards, which, however, is not necessarily
the least cost or lowest risk path for each auto-
mobile manufacturer to adopt to achieve com-
pliance. Since the fuel economy standards are
•'performance standards," manufacturers are free
to select any alternative path for achieving com-
pliance. Even if the Department had based its
fuel economy projections on the use of all luiown
technology, manufacturers would still have flex-
ibility in achieving compliance. In some cases,
the Department's analysis makes an allowance
for alternative technologies (e.g., downsizing or
material substitution to achieve weight reduction)
from which manufacturers may select. In addi-
tion, manufacturers may increase the percent of
their production for which some methods are
used and thereby genei'ate flexibility to decrease
PART 531— PRE 4
Effacllva: Model Years 1981-1984
the usag;e of some other method. The manufac-
turers may vary the intensity •witli which they
apply a particular method, for example, achiev-
ing a greater or lesser reduction in weight or
acceleration capability. Many of the achievable
improvements assumed in the analysis are based
on projections of fuel economy improvement
potential which the Department considers con-
servative. If improvements in fuel economy
greater than those projected are in fact realized,
more flexibility is obtained. Finally, any new
technological developments over the intervening
years would generate additional flexibility. Foi'
these reasons, it is clear that, even excluding the
measures comprising the compliance safety mar-
gin provided in this analysis, alternate ap-
proaches to complying with fuel economy
standards will be open to the automobile manu-
facturers.
B. Statutory requirements.
Section 502 of the Act provides guidance re-
garding the analysis to be used in setting the
1981-84 fuel economy standards. The first re-
quired step is to determine the "maximum fea-
sible average fuel economy level." The first
consideration required inider section 502(e) in
determining that level is "teclinological feasibil-
ity." The Department interprets the latter
phrase, in the context of the "maximum feasil)le"
requirement and the methodological approach
discussed above, as presenting the question of
whether the various technological options for
improving fuel economy are, individually and
when used with other options, capable of com-
mercial application in 1981-84. Therefore, the
technology considered in the Department's assess-
ment is not limited to that presently in produc-
tion. If it can be reasonably projected that the
technology will become available in time to be
applied in a specified model year, its use is tech-
nologically feasible in that year. See generally
"Chrysler Corp. v. Department of Transporta-
tion," 472 F.2d 659 (6th Cir. 1972, at 671-3;
"International Harvester v. Euckelshaus," 478
F.2d 615 (D.C. Cir. 1973), at 628-9. Although
marketing strategies for encouraging the pur-
chase of fuel efficient passenger automobiles are
not items of technology, those strategies have
been included in the "mix shift" portion of the
discussion of the technology -based average fuel
economy projections. Given the use of "maxi-
mmn," the Act must be construed to require the
Department to base its analysis on the use of all
feasible methods for improving average fuel
economy.
The NPRM, at 42 FR 10322, solicited comment
on the second statutory considei'ation, "economic
practicability." Ford Motor Company argued
that this consideration, along with the techno-
logical feasibility consideration, requires the De-
partment to reject any level of standards which
would create even a risk of reductions in industry
sales, employment or profits or of restrictions in
the mix of automobiles offered for sale. DN-15,
Document II, p. 2. Ford suggests basing the
standards on a "risk-benefit" analysis. Chrysler
Corporation argued that the term means as a
minimmn that "the various manufacturers are
financially capable of taking the necessary steps
to insure compliance." DN-30, p. 20. Chrysler
goes on to state that the analysis should require
a consideration of the impacts of the proposed
standards on employment, inflation, and consum-
ers. The Department's view on this issue is more
consistent with that of Chrysler than with Ford's.
The dictionary meaning of the word "prac-
ticable" is that something is "capable of being
put into practice, done or accomplished." Web-
ster's Third New International Dictionaiy, p.
1780 (1961) 8 Oxford English Dictionary, p. 1218
(1970). "Economic practicability" is nowhere
defined in the Act. However, similar terms,
"economically justified" and "economically fea-
sible," are used in Part B of Title III of the
Energy Act, and it is possible to infer the mean-
ing of "economic practicability" from the use of
those terms. The word "pi'acticable" is synony-
mous with "feasible," according to the Oxford
definition. This appears to be consistent with the
way the term is used in the Act.
Section 325(a)(4)(D) defines "economically
justified":
. . . improvement of energy efficiency is eco-
nomically justified if it is economically feasible
the benefits of reduced energy consumption,
and the savings in operating costs throughout
PART 531— PRE 5
Effective: Model Years 1981-1984
the estimated average life of the covered
product, outweigh —
(i) any increase to purchasers in initial
charges for, or maintenance expenses of, the
covered product which is likely to result from
the imposition of the standard,
(ii) any lessening of the utility or the per-
formance of the covered product, and
(iii) any negative effects on competition.
It should be noted that "economically feasible
the benefits of" is a grammatical error which
appears in the Energy Act itself as well as the
Conference Report. The legislative history in-
dicates that it should probably be lead "eco-
nomically feasible and if the benefits of."
Section 325 clearly contemplates that a stand-
ard must be hoth economically feasible and justi-
fied on a cost-benefit basis. Since Congress used
the two concepts separately, it obviously did not
intend them to be synonymous, i.e., economically
feasible is not the same as cost-beneficial. This
is further made clear by the definition of feasi-
bility in the Conference Report :
The term feasibility is used in section 325 in
the strict sense, namely "capable of being car-
ried out." Economic feasibility refers to
whether or not a manufacturer has the eco-
nomic capability to carry out the requirements
of an energy efficiency standard. S. Rep. No.
94-516, H. R. Rep. No. 94-700 (94th Cong.,
1st Sess.) at 172.
In the dictionary definitions listed above,
"feasible" was listed as a synonym for "prac-
ticable," and interchanging them would lead to
the conclusion that economic practicability is a
separate concept from cost-beneficial (the second
element of economically justifiable).
In addition, not equating cost-benefit consid-
erations with economic practicability is consistent
with the goal of achieving maximum feasible fuel
economy by allowing economically and tech-
nologically possible standards which will improve
fuel economy but which an analysis, subject to
many practical limitations, might indicate are
not cost-beneficial.
The word "practicable" appears in the other
major vehicle regulatory statute that NHTSA
administers, the National Traffic and Motor Ve-
hicle Safety Act. Section 103(a) of the Vehicle
Safety Act (15 U.S.C. § 1392(a) ) states, in part:
. . . The Secretary shall establish by order
appropriate Federal motor vehicle safety
standards. Each such Federal motor \'ehicle
safety standard shall be practicable . . .
Unfortunately, the term is defined neither in the
Vehicle Safety Act nor its legislative history.
However, the legislative history of the Vehicle
Safety Act states that the determination of prac-
ticability must include consideration of tech-
nological and economic factors. Further, there
is a small body of judicial interpretations of the
term which outlines its contours.
First, it is clear that the term does not mean
cost-beneficial. In "Chrysler Corp. v. Depart-
ment of Transportation," 472 F. 2d 659 (6th Cir.
1972), the court noted that the Automobile
Manufacturers Association had suggested a num-
ber of amendments to the bill from which the
Vehicle Safety Act arose, including limiting
standards to those at costs commensurate with
the benefit to be achieved. Id. at 672, fn. 16.
and stated:
None of these specific restraints sought by the
Automobile Manufacturers Association was
adopted, and we must decline to write into the
Act the very same suggestions which Congress
declined to write into the Act. Id. at 672,
fn. 16.
Considering the definition of "economically
justifiable" that Congress placed in Part B but
not Part A of Title III of the Energy Act, the
Department must likewise decline any invitation
to write such limitation into Part A.
\Miat "practicability" does mean is suggested
in the following cases. In "Chrysler Corp. v.
Department of Transportation," 515 F. 2d 1053
(6th Cir. 1975), relating to rectangular head-
lamps, the court stated :
A review of the cases in this area suggests the
practicability requirement was designed pri-
marily to prevent the NHTSA from establish-
ing mandatory safety standards tiiat are
economically or technologically infeasible. (ci-
tations omitted). Id. at 1060.
PART 531— PRE 6
Effective: Model Years 1981-1984
In "Chrysler Corporation v. Department of
Transportation," 472 F. 2d 659 (6th Cir. 1972),
relating to passive restraints the court stated :
We do not intend to suggest that the Agency
might impose standards so demanding as to
require a manufacturer to perform the im-
possible, or impose standards so imperative
as to put a manufacturer out of business.
But it is clear from the Act and its legislative
history that the Agency may issue standards
requiring future levels of motor vehicle per-
formances which the manufacturers could not
meet unless they devoted more of their re-
sources to producing additional safety tech-
nology than they might otherwise do.
Id. at 672. It should be noted that this ex-
plicitly recognizes the Department's authority to
set standards at non-free market dictated levels,
i.e., at levels not fully cost justified under tradi-
tional free market economic theory.
Finally, in "H & H Tire Co. v. U.S. Depart-
ment of" Transportation," 471 F. 2d 350 (7th
Cir. 1972) the Court said:
We agree with the Government that "the fact
that a government regulation may cause eco-
nomic hardship to a party does not make such
regulation unreasonable." Id. at 354.
Congress was presumably aware of the judicial
interpretation of this term. It can be inferred
from Congress' use of the same term in the Cost
Savings Act as in the Vehicle Safety Act, both
of which are overseen by the Commerce Com-
mittee and administered by the XHTSA, that
Congress intended the same interpretation in both
cases.
Considering all these factors, the Department
concludes that "economic practicability" should
be interpreted as requiring the standards to be
within the financial capability of the industry,
but not so stringent as to threaten substantial
economic hardship for the industry. A cost-
benefit analysis would be useful in considering
these factors, but sole reliance on such an anal-
ysis would be contrary to the mandate of the Act.
The third consideration in determining "maxi-
mum feasible average fuel economy" levels is
"the effect of other Federal motor vehicle stand-
ards on fuel economy." This term is interpreted
to call for making a straight- forward adjustment
to the fuel economy improvement iirojections to
account for the impacts of othei- Federal stand-
ards, principally those in the areas of emission
control, occupant safety, vehicle damageability,
and vehicle noise. However, only the unavoid-
able consequences of - compliance witli these
standards should be accounted for. The automo-
bile manufacturers must be expected to adopt
those feasible methods of achieving compliance
with other Federal standards which minimize
any adverse fuel economy effects of those stand-
ards.
The final statutory consideration is the "need
of the Nation to conserve energy." The Support
Document contains information on this topic,
including a discussion of the impact of our na-
tional need to import large quantities of pe-
troleum, and the impact of various automotive
fuel economy standards schedules on such im-
portation. No participant in the rulemaking
proceeding disputed the importance of the need
to conserve energy. The magnitude and promi-
nence of this need have increased in the years
since Congress' amendment of the Act. It must
be recognized that achieving improvements in
automobile fuel economy, no matter how great,
will not by itself solve the national energy prob-
lem. Maximum conservation efforts must be
made in all areas of energy consumption if the
nation is to begin to solve its overall energy
problem. It would jeopardize the overall na-
tional conservation effort if individual elements
of that effort, such as the automobile fuel econ-
omy program, were to fail to require the last
increments of feasible fuel savings on the -sole
ground that such increments are small in com-
parison to the overall need. Therefore, in con-
sidering various fuel economy schedules for
1981-84 passenger automobiles, the Department
must select the highest schedule consistent with
the other statutory requirements, due to the
serious national need to conserve enei'gy. See
Federal Energy Administration submission, DN-
37, pp. 1-2.
The second substantive statutory requirement
for the 1981-84 standards is that they must result
in "steady progress" toward meeting the 1985
standard. Although the Act does not define the
term "steady progress," some guidance as to the
term's meaning can be obtained by reference to
PART 531— PRE 7
EfFecHve: Model Years 1981-1984
the "plain meaning" of the two words, cases
constniing the two words, and the Act's legisla-
tive history. From a review of these materials,
it appears that the term requires annual increases
in average fuel economy, but with none of the
annual increments varying dramatically from the
other annual increases. Schedules like those
suggested by American Motors Corporation
(Tr-I, p. 74) and by Damiler-Benz AG (DN-10.
p. 11), which require increases in average fuel
economy in only one year during the 1981-84
period, would be inconsistent with the "steady
progress" requirement, even if they met the
"maximum feasible" requirement, since they do
not require annual progress. On the other hand,
a projected maximum feasible average fuel econ-
omy level of 26 mpg for 1981, for example, would
have to be adjusted downward because of the
disproportionately large increment resulting for
that year.
III. Determination of maximum feasible average
fuel economy levels.
A. Technology-hased fuel econ-oTny projections.
Participants in the rulemaking proceeding did
not seriously challenge the appropriateness of the
basic methodological approach used in the Sup-
port Document (Docket Number FE 76-01
GR-3) to project fuel economy improvement
potential. That methodology assigns an analyt-
ically-derived percent average fuel economy
improvement to certain options which are tech-
nologically feasible and applies that percentage
to each of the various manufacturers" present
passenger automobile fleets. The same imple-
mentation schedule is not used for all manufac-
turers nor for all automobiles in a given
manufacturer's fleet due to the significant difi'er-
ences which exist in the financial capability and
in the efficiency of the current automobiles of the
various manufacturers. Rather, a maximum
appropriate improvement schedule taking those
factors into consideration is assigned. The tech-
nology considered in the development of the
standards established in this notice are discussed
in detail below. Because of the qualitative dif-
ference in the domestic automobiles and the im-
ports, the fuel economy improvement potential
of the imports will be discussed separately.
1. Weight reduction.
The most obvious method for improving fuel
economy is to make the passenger automobile
lighter. For analytical purposes, the Support
Document divided this option into three sub-
options: downsizing; material substitution; and
mix shifts. "Downsizing" referi-ed to the reduc-
tion of vehicle weight and exterior dimensions
by optimizing the vehicle design. The goal of
downsizing is to reduce the exterior dimensions
of the automobile without reducing significantly
the interior passenger and higgage volume of the
automobile. According to General Motoi-s, this
option "retains the essential characteristic of cars
tlw^it meet a variety of consumer needs and de-
sires." DX-18. Attachment VIII, p. 3. The
Department notes that there is significant varia-
tion in the interior space of different passenger
automobiles with the same number of seating
positions and that tradeoffs between interior
space and improved fuel economy are possible.
"Material substituti<m" refers to the substitution
of materials with lighter weight for a given
strength, such as aluminum, plastics, and high-
sti'ength steel, for currently used materials. "Mix
shifts" refers to shifting the percentages of the
vehicles sold in different market classes (e.g.,
selling more compacts and fewer midsize auto-
mobiles). For explanation of these market
classes, see the fuel economy labeling regulations
established by E.P.A. in 41 FR 49753 (November
10, 1976). The automobile manufacturers gen-
erally argued that they were unable to differen-
tiate between weight savings attributable to
downsizing and material substitution, since they
are both inseparable parts of the vehicle redesign
process. See GM connnent, DN-18, p. 11;
Chrysler comment, DN-3'2, pg. 11. Therefore,
the Rulemaking Support Paper has combined
the weight reducti(m potentials for those two
methods. Mix shifts will be dealt with separately
in section III.xV.lO.
The Support Document based its projections
of feasible weight reduction tlirough downsizing
primarily on the reductions already achieved by
General Motors with its large-sized vehicles and
on press reports of planned downsizing of the
other market classes. See Support Document 2,
Volume I, page 2-7. Since these projections
were based on current downsizing efforts, they
PART 531— PRE 8
Effective: Model Years 1981-1984
may well understate the inaxiinum potential for
downsizing in 1981-84. See DN-11, p. i, com-
ments of Mr. Thomas Austin. In fact, Ford, in
response to the April 1 special order (DX-7)
projected greater total weight reduction for its
fleet than NHTSA had originally assumed.
DN-15, Doc. Ill, p. 30. GM strongly implied
that a second round of downsizing, in addition
to the one now underway, was both feasible and
planned. DN-18, Att. VIII, p. 3. In addition,
GM submitted a "hypothetical scenario" of ac-
tions it could take to meet a standard of 27.5
mpg in 1985. DN-18, p. 12. Although GM
characterizes this scenario as "drastic," the com-
pany's main concern appears to be that the
scenario assumes the use of diesel engines in 25%
of its automobiles and a reduction in average
acceleration capability. The projected weight
reductions, which are significantly greater than
those initially projected by NHTSA, do not ap-
pear "drastic," and are generally consistent with
Ford's projections. The reasonableness of GM's
projections can also be inferred from GM's state-
ment that the reduction assumed no mix shift
toward smaller market classes (p. 12) and the
fact that its projected average inertia weight for
1984 subcompacts (p. 13) is substantially higher
(2690 pounds) than that of many subcompacts
built today.
Additional evidence that the Support Docu-
ment's projections of achievable weight reductions
were unduly pessimistic was provided by Alcoa
and U.S. Steel Corporation in response to the
April 20 special order. See DN-27. Alcoa
projected that the use of aluminum in certain
vehicle components where that use is expected to
be feasible by 1982 could I'educe the weight of a
present compact car by 415 pounds. Alcoa em-
phasized that that total was nof based on a com-
plete list of all feasible aluminum substitutions
and that no allowance was made for propagation
effects, i.e., the ability to reduce the weight of
certain additional components because of weight
reductions achieved in other components. DN-
27-D.
Alcoa projected a material cost increase of only
$33 for its proposed aluminum substitution.
U.S. Steel projected a slightly greater weight
reduction, at a higher cost, through the substitu-
tion of certain steel products for those presently
used. DN-27-A. These projected weiglit reduc-
tions, which do not refer to identical lists of
vehicle components, are approximately twice as
great as those projected in the Support Docu-
ment, Doc. 2, Vol. I, page 2-7, of 150-250 pounds.
Since the Alcoa and U.S. Steel projections were
not available at the time of the XPRM, the
Department is reluctant at this time to revise
upward its projections in this rulemaking of
weight-saving potential on the basis of tliose sub-
missions. However, these submissions do support
the feasibility of the original weight reduction
projections.
Front engine, front wheel drive power trains
oti'er another technological option for further
downsizing of passenger automobiles. GM
(DX-18, p. 10) and Chrysler (DN-19, p. 7) each
projected use of such power trains in their fleets
in 1981-84. Their use allows additional vehicle
downsizing through maximizing passenger com-
partment volume by elimination of the driveline
tunnel and rear axle kick-up area. It may also
be possible to reduce the length of the engine
compartment by transverse mounting of the en-
gine and transmission. The only projection given
for fuel economy improvements associated with
front wheel drive was the 5 percent figure of-
fered by Dr. Sawyer at the hearing. Tr-III,
p. 93. Although no percent improvement is as-
signed to front-wheel drive for the purposes of
this analysis, the use of such power trains is
recognized as a feasible method for optimizing
vehicle design. The availability of this option,
which was not part of the original DOT anal-
ysis, tends to confirm the Department's conclusion
that the weight reductions projected in the Sup-
port Document are conservative estimates of the
maximum feasible reductions. There appears to
be no technological reason which would prohibit
the use of such power trains in all vehicles, par-
ticularly if the implementation of this option
were phased in concurrently with transmission
changes. (See sections 3 and 4.)
Therefore, the weight reductions assumed for
Ford and GM have been revised to take into
account the higher projections made by those
companies, but not the submissions by Alcoa and
U.S. Steel. In the case of AMC and Chrysler,
the original projections in the Support Document
have been retained, despite the claims of those
PART 531— PRE 9
Effective: Model Years 1981-1984
two manufacturers that the Department's projec-
tions exceed their plans.^ AMC argues that its
vehicles are presently optimally designed, and
that the other manufacturers' downsizing plans
will merely bring the latter automobiles up to
AMC's level of efficiency. DX-14, p. 1. Chrysler
argues that DOT projections are 100-200 pounds
too optimistic per vehicle. DX-30, p. 9. With
respect to both AMC and Chrysler, there is no
reason to believe that the improvements asso-
ciated with material substitution are not as fully
applicable to them as to Foi-d and GM, which
did not dispute the projected improvements.
Neither AMC nor Chrysler gave any indication
that they presently use light-weight materials to
a greater extent than their domestic competitors,
and a comparison of the weights of their present
vehicles confirms that there is no such difference.
AMC's claim that absolutely no downsizing of
its vehicles is possible must also be rejected. For
example, the AMC Gremlin has less interior
room than a Honda Accord, but weighs nearly
800 pounds more. See 1977 EPA/FEA Gas
Mileage Guide, Second Edition, and Automotive
News, 1977 Market Data Book Issue, April 27,
1977, p. 76, 109. The AMC Hornet weighs
nearly 500 pounds more than an Audi lOOLS.
but has less interior room. The AMC Pacer
weighs nearly 600 pounds more than that same
Audi model, with equivalent interior roominess.
The AMC Matador weighs 168 pounds more than
a large size Pontiac, based on a comparison of
six-cylinder versions of both cars, but has eight
less cubic feet of total interior volume. A similar
comparison between present Chrysler and Ford
automobiles reveals no significant differences in
weight or roominess, yet Ford projects that it
will achieve a significantly lower fleet average
weight than Chrysler. It is significant that
Chrysler engineers have projected that weight
reductions of 630 pounds could be achieved
through light-weight material substitution alone
in a mid-size car, with "moderate changes in
' Many of the automobile manufacturers' specific ob-
jections to the percent improvements projected by the
Department for various technological options are phrased
in terms of differences between DOT projections and
the manufacturer's present "plan." It is clear, however,
that under the statute DOT'S projections must be based
on maxinmm achievable improvements, notwithstanding
any contrary "plans" by the manufacturer.
design and manufacturing techniques." SAE
Paper #760203, Docket FE-76-01-GR-21.^ Those
engineers project that such weight reduction
techniques could be implemented in "two or three
years," with a resulting fuel economy improve-
ment of 26 percent. Therefore, the original
assessments of weight reduction potential for
AMC and Chrysler have been retained. The
originally adopted schedule for attaining those
reductions allows more time for those two com-
panies to complete the process than in the cases
of Ford and GM, in order to take into account
differences in economic and product development
capabilities (see Support Document, Doc. 4).
These delays provide needed flexibility for the
smaller domestic manufacturers without signifi-
cantly reducing total fuel savings. Table 5.1 of
the KSP provides the projected fleet average
inertia weights for each manufacturer and the
resulting fuel economy values appear in Table
5.9.
2. Reduction in straight-line acceleration capa-
hility.
Over a limited range of engine parameters, it
is possible to achieve fuel economy improvements
through reducing engine displacement or the
I'atio of engine speed to vehicle speed (N/V), or
some combination of those two items. These re-
ductions, while improving fuel economy, also
adversely afl'ect vehicle acceleration capability.
Where it is possible to merely substitute one set
of gears for another to change the axle ratio or
expand the ratio of transmission gearing or
where sufficient plant flexibility exists for a
manufacturer to increase the production of lower
displacement engines, this method of improving
fuel economy can be implemented in a highly
economical manner. The primary constraint
which restricts the use of this method is consumer
resistance, at least initially, to significantly re-
duced levels of vehicle acceleration. A secondary
constraint is the increased difficulty of controlling
NOx emissions as engine loading increases.
' "SAE Paper.s" are technical research papers presented
before the Society of Automotive Engineers. The papers
cited in this notice were prepared by engineers and
scientists expert in particular areas of automotive
technology.
PART 531— PRE 10
EffecHve: Model Years 1981-1984
Therefore, in the April 1 special orders, the
automobile manufacturers were required to sub-
mit estimates of the minimum level of accelera-
tion performance wliich consumers currently find
acceptable. DN-7, Question I.B.2. The responses
to this question were relatively consistent. In
terms of the time required for vehicles to ac-
celerate from rest to a speed of 60 miles per
hour, GM indicated that vehicles which require
more than 15 seconds are "currently meeting
with unfavorable consumer acceptance" (DX-18,
p. 5) ; Ford judged the same time to be the
"minimum performance acceptable without en-
countering consumer resistance" (DN-15, p.
11) ; Chrysler estimated a "threshold level" at
about 17 seconds (DN-32, p. 8) ; and AMC
states that times in excess of 20 seconds are
"clearly unacceptable" (DN-14, p. 4). However,
the specified "thresholds" do not appear to be
absolute minima, even at present, which all pas-
senger automobiles must exceed. GM states that
16 percent of its present fleet of passenger auto-
mobiles presently have acceleration times poorer
than its specified minimum (id., p. 5), Ford
states that nearly 26 percent of its fleet is in that
class (DN^3, Att. I), and AMC states that 26
percent of its sales are presently near the 20
second threshold (id., p. 4). Eight percent of
Chrysler's domestic fleet has acceleration times
poorer than 17 seconds. DN-32-A. Large por-
tions of all manufacturers' current import fleets
have acceleration performance levels poorer than
these "thresholds."
In view of these statements, it is concluded
that a reduction in average passenger automobile
acceleration of approximately 10 percent from
the present average baseline acceleration times of
approximately 14 seconds can be achieved with-
out incurring substantial consumer resistance.
This reduction roughly corresponds to a fleet
average "zero-to-sixty" time of 15.4 seconds, and
would be phased-in by the 1981 model year. A
fuel economy benefit of four percent would result
from this change.
It should be noted that several factors combine
to mitigate the impact of even this relatively
modest reduction. First, it is possible for the
manufacturers to achieve this reduction by nar-
rowing the range of offered acceleration char-
acteristics, e.g., by decreasing the acceleration
time for its faster automobiles. P^ven under the
GM "Hypothetical Scenario," which assumed a
greater performance reduction than tlic one
projected here, the reduction in average accelera-
tion performance is achieved while concurrently
hnproring the performance of the slowest of
GM's present passenger automobiles. DX-18, p.
17. In addition, it may be possible for the manu-
facturers to offset this performance reduction in
their passenger automobiles. At the same time
that a manufacturer switches from an 8-cylinder
engine to a 6-cylinder engine or loAvers tlie N/V
ratio, it could increase the acceleration perform-
ance of whatever engine is used by using a turbo-
charger or fuel injection system. The use of this
alternate technology may even result in a net fuel
economy benefit, in some cases. DN-16, p. 1
(Volkswagen) and DX-27B, p. 2 and Attachment
(Bendix). Fuel injection is presently used on a
number of passenger automobiles, and at least
one manufacturer plans to use turbochargers in
the near future. DX-18, p. 0 (GM). Volks-
wagen, under DOT contract, tested a turbo-
charged version of the Diesel Rabbit and achieved
a fuel economy improvement of up to 18 percent
with a concurrent improvement in acceleration
performance. The acceleration level of this ve-
hicle is superior to that of approximately 24
percent of General ^Motors' present passenger
automobiles. DX-16, p. 2 (VW) and DX-18.
p. 6 (GM). The fuel economy benefit from
turbocharging is an indirect one which would
typically result from the ability to substitute a
smaller displacement engine for the larger one
currently used and increasing the smaller en-
gine's horsepower while maintaining its better
fuel economy by turbocharging. Therefore, the
performance reduction discussed above is adopted
in the analysis on which the 1981-84 standards is
based. See Rulemaking Support Paper, Section
5.3, for a further discussion of this topic.
3. Improved automatic transmissions.
The Support Document projected that im-
provements in automatic transmissions could re-
sult in a 10 percent fuel economy improvement
in vehicles which use automatic transmissions, or
about 85 percent of the domestic fleet. This
improvement was based on tests of prototype
transmissions under contract for DOT, and sev-
eral studies presented in papers submitted to the
PART 531— PRE 11
EfFecrive: Model Years 1981-1984
Society of Automotive Engineers. Id. Document
2, Vol. 1. These data indicate that improvements
up to nearly 20 percent are achievable with cer-
tain types of improved automatic transmissions.
Present automatic transmissions are generally
three-speed units with a conventional torque
converter. Some data generated by the domestic
manufacturers indicate that certain modified ver-
sions of the present three-speed transmissions,
principally those employing a lock-up clutch on
the torque converter in conjunction with a wide
gear ratio range, have the potential to achieve
the assumed 10 percent improvement. In addi-
tion, a four-speed, wide ratio range automatic
transmission has the potential to achieve even
greater fuel economy improvements, but at sig-
nificantly higher costs. Ford, GM, and Chrysler
each projected fuel economy improvements
achievable through the use of one or more of the
above types of automatic transmission of a mag-
nitude either consistent with or very close to the
assumed 10 percent figure projected in the Sup-
port Document. DN-15, Doc. I, p. 3; DX-18,
p. 3; DX-30, p. 11. Volvo also supported the
10 percent improvement projection. DX-28-02,
p. 5. Even if tlie higlier cost four-speed unit is
necessary to achieve this improvement, none of
the four domestic manufacturers claimed that the
use of such units is economically impracticable,
in response to a specific question in the April 1
special order. DN-7, Questions IIA and B.
Indeed, Ford has begun plant modifications to
permit the production of a four-speed automatic
transmission with lock-up torque converter in
time for installation in some 1980 model year
automobiles. Docket FE-76-01-GR-23. There-
fore, the original 10 percent improvement is re-
tained in the final analysis.
GM argued that the 10 percent improvement
in automatic ti-ansmissions is not applicable to
all automobiles which use automatic transmis-
sions. DX-19, p. 3. Lightweight vehicles "with
small displacement engines, small automatic
transmissions and high axle ratios" are projected
to attain a significant share of the market and,
according to GM, the fuel economy of such ve-
hicles is not significantly improved by the addi-
tion of a lock-up clutch. Id., p. 4. NHT8A
cannot accept this argument for several reasons.
First, GM addressed itself primarily to the im-
pact of the lock-up clutch, without addressing
the impact of increasing the number of geared
speeds, which, as was previously noted, is consid-
ered both technologically feasible and economi-
cally practicable, or of other transmission
improvement techniques. Second, none of the
other manufacturers raised a similar objection to
the assumed across-the-board application, despite
their even greater orientation toward smaller
market class automobiles. Third, it should be
noted that General Motors' engineers have pro-
jected fuel economy improvements up to nearly
20 percent, over a wide range of engine sizes and
axle ratios. See SAE Paper #770418, Docket
FE-76-01-GR-2i. It may be that GM is im-
plying that its future use of a (presumably new)
small automatic transmission with high axle
ratio would obviate the need to use a lock-up
torque converter on its small cars. If this is
true, then the projected 10 percent improvement
figure for all automobiles which employ auto-
matic transmissions is still correct, since the new
drive train would achieve that improvement.
GM is in no way constrained to achieve that
improvement in precisely the same manner in
which it is postulated in this analysis.
AMC stated that it could only achieve a 2
percent improvement in its automatic transmis-
sions. DX-14, p. 1. However, AMC presently
purchases its transmissions from Chrysler and is
likely to continue to purchase such technology
from outside sources in the future. Therefore,
any transmission improvements achieved by the
"Big Three" would become available to AMC,
albeit on a delayed basis. Implementation delays
similar to those assumed for Chrysler and AMC
for weight reduction were also assumed for trans-
mission improvements in this analysis. See RSP
Tables 5.5-5.8.
4. Improved manual transmissions.
Another possible area of fuel economy im-
provement is the use of additional drive gears in
manual transmissions. Many domestic manual
transmissions have only 3 speeds. Information
received on this subject in response to the April 1
(DX-7) and April 21 (DX-28) special orders
supports a projected fuel economy improvement
of 5 percent for the manual transmission portion
of the fleet. DX-18, p. 8 (GM) ; DX-28-02, p. 6
PART 531— PRE 12
Effective: Model Years 1981-1984
(Volvo) ; DN-28-03, p. 5 (Honda). Ford's sub-
niission supports the feasibility of tliis substitu-
tion for all present manual transmissions.
DN-15, Doc. I. p. 11. No information was sub-
mitted which raised any doubts about the tech-
nolofiical feasibility or economic practicability of
this option. In fact, five-speed manual trans-
missions have currently achieved substantial
market penetrations in the import fleet. Honda
projects that the use of five-speed manual trans-
missions would result in a $50 per vehicle price
increase (for those vehicles with manual trans-
missions). DN-28-03, p. 5. Therefore, a 5 per-
cent improvement for all manual transmission
vehicles was adopted in the analysis. The per-
oentajie of vehicles which use manual transmis-
sions was not projected to increase between the
present and 1985, due to the difficulty encountered
by certain manual transmission vehicles in at-
tempting^ to meet more stringent emission stand-
ards. The use of manual transmissions with
additional drive gears results in a small, but
nevertheless significant, increase in average fuel
economy.
5. hn proved lubricants and accessories.
Improvements in average fuel economy can
also be obtained through the use of synthetic,
lower viscosity, or extended viscosity range lubri-
cants and through improvements in the efficiency
of vehicle and engine accessories such as pumps,
fans, and accessory drives. A total improvement
of 4 percent was assigned to these options in the
Support Document, 2 percent for each category.
See Doc. 2, Vol. I, p. 2-19. Three domestic
manufacturers which addressed this issue did not
object to the 4 percent improvement projection.
DN-18, p. 1 (GM) ; DN-15, Doc. I, p. 3 (Ford) ;
DN-14, p. 1 (AMC). Improvements up to the
assumed 4 percent for lubricant improvements
alone have been documented. See SAE Papers
750376 (Docket FE-76-01-GK-21 ) and 750675
(Docket FE-76-01-GR-21). Therefore, the as-
sumed 4 percent improvement is retained in this
analysis.
6. Reduction of aerodynamic drag and rolling
resistance.
Further fuel economy improvements are
achievable through reducing the automobile's
aerodynamic drag and rolling resistance. The
latter term refers to the use of improved radial
and other advanced tires and reductions in the
frictional losses of bearings and other similar
drive line and chassis components. Aerodynamic
drag and rolling resistance improvements should
be achieved in two ways. The first way is to
obtain credit for aerodynamic drag reductions
already achieved, through the use of the optional
EPA "coast-down'' procedure for determining
road load dynamometer settings in fuel economy
tests. See 40 CFR 86.177-11 (e) (2). If the op-
tional procedure is not used, fuel economy test
results will be based on current tabulated values
of road load power which in certain cases may
result in deleterious fuel economy effects. The
second way results from future improvement in
these two areas. Credit for future aerodynamic
drag reductions must also be obtained through
the use of the optional EPA procedure. Data
indicates that improvements in the first category
alone can be of substantial magnitude. See RSP,
App. D, Ref . 18.
The automobile manufacturers expressed a
major difference of opinion on the magnitude of
achievable improvements in this area. GM indi-
cated that improvements up to 4 percent for
aerodynamic drag and 4 percent for rolling re-
sistance were achievable. DN-18, p. 5, 10, and
ANPRM submission. Docket Number FE 76-01-
NOl, #10. pp. 16a, 21-24. The other manufac-
turers indicated much lower improvement poten-
tial, although apparently not assigning a high
research and development priority to these items.
DN-14, pp. 4, 5 (AMC) ; DN-19, p. 3, DN-32,
Att. II (Chrysler) ; DN-15, Doc. I, p. 11 (Ford).
As was frequently the case with the manufac-
turers' statements, the percent improvements
given reflect present plans as opposed to maxi-
mum capabilities. Therefore, the Department
conducted an investigation to determine which of
the disparate projections most closely corre-
sponded to the actual maximum feasible improve-
ment. Available data indicates that improvements
in the upper range of GM's projections are in
fact feasible for the 1981-84 time period. Volks-
wagen, for example, has demonstrated how rela-
tively minor changes to automobile extei'ior
design can result in significant reductions in
aerodynamic drag, even beyond the GM projec-
tions." SAE Paper #760185, Docket FE-76-01-
PART 531— PRE 13
Effective: Model Years 1981-1984
GR-21. Methods for reducing aerodynamic drag
are discussed further in Appendix D of the
Rulemaking Support Paper.
In the case of rolling resistance, it appears
that a 5 percent fuel economy improvement can
be obtained by switching from bias tires to "first
generation" radials, although much of the switch-
ing has already occurred. "Second generation"
radials which will offer further improvements of
2 to 4 percent are now under development, with
GM apparently being the leader in this area
among the auto companies. Docket FE76-01-
GR-19, 20, 22. It should be noted that develop-
ments in this area will result from the automobile
companies working together with the tire manu-
facturers, since the automobile companies gen-
erally do not manufacture their own tires. It is
likely that major breakthroughs by one automo-
bile manufacturer would soon become available
to all manufacturers, since the tire company
which produces the improved tire could market
that tire freely. Additional rolling resistance
reduction can be obtained through increasing tire
inflation pressures while making appropriate
changes in the vehicle suspension system. See
Appendix D of the Rulemaking Support Paper
for further information on reducing rolling re-
sistance. It is concluded that the previously
discussed improvements in each of these two
areas are feasible in the 1981-84 time frame, on
a gradual phase-in basis. See RSP, Tables
5.5-5.8.
7. Use of alter'native enghies.
Tlie present fleet of domestically manufactured
passenger automobiles is powered exclusively by
conventional, homogeneous charge spark ignition
gasoline engines. However, certain alternative
engine types such as the diesel and such stratified
charge concepts as the Honda CVCC and the
Ford PROCO (programmed combustion) offer
the potential for significantly better fuel ef-
ficiency than present engines. Many manufac-
turers plan to use some form of alternative
engine in their domestic fleets in the near future,
including General Motors with the diesel (DX-
18, p. 32), Ford with the PROCO (DX-15, Doc.
I, p. 2) , and Chrysler with a form of pre-chamber
engine (DX-35-01, Attachment B, p. 6), in addi-
tion to the Honda CVCC and Mercedes, VW, and
Peugeot diesels already on the mai'ket. In the
case of the diesel, the Support Document pro-
jected (Summai-y Report, p. A39), and the do-
mestic manufacturer most actively pursuing the
development of diesel engines confirmed in its
response to the April 1 special order, that the
diesel offers 25 percent better fuel economy than
a comparably performing conventional spark
ignition engine. DN-18, p. 2 and Attachment V
(GM) ; DN-7, Question I.A. In addition, Volvo
indicates that the PROCO engine can be ex-
pected to provide an improvement in fuel econ-
omy of approximately 20 percent. DN-15, Doc.
I, p. 3 and Tr-II, p. 38. Honda projects a fuel
economy improvement differential of roughly 10
percent" for its CVCC engine. DX-28-03, p. 11.
This projection may be low. The fuel economy
difference between its CVCC and non-CVCC
versions of the Ciyic, as determined in EPA fuel
economy tests, is approximately 30 percent. The
Support Document's projection Of a 25 percent
improvement in fuel economy for the diesel was
based on a comparison of fuel economy differ-
entials actually experienced by GM and VAV with
their recently certified diesel passenger automo-
biles.
A nmnber of objections were raised by a va-
riety of participants in the proceeding with re-
spect to the Department's original projections of
a market penetration for diesels in the passenger
automobile fleet gi'owing linearly from 5 percent
in 1981 to 25 percent in 1985. The passenger
automobile industry argued that the primary
difficulties in achieving those substantial market
penetrations involve questions about the jnarket-
ability of diesels and the ability of diesel engines
to meet stringent nitrogen oxides emission stand-
ards. Tr-II, p. 105, 126, (GM) ; DX-19, p. 1
(Chrysler). The marketability problem for
diesels is attributed to their higher initial cost
and current problems with exhaust smoke, engine
noise, cold-starting, fuel availability, and odors.
The nitrogen oxide problem results from the
diesel's alleged inability to achieve nitrogen
oxide standards as low as 1.0 gram-per-mile, the
level specified in the Senate and House versions
of the Clean Air Act amendments. On the other
hand, representatives of some public interest
groups argued that the most serious problem
with tlie diesel engine is that it emits certain
PART 531— PRE 14
Effective: Model Years 1981-1984
presently unrefjulated, but nevertheless dan<ier-
ous, pollutants such as particulates and poly-
nuclear aromatics (PXA) and that increased use
of diesel engines should therefore be pursued
with caution. DX-12, pp. 19-28 (Citizen's for
Clean Aix) ; Tr-I, p. 93 (Dr. Sawyer, for En-
vironmental Defense Fund).
In order to obtain more infoi'mation on the
marketability of diesel engines, the Department,
in the April 1 special order, required those pas-
senger automobile manufacturers most actively
pursuing the diesel option to submit copies of
any surveys in their possession relating to the
marketability of diesels in the United States.
DN-7, Question IV.A (GM) and Question B
(VW). These surveys tended to support the
conclusion that a 20 to 25 percent market pene-
tration is potentially achievable. DX-18, Att.
IV. It appears that the initial orientation of
present passenger automobile buyers toward
diesels is improved significantly when potential
buyers obtain more information about the diesel's
characteristics. In addition, present consumer
resistance to diesels is based on perceptions of
those diesel vehicles presently on the road. GM
reports that "(r)ecent developments have sig-
nificantly improved some of the factors that have
historically detracted from the market acceptance
of diesel engines such as noise, odor, cold start
time and reduced acceleration." DN-18, p. 2.
See also DN-16, p. 1 (VW), with respect to the
turbocharged diesel Rabbit. Further improve-
ments in diesel performance can be anticipated
as the use of diesels is expanded. Therefore,
marketability of diesel engines does not at this
time appear to be as serious a problem as the
manufacturers have indicated, although (juestions
of the precise extent of future market penetra-
tion remain.
Similarly, the nitrogen oxides emission prob-
lem does not appear to be beyond solution.
Relatively little has been done in the area of
research on control of diesel emissions because of
their present low market penetration and their
ability to meet present emission standards essen-
tially without emission controls external to the
combustion chamber. In small diesel passenger
automobiles, such as the VW Rabbit, XOx levels
either meeting or closely approaching a 1.0 gram-
per-milc standard have been achieved without the
use of such NOx control techniques as exhaust
gas recirculation. Tr-III, p. 11. In larger auto-
mobiles, GM states that a level of 1.5 grams-per-
mile of XOx is achievable with its 350 V-8
diesel. Tr-II, p. 127. Further, both the recently
passed House and Senate amendments to the
Clear Air Act provide for some type of XOx
waiver for diesel engines. Ford states that its
PROCO alternative has the capability to achieve
the 1.0 XOx standard without encountering the
unregulated pollutant problems to the same ex-
tent as diesels. Tr-II, pp. 36, 42. The Honda
CVCC approach appears to offer significantly
better emission control potential than the homog-
eneous charge engine, without associated unregu-
lated pollutant problems. DX-28-03, Attach-
ment, p. 100. Therefore, the Department has
concluded that control of XOx emissions down to
approximately 1.0 gram-per-mile will not present
an insurmountable barrier to the increased use of
alternative engines, although further develop-
ment work may be required. See Tr-I, p. 93
(Dr. Sawyer).
Tlie magnitudes of tlie problem presented by
the unregulated pollutants emitted from the
diesel and the PROCO and of the potential for
reducing those emissions are presently unclear.
The particulate emissions from diesels are of
concern to EPA because of the potential signifi-
cant contribution to air quality control regions'
pai'ticulate problems. EPA is studying the total
mass and other aspects of diesel particulates, but
as yet no firm guidelines on allowable diesel
particulate emissions have been set. Control of
diesel particulates, if needed, is expected to be
a formidable technical task. See Docket Xumber
FE-76-01-GR-17.
For the reasons specified above, and partic-
ularly because the Department desires further
information on health effects the Department has
not included alternative engines in the analysis
forming the basis for maximum feasible average
fuel economy projections. The foregoing dispo-
sition of the "alternative engine" issue does not
preclude the Department from including the use
of such engines in projections of maximum
feasible average fuel economy in a subsequent
proceeding to amend the 1985 standard.
PART 531— PRE 15
Effective: Model Years 1981-1984
One final point witli respect to future use of
the diesel engine desei'ves further discussion. Up
to the present, the use of diesel engines has gen-
erally been confined to luxury automobiles such
as the Mercedes and Peugeot. Recently, Volks-
wagen and General Motors have begun imple-
mentation of that engine by dieselizing an
existing engine, rather than designing a com-
pletely new engine. In view of past applications
of the diesel engine, it would not be surprising
if the new dieselized versions of the VW and
GM engines were marketed as luxury items at a
high price mark-up, higher than that justified by
the additional cost alone. If this were done, this
fuel efficient technolog^^' might not get the fair
market test which it deserves, because of the
high price differential.
Volkswagen has not adopted this approach.
Rather, it has offered its diesel engine as a $170
option in the Rabbit (Tr-III, p. 18), and all
indications are tliat the diesel version is selling
extremely well, both in the United States and in
Europe. Persistent rumors have circulated that
the General Motors diesel would be offered at an
extremely higli mark-up, of up to $1,000. Tr-II.
p. 110. This would raise serious questions as to
the adequacy of the market test which the GM
diesel would receive, if those rumors are in fact
true. See Tr-II, p. Ill (GM). Despite the
differences in size between the VW and GM
engines, the Department would be hard pressed
to understand such a large price difference be-
tween the two engines. See Support Document,
Doc. 3, App. B.
8. Improved spark ignition engines.
The Support Document projected that a fuel
economy improvement on the order of 10 percent
is achievable through improvements to the con-
ventional spark ignition engine. The use of an
integrated electronic control unit for spark ad-
vance, fuel metering, and exhaust gas recircula-
tion, optimization of combustion chamber, intake
system, and valve timing, and the use of knock
sensing and fuel injections were identified as
methods for achieving the improvement. See
Support Document, Doc. 2, Vol. I, pp. 2-16, 3-7.
The percent improvement attributable to each of
those options was not specified, although it was
stated that 2 percent of the total was assigned to
fuel injection, with the remaining 8 percent di-
vided among the others. Id., 3-7.
The Support Document also identifies other
spark ignition engine improvements that could
occur as a result of that Document's downsizing
methodology. As vehicles were downsized,
smaller engines were projected to be used in
those vehicles, in order to maintain horsepower-
to-weight ratios. However, in selecting among a
manufacturer's existing engine line, it was antici-
pated that in those cases where a choice among
existing engines was possible, the manufacturer
would select the more efficient one and phase out
the least efficient. This procedure would result
in an improvement in average engine efficiency
of 8 to 13 percent. See Support Document, Doc.
2, Vol. 1, p. 3-8.
The Support Document noted further that
sevei'al of the technological changes to engines
for fuel economy improvement might also be
used to control engine exhaust emissions. The
dual benefits of sucli engine and emission control
technologies is explicitly recognized. It is neces-
sary to avoid double counting of benefits, how-
ever, and since the automobile companies and the
Environmental Protection Agency (EPA) have
generally treated the electronic control unit as
part of the emission control system, this analysis
is I'evised accordingly to make it consistent.
DX-18, p. 20 (GM); DX-15, Doc. I, p. 17
(Ford) ; ''Analysis of Alternative Motor Vehicle
Emission Standards," Docket FE 76-01-GR-17,
App. A. Therefore, no separate fuel economy
benefit was attributed to the use of electronic
control units.
The 2 percent fuel economy improvement as-
signed to fuel injection was confirmed by Ford,
and no participant in the proceeding suggested
a lower number. Id., Doc. I, p. 17. Bendix, the
major domestic manufacturer of these units,
claimed a 15 percent fuel economy benefit, ad-
justing for comparable emission and horsepower
levels. DX-27B, p. 2. Bendix projects the costs
of the unit, including the previously discussed
electronic control unit and sensors, to be less than
$100, about $15 more than the advanced carbu-
retor it would be likely to replace. Several
model types now in production employ fuel in-
jection. See 1977 EPA/FEA Gas Mileage
Guide.
#
PART 531— PRE 16
EfFecllve: Model Years 1981-1984
It appears likely that the precise improvement
achievable tJiroiigh the use of the remainino; en-
gine improvement teclmiqiies will vary from
manufacturer to manufacturer, depending on tlie
efficiency of engines presently in use. AMC ex-
pressed "no disagreement"' with tlie originally
assigned improvement, which was 10 percent.
DX-14, p. 1. Clirysler projected up to a 3 per-
cent fuel economy improvement for i-edesigned
cylinder heads, and .a total of 71/2 percent for
engine control optimization. DX-30, 10, 44.
Ford did not address the issue except for the
impact of electronic control unit.
Therefoi'e, it appears that a fuel economy im-
provement rising from 2 to 10 percent, depending
on the manufacturer, is acliievable by improve-
ments to spark ignition engine efficiency, even
beyond that associated with the use of the best
of present engines. In the case of the manufac-
turers with the most efficient engine lines, the 2
percent fuel injection benefit would be available,
as a minimum, since present domestic automo-
biles use tliat technologj- only to a negligibly
small extent. In the case of the manufacturers
with the least efficient engines, even selecting the
most efficient engines in their lines would not
result in the application of optimally efficient
engines. Further techniques would be available
to those manufacturers to achieve up to the 10
percent improvement in fuel economy projected
in the Support Document.
The Department's assessment of the fuel econ-
omy improvements due to improved engines in
1981-1984 is that the detailed matching of specific
engines with veliicles in specific inertia weight
classes as identified in the Support Document is
valid, and that the various engine and emission
control technologies discussed above can be used
to maintain the fuel economy resulting from that
matching process while emission standards are
tightened. See Section III. C, however, for fur-
ther discussion of the relation between fuel econ-
omy and emission standards.
A specific engine efficiency improvement device
not included in the previous discussion is the
variable displacement engine. This concept in-
volves the use of an electromechanical system
which deactivates some of the engine's cylinders
during those operating modes wliich require less
power, such as idle, light acceleration, cruising
and deceleration. Eaton Corporation, the de-
veloper of this technology, projects fuel economy
improvements of 10 to 40 percent with its units,
depending on the engine operating mode. Some
fuel economy benefit would accrue during all
operating modes except moderate to heavy ac-
celeration. Ford, which is the automobile com-
pany most actively pursuing the implementation
of this technology, cites fuel economy benefits to
date of 3 to 7 percent on the EPA composite
driving cycle. DX-15, Doc. 1, p. 17. It should
be noted that this technology has been applied
to certain prototype alternative engines, in addi-
tion to conventional engines. Tr-II, p. 39.
9. Building '"''captive imports^' domestically.
Section 503 of the Act provides that for pur-
poses of determining compliance with fuel econ-
omy standards, the fuel economy ratings of
domestically manufactured automobiles may not
be averaged after model year 1979 together with
automobiles more than 25 percent of wdiose cost
is attributable to value added outside the United
States and Canada. Ford, GM, and Chrysler
each have subcoiupact passenger automobiles
which fall in the latter category. Thus, if those
"captive import" passenger automobiles were
manufactured in the United States in the future,
they could be included in those manufacturers'
averages, resulting in some increase in that aver-
age. All three manufacturers disclaimed having
present plans to do this, but none claimed this to
be infeasible. Therefore, this also presents a
possible method for complying with the fuel
economy standards, while concurrently increasing
domestic employment.
Volkswagen has noted that this provision has
the anomalous effect of discouraging a foreign
manufacturer from building production facilities
in the United States. While it was adopted to
prevent an exportation of jobs, the provision, as
applied to a foreign manufacturer, discourages
the importation of jobs. Although this impact
may well not have been intended by Congress, it
follows directly from the statutory language and
the Department is powerless to change the result
administratively. However, Volkswagen, or any
other foreign manufacturer, may manufacture
automobiles in the United States as long as more
PART 531— PRE 17
Effective: Model Years 1981-1984
than 25 percent of the value added content is
foreign, and still average those vehicles together
with their imported fleet.
10. Mix shifts.
A significant fuel economy benefit can be
achieved through the use of marketing strategies
to increase the sales of smaller automobiles. In
addition, some improvement can result from mix
shifts even in the absence of any initiatives by
the manufacturers, if increases in demand for
the smaller market class automobiles can be
projected. Such a trend is projected by Ford
and Chrysler, relying in part on long-term trends
toward the smaller market classes. Tr-II. p. 270
(Chrysler) and DX-15, Doc. I, p. 11 (Ford).
See also Tr-I, p. 89 (Dr. Sawyer), DX-13, p. 4
(Environmental Defense Fund), and DX-21,
Attachment (Public Interest Economics Foun-
dation), the latter with respect to the issue of the
feasibility of "forcing" mix shifts.
Ford argued that requiring the manufacturers
to take actions to shift the mix of passenger
automobiles away from that mix which would
result from "free market" forces is beyond the
Depai-tment's statutory authority. DX-1.^. Doc.
IV, p. 3-8. The Department rejects this position
as inconsistent with the "maximum feasible" re-
quirement and the legislative history of the Act.
The legislative history of S. 1883, the Senate
version of the fuel economy provisions, contains
a clear indication of the Congressional intent
with regard to the role of market forces and mix
shifts in establishing the standards. In explain-
ing the standards set in the bill, the Senate
Commerce Connnittee stated :
a DOT/EPA report estimated that up to a
63-percent improvement in new car fuel econ-
omy could be achieved by 1980. This 63-percent
gain was based upon maxinnim technological
impi-ovement through 1980 (weight reduction,
aerodynamic drag reduction, transmission im-
provement, engine resizing and optimization)
and a moderate shift in sales mix to 35 percent
large and intermediate cars, and 65 percent
compact and subcompact cars. Such a shift is
within the current capability of the auto in-
dustry. By calling for a 50-pei-cent improve-
ment, this legislation provides ample cushion
for unforeseen contingencies.
S. Eep. Xo. 94-179 (94th Cong., 1st Sess.) at 10.
The Committee thus seems to have implicitly
accepted the necessary or propriety of requiring
such a mix shift to achieve the standards it set.
In selecting a 50 percent instead of 63 percent
improvement, the Committee did not reject any
particular identified means of improving fuel
economy. It simply provided a cushion against
all types of contingencies. One contingencj-
would be the failure of the assumed mix to sell.
Another would be the failure of technology to
develop at the assumed pace or to jdeld the
anticipated improvement. The Committee's ac-
ceptance of the shift is made even clearer a few
pages later in the Report :
Figures obtained from the Recreational Ve-
hicle Industry Association indicate that there
will be approximately 2 million travel trailers
(homes-on- wheels) and 1.2 million camping
trailers (fold-down types) in the hands of the
American public in 1976. There are also 3.2
million families in the United States of 7 or
more persons. If reasonable assumptions are
made about yearly growth in the number of
trailers, auto fleet turnover rates, etc., a con-
servative estimate of the towing and large
family demand for big cars is something under
1 million per year over the next few years.
Even if the most drastic sales mix shifts neces-
sary to meet the 1980 goal occur, there will
still be at least 1 million full size and luxury
cars produced, clearly a suiRcient number to
meet the demand. Special problems could
arise in the 198()"s if the automakers insist on
sticking solely to the internal combustion en-
gine to meet the 1985 goal. However, diesel
towing packages could be an answer to this
problem, with no sacrifice in fuel economy.
Also, light duty trucks, which are not subject
to the 1980 or 1985 goals, could meet a signifi-
cant portion of towing demand.
Id. at 14. The Committee clearly anticipated
shifts in both sales mix and the type of vehicles
offered for given uses. The 1 million figure was
apparently obtained by nuUtiplying the 10 per-
cent large car figure used in the mix shift as-
sumed in the DOT/EPA leport and 10 million,
the total number of passenger automobiles sold
annuallv in the mid-1970's.
PART 531— PRE 18
EfFecHve: Model Years 1981-1984
The extent of the sales mix shift the Commit-
tee contemplated as bein^ possibly required to
meet the 27.5 mpg standard, and the means that
would be necessary to achieve it, are apparent
from the DOT/EPA report cited by the Com-
mittee. The potential 63 percent improvement
was under "Scenario D," which required :
Steady technological improvement through the
1980's...
. . . with 1980 sales mix assumed at 10 percent
large cars, 25 percent intermediates, 25 percent
compact, and 40 percent subcompact.
Potential fon' Motor Vehicle Fuel Econom,y Ini-
prm'ements: Report to the Congress, U.S. De-
partment of Transportation and the U.S. En-
vironmental Protection Agency, October 24, 1974,
at 66. The DOT/EPA report also states that:
. . . sales shift in Scenario D would probably
not occur "voluntarily" because of market de-
mands for larger cars, i.e., Scenario D would
probably require more substantial government
pressure on manufacturers and/or consumers
than would be the case under Scenarios B
and C.
Id. at 64, and that ;
Shift in mix was limited to that possible
given the availability of production facilities,
but no limitations due to consumer demand
were assumed. Some of the technological op-
tions considered require further development;
however, their implementation is deemed
feasible by 1980. Technological options were
screened for consumer acceptability prior to
their inclusion, but once selected, eventual 100
percent application to the new car fleet was
assumed.
Id. at 4. The Committee thus explicitly recog-
nized that major shifts in sales mix could be
required to meet the standards and implicitly
recognized that these shifts might not result vol-
untarily but could require government pressure
on the manufacturers and/or consumers. The
only limit on the mix shift that was contemplated
was that which was imposed by the availability
of production facilities ; consumer acceptance was
considered only with respect to technological
impi'ovements.
The Senate Committee apparently realized
that this process would not be without some
risks. First, as stated above, it reduced its stand-
ard to require only a 50 percent increase, rather
than a 63 percent increase, to provide "ample
cushion for unforeseen contingencies" (emphasis
added). Second, the bill itself contained provi-
sions to protect the manufacturers from an
"unanticipated retail sales mix" beyond the con-
trol of the manufacturer in section 508(b) (3) :
(3) The Secretary may waive or modify a
civil penalty determined under subsection
(a) (1) of this section if, and to the extent that
the manufacturer involved demonstrates to the
Secretary that its failure to comply with an
applicable average fuel economy performance
standard resulted from an unanticipated retail
sales mix among diiferent classes of automo-
biles or light duty trucks, as appropriate,
manufactured by it and that such mix was
beyond the control of the manufacturer: Pro-
vided, That the Secretary may not waive or
modify any such penalty unless the manufac-
turer involved demonstrates to the Secretary
that it included in its automobiles or light duty
trucks, as appropriate, all of the improvements
to increase fuel economy that were technolog-
ically feasible, and that it made a good faith
eflfort to produce or stimulate a retail sales mix
that would have resulted in compliance with
the applicable standards, through advertising,
pricing practices, availability of models, and
any other means.
In other words, a manufacturer could be let off.
but only if it had done everything it could to
achieve the required product sales mix.
Finally, the bill provided some additional pro-
tection for the manufacturers by allowing for
recoupment of penalties in the event of subse-
quent overachievement (section 508(c)) and for
modification of the standards by the Secretary if
new information indicated the standards could
not be achieved (section 504(b)). It should be
noted, however, that downward revision of the
1980 and 1985 standards would be subject to
Congressional approval (section 504(b)(2)).
PART 531— PRE 19
Effective: Model Years 1981-1984
To summarize briefly, the Committee appar-
ently recognized that a major sales mix shift
away from current levels would be necessary to
meet the standards, and that achieving this shift
would require pressure from the government on
the manufactui'ers and by the manufacturers on
the consumers. It realized there were risks in-
volved in this, and tried to reduce them first by
setting the standai'ds below the maximum achiev-
able level, and then by allowing an escape clause
for the manufacturers if the consumers did not
accept the sales mix necessary to meet that re-
duced level after every good faith effort to change
their preferences. Finally, it provided a mech-
anism for recoupment of penalties, and for re-
vision of the standards downward, subject to
Congressional approval, if the standards could
not be met.
There is only one statement in the report which
could be claimed to limit this virtual requirement
of significant sales mix shifts :
The fuel economy standards approach
adopted in this legislation leaves maximum
flexibility to the manufacturer to meet the
standards. This should result in a more di-
verse product mix and wide consumer choice.
In meeting the fuel economy standard ap-
plicable to any given model year one manufac-
turer could choose new technology, another
could choose to shift more rapidly to lighter
weight vehicles, and still another could choose
some combination of the two.
S. Rep. Xo. 94—179, supra, at 6. Arguably, the
"more diverse product mix" language limits the
extent to which any mix shift could be pushed.
However, this argument must be rejected because
the language already states that the standards
adopted in the bill, which include the significant
mix shifts, will satisfy this concern. Rather than
limiting the magnitude of the mix shifts neces-
sary, this language seems to indicate that the
approach of letting eacli manufacturer choose
its own approach to meeting the standards will
result in a more diverse product mix than the
alternative legislative solutions that were consid-
ered, such as mandating the procedures to be used
for forbidding the sales of vehicles getting below
a specified fuel efficiency rating.
The legislative history of H.R. 7014, the bill
containing the House version of the fuel economy
provisions, is less specific in its treatment of
product mix and market demand. The first ref-
erences were in regard to the process of setting
the 1980 standards:
The DOT-EPA study of the potential for
motor vehicle fuel economy improvement indi-
cates that with technological improvements
and use of smaller engines but witliout any
shift to smaller cars, sales-weighted fuel econ-
omy of automobiles sold in 1980 could reach
20.3 MPG in 1980 (a 45 percent increase above
1974). If the maximum feasible shift to small
cars occurred, sales-weighted fuel economy
could reach 22.2 mpg in 1980 (a 59 percent
increase over 1974). The study assumed, for
purposes of these projections, that these levels
of fuel economy could be achieved without any
reduction in the stringency of the statutory
hydrocarbon (HC) and carbon monoxide (CO)
emission standards which are scheduled to be
effective in 1978.
H.R. Rep. Xo. 94340 (94th Cong., 1st Sess.) at
86, and
The Connnittee, in setting the statutory av-
erage fuel economy standards for passenger
automobiles, gave careful consideration to the
EPA-DOT study's conclusion that a 63 percent
improvement in average fuel economy levels
between 1974 and 1980 (22.2 MPG) was the
maximum potential improvement in average
fuel economy. This projection was on an in-
dustry-wide basis and was not a level which
each manufacturer necessarily could be ex-
pected to reach ; it assumed the maximum shift
to smaller cars which was technologically
feasible, and it appeared to assume that there
would be no reduction in fuel economy asso-
ciated with more stringent emissions standards.
The Connnittee, in translating this industry-
wide potential average fuel economy projection
into an average fuel economy standard which
each manufacturer must attain, was of the view
that any emission standards likely to be in
effect in 1980 would involve at least a 5 percent
reduction (1 MPG) in average fuel economy
in 1980. In addition, because of tlie likelihooil
that in that year a number of smaller manu-
PART 531— PRE 20
Effective: Model Years 1981-1984
facturers are likely to "overachieve" (have an
avei'a<re fuel economy in excess of the industry-
wide target), the Committee felt it could set a
standard for each manufacturer which was
somewhat lower than the industry-wide target.
In light of these considerations, the Committee
set the average fuel economy standard for each
manufacturer at 20.5 MPG for model year
1980. The model year 1978 and 1979 standards
were set at 2 MPG and 1 MPG, respectively,
below the 1980 standai'd.
Id. at 88.
Taken together, these two passages leave no
doubt that the Committee based its standards on
the improvement projection that included the
significant product mix shift, as discussed above,
and thus also implicitly accepted the possibility
that mix shifts would be required to meet the
standards. Id. at 87. This seems particularly
clear from the second statement. The Committee
started with one figure and made two adjustments
in it to obtain the standard specified in the House
bill. Since the starting figure was based on the
mix shift assumed in the DOT-EPA report and
since neither of the adjustments involved elimi-
nation of the mix shifts, the final figure must be
based upon those shifts too.
The only other mention of product mix or
consumer demand is the following :
. . . Committee recognizes that the automobile
industry has a central role in our national
economy and that any regulatory program
must be carefully drafted so as to require of
the industry what is attainable without either
imposing impossible burdens on it or unduly
limiting consumer choice as to capacity and
performance of motor vehicles. The Commit-
tee has devised the regulatory program, which
appears in Part A of the bill, . . .
Id. at 87. Again, it is arguable that the "with-
out . . . unduly limiting consumer choice" lan-
guage could limit the extent of any market shift.
However, it is again clear that the Committee
believed that the program it had proposed would
satisfy this constraint, i.e., that the mix shifts
contemplated by the standards would not unduly
limit consumer choice. Further, this passage
proscribes only ^^unduly limiting consumer
choice". (Emphasis added.) That is, consumer
choice may not be limited unless it can be justi-
fied by resulting improvements in fuel economy.
Finally, the House bill did not contain any
provisions allowing modification of any penalties
incurred because of unanticipated sales mix.
However, the bill contained provisions allowing
both the carry-back and carry-forward of penalty
credits for overachieving in any model year (sec-
tion 508(a)(3)) and modification of the stand-
ards, subject to Congressional disapproval for
decreases below 26.0 mpg or increases above 27.5
mpg.
The legislative history indicates that both
houses of Congress expected that significant shifts
in product mix might be recjuired to meet the
standards they were setting, and that there would
have to be some efforts to induce the market to
achieve these shifts. The manufacturers have a
panoply of marketing measures, including pric-
ing, advertising, and dealer incentives, to aid
them in such efforts. Both houses of Congress
provided some mechanism for reducing penalties
if the standards could not be achieved, with the
Senate specifically providing for the effects of a
failure of a manufacturer to succeed in inducing
the market to accept the required mix.
The Act as finally adopted does not contain
the Senate unanticipated nux provision, but is
basically identical to the House bill in its penalty
lecoupment provisions. The fact that the Senate
provision was eliminated may indicate either that
a tougher standard was finally agreed to by the
Senate, or that the recoupment and standard
modification procedures were believed adequate
to handle failures to achieve recjuired product
mixes. What is clear is that free market demand
and product mix in no way determinative of the
standards finally adopted. If consideration of
non-free market mix shifts is appropriate in es-
tablishing the 1980 standard, it must also be
appropriate for the 1981-84 standards, which are
required to result in "steady progress" over the
1980 base toward the 1985 target.
11. Combining the improvement projectio'iis.
To determine the technologically feasible level
^of average fuel economy for each of the domestic
manufacturers, it is necessary to combine the per-
cent improvements assigned to each of the tech-
nological options discussed in section III.A,
PART 531— PRE 21
Effective: Model Years 1981-1984
accordinfj to the phase-in schedule set forth in
Tables 5.5-5.8 of the ESP. The methodology in
the Support Document assumed (Doc. 2, Vol. I.
p. 2-23), and the manufacturers did not seriously
dispute, that the improvement options, includiro;
weight reduction, transmissions, engine improve-
ments, and alternative engines could he combined
in a straight forward arithmetically additive
manner. Question I.D of the April 1 special
order directed the automobile manufacturers to
specify which, if any, of the options for improv-
ing fuel economy are not additive, to ([uantify
any negative synergistic effect, and to submit any
data relevant to this issue. GM responded that
the options it had evaluated are additive. DN-IS,
p. 11. Ford presented a talile showing areas of
judged incompatibility between various options
Init presented no supporting data or rationale.
DX-15, Doc. I, p. 14. Most of the areas of ques-
tionable additivity involved alternative engines.
Chrysler expressed the opinion that the various
options are either "additive or very nearly addi-
tive" and stated that it relied on the assumption
of additivity for its own internal projections.
DX-32, p. 12. Chrysler expressed uncertainty
about the options related to engine speed, such as
some accessory improvements and over-drive
transnussions, but was unable to (juantify this
eifect. Therefore, the assumption of additivity
has been retained. Options whicli are mutually
exclusive, such as improved automatic and man-
ual transmissions, are of course not additive.
Based upon the technologically feasible weight
reduction only, the Department projects that
General Motors, Ford, Chryslei', and American
Motors will be able to achieve 21.6 mpg. 21.6
mpg, 22.7 mpg, and 21.2 mpg, respectively, by
1!)81, and 22.2 mpg. 23.0 mpg, 23.6 mpg. and 24.7
mpg, respectively, by 1985. Table 1 lists addi-
tional average fuel economy gains that can be
achieved through the use of the other techno-
logical options.
B. Economic practicdbiUty.
In considering the economic practicability of
implementing the technologically feasible options
in 1981-84, the Department examined several
dirt'erent schedules of standards based upon dif-
ferent sets of options. The sets ranged from one
that was ahnost fully comprehensive to one that
included only a select number of the options.
Kxcluded from all sets were some spark ignition
engine improvements, variable displacement en-
gines, further weight reduction beyond that
initially projected in the Support Document or
submitted by tlie manufacturers, and domestic
l)roduction of captive import passenger automo-
l)iles. Due to the lack of complete data for these
options antl their omission from the XPKM and
Support Docuiuent, they have been excluded from
further consideration in tins rulemaking. Eti'orts
will be uuule to suppkuuent the Department's
data base in these areas in future rulemaking
proceedings.
TABLE 1
Acceleration reduction
Automatic transmission with lockup torque converter
Five-speed manual transmission
Improved lubricants
Reduced accessory loads
Reduced aerodynamic drag
Reduced rolling resistance
Diesels (or equivalent alternative engine)
Further weight reduction (additional material substitution and further down-
sizing, including front wheel drive) - —
Improved spark ignition engines
Variable displacement engines
Tui"bochargers
Domestic production of captive imports
Mix shift to 10 percent large, 25 percent intermediate, 25 percent compact,
and 40 percent subcompact
PART 531— PRE 22
10
percent
10
percent
5
percent
-)
percent
2
percent
4
percent
3
percent
20-25
percent
5
percent
2-10
percent
3-7
percent
0-15
percent
0-4
percent
5
percent
Effective: Model Years 1981-1984
The least comprehensive set was that imder-
lyin<j the schedule of standards sufi^estcd by
Ford: 21 mpp in 1981; 22 mpji in 1982; 23 nipg
in 1983; 24 mp<j in 1984; and 25 inpg in 1985.
Ev'en thouph that was the hi<;;hest schedule sug-
•lested by any manufacturer, the Department
regards it as a low range schedule. It was re-
jected for several reasons. First, it would not
satisfy the maximum feasible reciuirenient. The
manufacturers have available to them options
that involve little or no engineering or marketing
risk that in combination would be economically
practicable and would enable them to exceed
substantially Ford's suggested schedule. Second,
the schedule would violate the requirements that
the 1981-84 standards result in steady progress
toward the 1985 standard which, unless changed
by future rulemaking, is 27.5 mpg, not 25 mpg.
The Department also considered a high range
schedule based on all of the options not excluded
in the first paragraph of this section.
The Department believes that there are risks
associated with substantial mix shifts notwith-
standing the historical trend toward smaller pas-
senger automobiles. "Wliile that trend may
continue, there is no assurance that it will. For
reasons including prestige, comfort, and sheer
size, there continues to be a strong demand for
midsize and large size passenger automobiles.
This is true even though most of these automo-
biles offer no more seating capacity in terms of
number of positions than some compacts. Fur-
ther, as discussed below, the downsizing of pas-
senger automobiles may at least temporarily slow
the trend to small cars. Further, the Department
lacked sufficient marketing data to justify a
lesser shift toward small cars.
Given the overriding purpose of the fuel econ-
omy provisions in the Act to conserve fuel, the
Department was concerned that the standards be
set as high as possible, but not so high as to
necessitate the manufacturers' using compliance
methods that would result in a substantial sales
drop. To the extent that the total passenger
automobile population fails to turn over and re-
new itself at the usual pace because some owners
retain their existing vehicles for an extra year or
two, the projected fuel savings from a given fuel
economy standard would not be fully realized.
In addition, a substantial sales drop would have
a significant effect on employment in the auto-
mobile and related industries and would ad-
versely affect the manufacturers" efforts to raise
capital for further fuel economy improvements.
See KSP, Chap. 13, Reference 27. Section E.
The Department concluded that the implemen-
tation of the schedule of standards resulting
from this set was not economically practicable
due to the risk posed by substantial mix shifts
that a significant number of consumers might
defer purchasing new passenger automobiles in
1981-84. Further, implementing all of the op-
tions in this set would result in levels of average
fuel economy above those permitted under the
steady progress re(iuirement, since the 27.5 mpg
level would be exceeded prior to 1985.
The Department is also concerned about the
possible adverse environmental impacts associated
with some alternative engines, notably the diesel.
As discussed above, several commenters pointed
out that particulate and PNA emissions of these
engines may pose a iiealth hazard. If the exist-
ence of a health hazard is confirmed by the En-
vironmental Protection Agency, then regulation
of those emissions will presumably follow. The
stringency of those regulations and their effect
on the fuel economy of the alternative engines is
indeterminant at this time. As information from
that agency and other sources clarifies this ques-
tion, the Department will begin to consider
whether to base fuel economj' standards on the
use of those engines.
For all of the foregoing reasons, the Depart-
ment decided not to set the average fuel economy
standards so high as to necessitate the use of all
options within the limited period of 1981-84.
The Department also considered a medium
range schedule of standards based on a less com-
prehensive set of technological options from
which alternative engines and mix shifts had
been excluded. In excluding these options as
bases for determining the fuel economy standards
under this set of options, the Department was
particularly mindful that there will be substan-
tial changes in passenger automobiles in the early
1980's due to changes in fuel economy and emis-
sion standards. In a later period of less product
design and technological flux, the risk associated
with mix shifts and alternative engines would be
lessened.
PART 531— PRE 23
Effective: Model Years 1981-1984
The Department regards mix shifts and alter-
native engines, as well as the options excluded
from the high range set of options, as constitut-
ing a safety margin for the manufacturers that
choose to implement the medium range options
to the extent set forth below. If the latter op-
tions do not yield the anticipated gains, despite
the conservative assessments of those gains, the
manufacturers may avail themselves of options
in the safety margin. For manufacturers which
do not wish to implement the medium range
collection of options in the amount described be-
low, these additional options represent alternative
options which they can utilize. The Department
notes that virtually every option excluded from
the high or medium range sets of options will be
used by at least one manufacturer and some by
several. To the extent that these options are
used, the manufacturers will not have to rely so
much on the collection of medium range options.
Further, all manufacturers can use marketing
measures to encourage the purchase of the most
fuel efficient vehicles within each carline.
The schedule for impleuientation of the various
middle range technological options or improve-
ments, which are set forth in Tables 5.5-5.8 of
the RSP, reflect the differences in economic
capability of the various domestic manufacturers.
That implementation schedule is in no case more
stringent than that in the NPRM Support Docu-
ment. See Document 2, Volume 1. None of the
manufacturers claimed that the proposed imple-
mentation schedule is impracticable. However,
objections to specific cost assumptions in the
Support Document were submitted by some
manufacturers. Since these cost numbers affect
the projected sales, employment and inflationary
impacts of the standards, and thereby economic
practicability, these objections have been care-
fully reviewed. However, the vagueness and un-
substantiated character of the assertions in the
manufacturers' comments have impaired the use-
fulness of the submitted information, here as in
the case of the technological issues discussed in
section III. A.
General Motors, Ford, and Chrysler all ob-
jected to the projected capital investment re-
quirement for downsizing of $150-250 million for
an annual production capacity of 400,000 auto-
mobiles. All stated that this figure was about
half the correct amount. DN-18, p. 18 (GM),
DX-43, Att. II, p. 2 (Ford), and DN-30, p. 53
(Chrysler). Therefore, and in view of the fact
that GM and Ford already have had substantial
experience with implementing this technological
option, the capital recjuirement for downsizing
was revised to the $400 million figure. GM and
Chrysler both objected to the variable cost sav-
ings of $200 assigned to downsizing, but neither
submitted a different figure or a detailed critique
of the Department's analysis. Ford's discussion
of the savings resulted from the introduction of
a new, small, future car line is consistent with
the Department's assumption, when weight re-
duction and concurrent pi'oduct improvements
are separated. DX-43, Att. II, p. 3. Therefore,
the originally projected savings in variable cost
was retained. Chrysler's unquantified objection
to the maintenance cost figure is also rejected.
The Department's further evaluation of data
supporting the original projection of a Socf/pound
maintenance cost saving reaffirms the original
conclusion. See Support Document. Summary
Report, p. R-2, #3.
GM, Ford, and Chrysler raised similarly vague
objections to the projected capital and variable
costs attril)utable to material substitution. DX-
18, p. 19; DX-43, Att. II, p. 4; DX-30, p. 54.
Xevertheless, Chrysler conceded that the use of
high strength steel would have no appreciable
effect on variable costs. Detailed cost informa-
tion on the use of aluminum and high strength
steel was submitted by Alcoa and U.S. Steel
Corporation, respectively. DX-27-D. DX-27-A.
Both submissions supported the Department's
original conclusion about the cost of light-weight
material substitution. If components are selected
from the lists of feasible material substitutions
provided by these two companies, it is possible
to achieve the weight reductions projected in the
Support Document without increasing variable
costs. Further weight reductions could be
achieved at slightly higher cost. Similar objec-
tions were raised to cost savings attributable to
reduced maintenance. However, as noted above,
the Department's further study in this area fully
supports the Support Document's projected rela-
tionship between weight reduction and reduced
maintenance expense. This savings results from,
as one example, the ability to use smaller tires
PART 531— PRE 24
EffecHve: Model Years 1981-1984
on lifrhter antomobiles. thereby rediicinf;: replace-
ment costs. GM failed to quantify or substan-
tiate its claim that the lig;hter weijrht substitute
materials would be more damajre prone than
present materials. DX-18, p. 22. The Depart-
ment's analysis, topfether with the Alcoa and U.S.
Steel submissions, supports the achievability of
the assumed weijiht reduction by careful match-
ing of a particular substitute material to the
particular application desired. Furthermore, GM
failed to address the savings associated with the
improved corrosion resistance of aluminum or
plastic substitutes. DX-27D, p. 2 (Alcoa).
Therefore, the original maintenance costs savings
estimate has been retained.
The costs associated with improvements in
such areas as lubricants, accessories, aerodynamic
drag reduction, and rolling resistance reduction
are as set forth in Table 7.1 of the Rulemaking
Support Paper. No contradictory information
was submitted on these costs, in response to a
specific question in the April 1 and April 21
special orders. DX-7, DN-28, Question II. A.
Xo manufacturer challenged the costs attrib-
uted to automatic transmission improvements.
Chrysler, the only manufacturer to address the
issue specifically, found the costs to be within
"an acceptable planning range." DX-30, p. 55.
For the purposes of the total cost calculation, the
upper liound of the cost range for the four speed
automatic transmission was used as a "safe" esti-
mate. This probably overstates the total cost
impact, since, as previously noted, it is likely
that a variant of the three-speed transmission
would in fact be used. Capital requirements as-
sociated with the four-speed unit are up to twenty
times greater than those for the three-speed (less
than $10 million vs. $200 million per standard
production facility with a capacity of 500,000
units per year), since relatively inexpensive
changes can be made to existing transmission
production facilities to accommodate improve-
ments to three speed units, while complete new
plants are necessary to produce four speed units.
Reductions in acceleration performance were
assumed to be achieved through the substitution
of existing smaller displacement engines, up to
the maximum level consistent with production
flexibility at existing engine plants, at no in-
creased cost. These reductions could also be
achieved through axle ratio changes, at negligible
cost.
Total required capital expenditure to achieve
the postulated fuel economy was generally within
the range of planned expenditures ff)r fuel econ-
omy improvement over the 1076-85 time period.
DX-30, p. 52 (Chrysler) ; DX-15, Doc. T, p. 20
(Ford) ; p. 1-18, Economic Impact Statement
(see sec. VIII, infra). However, it is not cor-
rect to treat this as a totally "extraordinary"
investment required of the automotive industry
in order to comply with fuel economy standards.
Much of this expense is "integral to the normal
cycle of product improvements" which the com-
panies would engage in regardless of the stand-
ards. DX-30, p. 55 (Chrysler). The fact that
improved fuel economy is itself a highly market-
able attribute for passenger automobiles might
force the companies to make many of the product
improvements tliscussed in this notice, as a result
of competitive market pressures regardless of the
fuel economy standards. DX-15, Doc. I, p. 20
(Ford). Conceptually, this means that the auto-
mobile companies must, as part of each decision
to change a significant component in a passenger
automobile, take into account, and possibly re-
orient their product line in view of, the fuel
economy requirements. Therefore, the capital
expenditures discussed above have been adjusted
to take into account "business-as-usual" reinvest-
ment, which would occur even in the absence of
any standards. A further discussion of this topic
is contained in the RSP, Reference 27, Chap. 13.
The total cost increases are assumed to be re-
flected in increased new passenger automobile
prices according to tlie formulas set forth in the
Support Document. See Summary Report, p.
A-27. Generally, the manufacturers did not ob-
ject to the total or "bottom line" price changes
generated by this methodolog}', although they
did not necessarily agree with all of the details.
See, e.g., DX-15, Doc. I, p. 21 (Ford). GM
merely noted that price increases are determined
by market forces, rather than some arbiti'ary cost
pass through formula. DX-18, p. 24. The De-
partment does not take issue with that statement,
*liut some method must be used to assess price
impacts, and no participant in the proceeding
suggested a better alternative. Chrysler argued
PART 531— PRE 25
Effective: Model Years 1981-1984
that the methodology did not provide for recov-
ery of the vakie of tlie investment itself. DX-32,
p. 19. However, it appears that Chrysler has
misunderstood the application of the methodol-
ogy, since capital costs are assumed to be recov-
ered by price increases tied to the rate of return
on investment. The projected impact on new car
prices, as shown in Table 8.1 of the Rulemaking
Support Paper, is an increase of $5-1 by 1985, as
an industry average, relative to 1977 model year
automobiles. When gasoline and maintenance
savings are considered, net savings to the con-
sumer of approximately $1000 over the life of the
automobile are projected. See Table 8.4, RSP.
The final impacts to be considered in the eval-
uation of economic practicability are the pro-
jected impacts on industry sales and employment.
These impacts were projected by using the
Wharton Automobile Demand Model. See Sup-
port Document, Summary Report, p. A-91. This
model is one of the latest and most complex for
projecting automobile industry sales and employ-
ment. See DX-15, Doc. I, Att. A, p. 176 (Ford) :
DX-.30, p. 38 (Chrysler).
On the basis of this projection, domestic in-
dustry sales and employment woidd attain levels
higher than present levels during the 1981-84
period, and would be approximately the same as
would be the case if there were no additional
costs attributable to fuel economy standards. A
sensitivity analysis that assumes a 2 percent per
year increase in automobile prices for the 1981-84
model years shows a small decrease in projected
sales during those years and a small increase in
subsequent years. Since the average change in
car prices due to these fuel economy standards
for those same model years is only 1 percent, the
etfect on sales is similarly small.
The Department has been unable to quantify
the impact of such non-price changes as accelera-
tion capability reductions and exterior downsiz-
ing. However, as discussed in section III. A of
tliis section, these impacts are not expected to be
severe. The Department has taken into account
any possible adverse impacts in those areas by
the provision of a "safety margin" of fuel econ-
omy improvement potential and in the discussion
of uncertainties in section IV.
The industry generally argued that the uncer-
tainty of consumer acceptance of more fuel ef-
ficient vehicles was a major concern in tliis
rulemaking. Tr-I, pp. 19 (Ford), .50 (GM), 78
(AMC), and 104 (Chrysler). However, these
statements appear to be more in the nature of
fear of the unknown than the result of detailed
study and analyses. See Tr-II, pp. 10, 23, 58,
62-64, 121, 146, 161. The Federal Energy Ad-
ministration's own analyses show that it is the
"manufacturer's i-esponse to the standards, rather
than the consumer demand, that most influences
new car fleet average fuel economy under a sce-
nario of little or no market shift." DX-37, p. 2.
The provision of a safety margin of technology
permits a variety of manufacturer responses.
Improvements in automotive fuel economy, if
unaccompanied b^y adverse impacts on other auto-
mobile attributes, are undeniably an aid to
marketability. The technological options relied
upon are not expected to have such accompanying
detriments. Among these options, material sub-
stitution, and improvements in accessories, lubri-
cants, aerodynamic characteristics, and rolling
resistance are virtually undetectable by consum-
ers, except with respect to price changes, whose
impact has been accounted for above. Downsiz-
ing, while maintaining or even increasing vehicle
interior roominess, has lieen accomplished with-
out consumer rejection to date, in the case of
General Motors' full-size automobiles. Although
downsizing of all market classes has yet to be
completed, it appears likelj* that purchasers of
the largest size automobiles are the group most
concerned about size attributes, and if they are
willing to accept downsized vehicles, the pur-
chasers of other market class automobiles would
also accept them. With respect to automatic
transmission improvements, it appears that past
driveability problems with lock-up torque con-
verters are near resolution, in view of some manu-
facturers near-tei'm implementation plans. Ac-
celeration performance reductions have been
limited to those within the manufacturers' stated
range of consumer acceptability. Turbochargers
could be used to offset even those very modest
acceleration reductions. Safety margin teclmol-
ogy would permit flexibility in selecting compli-
ance approaches which individual manufacturers
find more salable than the ones projected in this
PART 531— PRE 26
Effective: Model Years 1981-1984
analysis. Further, it is likely that consumer
acceptance of fuel efficient automobiles will in-
crease as gasoline prices increase in the future.
Therefore, the Department concludes that mar-
ketability constraints would not prevent the at-
tainment, in an economically practicable manner,
of the standards promulfrated lierein.
Thus, it appears that the total imi)act of the
fuel economy standards established in this notice
is relatively modest, certainly within the "eco-
nomic capability of the industry." The Depart-
ment concludes that compliance with these
standards is economically practicable.
C. The eifcet of other Federal standards.
The next step in calculatino; the manufacturers'
maximum achievable fuel economy is an assess-
ment of the impact of other motor vehicle stand-
ards on fuel economy. It is impossible at this
time to predict with perfect accuracy even the
level of these standards which will be in effect
in the 1981-84 period, since all catetrories of
these standards are either subject to future ad-
ministrative action or are being reviewed by
Congress. Nevertheless, for the purposes of this
analysis, it is assumed that the applicable auto-
motive emission standards will be those contained
in the Administration proposal, i.e., 0.41 gram
per mile hydrocarbons, 3.4 grams per mile carbon
monoxide, and 1.0 gram per mile of nitrogen
oxides, with waivers for nitrogen oxides up to
1.5 gram per mile for heavier diesel automobiles,
if necessary. The same result would apply under
either the House or Senate passed emission
standard schedules.
The issue of the impact on fuel economy of
various proposed emission standards was one of
the more controversial ones in this proceeding.
Much development work remains to be done in
the emission control area between now and 1081,
so projections in this rapidly progressing ai'ea
necessarily involve some degree of uncertainty.
However, the Environmental Protection Agency
(EPA) has done extensive evaluation of the
emission control systems now under development.
The Department of Transportation has worked
with the EPA in many of these studies.
Among the more recent of these studies are the
February, 1977, report titled "Analysis of Effects
of Several Specified Alternative Automobile
Emission Control Schedules Upon Fuel Economy
and Costs," prepared jointly by the Departments
of Commerce and Transportation, the Energy
Research and Development Administration, EPA.
and FEA; an EPA report dated April, 1977,
titled "Automotive Emission Control — The De-
\elopment Status, Trends, and Outlook as of
December 1976;" and the Jlay 19. 1977, "Analysis
of Alternative Motor Vehicle Emission Stand-
ards." (All of these reports are in the General
Reference section of the FE 76-01 Docket.) All
three reports evaluate the optimal emission con-
trol systems for meeting emission standards at
minimum fuel eccmoiny penalty, and all three
conclude that little or no penalty need result
from the use of optimal systems at the level of
the proposed emission standards, as compared to
1977 levels. This conclusion was supported by
those public interest representatives which par-
ticipated in this proceeding and addressed the
issue. DN-11, p. 8 (Mr. Thomas Austin) ;
DX-1'2, p. 33 (Citizens for Clean Air) ; DN-13.
p. 16 (Environmental Defense Fund).
As identified in Appendix A of the May 19,
1977 DOT-EPA-FEA report, fuel optimal sys-
tems to meet standards of 0.41 HC/3.4 CO/1.0
XOx may be expected to include a three-way
catalyst, start catalyst, electronic spark advance,
electronic control of exhaust gas recirculation,
electronic air-fuel ratio control, oxygen sensor,
high energy ignition, improved fuel metering,
and a complex electronic control unit. In addi-
tion, the heavier cars, those weighing more than
3000 lbs., would have an air injection unit.
The passenger automobile manufacturers" views
on the issue of emission standard penalties varied
rather widely. Ford stated that the proposed
emission standards could be achieved without
fuel economy penalty through the use of three-
way catalyst and full electronic control technol-
ogy. DX-15, Doc. I, p. 24, Doc. Ill, p. 4, Tr-II.
pp. 93-4. Volkswagen stated that compliance
with the emission standards without a fuel econ-
omy penalty was possible. DN-28-01, p. 2.
Daimler-Benz projected that compliance with the
more stringent emission standards w-ould pro-
duce a 3 to 5 percent benefit in fuel economy for
the portion of its fleet which presently employs
fuel injection. DN-28-05, p. 34.
PART 531— PRE 27
Effective: Model Years 1981-1984
On the other hand, the remaining domestic
manufacturers all project substantial emission
standards fuel economy penalties. GM claimed
to have experienced fuel economy penalties as
high as 20 percent on some prototype vehicles
(DX-18, p. 27), although it admits that much
development work remains to be done. Tr-II.
p. 124. Chrj'sler projected a penalty of 12 per-
cent (DN-30, p. 62, DX-35-01, Att. B, p. 27),
but projects the use of a control system which is
apparently less efficient than that assumed by
EPA, DN-30, p. 61, in such areas as the use of
electronic spai'k advance, port liners, and stai't
catalysts. Further, Clirysler's projections were
apparently based on actual test data from their
1977 California vehicles, adjusted by some arbi-
trary amount for future system optimization.
These vehicles do not employ three-way catalysts
and full electronic controls on which EPA's
projections are based. Tr-II, p. 258. Likewise,
AMC's projected fuel economy penalties were
based on their present California technology', not
the advanced system assumed by EPA. DX-14,
p. 3. GM also assumes a control system less
complex than EPA's by not including the use of
such technolog}' as electronic exhaust gas recir-
culation, electronic air-to-fuel ratio control, port
liners, and start catalysts. DN-18, p. 27. GM
remains hopeful that, given enough development
time, the penalty could be eliminated. Tr-II.
p. 124.
Ford notes that, even with the three-way
catalyst, a clean up catalyst, and a full electronic
system to meet the 0.41 HC, 3.4 CO, 1.0 XOx
standard, it would expect a 2 percent difference
in average fuel economy between the first and
third year of the standards. DX-15, Doc. I, p.
15. The May 19, 1977 DOT-EPA-FEA report
observes that :
The development of technologj' to control
emissions and permit good fuel economy cali-
brations to be maintained is expected to take
longer than just the development of technology
solely for the purpose of controlling emissions.
For example, the use of electronic controls
which have the potential to be an important
part of future low emission, fuel efficient sys-
tems will require the generation and analysis
of significant quantities of new engine data in
order to determine more optimum calibrations.
Thus, it appears that none of the manufactur-
ers presented any evidence which would directly
contradict EPA's findings in this area, and in
fact some manufacturers supported the "no pen-
alty" assumption. Tlierefore, it is concluded that
compliance with the specified emission standards
in the 1981-84 time period can be achieved with
little or no fuel economy penalty, through the
use of the advanced control technology postulated
by EPA. In the technical analysis contained in
the RSP, a fuel economy penalty of zero percent
is used for all the 1981-84 models.
One other issue with respect to the emission
standards was raised ,by AMC and Chrysler.
Those two companies claim that an emission test
procedure change recently proposed by EPA
(41 FR 38674, Sept. 10, 1976) would, if adopted,
adversely affect the derivative fuel economy data.
DX-23, p. 2 and DX-30, p. 30. Chrysler projects
a very small impact for this revision on fuel
economy, to the order of 0.28 mpg. The change
in question involves decreasing the magnitude of
inertia weight class increments and modification
of the road load horsepower requirements. The
proposed changes are intended to permit dyna-
mometer testing of vehicles at inertia weight and
road load settings that are more representative
of actual vehicle weight and road load, so that
the resulting fuel economy value would be a
more realistic estimate of on-the-road fuel econ-
omy. Since this test procedure change is merely
a proposal, it is unnecessary to attempt now to
quantify the precise impact of any test procedure
revisions which EPA may ultimately adopt. It
should be noted further that EPA presently be-
lieves that the revisions in question should not
result in a systematic change in fuel economy
data either upward or downward, but rather that
the revisions tend to improve the overall ac-
curacy of the data. DX-20, p. 2.
An adjustment is made to each manufacturer's
projected fuel economy capability to allow for
the added weight associated with Federal Motor
Vehicle Safety Standards. To assure adequate
crash survivability in the passenger automobiles
of the 1980's, additional safety requirements will
be necessary. Those requirements are anticipated
to cause an estimated 1 percent fuel economy
penalty. See RSP.
PART 531— PRE 28
EfftcHve: Modal Years 1981-1984
Tfie Department has no basis at this time to
project the existence of any other motor vehicle
standards at a specific level. If these projections
are proven erroneous by future events, and if the
impact of those future standards would substan-
tially reduce the safety margin provided in this
notice, it may be necessary to reconsider the
standards promulo^ated herein.
D. The iieed of the Nation to eonsenie energy.
As discussed in section II. B of this notice, this
final consideration in establishing maximum
feasible average fuel economy levels requires the
establishment of fuel economy standards at the
highest 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 above analyses, are as set
forth in Table 2 below. These numbers are based
on a 0 percent emissions penalty. For the
reasons discussed in section III.E below, includ-
ing consideration of the emissions standards, an
adju.stment is made in that section to Table 2.
TABLE
2
Mantifacturer
1981
1982
1983
198Jf
American Motors
22.2
22.6
23.1
24.7
Chrysler
23.8
25.1
26.3
28.1
Ford
23.4
24..5
26.1
27.0
General Motors
23.3
24.2
26.0
28.8
E. Establishing the maximum feasible average
fuel economy level.
In determining maximum feasible average fuel
economy, the Department cannot simply select
the level achievable by the least capable manu-
facturer in each model year. Instead, an analysis
along the lines of that set forth in pages 154—5 of
the Conference Report must be carried out.
That Report states:
Such determination should therefore take
industry-wide considerations into account. For
example, a determination of maximum feasible
average fuel economy should not be keyed to
the single manufacturer which might have the
most difficulty achieving a given le\'el 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 currently exist,
and the possible implications for the national
economy and for reduced competition asso-
ciated with a severe strain on any manufac-
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 yeai'. Rather, they should be
set at some point above those levels. "WTiether
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, DX-14, p. 6
and Attachments, and whose projected maximum
achievable fuel economy is substantially less than
its domestic competitors. See Table 2.
"\\nien 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
EfFeclive: Model Years 1981-1984
the projected maximum feasible level for AMC
in the years 1981-84 ranges from approximately
one to thi-ee miles per gallon less than that of the
least capable of the "Big 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 througli 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. Furthei-, 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 In' the De-
partment. In view of these considerations, the
Department must 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 which
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 1980's. "Ward's Auto
World," June 1977, p. 30, Docket Number FE-
76-01-GE-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 sulfered by those companies
as a result of a liigher standard is measured by
the magnitude of the civil penalties generated.
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 maximum 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 overacliievement in prior or subse-
quent years. The only 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
EfFecfive: Model Years 1981-1984
compliance would be ontwei<rliecl by the benefits
of establishing!; "inaxiniiun feasible avcrajje fuel
economy" at levels where these manufacturers
would pay no net civil penalty, takin<;- into ac-
count their ability to carry credits forward or
back.
The Department has concluded that the emis-
sions standards expected to be effective in the
early 1980*s can be achieved with little or no fuel
economy penalty. The analysis of average fuel
economy potential discussed above was predicated
upon a zero penalty. It appears clear, however,
that the engineering and manufacturing prob-
lems associated with the introduction of compli-
cated emission control technology may well be
substantial, particularly since these advancements
will have to be implemented simultaneously with
other new technology required to meet fuel econ-
omy and safety standards. Although the De-
partment has already tried to ensure the sound-
ness of its average fuel economy standards by
making generally conservative conclusions at
each step in its analysis, no allowance has yet
been made for unfoi'eseen contingencies that may
arise due to the need for manufacturers to deal
simultaneously with the diverse set of manufac-
turing requirements imposed by the various fuel
economy, emissions, and safety standards that
will become effective in the early 1980's, par-
ticularly in 1981. Allowing for such contingen-
cies is consistent with the approach taken by the
Senate Commerce Committee in establishing the
1980 average fuel economy standard in S. 1883.
See S. Eep. No. 179, 94th Cong., 1st Sess. 10
(197.5). More important, allowance of these con-
tingencies will ensure that the manufacturers can
produce and sell cars that meet energy, environ-
mental, and safety needs of the Xation. It is
important to recognize that one limitation on the
rate of product innovation is the rate of con-
sumer acceptance of that innovation. Finally,
there are some uncertainties, particularly in the
later years of the 1981-84 period, associated with
the accuracy of the estimates of the average fuel
economy to be gained from the combination of
the various technological options.
In view of the factors enumerated in the im-
mediately preceding paragraph, the Department
has determined it to be prudent to adjust the no
net penalty average fuel economy levels to 22
mpg for 1981. 24 mpg for 1982, 26 mi)g for 1983.
and 27 mpg foi' 1984. Based upon consideration
of the domestic manufacturers, the Department
has determined that these are tlie maximum
feasible levels of average fuel economy for those
model years.
IV. The Imports.
With the possible exceptions of downsizing,
mix shifts, straight-line acceleration reductions,
and domestic production of captive imports, the
same technological improvement options apply
to the imported passenger automobiles as to their
domestic counterparts. Since the passenger auto-
mobiles produced in foreign countries generally
start at a much higher fuel economy base, those
passenger automobiles can generally meet any
level of average fuel economy which the domes-
tics can attain. However, the possible unavail-
ability of the options listed above and the fact
that the U.S. market may account for only a
small portion of such manufacturers' total sales
necessitate an analysis of the impact of fuel
economy standards on the foreign manufacturers.
Total sales of imported automobiles has varied
between approximately 15 and 20 percent of total
U.S. .sales for the past four years. The four
largest importers in 1976, Toyota, Nissan
(Datsun), Volksw-agen, and Honda, accounted
for approximately two-thirds of the import total.
"Automotive News 1977 Market Data Book
Issue," p. 70. Each of these four manufacturers
either presently has or will have in the near
future an average fuel economy exceeding the
1985 standard of 27.5 mpg. DN-9, p. 1
(Toyota) ; DN-28-03, p. 1 (Honda) ; DN-28-04.
p. 5 (Nissan) ; DN-16, p. 2 (VW — projections ex-
clude Rabbit). Therefore, the majority of the
import market must only maintain or marginally
improve their present average fuel economy
levels to comply with these fuel economy stand-
ards. Another group of importers, accounting
for nine percent of import sales, ai'e presently
either meeting the 1985 standard or are in close
proximity of that goal. This group includes
Subaru, and the captive import fleets of Chrysler
and GM. See 1977 EPA/FEA Gas Mileage
Guide, Second Edition. Of the remaining manu-
facturers, which account for a total of slightly
PART 531— PRE 31
Effective: Model Years 1981-1984
more than 20 percent of all imports, Volvo.
Daimler Benz, and British Leyland are the larg-
est importers which may face difficulties in meet-
ing a fuel economy standard of 27.5 mpg. Volvo
and Daimler-Benz each account for approxi-
mately 3 percent of the import total, with
British-Leyland accounting for nearly 5 percent.
Volvo projects that it could achieve an average
fuel economy level not higher than 24.5 mpg by
1985. DX-28-02, p. 9. This level of fuel econ-
omy would result in the imposition of a civil
penalty of $150 per passenger automobile sold in
the U.S. Since Volvo presently sells its pas-
senger automobiles in the $7,000 to $10,000 range
and since demand in that price range is relatively
inelastic, the added cost would not be likely to
reduce sales substantially. Furthermore, XHTSA
believ'es that it may be possible for Volvo to
achieve better fuel economy than it has projected.
For example, the Volvo projection is appai-ently
based on the assumption that no weight reduction
is achieved, although its 244 model weighs nearly
400 pounds more than a comparable Audi lOOLS.
See DX-28-02, p. 9 and "Automotive Xews,"
supra, at 76-7.
Daimler-Benz projects being able to attain
levels of fuel economy close to those projected
for the domestic manufacturers (DX-28-05, p.
32), primarily by achieving a diesel market
penetration of over 60 percent by 1980. DX-10,
p. 8. This projection is also based on i-elatively
little weight redu(?tion. For example, Daimler-
Benz projects that by 1985 its two-seater sports
model will be in the same or a higher inertia
weight class as the GM "hypothetical scenario"
projects for large-size six-aeater passenger auto-
mobiles. DX-28-05, p. 31 and DX-18, p. 13.
Even if Daimler-Benz" projections reflected the
maximum fuel economy improvement achievable
by that comjDany, the civil penalties resulting
from noncompliance with the fuel economy
standards would likely be less than those men-
tioned above with respect to Volvo and would
have a negligible impact on sales of passenger
automobiles whose prices are in the $10,000-
$20,000 range.
British Leyland's present product mix is split
between relatively' inexpensive two-seater sports
cars and luxury cars in the Mercedes price range.
The small sports cars are highly inefficient even
by present standards. For example, the MG
Midget and Triumph Spitfire weigh about the
same as a Volkswagen Rabbit, yet the Rabbit
has roughly 50 percent more horsepower and 25
percent better fuel economy. The Toyota Celica
weighs 200 pounds more and has 50 percent more
horsepower than the MG-B. yet the Toyota has
about 18 percent better fuel economy. See
"Automotive Xews,'" p. 76, and 1977 EPA/FEA
Gas Mileage Guide. Therefore, it seems likely
that substantial improvements must be made to
the smaller British Leyland products just to be
competitive in the U.S. market. If such im-
provements are made, the British Leyland aver-
age promulgated level would be close enough to
the standards promulgated herein to allow any-
required civil penalties to be passed on to con-
sumers of the luxury passenger automobiles
which are responsible for bringing down their
average.
In sununary, it appears that the manufacturers
of the less expensive import passenger automo-
biles are already in compliance with the ap-
plicable fuel economy standards through 1985,
or are close to that level now and can readily
achieve compliance. The manufacturers of the
more expensive imports may face some difficulties
in meeting the standards. However, if those
difficulties prove to be insurmountable, the manu-
facturers will incur civil penalties that will be
small in comparison to the price of their pas-
senger automobiles. Therefore, and in view of
the Congressional admonition against basing
these standards on the least fuel efficient manu-
facturer (see pages 154-5 of the conference re-
port on the Act, S. Rep. Xo. 94-516, 94th Cong.,
1st Sess. (1975), and section III.E of this no-
tice), it is concluded that the establishment of
these standards is not constrained by the capabil-
ities of these import manufacturers. A more
detailed discussion of the capabilities for improv-
ing fuel economy of these manufacturers is
contained in Appendix E of the Rulemaking
Support Paper. Accordingly, the Department
has determined that the maximum feasible aver-
age fuel economy levels based upon consideration
of domestic and foreign manufacturers are the
same as the levels set forth at the end of section
III.E.
PART 531— PRE 32
Effective: Model Years 1981-1984
V. The "steady progress" criterion and setting
the standards.
The final step in the standard-setting process
is the application of the "steady projrress" cri-
terion. As discussed in section II, this provision
requires that tlie standards increase each year,
that all standards fall between 20 and 27.5 mpg,
and that none of the resultinfr annual increases
be disproportionate to the other increments. The
Department has determined that tlie maximum
feasible levels of avera<i:e fuel economy specified
at the end of Section V meet each of tliese tests
and therefore will result in steady progress
toward the 1985 standard of 27.5 mpg. There-
fore, average fuel economy standards are: 22
mpg for 1981; 24 mpg for 1982; 26 mpg for
1983 ; and 27 mpg for 1984.
VI. Additional comments on the NPRM.
Most substantive comments received relating to
the establishment of 1981-84 fuel economy stand-
ards have been discussed above, primarily in sec-
tion III, as they relate to the development of the
standards. However, certain additional com-
ments on the NPRM deserve further discussion.
The single point raised most frequently in the
rulemaking proceeding by the automobile in-
dustry did not relate to the technological feasi-
bility or economic practicability of any particular
level of average fuel economy, but rather involved
the uncertainties inherent in the establishment of
these standards. Among the uncertainties raised
by industry were the precise fuel economy im:
provenients achievable with the various items of
technology, consumer acceptance of the more fuel
efficient automobiles to be produced in the future,
the impact of future motor vehicle standards in
areas other than fuel economy, and the state of
the national economy over the next eight years.
Tr-I, p. 106 (Chrysler) ; Tr-I, pp. 53-58 (GM) ;
Doc. IV, pp. 17-35 (Ford). The manufacturers
wlio were unable to relate the alleged areas of
uncertainty to any particular quantified impacts
on sales or to any particular levels of average
fuel economy standards. The Department recog-
nizes that areas of uncertainty exist in this pro-
ceeding, although not fully agreeing with the
manufacturers' assessments of the magnitude of
the resulting risks, particularly in the technology
area. But cf. Tr-I, p. 53, where GM characterizes
the latter uncertainty as "relatively small." The
Department also recognizes that in making pro-
jections as to future events and capabilities it is
not appropriate to engage in a "crystal ball in-
quiry." "Natural Resources Defense Council v.
Morton." 458 F. 2d 827, 837 (D.C. Dir., 1972).
Nevertheless, the Act, in re<iuiring that 1981-84
model year fuel economy standards l)e established
by July 1. 1977, necessarily contemplates that
standards will be established on the basis of less
than perfectly certain information. Nor does the
law require such certainty, so long as projections
rest on a rational basis. See generally "Ethyl
Corp. V. EPA," 511 F. 2d 1. 28 (D.C. Cir. 1976) ;
"National Asphalt Pavement Association v.
Train," 539 F. 2d 775, 7834 (D.C. Cir. 1976) ;
"Reserve Mining Co. v. EPA," 514 F. 2d 492,
507 n. 20 (8th Cir. 1975) ; "Society of the Plastics
Industry v. OSHA," 509 F. 2d 1301, 1308 (2d
Cir. 1975) ; "Amoco Oil Co. v. EPA," 501 F. 2d
722, 741 (D.C. Cir. 1974) ; "Industrial Union
Department v. Hodgson," 400 F. 2d 457, 474
(D.C. Cir. 1974). This is especially true in a
regulatory program relating to a crucial national
need such as energy conservation. "Mobil Oil
Co. V. FPC," 417 U.S. 283, 318 (1974).
Substantial efforts have been made to account
for the uncertainties involved in establishing
these fuel economy standards. For example, as
noted in section III, many of the projections of
achievable fuel economy improvements are based
on conservative estimates of achievable potential.
Further, a safety margin of improvement poten-
tial is provided to compensate for any unforeseen
contingencies. In addition, it is highly likely
that some of the uncertainties inherent in this
proceeding will operate to the manufacturers'
advantage. For example, future technological
developments may lead to greater fuel economy
improvements than even the most optimistic of
the projections made by the Department.
Given that the Department is required to set
standards in an area of some uncertainty, it is
appropriate to compare the consequences of err-
ing on either the low or the high side in our
judgments. This balancing of risks is quite simi-
lar to that conducted by the court in "Interna-
tional Harvester Company v. Ruckelshaus," 478
F. 2d 615 (D.C. Cir. 1973), involving the EPA
Administrator's 1975 automobile emission stand-
PART 531— PRE 33
Effective: Model Years 1981-1984
ards suspension decision. If the Department's
projections err on the low side, one obvious con-
sequence is the lost opportunity to conserve
energy, the significance of which needs no furtlier
discussion. A less obvious consequence is the
removal of the "technology forcing" effect of a
strict standard. "Union Electric Co. v. EPA,"
427 U.S. 246 (1976). Stringent fuel economy
standards are likely to encourage the automobile
industry to pursue the development and refine-
ment of technology which can reduce fuel con-
sumption. Standards set at easily achievable
levels provide no incentive to pursue the develop-
ment technologies, such as alternative engines,
which have substantial fuel economy improve-
ment potential but which may never reach the
market in large numbers unless additional tech-
nological refinement is accomplished. DX-37, p.
2 (Federal Energj^ Administration). On the
other hand, the danger involved in setting the
standards too high is much less than in the "In-
ternational Harvester" situation. For example,
under the Act, the penalty for noncompliance
with fuel economy standards is a monetary civil
penalty, the magnitude of which is tied to the
extent of the violation. On the other hand,
violation of Clean Air Act emission standards
might result in enjoining the sale of the non-
complying vehicles, conceivably resulting in an
industry shutdown. 42 U.S.C. 1857f-5. Fuel
economy civil penalties are assessed at a level of
five dollars per vehicle per 0.1 mpg of violation,
generally within the capability of the automobile
companies to either absorb or to pass on to con-
sumers without substantial sales reduction. 15
U.S.C. 2008. In addition, civil penalties incurred
in one year can be olfset by credits earned in the
previous and subsequent years, as previously
noted. Penalties large enough to jeopardize a
company's continued viability or generated by
forces beyond the company's control can be re-
duced or eliminated. 15 U.S.C. 2008(b)(3).
Finally, the Act provides for amending these
standards at any time, where the amendment
makes the standards less stringent. See section
502(f) of the Act. If some unforeseen contin-
gency arises which makes the attainability of the
standards appear dubious, adjustments can be
made. The time frame for making these adjust-
ments is much greater than was the case in
"International Harvester." All of the technologi-
cal improvements assumed in this notice are per-
mitted and expected to be phased-in over several
years. If problems arise with respect to the
marketability or feasibility of the technology,
the problem will appear at the start of the
phase-in period for the technology, prior to the
time when the industry has made irreversible
commitments in that area regarding their entire
fleets. This contrasts with the "International
Harvester" situation where all automobiles would
have been required to make major technological
steps in a single year. Thus, a balancing of the
risks in\'olved in setting the standards indicates
that less demage is incurred by erring on the
high side. In that case, corrections can be made
with limited adverse impacts. If the eri'or is on
the low side, that error may never become ap-
parent, since additional research efforts would
not be fully pursued, and the damage could be
irreparable. This counsels against any major
reduction in the standards to account for "un-
certainties," especially given the safety margin.
VII. Impact on petroleum consumption.
Section 6 of the Rulemaking Support Paper
and section III of the Economic Impact State-
ment contain discussions of the impacts on pe-
troleum consumption of various fuel economy
standards schedules. The ESP concludes that
.gasoline savings ranging from approximately 9.6
billion gallons per year in 1985 to about twice
that amount in the year 1995 are achievable. See
Table 6.6, RSP. Over the lives of the passenger
automobiles produced in model years 1981-84,
gasoline savings of approximately 41 billion
gallons would result. These gasoline savings are
calculated in relation to a baseline of the gasoline
consumption which would have resulted had the
new passenger automobile average fuel economy
remained at a level of 20 mpg for the year 1980
and thereafter. This baseline was selected be-
cause it coincides with the level of the statutory
1980 fuel economy standard, it is consistent with
the level of average fuel economy likely to have
been voluntarily achieved by the manufacturers,
and its use was supported by at least one partici-
pant in the proceeding. Tr-II, p. 96: DX-15.
Document III, p. 2 (Ford). To put this fuel
savings in perspective, the resulting reduction in
i
PART 531— PRE 34
EfFeclive: Model Years 1981-1984
pctroloiiin consumption could I'csult in a cumula-
tive national savings of appi'oxiinatel_v 2r> billion
dollars by the year 1995, at an assumed petroleum
price of $13.50 per barrel. See RSP Table 6.7.
VIM. Economic impact of the standards.
The economic impact of these standards was
independently evaluated in accordance with In-
ternal Re<rulatory Procedures by the XHTSA
Office of Plannino- and Evaluation. This assess-
ment utilizes the assumptions set forth in the
RSP and expands 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
reflects changes from MY 1980 vehicles due solely
to improvements necessary to meet the rule.
To summarize the Economic Impact Assess-
ment, the total change for the Domestic Auto
Industry for model years 1981-84 (from a base
of MY 1980 and 20 mpg) due to the rule are
estimated as follows:
Gasoline consumption for the average vehicle
manufactured in MY"s 1981-84 will be reduced
by 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 rise 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 the 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 tiie economic projections
made in the Department's various economic
analyses are subject to i)ossible changes in the
national economy and in tiie 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
EfFectlve: Model Years 1981-1984
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 lai'ge auto-
mobiles may have is that their additional size
may provide for additional energj-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 No. FE-
76-01-CtK-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-GE-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 ESP).
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 energy-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 sucli as those described by Volvo when
l)resent 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 recpiirements 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— PEE 36
Effective: Model Years 1981-1984
The President has recently stated that the na-
tion's energy sitaiation will require actions and
possible sacrifices on the part of all citizens. In
that context, any sacrifices required of the driv-
injr public as a result of these fuel economy
standards appear insubstantial, mainly requirinjr
the curtailment of wasteful automotive desipus
and technology. Such measures reduce the need
for additional and possibly severe methods of
conservinjr gasoline, such as I'educing vehicle
usage, and thus preser.ve the most important
value of passenger automobiles, their contribu-
tion to public mobility. In fact, the Department
believes that passenger automobiles ]iroduced in
the 1081-84 period have the potential to be su-
perioi- overall products as compared to their
present counterparts. These future vehicles have
the potential to be superior not just from the
standpoint of fuel economy, but also in such
important areas as emission control and occupant
safety, and in terms of technological sophistica-
tion and overall reliability. Statements to the
efi'ect that 1981-84 fuel economy standards would
necessarily force the entire new car buying public
into cramped, spartan, 4-seat subcompacts are
clearly incorrect in the Department's view. For
example, the Department projects that if the
present General Motors full-size cars with stand-
ard engine were modified in accordance with the
options listed in section III of this notice in such
areas as material substitution (but not down-
sizing), improved automatic transmission, lubri-
cants, and accessories, and reduced aerodynamic
drag and rolling resistance, the fuel economy of
those passenger automobiles would be approxi-
mately 25 mpg. If some form of alternative
engine were used in those automobiles, their fuel
economy could rise to over 30 mpg.
The most obvious adverse impact of the various
changes is that the cost to produce new passenger
automobiles will increase. However, the manu-
facturing cost inci'eases and resulting retail price
increases can be held within an acceptable range.
Further, these initial price increases are expected
to be slight and to be recouped over the life of
the automobile, in the form of fuel savings, re-
duced maintenance expenditures, and societal
health benefits from improved emission and
safety characteristics. Compared to 1977 auto-
mobiles, tlie net benefit for 1984 automobiles over
tlieir lifetime should be more than $1,000.
The Department believes that the 1981-84 pas-
senger automobiles can be designed to have better
overall performance characteristics than present
ones. Tlie term "performance" is often defined
very narrowly as a syn(mym for high accelera-
tion capability on a straightaway. However,
straight-line acceleration is only one aspect of
overall driving performance. Other important
aspects are maneuverability, handling, reliability,
and overall economy of operation. Many of to-
day's passenger automobiles leave substantial
room for improvement in these aspects of per-
formance. Compliance with fuel economy stand-
ards will create the potential to improve these
latter aspects, without major reductions in
straight-line acceleration, primarily through the
elimination of bulk. The Department's analysis
shows that tiiese changes can be accomplished
without sacrifice to vehicle roominess and utility.
Further changes can be made to future engines.
There is no i-eason to believe that consumers'
transportation needs would not be satisfied by
such automobiles.
XII. Implications for the standards for 1985 and
thereafter. /
For the purposes of this rulemaking proceed-
ing, the Department was constrained to consider
standards within a "steady progress" path be-
tween the statutorily imposed 1980 standard of
20 mpg and the standard for 1985 and thereafter
of 27.5 mpg. However, section 502(a) (4) of the
Act authorizes the Department to amend the
standard or standards for 1985 and thereafter if
it is detemiined that the statutory level is not in
fact the "maximum feasible average fuel economy
level" for those years. Our analysis indicates
that levels of average fuel economy in exce.ss of
27.5 mpg are achievable in the 1985 time frame.
In addition, several areas of additional fuel econ-
omy improvement potential deserve exploration.
Among these are the impact of whatever new
energy legislation ultimately is signed into law
on future product mixes, the potential for addi-
tional weight reduction through extensive ma-
terial substitution, and the potential to shift to
alternative engines. Because of the limited scope
of the present proceeding and time constraints,
PART 531— PRE 37
Effective: Model Years 1981-1984
it was not possible to explore these issues ade-
quately. However, the significant fuel saving
potential associated with these items and the
high national priority correctly assigned to the
need to conserve energj' necessitate a considera-
tion of the level of the standards for 1985 and
thereafter. Therefore, in the near future the
Department will exercise its discretionary au-
thority under section 502(a)(4) of the Act to
initiate rulemaking to amend those standards.
As part of this rulemaking, it will also be neces-
sary to reconsider the standards promulgated
today, to assure that they are set at levels which
are both the maximum feasible average fuel
economy levels and will result in steady progress
toward the selected standard for 1985. However,
it is unlikely that the standards for 1981-83
would be significantly revised as part of the
reconsideration, given the diminished lead-time
for the manufacturers by the time that rulemak-
ing is completed and the need to provide stable
planning targets. See Senate Report, supra, at
p. 21.
(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)).
The program official and lawyer principally
responsible for the development of this regulation
are Stanley R. Scheiner and Roger C. Fairchild,
respectively.
Issued on June 27, 1977.
Brock Adams
Secretary of Transportation
42 F.R. 33534
June 30, 1977
•
PART 531— PRE 38
PREAMBLE TO AMENDMENT TO PART 531— AVERAGE FUEL ECONOMY STANDARDS
FOR PASSENGER AUTOMOBILES
(Docket No. LVM 77-05; Notice 3)
Action; Final decision to grant exemption from
average fuel economy standards.
Summary: This notice exempting Excalibur
Automobile Corp. (Excalibur) from the gener-
ally 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 Excalibur. The alternative standard is 11..5
mpg.
Date: The exemption and alternative standard
apply in the 1978 model year.
For further information contact :
Douglas Pritchard, Office of Automotive
Fuel Economy Standards, National Highway
Traffic Safety Administration, Washington,
D.C. 20590 (202-755-9384).
Supplementary information:
The National Highway Traffic Safety Admin-
istration (NHTSA) is exempting Excalibur from
the generally applicable passenger automobile
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 vohmie manufacturer's maximum
feasible 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 (43 FR 19311; May 4,
1978) and a proposed decision to grant an exemp-
tion to Excalibur for the 1978 model year (43
FR 33268; July 31, 1978).
No comments were submitted in response to the
notice of receipt of the petition.
Three comments were submitted in response to
the proposed decision. One of these comments
was submitted by a private citizen, who supported
the proposed exemption, because he believed that
Excalibur produced an excellent product. The
other two comments, both of which opposed the
proposed exemption, were submitted by public
interest groups. The objections centered primar-
ily on the suggestion that the proposed exemption
for Excalibur was contrary to the Congressional
intent, that the agency had erroneously deter-
mined Excalibur's maximum feasible average fuel
economy level, and that even if Excalibur's max-
imum feasible average fuel economy level had
correctly been determined, the agency should use
its discretion to deny the requested exemption.
With regard to the first point, both com-
menters stated that granting an exemption to
Excalibur would be contrary to the general Con-
gressional intent of improving fuel economv.
Congress, however, specifically included a provi-
sion whereby low volume manufacturers could
PART 531— PRE 39
be exempted from the generally applicable stand-
ard if that generally applicable standard were
greater than the low volimie manufacturer's max-
imum feasible average fuel economy and the
agency establishes an alternative standard for
the low volume manufacturer at its maximum
feasible average fuel economy level. The inclu-
sion of this provision strongly suggests that
Congress intended that, in some circumstances,
low volume manufacturers would be exempted
from the generally applicable standard.
One commenter went on to argue that Congress
had intended that the low volume exemptions
only be available to manufacturers of moderately
priced cars, and not to manufacturers of very
expensive cars. In this commenter's view, the
manufacturer of very expensive cars can pass on
any civil penalties to its customers in the form
of a price increase, and both manufacturer and
customer could consider this as "conscience
money".
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 discretionar}- authority to
grant or deny petitions. However, Congress did
not direct the agency to use the discretion to
deny exemption petitions by manufacturers of
high-priced automobiles or to use it in any other
particular manner.
This commenter went on to urge that there is
no incentive for these low volume manufacturers
to improve fuel economy, because an exemption
can be expected. However, any exemption is re-
quired to be accompanied by an alternative stand-
ard set at that manufacturer's maximum feasible
average fuel economy level. This will ensure
that these manufacturers must improve their fuel
economy, or pay a civil penalty.
Both public interest groups asserted that
NHTSA had incorrectly determined Excalibur's
maximum feasible average fuel economy. One
commenter pointed out that had Excalibur
adopted the Corvette engine in 1975, its automo-
biles would have better fuel economy for the 1978
model year. This point is true, but, as the notice
of receipt of Excalibur's petition pointed out, the
decision not to use the Corvette engine was made
because of technical problems relating to the
placement of the catalyst and the costs of certi-
fying that vehicle. This decision was not clearly
unreasonable when made, and was made before
the passage of any fuel economy standards by
Congress. Accordingly, the determination of
maximum feasible average fuel economy for
Excalibur was made assuming that Excalibur
was using the engine currently in its vehicles,
instead of another engine it might have installed
in those vehicles. It should be emphasized that
the. time for selecting a different engine and im-
proving the fuel economy of 1978 Excaliburs has
passed.
Both of these commenters asserted that the
agency erred in suggesting that the Nation's need
to conserve energj' would be negligibly affected
by granting this exemption. However, neither
of these commenters questioned the agency esti-
mate that Excalibur's 1978 automobiles achieving
an average fuel economy of 11.5 mpg rather than
18.0 mpg would result in the consumption of an
additional 2.5 barrels of fuel per day. Since the
United States currently consumes about 5 million
barrels of fuel in passenger automobiles each day,
the additional fuel consumed by Excalibur
achieving an average fuel economy of 11.5 mpg
represents .00005 percent of daily passenger car
fuel consumption. The agency again concludes
that this amount is insignificant. In any event,
NHTSA again points out that no excess fuel is
used if Excalibur's standard is set at its maxi-
mum feasible level instead of some higher level.
Both commenters urged that even if Excali-
bur's excess use of fuel is minor, the excess use by
all low volume manufacturers would not be
minor. The additional fuel consumption by all
low volume manufacturers who have petitioned
for exemption in the 1978 model year achieving
their maximum feasible average fuel economy
levels rather than the generally applicable stand-
ard of 18.0 mpg will amount to about 64 barrels
of fuel per day. This total represents about
.0013 percent of daily passenger car fuel use, and
is still small enough for this agency to conclude
that it is an insignificant amount. More impor-
tant, setting standards above these manufacturer's
maximum feasible levels would not result in ad-
ditional fuel savings.
PART 531— PRE 40
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 very small manufacturei-s 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 CFR 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 Januai-y 11, 1979.
Joan Claybrook
Administrator
44 F.R. 3708-3709
January 18, 1979
PART 531-PRE 41-42
f
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.
Suminai'y : This notice exempting Eolls-Royce
Motors Inc. (Rolls-Royce) from tlie 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.
Fm' further information contact:
Douglas Pritchard, Office of Automotive
Fuel Economy Standards, National Highway
Traffic Safety Administration, Washington,
D.C. 20590 (202-755-9384).
Supplementary 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
feasible 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-
noimcing 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: tlie 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 manufacturere 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 maximiun 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 ci\dl 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 deci-ease
in sales, while an exemption would only ser\'e 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 unfair
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 manufacturers 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 agrees
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, tlie 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
f
PART 531-PRE 44
Congress intended the ability to pay a civil pen-
alty to be a part of economic practicability under
these circumstances.
Other commenters suggested that NHTSA's
determination that the need of the Nation to
conserve energy would be negligibly affected by
granting this exemption was erroneous. For in-
stance, one commenter stated that it was imfair
to consider exempting Rolls-Royce because of the
insignificant amount of fuel involved, and com-
pared this to a proposal allowing Cadillac drivers
to drive at whatever speed they chose while re-
quiring drivers of all other cars to observe posted
speed limits, because of the small number of
Cadillacs on the road. Congress has already de-
cided the issue of fairness by authorizing the
exemption of low volume manufacturers. Further,
the Act specifically directs the agency to consider
the need of the Nation to conserve energy, and
when that need is negligibly affected by a given
fuel economy, the agency must give weight to
that fact.
None of these comments questioned the agency
estimate that Rolls-Royce 1978 automobiles
achieving an average fuel economy level of 10.7
mpg rather than 18.0 mpg would result in the
consumption of an additional 30.4 barrels of fuel
per day. Since the United States currently uses
about 5 million barrels of fuel in passenger auto-
mobiles each day, the additional fuel consumed
by Rolls-Royce represents .00061 percent of daily
fuel consumption. The agency concludes that an
amount this small is insignificant.
The final reason suggested by the commenters
for denying an exemption for Rolls-Royce was
that the agency should exercise its discretion to
deny the exemption request on the grounds that
it is contrary to the goal of energy conservation
and will erode public support for the fuel econ-
omy program. This agency believes that the
language in section 502(c) specifying that this
agency may exempt low volume manufacturers
indicates that Congress intended this agency to
apply a test of whether granting an exemption
would be generally consistent with the purposes
of the Act. The main purpose of the Act is con-
serving energy. Establishing standards above
the maximum feasible average fuel economy
levels for Rolls-Royce would not consen'e any
additional energy, since the alternative standard
is based on the premise that it is not possible for
the company to achieve better fuel economy than
the maximum feasible level.
As to the comments stating that exemptions
would endanger public support for the fuel econ-
omy program, this agency does not agree that
requiring very small manufacturers like Rolls-
Royce to comply with standards set at their
maximum feasible level instead of the maximum
feasible level for larger manufacturers will neces-
sarily 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 ap-
plicable fuel economy standards to the lesser
capabilities of these manufacturers.
For the above reasons, the agency has deter-
mined that the maximum feasible average fuel
economy for Rolls-Royce in the 1978 model year
is 10.7 mpg. Therefore, the agency is exempting
Rolls-Royce from the generally applicable stand-
ard of 18.0 mpg for the 1978 model year and
establishing an alternative standard for Rolls-
Royce at 10.7 mpg for the 1978 model year.
Accordingly, 49 CFR Part. .531 is amended. . . .
The program official and attorney principalh'
responsible for tlie development of this decision
are Douglas Pritchard and Stephen Kratzke,
respectively.
AUTHORITY: Sec. 9, Pub. L. 89-670, 80 Stat.
931 (49 U.S.C. 16.57) ; sec. 301, Pub. L. 94-163,
89 Stat. 901 (15 U.S.C. 2002) ; delegation of
authority at 49 FR 25015, June 22, 1976.
Issued on January 11, 1979.
Joan Claybrook
Administrator
44 F.R. 3710
January 18,1979
PART 531-PRE 45-46
PREAMBLE TO AMENDMENT TO PART 531— PASSENGER AUTOMOBILE AVERAGE
FUEL ECONOMY STANDARDS
(Docket No. LVM 77-07; Notice 3)
Action: Final decision to grant exemption from
average fuel economy standards.
Summary : This notice exempting Officine Alfieri
Maserati, S.p.A. (Maserati) from the generally
applicable average fuel economy standard of 18.0
miles per gallon (mpg) for the 1978 model year
passenger automobiles and establishing an alter-
native standard is issued in response to a petition
by Maserati. The alternative standard is 12.6
mpg.
Applicable date: The exemption and alternative
standard apply in the 1978 model year.
For further information contact :
Douglas Pritchard, Office of Automotive
Fuel Economy Standards, National Highway
Traffic Safety Administration, Washington,
D.C. 20590 (202-755-9384).
Supplementary information:
The National Highway Traffic Safety Admin-
istration (NHTSA) is exempting Maserati from
the generally applicable passenger automobile
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 the Motor Vehicle Information
and Cost Savings Act, as amended, (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 generally applicable average fuel econ-
omy standard if that standard is greater than the
low volume manufacturer's maximum feasible
average fuel economy and if the NHTSA estab-
lishes an alternative standard applicable to that
manufacturer at that manufacturer's maximum
feasible average fuel economy. In determining
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 (43 FR 46016; October
5, 1978) and a proposed decision to grant an
exemption to Maserati for the 1978 model year
(44 FR 3737; January 18, 1979). Only one com-
ment on the notice of receipt was submitted.
That commenter ui-ged that Maserati's petition
be granted so that it could remain in the U.S.
market and asserted that the world will be a
better place because of the continued existence
of these automobiles. No comments were received
on NHTSA's proposal to exempt Maserati from
the generally applicable standai'd of 18.0 mpg for
the 1978 model year and to establish an alterna-
tive standard for Maserati at 12.6 mpg during
the 1978 model year.
Accordingly, in consideration of the foregoing.
49 CFR Part"531 is amended
The progi'am official and attorney principally
responsible for the development of this decision
are Douglas Pritchard and Stephen Kratzke,
respectively.
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
authority at 49 CFR § 1.50.
Issued on Februai^ 16, 1979.
Joan Claybrook
Administrator
43 F.R. 34785
August 7, 1979
PART 531-PRE 47-48
i
PREAMBLE TO AN AMENDMENT TO PART 531— PASSENGER AUTOMOBILE
AVERAGE FUEL ECONOMY STANDARDS
(Docket No. LVM 77-07; Notice 4)
ACTION: Technical Amendment.
SUMMARY: In the Federal Register of March 1,
1979 (44 FR 11548), this agency published a notice
exempting Officine Alfieri Maserati, S.p.A.
(Maserati) from the generally applicable average
fuel economy standard of 18.0 miles per gallon
(mpg) for 1978 model year passenger automobiles,
and established an alternative average standard
for Maserati at its maximum feasible level of 12.6
mpg. Upon recalculating Maserati's maximum
feasible average fuel economy level, this agency
discovered that it had made an error in rounding
the number to the nearest tenth of a mile per
gallon. The actual maximum feasible fuel economy
for 1978 Maserati automobiles was 12.5 mpg, and
this notice amends Maserati's alternative standard
for the 1978 model year to 12.5 mpg.
EFFECTIVE DATE: This amendment is effective
upon date of publication in the Federal Register.
January 21, 1980.
FOR FURTHER INFORMATION CONTACT:
Robert Mercure, Office of Automotive Fuel
Economy Standards, National Highway Traffic
Safety Administration, 400 Seventh Street, S.W.,
Washington, D.C. 20590 (202-755-9384).
SUPPLEMENTARY INFORMATION:
In a notice published at 44 FR 11548, March 1,
1979, the National Highway Traffic Safety
Administration, (NHTSA) announced the final
determination exempting Maserati from the
generally applicable passenger automobile average
fuel economy standard for the 1978 model year,
and establishing an alternative standard of 12.6
mpg for Maserati for the 1978 model year. This
alternative standard was set at the level which
NHTSA determined was Maserati's maximum
feasible average fuel economy for its two model
types, as NHTSA is required to do by section
502(c) of the Motor Vehicle Information and Cost
Savings Act, as amended (15 U.S.C. 2002(c)).
Determination of that level involved assessing the
extent to which the fuel economy of Maserati's two
model types could be improved and then averaging
the fuel economy values for those model types in
accordance with the procedure of the Environ-
mental Protection Agency.
A recent re-examination by the agency of its
computation of Maserati's maximum average fuel
economy for model year 1978 revealed a signifi-
cant mathematical error. The agency had
erroneously rounded off the fuel economy values
for that company's two model types. When those
values are properly rounded and the average is
recomputed, the average is 12.5 mpg instead of the
12.6 mpg originally computed by the agency.
To correct this error, the agency is amending the
alternative standard for Maserati for model year
1978 to change it from 12.6 mpg to 12.5 mpg.
Accordingly, 49 CFR § 531.5(b) (7) is amended 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:
*****
(7) Officine Alfieri Maserati, S.p.A.: Model
Year 1978, average fuel economy standard (miles
per gallon), 12.5.
Issued on January 15, 1980.
Michael M. Finkelstein
Associate Administrator
for Rulemaking
45 F.R. 5738
January 24, 1980
PART 531; PRE 49-50
i
PREAMBLE TO AN AMENDMENT TO PART 531
Passenger Automobile Average Fuel Economy Standards
(Docket No. LVM 7704; Notice 3)
ACTION: Final decision to grant exemption from
fuel economy standards.
SUMMARY: This notice exempts Aston Martin
Lagonda Inc. (Aston Martin) from generally appli-
cable average fuel economy standards of 19.0 miles
per gallon (mpg) and 20.0 mpg for 1979 and 1980
model year passenger automobiles, respectively,
and establishes alternative standards. The alter-
native standards are 11.5 mpg in the 1979 model
year and 12.1 mpg in the 1980 model year.
DATES: The exemptions and alternative standards
set forth in this notice apply in the 1979 and 1980
model years.
FOR FURTHER INFORMATION CONTACT:
Robert Mercure, Office of Automotive Fuel
Economy Standards, National Highway
Traffic Safety Administration, 400 Seventh
Street, S.W., Washington, D.C. 20590
(202-755-9384)
SUPPLEMENTARY INFORMATION: The National
Highway Traffic Safety Administration (NHTSA)
is exempting Aston Martin from the generally
applicable average fuel economy standards for the
1979 and 1980 model years and establishing alter-
native standards applicable to that company in
those model years. This exemption is issued under
the authority of section 502(c) of the Motor Vehicle
Information and Cost Savings Act, as amended
(the Act) (15 U.S.C. 2002(c)). Section 502(c) provides
that a manufacturer of passenger automobiles that
manufactures 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 low volume manufacturer's maximum
feasible average fuel economy. In determining the
manufacturer's maximum 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 an-
nouncing the NHTSA's proposed decision to grant
an exemption to Aston Martin for the 1979 and
1980 model years (45 FR 24511, April 10, 1980).
NHTSA received 58 comments during the 30-day
comment period. All comments were from Aston
Martin owners, and all comments supported the
proposed exemptions and alternative standards.
NHTSA had previously considered all the factors
enumerated by the commenters supporting the
proposed exemptions.
NHTSA had proposed to establish alternative
fuel economy standards of 11.4 mpg for Aston
Martin in the 1979 model year and 12.4 mpg in the
1980 model year. Information which became
available to this agency from the Environmental
Protection Agency after the publication of the pro-
posal indicates that the 1979 Aston Martins
achieved a fuel economy level of 11.5 mpg, which is
higher than was proposed, and 12.1 mpg in the
1980 model year, which is lower than was pro-
posed. Since these Aston Martin automobiles used
all the means for improving fuel economy deemed
to be technologically feasible and economically
PART 531 -PRE 51
practicable, these fuel economy tests figures are a
more accurate representation of Aston Martin's
maximum feasible average fuel economy than the
previous estimates made by NHTSA. Accordingly,
this final decision incorporates the subsequent
information, and adopts 11.5 mpg and 12.1 mpg as
Aston Martin's maximum feasible average fuel
economy in the 1979 and 1980 model years, respec-
tively.
Based on its conclusions that it is not tech-
nologically feasible and economically practicable
for Aston Martin to improve the fuel economy of
its 1979 and 1980 model year automobiles above an
average of 11.5 and 12.1 mpg, respectively, that
other Federal automobile standards will not affect
achievable fuel economy beyond the extent consid-
ered in this analysis, and that the national effort to
conserve energy will be negligibly affected by the
granting of the requested exemptions and estab-
lishment of alternative standards, this agency con-
cludes that the maximum feasible average fuel
economy for Aston Martin in the 1979 and 1980
model years is 11.5 and 12.1 mpg, respectively.
Therefore, the agency is exempting Aston Martin
from the generally applicable standards and is
establishing alternative standards of 11.5 mpg for
the 1979 model year and 12.1 mpg for the 1980
model year.
In consideration of the foregoing, 49 CFR Part
531 is amended by adding 531.5(b)(4) to read as
follows:
§531.5 Fuel economy standards.
* 4> * •
(b) The following manufacturers shall comply
with the standards indicated below for the speci-
fied model years:
* * 4> *
(4) Aston Martin Lagonda Inc.
i
Model Year
1979
1980
Average fuel
economy standard
(miles per gallon)
11.5
12.1
The program official and attorney principally
responsible for the development of this decision
are Robert Mercure and Stephen Kratzke, respec-
tively.
Issued on September 29, 1980.
Joan Claybrook
Administrator
45 FR 67095
October 9, 1980
PART 531 -PRE 52
PREAMBLE TO AN AMENDMENT TO PART 531
Passenger Automobile Average Fuel Economy Standards
(Docket No. LVM 7701; Notice 6)
ACTION: Final decision to grant exemption from
average fuel economy standards and to establish
alternative standards.
SUMMARY: This notice exempts Avanti Motors
Corporation (Avanti) from the generally applicable
average fuel economy standards of 19.0 miles per
gallon (mpg) and 20.0 mpg for 1979 and 1980 model
year passenger automobiles, respectively, and
establishes alternative standards. The alternative
standards are 14.5 mpg in the 1979 model year and
15.8 mpg in the 1980 model year.
DATES: The exemptions and alternative standards
set forth in this rule apply in the 1979 and 1980
model year.
FOR FURTHER INFORMATION CONTACT:
Robert Mercure, Office of Automotive Fuel
Economy Standards, National Highway
Traffic Safety Administration, 400 Seventh
Street, S.W., Washington, D.C. 20590
(202-755-9384)
SUPPLEMENTARY INFORMATION: The National
Highway Traffic Safety Administration (NHTSA)
is exempting Avanti from the generally applicable
average fuel economy standards for the 1979 and
1980 model years and establishing alternative
standards applicable to that company in those
model years. This exemption is issued under the
authority of section 502(c) of the Motor Vehicle
Information and Cost Savings Act, as amended
(the Act) (15 U.S.C. 2002(c)). Section 502(c) provides
that a manufacturer of fewer than 10,000 pas-
senger automobiles 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 alter-
native standard applicable to that low volume
manufacturer at the level of its maximum 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 announ-
cing the NHTSA's proposed decision to grant an
exemption to Avanti for the 1979 and 1980 model
years (46 FR 5022, January 19, 1981). No comments
were received during the 45-day comment period.
Based on its conclusions that it is not
technologically feasible and economically prac-
ticable for Avanti to improve the fuel economy of
its 1979 and 1980 model year automobiles above an
average of 14.5 and 15.8 mpg, respectively, that
other Federal automobile standards did not affect
achievable fuel economy beyond the extent con-
sidered in this analysis and that the national effort
to conserve energy will be negligibly affected by
the granting of the requested exemptions, this
agency concludes that the maximum feasible
average fuel economy for Avanti in the 1979 and
1980 model years is 14.5 and 15.8 mpg, respective-
ly. Therefore, NHTSA is exempting Avanti from
the generally applicable standards and is
establishing alternative standards of 14.5 mpg for
the 1979 model year and 15.8 mpg for the 1980
model year.
In consideration of the foregoing, 49 CFR Part
531 is amended by revising §531.5(b)(l) to read as
follows:
PART 531 -PRE 53
. J J The nroeram official and attorney principally
§531.5 Fuel economy standards. ^ responsible fo" the development of this decision
* * are Robert Mercure and Stephen Kratzke,
(b) The following manufacturers shall comply respectively,
with the fuel economy standards indicated below
for the specified model years: j^^^^^ ^^ ^pj.jl 37, 1981.
(1) Avanti Motor Corporation.
Average Fuel
Economy Standard
Model Year (miles per gallon) Diane K. Steed
.„„g 16.1 Acting Administrator
1979 14-5
1980 15.8 46 FR 24952
. * * May 4, 1981
PART 531 -PRE 54
PREAMBLE TO AN AMENDMENT TO PART 531
Passenger Automobile Average Fuel Economy Standards
(Docket No. LVM 77-02; Notice 5)
ACTION: Final decision to grant exemption
from average fuel economy standards and to
establish alternative standards.
SUMMARY: This notice exempts Rolls-
Royce Motors, Ltd. (Rolls-Royce) from the
generally applicable average fuel economy
standards of 19.0 miles per gallon (mpg) and
20.0 mpg for 1979 and 1980 model year
passenger automobiles, respectively, and
establishes alternative standards. The
alternative standards are 10.8 mpg in the
1979 model year and 11.1 mpg in the 1980
model year.
DATES: The exemptions and alternative
standards set forth in this notice apply in the
1979 and 1980 model years.
SUPPLEMENTARY INFORMATION: The
National Highway Traffic Safety
Administration (NHTSA) is exempting Rolls-
Royce from the generally applicable average
fuel economy standards for the 1979 and 1980
model years and establishing alternative
standards applicable to that company in
those model years. This exemption is issued
under the authority of section 502(c) of the
Motor Vehicle Information and Cost Savings
Act, as amended (the Act) (15 U.S.C. 2002(c)).
Section 502(c) provides that a manufacturer
of passenger automobiles that manufactures
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 manufacturer's maximum
feasible average fuel economy and if the
NHTSA establishes an alternative standard
applicable to that manufacturer at the low
volume manufacturer's maximum feasible
average fuel economy. In determining the
manufacturer's maximum 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
announcing the NHTSA's proposed decision
to grant an exemption to Rolls-Royce for the
1979 and 1980 model years (45 F.R. 67108;
October 9, 1980). NHTSA received two
comments on that proposed decision.
The first comment was submitted by Rolls-
Royce, in response to an invitation in the
proposed decision for the company to explain
why it could not have improved the fuel
economy of its 1980 cars certified to the
49-state emission standards. Specifically,
Rolls-Royce used fuel injection and a 3-way
catalyst on its 1980 California vehicles, which
resulted in improved fuel economy for those
vehicles compared with the 1979 California
vehicles. NHTSA did not have sufficient
information to determine whether it would
have been feasible to have also made this
change to the 1980 49-state models. Lacking
sufficient information, the agency raised the
issue in the proposed decision, and invited
Rolls-Royce to provide specific information to
show that the change would not have been
PART 531 -PRE 55
feasible. If the company did not provide the
information, NHTSA would then consider
deciding that the change was feasible.
In response, Rolls-Royce stated that fuel
injection and 3-way catalysts were new
technologies to the company, and that it was
necessary to have a limited run with the new
technologies to give the company experience
with manufacturing them before including
the technologies on all their vehicles.
Additionally, Rolls-Royce stated that the
1980 California vehicles were certified at a
low enough emissions level that the
certification can be carried over for the 1981
and 1982 California and 49-state emissions
standards. By not having to retest for
compliance with those standards, the
company will save an estimated $50,000 in
each of the two model years.
The company also argued that it has
decided to produce only one model type for
emissions purposes — one that complies with
both the 49-state and California emissions
standards — beginning in the 1981 model
year. By so doing, Rolls-Royce will join all the
other low volume manufacturers except
Checker Motors in producing a vehicle that
complies with both sets of emissions
standards. This is important for marketing
flexibility, so that the low volume
manufacturer can sell its cars in California or
the other 49 states depending on the actual
demand. When the company produces two
models (49-state and California), it must
forecast how many of each to make. It cannot
sell 49-state vehicles in California, or vice
versa, when actual demand differs from
forecasted demand. Such a decision by Rolls-
Royce is not unreasonable.
Rolls-Royce argued that use of fuel
injection and a 3-way catalyst on its 1980
49-state vehicles would have required
additional and different development work
for the company to optimize the fuel
consumption and emissions to the less-
stringent 49-state standards. This
development would have been useful only for
that one model year, since the company was
not planning to certify vehicles to these less
stringent standards in the foreseeable future,
as explained above. Given the company's
limited engineering staff, it decided to devote
all of its efforts to achieving emissions levels
in its 1980 California vehicles that would
satisfying the 1981 and 1982 California and
49-state requirements, instead of splitting its
effort between that and achieving optimal
settings for its 49-state vehicles, which would
be used only for the 1980 model year. Rolls-
Royce also argued that it was erroneous for
the agency to imply that the use of fuel
injection with a 3-way catalyst was
responsible for the fuel economy
improvement on its 1980 California vehicles.
NHTSA recognizes that the fuel rich
mixtures required for efficient operation of
the 3-way catalyst would be above the level
required for minimum fuel consumption, and
that any potential fuel economy
improvements would depend on the specific
vehicle involved and the stringency of the
applicable emissions standards. However,
without resolving this latter argument,
NHTSA concludes that it would not have
been economically practicable for Rolls-Royce
to have incorporated fuel injection and the
3-way catalyst on its 1980 49-state vehicles.
This decision is based on the newness of the
technology to the company, marketing
considerations, the staff and resources
available to the company, and the fact that
the company is certifying only one model
type in 1981 and subsequent model years.
The other comment was submitted two
weeks after the comment period had closed.
This comment criticized the timing of the
agency's proposal, and the procedure used to
reach a final decision on the feasibility of
Rolls-Royce using fuel injection and 3-way
catalysts on its 1980 49-state vehicles. The
comment argued that the agency should have
set the proposed alternative standard at the
level Rolls-Royce would have achieved had it
used fuel injection and the 3-way catalyst,
and then lowered the standard only if Rolls-
Royce was able to show that it could not have
used the technology. This suggestion appears
to be a distinction without a difference,
because following either it or the procedure
chosen by the agency required the
manufacturer to demonstrate that it could
not have used the item of technology, or the
PART 531 -PRE 56
maximum feasible average fuel economy for
the manufacturer would be calculated as if
the manufacturer had used the item. The
agency notes that by raising the point in the
proposed decision, there was sufficient notice
and opportunity to comment (as required by
the Administrative Procedure Act) to permit
the final decision to include the use of fuel
injection when calculating the manufacturer's
maximum feasible average fuel economy.
This comment also raised two substantive
objectives to the proposed decision. First, the
comment stated, "NHTSA has concluded that
Rolls-Royce was justified in foregoing any
engine improvements because Rolls-Royce
said doing so might well have increased NOx
emissions (45 F.R. at 67111)." This objection
is a misstatement of the proposal, in which
NHTSA said that a reduction in engine size
without an accompanying weight reduction
for the vehicle might well have increased
NOx emissions. This is because emissions of
oxides of nitrogen increase with increased
engine loading due to the higher operating
temperatures. Increased engine loading can
occur with either the substitution of a smaller
engine or the use of a lower axle ratio on the
same engine. Rolls-Royce reported no net fuel
economy gain from reducing engine size,
after returning the engine to control the
higher NOx emissions. Further, the agency
considered other engine improvements, such
as alternative engines, but determined they
were not technologically feasible, with no
mention of NOx emissions.
The second objection was that the rear
axle ratio used by Rolls-Royce could have
been reduced. However, the agency set forth
the reasons that this reduction would not be
technologically feasible and economically
practicable at 45 F.R. 67112, and the
commenter did not explain why it considered
the proposed finding to be erroneous or less
than maximum feasible. Accordingly, the
agency reaffirms its finding.
After analyzing the public comments
received on the proposed decision, NHTSA
believes that the fuel economy levels
proposed therein represent Rolls-Royce
maximum feasible average fuel economy for
the 1979 and 1980 model years. Therefore,
based on its conclusions that it was not
technologically feasible and economically
practicable for Rolls-Royce to improve the
fuel economy of its 1979 and 1980 model year
automobiles above an average of 10.8 mpg
and 11.1 mpg, respectively, that other
Federal automobile standards did not affect
achievable fuel economy beyond the extent
considered in this analysis, and that the
national effort to conserve energy will be
negligibly affected by the granting of the
requested exemptions and establishment of
alternative standards, NHTSA concludes
that the maximum feasible average fuel
economy for Rolls-Royce in the 1979 and 1980
model years was 10.8 and 11.1 mpg,
respectively. Therefore, the agency is
exempting Rolls-Royce from the generally
applicable standards and is establishing
alternative standards of 10.8 mpg for the
1979 model year and 11.1 mpg for the 1980
model year.
In consideration of the foregoing, 49 CFR
Part 531 is amended by revising §531.5(b)(2)
to read as follows:
§531.5 Fuel economy standards.
* * *
(b) The following manufacturers shall com-
ply with the standards indicated below for
the specified model years:
* * *
(2) Rolls-Royce Motors, Inc.
Model Year
1978
1979
1980
Average fuel economy standard
(miles per gallon)
10.7
10.8
11.1
Issued on May 28, 1981.
Raymond A. Peck, Jr.
Administrator
46 F.R. 29944
June 4, 1981
PART 531-PRE 57-58
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
U.S.C. 2002(c)). Section 502(c) provides that a
manufacturer of passenger automobiles which
manufacture 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
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
i
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
PREAMBLE TO AN AMENDMENT TO PART 531
Passenger Automobile Average Fuel Economy Standards
[Docket No. LVM 82-01; Notice 5]
ACTION: Final rule granting exemption from
average fuel economy standard and establishing
an alternative standard.
SUMMARY: This rule is issued in response to a
petition filed by Rolls-Royce Motors, Ltd. (Rolls-
Royce) requesting that it be exempted from the
generally applicable average fuel economy stan-
dard of 27.5 miles per gallon (mpg) for 1986 model
year passenger automobiles, and that a lower
alternative standard be established for it. This
rule grants Rolls-Royce that exemption and
establishes an alternative standard of 11.0 mpg for
Rolls-Royce for the 1986 model year.
EFFECTIVE DATE: This exemption and alter-
native standard apply to Rolls-Royce for the 1986
model year.
SUPPLEMENTARY INFORMATION: NHTSA is
exempting Rolls-Royce from the generally ap-
plicable average fuel economy standard for 1986
model year passenger automobiles and estab-
lishing an alternative standard applicable to Rolls-
Royce for that model year. This exemption is
issued under the authority of section 502(c) of the
Motor Vehicle Information and Cost Savings Act,
as amended ("the Act") (15 U.S.C. 2002(c)). Section
502(c) provides that a passenger automobile manu-
facturer which manufactures fewer than 10,000
vehicles annually may be exempted from the
generally applicable average fuel economy stan-
dard for a particular model year if that standard is
greater than the low volume manufacturer's maix-
imum feasible average fuel economy and if
NHTSA establishes an alternative standard ap-
plicable to that manufacturer at its maximum
feasible average fuel economy. In determining the
manufacturer's maximum feasible average fuel
economy, section 502)e) of the Act (15 U.S.C.
2002(e)) requires 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 decision was preceded by a proposed
decision announcing the agency's tentative conclu-
sion that Rolls-Royce should be exempted from the
generally applicable 1986 passenger automobile
average fuel economy standards, and that an alter-
native standard of 11.0 mpg should be established
for Rolls-Royce "in the 1986 model year; 50 FR
5405, February 8, 1985. No comments were receiv-
ed on the proposed decision.
The agency is adopting the tentative conclusions
set forth in the proposed decision as its final con-
clusions, for the reasons set forth in the proposed
decision. Based on the conclusions that the max-
imum feasible average fuel economy level for
Rolls-Royce in the 1986 model year is 11.0 mpg,
that other Federal motor vehicle standards will
not affect achievable fuel economy beyond the ex-
tent considered in the proposed decision, and that
the national effort to conserve energy will not be
Eiffected by granting this requested exemption,
NHTSA hereby exempts Rolls-Royce from the
generally applicable passenger automobile
average fuel economy standard for the 1986 model
year and establishes an alternative standard of
11.0 mpg for Rolls-Royce in the 1986 model year.
NHTSA has analyzed this decision, and deter-
mined that neither Executive Order 12291 nor the
Department of Transportation regulatory policies
PART 531 -PRE 61
and procedures apply, because this decision is not a List of Subjects in 49 CFR Part 531
"rule," which term is defined as "an agency state- Energy conservation, Gasoline, Imports, Motor
ment of general applicability and future effect." vehicles.
This exemption is not generally applicable, since it In consideration of the foregoing, 49 CFR Part
applies only to Rolls-Royce. If the Executive Order 531 is amended by revising §531.5fbX2) to read as
and the Department policies and procedures were follows:
applicable, the agency would have determined that PART 531— PASSENGER AUTOMOBILE
this action is neither "major" nor "significant." AVERAGE FUEL ECONOMY STANDARDS
The principal impact of this exemption is that 1. The authority citation for Part 531 is revised
Rolls-Royce will not be required to pay civil to read as follows:
penalties if it achieves its maximum feasible AUTHORITY: 15 U.S.C. 2002; delegation of
average fuel economy, and purchasers of its authority at 49 CFR 1.50.
vehicles will not have to bear the burden of those 2. §531.5(bX2) is revised to read as follows:
civil penalties in the form of higher prices. Since §531.5 Fuel economy standards.
this decision sets an alternative standard at the *****
level determined to be Rolls-Royce's maximum (h) The following manufacturers shall comply
feasible average fuel economy, no fuel would be with the standards indicated below for the
saved by establishing a higher alternative stan- specified model years:
dard. The impacts for the public at large will be *****
minimal. (2) Rolls-Royce Motors, Inc.
The agency has also considered environmental
implications of this decision in accordance with the
National Environmental Policy Act and determin- Average fuel economy
ed that this decision will not significantly affect j^^^j y^^ standard (miles per gallon)
the human environment. Regardless of the fuel
economy of a vehicle, it must pass the emissions 1978 10.7
standards which measure the amount of emissions 1979 10.8
per mile travelled. Thus, the quality of the air is 1980 11.1
not affected by this exemption and alternative 1981 10.7
standard. Further, since Rolls-Royce's 1986 1982 10.6
automobiles cannot achieve better fuel economy 1983 9.9
than 11.0 mpg, granting this exemption will not 1984 10.0
affect the amount of gasoline available. 1985 10.0
Since the Regulatory Flexibility Act may apply 1986 11.0
to a decision exempting a manufacturer from a
generally applicable standard, I certify that this
decision will not have a significant economic im-
pact on a substantial number of small entities. Issued on: August 6, 1985
This decision does not impose any burdens on
Rolls-Royce. It does relieve the company from
having to pay civil penalties in the 1986 model
year. Small organizations and small governmental Diane K. Steed
jurisdictions generally are not purchasers of Rolls- Administrator
Royce automobiles. In any event, since the prices
of 1986 Rolls-Royce automobiles are not affected by 50 F.R. 32424
this decision, the purchasers will not be affected. August 12, 1985
i
PART 531-PRE 62
PREAMBLE TO AN AMENDMENT TO PART 531
Passenger Automobile Average Fuel Economy Standards
Model Year 1986
[Docket No. FE-85-01; Notice 3]
ACTION: Final rule.
SUMMARY: This notice amends the average fuel
economy standard applicable to passenger
automobiles manufactured in model year (MY)
1986 by reducing it from 27.5 mpg to 26.0 mpg.
This rulemaking was initiated in response to peti-
tions for rulemaking submitted by General Motors
(GM) and Ford. The agency's analysis indicates
that GM and Ford, constituting a substantial part
of the industry, had sufficient plans to meet the
27.5 mpg standard in MY 1986 and made signifi-
cant progress toward doing so, but were prevented
from fully implementing those plans by unforeseen
events. Among other things, there has been a
substantial shift in consumer demand toward
larger cars and larger engines, away from the sales
mixes recently anticipated for MY 1986 by GM and
Ford. This shift is largely attributable to a continu-
ing decline in gasoline prices. The agency's
analysis further indicates that the only actions now
available to those manufacturers to improve their
fuel economy levels for MY 1986 would involve
product restrictions likely resulting in significant
adverse economic impacts, including sales losses
well into the hundreds of thousands and job losses
well into the tens of thousands, and unreasonable
restrictions on consumer choice. Based on its con-
sideration of the relevant statutory criteria,
NHTSA has determined that the maximum feasi-
ble average fuel economy level for MY 1986 is 26.0
mpg.
DATES: The amendment made by this rule to the
Code of Federal Regulations is effective November
3, 1985. The standard is applicable to the 1986
model year.
Background
A. The Energy Poling and Consenmtion Act
In December 1975, during the aftermath of the
energy crisis created by the oil embargo of
1973-74, the Congress enacted the Energy Policy
and Conservation Act. Based on the relatively low
average fuel economy of cars at that time (14 mpg
for model year 1974 cars) and on a report by the
Department of Transportation on the potential for
improving that average. Congress included a pro-
vision in that Act establishing the automotive fuel
economy regulatory program. That provision add-
ed a new title, Title V, "Improving Automotive Ef-
ficiency," to the Motor Vehicle Information and
Cost Savings Act.
Title V specified corporate average fuel economy
(CAFE) standards for cars of 18, 19 and 20 mpg
for model years 1978, 1979, and 1980, respectively,
and 27.5 mpg for 1985 and thereafter. The
Secretary of Transportation was required to
establish standards for model years 1981-84. Sec-
tion 502(a)(3) required that the standards for each
of those model years be set at a level which (1) was
the maximum feasible average fuel economy level
and (2) would result in steady progress toward
meeting the 27.5 mpg standard for model year
1985.
Although Congress clearly established the 27.5
mpg value as a goal to strive for (27.5 mpg is
roughly twice the MY 1974 estimated CAFE), it
recognized that such long-term goals are subject to
considerable uncertainty. The Act permits the
standard to be reconsidered by the Department
based on up-to-date information and changing
trends and assumptions. Section 502(a)(4) provides
that the Secretary of Transportation can raise or
lower the 27.5 mpg standard for model year 1985
or for any subsequent model year if he or she deter-
mines that some other standard represents the
maximum feasible average fuel economy level. In
determining maximum feasible average fuel
economy, the Secretary is required under section
502(e) of the Act to consider four factors:
technological feasibility, economic practicability.
PART 531 -PRE 63
the effect of other Federal motor vehicle standards
on fuel economy, and the need of the nation to con-
serve energy.^
Congress' recognition of the need for flexibility is
clearly indicated by the Energy Policy and Conser-
vation Act's legislative history. The report accom-
panying H.R. 7014, the bill containing the House
version of the fuel economy provisions (which
would have specified a 28.0 mpg standard for 1985
and thereafter), stated that "the automobile in-
dustry has a central role in our national economy
and that any regulatory program must be carefully
drafted so as to require of the industry what is at-
tainable without either imposing impossible
burdens on it or unduly limiting consumer choice
as to capacity and performance of motor vehicles."
H.R. Rep. No. 94-340, 94th Cong., 1st Sess. 87
(1975). The report recognized the difficulty in
establishing goals ten years in the future by stating
that "(t)he 1985 average fuel economy standard
presented a different problem [then establishing
standards for MY's 1978-80] because of the high
level of uncertainty which attends any attempt to
predict technological feasibility a decade into the
furure." Id. at 88. The Committee also stated that
although the 1985 standard was a "clear target," it
also provided DOT the ability to amend that target
so as to provide the program "with the necessary
flexibility." Ibid.
It is noteworthy that the Secretary was given
authority to lower the standard for MY 1985 or for
any subsequent year to 26.0 mpg without such ac-
tion being subject to a one-house veto. Conversely,
any action to raise the standard above 27.5 mpg or
to lower it beyond 26.0 mpg was subject to that
form of congressional review and disapproval.
While such legislative vetoes have since been
declared unconstitutional in the Supreme Court's
Chadha decision, the different treatment in the
original legislation of action to lower the standard
to any level between 26.0 mpg and 27.5 mpg ap-
pears to reflect Congress' view of the likelihood of
such events and its willingness to accept -without
formal review - Departmental actions which might
make slight changes in the long-term goal
established by the Act.^
' Responsibility for the automotive fuel economy program
was delegated by the Secretary of Transportation to the Ad-
ministrator of NHTSA (41 FR 2,i015, June 22, 1976).
2 The Department of Justice has advised that the legislative
veto provision in section 502(aX4) is fully severable from the
balance of that section. Thus, the Department of Transportation
B. Setting the 1981-84- Standards
On June 30, 1977, NHTSA published in the
Federal Register (42 FR 33534) a final rule
establishing the 1981-84 passenger automobile
CAFE standards. As part of establishing these
standards, the agency developed estimates of the
maximum feasible fuel economy for each manufac-
turer for model years 1981 through 1985. The
agency's conclusion at that time was that "levels of
average fuel economy in excess of 27.5 mpg are
achievable in the 1985 time frame." 42 FR 33552.
The agency believed that it was feasible in model
year 1985 for General Motors to achieve an
average fuel economy level of 28.9 mpg. Ford 27.9
mpg, and Chrysler 28.7 mpg. 1977 Rulemaking
Support Paper (RSP), p. 5-38 (Table 5.11). Those
levels were based on a number of assumptions, in-
cluding the ability of manufacturers to maintain a
rapid rate of introduction of technology, consumer
acceptance of a 10 percent reduction in vehicle ac-
celeration, and significant use of a widespread
range of technological options, including weight
reduction, improved transmissions and lubricants,
reduced aerodynamic drag, reduced accessory
losses, and reduced tire rolling resistance.
The agency's estimates did not assume a
downward mix shift in automobile sizes or the use
of diesel engines. The agency concluded in 1977
that a standard set at a level requiring substantial
mix shifts would not be economically practicable
due to the risk that a significant number of con-
sumers might defer purchasing new automobiles,
resulting in a substantial sales drop. However,
these techniques were viewed in the 1977 rule as
"constituting a safety margin" for manufacturers
in the event that other technological improvements
did not result in sufficient CAFE improvements.
42 FR 33545, June 30, 1977.
As to foreign manufacturers, the 1977 RSP pro-
jected that all but three of them could improve
their average fuel economy levels, without expand-
ed use of diesel engines, sufficiently to meet the
27.5 mpg standard. With fleet fuel economy im-
provements from additional diesels included in the
foreign fleet projections, only one manufacturer,
Mercedes-Benz, was projected to fall below the
1985 standard.
It should be emphasized that the agency's 1977
retains its authority to establish fuel economy standards both
within and outside the 26.0 to 27.5 mpg range, so long as the
standard is at the "maximum feasible" level for the model year
in question.
PART 531 -PRE 64
estimates were intended to demonstrate the
feasibility of achieving the 27.5 mpg standard and
not to predict what specific actions the manufac-
turers would actually take to achieve that stand-
ard. The agency's estimates were based on one
scenario of what the agency believed manufac-
turers could do to achieve an average fuel economy
level of 27.5 mpg by 1985. Manufacturers were
free to pursue other courses of action to achieve
the 27.5 mpg fuel economy level.
Subsequent to the issuance of the June 1977 final
rule, the domestic manufacturers all indicated they
expected to meet the requirements.
C. Events Frrni 1977 to 1985
In January 1979, NHTSA presented new
feasibility estimates for each manufacturer for
model years 1980 through 1985 in its Third Annual
Report to the Congress on the Automotive Fuel
Economy Program (44 FR 5742, January 29,
1979). The agency concluded that "(o)n balance, the
conclusions reached during the 1981-84 rulemak-
ing . . . are similar to those resulting from the most
recent assessments. These assessments indicate
that all domestic manufacturers can exceed the
scheduled standards for each year through 1985."
44 FR 5757.
NHTSA recognized in its Third Annual Report
that the changes in vehicle design necessary to
meet the fuel economy projections would require
tremendous outlays of capital. The agency stated:
. . . the important impact of the fuel economy
program on the industry relates directly to the
fact that the industry must have the resources
directly to generate an "extra" $11.5 billion in
capital. This ability to make increased in-
vestments while maintaining financial health is
the criterion which was of prime importance in
determining whether the standards are
"economically practicable." The Department
largely views this criterion to mean that the in-
vestment requirements are within the industry's
capability but not so stringent as to threaten
economic hardship for the industry as a whole.
44 FR 5765.
NHTSA also recognized that its feasibility
estimates were dependent on the continued finan-
cial health of the industry and could be subject to
change in the event of a severe economic
downturn. The agency stated:
DOT also analyzed the degree to which potential
anti-competitive pressures would be increased if
the economy were to suffer a downturn. Certain-
ly in a severe economic downturn, companies
with a weaker financial base will find their
resources strained more severely .... Thus, if a
serious decline in auto sales occurs in conjunc-
tion with a severe economic downturn, the
Department has the authority to revise the
standards since regulations that were
"economically practicable" in a healthy economy
might not be so in a recession. . . . 44 FR 5772.
The Third Annual Report noted that a number of
manufacturers did not agree with the agency's con-
clusion that "(t)he technology is available that will
enable manufacturers to achieve an average fuel
economy of 27.5 mpg without reducing vehicle in-
terior space or significantly affecting performance
and without significantly changing the mix of size
classes." The document stated:
Ford indicated the conclusion is wishful thinking
on NHTSA's part. The technology on which
Ford's predictions are based are the PROCO
and/or diesel engines. They indicated that
neither engine is "available" at the present time
because of various problems yet to be solved.
Ford also said the second round of downsizing
will decrease interior volume unless very expen-
sive materials are used and indicated that
smaller engines in its vehicles will cause reduced
vehicle acceleration.
GM stated that the rise of standards at the rate
of two miles-per-gallon per year will cause all
manufacturers to introduce unproven tech-
nology and that there will be compromises in
vehicle acceleration and owner utility. GM stated
that much of the available technology is "high
risk," and may not be "commercially practicable
in production hardware." 44 FR 5775-5776.
Between January and May of 1979, NHTSA
received a number of submissions from Ford and
General Motors on the 1981-84 fuel economy
standards for passenger automobiles asserting
that those standards should be reduced. In
response to these submissions, the agency publish-
ed a document entitled "Report on Requests by
General Motors and Ford to Reduce Fuel Economy
Standards for MY 1981-85 Passenger
Automobiles," DOT HS-804 731, June 1979. The
report concluded that the standards were
technologically feasible and economically prac-
ticable and noted that both companies had submit-
PART 531 -PRE 65
ted product plans for meeting the standards.
Report, p. 14.
One year later, the nation was in the midst of
another energy crisis, brought on by events in
Iran. Gasoline prices were rising rapidly, creating
significantly increased consumer demand for small
cars. The U.S. city average retail price for unlead-
ed gasoline rose from 90 cents per gallon in 1979 to
$1.25 in 1980. (In 1984 dollars, this increase was
from $1.24 in 1979 to $1.57 in 1980.) In light of
these changed conditions, the industry announced
plans to significantly exceed the 27.5 mpg stan-
dard for 1985. Both Ford and GM, as well as
Chrysler and American Motors, -indicated that they
expected to achieve average fuel economy in ex-
cess of 30 mpg for that model year. Product plans
submitted to NHTSA by those companies indicated
that the projections assumed that consumer de-
mand would produce significant mix shifts toward
smaller cars, and rapid introduction of new
technology. A letter submitted to the agency by
Ford in July 1980, however, cautioned that "it is
important to emphasize that the affordability of
many of these programs is dependent upon
substantial improvement in the market and
economic conditions."
On January 26, 1981, NHTSA published an ad-
vance notice of proposed rulemaking (ANPRM) in
the Federal Register (46 FR 8056) which addressed
the issue of passenger automobile fuel economy
standards for model year 1985 and beyond. That
notice and an accompanying paper entitled
"Analysis of Post-1985 Fuel Economy," assumed
that manufacturers would achieve their announced
average fuel economy goals of over 30 mpg for
1985. The notice also took note, however, of a
deepening economic crisis then facing the auto in-
dustry and possible adverse effects on financing in-
vestments for improving fuel economy. The notice
stated:
A major issue is the capability of the domestic
manufacturers to finance investments for fuel
economy improvements after 1985 when they
have strained that capability to make the in-
vestments needed to meet the fuel economy
standards through model year 1985. It is ex-
pected that the combined losses of the domestic
manufacturers for 1980 will exceed $4.5 billion.
The domestic automobile industry's traditionally
more profitable mid- and large-size passenger
automobiles are once again selling poorly, while
smaller passenger automobiles are selling at
very high volumes. Indefinite layoffs of
automobile workers now exceed 175,000, and
significant operational cash shortfalls are being
projected for the domestic manufacturers in the
early 1980's. This will involve substantial bor-
rowing by the domestic manufacturers, whereas
they have traditionally used internal sources of
funds for capital expenditures. Thus, the pace at
which the domestic manufacturers can improve
their fuel economy must be closely examined.
. . . 46 FR 8058-8059.
On April 16, 1981, NHTSA published in the
Federal Register (46 FR 22243) a notice withdraw-
ing the ANPRM. The notice stated that "(t)his ac-
tion is being taken in recognition of market
pressures which are creating strong consumer de-
mand for fuel-efficient vehicles and sending clear
signals to the vehicle manufacturers to produce
such vehicles. It is expected that the market will
continue to act as a powerful catalyst. . . ."
Conditions affecting fuel economy changed
dramatically after 1981, however, following decon-
trol of domestic oil and other external factors in-
creasing available supplies. Gasoline prices did not
continue to rise but instead declined over time.
This, combined with economic recovery, caused
consumer demand to shift back toward larger cars
and larger engines. Data submitted to the agency
by GM and Ford in mid- 1983 indicated that instead
of achieving fuel economy well in excess of the 27.5
mpg standard for MY 1985, they would be unable
to meet the levels prescribed by the standard.
Petitions and Grant Notice
In March 1985, both GM and Ford submitted
petitions for rulemaking requesting that NHTSA
reduce the automotive fuel economy standards for
passenger cars for the 1986 model year and beyond
from 27.5 mpg to 26.0 mpg. The petitioners stated
that factors beyond their control, including lower
gasoline prices and a resultant shift in consumer
demand toward larger cars and larger engines, had
reduced their fuel economy capability. NHTSA
granted the GM and Ford petitions in a notice
published in the Federal Register (50 FR 12344) on
March 28, 1985, and requested public comments.
The agency noted that it was already considering,
in connection with a petition for rulemaking sub-
mitted by the Center for Auto Safety (CFAS) and
the Environmental Policy Institute (EPI), whether
the fuel economy standards for passenger cars
PART 531 -PRE 66
manufactured in model years 1987 and thereafter
should be amended. The CFAS/EPI petition had
requested that those standards be increased.
NHTSA stated in the March 1985 notice that as a
first step in its consideration of the fuel economy
standards for passenger cars, it was focusing its
attention on the 1986 model year. The agency ex-
plained that it believed this approach was ap-
propriate in view of the possibility of serious
economic harm cited by GM and Ford and the
limited remaining time for amending the 1986
standard.
While the agency focused its attention first on
the 1986 model year, it is in the process of analyz-
ing the data for MY 1987 and subsequent years.
The agency currently anticipates issuing shortly a
notice proposing a range of alternatives for MY
1987 and subsequent years.
Notice of Proposed Rulemaking
On July 22, 1985, after considering the com-
ments submitted in response to the March 1985
notice and based on a detailed agency analysis,
NHTSA published in the Federal Register (50 PR
29912) a notice of proposed rulemaking (NPRM) to
amend the model year 1986 passenger automobile
average fuel economy standard by reducing it from
27.5 mpg to 26.0 mpg. The agency explained that,
based on its analysis and in light of the four factors
of section 502(e), it had tentatively concluded that
the maximum feasible average fuel economy level
for MY 1986 is 26.0 mpg. The agency's analysis in-
dicated that GM and Ford, which together con-
stitute a substantial part of the industry, had made
significant efforts to meet the 27.5 mpg standard,
and that those efforts had been overtaken by un-
foreseen events. The agency's analysis further in-
dicated that the only actions now available to GM
and Ford to significantly improve their fuel
economy levels for MY 1986 would involve product
restrictions likely resulting in significant adverse
economic impacts, including sales losses well into
the hundreds of thousands and job losses well into
the tens of thousands, and unreasonable restric-
tions on consumer choice. The agency invited both
written and oral comments on the proposal. A
public meeting was held on August 8, 1985, in
Washington, D.C., to receive oral comments.
Public Comments
Comments were received both from parties
strongly supporting the proposed reduction in the
MY 1986 passenger automobile CAFE standard
and parties strongly opposing such action. Many of
the parties reiterated the positions they had taken
in response to the March 1985 notice granting
Ford's and GM's petitions for rulemaking.
Supporters of the agency's proposal included
GM, Ford, several automotive trade associations,
the U.S. Department of Commerce, the U.S.
Department of Energy (DOE), the Washington
Legal Foundation, more than 40 members of Con-
gress, and about 60 percent of the approximately
3,000 private individuals who submitted com-
ments. The Council of Economic Advisers (CEA)
supported the direction of the proposal, but also
argued that it did not go far enough.
GM and Ford reemphasized the issues raised by
their petitions, focusing particular attention on the
efforts they have made to improve their fuel
economy and on the serious economic conse-
quences which could occur if the standard were not
reduced. Those commenters also emphasized the
relatively small effect the proposed amendment
would have on energy conservation. Ford
estimated that lowering the standard would in-
crease U.S. petroleum consumption by no more
than 0.06 percent, while GM stated that the effect
would be an increase of less than 0.04 percent.
Those manufacturers submitted various additional
information in support of their petitions, some of it
in response to agency requests for further explana-
tion of their views and arguments. While both
manufacturers strongly supported the agency's
proposal, they did raise some issues concerning the
agency's analysis. Also, GM objected to NHTSA's
conclusion in the NPRM that the Cost Savings Act
generally requires fuel economy standards to be
set without regard to carryforward/carryback
credits.
The Automobile Importers of America (AIA)
stated that continuation of the 27.5 mpg standard
would unduly restrict consumer choice and harm
importers, while the proposed reduction in the
standard would not unreasonably affect energ\'
conservation. AIA argued that NHTSA has con-
siderable discretion in amending the CAFE stand-
ard within the range of 26.0 mpg to 27.5 mpg, that
consumer demand is a factor which the agency
must consider as part of its standard-setting
analysis, and that l)enefits must outweigh costs for
a standard to be technologically feasible and
economically practicable. AIA also stated that it
does not agree with NHTSA's conclusion that a
PART 531 -PRE 67
given model year's standard cannot be reduced
after the start of the model year. With respect to
whether the agency should consider the need for
carryback credits as part of its standard- setting
process, that commenter argued that NHTSA
should consider previously approved carryback
plans.
Professor Robert Leone of Harvard University,
commenting on behalf of AIA, argued that a 27.5
mpg standard for model year 1986 is not technical-
ly feasible due to inadequate lead time; not
economically practicable because of excessive
burdens on consumers, producers and workers; not
feasible because fuel economy requirements for
light trucks encourage diversion of sales from
passenger cars to vans and light trucks, and not
sound energy policy because of possible adverse ef-
fects on energy consumption. With respect to this
last issue. Professor Leone stated that if one con-
sumer in five who was frustrated by the inability to
purchase a passenger car of choice chose to buy a
light truck, specialty vehicle, or van instead, the
net impact of a 27.5 mpg standard over a 26.0 mpg
standard would be zero. That commenter also in-
dicated that if one consumer in five who was
frustrated by the inability to purchase a passenger
car of choice decided to keep an old 18 mpg car on
the road instead, gasoline fuel economy for the
fleet as a whole would actually fall with the more
stringent 27.5 mpg standard.
The National Automobile Dealers Association
(NADA) stated that the agency's proposal would
directly benefit the automobile buying public and
the new car dealer industry that serves it. Ac-
cording to that commenter, a 26.0 mpg standard
would ensure that GM and Ford customers would
continue to be allowed the choice of purchasing
vehicles of greater size, utility, comfort and per-
formance. NADA stated that an overly stringent
standard that leaves the manufacturer no choice
but to reduce its production of larger vehicles
would likely wreak as much, if not more, economic
havoc on the dealer whose customers depend on
those cars, as on the manufacturer itself.
The Recreational Vehicle Industry Association
(RVIA) and several other commenters stated that
continuation of the 27.5 mpg standard could create
a lack of tow vehicles to safely pull travel trailers
and other items of equipment. RVIA stated that
larger cars with large engines are required to pull
many travel trailers, due to the trailers' size and
weight, and noted that there are very few travel
trailers that can be towed with a six-cylinder
engine.
The European manufacturers generally cited the
significant progress they have already made in im-
proving fuel economy, increased market demand
for larger cars and larger engines, and the difficul-
ty that limited-line manufacturers have in achiev-
ing higher average fuel economy if they do not pro-
duce small cars whose fuel economy can be aver-
aged with that of their larger cars.
While the U.S. Department of Commerce did not
submit a new comment in response to the July
1985 NPRM, its comment on the March 1985 grant
notice expressed support for reducing the standard
based upon its view that achievement of the 27.5
mpg standard for MY 1986 no longer appears to be
economically practicable or technologically feasi-
ble. That Department stated that it believes GM
and Ford could achieve that standard only by
reducing their U.S. product offerings and ad-
justing their output mix, with economically damag-
ing consequences, including substantial sales
losses and employment decline.
The U.S. Department of Energy stated that it
supports NHTSA's proposal and submitted an
analysis concluding that GM and Ford would not be
able to achieve CAFE of 27.5 mpg for model year
1986 without restricting the availability of larger
car and station wagon models and larger optional
engines. DOE stated that such actions would result
in lost sales of between 630,000 and 770,000
vehicles for GM and between 160,000 and 230,000
for Ford. That commenter also stated that it
believes efforts to reduce energy use serve the Na
tion's interest only to the extent that they con-
tribute to the broader goals of increased economic
growth and improved economic efficiency. Fur-
ther, it does not believe that the "need to conserve
energy" requires or justifies the imposition of cost-
ineffective product changes or product choice
restrictions on consumers and manufacturers.
On September 9, 1985, the Department of
Energy provided a partial draft analysis prepared
by one of its contractors. Energy and Environmen-
tal Analysis, Inc. (EEA), which concluded that GM
could achieve 26.4 mpg (not including the
GM/Toyota joint venture car) for MY 1986 and
Ford 26.85 mpg. The Department of Energy noted
that the results of that report do not represent
either that Department's recommendation on a
specific value for the maximum feasible level of
PART 531 -PRE 68
fuel economy in 1986 nor necessarily its views on
various technical issues.
While the Council of Economic Advisers sup-
ported the direction of the agency's proposal, it
stated that even a 26.0 mpg standard could in-
crease the relative price of large cars, limit con-
sumer choice, harm U.S. manufacturers in interna-
tional competition, and cause the loss of jobs in ef-
ficient domestic production sectors. CEA urged a
reinterpretation of statutory criteria to permit
adoption of what it termed "nonbinding" stand-
ards, i.e., standards which permit major
automobile manufacturers to produce and price
automobiles in response to free market forces,
without concern that their competitive production
and pricing decisions will lower their CAFE and
lead to civil penalties. CEA also argued that safety
is adversely affected by shifts to smaller, more
fuel-efficient cars and that the agency should con-
sider the relationship between possible adverse
safety effects and improved fuel economy.
Chrysler, the Energy Conservation Coalition
(ECC), Americans for Energy Independence, EPI,
CFAS, the attorney general of California, several
members of Congress, and various private in-
dividuals opposed reducing the MY 1986 fuel
economy standard.
Chrysler argued, as it had in its comment on the
March 1985 notice, that the issue of this rulemak-
ing is not whether the petitioners are currently
capable of meeting the 27.5 mpg standard, but in-
stead whether petitioners did everything possible,
within the limits of technological feasibility and
economic practicability, to meet the 27.5 mpg
standard prescribed by Congress. According to
that commenter, the threatened closing of fac-
tories and employee layoffs have nothing to do
with the rulemaking. That commenter argued that
the statute does not require such actions but in-
stead prescribes civil penalties for noncompliance.
Chrysler stated that since Congress provided near-
ly 10 years to meet the standard, the "maximum
feasible" average is the highest level the peti-
tioners could have reached if they had done
everything reasonably possible over the course of
that entire period. According to that commenter, if
GM and Ford could have met the 27.5 mpg stan-
dard with due diligence, the agency has no legal
authority to reduce it.
Chrysler alleged that even though GM and Ford
have known since at least 1983 that their CAFE
performance would come up short in 1985 and
1986, those companies took no adequate corrective
action to raise their CAFE averages and, to the
contrary, took a number of actions which have fur-
ther reduced their CAFE averages.
Chrysler also reemphasized its position that
reducing the standard would cause substantial
harm to those manufacturers that, in its words,
"chose to comply." That commenter argued that
the proposed amendment would give a competitive
advantage to GM and Ford, since they can most
quickly adapt to the new standard. Chrysler
argued that the competitive injury would fall on
the firms that least deserve it, since they have, in
that company's words, "already absorbed the
substantial costs of CAFE compliance."
ECC objected to several aspects of the agency's
analysis. That commenter argued that NHTSA's
analysis erred by assuming that Ford and GM had
to suddenly increase their CAFE's to 27.5 mpg by
MY 1986. That commenter argued that if manufac-
turers petitioned NHTSA just before the start of
each model year for a reduction in the standard,
after having made no effort to improve fuel
economy, the agency would always find that the
previously established standard could not be met if
it considered only what petitioners could do in the
remaining time. ECC also argued, like Chrysler,
that Congress did not intend to bar manufacturers
from selling vehicles that would place them in non-
compliance with fuel economy standards.
ECC also argued that the agency erred in analyz-
ing technological feasibility by relying primarily on
the level of consumer demand for fuel efficient
vehicles to define the maximum technologically
feasible standard, erred in analyzing the need of
the nation to conserve energy by failing to ade-
quately consider future energy needs, and review-
ed the energy consumption effects of the proposed
26.0 mpg standard in an unreasonably narrow
framework by not recognizing that small, steady
improvements in fuel economy result in significant
long-term energy savings. ECC also argued that
comparing GM and Ford fleets to Chrysler's fleet
indicates that Chrysler has more fuel-efficient
technology in its fleet.
EPI argued that a reduction in the MY 1986
CAFE standard would sanction the failure of cer-
tain automobile companies to comply with the
Energy Policy and Conservation Act; exacerbate
what it contends is a currently diminished focus on
energy conservation in the transportation sector;
increase automobile fuel consumption, thereby
PART 531 -PRE 69
promoting U.S. dependence on oil imports; and
greatly diminish or eliminate chances for enact-
ment of future Federal policies to encourage prog-
ress in the production of fuel-efficient vehicles by
the domestic manufacturers. Like Chrysler, that
commenter argued that GM and Ford should have
done more during recent years to improve their
fuel economy. EPI also stated that carryback plans
submitted by GM and Ford are inconsistent with
their petitions to reduce the 27.5 mpg standard,
since the carryback plans constitute a conclusion
by those companies that they have the ability to ex-
ceed that standard.
CFAS stated that NHTSA improperly relied on
market demand as a basis for proposing to reduce
the standards, arguing that the Cost Savings Act
intended that fuel economy standards lead the
market rather than that the market lead fuel
economy standards. CFAS also argued that the
proposal cannot be sustained on grounds of
economic practicability, since a difference of 1.5
mpg for a manufacturer which fails to meet a
standard is simply a penalty of $75 per car. That
commenter also argued that GM and Ford are
below the 27.5 mpg standard because of their own
marketing decisions, including retention of old
models and old technology, that GM and Ford used
various "accounting tricks" to project lower fuel
economy for model year 1986 than they are capable
of achieving, and that the agency should consider
the ability of GM and Ford to obtain carryback
credits as a basis for not reducing the model year
1986 standard.
Agency's Analytical Approach
As discussed above, section 502(aX4) provides
that if NHTSA determines that a level other than
27.5 mpg is the maximum feasible average fuel
economy for 1985 or any subsequent model year,
the agency may change the standard for that year
to that level. If NHTSA were writing on a blank
slate and establishing the MY 1986 standard for
the first time, it would simply evaluate the current
average fuel economy levels of the manufacturers
and determine what improvements could be made
in those levels between now and the end of MY
1986. This would involve taking into account the
capabilities of each manufacturer and considering
the four factors listed in section 502(e), i.e.,
technological feasibility, economic practicability,
the effect of other Federal motor vehicle standards
on fuel economy, and the need of the Nation to con-
serve energy.
The agency agrees with Chrysler and other com-
menters, however, that the issue is not solely
whether manufacturers are now capable of
meeting the 27.5 mpg standard. Since the Cost
Savings Act imposed a long-term obligation on
manufacturers to achieve a 27.5 mpg fuel economy
level, it would be inappropriate to reduce the
standard if a current inability to meet the standard
simply resulted from manufacturers previously
declining to take appropriate steps to improve
their average fuel economy as required by the Act.
Therefore, the agency must evaluate the manufac-
turers' past efforts to achieve higher levels of fuel
economy as well as their current capabilities.
On the other hand, the agency does not consider
it appropriate to judge each and every manufac-
turer product action by 20-20 hindsight. In assess-
ing the sufficiency of manufacturers' fuel economy
efforts, it is necessary to take account of the infor-
mation available to manufacturers at the time
product decisions were being made. Manufacturers
had an obligation to take whatever steps were
necessary, consistent with the factors of section
502(e), to meet the 27.5 mpg standard. To the ex-
tent that manufacturers had plans to meet the
standard which subsequently became infeasible
due to unforeseen events, NHTSA does not believe
the manufacturers should be charged with a failure
to make a sufficient effort.
The agency's analytical approach thus consists of
first evaluating the maximum feasible average fuel
economy level that manufacturers are now capable
of achieving in MY 1986, taking into account the
four factors of section 502(e) and second, to the ex-
tent that level is determined to be below 27.5 mpg,
assessing the sufficiency of manufacturers' efforts
to meet the 27.5 mpg standard, in light of the infor-
mation available to manufacturers at the time fuel
economy product decisions were being made and
the four factors of section 502(e).
NHTSA has followed this same approach
throughout this rulemaking. Therefore, ECC is in-
correct in alleging that the agency simply assumed
that Ford and GM would have to suddenly increase
their CAFE's to 27.5 mpg by MY 1986.
Summary of Agency Decision and Analysis
After carefully considering all of the comments
and other available information and making a
detailed analysis, NHTSA has determined that the
PART 531 -PRE 70
maximum feasible average fuel economy level for
MY 1986 is 26.0 mpg. The agency's analysis, which
is similar to that presented in the NPRM, indicates
that GM and Ford, constituting a substantial part
of the industry, had sufficient plans to meet the
27.5 mpg standard, made significant progress
toward doing so, and were prevented from fully
implementing those plans by unforeseen events.
The agency's analysis further indicates that the on-
ly actions now available to GM and Ford to im-
prove their fuel economy levels for MY 1986 would
involve product restrictions likely resulting in
significant adverse economic impacts, including
sales losses well into the hundreds of thousands
and job losses well into the tens of thousands, and
unreasonable restrictions on consumer choice. Ac-
cordingly, NHTSA is amending the MY 1986
standard from 27.5 mpg to 26.0 mpg.
Manufacturer Capabilities for MY 1986
In evaluating manufacturers' fuel economy
capabilities for MY 1986, the agency analyzed the
manufacturers' current projections and underlying
product plans and then considered what, if any, ad-
ditional actions the manufacturers could take to
improve their fuel economy.
A. Manufacturer projections
While manufacturers have greatly improved
their CAFE during the past decade, current pro-
jections indicate that the CAFE levels for a
number of manufacturers remain below 27.5 mpg.
The NPRM indicated that, not including EPA
test adjustment credits, ^ GM projected its MY
' A factor which somewhat complicates analyzing the
manufacturers' projections is Environmental Protection Agen-
cy (EPA) test adjustment credits. Since 1983, EPA has been
engaged in rulemaking to provide CAFE adjustments to com-
pensate for the effects of past test procedure changes. As
discussed in the section of this preamble entitled "Other Federal
Standards," EPA published its final rule on July 1, 1985. The
final rule adopted a formula approach for calculating CAFE ad-
justments and generally provided higher CAFE adjustments for
model year 1985 than for model year 1986.
While manufacturers closely followed the EPA rulemaking
and were generally aware, based on the proposal, of what that
agency was likely to do, they did not know what EPA's specific
decision would be. Therefore, CAFE projections submitted by
the manufacturers to this agency before EPA's decision could
not fully reflect the EPA test adjustment credits. It should be
noted, however, that some but not all manufacturers did include
CAFE adjustments in their projections, based on EPA's pro-
posal.
While NHTSA has fully taken account of EPA test adjust-
ment credits throughout this rulemaking, it has, in its analysis,
found it necessary to sometimes use manufacturer projections
not reflecting the EPA test adjustment credits. The discussion
in this preamble indicates which projections include EPA test
adjustment credits and which do not.
1986 CAFE at 25.7 mpg, 0.6 mpg higher than the
company's projection of 25.1 mpg for MY 1985.
This improvement was projected to result primari-
ly from a reduction in the average weight of the
GM fleet. The weight reduction is due mainly to the
introduction of a new front-wheel drive large car
(the GM70- replacing the rear-drive Buick
LeSabre and Oldsmobile 88 models), the introduc-
tion of a lighter mid-size luxury car (the
GM30- replacing the E- and K-body models: the
Oldsmobile Toronado, Buick Riviera, the Cadillac
Eldorado, and the Cadillac Seville) and the in-
troduction of a 4-door version of the GM20 com-
pact. There is an additional fuel economy gain due
to the expanded use of 4-speed automatic transmis-
sions. There is also an increase in CAFE because of
a slight mix shift toward smaller models. (As
discussed elsewhere in this preamble, however,
mixes have generally shifted toward larger cars
and larger engines over the past several years.)
Much of this mix shift is due to an increase in com-
pact sales as a result of the introduction of the
4-door GM20 model, as well as a reduction in the
share of GM's mix taken by large car sales.
Several other changes in the characteristics of
the GM car fleet have minor, and generally offset-
ting, effects on the company's projected MY 1986
CAFE. The new models have improved
aerodynamics, increasing the company's fuel
economy level. However, this effect is essentially
offset by the elimination of diesel engines from all
models except the Chevette/1000.
GM submitted a letter on June 18, 1985, in-
dicating that its MY 1986 fuel economy projection
was likely to change to 26.3 mpg. In its August 2,
1985 mid-model year report, GM confirmed that its
MY 1986 CAFE may be as high as 26.3 mpg, in-
cluding a 0.2 mpg EPA test adjustment credit.
This represents a 0.4 mpg increase in GM's projec-
tion (since GM's 25.7 mpg projection did not in-
clude the EPA test adjustment credit). The in-
crease relates to the length of the model year for
certain models and to the type of engines to be
placed in certain models. The specific details are
subject to a claim of confidentiality.
CFAS argued that GM's MY 1986 projections in-
corporated a number of "accounting tricks" to
lower the MY 1986 CAFE level while inflating the
MY 1987 CAFE level. That commenter alleged
that GM's projection artificially extends the 1986
model year for fuel-inefficient B and G bodies;
decreases the projected fuel economies and mixes
PART 531 -PRE 71
for fuel-efficient compact J-bodies, GM-20's, and
A-wagons, the latter of which are carryovers from
the 1985 model year; eliminates the GM/Toyota
joint venture car from inclusion in CAFE calcula-
tions; and projects higher sales for the G/G-SP cars
than are being achieved in 1985.
NHTSA has analyzed each of CFAS's allegations
with respect to GM's product plans and concluded
that CFAS's arguments do not provide a basis for
determining that GM's projected MY 1986 CAFE
is unreasonable.
While an earlier GM product plan did include an
extended 1986 model year for B and G models, that
company's latest plan, submitted on August 2,
1985, does not. It is therefore unnecessary to
discuss how an extended model year for a less fuel-
efficient vehicle should be considered in determin-
ing maximum feasible average fuel economy level.
With respect to CFAS's argument about reduced
fuel economies for J-bodies, GM-20's and
A-wagons, in GM's latest projections the only
model of this group which has overall lower fuel
economy in MY 1986 than MY 1985 is the J-body.
According to GM, its projection for the J-body is
based on incomplete test data. That company
estimates that with additional test data the cars
will be within 0.1 mpg of the 1985 model. Since
GM's product plan projects a somewhat larger dif-
ference (the magnitude of which is subject to a
claim of confidentiality), the agency considered
whether GM's projected CAFE should be adjusted
to reflect that estimate. The agency concluded,
however, that the effect of such an adjustment on
GM's overall MY 1986 CAFE would be negligible.
The GM-20's and A-wagons have certain models on
which the fuel economy drops from MY 1985 to MY
1986 because of using different vehicles, test
variability, test mileage, and/or calibration.
However, these declines in fuel economy are more
than offset by increases in other configurations of
the same model.
The projection of higher sales for the G/G-SP
was related to the extended model year for B and G
models, discussed above. GM's current product
plan does not project higher sales for these cars in
MY 1986 than in MY 1985.
With respect to the issue raised by CFAS con-
cerning the GM/Toyota joint venture car, the agen-
cy notes that the Cost Savings Act requires
manufacturers to meet average fuel economy stan-
dards separately for their domestically manufac-
tured and imported fleets. (The purpose of this pro-
vision was to attempt to prevent the fuel economy
program from inducing domestic manufacturers to
increase their importation of foreign-produced
cars.) The GM/Toyota joint venture car is not in-
cluded in GM's MY 1986 projection since it has less
than 75 percent domestic content and therefore is
considered to be nondomestically manufactured
under section 503(bX2XE) of the Act.
There is an issue, however, whether GM could
count the joint venture car in its domestic CAFE
by virtue of an exemption under section 503(bX3)
of the Act. This would assume that the manufac-
turer of the cars. New United Motor Manufactur-
ing, Inc. (NUMMI), could obtain such an exemption
and then transfer it to GM. In fact, NUMMI has
not applied for an exemption. The agency notes
that the decision whether to apply for an exemp-
tion is discretionary. The agency also notes that,
even if NUMMI applied for and met the statutory
criteria for an exemption and could transfer that
exemption to GM, a further issue exists regarding
whether GM could then earn or use carryfor-
ward/carryback credits in a year in which an ex-
emption exists, because the statutory provision
authorizing such exemptions also appears to
preclude the use of carryforward/carryback credits
by a recipient of such an exemption. Given all these
factors, the agency believes it would be too
speculative for the agency to count this vehicle in
GM's domestic CAFE for MY 1986.
With respect to EEA's conclusion that GM could
achieve 26.4 mpg (without the GM/Toyota joint
venture car) in MY 1986, the agency notes that
EEA used an incorrect baseline for its analysis.
EEA states that in November 1984 GM submitted
a MY 1986 CAFE projection of 26.9 mpg. It ap-
pears that EEA derived this estimate from Attach-
ment 3 of a GM submission dated May 30, 1985
(docket item FE-85-01-N01-067). This GM submis-
sion made available to the public information that
had been previously categorized as confidential.
However, the May 30 submission contained signifi-
cant errors. These were corrected in a GM submis-
sion dated July 16, 1985 (docket item FE-85-01-
NOl-106). The July 16, 1985 submission correctly
identified GM's November 1984 projection as 26.2
mpg for MY 1986 (without EPA test adjustment
credits). This estimate is essentially the same as
GM's current estimate of 26.1 mpg (without EPA
test adjustment credits) or 26.3 mpg (with EPA
test adjustment credits). Due to the use of a much
PART 531 -PRE 72
higher, incorrect baseline, EEA's analysis for GM
is both overstated and invalid.
The NPRM indicated that, not including EPA
test adjustment credits. Ford projected its MY
1986 domestic CAFE to be 26.2 mpg, 0.9 mpg
higher than the company's projection of 25.3 mpg
for MY 1985. The most visible change in Ford's
fleet for MY 1986 is the introduction of the
Taurus/Sable mid-size model. This new front-wheel
drive car is designed to eventually replace the rear-
wheel drive LTD/Marquis models. The new model
includes new 2.5 liter 4-cylinder and 3.0 liter V-6
engines, as well as a new 4-speed automatic
transmission, and is thus more fuel-efficient than
the LTD/Marquis.
Between MY 1985 and MY 1986, Ford projected
an increase in mid-size car sales as a percentage of
its fleet and a decline in the large car and compact
car share of its sales. Some of this effect is caused
by the timing of the introduction of new models.
This effect results in a slight lowering of Ford's
CAFE.
Ford expected a slight increase in its average
test weight for MY 1986. Reasons for this increase
include the replacement of the 1.6 liter engine in
the Escort/Lynx compacts with a 1.9 liter engine,
increased sales of an optional larger engine in the
Mustang/Capri, and the introduction of a new ver-
sion of an existing vehicle. This impact on Ford's
CAFE is a 0.4 mpg decline, which is completely off-
set by a reduction in average engine size with the
introduction of the Taurus/Sable.
Ford intends to introduce a number of
technological improvements for MY 1986. These
improvements include engine efficiency im-
provements, reduced aerodynamic drag (primarily
due to the introduction of the Taurus/Sable), lower
rolling resistance tires on several models, im-
proved calibrations on two engines, and a number
of other, relatively minor, changes.
After the NPRM was issued. Ford estimated in
its 1985 mid-model year report that its CAFE for
that model year would be higher than previously
expected. Ford now projects that its MY 1985
CAFE will be 26.3 mpg, including a 0.5 mpg test
adjustment credit. Thus, without the credit. Ford's
MY 1985 CAFE is 0.5 mpg higher than projected
earlier, 25.8 mpg rather than 25.3 mpg. Since Ford
has not changed its MY 1986 projection, this
means it now expects a 0.4 mpg improvement in
fuel economy between MY 1985 and MY 1986
rather than a 0.9 mpg improvement (when examin-
ing CAFE estimates without EPA test adjustment
factors).
An analysis of Ford's projections indicates that
there are two major reasons for the increase in
that company's MY 1985 projection without accom-
panying increases in its previous MY 1986 projec-
tion: (1) a shift in model mix and (2) selection of ad-
ditional voluntary test vehicles for certain models
so that their assigned fuel economy value reflects
configurations which have fuel economy values
that are higher than those already tested for the
purpose of certifying and labeling those models.
The use of these additional test vehicles added 0.23
mpg to Ford's MY 1985 CAFE. The volume shift,
which consists primarily of increased Tempo/Topaz
and Escort/Lynx sales, is due to major marketing
programs to increase Ford small car sales. This
shift also added 0.23 mpg to Ford's MY 1985
CAFE. Ford argued that this gain cannot continue
for MY 1986 because the sales represent pull-ahead
of later planned purchases and because the impact
of the elimination of import restrictions and the ef-
fect of competitive responses to its marketing pro-
grams are now well defined. The selection of addi-
tional voluntary test vehicles was already included
in Ford's MY 1986 projection, but it was not an-
ticipated by the agency that Ford would be able to
achieve any MY 1985 CAFE improvements
through this means.
CFAS argued that Ford's MY 1986 projections
incorporated a number of "accounting tricks" to
lower the MY 1986 CAFE level. That commenter
alleged that Ford's projection includes artificially
low sales of the Escort/Lynx/EXP, a lowered fuel
economy rating for Taurus/Sable which is down 10
percent from its initial 1983 projection, an unex-
plained fuel economy drop for the Mustang and
Capri, which are carryover models from 1985, an
extended 1986 model year production for large
cars, and a lower fuel economy rating for large
cars than is consistent with a statement by that
company that it does not anticipate paying a gas
guzzler tax on any 1986 models.
NHTSA has reviewed each of CFAS's allegations
and determined that they have no basis in fact.
With respect to Ford's projection of Escort/
Lynx/EXP sales, the agency notes that a recent
surge in sales of those models appears to be related
to the 1985 1/2 facelift on the Escort and Lynx (the
EXP was not changed). Car sales of "new" models
are highest when they are first introduced and
then gradually decline over time. Sales of the
PART 531 -PRE 73
Escort/Lynx jumped during the month of May this
year from 23 percent of Ford sales in 1984 to 34.3
percent in 1985. However, sales returned closer to
1984 levels in June and July. A 6.0 percent sales in-
crease in July cited by CFAS is based on an overall
2.5 percent improvement in Ford sales for the
month, so the share of these models rose only to
22.4 percent from the July 1984 share of 21.7 per-
cent. Looking at January to July sales in 1985
without including the May sales, the
Escort/Lynx/EXP market share of Ford sales
dropped from 22.3 percent to 21.6 percent as com-
pared to the previous year. Thus, there may be an
overall trend toward a reduction in
Escort/Lynx/EXP sales as a proportion of Ford's
total sales. Indeed, the calendar year 1984
Escort/Lynx/EXP share is 22.9 percent of Ford
sales, down from 27.3 percent in 1983. Other fac-
tors relevant to this issue include the fact that
Ford engaged in major marketing efforts to in-
crease its MY 1985 small car sales which, as
discussed below, is a trend that the agency does
not believe can be assumed to continue for MY
1986. In addition, the ending of the Voluntary
Restraint Agreement with Japan and the introduc-
tion of new, inexpensive small cars from Korea,
Yugoslavia, and possibly Greece, in MY 1986 will
make it more difficult for the domestic manufac-
turers to sell small cars. Based on all of these fac-
tors, the agency believes that Ford's projection of a
slight decrease in the share of Escort/Lynx/EXP
sales for MY 1986 is reasonable.
The lowered fuel economy rating for the
Taurus/Sable since 1983 reflects a decline from ex-
pectations concerning technology as the model was
refined from conception to production. Recent
EPA test data have led Ford to lower its previous
fuel economy projections for these vehicles as the
actual test data indicate the original fuel efficiency
targets are not being met. Ford is not arbitrarily
lowering these values as one might infer from the
CFAS comment. Such decreases from projections
are fairly typical of experience in introducing any
new technology on cars and trucks. In addition, a
larger portion of this fleet is now, based on recent
trends in the market, expected to be the larger 3.0
liter engine models of the sedan and wagon. While
CFAS indicates that there have been no changes in
the Mustang/Capri between MY 1985 and MY
1986, the fuel economies of three Mustang/Capri
models have increased 0.3 to 1.0 mpg, two have
declined 0.3 to 0.5 mpg, and one is unchanged. The
principal reason for the fuel economy decline for m
the series is a mix shift within the series from 2.3 ^
liter models to 3.8 litter and 2.3 liter turbocharged
models. This reflects a shift in consumer demand
toward higher performance, particularly in sporty
cars.
Contrary to CFAS's allegation about extended
model years for large cars, Ford has indicated that
it has no plans for unusual production schedules for
the 1986 model year. All models will be produced
on the normal 12-month cycle, except for the large
Crown Victoria/Grand Marquis models and the
Tempo/Topaz, both of which will have a later start
by one or two months (thus resulting in a 10- to
11-month model year) and the LTD/Marquis which
will end production after about six months. These
minor production reductions should have a negligi-
ble effect on Ford's MY 1986 CAFE and are in the
direction, in most cases, of increasing its CAFE.
The agency has also concluded that Ford's state-
ment that it anticipates paying no gas guzzler tax
for model year 1986 is not inconsistent with its fuel
economy projections, as is alleged. Gas guzzler tax
liability is based on the model type fuel economy
generated for purposes of labeling. The volume of
data used for these purposes is much more limited ^
than for calculating CAFE. While some V-8 con- ^
figurations will have fuel economy levels less than
22.5 mpg, the level where the gas guzzler tax is
assessed for MY 1986, Ford expects that its
highest selling sub-configuration of the highest
selling configuration will exceed 22.5 mpg with the
EPA test adjustment credit included. This test will
establish the model type fuel economy for labeling
and for gas guzzler tax purposes, and none of
Ford's cars (or GM's) would qualify for the tax.
EEA concluded that Ford could achieve 26.85
mpg in MY 1986 based on several factors, all of
which represented adjustments by that company to
Ford's April 19, 1985, CAFE projection.
First, EEA added 0.07 mpg to Ford's projected
CAFE of 26.4 mpg by adjusting the MY 1986
Mustang/Capri engine mix to match the MY 1985
mix, on the grounds that fuel prices are expected
to be stable. As discussed elsewhere in this pream-
ble, the Energy Information Administration pro-
jects declining gasoline prices during the next year
(particularly when measured in real prices) rather
than stable prices. In addition, shifts in consumer
demand toward larger engines are possible even
with stable fuel prices. Consumer demand for ^^
larger cars and larger optional engines may in- ^^
PART 531 -PRE 74
crease as consumers gain confidence from con-
tinued economic growth. Accordingly, NHTSA
believes Ford's projections in this area are
reasonable and sees no basis to accept the EEA
figure.
Second, EEA added 0.16 mpg to Ford's pro-
jected CAFE by restoring half of the combined
total of "high probability/historic risks" and a
reduction in Taurus/Sable fuel economy. NHTSA
has evaluated these technical risks, the details of
which are subject to a claim of confidentiality, and
believes they are reasonable. These risks encom-
pass such diverse areas as the gains in fuel
economy anticipated through new items of
technology to the production start-up dates of such
items. The agency does not believe there is any
reason, without supporting analysis, to arbitrarily
reduce them by half. With regard to the
Taurus/Sable fuel economy estimates, as discussed
above, the decline reflects Ford's inability to
achieve certain technological goals. The agency
does not believe Ford will be able to achieve this
gain in MY 1986.
Third, EEA added 0.20 mpg to Ford's projected
CAFE by raising the level of anticipated MY 1986
sales of Escort/Lynx and Tempo/Topaz models to
MY 1985 levels. The reasons why Escort/Lynx
sales may decline from MY 1985 to MY 1986 are
discussed above with respect to CFAS's comment.
The Tempo/Topaz is a carryover model in its third
year of production, and will be competing against a
new GM four-door model and the new, larger
Taurus/Sable, as well as more smaller cars. The
agency thus believes it is reasonable to project a
decline of sales for this model.
Fourth, EEA used a preliminary estimate of 0.2
mpg from Ford as to the level of the EPA test ad-
justment credit it would receive in MY 1986. Ford
has since lowered this estimate by 0.1 mpg, based
on EPA's final rule. Thus, its upper range estimate
for MY 1986 is not 26.4 mpg but 26.3 mpg.
Fifth, EEA did not take account of the additional
risks identified by Ford in its April 19, 1985, sub-
mission, including market and technical risks,
which might lower its projected CAFE by 0.5 mpg.
For the reasons discussed above, the agency
determines that EEA's analysis does not provide
any basis to conclude that Ford's projected MY
1986 CAFE is unreasonable.
The NPRM indicated that, not including EPA
test adjustment credits, Chrysler had projected
that its MY 1985 CAFE would be 27.5 mpg and
that its 1986 CAFE would be 28.1 mpg.
Chrysler now projects that, not including EPA
test adjustment credits, its MY 1985 CAFE will be
27.3 mpg and its MY 1986 CAFE will be 27.7 mpg.
The declines in the projections appear to reflect ac-
tual Chrysler test data instead of the use of pro-
jected vehicle fuel economy values, rather than
significant changes in product plans.
Chrysler plans a number of technological im-
provements for MY 1986 that should lead to im-
provements in its CAFE compared to that of the
previous model year. The technological im-
provements relate to changes in engines, car-
buretors, tires and oil. However, with the phase-
out of the L-body (Omni/Horizon) car line (to be
replaced by the new P-body compact model, in-
troduced in mid-1986 as a 1987 model), the propor-
tion of compacts and subcompacts in the Chrysler
fleet should decline from MY 1985 to MY 1986.
This shift between size classes is expected to result
in a 0.1 mpg decline in Chrysler's average fuel
economy, thereby offsetting some of the improve-
ment in CAFE relating to technological changes.
American Motors, Volkswagen and the major
Japanese manufacturers are expected to easily ex-
ceed the current 27.5 mpg standard for MY 1986.
The fuel economy trend of the Japanese manufac-
turers has been mixed, however. Several of the
Japanese manufacturers have actually declined in
fuel economy during recent years due to a mix shift
toward larger, more performance-oriented
vehicles, and that decline may continue in MY
1986.
Most of the European manufacturers are ex-
pected to be below the 27.5 mpg level for MY 1986.
These include BMW, Mercedes-Benz, Peugeot,
Saab, Volvo, and Jaguar. Many of these manufac-
turers' cafe's have also decHned in recent years.
In the discussion which follows, the European
manufacturers' projections do not include an EPA
test adjustment credit.
BMW projects a MY 1986 CAFE of 26.1 mpg.
While that is above its projected MY 1985 CAFE of
25.6 mpg, it is well below its MY 1984 CAFE of
27.4 mpg. BMW's drop in CAFE has resulted from
a mix shift in sales to vehicles with larger engines
and greater performance. While BMW has a selec-
tion of vehicle models which exceed the standard of
27.5 mpg, sales have shifted toward higher per-
formance vehicles with lower fuel economy.
PART 531 -PRE 75
While the agency does not have a MY 1986
CAFE projection from Mercedes-Benz, that com-
pany's fuel economy has dropped approximately 3
mpg over the last three years. Its 1983, 1984 and
projected 1985 CAFE levels have been 26.5 mpg,
25.5 mpg and 23.4 mpg, respectively. The reason
for the drop is that consumer demand has shifted
sales toward the higher performance end of that
company's model line and away from vehicles with
diesel engines. The fraction of Mercedes-Benz cars
equipped with diesels has fallen from 78 percent in
1983 to an estimated 44 percent in 1985. While
Mercedes introduced a smaller model (the 190)
with fuel economy of up to 40 mpg in some diesel
versions, the sales volumes have not been enough
to offset the sales of its larger vehicles. That com-
pany noted in its comment that the pump price of
regular unleaded gasoline is currently approx-
imately $1.15 per gallon versus $1.29 for diesel
fuel, the opposite of the relative prices in effect
when the CAFE legislation was passed and when
that company developed its plans to improve its
fuel economy.
Volvo projects a MY 1986 CAFE of 26.5 mpg,
approximately the same as its projected CAFE for
MY 1985. Peugeot projects that its MY 1986
CAFE will be 25.6 mpg, 0.8 mpg higher than its
MY 1985 projection of 24.8 mpg. Saab projects
that its MY 1986 CAFE will be 25.4 mpg, 0.4 mpg
lower than its MY 1985 projection of 25.8 mpg.
Jaguar, which produces only large, heavy, luxury
class vehicles, projects a MY 1986 CAFE of 19.2
mpg.
The agency has evaluated the domestic and
foreign manufacturers' MY 1986 CAFE projec-
tions and considers them to be reasonable projec-
tions based on the vehicles the manufacturers plan
to offer for sale and expected market conditions.
As with any sales projections, there are a number
of uncertainties associated with them. Both GM
and Ford indicated a number of marketing risks,
including the possibility that Japanese car sales
may rise substantially during the 1986 model year
and result in a corresponding loss in sales of their
most fuel-efficient cars and a concomitant reduc-
tion in their CAFE ability. Ford also identified a
number of technological risks associated with
achieving its CAFE estimates for MY 1986, which
could result in a small reduction in that company's
projected CAFE.
B. Possible Actions to Improve MY 1986 CAFE
Since the 1986 model year begins this fall, there
is insufficient time for the manufacturers to make
further significant technological changes in their
product plans. Any additional efforts by the
manufacturers to increase their MY 1986 CAFE
would therefore largely be limited to attempts to
change product mixes through increased
marketing efforts and/or product restrictions.
The agency has indicated in the past that
manufacturers must, under the Act, make efforts
to promote the sales of fuel-efficient cars. The
agency concludes, based on its analysis, that GM
and Ford have in the past been, and are now, mak-
ing such efforts. To counteract the declining con-
sumer interest in new fuel economy, manufac-
turers have undertaken extensive and significant
market efforts to shift consumers toward their
more fuel-efficient vehicles and options. As
discussed in the agency's 1985 Final Regulatory
Impact Analysis (FRIA), both GM and Ford have
undertaken pricing actions to encourage small car
sales and to discourage large car sales and the pur-
chase of optional, less fuel-efficient engines.
Below-market financing offerings, cash discounts,
and non-cash consumer and dealer incentives were
some of the other measures undertaken by Ford
and GM to increase their CAFE through
marketing actions. Ford stated in its comment on
the NPRM that it has put in place approximately
100 marketing incentive programs since 1982 to
promote the sale of small cars. That company in-
dicated that as a percent of retail value it is cur-
rently spending four times more on small car
marketing programs than on large and luxury car
programs. It also noted that the base Escort price
is now 50 percent of a Crown Victoria, whereas in
1982 it was 60 percent. GM stated that its small car
prices increased less than two percent per year
between 1981 and 1985 while the average car price
increased four percent during that period.
The agency believes that the ability to improve
CAFE by marketing efforts is relatively small. As
a practical matter, marketing efforts to improve
CAFE are largely limited to techniques which
either make fuel-efficient cars less expensive or
less fuel-efficient cars more expensive. Moreover,
the ability to increase sales of fuel-efficient cars
largely relates to either increasing market share at
the expense of competitors or pulling ahead sales
from the future. A factor which makes it par-
ticularly difficult to increase sales of fuel-efficient
cars is the strong competition in that market from
the Japanese manufacturers, which enjoy a signifi-
cant cost advantage over the domestic manufac-
turers. The comment submitted by the Department
PART 531 -PRE 76
of Commerce estimated the cost advantage at
$2,000 per car. This cost advantage limits the abih-
ty of the domestic manufacturers to increase sales
of small cars through price reductions, since the
Japanese manufacturers will be able to match or
exceed any price reduction.
An additional factor making it difficult for the
domestic manufacturers to sell fuel-efficient cars is
the expected entry in MY 1986 of three new
manufacturers, Hyundai from Korea, Yugo from
Yugoslavia, and Desta from Greece, selling small
cars. These companies anticipate first-year sales of
nearly 200,000 vehicles.
A problem with pulling ahead sales is that the
manufacturer's CAFE for subsequent years is
reduced. For example, if a manufacturer increases
its MY 1985 CAFE by pulling ahead sales of fuel-
efficient cars from MY 1986, the MY 1986 CAFE
will decrease, compared with the level it would
have been in the absence of any pull-ahead sales at-
tributable to marketing efforts. For this reason, a
manufacturer cannot continually improve its
CAFE by pulling ahead sales.
Given these factors and the manufacturers' past
and current marketing efforts, NHTSA does not
believe that GM and Ford can significantly im-
prove their CAFE by increased marketing efforts.
Also, the agency agrees with Ford's comment that
it cannot expect its MY 1985 fuel economy im-
provement attributable to major marketing efforts
to continue for MY 1986, in light of competitive
responses and since much of the improvement
relates to pull-ahead sales. Further, the agency
concludes that Ford and GM have made reasonable
marketing efforts to improve their CAFE.
Manufacturers could improve their CAFE by
restricting their product offerings, e.g., deleting
less fuel-efficient car lines or dropping higher per-
formance engines. However, as discussed below,
such product restrictions would have significant
adverse economic impacts on the industry and the
economy as a whole.
The Department of Commerce comment
estimated that the effect of GM and Ford achieving
27.5 mpg CAFE in MY 1986 could be sales losses
ranging from 750 thousand to 1 million units. Bas-
ed on the labor required for producing large
domestic cars, including suppliers, that Depart-
ment estimated job losses between 80 and 110
thousand. These estimates were based on the
assumption that Ford and GM would either be
unable to improve their estimated MY 1985 CAFE
performance, then estimated at 25.7 mpg and 25.1
mpg, respectively, or improve it only slightly given
the present competitive and energy price en-
vironments. Since Ford and GM now project their
MY 1986 CAFE at 26.3 mpg, the Department of
Commerce estimates are overstated, holding all of
their other assumptions constant. Taking account
of this factor, however, the Department of Com-
merce analysis still indicates enormous sales and
job losses.
A submission from the Department of Energy in-
dicated combined lost sales for GM and Ford of
between 790,000 and 1,000,000 units, essentially
indentical to the Commerce Department estimate.
Confidential submissions received from GM and
Ford indicated that an even higher number of job
losses than that estimated by the Department of
Commerce would be possible.
NHTSA has analyzed these submissions and has
concluded that, while it is difficult to calculate
precise numbers for potential sales and employ-
ment losses associated with the major manufac-
turers achieving 27.5 mpg CAFE for MY 1986,
there would be a likelihood of sales losses well into
the hundreds of thousands of units and job losses
well into the tens of thousands. Sales and employ-
ment losses of these magnitudes would have
significant adverse effects on the economy as a
whole.
With respect to improving CAFE by making
larger cars and engines more expensive, the agen-
cy notes that there is no sharp dividing line be-
tween marketing efforts and product restrictions.
As indicated above, GM and Ford already have
raised the prices of their larger cars and engines as
part of their efforts to improve their CAFE,
although sales of larger, optional engines have con-
tinued to increase as prices have risen. While very
large price increases, e.g., a doubling of prices,
would likely significantly reduce sales of less fuel-
efficient vehicles, such increases would amount to
product restrictions. Expecting manufacturers to
make such very large price increases would be in-
consistent both with Congress' intent that con-
sumer choice not be unduly limited and with the
statutory criterion of "economic practicability."
In the preamble to the final rule establishing the
MY 1981-84 passenger car standards, the agency
concluded that economic practicability should be
interpreted as requiring standards to be within the
financial capability of the industry, but not so strin-
gent as to threaten substantial economic hardship
PART 531 -PRE 77
for the industry. 42 FR 33537, June 30, 1977. In a
final rule reducing the light truck fuel economy
standard for MY 1985, the agency concluded that
sales reductions to a manufacturer of 100,000 to
180,000 units, with resulting employment losses of
12,000 to 23,000, "go beyond the realm of
'economic practicability' as contemplated in the
Act . . . ." 49 FR 41252, October 22, 1984. Since
the employment losses associated with maintain-
ing the 1986 passenger automobile CAFE stan-
dard at 27.5 mpg are at least as large as the ones
projected in the MY 1985 light truck rule, the agen-
cy similarly concludes here that the economic hard-
ship associated with the product restrictions
necessary for the major manufacturers to achieve
27.5 mpg CAFE in MY 1986 would be beyond the
realm of economic practicability.
Manufacturer Compliance Efforts 1977 to 1985
While there is now insufficient time for manufac-
turers to improve their MY 1986 CAFE by making
significant technological changes in their product
plans, the current MY 1986 standard has been in
effect for nearly a decade. Therefore, an important
issue in analyzing the GM and Ford petitions is
whether manufacturers made sufficient efforts to
meet the standard. As discussed above, the agency
would not consider it appropriate to reduce the
standard if a current inability to meet the standard
simply resulted only from manufacturers declining
to take sufficient steps to improve their average
fuel economy as required by the Act. As part of
analyzing this issue, NHTSA compared manufac-
turers' current product plans with past agency
analyses which had concluded that the 27.5 mpg
standard was feasible. The agency also compared
current product plans with earlier plans submitted
by the manufacturers indicating that they would
meet the standards. As discussed below, the agen-
cy believes that GM and Ford made sufficient ef-
forts to comply with the current MY 1986 standard
and that the manufacturers' efforts were over-
taken by unforeseen events whose effects could not
be overcome with the means and time available.
(The discussion which follows first presents the
agency's conclusions concerning the differences
between the manufacturers' current product plans,
i.e., what is now actually happening, and past
analyses/plans by NHTSA and the manufacturers
as to what was believed feasible, and then presents
the agency's conclusions as to why manufacturers'
cafe's are lower than was once expected.)
A. NHTSA's 1977 RSP
As discussed above, as part of establishing the
1981-84 standards, the agency developed
estimates of the maximum feasible fuel economy
for each manufacturer for model years 1981
through 1985. The estimates were based on a
number of assumptions, including the ability of
manufacturers to sustain a rapid rate of introduc-
tion of technology, consumer acceptance of a 10
percent reduction in vehicle acceleration, and
significant use of a widespread range of
technological options, including weight reduction,
improved transmissions and lubricants, reduced
aerodynamic drag, reduced accessory losses, and
reduced tire rolling resistance. The agency's
estimates did not assume a downward mix shift in
automobile sizes or the use of diesel engines.
The agency's 1985 FRIA contains a detailed
analysis comparing NHTSA's 1977 feasibility
estimates for MY 1985 with manufacturers' cur-
rent projections for that model year. The analysis
is similar to that of the PRIA, but reflects more re-
cent information. It should be noted that while the
1977 RSP projected that it was feasible for a
number of manufacturers to achieve fuel economy
levels somewhat above 27.5 mpg by MY 1985, no
standard was ever set above the 27.5 mpg level.
Thus, manufacturers were never required to make
efforts to achieve the higher (NHTSA-projected)
CAFE levels.
The 1977 RSP estimated that GM could achieve
28.9 mpg CAFE for MY 1985. GM currently pro-
jects its MY 1985 CAFE at 25.5 mpg, including a
0.4 mpg EPA test adjustment credit. The FRIA
concludes that the primary reason why GM's pres-
ent MY 1985 projection is lower is that the average
GM model for MY 1985 weighs about 360 pounds
more than NHTSA projected in 1977. Part of the
difference in expected weight is due to changes in
EPA test weight classes, which could result in a
measured fuel economy loss of 0.3 mpg. The effect
of the remaining weight difference, including the
fact that a proportionately larger engine is needed
to maintain acceleration capabilities, is a 2.0 mpg
reduction in average fuel economy from that
estimated in 1977.
A number of factors appear to account for this
weight difference. In the 1977 RSP, NHTSA con-
cluded that GM could perform both a major
redesign and a material substitution action for an
additional reduction in weight, for every car line
during the MY 1977-85 timeframe. GM made all
PART 531 -PRE 78
anticipated major redesigns except in the T-body
cars (Chevette and Pontiac 1000) and, in addition,
introduced two additional lightweight models not
projected in the 1977 analysis. The redesigns did
not, however, achieve the full amount of weight
reduction originally projected as feasible, and, in
most cases, the material substitution actions did
not occur. Also, when GM introduced new models,
the company often continued production of the
earlier models.
Other factors which explain GM's lower CAFE
are a higher than anticipated engine/size ratio
(-0.6 mpg), indicating that GM's MY 1985 fleet
does not include the reduction in acceleration
capability by the percentage projected by the 1977
RSP (GM did achieve the postulated reduction in
MY 1982, but consumer demand led to later in-
creases), and fewer 4-speed automatic transmis-
sions (-0.8 mpg). These factors account for the
bulk of the remaining differences between GM's
present MY 1985 CAFE estimate and NHTSA's
1977 projection.
The 1977 RSP estimated that Ford could achieve
27.9 mpg CAFE for MY 1985. Ford currently pro-
jects its MY 1985 CAFE at 26.3 mpg, including a
0.5 mpg EPA test adjustment credit. The agency's
analysis in the FRIA concludes that a number of
factors explain Ford's lower CAFE. The most
significant are an increase instead of reduction in
acceleration capability (-1.1 mpg) (Similarly to
GM, Ford reduced acceleration capability through
MY 1982, but consumer demand resulted in in-
creases for later model years), higher weight than
anticipated (-0.8 mpg), and fewer lockup and
wide-ratio automatic transmissions (-0.8 mpg).
Additional factors which explain Ford's lower
CAFE are the EPA change in test weight classes
(-0.3 mpg) and a sales mix adjustment ( -0.1 mpg).
While Ford's CAFE is lower than was projected as
feasible back in 1977, the agency concludes, as
discussed in the FRIA, that Ford exceeded the
agency's projections for improving CAFE in the
areas of reduced rolling resistance (-1-0.4 mpg) and
reduced aerodynamic drag ( -1-0.2 mpg). Also, diesel
engines added slightly to Ford's CAFE (-i-O.l
mpg).
In Ford's comments on the NPRM, it took issue
with NHTSA's analysis of the contributing factors
to this CAFE shortfall, contending that the over-
whelming influences on CAFE have been market-
driven and that the agency's estimates of the
weight, transmission and performance issues are
overstated. While the agency agrees that market-
related factors have been important, it disagrees
that it overstated the effects cited by Ford. The
agency notes that its estimate of the fuel economy
effect of the acceleration capability improvement
is identical to Ford's estimate in a May 8, 1985,
submittal.
The 1977 RSP estimated that Chrysler could
achieve a 28.7 mpg CAFE for MY 1985. Chrysler
currently projects its MY 1985 CAFE at 27.9 mpg,
including a 0.6 mpg EPA test adjustment credit.
Major changes in product plans by that company
from what were anticipated in 1977 make it dif-
ficult to directly compare the agency's 1977 RSP to
Chrysler's current projections. An unanticipated
shift toward smaller cars in the company's product
line-up significantly increased Chrysler's CAFE
(-1-2.3 mpg). This was more than offset, however,
by the effect of fewer lock-up and no wide-ratio
automatic transmissions (-2.5 mpg). A number of
other items, such as not achieving as much reduc-
tion in acceleration capability as believed feasible
and minor weight increases contribute to the re-
maining decline in fuel economy.
The FRIA also compares the 1977 RSP feasibili-
ty estimates for foreign manufacturers to current
projections. On a sales-weighted basis, the foreign
manufacturers' vehicle horsepower/weight ratio
has increased by an average of 13 percent and vehi-
cle weight has increased by an average of 8.6 per-
cent since 1977, rather than decreasing as believed
feasible by NHTSA in 1977. In spite of these
changes, the foreign manufacturers have in-
creased their average fleet fuel economy by about
2.5 mpg since 1977, as a result of factors such as
improved rolling resistance and aerodynamic drag.
However, this is significantly less than the agency
had projected as feasible.
B. Manufacturers' Previcms Plans
1. 1980
During the summer of 1980, as fuel prices were
rising rapidly, GM, Ford and Chrysler all announc-
ed that their MY 1985 CAFE levels would be ap-
proximately 30 mpg or higher. At NHTSA's re-
quest, the companies provided the agency with
data to support the projections.
GM expected to achieve 31 mpg in MY 1985 with
a completely redesigned line-up of U.S. passenger
cars. Included in this product plan were extensive
use of diesel engines, the introduction of an electric
car, the introduction of a new domestic subcom-
pact front-wheel drive economy car (the S-body,
PART 531 -PRE 79
designed to eventually replace the Chevette/Pon-
tiac 1000), the replacement of essentially all GM's
existing cars with lighter weight front-wheel-drive
models, a mix shift toward smaller models, and the
virtual elimination of V-8 engines.
There are a number of differences in GM's 1980
plan for MY 1985 and what actually happened, in-
cluding a substantial drop in diesel engine sales,
the fact that GM did not introduce an electric car
or a new domestic subcompact economy car, a
slowdown in the rate of replacing existing cars
with lighter weight front-wheel-drive models, a
sales shift toward larger models and engines, and
the continuation of several existing lines.
In the summer of 1980, Ford projected that it
could achieve a fuel economy level as high as 29.9
mpg in MY 1985. Included in that product plan was
the complete elimination of large cars and large
station wagons by MY 1985. Instead, large car
sales are now projected to comprise approximately
a fifth of Ford's MY 1985 volume. Other dif-
ferences between Ford's 1980 Plan for MY 1985
and what actually happened include a delay in in-
troducing the new front-wheel-drive Taurus mid-
size car (to MY 1986), continuation of V-8 engines
in a significant portion of the vehicle fleet instead
of being able to eliminate them, lower-than-
expected diesel sales, and substantially fewer sales
of Ford's most fuel-efficient car line, the two-
seater EXP.
In 1980, Chrysler expected to achieve a CAFE of
30.7 mpg in MY 1985, well above that company's
current projection of 27.3 mpg, without the EPA
test adjustment credit. A number of the car models
in that plan have not been introduced. In addition,
Chrysler projected it would replace the rear-wheel
drive, relatively heavy M-body (presently the
Diplomat, Gran Fury, and Fifth Avenue) with ver-
sions of the front-wheel-drive K-body. Instead,
Chrysler continued to offer this model after its
ostensible replacements were introduced. The
older design M-body has an average fuel economy
about 6 mpg below the equivalent front-wheel-
drive models. Chrysler also planned a number of
technological improvements that have not been in-
troduced.
2. 198S
By mid- 1983, GM's and Ford's expectations
about exceeding the fuel economy standards had
reversed. By this time, the manufacturers were
having difficulty meeting the levels of the fuel
economy standards. GM, Ford and Chrysler, as
well as many other companies, had experienced a
decline in their CAFE levels between MY 1982 and
MY 1983. At NHTSA's request, the manufacturers
provided the agency with data indicating their pro-
jected fuel economy levels through MY 1988.
GM's and Ford's mid-1983 projections for MY
1985 were not substantially different from what
they are today. GM projected a CAFE of 25.9 mpg
for MY 1985, as compared to its current projection
of 25.1 mpg, without the EPA test adjustment
credit. In 1983, that company projected a sales mix
with a slightly lower average weight and a greater
number of diesel sales. Ford's 1983 projection was
25.2 mpg, compared to its current projection of
25.8 mpg, without the EPA test credit adjustment.
The percentage of large cars and station wagons in
the MY 1985 fleet increased from 16.1 percent in
the 1983 projection to 21 percent today. However,
this negative impact was offset by an increase in
average fuel efficiency of the compact class due
primarily to increases in projected Escort/Lynx
sales and decreases in Thunderbird/Cougar sales.
Chrysler projected in 1983 that it could achieve
28.8 mpg in MY 1985, as compared to its current
estimate of 27.3 mpg, without the EPA test credit
adjustment. In 1983, Chrysler did not provide the
agency with as detailed product plans for MY 1985
as did GM and Ford. Based on the limited data, it
appears that Chrysler's least fuel-efficient models
are now selling at higher rates than the company
anticipated in 1983. In addition, the average fuel
economy level for each car line is lower than an-
ticipated. This appears to indicate a mix shift
toward larger and more powerful engines within
each car line, similar to the mix shift experienced
by Ford and GM.
3. 198A-1985
Product plan information provided to NHTSA
within approximately the past year-and-a-half by
GM and Ford indicates that those companies'
CAFE projections for MY 1986 have changed dur-
ing that period.
The most significant changes have been for
Ford. A MY 1984 carryback plan submitted by that
company on May 7, 1984, indicated that Ford then
expected to achieve a MY 1986 CAFE of 28.5 mpg,
without the EPA test credit adjustment. This pro-
jection was reduced to 26.9 mpg in a MY 1985 car-
ryback plan submitted on December 7, 1984.
Ford's February 28, 1985, response to a NHTSA
questionnaire on post- 1985 fuel economy and an
April 19, 1985, submission discussing the effects of
PART .531 -PRE 80
changes in the Voluntary Restraint Agreement
(VRA) with Japan both included additional declines
in projected CAFE for MY 1986.
The FRIA includes an analysis of the changes in
Ford's CAFE projections. Ford explained the
reductions by citing changes in mix and model
start-up schedules and the fact that new models
had resulted in less fuel economy improvement
than expected. The agency's analysis is largely in
agreement with Ford's explanation.
As discussed by the FRIA, GM's projected MY
1986 fuel economy, without the EPA test adjust-
ment credit, was 26.2 mpg in a November 1984
carryback plan, 25.7 mpg in a February 1985 sub-
mission, and 26.1 mpg in a June 1985 submission.
The reasons for these relatively small changes are
discussed in the FRIA.
C. Assessment of Manufacturers' Compliance
Efforts
Assessing manufacturers' efforts to meet the
27.5 mpg standard is a difficult and complex task.
With 20-20 hindsight, one can point to various ac-
tions that manufacturers might have been able to
take at different points over the past decade, e.g.,
increased use of material substitution, that would
have improved their current fuel economy capa-
bility for MY 1986. The manufacturers, however,
had to make their product plan decisions based on
the information then available and, in the early
1980's, in the face of considerable economic dif-
ficulty and uncertainty.
In looking back over the past decade, the agency
notes that the manufacturers' progress in improv-
ing fuel economy has been impressive. In
evaluating technological feasibility, the agency
considers whether an item of technology will be
commercially available in time to aid in meeting a
standard for a particular model year. The amount
of CAFE improvements gained by a manufacturer
from using new technology is dependent on: (1) the
increase in fuel economy associated with a par-
ticular type of technology, and (2) the percent of a
manufacturer's fleet which incorporates that
technology. Technology-based improvements in-
clude such items as weight reduction via down-
sizing or material substitution, engine and
transmission improvements, reduced performance
(e.g., acceleration capability), reductions in rolling
resistance and aerodynamic drag, improved
lubricants, and increased accessory efficiency,
among others.
Over the past 10 years, manufacturers have
reduced average car weight by 1000 pounds, re-
duced average engine displacement from 288 CID
to 177 CID, increased the use of front-wheel drive
from 7 percent to 64 percent, increased the use of
transmissions with overdrive and/or lockup from 5
to 84 percent, and increased the use of fuel-
injected engines from 5 percent to 54 percent.
The agency notes that some major investments
made by manufacturers to improve fuel economy
were not successful. For example, GM and Ford
made major investments in alternative power
plants, such as diesel and direct injection stratified
charge engines. Largely due to market conditions,
however, including lower-than-expected gasoline
prices, a change in the relative price of gasoline
and diesel fuel and lower-than-expected consumer
acceptance of the diesel engine, sales of passenger
cars with diesel engines have virtually collapsed.
Mercedes-Benz has experienced similar difficulties
in selling diesel engines, with a reduction of from
78 percent to 44 percent of its fleet being so
equipped in the last two years. Various efforts by
the manufacturers to develop new technologies,
such as Ford's experience with the PROCO engine,
were unsuccessful. Given the massive undertaking
by the industry to virtually double its CAFE in a
relatively short period of time, it is not surprising
that there would be failures as well as successes. In
assessing the manufacturers' efforts to improve
their CAFE's, the agency believes it is appropriate
to take account of all of the efforts.
Manufacturers have used virtually all the
technologies deemed feasible in the agency's 1977
RSP, as well as achieving a number of gains in
areas not foreseen at that time. However, not all of
those technologies have been installed in as high a
percentage of cars in the manufacturers' fleets as
was believed feasible. This is particularly true for
weight reduction, performance reduction, and
transmission improvements.
The agency believes that the lower than an-
ticipated use of these technologies is largely at-
tributable to market conditions. For example, the
consumer acceptability of lower performance is
relatively easy to achieve in times of short fuel sup-
ply and steadily rising fuel prices. However, the
real price of gasoline has declined by nearly 35
cents per gallon since the early 1980's and is
generally expected to rise less than 4 percent over
the next five years. Further, there is currently a
petroleum glut. Thus, as discussed in the FRIA,
the anticipated performance reductions were
achieved as early as 1982, but since that time con-
sumers have been demanding greater engine/vehi-
PART 531 -PRE 81
cle performance. Similarly, consumers have been
switching to heavier vehicles over the last few
years.
As discussed above, the Cost Savings Act im-
posed a long-term obligation on manufacturers to
achieve CAFE of 27.5 mpg. As of mid-1980, GM
and Ford had plans which they believed would not
only achieve that level but significantly exceed it.
Moreover, during the early 1980's manufacturers
not only met the standards set at levels intended to
result in steady progress toward 27.5 mpg, but in
fact exceeded those standards.
By 1983, however, domestic manufacturers were
having difficulty meeting the levels of fuel
economy standards. The Nation (and the auto in-
dustry in particular) was coming out of a serious
economic recession, and, contrary to prior NHTSA
and industry expectations, gasoline prices were
falling instead of rising. The U.S. city average
retail price for unleaded regular gasoline fell from
$1.38 in 1981 to $1.30 in 1982 and $1.24 in 1983.
{Monthly Energy Review, Energy Information Ad-
ministration,^ U.S. Department of Energy,
January 1984, p. 88) (In 1984 dollars, this decrease
was from $1.58 in 1981 to $1.40 in 1982 and $1.29
in 1983.) As a result of these factors, consumer de-
mand was shifting toward larger cars with higher
acceleration capabilities. Thus, just as the rise in
gasoline prices from 1973 to 1980 contributed to
the tremendous increase in fuel efficiency that was
achieved in that period and to the projections for
significantly exceeding the 27.5 mpg standard in
the mid-1980's, so the fall in gasoline prices since
1980 has led to a fall in fuel economy projections.
The effect of consumer demand on CAFE is
reflected both by actual market shifts and by the
failure of expected market shifts to occur. The per-
cent of total new car sales consisting of subcom-
pact models declined from 46 percent in model
year 1980 to 30 percent in model year 1983. Since
then, the share appears to be leveling off at ap-
proximately 26 percent. For GM, the percent of
sales of subcompacts (including two-seaters)
declined from 27 percent in model year 1980 to 11
percent in model year 1983. For model year 1985,
GM projects that 1 1 percent share of its cars will be
subcompacts (including two-seaters). Seventeen
percent of GM's model year 1980 sales were large
cars, as compared to 27 percent for model year
■• The Energy Information Administration is a statistical and
analytical branch of the Federal Government that is policy in-
dependent of the Department of Energy.
1983 and a projection of 27 percent for model year
1985. For Ford, the percent of sales of subcom-
pacts (including minicompacts) declined from 37
percent for model year 1980 to 12 percent for
model year 1983. For model year 1985, Ford pro-
jects that 9 percent of its cars will be subcompacts
(including two-seaters). Sixteen percent of Ford's
model year 1980 sales were large cars, as com-
pared to 21 percent for model year 1983 and a pro-
jection of 22 percent for model year 1985. For
Chrysler, the percent of sales of subcompacts
declined from 41 percent in model year 1980 to 12
percent in model year 1983. For model year 1985,
Chrysler projects that 20 percent of its cars will be
subcompacts.
In addition to these actual market shifts are ex-
pected market shifts which did not occur. For ex-
ample, as indicated above. Ford anticipated in
1980 that it could eliminate large cars by 1985, as
compared to its current projection that large cars
will comprise 22 percent of its sales. Ford's most
fuel-efficient model, the two-seater EXP, was pro-
jected in 1980 to capture over 12 percent of its
model year 1985 sales. Ford now expects it will
take less than two percent of sales. Similarly, GM
anticipated in 1980 that the large car share of its
model year 1985 sales would be 17 percent, well
below its current projection of 27 percent. GM ex-
pected its subcompact share to be 18 percent, as
compared to its current projection of 11 percent
(including two-seaters). The manufacturers' 1980
expectations were overtken by events as gasoline
prices began to fall, instead of rising significantly
as expected.
MY 1985 projections provided by the manufac-
turers during the summer of 1983 indicate that
they recognized at that time they would not be able
to achieve 27.5 mpg CAFE for MY 1985 (although
Ford believed until well into 1984 that it would still
exceed 27.5 mpg for MY 1986). Given that recogni-
tion of difficulties (as opposed to the earlier expec-
tations of significantly exceeding the standard),
the issue arises whether manufacturers could or
should have done more between then and now to
improve their CAFE.
The agency believes several factors are relevant
in analyzing that issue. First, the agency has long
recognized that the ability to generate the funds
necessary to make fuel economy improvements is a
critical factor in assessing economic practicability
and determining maximum feasible average fuel
economy. As discussed in the background section
PART 531 -PRE 82
of this preamble, NHTSA recognized in its January
1979 Third Annual Report that its feasibility
estimates were dependent on the continued finan-
cial health of the industry and were subject to be-
ing lowered in the event of a severe economic
downturn.
The domestic industry was just beginning in
1983 to recover from one of the worst periods of
economic difficulty in its history. From a picture of
high profitability in the late 1970's, their fortunes
had declined such that they encountered their
largest losses ever during the 1980-82 period. Dur-
ing those three years, GM, Ford, and Chrysler had
combined operating losses of $4.8 billion. Chrysler
staved off bankruptcy through corporate restruc-
turing and with the help of Federal loan
guarantees, while Ford alone incurred $3.3 billion
in losses over that three-year period.
At the same time, the companies were involved
in massive efforts to restructure their operations
and redesign their fleets. Even though they were
encountering operating losses and high inflation in
the early 1980's, Ford and GM continued or ac-
celerated their capital investment levels, compared
to earlier years. For example, GM's highest two
years of actual capital expenditures occurred dur-
ing 1980-81. Long-term debt greatly increased for
GM and Ford during this period, as they could not
raise the money they needed for capital expend-
itures from operations. Given this backdrop of
events, it would have been very difficult for GM
and Ford to initiate significant further new pro-
grams in those years to improve their model year
1986 fuel economy.
Second, it was generally expected that the drop
in gasoline prices during the early 1980's was tem-
porary. It is useful to examine past projections of
future gasoline prices, using constant dollars to ac-
count for the effects of inflation. In the spring of
1983, Data Resources, Inc. (DRI) expected
gasoline prices to rise from $1.22 in 1983 to $1.29
in 1986 (after falling and then rising slightly in
1984 and 1985, respectively), $1.34 in 1987, $1.38
in 1988, $1.45 in 1989, and $1.54 in 1990 (all
figures expressed in 1984 dollars). In Feburary of
1983, EIA was predicting that gasoline prices
would be $1.19 in 1985, $1.30 in 1986, $1.42 in
1987, $1.51 in 1988, $1.55 in 1989 and $1.57 in
1990 (all figures expressed in 1984 dollars). By Oc-
tober of 1983, EIA had reduced its 1986 projection
to $1.16 (expressed in 1984 dollars). However, it
still expected that gasoline prices after 1986 would
quickly rise. DRI still expected in its Winter
1983-84 forecast that the 1986 price of gasoline
would be $1.27 (expressed in 1984 dollars). By con-
trast, EIA currently projects, in its July 1985
forecast, that the 1986 gasoline price will be $1.07
(expressed in 1984 dollars), while DRI projects, in
its Summer 1985 forecast, that it will be $1.10).
This continued decline (in real terms) of gasoline
prices has resulted in relatively less consumer de-
mand for small cars with high fuel efficiency levels
than would otherwise have been expected. The vir-
tual collapse in sales of diesel fuel automobiles il-
lustrates this effect.
Third, the manufacturer's projections in recent
years indicate that they believed they would still
meet the standard for model years 1985 and 1986,
using carryforward/ carryback credits as permitted
by the Cost Savings Act.^ Indeed, later submis-
sions by both Ford and GM, most notably the car-
ryback plans discussed above, indicate that they
did not recognize a CAFE compliance problem un-
til approximately the time they submitted their
petititions in March of this year. By that time, it
was too late for the manufacturers to make further
significant technological changes in their product
plans for MY 1986.
Chrysler took issue with several aspects of the
agency's consideration of GM's and Ford's com-
pliance efforts. First, that commenter objected to
consideration of the manufacturers' financial dif-
ficulties during 1980-82, arguing that NHTSA
failed to cite instances where GM or Ford had to
hold back on some technological improvement
because of shortage of capital. NHTSA did not at-
tempt to prove that shortages of capital in the 1983
time period necessarily made the 27.5 mpg stan-
dard technologically infeasible for MY 1985 or MY
1986. The agency's argument, as mentioned
previously, was that further investments at that
time could not be expected given the recent finan-
cial difficulties of those manufacturers.
^The Cost Savings Act does not require absolute compliance
with a standard for each year. Instead, it allows a shortfall in
one year to be offset if a manufacturer exceeds the standard for
another year. Under the Act, as amended by the Automobile
Fuel Efficiency Act of 1980, manufacturers earn credits for ex-
ceeding average fuel economy standards which may be carried
back for three model years or carried forward for three model
years. See section .502(1). In order to use carryback credits in
advance of their actually being earned, manufacturers must
submit a plan demonstrating thai the credits will be earned.
Such plans are subject to DOT approval.
FART 531 -PRE 83
Chrysler also objected to the conclusion that GM
and Ford could reasonably have expected a quick
reversal in the decline of gasoline prices, with a
consequent shift back to smaller, more fuel-
efficient vehicles. That commenter argued that the
agency did not make any effort to determine what
particular actions either of those manufacturers
may have taken in reliance on such an assumption,
nor point to evidence that might have given
credence to the assumption. With respect to
reliance, the agency notes GM's and Ford's com-
pliance plans, which did not recognize the
magnitude of the continuing consumer demand for
larger and more powerful cars. With respect to
evidence, this preamble compares past forecasts of
gasoline prices by EIA and DRI to current
forecasts. The comparison indicates that these ma-
jor forecasts expected in 1983 that the price of
gasoline in 1986 would be significantly higher than
they now expect. Consistent with the direction of
the changed forecasts by EIA and DRI, a com-
parison of submissions submitted by Ford in
August 1983 and February 1985 indicates that its
projections of 1985 and 1986 gasoline prices de-
clined over that time by 9 percent and 13 percent,
respectively. Comparison of similar submissions by
GM indicates that its projections declined by a
higher percentage. (The specific percentages for
GM are subject to a claim of confidentiality.)
As it had in earlier comments, Chrysler also
raised the issue of the reasonableness of GM and
Ford changing their product plans over the past
few years in a variety of ways that had the effect of
decreasing their projected CAFE's. Chrysler cited
decisions by those companies to continue selling
larger models and engines that had been planned
to be cancelled and the continuation of rear-wheel
drive models after front-wheel drive "replace-
ments" had been introduced.
The agency notes that Chrysler has stated that it
"agrees that consumers have indicated a
preference for better performance in recent
years . . . ," and that it in fact has done some of the
same things as have GM and Ford. It is that com-
pany's contention, however, that "what is permissi-
ble for Chrysler, who meets the 27.5 mpg stan-
dard, should be considered excessive for GM, who
does not."
NHTSA cannot agree that product plan changes
that decrease CAFE are necessarily inappropriate
for companies which are having difficulty meeting
the CAFE standards. Given that consumer
demands has always been a major determinant of
what it is economically practicable for manufac-
turers to sell, since consumers need not buy what
they do not want, it is axiomatic that a change in
consumer demand (all other things held constant)
will change what is economically practicable for
manufacturers to sell. The fact that GM and Ford
once believed they could delete certain models or
engines without significant adverse economic im-
pacts does not mean that they would be able to do
so after conditions have changed, e.g., after fuel
prices have ceased to rise and instead begun to fall.
Holding manufacturers to product plans which
are no longer consistent with current market con-
ditions would have the same result as requiring
product restrictions. As discussed above, the types
of product restrictions that would be required to
significantly improve GM's and Ford's CAFE's
would result in serious harm to the industry and
the economy as a whole, and have never been con-
templated by NHTSA to be consistent with the
statute.
While the agency believes that product plan
changes such as those discussed above are con-
sistent with statutory criteria, since they reflect
changes in what is economically practicable,
manufacturers continue to have an obligation to
make all necessary efforts consistent with those
statutory criteria to meet CAFE standards. To the
extent that changes in product plans result in
manufacturers not being able to meet a standard,
the manufacturers must pursue additional means,
consistent with the factors of section 502(e), to
meet the standard. As discussed above, however,
by the time GM and Ford recognized that economic
forces had created a compliance problem, it was
too late to make further significant technological
changes to improve their CAFE's for MY 1986.
Chrysler objected to NHTSA's treatment of
GM's and Ford's changes in product plans, arguing
that the agency did not explain why a strategy that
proved successful for it was economically imprac-
ticable for them, identify the options that were
open to GM and Ford, quantify the economic ef-
fects of pursuing one option or another, or ask how
great a price GM and Ford would have had to pay
to meet the standard. That commenter char-
acterized the agency's analysis as suggesting that
GM and Ford are under no obligation to pay any
price, forego any profit opportunity, or make any
additional investment to meet the CAFE require-
ment.
PART 531 -PRE 84
Chrysler admitted in a footnote that NHTSA had
cited the Department of Commerce study concern-
ing the significant loss of sales and unemployment
that would result from the product restrictions
that would be needed to bring GM and Ford into
compliance, as well as confidential data submitted
by GM and Ford regarding those impacts. Chrysler
argued that this did not, however, have any bear-
ing on a whole variety of options that would have
been available to GM and Ford beginning in 1983.
That commenter also argued that the Department
of Commerce study was unsupported by any con-
vincing evidence and virtually ignored the argu-
ment that a decline in sales of GM's and Ford's
least efficient vehicles would mean no loss of jobs
but rather a concomitant increase in sales of their
newer, fuel-efficient, large vehicles.
As recognized by Chrysler's footnote, NHTSA
did consider the options for GM and Ford to com-
ply with the 27.5 mpg standard in MY 1986. As in-
dicated above, the agency concluded that GM and
Ford could meet that standard only through prod-
uct restrictions likely resulting in significant
adverse economic impacts, including sales losses
well into the hundreds of thousands and job losses
well into the tens of thousands, and unreasonable
restrictions on consumer choice. This conclusion
was not based solely on the Department of Com-
merce study, but also on the data submitted by GM
and Ford and on the agency's own analysis. The
agency notes that a study submitted by the Depart-
ment of Energy supports the same conclusion. The
agency does not agree that product restrictions
would simply result in increased sales of GM's and
Ford's newer, fuel-efficient vehicles, without any
effect on employment. While some consumers
might purchase other GM and Ford models, to the
extent that the manufacturers were able to in-
crease their production of these models, many
others would either stay out of the market entirely
or shift their purchases to other manufacturers.
The issue of the extent to which the agency must
address what GM and Ford could have done since
1983 is largely discussed above. The legislative
history of the Cost Savings Act clearly indicates
that NHTSA may reduce fuel economy standards
up until the beginning of a model year. The deter-
mination of maximum feasible average fuel
economy level is made as of the time of the amend-
ment. The agency has emphasized, however, that it
would not reduce a standard if a current inability
to meet the standard simply resulted from
manufacturers previously declining to take
reasonable steps to improve their average fuel
economy as required by the Act.
With respect to Chrysler's question why the ap-
proach it adopted to achieve 27.5 mpg CAP^E was
economically impracticable for GM and Ford to
adopt, when changing market conditions overtook
GM's and Ford's earlier plans, the agency
reiterates that the legislative history of the Cost
Savings Act clearly indicates that Congress did not
intend to unduly limit consumer choice as to
capacity and performance of motor vehicles. As in-
dicated above, the House report stated that
". . . any regulatory program must be carefully
drafted so as to require of the industry what is at-
tainable without either imposing impossible
burdens on it or unduly limiting consumer choice
as to capacity and performance of motor vehicles."
H.R. Rep. No 94-340, 94th Cong., 1st Sess. 87
(1975). The agency believes that GM's and Ford's
decisions to continue selling large cars, which ac-
count for 20-25 percent of their sales, are fully con-
sistent with the statutory criteria and the
legislative history.
The fact that GM and Ford may at one point in
time have considered deleting certain models does
not commit those manufacturers to now do so.
Manufacturers' product plans are constantly
changing over time in response to market condi-
tions. As noted above, what is economically prac-
ticable at one point in time may not be so at
another. NHTSA does not believe that it is now
economically practicable for GM and Ford to sim-
ply curtail production of 20 percent of their fleets.
The primary reason GM's and Ford's CAFE's are
lower than Chrysler's is that Chrysler does not
compete in all the market segments in which GM
and Ford sell cars. Unlike GM and Ford. Chrysler
does not offer any vehicles which are defined by
EPA as "large cars" or "large station wagons."
These vehicles, which, as noted above, account for
20-25 percent of Ford's and GM's sales, are less
fuel-efficient than the cars Chrysler sells. As
pointed out by the NPRM, Chrysler's fuel economy
is not significantly different from that of GM or
Ford for the market segments in which it does
compete. Indeed, as demonstrated in the FRIA,
Chrysler vehicles tend to have fewer fuel economy-
enhancing technologies. Thus, if the sales mixes of
all the manufacturers were equivalent, GM and
Ford would have higher CAFE's than does
Chrysler.
PART 531 -PRE 85
While a particular manufacturer may choose to
comply with fuel economy standards by various
strategies, including not producing large cars, the
agency would not consider standards which re-
quire full-line manufacturers to stop producing
large cars to be consistent with the statutory
criterion of economic practicability.
Contrary to the arguments made by ECC,
Chrysler does not have more fuel-efficient
technology in its fleet than GM and Ford. ECC
cited comparisons showing that for MY 1984
Chrysler had better fuel economy for its curb
weight, interior roominess, engine size, and fleet
mix.
The three fuel economy ratios (mpg/curb weight,
mpg/roominess, and mpg/CID) are not valid
measures of efficiency. The high values exhibited
by the Chrysler fleet do not indicate whether the
high ratio of mpg/curb weight, for instance, is due
to very high fuel economy or merely a low average
curb weight. For example, the mpg/curb weight
ratio would show that a 2000-pound car getting 20
mpg is more fuel-efficient than a 4000-pound car
that achieves 20 mpg, when the opposite is ob-
viously true.
A more meaningful analysis would be to use the
fleet average ratio of fuel consumption to test
weight (or curb weight), to roominess, or to engine
displacement. This is a method that was proposed
by Chrysler employees in a 1978 Society of
Automotive Engineers (SAE) paper, "TFC/IWT,"
D. K. Samples and R. C. Wiquist, SAE paper
#780937. Regarding the ratio of average fuel con-
sumption divided by average test weight, Chrysler
has been about midway between GM and Ford in
recent years and for MY 1985 has the least effi-
ciency of the three. This is also true of average fuel
consumption per cubic inch of engine displace-
ment. Chrysler has, however, been more efficient
than GM and Ford in recent years on the basis of
average fuel consumption per cubic foot of
roominess index.
GM submitted information indicating that in the
13 test weight/transmission classes in which it and
Chrysler competed directly, GM had the higher
fuel economy car in 11 of the 13 cases. As a result,
GM showed that if it had Chrysler's product mix,
its CAFE would be 28.5 mpg as compared to
Chrysler's 27.5 mpg (without EPA test adjustment
credits).
The mix analysis cited by ECC, which was
prepared by the Department of Energy, attempts
to correct the companies' CAFE's to what they
would be if they had the same mix as Chrysler and
without two-seaters, small wagons, and large
sedans and wagons. This analysis ignores the
diversity of models within the GM and Ford fleets,
even in the size classes which are the same as
Chrysler's. For instance, the Chrysler fleet has
only four-cylinder engines except for the mid-size,
rear-drive V-8's that make up a small part of their
fleet. GM and Ford have six- and/or eight-cylinder
offerings in nearly all of their size classes. The
compact size class for Chrysler consists of essen-
tially one model -the Omni/Horizon four-door
hatchback, while the Ford line includes the two-
door and four-door hatchback Escort/Lynx, the
Thunderbird/Cougar, and two-door and four-door
Tempo/Topaz. The GM compacts in MY 1985 in-
cludes J-body, X-body, and GM20 models in a varie-
ty of body styles. GM and Ford also offer small
wagon versions of some of these models while
Chrysler does not. Also, Ford and GM have one or
more model offerings in the other EPA size classes
not offered by Chrysler -two-seater, large sedan
and large wagon.
If GM and Ford were to drop all large sedans and
wagons in the MY 1985 fleet while retaining all the
other models, their CAFE's would increase by 1.0
mpg for GM and 1.9 mpg for Ford. In Ford's case,
this is a significant improvement rather than the
loss in CAFE claimed by the Department of
Energy analysis for the use of the Chrysler sales
mix. In the case of GM, the improvement is the
same as the Department of Energy showed for us-
ing the Chrysler mix.
The agency rejects Chrysler's characterization of
NHTSA's analysis as not requiring GM and Ford to
do anything to improve their fuel economy. The
context of this rulemaking is responding to
manufacturer petitions to reduce a standard in
light of changed events, in a time period when
there are only a few months remaining before the
start of the model year. The agency has empha-
sized that when a manufacturer discovers its com-
pliance plan is insufficient and it has no prospect of
having the necessary amount of credits to offset
the shortfall, it must make additional efforts to in-
crease its fuel economy to meet standards.
However, there is now insufficient leadtime to
make additional technological improvements for
the 1986 model year. The agency has also em-
phasized the need to take into account marketing
efforts to improve CAFE, as GM and Ford have
been doing.
PART 531 -PRE 86
NHTSA concludes that GM and Ford did make
sufficient efforts to improve their fuel economy to
comply with the Cost Savings Act and that those
efforts were overtaken by unforeseen events
whose effects could not be overcome by available
means within the time available.
Other Federal Standards
As indicated above, EPA published a final rule in
the Federal Register (50 FR 27172) on July 1, 1985,
to provide CAFE adjustments to compensate for
the effects of past test procedure changes. The
final rule adopted a formula approach for
calculating CAFE adjustments for the 1986 model
year.
Manufacturers had argued that changes in EPA
test procedures had adverely affected their CAFE
values. On December 21, 1983, EPA published a
proposal to give a 0.2 mpg credit to all passenger
car manufacturers to account for test procedure
changes regarding inertia weights, dynamometer
controllers, actual distance versus nominal
distance traveled in the test, and humidity level. In
August 1984, GM requested additional CAFE
credit to compensate for changes over time in the
properties of test fuels used by EPA and the in-
dustry. GM argued that the test fuel adjustment
should be an additional 0.02 mpg to 0.32 mpg fuel
economy credit, with the value varying by model
year. On December 7, 1984, EPA published a sup-
plemental notice requesting comment on the test
fuel issue.
Because EPA had issued its proposals prior to
this agency's receipt of the GM and Ford petitions,
NHTSA considered the effect of the EPA rulemak-
ing throughout its analysis of those petititons and
the subsequent rulemaking. Due to the formula ap-
proach adopted by EPA, that agency was unable to
provide precise calculations concerning how the
rule will affect each manufacturer. EPA staff in-
formed NHTSA that they expected GM and Ford
to receive credits for the 1986 model year of ap-
proximately 0.2 mpg. GM and Ford informed
NHTSA that they expected to receive credits of 0.2
mpg and 0.1 mpg, respectively. While the agency
does not have specific data concerning how the
credits will affect other manufacturers, it believes
that the credits will be similar to those for GM and
Ford.
As discussed in the FRIA, changes in other
Federal standards which may affect CAFE have
been made in safety and damageability re-
quirements. These include the May 1982 amend-
ment to the Part 581 Bumper Standard, which per-
mits weight savings; several amendments to the
agency's lighting standard, which permit greater
aerodynamic efficiency; and the fact that the
automatic restraint requirement of Standard No.
208, with its attendant weight penalty, is not in ef-
fect for MY 1986 as anticipated in 1977. The poten-
tial weight savings permitted by the change in the
Bumper Standard could improve CAFE by approx-
imately 0.15 to 0.4 mpg. The agency concluded,
however, that continued consumer demand for 5
mph bumpers did not permit the manufacturers to
avail themselves of much of those potential weight
savings. The net effect of the safety changes was
to increase the CAFE capabilities of the manufac-
turers by approximately 0.3 mpg. BMW noted that
it plans to introduce air bags in MY 1986 and will
thus incur a weight penalty. The agency notes that
the slight weight penalty in that year is not due to
the standard's requirements but to that company's
voluntary decision to comply early.
The Need to Conserve Energy
Since 1975, when the Energy Policy and Conser-
vation Act was passed, this nation's energy situa-
tion has undergone a great deal of change. In par-
ticular, oil markets have been deregulated and the
Strategic Petroleum Reserve (SPR) has been
established.
The United States imported 15 percent of its oil
needs in 1955. By 1977, the import share was 46.4
percent and the value of imported crude oil and
refined petroleum products was $67 billion (stated
as 1984 dollars). While the import share of total
petroleum demand declined after that year, the
cost continued to rise to a 1980 peak level of $93.2
billion (1984 dollars). By 1984, the import share
had declined to 30.9 percent at a cost of $54.2
billion. Thus, the concern over dependence on im-
ported petroleum, as measured by these indicators,
has lessened in the past several years.
Moreover, imports from OPEC sources have
been declining, from a high of 6.2 million barrels
per day and 70.3 percent of all imports in 1977 to
2.0 million barrels per day and 37.6 percent of im-
ports in 1984. Imports from non-OPEC sources
have risen slightly from a low of 2.2 million barrels
per day or 30.7 percent in 1976, to 3.4 million bar-
rels per day or 62.4 percent in 1984. In 1984, Mex-
ico supplied the U.S. with the largest amount of
crude oil and petroleum products, followed by
PART 531 -PRE 87
Canada. As imports have shifted to non-OPEC
sources, the United States' supply of petroleum has
become less vulnerableto the political instabilities
of some OPEC countries, as compared to the situa-
tion in the mid-1970's.
Overall, the Nation is much more energy inde-
pendent than it was a decade ago, when Congress
established the MY 1985 and thereafter standard.
From 1975 to 1984, energy efficiency in the
economy improved by 21 percent. {198Jt Annual
Energy Review, Energy Information Administra-
tion, U.S. Department of Energy, p. 47) Passenger
car petroleum consumption is actually lower than
it was in 1975, even though travel has increased 25
percent since then. Domestic oil production is
higher than it was in 1975, total imports have
dropped 20 percent since then, the value of the Na-
tion's imported oil bill has declined nearly 40 per-
cent in the last five years (on a net import basis,
the value of the Nation's imported oil bill fell nearly
45 percent from 1980 to 1984), and the amount of
imported oil from OPEC has dropped by 67 per-
cent since the peak of 1977. As a percentage share
of GNP, the net oil import bill fell from 2.8 percent
in 1980 to 1.5 percent in 1984. In addition, the
price of oil is now fully decontrolled, permitting the
market to adjust quickly to changing conditions,
and the Strategic Petroleum Reserve is well on its
way to being filled. The 451 million barrels in the
SPR at year-end 1984 were equal to 141 days or
38.6 percent of non-SPR crude oil imports that
year. Thus, by any measure, the Nation is in a
stronger energy position than it was a decade ago.
According to Energy Information Administra-
tion (EIA) and Data Resources, Inc., projections,
however, domestic production is expected to
decline from a stable level of 10 MMB/D to about
8.5 MMB/D by 1995. Net imports are expected to
rise from 4.5 to 5 MMB/D to about 7.5 (EIA) to 9.0
(DRI) MMB/D by 1995. This would result in im-
ports approaching 50 percent of U.S. petroleum
use by 1995. However, future projections about
petroleum imports are subject to great uncertainty
and may be overtaken by new domestic
discoveries. Indeed, oil imports are very difficult to
project beyond a year or two. For example, the
EIA's 1977 Annual Report to Congress projected
that net oil imports by the United States would, in
the "reference case," reach II million barrels per
day by 1985. Net imports for this year are now
forecast to be less than 4.5 million barrels per day,
substantially less than half the level predicted in
1977. The agency believes that energy conserva-
tion is important but also notes that even with a
reduction in the standard MY 1986 passenger cars
meeting a 26.0 mpg standard will be considerably
more fuel-efficient than the nation's overall vehicle
fleet and will thus make a substantial positive con-
tribution to the goal of petroleum conservation.
Determining the 1986 Maximum Feasible
Average Fuel Economy Level
As discussed above, section 502(a)(4) provides
that the 27.5 mpg standard can be raised or
lowered for MY 1985 or any subsequent model
year if the agency determines that some other
standard represents the maximum feasible
average fuel economy level. In making this deter-
mination, the agency must consider the four fac-
tors of section 502(e): technological feasibility,
economic practicability, the effect of other Federal
motor vehicle standards in fuel economy, and the
need of the Nation to conserve energy.
In the NPRM, the agency stated that, based on
dictionary definitions and judicial interpretations
of similar language in other statutes, it has inter-
preted the terms "feasible" and "practicable" to
refer to whether something is capable of being
done. The NPRM noted that in American Textile
Mfrs. Institute v. Donovan. 452 U.S. 490, (1981),
the Supreme Court interpreted the use of the word
"feasible" in a similar statutory context to mean
"capable of being done."
CEA urged a reinterpretation of the statutory
criteria to permit adoption of what it termed "non-
binding" standards, i.e., standards which permit
major automobile manufacturers to produce and
price automobiles in response to free market
forces, without concern that their competitive pro-
duction and pricing decisions will cause imposition
of CAFE penalties. CEA stated at the beginning of
its docket comments that this particular argument
was intended to apply to NHTSA's future rulemak-
ing on passenger car standards for model years
1987 and thereafter. Although there is some am-
biguity later in CEA's comments as to the ap-
plicability of this argument for reinterpretation,
NHTSA believes it was CEA's intention that the
argument apply only to subsequent rulemaking for
model years 1987 and beyond. Moreover, if CEA's
argument were applied to the current rulemaking,
it would pertain to lowering the standard below
26.0 mpg, which would be outside the scope of this
PART 531 -PRE
rulemaking. Therefore, NHTSA has determined
that it is unnecessary to respond to this CEA com-
ment in this final rule, and will respond to the argu-
ment in the proposed rulemaking for model years
1987 and beyond. Other comments raised in CEA's
docket comments, which addressed the model year
1986 rulemaking, are discussed elsewhere in this
preamble.
Some commenters raised the issue of how costs
and benefits should be taken into account in apply-
ing the statutory criteria. AIA argued that in order
for a fuel economy standard to be "technologically
feasible" and "economically practicable," it is
necessary for the benefits of the standard to
outweigh the costs. The Department of Energy
stated that it believes efforts to reduce energy use
serve the Nation's interest only to the extent that
they contribute to the broader goals of increased
economic growth and improved economic efficien-
cy, and that it does not believe that the "need to
conserve energy" requires or justifies the imposi-
tion of cost-ineffective product changes or product
choice restrictions on consumers and manufac-
turers.
While both AIA and the Department of Energy
supported NHTSA's proposal, the agency notes
that it is not adopting the view that the statutory
criteria necessarily require fuel economy stan-
dards to be cost-beneficial. The agency has ad-
dressed this issue at length in the past and deter-
mined that while it is appropriate for the agency to
consider costs and benefits, the Cost Savings Act
does not require benefits necessarily to exceed
costs. See 42 FR 33536-33537 (June 30, 1977) and
49 FR 41254 (October 22, 1984).
The agency's traditional interpretation of the
statutory criteria, with respect to consideration of
economic factors, is that "economic practicability"
requires standards to be within the financial
capability of the industry, but not so stringent as to
threaten substantial economic hardship for the in-
dustry. See 42 FR 33537. This final rule is based on
the agency's traditional and longstanding inter-
pretation of the statutory criteria.
With respect to determining the maximum feas-
ible average fuel economy level, the Conference
Report to the 1975 Act (S. Rep. No. 94-516, 94th
Cong., 1st Sess. 154-5 (1975)) states:
Such determination should therefore take in-
dustrywide considerations into account. For ex-
ample, 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 in-
dividual automobile manufacturers. Such dif-
ficulties, however, should be given appropriate
weight in setting the standard in light of the
small number of domestic automobile manufac-
turers that currently exist, and the possible im-
plications for the national economy and for
reduced competition association (sic) with a
severe strain on any manufacturer. . . .
This language of the Conference Report in-
dicates that standards may at times be set at a
level above that of the least capable manufacturer
and that some manufacturers may find it
necessary to pay penalties. The issue arises of how
(and whether) this language should be reconciled
with the statutory text indicating that standards
must be set at a level that is capable of being done.
As a matter of construction, statutory language is
controlling over legislative history. Legislative
history, however, should be used as an indication of
congressional intent in resolving ambiguities in
statutory language. The agency believes that the
above-quoted language of the Conference Report
provides guidance on the meaning of "maximum
feasible average fuel economy level."
It is clear from the Conference Report that Con-
gress did not intend that standards simply be set at
the level of the least capable manufacturer.
Rather, NHTSA must take industrywide con-
siderations into account in determining the max-
imum feasible average fuel economy level. The
focus, thus, must be on the manufacturers' collec-
tive ability to meet a standard, rather than any
particular manufacturer's ability to meet it.
With respect to light truck standards, NHTSA
has consistently taken the position that it has a
responsibility to set standards at a level that can be
achieved by manufacturers of a substantial share
of sales. See 49 FR 41251, October 22, 1984. The
agency believes this same criterion is relevant to
the setting of passenger car standards, as part of
taking industrywide considerations into account.
Given the substantial share (more than 60 percent)
of car sales by GM and Ford, the agency believes
that a standard set at a level above the maximum
feasible capability of these manufacturers would by
definition not be at the maximum feasible average
PART 531 -PRE 89
fuel economy level for the industry, i.e., such stan-
dard would exceed that level.
The least capable manufacturers with major
shares of the market are GM and Ford. Taking ac-
count of the EPA test adjustment credit, both of
those manufacturers project that their MY 1986
CAFE could be as high as 26.3 mpg.
In the section of this preamble entitled
"Manufacturer Capabilities for 1986," the agency
made several conclusions concerning the manufac-
turers' abilities to improve their projected CAFE
levels. First, given the imminence of the 1986
model year, there is insufficient time now for the
manufacturers to make further significant
technological changes to their product plans.
Therefore, any additional efforts by the manufac-
turers to increase their MY 1986 CAFE would
largely be limited to attempts to change product
mixes through increased marketing efforts and/or
product restrictions. Second, based on past ex-
perience and current competitive conditions, GM
and Ford cannot significantly improve their
cafe's by increased marketing efforts. Third, the
types of product restrictions that would be re-
quired for GM and Ford to significantly improve
their CAFE's could result in significant adverse
economic impacts and restrict consumer choice to
an unreasonable degree. The unacceptability of the
resulting product mix to a significant segment of
the consuming public would likely result in MY
1986 sales losses well into the hundreds of
thousands of units and job losses well into the tens
of thousands. The agency considers these effects to
be beyond the realm of economic practicability.
While the agency believes that energy conserva-
tion is important, it cannot conclude that the possi-
ble energy savings associated with maintaining the
27.5 mpg standard for MY 1986 would justify the
potential major economic hardships discussed
above. The magnitude of possible energy savings is
uncertain. If manufacturers restricted the
availability of their large cars, consumers might
tend to keep their older, less fuel-efficient large
cars in service longer or purchase large pickup
trucks and vans to obtain the room, power and
load-carrying capacity they desire. This could off-
set in whole or part the apparent energy savings
associated with higher passenger car CAFE.
The agency's FRIA indicates that the maximum
magnitude of any increase in fuel consumption
associated with a 26.0 mpg CAFE standard would
be 1.54 billion gallons (37 million barrels) over the
life of the MY 1986 fleet. The maximum yearly im-
pact on U.S. gasoline consumption would be 210
million gallons, or roughly 0.3 percent of total an-
nual automobile gasoline consumption. In terms of
total U.S. petroleum consumption, it would
amount to a maximum yearly increase of 0.09 per-
cent. While the agency does not view these figures
as insignificant, it does not believe that such
hypothetical savings would justify potential sales
losses to the industry in the hundreds of thousands,
job losses in the tens of thousands, or the
unreasonable restriction of consumer choices.
Some commenters argued that greater weight
should be placed on the need of the Nation to con-
serve energy. ECC argued that the agency failed
to adequately consider future energy needs and
reviewed energy consumption effects without con-
sidering that it is the cumulative, long-term effect
of steadily increasing standards that produces the
energy conservation results that Congress in-
tended.
As discussed above, NHTSA has considered
future energy needs and concurs that energy con-
servation is important. Moreover, the agency
agrees with ECC that major improvements in
energj' conservation result from cumulative
smaller improvements made over time. However,
this rulemaking is not one where the agency is
declining to set future higher standards merely
because the required energy conservation im-
provements would be relatively small. Rather, the
agency's action in reducing the MY 1986 standard
is being taken in light of all the statutory criteria
for determining maximum feasible average fuel
economy level. The need to conserve energy' is im-
portant but does not outweigh the other criteria
and, in the agency's judgment, does not justify the
severe economic consequences discussed above.
NHTSA believes this is particularly true in light of
the relatively small and uncertain effect maintain-
ing the 27.5 mpg standard for MY 1986 would have
on energy consumption. The agency also notes that
industry CAFE, even with a MY 1986 26.0 mpg
standard, is likely to be higher than it was in MY
1985, thus contributing to energy conservation.
Some commenters argued that it is improper to
reduce a fuel economy standard in light of changed
market demand or that the agency placed too much
weight on that factor. CFAS argued that the Cost
Savings Act was intended to lead the market
rather than have the market lead fuel economy
standards.
PART 531 -PRE 90
NHTSA has always considered market demand
in establishing fuel economy standards as that fac-
tor is an implicit part of the consideration of
economic practicability. In a free market economy,
market demand is one of the primary determinants
for what manufacturers will be able to sell. As the
agency has noted before, consumers need not pur-
chase what they do not want. A standard set
without regard to market demand could be overly
stringent and economically impracticable.
Court decisions construing the term "prac-
ticability" in sections 103(a) and (f) of the National
Traffic and Motor Vehicle Safety Act are instruc-
tive here. In NHTSA v. Brinegar, 491 F.2d 31, 38
(D.C. Cir. 1974), the court concluded that a stan-
dard requiring permanently molded labels on
retreaded tires was "impracticable" because it was
economically infeasible, in that it would reduce the
volume of tire carcasses available for retreading by
two-thirds, and would cause severe economic
dislocation in the retreaded tire industry. The
definition of practicability applied by the court re-
quired scrutiny of several economic factors, and
the agency had improperly failed to consider the
effect of the standard on a large segment of the
motoring public, among other factors. Id. at 42.
In Panfic Legal Foundation v. DOT, 593 F.2d
1338, 1345 (D.C. Cir. 1979), cert, denied, 444 U.S.
830 (1979), the court concluded that the "prac-
ticability" requirement of the Vehicle Safety Act
required the Secretary to take public reaction into
account in deciding whether to adopt a regulation
requiring automatic restraints in passenger cars.
The court rejected the view that "public acceptance
or rejection ... is not one of the statutory criteria"
to be applied in establishing safety standards.
While NHTSA believes it would be error to fail to
take account of market demand in considering
economic practicability, that does not mean that
the agency's fuel economy standards are based
solely or primarily upon market demand. As
discussed above, the agency is required to establish
standards at the maximum feasible average fuel
economy level based upon four factors. Economic
practicability is only one of those four factors, and
market demand is only one aspect of economic
practicability.
The changes in Federal safety and damageability
standards discussed above provided some addi-
tional flexibility in improving CAFE. However, as
discussed above with respect to possible
technological changes, the imminence of the 1986
model year precludes significant changes in prod-
uct designs.
Taking account of the four factors of section
502(e), the agency determines that the maximum
feasible average fuel economy level for MY 1986 is
26.0 mpg. This level would be at the maximum
capability of GM and Ford, the least capable
manufacturers with major shares of the market,
taking account of marketing and technological
risks. As discussed above, the agency believes it
has a responsibility to set standards at a level that
can be achieved by such major manufacturers.
NHTSA has determined that there are significant
risks that GM and Ford may not be able to achieve
their highest projected capabilities of 26.3 mpg,
and it is in light of those risks that the agency is
setting a standard at a level that provides a slight
margin for risks.
As discussed above, GM's projected CAFE of
26.3 mpg is subject to marketing risks, including
the possibility that Japanese car sales may rise
substantially during the 1986 model year, resulting
in a corresponding loss in sales of GM's most fuel-
efficient cars and a concomitant reduction in its
CAFE capability. Ford's maximum projected MY
1986 CAFE of 26.3 mpg is subject to both
technological and marketing risks, amounting to
0.5 mpg, resulting in a potential CAFE for Ford of
below 26.0 mpg.
The agency notes that the EIA's July 1985 Short-
Term Energy Outlook indicates that motor
gasoline prices are expected to decline by one cent
per gallon during 1985 and to drop by an additional
four cents per gallon between 1985 and 1986,
mainly as a result of lower crude oil prices. Such a
continuing decline in gasoline prices adds con-
siderable uncertainty to whether manufacturers
will be able to achieve their projected CAFE's, par-
ticularly since the EI A projection was made after
the manufacturers submitted their CAFE
estimates. Thus, this latest estimate of declining
gasoline prices is not included as part of GM's and
Ford's considerations.
Subsequent to the EIA estimate, Saudi Arabia
indicated plans to raise its petroleum production by
at least one million barrels a day starting in Oc-
tober. The Wall Street Journal quoted Saudi Oil
Minister Ahmed Zaki Yamani as stating that
unless other members of the oil cartel hold the line
on production and price- something they haven't
been doing- prices could conceivably fall by next
spring to $18 a barrel from the current market
PART 531 -PRE 91
average of about $26. The newspaper quoted
economist Alan Greenspan, the chairman of
Townsend-Greenspan & Co., as predicting a weak
market in the spring, with oil prices falling at least
as far as $22 a barrel. Since these Saudi plans came
after GM and Ford prepared their projections, they
add another element of uncertainty.
Another factor of uncertainty is the introduction
of inexpensive small cars from Yugoslavia, Korea,
and Greece. Yugo sales began on August 26, 1985.
That company projects it will sell 10,000 cars by
the end of the 1985 calendar year and 40,000 cars
the first year of sales. Hyundai cars are expected
to be introduced into the U.S. market in early
1986. That company plans to sell 100,000 cars the
first year. Ford noted that while its 1985 estimates
include some consideration of these vehicles,
substantial success of such entries presents a fur-
ther risk to its CAFE. In addition, the Desta, a
recently announced Greek import, is also expected
to sell up to 40,000 vehicles in its first year.
Experience with uncertainties that may reduce
manufacturers' CAFE indicates that there is a
substantial risk that such uncertainties may come
to fruition. For example, a comparison of manufac-
turers' CAFE estimates as shown in their pre-
model year reports, which are submitted in late
December of the then-current model year (i.e., at a
time when many vehicles are well into production),
with actual CAFE's indicates that the actual
cafe's differed from the estimates by an average
of 0.5 mpg, and by as much as 1.2 mpg. Thus, com-
panies such as Ford, GM, Chrysler, and Toyota
have difficulty estimating their CAFE closer than
0.5 mpg even at that late a period in time.
NHTSA disagrees With CEA's comment that a
standard set at 26.0 mpg is too high and with that
commenter's assertion that the NPRM "conceded"
that under current market conditions a 26.0 mpg
standard is likely to cause a shift of consumer pur-
chases from larger GM and Ford products to
models produced by other manufacturers, as well
as smaller GM and Ford automobiles.
The agency further disagrees with assertions by
CEA that a 26.0 mpg standard will reduce con-
sumer choice and induce automobile purchasers to
acquire less desirable models, handicap U.S.
manufacturers in their efforts to compete against
Japanese and other automobile imports, lead to
loss of U.S. jobs in manufacturing sectors where
the U.S. retains a comparative advantage in a
highly competitive, international market, and in-
crease highway fatalities and casualties by causing
automobile consumers to buy automobiles that are
smaller and not as safe as those they would pur-
chase under lower CAFE standards.
As discussed above, the agency has concluded
that GM and Ford will be able to achieve average
fuel economy of 26.0 in MY 1986 without engaging
in unreasonable product restrictions. Therefore,
the 26.0 mpg standard will not reduce consumer
choice or lead to loss of U.S. jobs.
The agency does not believe that there is any
basis for concluding that a 26.0, or even a 27.5 mpg
standard, would represent any significant increas-
ed risk of injury or death for passenger car occu-
pants. It is true that in a crash between cars of dif-
ferent sizes, everything else being equal, the occu-
pants of the smaller cars are at greater risk of in-
jury. However, as large cars are reduced in size,
the mass differences between large and small cars
diminish, along with the potential for injury. In ad-
dition, the agency is taking steps to ensure that
smaller vehicles provide sufficient crash protec-
tion. Also, small cars may have crash-avoidance
advantages compared to heavier vehicles.
Passenger car occupant deaths have in fact drop-
ped from 28,200 in 1978 to 23,500 in 1984, a 17 per-
cent decline. This occurred during a time when the
average new car's weight was reduced by 1000
pounds.
With respect to CEA's request that the agency
adopt a MY 1986 standard below 26.0 mpg,
NHTSA also notes that such an amendment would
be outside the scope of notice of the NPRM.
With the exception of Jaguar, Mercedes-Benz,
and possibly Saab, the agency believes the rest of
the industry is capable of meeting the 26.0 mpg
standard,, although compliance may be close for
some of the European manufacturers. NHTSA has
concern about setting standards that one or more
manufacturers cannot meet, particularly since
some of the manufacturers have made great im-
provements in their fuel economy. As discussed
above, however, the Act requires the agency to
take industrywide considerations into account in
determining the maximum feasible average fuel
economy level. A standard set at the level of the
least capable European manufacturer would be so
far below that of the industry as a whole that it
would remove any effect the CAFE program has
on improving fuel economy. The agency noted in
the NPRM that these manufacturers have chosen
to concentrate on a segment of the market that
PART 531 -PRE 92
tends toward lower fuel economy. BMW objected
to this characterization, arming that it implied a
wilful choice toward noncompliance. That com-
menter argued that foreign manufacturers with
more than one model usually cannot import all of
them into the U.S., which is an extremely com-
petitive marketplace, but can only import the most
competitive models. As indicated above, NHTSA
recognizes that some of these manufacturers have
made significant fuel economy improvements, and
the agency was not suggesting criticism of those
manufacturers.
In this and other rulemakings, commenters have
raised the issue of whether and how penalties and
carryforward/carryback credits should be taken in-
to account in setting standards at the maximum
feasible average fupl economy level. The agency's
analysis of these issues is contained in the FRIA.
Competitive Effects
Chrysler argued that NHTSA must consider the
economic impact of a reduced standard on
manufacturers which will achieve the 27.5 stan-
dard. That commenter argued that a reduced stan-
dard will have a deleterious competitive impact on
such manufacturers, since they will have no time to
reallocate their resources and compete as effec-
tively as possible in the new environment.
The agency recognizes the varying impacts
among manufacturers that are involved in revising
fuel economy standards. However, the agency
must consider the feasibility of its standards for
the industry as a whole, as discussed above, in ac-
cordance with the four factors provided by section
502(e) of the Act. Indeed, since the Act specifically
permits the revision of previously set fuel economy
standards, it necessarily contemplates the
possibility of different impacts on different
manufacturers. Any change in a standard will
result in varying impacts, because different
manufacturers will be at different stages along
varying paths toward complying with the previous
standard. The agency notes that the MY 1981 light
truck standard was lowered in response to a peti-
tion for rulemaking submitted by Chrysler. Thus,
that company has requested and received the
benefit from the same type of rulemaking action to
which it now objects.
The agency also notes that Chrysler has em-
phasized that it is now earning the greatest profits
in its history. This is occurring while its CAFE is
above that of GM and Ford. While that company
has argued that it could be earning still higher pro-
fits if it had known the fuel economy standard
would be reduced, it has not shown that reducing
the standard to 26.0 mpg will have any
demonstrable impacts on its current high level of
profitability or on its employment. Moreover, the
agency believes that any such relatively minor im-
pacts are heavily outweighed by the possibility of
serious adverse economic consequences to the in-
dustry and economy as a whole if the standard is
not reduced.
Comment Period; Timeliness of Decision
The attorney general of California argued that
the 30-day comment period unfairly restricted
public comment. That commenter argued that the
July 22, 1985, issue of the Federal Register did not
reach the West, Coast until a week or more after
the publication date and that the comment period
was effectively shortened even further by the time
required to obtain various documents referred to
by the notice that were in the public docket.
As indicated by the March 1985 notice granting
the GM and Ford petitions and requesting com-
ments on those petitions, NHTSA stated that it
was focusing its attention on the 1986 model year
in view of the possibility of serious economic harm
cited by the petitioners and the limited remaining
time for amending the 1986 standard. As discussed
by the agency in a previous Federal Register
notice, amendments reducing a standard for a par-
ticular model year may be made until the beginning
of the model year, but not after that time. See 49
FR 41250, 41254-5 (October 22, 1984). In its March
1985 notice, the agency noted that since model
years begin in the fall, a final rule reducing the
1986 standard would have to be issued by this fall.
The agency also noted that "(t)he nearness of that
deadline would necessitate that each phase of the
rulemaking, including the period for commenting
on a proposal, be shortened so that the rulemaking
could be completed in a timely fashion." 50 FR
12344 (March 28, 1985).
Because of the importance of the issues
presented by this rulemaking, which concern possi-
ble serious economic harm to GM and Ford and the
economy as a whole, coupled with the nearness of
the deadline for amending the 1986 model year
standard, the agency found good cause for a 30-day
comment period. The statute does not establish a
specific minimum notice period. Accordingly, the
agency established a reasonable comment period.
PART 531 -PRE 93
based on the circumstances. The agency believes
that the procedural steps followed by the agency
provided a full opportunity for meaningful par-
ticipation by the public. The agency notes that the
public was given advance notice in the March 28,
1985 Federal Register publication of a possible
shortened comment period and the opportunity to
comment on the issues raised by the petitions in ad-
vance of NHTSA's decision whether to issue an
NPRM.
CFAS argued that it is too late to reduce the MY
1986 standard because the model year has already
begun. That commenter cited July 1985 sales of
MY 1986 GM N-body cars.
The agency disagrees with that commenter's
position. The time when a model year begins is im-
precise. Model years may differ for different
manufacturers and for different vehicles produced
by a manufacturer. 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 1985 is the beginning of the 1986 model
year). See Center for Auto Safety v. NHTSA. 710
F.2d 842, 847 (D.C. Cir. 1983). The court did not
specify a particular date for the beginning of the
model year. Consistent with the court's general
view, the agency concludes that this amendment to
the MY 1986 standard is timely.
Issued on September 30, 1985
Diane K. Steed
Administrator
50 F.R. 40528
October 4, 1985
PART 531 -PRE 94
PREAMBLE TO AN AMENDMENT TO PART 531
Passenger Automobile Average Fuel Economy Standards
Final Decision to Grant Exemption
(Docket No. LVIVI 82-01; Notice 6)
ACTION: Final rule granting exemption from
average fuel economy standard and establishing an
alternative standard.
SUMIVIARY: This rule is issued in response to a
petition filed by Rolls-Royce Motors, Ltd. (Rolls-
Royce) requesting that it be exempted from the
generally applicable average fuel economy standard
of 27.5 miles per gallon (mpg) for 1987-1989 model
year passenger automobiles, and that a lower alter-
native standard be established for it. This rule grants
Rolls-Royce that exemption and establishes an alter-
native standard of 11.2 mpg for Rolls-Royce for
years 1987-1989.
EFFECTIVE DATE: This exemption and alter-
native standard apply to Rolls-Royce for model years
1987-1989.
SUPPLEMENTARY INFORMATION: NHTSA is
exempting Rolls-Royce from the generally applicable
average fuel economy standard for 1987-1989 model
year passenger automobiles and establishing an
alternative standard applicable to Rolls-Royce for
those model years. This exemption is issued under
the authority of section 502(c) of the Motor Vehicle
Information and Cost Savings Act, as amended ("the
Act") (15 U.S.C. 2002(c)). Section 502(c) provides
that a passenger automobile manufacturer which
manufactures 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 NHTSA establishes an alter-
native standard for the manufacturer at its max-
imum feasible level. Section 502(e) of the Act (15
U.S.C. 2002(e)) requires NHTSA, in determining
maximum feasible average fuel economy, 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 decision was preceded by a proposed
decision announcing the agency's tentative conclu-
sion that Rolls-Royce should be exempted from the
generally applicable 1987-1989 passenger auto-
mobile average fuel economy standards, and that an
alternative standard of 11.2 mpg should be estab-
lished for Rolls-Royce in those model years, 50 FR
23738, June 5, 1985. No comments were received
on the proposed decision.
The agency is adopting the tentative conclusions
set forth in the proposed decision as its final con-
clusions, for the reasons set forth in the proposed
decision. Based on the conclusions that the max-
imimi feasible average fuel economy level for Rolls-
Royce in years 1987-1989 is 11.2 mpg, that other
Federal motor vehicle standards will not affect
achievable fuel economy beyond the extent con-
sidered in the proposed decision, and that the na-
tional effort to conserve energy will not be affected
by granting this requested exemption, NHTSA
hereby exempts Rolls-Royce from the generally ap-
plicable passenger automobile average fuel economy
standard for the 1987-1989 model years and
establishes an alternative standard of 11.2 mpg for
Rolls-Royce in those years.
NHTSA has analyzed this decision, and deter-
mined that neither Executive Order 12291 nor the
Department of Transportation regulatory policies
and procedures apply, because this decision is not
a "rule," which term is defined as "an agency state-
ment of general applicability and future effect." This
exemption is not generally applicable, since it applies
only to Rolls-Royce. If the Executive Order and the
Department policies and procedures were applicable,
the agency would have determined that this action
PART 531-PRE 95
is neither "major" nor "significant." The principal
impact of this exemption is that Rolls-Royce will not
be required to pay civil penalties if it achieves its
maximum feasible average fuel economy, and pur-
chasers of its vehicles will not have to bear the
burden of those civil penalties in the form of higher
prices. Since this decision sets an alternative stand-
ard at the level determined to be Rolls-Royce's max-
imum feasible average fuel economy, no fuel would
be saved by establishing a higher alternative stand-
ard. The impacts for the public at large will be
minimal.
In consideration of the foregoing, 49 CFR Part
531 is amended by revising § 531.5(bX2) to read as
follows:
(b) The following manufacturers shall comply with
the standards indicated below for the specified
model years:
(2) Rolls-Royce Motors, Inc.
Model Year
Average fuel economy standard
(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
1986
11.0
1987
11.2
1988
11.2
1989
11.2
Issued on: April 9, 1986
Diane K. Steed
Administrator
51 F.R. 12855
April 16, 1986
PART 531-PRE 96
PREAMBLE TO AN AMENDMENT TO PART 531
Passenger Automobile Average Fuel Economy Standards
Model Years 1987-1988
(Docket No. FE-8501; Notice 6)
ACTION: Final rule.
SUMMARY: This notice amends the average fuel
economy standards applicable to passenger
automobiles manufactured for model years (MY)
1987 and 1988 by reducing the standards from 27.5
mpg to 26.0 mpg. This rulemaking was initiated in
response to petitions for rulemaking submitted by
General Motors (GM) and Ford. The agency earlier
reduced the MY 1986 standard from 27.5 mpg to 26.0
mpg as part of the rulemaking related to those peti-
tions. Based on all available information, including
public comments, NHTSA has concluded that GM
and Ford, constituting a substantial part of the in-
dustry, took or planned appropriate steps to meet the
27.5 mpg standard for MY 1987-88 and made signifi-
cant progress toward doing so, but have been
prevented from fully implementing those steps by un-
foreseen events. Among other things, there has been
a substantial shift in expected consumer demand
toward larger cars and engines, and away from the
more fuel-efficient sales mixes anticipated for MY
1987-88 by GM and Ford when they developed their
product plans. This shift is largely attributable to a
decline in gasoline prices, which has stimulated con-
sumer demand for the new mix. Also, a number of
technological improvements planned by GM and
Ford did not achieve the full fuel economy benefit
that was anticipated by those manufacturers. The
agency's analysis further indicates that the only
actions now available to those manufacturers to raise
the fuel economy of their domestic fleets to 27.5 mpg
in MY 1987-88 would involve a combination of (1)
product restrictions likely resulting in significant
adverse economic impacts, including substantial job
losses and sales losses and unreasonable restrictions
on consumer choice, and (2) transferral of the produc-
tion of large cars outside of the United States,
thereby costing American jobs, while having ab-
solutely no energy conservation benefits. Such ac-
tions could also severely exacerbate the U.S. trade
deficit.
DATES: The amendments made by this rule to the
Code of Federal Regulations are effective November
5, 1986.
SUPPLEMENTARY INFORMATION:
Background
A. The Energy Policy and Conservation Act
1. Overview
In December 1975, during the aftermath of the
energy crisis created by the oil embargo of 1973-74,
the Congress enacted the Energy Policy and Conser-
vation Act (EPCA). Congress included a provision in
that Act establishing the automotive fuel economy
regulatory program. That provision added a new
title, Title V, "Improving Automotive Efficiency," to
the Motor Vehicle Information and Cost Savings Act.
Title V specified corporate average fuel economy
(CAFE) standards for cars of 18, 19, and 20 mpg for
model years 1978, 1979, and 1980, respectively, and
27.5 mpg for 1985 and thereafter. The Secretary of
Transportation was required to establish standards
for model years 1981-84. Section 502(aX3) required
that the standards for each of those model years be
set at a level which (1) was the maximum feasible
average fuel economy level and (2) would result in
steady progress toward meeting the 27.5 mpg stand-
ard for model year 1985.
Although Congress clearly established the 27.5
mpg value as a goal to strive for (27.5 mpg is roughly
twice the MY 1974 CAFE), it recognized that such
long-term goals are subject to considerable uncer-
tainty. As discussed below, the Act permits, but does
not require, the Department to change the standard
based on up-to-date information and changing trends
and assumptions.
When EPCA was enacted, Congress declared its
long-term purpose to be to "decrease dependence
upon foreign imports, enhance national security,
PART531-PRE97
achieve the efficient utilization of scarce resources,
and guarantee the availability of domestic energy
supplies at prices consumers can afford." Conference
Report (S. Rep. No. 94-516, 94th Cong., 1st Sess.
(1975)) at p. 117. In considering EPCA, Congress
predicted that the nation's dependence on foreign oil
could be "nearly 12 million barrels per day in 1985,"
and expressed concern about the adverse effect of
such a level of imports on the international balance of
trade. (H.R. Rep. No. 94-221, 94th Cong., 1st Sess.
(1975)) It was noted that the cost of foreign oil had
risen from about $7 billion to $25 billion between
1973 and 1974 and could easily increase to $60 billion
in 1985 (in constant dollars).
EPCA was passed in an environment of congres-
sional concern about a weak economy and a desire by
Congress to encoiu-age energy conservation without
causing adverse economic and employment conse-
quences. See H.R. Rep. No. 94-221, 94th Cong., 1st
Sess. (1975) at pp. 14-15, and H.R. Rep. No. 94-340,
94th Cong., 1st Sess. (1975) at pp. 9-11, 87-88. The
legislative history of amendments to EPCA that were
enacted in 1980 also indicates congressional concern
about jobs. Indeed, one of the stated purposes of the
1980 amendments was "to encourage full employ-
ment in the domestic automobile manufacturing sec-
tor." See section 2 of the Act.
Congress' goal of energy conservation by improved
automotive fuel efficiency has largely been realized.
By 1985, U.S. imports of oil were less than when
EPCA was enacted, and the cost in constant 1974
dollars was not the $60 billion feared by Congress but
instead approximately $24 billion. In MY 1986, for
the first time, the average fuel economy of the total
fleet of new cars will in fact exceed 27.5 mpg. In addi-
tion, not only has the average fuel economy for all
cars sold reached the basic congressional goal, but
consumers now have wide choice in piu"chasing fuel-
efficient cars of all types and sizes.
While EPCA's energy conservation goals have
largely been realized, NHTSA confronts a record in
this rulemaking which indicates that EPCA's secon-
dary concern of ensuring that the fuel economy pro-
gram does not result in losses of American jobs is at
risk. As discussed below, the only actions available to
GM and Ford in the near-term to achieve fuel
economy levels of 27.5 mpg, i.e., for MY 1987-88,
would involve a combination of (1) product restric-
tions likely resulting in significant adverse economic
impacts, including substantial job losses and sales
losses and unreasonable restrictions on consumer
choice, and (2) transferring the production of large
cars outside of the United States, thereby costing
American jobs while having absolutely no energy
conservation benefits. Indeed, it should be noted that
this could severely exacerbate the U.S. trade deficit,
which, as noted above, was one of Congress' concerns
when it enacted EPCA. In 1975, Congress was con-
cerned about the effect of increased oil imports on the
U.S. balance of trade. The agency notes that the trade
deficit is now at an all-time high, due in large
measure to the increase in automobile imports.
A major reason that GM and Ford are having dif-
ficulty achieving a CAFE of 27.5 mpg, in addition, as
discussed below, to an unexpected drop in gasoline
prices since their MY 1987-88 product plans were
developed, relates to major changes which have
occurred in the structure of the automotive industry
since EPCA was passed. Due to major cost advan-
tages in producing small cars abroad, imports com-
prise an increasing share of U.S. car sales. For
example, while imports represented between 15 and
20 percent of all cars sold in the U.S. between 1973
and 1977, they are expected to comprise 35 percent of
sales in 1987-88. Since imports are concentrated in
the smaller, most fuel-efficient market segment, the
rising share of imports makes it more difficult for the
full-line domestic manufacturers to achieve CAFE of
27.5 mpg, since their cars are concentrated more in
the mid-size and larger market segment.
Moreover, as discussed below, although GM and
Ford themselves can attempt to solve the problem of
their small car production cost disadvantage by im-
porting small cars, they cannot count the imports
toward their domestic CAFE for purposes of meeting
CAFE standards. NHTSA notes that the Japanese
manufacturers find it easy to meet CAFE standards
due to their concentration on the smaller car market.
Similarly, GM's import fleet will easily surpass
CAFE of 27.5 mpg during MY 1987-88, as will Ford's
by MY 1988. Thus, the present difficulties faced by
the full-line manufacturers in complying with CAFE
standards are in fact largely limited to an artificial
subset of their cars. The agency notes that not only
will the average fuel economy of the total fleet of new
cars exceed 27.5 mpg during MY 1987-88, but GM's
total fleet, including domestic, imports, and joint,
venture cars, is expected to be 27.5 mpg by MY
1988.
The provision in EPCA which prevents manufac-
turers from averaging their import and domestic cars
for purposes of complying with CAFE standards was,
as discussed below, intended to discourage manufac-
turers from meeting CAFE standards by increasing
imports of small cars. Ironically, that same provision
now creates an incentive for the domestic manufac-
turers to meet standards by producing their larger,
less fuel-efficient cars outside the U.S., since the
larger cars could then be averaged with small car im-
ports, rather than with mid-size domestic cars.
PART531-PRE98
As indicated above, Congress recognized the dif-
ficulties in predicting CAFE levels a decade in ad-
vance and, therefore, permitted the Department to
amend CAFE standards. Section 502(aX4) provides
^^ that the Secretary of Transportation may raise or
^y lower the 27.5 mpg standard for model year 1985 or
for any subsequent model year if he or she deter-
mines that some other standard represents the max-
imum feasible average fuel economy level. In deter-
mining maximum feasible average fuel economy, the
Secretary is required under section 502(e) of the Act
to consider four factors: technological feasibility,
economic practicability, the effect of other Federal
motor vehicle standards on fuel economy, and the
need of the nation to conserve energy. (Responsibility
for the automotive fuel economy programs was
delegated by the Secretary of Transportation to the
Administrator of NHTSA (41 FR 25015, June 22,
1976).)
While compliance with fuel economy standards is
determined by averaging, enabling manufacturers to
produce vehicles with fuel economy below the level of
the standard if they produce sufficient numbers of
vehicles with fuel economy above the level of the
standard, manufacturers may not average their im-
ported cars together with their domestically
manufactured cars. Instead, manufacturers must
meet fuel economy standards separately for their im-
ported and domestically manufactured fleets. (See
^^ section 503.) Cars are considered to be domestically
^B manufactured if they have at least 75 percent
domestic content. Conversely, cars are considered to
be imports, or as the statute characterizes them, "not
domestically manufactvu-ed," if they have less than
75 percent domestic content.
While a separate fuel economy standard is set for
each model year, the Cost Savings Act does not re-
quire absolute achievement of the standard within
each year. Instead, it allows a shortfall in one year to
be offset if a manufacturer exceeds the standard for
another year or years. Under the Act, as amended by
the Automobile Fuel Efficiency Act of 1980, manufac-
turers earn credits for exceeding average fuel
economy standards which may be carried back for
three model years or carried forward for three model
years.
2. Congressional intent
While the Congress established a goal of 27.5 mpg,
it also recognized the need for flexibility and
authorized the Department to adjust the standards to
the maximum feasible level.
The report accompanying H.R. 7014, the bill con-
taining the House version of the fuel economy provi-
sions (which would have specified a 28.0 mpg stand-
ard for 1985 and thereafter), stated that "the
automobile industry has a central role in our national
economy and that any regulatory program must be
carefully drafted so as to require of the industry what
is attainable without either imposing impossible
burdens on it or unduly limiting consumer choice as
to capacity and performance of motor vehicles." H.R.
Rep. No. 94-340, 94th Cong., 1st Sess. 87 (1975). As
another indication of the congressional view of the
need for flexibility, the report recognized the difficul-
ty in establishing goals ten years in the future by
stating that "(t)he 1985 average fuel economy stand-
ard presented a different problem [than establishing
standards for MY's 1979-80] because of the high level
of uncertainty which attends any attempt to predict
technological feasibility a decade into the future." Id.
at 88. The Committee also stated that although the
1985 standard was a "clear target," it also provided
DOT the authority to amend that target so as to pro-
vide the program "with the necessary flexibility."
Ibid.
It is noteworthy that the Secretary was given
authority to lower the standard for MY 1985 or for
any subsequent year to 26.0 mpg without such action
being subject to a one-house veto. Conversely, any ac-
tion to raise the standard above 27.5 mpg or to lower
it below 26.0 mpg was subject to that form of congres-
sional review and disapproval. While such legislative
vetoes have since been declared unconstitutional, the
separate treatment in the original legislation of ac-
tion to lower the standard to any level between 26.0
mpg and 27.5 mpg appears to reflect Congress' view
of the likelihood of such events and its willingness to
accept— without formal review— Departmental ac-
tions making slight reductions in the long-term goal
established by the Act.
B. Setting the 1981-84 Standards
On June 30, 1977, NHTSA published in the Federal
Register (42 FR 33534) a final rule establishing the
1981-84 passenger automobile CAFE standards. The
selected standards were 22 mpg for 1981, 24 mpg for
1982, 26 mpg for 1983, and 27 mpg for 1984.
As part of establishing the 1981-84 standards, the
agency developed estimates of the maximum feasible
fuel economy for each manufacturer for model years
1981 through 1985. The agency's conclusion at the
time was that "levels of average fuel economy in ex-
cess of 27.5 mpg are achievable in the 1985 time
frame." 42 FR 33552. The agency believed that it was
feasible in model year 1985 for General Motors to
achieve an average fuel economy level of 28.9 mpg,
Ford 27.9 mpg, and Chrysler 28.7 mpg. See 1977
PART531-PRE99
Rulemaking Support Paper (RSP), p. 5-38 (Table
5.11). Those levels were based on a number of
assumptions, including the ability of manufacturers
to maintain a rapid rate of introduction of technology,
consumer acceptance of a 10 percent reduction in
vehicle acceleration, and significant use of a
widespread range of technological options, including
weight reduction, improved transmissions and
lubricants, reduced aerodynamic drag, reduced ac-
cessory losses, and reduced tire rolling resistance.
The agency's estimates did not assume a downward
mix shift in automobile sizes or the use of diesel
engines. The agency concluded that a standard set at
a level that required substantial mix shifts would not
be economically practicable due to the risk that a
significant number of consumers might defer pur-
chasing new automobiles, resulting in a substantial
sales drop. However, these techniques were viewed in
the 1977 rule as "constituting a safety margin" for
manufacturers in the event that other technological
improvements did not result in sufficient CAFE im-
provements. 42 FR 33545, June 30, 1977. The agency
also noted that some manufacturers might decide to
use some of those measures in place of some of the
ones assumed by the agency's estimates. 42 FR
33545.
As to foreign manufacturers, the 1977 RSP
projected that all but three of them could improve
their average fuel economy levels, without expanded
use of diesel engines, sufficiently to meet the 27.5
mpg standard. With fleet fuel economy improve-
ments from additional diesels included in the foreign
fleet projections, only one manufacturer, Mercedes-
Benz, was projected to fall below the 1985 standard.
It should be emphasized that the agency's 1977 esti-
mates were intended to demonstrate the feasibility of
achieving the 27.5 mpg standard and not to predict
what specific actions the manufacturers would
actually take to achieve that standard. The agency's
estimates were based on one scenario of what the
agency believed manufacturers could do to achieve an
average fuel economy level of 27.5 mpg by 1985.
Manufacturers were free to pursue other courses of
action to achieve the 27.5 mpg fuel economy level.
C. Events From 1977 to 1984
In January 1979, NHTSA presented new feasibility
estimates for each manufacturer for model years
1980 through 1985 in its Third Annual Report to the
Congress on the Automotive Fuel Economy Program
(44 FR 5742, January 29, 1979). The agency stated
that "'(o)n balance, the conclusions reached during
the 1981-84 rulemaking. . .are similar to those
resulting from the most recent assessments. These
assessments indicate that all domestic manufac-
turers can exceed the scheduled standards for each
year through 1985." 44 FR 5757.
NHTSA recognized in its Third Annual Report that
the changes in vehicle design necessary to meet the
fuel economy projections would require tremendous
outlays of capital. The agency also recognized that its
feasibility estimates were dependent on the con-
tinued financial health of the industry and could be
subject to change in the event of a severe economic
downturn.
The Third Annual Report noted that a number of
manufacturers did not agree with the agency's con-
clusion that "(t)he technology is available that will
enable manufacturers to achieve an average fuel
economy of 27.5 mpg without reducing vehicle in-
terior space or significantly affecting performance
and without changing the mix of size classes."
Between January and May of 1979, NHTSA receiv-
ed a number of submissions from Ford and General
Motors on the 1981-84 fuel economy standards for
passenger automobiles asserting that those stand-
ards should be reduced. In response to these submis-
sions, the agency published a document entitled
Report on Requests by General Motors and Ford to
Reduce Fuel Economy Standards for MY 1981-85
Passenger Automobiles, DOT HS-804 731, June 1979.
The report concluded that the standards were techno-
logically feasible and economically practicable and
noted that both companies had submitted product
plans for meeting the standards. Report, p. 14.
Shortly thereafter, the nation was in the midst of
another energy crisis, brought on by events in Iran.
Gasoline prices were rising rapidly, creating
significantly increased consumer demand for small
cars. The U.S. city average retail price for unleaded
gasoline rose from 90 cents per gallon in 1979 to
$1.25 in 1980. (In 1985 dollars, this increase would
have been from $1.28 in 1979 to $1.63 in 1980.) In
light of these changed conditions, the industry an-
nounced that it would significantly exceed the 27.5
mpg standard for 1985. Both Ford and GM, as well as
Chrysler and American Motors, indicated that they
expected to achieve average fuel economy in excess of
30 mpg for that model year. Product plans submitted
to NHTSA by those companies indicated that the pro-
jections assumed significant mix shifts toward
smaller cars and rapid introduction of new technology.
A letter submitted to the agency by Ford in July
1980, however, cautioned that "it is important to em-
phasize that the affordability of many of these pro-
grams is dependent upon substantial improvement in
the market and economic conditions."
On January 26, 1981, NHTSA published an ad-
vance notice of proposed rulemaking (ANPRM) in the
PART 531-PRE 100
Federal Register (46 FR 8056) which addressed the
issue of passenger automobile fuel economy stan-
dards for model year 1985 and beyond. That notice
and an accompanying paper entitled Analysis of
Post-1985 Fuel Economy assumed that manufac-
turers would achieve their announced average fuel
economy goals of over 30 mpg for 1985. The notice
also took note, however, of a deepening economic
crisis then facing the auto industry and possible ef-
fects on financing investments for improving fuel
economy.
On April 16, 1981, NHTSA published in the Federal
Register (46 FR 22243) a notice withdrawing the
ANPRM. The notice stated that "(t)his action is being
taken in recognition of market pressures which are
creating strong consumer demand for fuel-efficient
vehicles and sending clear signals to the vehicle
manufacturers to produce such vehicles. It is expected
that the market will continue to act as a powerful
catalyst. . . ."
Conditions affecting fuel economy changed dra-
matically after 1981, following completing of decon-
trol of domestic oil and other external factors in-
creasing available supplies. Gasoline prices did not
rise as they had in the 1970's but instead declined
over time. This, combined with economic recovery,
caused actual consumer demand to shift back toward
larger cars and larger engines. Data submitted to the
agency by GM and Ford in mid-1983 indicated that
instead of achieving fuel economy well in excess of
the 27.5 mpg standard for MY 1985, they would be
unable to meet the level prescribed by the standard.
Petitions
In July 1984, NHTSA received a petition for
rulemaking from the Center for Auto Safety (CFAS)
and the Environmental Policy Institute (EPI) re-
questing that the MY 1987-90 passenger automobile
average fuel economy standards be increased. The
agency granted the CFAS/EPI petition in a notice
published in the Federal Register (49 FR 46770) on
November 28, 1984. The agency stated that it be-
lieved the issues raised by the petition should be
analyzed in the context of rulemaking and granted
the petition to that extent.
In March 1985, both GM and Ford submitted peti-
tions for rulemaking requesting that NHTSA reduce
the passenger automobile average fuel economy stand-
ard for the 1986 model year and beyond from 27.5
mpg to 26.0 mpg. The petitioners stated that factors
beyond their control, including lower gasoline prices
and resultant greater consumer demand for larger
cars and engines, had reduced their fuel economy
capability. NHTSA granted the GM and Ford peti-
tions in a notice published in the Federal Register (50
FR 12344) on March 28, 1985, and requested public
comments. The agency noted that it was already con-
sidering the CFAS/EPI petition with respect to model
years 1987 and thereafter.
MY 1986 Standard
On September 30, 1985, NHTSA issued a final rule
which reduced the MY 1986 standard from 27.5 mpg
to 26.0 mpg (50 FR 40528, October 4, 1985).
In developing the MY 1986 final rule, NHTSA pro-
ceeded from the premise that because the Cost Sav-
ings Act had imposed a long-term obligation on
manufacturers to achieve a 27.5 mpg fuel economy
level, it would be inappropriate to exercise its discre-
tion to reduce the standard if a current inability to
meet the standard simply resulted from manufac-
turers previously declining to take appropriate steps
to improve their average fuel economy as required by
the Act. The agency therefore evaluated the
manufacturers' past efforts to achieve higher levels of
fuel economy as well as their immediate capabilities.
Based on all available information, including the
public comments received in response to the March
1985 Federal Register notice and a subsequent
NPRM (50 FR 22912, July 22, 1985), NHTSA con-
cluded that GM and Ford, constituting a substantial
part of the industry, had taken or planned ap-
propriate steps to meet the 27.5 mpg standard in MY
1986 and made significant progress toward doing so,
but were prevented from fully implementing those
steps by unforeseen events. A decline in gasoline
prices which began in 1982 had been expected to be
temporary and quickly reverse, but instead con-
tinued. The agency concluded in the MY 1986
rulemaking that, among other things, there had been
a substantial shift in expected consumer demand
toward larger cars and engines, and away from the
more fuel-efficient sales mixes recently anticipated
for MY 1986 by GM and Ford. The agency's analysis
indicated that this shift was largely attributable to
the continuing decline in gasoline prices. NHTSA's
analysis further indicated that the only actions then
available to those manufacturers to improve their
fuel economy for MY 1986 would have involved
product restrictions likely resulting in significant
adverse economic impacts, including sales losses well
into the hundreds of thousands and job losses well
into to the tens of thousands, and unreasonable
restrictions on consumer choice. Based on its analysis
of the relevant statutory criteria, NHTSA deter-
mined that the maximum feasible average fuel
economy level for MY 1986 was 26.0 mpg.
PART 531-PRE 101
NPRM for MY 1987-88
On January 22, 1986, NHTSA published in the
Federal Register (51 FR 2912) an NPRM to amend the
MY 1987-88 passenger automobile average fuel
economy standard, within a range of 26.0 mpg to 27.5
for each model year. The agency invited both written
and oral comments on the proposal. A public meeting
was held on February 19, 1986, in Washington, D.C.,
to receive oral comments.
Public Comments
Comments were received both from parties strongly
supporting a reduction in the MY 1987-88 passenger
automobile CAFE standards and parties strongly op-
posing such action. Many of the parties took positions
similar to those taken in the MY 1986 proceeding.
Both of the petitioners, GM and Ford, continued to
lu-ge that the standards be reduced to 26.0 mpg. GM
argued that it had met or exceeded EPCA's techno-
logical objectives, and that changed circumstances
over the past decade support a determination that the
standards for the 1987-88 model years must be
amended to a level no higher than 26.0 mpg. That
company stated that any higher standard would
threaten substantial production curtailments, job
losses, limitations on consumer choice, and other
economically impracticable consequences that far
outweigh any marginal energy conservation benefit
of a higher CAFE standard. GM emphasized that its
cxurent MY 1987-88 CAFE projections are subject to
uncertainties, and urged that the standards be set at
levels to enable it to generate sufficient carryback
credits to cover unanticipated shortfalls with respect
to the MY 1985 standard.
Ford argued that a 26.0 mpg standard for both
model years is consistent with the uncertainties in
predicting consumer demand and market conditions,
the fuel economy benefits associated with its new
products, and technology and fuel prices. While em-
phasizing the steps it has taken to improve its fuel
economy. Ford stated that it believes an analysis of
the relevant statutory factors demonstrates that the
same major changes in market conditions which led
NHTSA to amend the MY 1986 CAFE standard from
27.5 mpg to 26.0 mpg have an even greater impact on
the ability of full line manufacturers to comply with
the existing MY 1987-88 standards. That company
emphasized the continuing decline in fuel prices,
which it stated is expected to encourage further shifts
toward larger cars and engines, and the increasing
market share of Japanese and other imports in the
small car market. Like GM, Ford argued that any im-
pact on petroleum consumption associated with
reducing the MY 1987-88 standards to 26.0 mpg
would be minimal.
Professor Robert Leone of Harvard University,
commenting on behalf of the Automobile Importers of
America (AL\^), presented an analysis concluding that
MY 1987-88 standards above 26.0 mpg are not feasi-
ble because of constraints on manufacturers' at-
tempts to pursue competitive strategies consistent
with the globalization of the auto industry, not effi-
cient because of the excessive costs incurred as a con-
sequence of restrictions on consumer diversification
options, and not sound energy policy because of possi-
ble adverse effects on energy consumption and
economic efficiency that result from regulation-
induced market distortions.
The National Automobile Dealers Association
(NADA) urged that the MY 1987-88 standards be set
at 26.0, arguing that higher standards would result
in manufacturers restricting the availability of
larger, less fuel-efficient vehicles. According to
NADA, such product restrictions would send an
"economic shock-wave" from dealers to manufac-
turers and through the economy in general.
The Recreational Vehicle Industry Association
(RVIA) supported MY 1987-88 standards of 26.0 mpg,
arguing that any increase beyond that level could
result in a lack of available tow vehicles to pull safety
the four million travel trailers presently on the road.
As in the MY 1986 proceeding, individual Euro-
pean manufacturers supported lowering the stand-
ards for both model years to 26.0 mpg, citing the
significant steps they have taken to improve fuel
economy, increased market demand for larger cars
and engines, and the difficulty that limited-line
manufacturers have in achieving higher average fuel
economy if they do not produce small cars whose fuel
economy can be averaged in with that of their larger
cars.
The U.S. Department of Commerce (DOC) urged
that the MY 1987-88 standards be reduced to 26.0
mpg, stating that based on its analyses of the short-
and long-term competitive challenges facing the U.S.
automobile industry, the changed energy outlook,
and the industry's progress in developing and apply-
ing new technology to improve fuel economy, a CAFE
standard of 27.5 mpg no longer appears to be the
maximum feasible level attainable for those model
years. That Department stated that a large part of
the U.S. automobile industry will not be able to ex-
ceed the current CAFE standards by a margin suffi-
cient to carry back credits to meet an expected short-
fall in MY 1985 unless it reduces its domestic fleet
product offerings and adjusts its output mix. DOC
stated that its analysis indicates that such changes in
product mix and reduced product offerings could
#
PART 531-PRE 102
•
result in significantly reduced automobile production
and employment, and could have economically
damaging consequences for producers, workers, and
consumers.
The Bureau of Consumer Protection, Competition,
and Economics of the Federal Trade Commission
(FTC Staff) submitted a theoretical model and
analysis assessing the economic consequences of a
27.5 mpg standard for MY 1987-88. The FTC Staff
analysis concluded the following:
... in the short-term, the costs borne by society
if the 27.5 mpg standard is imposed would be
substantial. The price of large cars may rise by
as much as 22 percent as large-car production
drops by 1.7 million units. While small-car pro-
duction may rise by an amount between 350,000
and 670,000 units, total domestic car production
nonetheless may fall by more than 900,000
units. The short-term employment effects are
substantial: over 130,000 jobs in the domestic
automobile industry will disappear. Overall, the
sum of the deadweight loss to consumers and
producers and the output losses caused by the
temporary unemployment generated by the
higher CAFE standard would range between a
low of $3.0 billion and a high of $3.5 billion
Based on its analysis, the FTC Staff urged NHTSA to
set the MY 1987-88 standards at 26.0 mpg.
The U.S. Department of Energy (DOE) submitted a
comment focusing on three areas: market uncertain-
ty, technology marketability and cost-effectiveness,
and manufacturers' fuel economy capabilities. That
Department stated that its analysis shows that
market uncertainty has not been a decisive factor by
itself with respect to year-to-year changes in new car
CAFE. DOE commented that the industrywide car
size mix has been relatively stable over the past few
years as fuel prices have continued to decline, but
what has happened is that the mix failed to further
shift toward smaller cars to the degree some
manufacturers had anticipated. With respect to
technology marketability and cost-effectiveness,
DOE stated that its analysis of the cost-effectiveness
of a range of fuel economy technologies found that all
those that it examined were cost-effective at a fuel
cost $1.00/gallon and all were either cost-effective or
neutral at $.75 a gallon. DOE stated that it does not
find any reason to believe that consumers are re-
jecting the concept of technology-based fuel economy
improvements. That Department stated that its
analysis of technology has shown that most cost-
effective technologies have already been adopted by
hoth Ford and GM in their subcompacts and com-
pacts, but many technologies that are cost-effective to
the consumer have not been introduced in several
models in the large and intermediate size classes.
DOE commented that NHTSA should evaluate the
economic feasibility of GM and Ford introducing such
technologies in MY 1987-88. DOE stated that it
estimates Ford and GM could achieve CAFE of be-
tween 27 mpg and 27.3 mpg in 1987 and above 27.5
mpg in 1988, although these estimates are subject to
uncertainties about a number of market-related fac-
tors. DOE did not recommend specific values for the
MY 1987-88 standards, but emphasized its opposition
to setting standards at a level that would require
product restrictions.
Several civil rights organizations and other groups
and individuals interested in minorities urged that
the MY 1987-88 standards be reduced to 26.0 mpg.
The Reverend Jesse Jackson of the National Rainbow
Coalition commented that a reduction is needed as "it
will be necessary to drop from production many fami-
ly line vehicles, and the consequent layoffs would
have a severe adverse impact in the black commu-
nities." Rev. Jackson stated that "(a)s one in every
five assembly line production workers in the auto in-
dustry is black and some 204 dealerships comprising
over 35 percent of the top businesses listed in Black
Enterprise 100 are an integral part of the black
economy, these workers and dealerships contribute
measurably to the economic stability and growth of
the black community." According to that commenter,
"(t)he imposition of the 27.5 mpg standards could
seriously threaten that growth by removing thou-
sands of workers from auto assembly lines."
Benjamin Hooks, Executive Director of the National
Association for the Advancement of Colored People
(NAACP), commented that "(w)ith the minority com-
munity reeling from double digit unemployment,
some caused by the massive layoffs in the automobile
industry, we are cognizant of the fact that unless ef-
forts are made to strengthen oiu- domestic industries,
there is a great likelihood that we will experience ad-
ditional increases [in] unemployment." That com-
menter stated that while the NAACP shares "the
nation's goal of decreasing gas consumption and de-
creasing our dependence on foreign petroleum prod-
ucts, it is our belief that decreasing gas consumption
would not compensate for the possible job loss if the
American automobile industry is forced to comply
with the 27.5 mpg standards." John E. Jacob, Presi-
dent of the National Urban League, commented that
"(o)ur greatest concern is that abandoning the 26
mpg standard could encourage American manufac-
turers to drop or restrict production of family-size
cars, resulting in further job losses in an industry
that has already experienced wrenching unemploy-
PART531-PRE103
ment problems." That commenter added that "the in-
dustry and its suppliers are major employers of black
and minority workers and rules that retard employ-
ment in the industry will harm a black economy im-
pacted by 15 percent unemployment rates." Other
organizations supporting standards of 26.0 mpg in-
clude the National Urban Coalition, the United
Negro College Fund, the Labor Council for Latin
American Advancement, and the Ibero-American
Chamber of Commerce.
The Heritage Foundation urged that the MY
1987-88 standards be reduced to 26.0 mpg, arguing
that the single most important factor affecting the
domestic manufacturers' CAFE, the price of oil, is
beyond the manxifacturers' control, that few benefits
would result from enforcing standards of 27.5 mpg,
and that 27.5 mpg standards would result in signifi-
cant economic harm to the domestic industry and the
nation as a whole.
The Insurance Institute for Highway Safety (IIHS)
argued that CAFE standards can have a potentially
adverse effect on vehicle safety, since vehicle size is
an extremely important factor in safety. That com-
menter urged that the agency consider this issue
when choosing an appropriate CAFE target.
The Competitive Enterprise Institute argued that
the MY 1987-88 standards should be reduced to a
"non-forcing level," which it suggested might be 22
mpg. That commenter argued that fuel economy
standards result both in economic disruptions to the
American economy and in additional fatalities as the
car fleet changes toward smaller cars.
Numerous other commenters, including auto-
motive suppliers; dealers, employees, and stock-
holders of GM and Ford; States and local govern-
ments; almost 100 members of Congress; and private
individuals also supported standards of 26.0 mpg for
MY 1987-88. The States and local governments in-
cluded the Kentucky State Senate and House of
Representatives, the Governor of Kansas, and a
number of mayors and city councils.
Standing in sharp contrast to the comments
favoring a reduction in the MY 1987-88 standards
were those urging that the standards be left at 27.5
mpg. Chrysler argued that NHTSA has two options:
enforcing the law as Congress wrote it or cutting the
ground out from under a vital energy conservation
program by granting an unwarranted reduction in
the standards. That commenter argued that the
changes in market conditions on which GM and Ford
base their present CAFE difficulties were plainly in
evidence as long ago as 1982, and that there is no
reasonable basis on which the agency could now find
that those companies were unable to respond to these
changes by the 1987 and 1988 model years. Chrysler
alleged that GM and Ford chose corporate strategies
that emphasized short-term profit maximization over
a longer-term strategy of meeting the law. That
company cited past and current decisions by GM and
Ford to continue selling what it termed "older
technology rear wheel drive cars," and listed a
number of technological improvements which it
argued GM and Ford could have taken to meet the
standards within the available time.
The Center for Auto Safety (CFAS) argued that
Ford and GM can attain 27.5 mpg in MY 1987-88;
that the agency has grossly overestimated market
uncertainty, particularly with respect to how falling
gasoline prices and foreign competition may affect
CAFE; and that the recent drop in oil prices increases
the chance of yet another energy disruption and
underscores the urgent necessity of maintaining the
current fuel economy standards. With respect to the
issue of possible job losses, CFAS argued that the job
losses NHTSA should really consider are those
associated with Ford and GM moving production of
their small cars outside the United States. That com-
menter noted that Ward's Auto World has reported
that Ford is already planning to outsource 400,000 to
450,000 small cars by 1988, and argued that with
lower fuel economy standards for MY 1987-88, Ford
and GM would take the opportunity to further export
American small car jobs to foreign countries.
The Americans for Energy Independence stated
that the current condition of abundant oil and plum-
meting prices is temporary and that in the cir-
cumstances of today's oil market public policy, in-
cluding CAFE standards, is needed to compensate for
market signals that favor cheap oil.
The State of California, the cities of Los Angeles
and New York, and the Southern California Associa-
tion of Grovernments argued that a reduction in the
MY 1987-88 standards would have a significant
adverse impact on the environment and that the
agency is required to prepare a full Environmental
Impact Statement instead of an Environmental
Assessment for this rulemaking.
Numerous other commenters, including private
individuals and a few members of Congress, also
urged that the standards remain at 27.5
mpg.
Supplemental NPRM
On July 30, 1986, NHTSA published in the Federal
Register (51 FR 27224) a supplemental NPRM
(SNPRM) concerning the argument put forth by GM
that the agency may (or indeed, must) consider a com-
pany's need for carryback credits in determining the
maximum feasible average fuel economy level. The
V
PART 531-PRE 104
notice requested comment on a tentative conclusion
by the agency that the argument should be rejected,
and also asked commenters to address whether their
position on the issue would differ if adoption of the GM
argument would necessitate establishing the standard
below 26.0 mpg for either or both model years.
Agency's Analytical Approach
NHTSA is following the same basic analytical ap-
proach it adopted for the MY 1986 rulemaking. In
that rulemaking, the agency explained its approach
as follows:
"... section 502(aX4) provides that if NHTSA
determines that a level other than 27.5 mpg is
the maximum feasible average fuel economy for
1985 or any subsequent model year, the agency
may change the standard for that year to that
level. If NHTSA were writing on a blank slate
and establishing the MY 1986 standard for the
first time, it would simply evaluate the current
average fuel economy levels of the manufac-
turers and determine what improvements could
be made in those levels between now and the
end of MY 1986. This would involve taking into
account the capabilities of each manufacturer
and considering the four factors listed in section
501(e), i.e., technological feasibility, economic
practicability, the effect of other Federal motor
vehicle standards on fuel economy, and the need
of the nation to conserve energy.
"The agency agrees with Chrysler and other
commenters, however, that the issue is not sole-
ly whether manufacturers are not capable of
meeting the 27.5 mpg standard. Since the Cost
Savings Act imposed a long-term obligation on
manufacturers to achieve a 27.5 mpg fuel
economy level, it would be inappropriate to
reduce the standard if a current inability to
meet the standard simply resulted from manu-
facturers previously declining to take ap-
propriate steps to improve their average fuel
economy as required by the Act. Therefore, the
agency must evaluate the manufacturers' past
efforts to achieve higher levels of fuel economy
as well as their current capabilities.
"On the other hand, the agency does not con-
sider it appropriate to judge each and every
manufacturer product action by 20-20 hind-
sight. In assessing the sufficiency of manufac-
turers' fuel economy efforts, it is necessary to
take account of the information available to
manufacturers at the time product decisions
were being made.
"Manufacturers had an obligation to take what-
ever steps were necessary, consistent with the
factors of section 502(e), to meet the 27.5 mpg
standard. To the extent that manufacturers had
plans to meet the standard which subsequently
became infeasible due to unforeseen events,
NHTSA does not believe the manufacturers
should be charged with a failure to make a suffi-
cient effort.
"The agency's analytical approach thus consists
of first evaluating the maximum feasible
average fuel economy level that manufacturers
are now capable of achieving in MY 1986, tak-
ing into account the four factors of section 502(e)
and second, to the extent that level is determin-
ed to be below 27.5 mpg, assessing the sufficien-
cy of manufacturers' efforts to meet the 27.5
mpg standard, in light of the information
available to manufacturers at the time fuel
economy product decisions were being made and
the four factors of section 502(e)."
GM stated in its comments on the NPRM for MY
1987-88 that it "agrees . . . that such an approach
generally reflects a reasonable interpretation of
EPCA and the Agency's authority to set amended
standards." However, that company also commented
that the "sufficiency" assessment is not required by
the statute and is unnecessary for accomplishment of
the legislative goals. GM argued that the significance
of the original 27.5 mpg standard adopted by Con-
gress should not be "overstated" and that neither
NHTSA nor the manufacturers are compelled to pre-
sent a special justification or "defense" for the
finding that the actual "maximum feasible" level is
now less than 27.5 mpg. That company also com-
mented that the agency's finding in the MY 1986
rulemaking concerning the sufficiency of original
product plans need not be reopened and could be con-
sidered final for purposes of this proceeding as well.
NHTSA believes that evaluating the sufficiency of
efforts to date by the manufacturers to achieve 27.5
mpg CAFE is required under EPCA and the Ad-
ministrative Procedure Act (APA). EPCA's basic
statutory scheme consists of mandatory CAFE
standards, set in advance of a model year in order to
provide the manufacturers time to bring their fleets
into compliance, and civil penalties for failure to
meet the standards. Manufacturers thus have a legal
obligation to pursue over time all feasible means, con-
sistent with the factors of section 502(e), necessary to
PART 531-PRE 105
meet CAFE standards. The primary significance of
the 27.5 mpg level with respect to amending stand-
ards is that it is the law unless and until it is amend-
ed by NHTSA. The agency's amendment authority is
discretionary. Under the APA, a reviewing coxirt
would examine whether the agency had abused its
discretion in exercising that authority. Given the
overall statutory scheme, NHTSA believes, and
thinks that a court would likely find, that it would be
an abuse of discretion for the agency to reduce a
CAFE standard if a current inability to meet such
standard simply resulted from the regulated industry
previously declining to take reasonable steps to meet
the standard.
Moreover, while NHTSA agrees that its evaluation
of this issue in the MY 1986 rulemaking is relevant
to the current rulemaking, it believes that sufficiency
of past efforts must specifically be considered for MY
1987-88. The agency's determinations in the MY
1986 rulemaking with respect to both sufficiency of
efforts made through September 1985 and maximum
feasible average fuel economy level were not
necessarily determinative with respect to MY
1987-88. While the agency determined in the MY
1986 rulemaking that manufacturers had made suffi-
cient efforts to achieve 27.5 mpg for that model year,
which had been overtaken by unforeseen events, it
also acknowledged that with 20-20 hindsight it was
possible to point to various additional actions that
manufacturers could have taken to improve their fuel
economy, e.g., greater penetration of certain fuel-
efficient technologies. The agency also emphasized
that while changes in product plans which may, as an
unintended effect, reduce CAFE are consistent with
the statutory criteria to the extent that they reflect
changes in what is economically practicable, manu-
facturers recognizing the consequences of such
changes must then pursue additional means, consis-
tent with the factors of section 502(e), to meet
standards.
Manufacturer Capabilities for MY 1987-88
As part of its consideration of technological
feasibility and economic practicability, the agency
has evaluated the manufacturers' fuel economy
capabilities for MY 1987-88. In making this evalua-
tion, the agency has analyzed the manufacturers' cur-
rent projections and underlying product plans and
has considered what, if any, additional economically
practicable actions the manufacturers could take to
improve their fuel economy.
A. Manufacturer Projections
GM and Ford have submitted a number of different
projections of their MY 1987-88 CAFE levels over the
past several years, reflecting changing product plans.
This section focuses on the manufacturers' latest pro-
jections, since those projections reflect the manufac-
turers' current product plans. The current MY
1987-88 projections of both GM and Ford are lower
than earlier projections. The differences between
those manufacturers' current product plans and
earlier ones are discussed below in the section en-
titled "Manufacturer Compliance Efforts."
The agency notes that one factor which complicates
a discussion of manufacturer projections is En-
vironmental Protection Agency (EPA) test adjust-
ment credits. Between 1983 and 1985, EPA was
engaged in rulemaking to provide CAFE adjustments
to compensate for the effects of past test procedure
changes. During this time, some but not all manufac-
turers included CAFE adjustments in their projec-
tions based on what they expected EPA to do. EPA
ultimately adopted a formula approach for cal-
culating CAFE adjustments. While the CAFE adjust-
ment differs among manufacturers due to their dif-
ferent vehicle mixes, a typical adjustment during the
MY 1987-88 time period is 0.1 or 0.2 mpg. In the
discussion of manufacturer projections in this notice,
the projections include the EPA test credit adjust-
ment imless it is noted otherwise.
GM projected in July 1986 that it could achieve a
CAFE no higher than 26.3 mpg in MY 1987 and 26.9
mpg in MY 1988. Based on GM's pre-model year
report, NHTSA used a MY 1986 baseline of 26.4 mpg
in analyzing that company's projections. GM's mid-
model year report, submitted on July 31, 1986, con-
firmed that GM's MY 1986 CAFE will be about 26.4
mpg.
While there are a number of changes in GM's fleet
between MY 1986 and MY 1987, they largely cancel
each other out for CAFE calculation purposes. A
number of mix effects reduce the company's CAFE by
0.2 mpg. An additional decline of about 0.1 mpg is at-
tributable to test results, related to EPA testing.
There is also a slight decline related to a draft EPA
Advisory Circular concerning coastdown require-
ments. Largely offsetting these declines are various
technological improvements, a number of which are
engine improvements.
(The details of the changes are subject to a claim of
confidentiality as confidential business information
whose release could cause competitive harm. This is
also true with respect to this notice's discussion of
other manufacturer projections.)
PART 531-PRE 106
i
For MY 1988, GM itself projects a CAFE increase of
0.6 mpg, to 26.9 mpg. More favorable model and
engine mixes result in 0.5 mpg of this projected gain.
A number of technological actions, related to engines
and transmissions, result in a 0.2 mpg gain. Among
other things, as GM testified at the February 1986
public meeting, a new 4-cylinder, 16-valve engine
"will provide a major advance in fuel economy." GM
stated that this 4-cyclinder engine in fact outper-
forms the 6-cyclinder engine and that it will replace
both 6-cylinder and 8-cylinder engines. The agency
notes that GM's projection assumes full consumer ac-
ceptance of this new engine and the fact that technical
difficulties will not arise that could delay introduc-
tion of the engine. Past experience, however, in-
dicates that there are significant uncertainties
associated with major new products, particularly
those incorporating new technology. For example,
GM experienced problems related to consumer accept-
ance and/or technical difficulties for its diesel engine
and its V8-6-4 engine. Should GM experience
technical difficulties that delay introduction of its
new engine, or should there be a lag in consumer ac-
ceptance of the engine, there would be a decline in
GM's projected MY 1988 CAFE. GM's expected
CAFE gains are partially offset by another change
related to improving performance in response to an-
ticipated consumer demand.
• Ford projected in May 1986 that it could achieve a
CAFE level between 26.3 mpg and 27.1 mpg in MY
1987, and between 25.5 mpg to 26.3 mpg in MY 1988.
The material supporting the Ford submission in-
dicates that Ford considers the high ends of its
projected ranges to be its most likely CAFE levels.
The high ends are based on Ford's estimates of
probable consumer demand conditions and incor-
porate certain technical risks which Ford considers
likely to occur. The lower ends represent additional
risks, relating to possible sales mix shifts, beyond
what Ford has already incorporated based on its pri-
mary estimate of consumer demand conditions. These
additional risks include potential increases in larger
car sales, due to drops in gasoline prices, and the
possibility of increasing Korean and Japanese car
sales. Ford's projections do not include the significant
usage of extraordinary marketing and incentive
programs.
Based on Ford's 1986 pre-model year report and
sales data during the model year, NHTSA used a MY
1986 baseline of 26.8 mpg in analyzing that
company's projections. The general magnitude of this
number was confirmed in Ford's mid-model year
report, submitted on July 29, 1986, which indicated
that Ford's MY 1986 CAFE would be between 26.8
mpg and 27.0 mpg. The 26.8 number is 0.5 mpg
higher than the Ford projection NHTSA cited in the
MY 1986 proceeding. In that proceeding, NHTSA in-
dicated that Ford's maximum projected MY 1986
CAFE was 26.3 mpg, which was subject to risks
amounting to 0.5 mpg. See 50 FR 40547 (October 4,
1985). Ford indicated in its mid-model year report
that increased sales of fuel-efficient models/power-
trains had significantly increased its CAFE. A
number of other factors, each having a relatively
small impact on Ford's CAFE, also affected that com-
pany's CAFE.
Ford's high end MY 1987 projection of 27.1 mpg
would represent a 0.3 mpg increase over its MY 1986
CAFE. There are a number of changes expected in
Ford's fleet for MY 1987. Changing sales mix, in-
cluding completion of the replacement of the rear-
drive LTD/Marquis mid-size sedans and station
wagons with the more fuel-efficient Taurus/Sable
front-drive cars, accounts for a CAFE gain of 0.3 mpg.
Technological improvements relating to transmis-
sions and engines account for an additional 0.3 mpg
gain. Partially offsetting these gains, resulting in a
0.3 mpg loss, are certain changes designed to enhance
consumer acceptability of particular products.
Ford's high end MY 1988 projection of 26.3 mpg
would represent a 0.8 mpg drop in its CAFE as com-
pared to MY 1987. Changing sales mix accounts for a
CAFE decline of 0.9 mpg. The changing sales mix
reflects, among other things, fewer sales of
domestically produced smaller cars as Ford sells
larger numbers of imported small cars, and the
timing of model years. Certain added technical risks
account for an additional 0.1 mpg decline. Partially
offsetting these losses, by 0.2 mpg, are technological
improvements in a number of areas.
Chrysler: Chrysler projects that, not including the
EPA test credit adjustment, it will achieve a CAFE of
27.5 mpg in 1987 and 28.6 mpg in MY 1988. By com-
parison, Chrysler projects that it will achieve a CAFE
of 27.4 mpg in MY 1986 (again not including the EPA
adjustment).
For MY 1987, Chrysler's CAFE projection is almost
identical to its MY 1986 projection. Chrysler projects
minor mix shifts and the introduction of the Shadow/
Sundance "upscale" compacts.
For MY 1988, Chrysler's CAFE projection in-
creases by 1.1 mpg. The primary reasons for this in-
crease are technological improvements and model
changes.
Chrysler's projected technological improvements
are comparable to those already used by other manu-
facturers. As discussed in the MY 1986 proceeding,
the primary reason Chrysler's CAFE is higher than
that of GM and Ford is that Chrysler does not com-
PART531-PRE107
pete in all the market segments in which GM and
Ford sell cars.
Other Manufacturers: As part of its analysis for this
rulemaking, NHTSA asked four import car manufac-
turers to provide their latest CAFE projections for
MY 1987-88, as well as lists of planned technological
improvements for those model years. The import com-
panies are Toyota and Honda, which are the two
largest selling imports, and Volvo and Mercedes-
Benz, which are among the largest selling European
imports. Both Volvo and Mercedes-Benz produce a
relatively narrow range of models in the larger and
heavier size classes. In the discussion which follows,
none of the projections includes EPA adjustments.
Both Toyota and Honda project reductions in their
MY 1987-88 CAFE levels as compared to MY 1986,
although they will continue to remain well above
27.5 mpg due to their emphasis on smaller cars.
Toyota projects that its CAFE will decline from 32.2
mpg in MY 1986 to 31.8 mpg in MY 1987 and 31.7
mpg in MY 1988. Honda projects that its CAFE will
decline from 34.2 mpg in MY 1986 to 32.2 mpg in MY
1987 and 32.0 mpg in MY 1988. One reason ac-
counting for the decline in Honda's CAFE is the in-
troduction of the Acura Legend, which is less fuel-
efficient than Honda's other cars. Since that car was
introduced midway through MY 1986, Honda's
CAFE projection for that year does not reflect full
year sales of that car. Both companies project CAFE
declines attributable to mix shifts toward less fuel-
efficient cars, which are partially offset by
technological improvements.
Volvo projects that its CAFE will decline from 26.5
mpg in MY 1986 to 26.2 mpg in MY 1987 and MY
1988. Mercedes-Benz projects that its CAFE will rise
from 21.1 mpg in MY 1986 to 22.7 in MY 1987, and
then decline slightly to 22.5 mpg in MY 1988. Since
Mercedes introduced a more fuel-efficient, 300 series
diesel late in MY 1986, that company's MY 1986 pro-
jection does not reflect full-year sales of that car.
None of the four import manufacturers which pro-
vided detailed information to NHTSA projects any
dramatic changes in CAFE due to improved
technology or model offerings for MY 1987 and 1988.
Technology developments are generally typical of
those already used or projected to be used by the rest
of the industry. The differing CAFE levels are
primarily attributable to the different market
segments served by the manufacturers.
NHTSA has less detailed information for other
manufacturers. American Motors and Volkswagen,
however, are expected to easily exceed 27.5 mpg for
MY 1987-88. Other European manufacturers,
including BMW, Peugeot, Saab, and Jaguar, are ex-
pected, like Volvo and Mercedes-Benz, to be below the
27.5 mpg level for MY 1987-88. By way of example,
BMW and Peugeot projected in their MY 1986 mid-
model year reports that they would achieve a CAFE
of 25.7 and 24.8 mpg, respectively, for that model
year, and Saab and Jaguar projected in their MY
1986 pre-model year reports that they would achieve
a CAFE of 26.0 mpg and 19.1 mpg, respectively, for
that model year.
In analyzing the manufacturers' fuel economy pro-
jections and underlying product plans, NHTSA has
considered the reasonableness of mix assumptions.
The agency has particularly focused on GM's and
Ford's assumptions in this area, since, as discussed
below, those companies' MY 1987-88 projections have
declined in recent years due to changed expectations
concerning mix.
Given the dynamic and interactive nature of (1) an
individual manufacturer's product plan, (2) the
product plans of the manufacturer's competitors, and
(3) consumer demand, analyzing mix assumptions is
a highly complex matter. The agency notes that since
many factors affect mix, sales mix changes between
model years for a particular manufacturer may relate
to several factors and may or may not indicate a
trend with respect to overall consumer demand. For
example, if a manufacturer introduces a new model,
the high level of sales ordinarily associated with a
new model may result in increased sales of whatever
size class the vehicle happens to be, thereby altering
the mix. Similarly, the deletion of particular models
or the gradual aging and resultant reduced populari-
ty of particular models may also result in mix effects.
The agency also notes that, for GM and Ford, the mix
effects generally discussed in this notice reflect only
changes in those companies' domestic production and
not mix effects for their sales as a whole, which in-
clude captive imports. For all of these reasons, mix ef-
fects between model years for a particular manufac-
turer, which can have substantial effects on the
manufacturer's CAFE level, need not result from a
change in overall consumer demand. Thus, even if
total industrywide consumer demand for larger cars
is not increasing, a variety of other economic factors
can adversely affect GM's and Ford's year-to-year
CAFE capabilities.
In analyzing specific manufacturer capabilities
below, the agency has considered whether particular
expectations concerning sales of various models are
reasonable.
CFAS argued in its comment that GM's and Ford's
current projections "undoubtedly" assume an ex-
cessive sales mix for the large-car segment. That com-
menter argued that the assumption that falling oil
prices will have a substantial impact on automakers'
CAFE in 1987 and 1988 is speculative, illogical, ^
PART 531-PRE 108
ignores current market data and contradicts the most
recent statistical data from the Department of
Energy and Oak Ridge National Laboratory. CFAS
cited a DOE report which stated that the large-car
share does not appear to have been affected by the
drop in the real price of gasoline over the past four
years. That commenter stated that Ward's Auto-
motive Reports indicates that the large-car segment
has eroded by 30 percent from just one year ago.
CFAS argued that market trends demonstrate low
actual market demand for rear-wheel-drive cars, and
submitted an article headlined "Rear-Wheel Big Cars
Slipping," which it contended supported its position.
That commenter also argued that consumer demand
for larger engines has decreased since 1981, based on
statistics showing that the sales weighted engine size
in terms of CID has dropped for both large and mid-
size cars.
NHTSA has analyzed GM's and Ford's MY 1987-88
projections and concluded that they do not assume an
excessive sales mix for the large-car segment. In
making this conclusion, the agency has compared
GM's and Ford's projections with the sales experience
for MY 1986. GM and Ford are not assuming signifi-
cantly higher sales of large cars. Similarly, the agen-
cy has concluded that the projections do not assume
an excessive sales mix for rear-wheel-drive cars. Both
manufacturers' product plans for MY 1987-88 in-
dicate a higher percentage of front-wheel-drive cars
than for MY 1986.
With respect to CFAS's argument that it is illogical
that falling oil prices will have a substantial impact
on GM's and Ford's CAFE in MY 1987 and 1988, the
agency agrees that the impact is relatively small as
compared to the CAFE achieved in MY 1986.
However, as discussed below, the impact is substan-
tial as compared to earlier product plans for MY
1987-88 that were made based on expectations of
significantly rising gasoline prices.
CFAS's argument about consumer demand for
larger engines is incorrect to the extent it suggests
that manufacturers have been aided by a drop in de-
mand for larger engines. It is true that engine size in
terms of CID has decreased for large and mid-size
cars as those cars have been downsized. One of the
potential fuel economy benefits of downsizing is that
a smaller engine can be substituted without a reduc-
tion in performance. However, consumer demand for
performance has increased over the past several
years, resulting in higher than expected sales of op-
tional, larger engines, and reducing the fuel economy
benefits that would otherwise have resulted from
ownsizing. GM provided data indicating that its
performance, as measured by horsepower-to-weight
ratio, increased each year between MY 1982 to MY
1986.
As in the MY 1986 proceeding, CFAS also argued
that GM's and Ford's projections incorporate "ac-
counting tricks" to lower their CAFE levels. That
commenter alleged that EPA test information in-
dicates that a number of car models achieve higher
CAFE than projected by those manufacturers.
NHTSA has concluded that there is no basis for
CFAS's allegation that GM and Ford have "artificial-
ly" lowered their MY 1987-88 CAFE projections by
means of "accounting tricks." Among other things,
NHTSA requested that EPA review CFAS's claims
relating to EPA test data. EPA noted that a number
of fuel economy values reported by CFAS were ap-
proximately equal to unadjusted label values which
use early 1986 model year EPA test car list data.
However, EPA pointed out that these values were
determined at the start of the model year and that
the fuel economy of a model type may change be-
tween the time of initial labeling and the time when
a CAFE value is calculated. According to EPA, such
change may be due to one or all of the following fac-
tors: (1) additional vehicle testing is completed after
initial labels have been approved, (2) vehicle running
changes are implemented throughout the course of
the model year, and (3) initial values are calculated
based on projected model type sales. Thus, by the
time the manufacturer's CAFE is calculated, addi-
tional vehicle fuel economy data may have been
generated which may affect the model type fuel
economy. EPA also stated that differences in data re-
quirements between label and CAFE calculations
may also result in discrepancies between fuel
economy label values and those fuel economy values
used in CAFE calculations. EPA noted that while
model type fuel economies require only one set of test
data to represent a broad range of vehicles within a
model t3T)e, a CAFE calculation requires test data
which represent at least 90 percent of a manufac-
tvirer's total vehicle sales. EPA also indicated that,
until the model year in question has ended, only the
manufacturer has access to the potential effects of in-
creased testing, running changes and actual
customer demand on their final CAFE value. Thus,
EPA concluded that "(i)t is quite possible that the
manufacturer's projection is more accurate, due to
this information, than a projected CAFE based on
label values."
NHTSA has used data provided by the manufac-
turers in all of its CAFE proceedings and knows of no
instance where a manufacturer has knowingly pro-
vided inaccurate or misleading information. The
agency notes that as GM and Ford have updated their
PART 531-PRE 109
CAFE projections during this rulemaking proceeding
to reflect the latest available information, they have
taken account of new information or plans which im-
prove their CAFE, as well as new information or
plans which result in lower CAFE.
B. Possible Actions to Improve MY 1987-88 CAFE
The possible additional actions which manufac-
turers can take to improve their MY 1987-88 CAFE
above the levels which are currently projected may be
divided into four categories: further technological
changes (beyond what is contained in their product
plans), increased marketing efforts, restricting the
sale of their less fuel-efficient cars and engines, and
transferring the production of their less fuel-efficient
vehicles, or parts of those vehicles, outside of the
United States. As discussed below, this fourth possi-
ble action would have no effect on overall industry
CAFE or on energy conservation, but would raise the
manufacturer's domestic CAFE.
1. Further technological changes
The ability to improve CAFE by further techno-
logical changes to product plans is dependent on the
availability of fuel-efficiency enhancing techno-
logies which can be applied by available means
within available time.
GM commented that leadtime and other con-
straints preclude significant technological advances
for the 1987 and 1988 model years. Ford similarly
commented that introduction of additional techno-
logical improvements beyond those presently plan-
ned through the late 1980's may not be achievable
because of the short leadtimes. It stated that it
believes the plans presently in place accurately
reflect its CAFE capabilities through the rest of the
decade. Chrysler stated that it agrees that it is essen-
tially too late for meaningful technological changes
to be effected for even the 1988 model year.
At the outset, NHTSA notes the substantial techno-
logical progress that has been made by GM and Ford
since EPCA was passed. As the MY 1986 preamble
noted, manufacturers have over the past decade
reduced average car weight by 1000 pounds, reduced
average engine displacement from 288 CID to 177
CID, increased the use of front-wheel drive from
7 percent to 64 percent, increased the use of transmis-
sions with overdrive and/or lockup from 5 percent to
84 percent, and increased the use of fuel-injected
engines from 5 percent to 54 percent.
Now, in light of limited leadtime, NHTSA agrees
that it is too late to initiate further major techno-
logical improvements for MY 1987-88. For example.
once a new design is established and tested as feasi-
ble for production, the leadtime necessary to design,
tool, and test components such as new body sheet-
metal subsystems for mass production is t}rpically 22 i
to 29 months. Other potential major changes often
take longer. Leadtimes for new vehicles are typically
at least three years.
In analyzing specific manufacturer capabilities
below, however, the agency has considered whether
manufacturers have available capacity to increase
the penetration of particular technologies.
2. Increased marketing efforts
NHTSA addressed the issue of improving fuel
economy by additional marketing efforts in the MY
1986 rulemaking. The agency concluded, based on its
analysis, that GM and Ford have in the past been,
and are now, making efforts to improve the sales of
fuel-efficient cars. The agency determined that the
manufacturers have undertaken extensive and
significant marketing efforts to shift consumers
toward their more fuel-efficient vehicles and options.
Both GM and Ford have undertaken pricing actions
to discourage large-car sales and the purchase of op-
tional, less fuel-efficient engines. Below-market
financing offerings, cash discounts, and noncash con-
sumer and dealer incentives were some of the other
measures undertaken by Ford and GM to increase
their CAFE through marketing actions. '
Chrysler commented that GM and Ford have the
option of adopting marketing measures to boost sales
of their smaller, more efficient vehicles, and shift
sales from their older, less efficient models to their
more efficient and equally large newer products.
The agency has consistently noted that the ability
to improve CAFE by additional marketing efforts,
beyond what the manufacturers have already been
doing, is relatively small. As a practical matter,
marketing efforts to improve CAFE are largely
limited to techniques which either make fuel-efficient
cars less expensive or less fuel-efficient cars more ex-
pensive. Moreover, the ability to increase sales of
fuel-efficient cars relates in part to either increasing
market share at the expense of competitors or pulling
ahead a manufacturer's own sales from the future. A
factor which makes it particularly difficult for the
domestic manufacturers to increase sales of fuel-
efficient cars is the strong competition in that market
from the Japanese and other foreign manufacturers.
The domestic industry is currently facing new com-
petition in small cars from Yugoslavia, Korea, and
Brazil. The Japanese, Korean, and other foreign
manufacturers enjoy a significant cost advantage
over the domestic manufacturers. This cost advantage (|
PART531-PRE110
limits the ability of the domestic manufacturers to in-
crease sales of small cars through price reductions,
since the Japanese, Korean, and other foreign manu-
facturers will be able to match or exceed any price
reduction.
The agency also notes that the fuel efficiency of
modern large cars makes it more difficult for full-line
manufacturers to sell smaller cars. The reason for
this is that there are diminishing returns in terms of
fuel economy from purchasing small cars as the fuel
efficiency of larger cars increases. Similarly, as
gasoline prices have declined, there are diminishing
returns from purchasing more fuel-efficient vehicles.
A problem with pulling ahead sales is that the
manufacturer's CAFE for subsequent years is re-
duced. For example, if a manufacturer increases its
MY 1987 CAFE by pulling ahead sales of fuel-
efficient cars from MY 1988, the MY 1988 CAFE will
decrease, compared with the level it would have been
in the absence of any pull-ahead sales attributable to
marketing efforts. For this reason, a manufacturer
cannot continually improve its CAFE simply by
pulling ahead sales.
Ford indicated in its MY 1986 mid-model year
report that its increased sales of fuel-efficient
models/powertrains, beyond what it had earlier
projected, was largely attributable to incentive,
marketing, and pricing programs that were designed
to increase its CAFE. In light of Ford's MY 1986 ex-
perience, the agency has considered whether addi-
tional marketing efforts, beyond what Ford is already
planning, should be considered as part of "economic
practicability" in setting the MY 1987-88 standards.
Among other things, the agency analyzed confiden-
tial data provided by Ford concerning the costs and
potential fuel economy benefits of extraordinary
marketing efforts. Given the enormous costs and
relatively small and uncertain potential impact on
Ford's CAFE levels, NHTSA has concluded that ex-
traordinary marketing efforts of the type identified
by Ford to improve its MY 1987-88 CAFE levels
would be inconsistent with economic practicability.
This is particularly true since the relative costs for
Ford of improving its CAFE by this means would be
six times that of improving its domestic CAFE level
by converting large cars to imports, a subject which is
discussed below. The agency notes here that such out-
sourcing would result in absolutely no energy conser-
vation benefits but would reduce American jobs. With
respect to the incentives facing Ford for meeting
CAFE standards, however, improving its domestic
CAFE by outsourcing would not only be far less ex-
pensive than extraordinary marketing efforts, but
the benefits to its domestic CAFE level would also be
certain. Thus, the agency is concerned, based on the
factual record of this specific proceeding, that in-
cluding the potential CAFE effect of the extraor-
dinary marketing programs for MY 1987-88 could
encourage Ford to outsource larger car models,
thereby reducing U.S. employment.
3. Product restrictions
Manufacturers could improve their CAFE by re-
stricting their product offerings, e.g., cutting or drop-
ping production of less fuel-efficient car lines or
higher performance engines. However, as discussed
in the preamble to the MY 1986 final rule, such prod-
uct restrictions could have significant adverse eco-
nomic impacts on the industry and the economy as a
whole, and could run counter to the congressional in-
tent that the CAFE program not unduly limit con-
sumer choice. The agency took account of similar con-
cerns in 1977, concluding that standards should not
be set so high as to necessitate the manufactiu^ers
using compliance methods that would result in a sub-
stantial sales drop. See 42 FR 3354445, June 30, 1977.
A number of commenters provided estimates of job
losses and cited other deleterious economic effects
that they believe would occur if the MY 1987-88 stand-
ards remained at 27.5 mpg. For example, the FTC
Staff analysis concluded that over 130,000 jobs in the
domestic economy would disappear if the standards
remained at 27.5 mpg. This conclusion was based on
the assumption that GM and Ford can attain CAFE
of only 25.9 mpg, other than by product restrictions,
and that the two manufacturers could meet the 27.5
mpg standard only by restricting the sales of their
large cars in order to make up the difference between
25.9 mpg and 27.5 mpg.
The agency agrees with the FTC Staff analysis that
serious economic consequences, including significant
job losses, would result if GM and Ford restricted
large car production in order to make significant im-
provements in CAFE.
As in the MY 1986 proceeding, the agency also
notes that there is no sharp dividing line between
marketing efforts and product restrictions. GM and
Ford have already raised the prices of their larger
cars and engines as part of their efforts to improve
CAFE, although sales of larger, optional engines con-
tinued to increase, even as prices have risen. While
very large price increases would likely reduce sales of
less fuel-efficient vehicles significantly, such in-
creases would amount to product restrictions. The
agency believes that expecting manufacturers to
make such very large price increases would be incon-
sistent with Congress' intent that consumer choice
not be unduly limited and with the statutory criterion
of "economic practicability."
PART 531-PRE 111
4. Transferring production of less fuel-efficient cars
abroad.
As discussed above, manufaturers must meet fuel
economy standards separately for their imported and
domestically manufactured fleets. Cars are con-
sidered to be domestically manufactured if they have
at least 75 percent domestic content. The purpose of
this requirement was to attempt to prevent the fuel
economy program from directly encouraging the im-
portation of small, fuel-efficient, foreign-produced
cars. At the time EPCA was passed, the domestic
manufacturers were already importing some fuel-
efficient cars, and Congress was concerned that the
manufacturers might decide to meet fuel economy
standards largely by increasing such imports.
Today, the domestic manufacturers are importing
or planning to import substantial numbers of
smaller, fuel-efficient cars for reasons unrelated to
CAFE. However, the manufacturers could improve
their domestic CAFE by transferring the production
of their larger, less fuel-efficient vehicles to produc-
tion facilities outside of the United States, while still
maintaining relatively high import CAFE by virtue
of their fuel-efficient captive imports.
Ford commented that it has identified an alterna-
tive compliance program for MY 1988 by which it
could improve its domestic CAFE by 0.6 mpg by
sourcing sufficient LTD Crown Victoria and Mercury
Grand Marquis components outside the United
States to transfer these vehicles into its import CAFE
fleet. In Ford's import fleet, those cars would be
averaged in with new small cars Ford is planning to
introduce, enabling Ford to meet or exceed 27.5 mpg
for its import fleet. GM has also indicated that it is
considering outsourcing some of its less fuel-efficient
cars.
Transferring the production of less fuel-efficient
cars abroad would reduce the number of American
jobs while having no effect on improving actual fuel
economy. As discussed in the NPRM, given the com-
plete absence of energy conservation benefits and in
light of a clear congressional intent to avoid having
fuel economy standards directly induce manufac-
turers to increase their importation of foreign-
produced cars, NHTSA will not include such actions
as part of its consideration of the actions manufac-
turers could reasonably take to improve their CAFE.
C. Uncertainties
Consistent with its two prior passenger car CAFE
proceedings, the agency believes it is appropriate to
consider the significant uncertainties that surround
the establishment of CAFE standards and the assess-
ment of projected manufacturer CAFE. Whether it is
characterized as "allowance for unforeseen con-
tingencies" (see 42 FR 33548, June 30, 1977) or "pro-
viding a slight margin for risks" (see 50 FR 40547,
October 4, 1985), NHTSA has traditionally accounted
for uncertainties by providing a slight downward ad-
justment to the CAFE levels that seem achievable in
advance of the model years. This is particularly ap-
propriate when these uncertainties result from
events that are outside the control of the full-line
manufacturers, such as the price of oil, the effect of
new tax laws on consumer and business purchasing
decisions, and increased imports of small cars by
foreign manufacturers. These and other uncertain-
ties are discussed later in this notice.
GM submitted an economic study which concluded
that unexpected changes in the price of gasoline and
import sales statistically explain approximately two-
thirds of that company's past CAFE forecast error.
GM argued that this study shows that the most re-
cent declines in gasoline prices could cause its CAFE
to fall as low as 25.0 mpg in MY 1987 and 25.5 mpg in
MY 1988, and that if errors in forecasting import
volumes are also taken into account, its CAFE could
fall to 24.8 mpg in MY 1987 and 25.2 mpg in MY
1988. That company stated that if its current CAFE
estimates for MY 1987-88 are affected by gas price
changes to the same degree as previous one- and two-
year forecasts, its CAFE will deteriorate to 25.4 mpg
in MY 1987 and 25.8 mpg in MY 1988.
As indicated above, Ford provided ranges of CAFE
projections for MY 1987-88, with the lower ends of the
ranges reflecting risks. Ford's low end MY 1987 pro-
jection of 26.3 mpg and low end MY 1988 projection of
25.5 mpg reflect potential sales mix shifts. These in-
clude potential increases in larger-car sales, due to
drops in gasoline prices, and the possibility of increas-
ing Korean and Japanese car sales. Ford submitted
the results of an economic study of fuel price forecast
errors and errors in the estimation of the small car
market share for the industry which concluded that a
20 percent error in fuel price is typically associated
with a 9 percent error in small-car share of the
market. Ford stated that a shift of this magnitude
could affect its MY 1987-88 CAFE projections by ap-
proximately 0.5 mpg.
CFAS argued that NHTSA has grossly overesti-
mated market uncertainty with respect to consumer
demand and falling gasoline prices and the impact of
foreign competition. CFAS's comments discussed
above with respect to the market mix assumed by
GM's and Ford's projections also relate to this issue.
With respect to foreign competition, CFAS argued
that the rising value of the yen against the dollar has
begun to substantially raise the price of Japanese j
PART531-PRE112
cars, reducing the Japanese cost advantage. CFAS
also argued that imports from Korea and Yugoslavia
will not have a significant market penetration in the
1987-88 model years.
As discussed in the section of this preamble entitled
"Determining the Levels of the (see PRE 127) MY
1987-88 Standards," NHTSA recognizes that
manufacturer CAFE projections are subject to uncer-
tainties. In the timeframe of this rulemaking, the
major uncertainty relates to market mix.
While NHTSA believes the economic models sub-
mitted by GM and Ford are useful in analyzing the
historical effects of lower gasoline prices and in-
creased imports on CAFE, and in demonstrating that
these factors can result in lower CAFE, it does not
consider the analyses to be valid for predicting
specific MY 1987-88 CAFE values. Among other
things, the agency notes that the MY 1986 ex-
perience demonstrates that the models are unreliable
as predictive tools. Both models would have predicted
that GM and Ford would achieve much lower CAFE
in MY 1986 than they projected, due to the lower-
than-expected gasoline prices. As discussed above,
however, this did not occur. Also, the GM model
shows that when examining estimates of import
sales for the succeeding one-to-two-year time period,
there was no statistical significance between errors
in forecasts of import sales and of CAFE levels.
The agency also notes that the models are inac-
curate in that other factors may have a constraining
effect on CAFE changes. For example, very substan-
tial changes in passenger car mix, beyond present
plant capacity, would be required for reductions of
the magnitude cited by GM to occur.
In addition, there are several shortcomings with
GM's statistical model. First, as the author cautions,
the data include multiple estimates within calendar
years and model years. Therefore, the basic assump-
tion of independent, normally distributed errors for
significance testing is not met. Also, there is a ques-
tion as to whether data consisting of "errors in estima-
tion" are actually amenable to standard statistical
analysis. Estimates of future gas prices and of import
sales several years hence are of necessity based on a
large degree of subjective judgment. Such data lack
objectivity and may embody systematic biases.
Finally, the agency notes that GM's latest projec-
tions and underlying product plans for MY 1987-88,
submitted to the agency in July 1986, were made at a
time after the substantial drop in gasoline prices had
occurred and thus reflect the current very low price of
gasoline, and expectations that prices will remain
low for at least the next couple of years.
' While NHTSA does not believe that the GM and
Ford models are reliable for predicting specific CAFE
values, the directional conclusions of the models are
clearly correct. As gasoline prices decrease, the costs
of operating larger cars and of greater performance
decrease. Thus, all other things being equal, con-
sumer demand for larger cars and greater perfor-
mance increases. Similarly, as sales of smaller, more
fuel-efficient imports increase, sales of domestic
smaller cars decrease. NHTSA believes that the GM
and Ford models do help show the sensitivity of
CAFE estimates to changes in certain variables, par-
ticularly gasoline prices, everything else being equal.
D. Manufacturer-Specific CAFE Capabilities
In analyzing manufacturer-specific CAFE capabili-
ties, the agency has focused on GM and Ford, because
they have the lowest projected MY 1987-88 CAFE
levels among manufacturers with a substantial share
of the market.
As discussed above, GM projects that it can achieve
CAFE levels no higher than 26.3 mpg for MY 1987
and 26.9 mpg for MY 1988, and Ford projects that it
can achieve CAFE levels no higher than 27.1 mpg in
MY 1987 and 26.3 mpg in MY 1988. Since Ford's
stated maximum capability for MY 1987 is 0.8 mpg
higher than that of GM, the agency focused on GM in
determining the maximum feasible average fuel
economy level for that model year. Conversely, since
GM's stated maximum capability for MY 1988 is 0.6
mpg higher than that of Ford, the agency focused on
Ford in determining the maximum feasible average
fuel economy level for that model year. As discussed
in the section of the preamble entitled "Determining
the Levels of the MY 1987-88 Standards," the agency
believes that setting standards above the capabilities
of either Ford or GM would not be in keeping with
Congress' direction that standards be set based on
industrywide considerations, given the large market
share of each company.
GM: NHTSA has analyzed GM's MY 1987 max-
imum CAFE projection and underlying product plan.
The only additional technological action identified by
the agency that GM could take to improve its CAFE
within the available leadtime would be to increase
the installation rates of 4-speed automatic transmis-
sions. GM has available capacity to install a higher
number of 4-speed automatic transmissions in certain
mid-size cars, and the agency has concluded that
doing so would not have a significant effect on sales.
However, such increases in 4-speed automatic
transmission usage would add less than 0.1 mpg to
GM's MY 1987 CAFE. The agency has concluded that
other changes, consistent with consumer acceptabili-
ty, to improve fuel economy are not feasible for GM's
MY 1987 fleet. Therefore, NHTSA concludes that
PART 531-PRE 113
GM's maximum CAFE capability is no higher than
26.3 mpg to 26.4 mpg. As discussed elsewhere in this
preamble, that figure is subject to uncertainties
which could lower GM's MY 1987 CAFE level.
Since NHTSA focused on Ford in determining the
maximum feasible average fuel economy level for
MY 1988, the agency did not calculate a specific
CAFE capability for GM. However, the agency does
conclude that GM's MY 1988 CAFE capability ex-
ceeds that of Ford.
Ford: NHTSA has analyzed Ford's MY 1988 max-
imiun CAFE projection and underlying product plan.
One of the reasons Ford's projected CAFE declines
between MY 1987 and MY 1988 relates to the timing
of model years. Under the statute and applicable
regulations, manufacturers have a degree of flexibili-
ty concerning the timing of model years for in-
dividual models. Thus, the model year for different
models may vary in length. The agency emphasizes
that there is nothing wrong with manufacturers
utilizing this flexibility, whether for competitive
reasons, i.e., the timing of new models, or for com-
pliance flexibility. For purposes of considering
amending an existing standard, however, NHTSA
does not believe it would be appropriate to consider
extended production runs. While extended production
runs for certain vehicles can result in lower or higher
CAFE levels for a particular model year, those effects
are offset in the opposite directions in the preceding
or subsequent model year. Thus, changes in CAFE at-
tributable to extended production runs do not reflect
a manufacturer's CAFE capability but are instead
simply a matter of accounting within the control of
the manufacturer. Just as the agency does not con-
sider the ability of manufacturers to improve their
CAFE by extending the model year of their more fuel-
efficient cars, the agency will not consider decisions
by manufacturers to extend the model year of their
less fuel-efficient cars as indicating a reduction in
their fuel economy capabilities.
For purposes of analyzing Ford's MY 1987-88
capabilities in the context of standard-setting,
NHTSA is thus adjusting that company's projections
to "normalize" the timing of the model years. In
doing so, the agency emphasizes that (1) there is
nothing wrong with Ford's planned actions in this
area, and (2) that Ford actually can, if it chooses to do
so, specify the model year for the vehicles in question
consistent with the agency's adjustment. The effect of
the adjustment is to lower Ford's MY 1987 projection
by 0.2 mpg to 26.9 mpg and to raise Ford's MY 1988
projection by 0.1 mpg to 26.4 mpg.
Since NHTSA focused on GM in determining the
maximum feasible average fuel economy level for
MY 1987, the agency did not calculate a specific
CAFE capability for Ford. However, taking account
of the model year adjustment discussed above, the
agency does conclude that Ford's MY 1987 capability
exceeds that of GM.
For MY 1988, the agency has not identified any ad- |^^
ditional technological actions that Ford could take
within the available leadtime to improve its CAFE
level. No other changes, consistent with consvuner ac-
ceptability, to improve fuel economy are feasible for
Ford's MY 1988 fleet. Therefore, NHTSA concludes
that Ford's maximum MY 1988 fuel economy capabil-
ity is no higher than 26.4 mpg. As discussed
elsewhere in this preamble, that figure is subject to
uncertainties which could lower Ford's MY 1988
CAFE level.
DOE commented that it views a number of tech-
nologies as cost-effective for MY 1987-88, and that
NHTSA should evaluate the possibility of additional
uses of these technologies in the MY 1987-88 time-
frame. These include front-wheel drive, aerodynamic
improvements, material substitution, four-speed
automatic transmissions, and fuel injection.
With respect to front-wheel drive, DOE stated that
this technology has been adopted in both large and
intermediate cars by GM, but that company has con-
tinued sales of older rear-wheel-drive models and is
expected to retain most of these models through 1988.
DOE stated that Ford has no front-wheel-drive
models in the large size class. DOE commented that
conversion to front-wheel-drive could provide a 12 ^^
percent increase in fuel economy for a vehicle of^^
constant interior volume and that at $1.00 a gallon
for gasoline the technology appears cost-effective, and
at $0.75 approximately cost-neutral. That commenter
asserted that consumer acceptance of front-wheel
drive has been very favorable, stating that where
both rear- and front-wheel-drive models of similar
size have been offered by GM, the front-wheel-drive
model has been strongly favored. DOE indicated that
one aspect of front-wheel drive that could limit its ac-
ceptability is trailer towing, and suggested that
NHTSA develop data concerning how many large
cars are used for towing.
NHTSA requested that GM and Ford provide data
concerning large car towing use. GM stated that it
does not offer trailer hitches or optional trailer-
towing packages on passenger cars as factory install-
ed equipment and that it was unaware of data defin-
ing the percentage of passenger cars or trucks that
tow trailers. Ford submitted the results of a study in-
dicating that less than 1 percent of its small-car
owners report trailer towing usage, while 3 percent
of Crown Victoria buyers and 5 percent of Grand
Marquis buyers report trailer towing. With
respect to optional trailer-towing packages. Ford
#
PART 531-PRE 114
reported MY 1985 factory installation rates of 0.1 to
0.2 percent on mid-size Thunderbirds and Cougars
and installation rates of 2.3 to 3.3 percent on large
cars. Thus, the limited data available to NHTSA in-
dicate that trailer towing is not a significant pur-
chase consideration for the great majority of larger
car buyers.
GM commented that front-wheel drive provides lit-
tle or no direct fuel economy benefit but merely
facilitates "downsizing." GM argued that since it has
already downsized all of its mid-size and full-size
sedans, including the rear-wheel drive "B," "D," and
"G" cars, the conversion of these cars to front- wheel
drive would yield at best a relatively modest fuel
economy benefit. That company provided compari-
sons between several cars with different engines and
transmissions in arguing that the fuel economy
benefit of fi-ont- wheel-drive is overshadowed by other
factors such as engine size. NHTSA does not agree
with GM's assertion that conversion of cars to front-
wheel drive yields at best a relatively modest fuel
economy benefit. When front-wheel-drive vehicles are
compared to rear-wheel-drive vehicles of equal in-
terior roominess, performance and transmission class
on a systematic basis, the front-wheel-drive vehicles
achieve 10 to 15 percent greater fuel efficiency.
GM and Ford product plans indicate a higher
percentage of front-wheel drive cars for MY 1987-88
than for MY 1986. While the figures for MY 1987-88
are subject to a claim of confidentiality, the agency
can state that GM's front-wheel -drive usage in MY
1986 is approximately 69 percent while Ford's is 55
percent. Given that application of front-wheel drive
entails entire redesigns of cars, NHTSA believes that
front-drive usage beyond planned levels would not be
feasible for GM and Ford in MY 1987-88.
With respect to aerodynamic improvements, DOE
commented that this technology provides a 2- to
3-percent benefit in fuel economy for a 10-percent
reduction in drag coefficient, while being very cost-
effective even at fuel prices of $0.75 a gallon. DOE
stated that while Ford has converted all but the
Panther (Crown Victoria/Grand Marquis/Town
Car) series of cars to aerodynamic designs, GM's
large and intermediate cars have relatively high drag
coefficients, leaving room for improvement.
In general, both GM and Ford plan additional aero-
dynamic improvements as new car designs are in-
troduced or significant sheet metal changes are
made. Using average dynamometer power absorber
unit (PAU) values as a surrogate for aerodynamic
drag, both manufacturers project improvements in
this area by MY 1988. Since significant aerodynamic
drag reductions are generally achieved only when
new cars are introduced or major sheet metal changes
are made, the agency concludes that it is not feasible
for GM and Ford to introduce significant additional
improvements in this area beyond those that are
already planned.
DOE commented that the current technologically
feasible level of material substitution requires use of
high strength low alloy steel (HSLA) and, in some ap-
plications, plastics. DOE stated that material
substitution is cost-effective with gasoline at $1.00 a
gallon but marginal at $0.75 a gallon. DOE asserted
that Ford lags behind GM in this technological area,
arguing that both the Panther and Taurus/Sable
are approximately 8 percent heavier than their
counterparts from GM and Chrysler. According to
DOE, a 250-pound weight reduction in the Ford
Panther would result in a 3.9 percent benefit to fuel
economy, while a 250-pound weight reduction in the
Taurus/Sable would result in a fuel economy benefit
of 5 percent.
While Ford may be able to improve its CAFE by
additional material substitution in the future, there
is insufficient leadtime to make sufficient im-
provements in this area to significantly affect CAFE
for MY 1987-88.
DOE also commented that four-speed automatic
transmissions and fuel injection are already in use in
several models at both Ford and GM, indicating that
both technologies are economically practicable and
accepted by the consumer. DOE indicated that GM
has stated that these technologies will be used in only
a few additional models in the large and intermediate
size classes in MY 1987-88, while Ford is expected to
use both technologies in all applicable large and in-
termediate cars. DOE stated that NHTSA should con-
sider the ability of GM to introduce these tech-
nologies on the remainder of their large/intermediate
cars in setting standards for MY 1987-88.
In general, both GM and Ford are rapidly replacing
carburetors with either throttle-body fuel injection or
individual port fuel injection in their fleets. With
respect to four-speed transmissions, the agency con-
cludes, as it did in the MY 1986 proceeding, that the
additional cost of four-speed transmissions over
three-speed designs would significantly exacerbate
the production cost differential between domestic and
Japanese small cars, and therefore be impracticable.
As indicated above, however, the agency has con-
sidered GM's ability to increase the penetration of
this technology for their large/intermediate cars in
MY 1987-88.
GM commented that every one of its full-size and
mid-size cars is available with a four-speed automatic
transmission, but argued that in the mid-size class
four-speed transmissions may not always be cost-ef-
fective for the consumer. In support of this assertion,
PART 531-PRE 115
GM did not provide data concerning the actual costs
and benefits of its four-speed transmissions but
instead mixed a variety of estimates from NHTSA
and itself concerning factors relevant to costs and
benefits. Based on these various estimates, GM con-
cluded that the average owner would save about $108
in fuel expenses over the expected lifetime of the car,
as compared to costs of $115 to $165 for a four-speed
automatic transmission.
The agency continues to believe that four-speed
transmissions are cost-effective. The cost figures used
in the PRIA and cited by GM were based on manufac-
turer data submitted during the late 1970's. While
the agency has not conducted an independent analy-
sis of the cost of four-speed transmissions, it has spon-
sored research showing that the consumer cost for a
three-speed transmission alone for a 1980 Chevrolet
Citation is $284 in 1982 dollars. The agency does not
believe that the addition of a fourth gear could in-
crease the cost of the transmission by more than 50
percent. The agency also notes that the four-speed of-
fers other advantages, including reduced noise and
vibration at highway speed and enhanced accelera-
tion (as currently being applied). Moreover, NHTSA
notes that this technology has long been identified by
the agency to be an economically practicable method
of improving fuel efficiency.
While, as discussed above, NHTSA has concluded
that GM can install a higher number of 4-speed
transmissions in certain mid-size cars for MY 1987,
inclusion of this factor in GM's capability adds less
than 0.1 mpg to that company's CAFE.
DOE submitted a report prepared by one of its con-
tractors. Energy and Environmental Analysis, Inc.
(EEA), which included projections of GM's and Ford's
MY 1987-88 CAFE levels. The November 1985 report
projected that GM could achieve MY 1987-88 CAFE
levels of 27.8 mpg and 29.2 mpg, respectively, and
Ford 27.75 mpg and 28.05 mpg.
DOE revised these projections to account for the
following four factors: (1) fuel prices could be in the
$0.70 to $0.90 per gallon range in 1987 and 1988, (2)
the Japanese volunteiry import agreement may con-
tinue through MY 1988, (3) GM, Ford, and Chrysler
are pursuing aggressive captive import strategies
that may cause declines in domestic small car sales,
and (4) product plan revisions may cause shifts in
strategy for specific carlines. DOE concluded that the
fuel price decline would primarily increase consumer
demand for acceleration performance, rather than
significantly affecting size class mix. DOE estimated
the change in fuel price projections would reduce
manufacturers' CAFE levels by 0.5 to 0.7 mpg. With
regard to continued export restraint by Japanese
manufacturers, DOE concluded that the potential
domestic manufacturer CAFE increases due to cap-
turing a larger share of the small car market will be
offset by "aggressive" captive import strategies. On
the issue of product plan changes, DOE stated that
Ford is moving to reclassify its large cars as imports
for MY 1988, which will increase that company's
CAFE by 1.4 mpg. DOE also stated that GM "has
delayed its GM-10 body coupe for 1988 reducing fuel
economy by 0.3-0.4 mpg." With all of these changes,
DOE concluded that GM can achieve CAFE of 27.1 to
27.3 mpg in MY 1987 and 28.1 to 28.4 mpg in MY
1988, and that Ford can achieve CAFE of 27.0 to 27.2
mpg in MY 1987 and 28.9 to 29.1 mpg in MY 1988.
DOE noted that the GM estimates include the GM-
Toyota joint venture car (the Chevrolet Nova) as a
domestic car.
NHTSA has analyzed the EEA report and conclud-
ed that it does not provide a basis for determining
that GM and Ford have higher CAFE capabilities
than those discussed above. As part of this analysis,
the agency compared the EEA projections to those of
the manufacturers.
For GM, NHTSA compared the EEA MY 1987-88
projections to those made by GM in April 1986. Since,
as discussed below, the agency separately considered
the reasonableness of the reductions in GM's projec-
tions between April 1986 and July 1986, it concluded
that it was unnecessary to re-perform the analysis
and directly compare the EEA projections to GM's
July 1986 projections. Thus, the GM projections
discussed in this section below represent that com-
pany's April 1986 projections rather than the July
1986 projections discussed above.
EEA's MY 1987 projections of 27.1 to 27.3 mpg for
GM is higher than that company's April 1986 projec-
tion of 26.4 mpg. One reason for the difference is that
EEA assumes that the GM-Toyota joint ventui-e car
produced by New United Motor Manufacturing, Inc.
(NUMMI), the Chevrolet Nova, is included in GM's
domestic fleet. Currently, NUMMI reports its CAFE
separately from GM's domestic fleet. For the same
reasons discussed in the MY 1986 proceeding,
NHTSA concludes that it would be too speculative for
the agency to count this vehicle in GM's domestic
CAFE. See 50 FR 40534-40535. Removing these
vehicles from the EEA projection would reduce it by
0.3 mpg. Differences in EEA's and GM's assumptions
concerning model mix account for another 0.1 mpg of
the difference. The remaining 0.3 to 0.5 mpg dif-
ference between the GM and EEA projections is due
primarily to GM projecting lower carline fuel
economy levels than EEA.
EEA's MY 1988 projection of 28.1 to 28.4 mpg for
GM is also higher than that company's April 1986
projection of 27.4 mpg. As in the case of MY 1987,
PART 531-PRE 116
one reason for the difference is that EEA assumes the
Nova is included in GM's domestic fleet. Removing
these vehicles from the EEA projection would reduce
it by 0.3 mpg. Differences in assumptions concerning
the GM-10 car account for 0.2 to 0.3 mpg of the dif-
ference. GM's April 1986 projection reflected a sales
mix biased more toward fuel-efficient models than
the EEA sales mix. The impact of this assumption
would raise the EEA CAFE projection by 0.2 mpg.
The remaining 0.4 to 0.6 mpg difference between the
two projections primarily reflects^ GM projecting
lower carline fuel economy levels than EEA.
For Ford, the EEA MY 1987 projection of 27.0 to
27.2 mpg is essentially the same as Ford's high end
projection. However, there are a number of dif-
ferences in the underlying product plans. Among
other things, Ford's projected sales mix among
models results in a 0.3 mpg higher CAFE level than
the assvuned EEA mix. The different sales mix is par-
tially attributable to the model year timing issue,
discussed above. This 0.3 mpg gain is offset, however,
by other factors. For one thing, EEA assumed that an
adjustment it made to Ford's MY 1986 CAFE, raising
Ford's CAFE by 0.16 mpg, carries over into MY 1987.
The adjustment in question involved reducing Ford's
stated technological risk by half. As discussed in the
MY 1986 proceeding, NHTSA evaluated Ford's MY
1986 risks and saw no reason to arbitrarily reduce
them by half Moreover, it is incorrect to assume that
any 0.16 mpg "gain" through reducing risks asso-
ciated with MY 1986 CAFE projections carry forward
into subsequent years. For example, some of Ford's
MY 1986 risk related to likely delays in the introduc-
tion of certain technology, which has now been in-
troduced and which is already reflected in Ford's MY
1987 projection. Ford's MY 1987 projection and
underlying product plan also reflect a number of fac-
tors not taken into account by EEA.
EEA's MY 1988 projection of 28.9 to 29.1 mpg for
Ford is substantially above Ford's high end MY 1988
projection of 26.3 mpg. The largest reason for the dif-
ference is that EEA assumes that Ford will reduce
the domestic content of its Panther cars, i.e.. Crown
Victoria, Grand Marquis, and Town Car, in order to
include the cars in its import fleet. While, as
indicated above. Ford is considering such outsourcing
of the Crown Victoria and Grand Marquis as part of
an alternative compliance program for MY 1988, it
has not made the decision to carry out that program.
Moreover, Ford has never indicated that it is con-
sidering outsourcing the Town Car. Another reason
for the difference in the EEA and Ford projections is
different sales mix assumptions, in part reflecting the
model year timing issue. Other differences between
the EEA and Ford projections include EEA's con-
tinuing to carry forward the 0.16 adjustment it made
with respect to mix, a slight difference in the EPA
test adjustment credit, additional technological risks
identified by Ford that were not taken into account
by EEA, and the projection by Ford of lower fuel
economy levels for each carline than EEA. Among
other things, the EEA projection does not reflect a
decision by Ford not to continue a certain techno-
logical change, for reasons related to consumer
acceptability.
NHTSA's analysis of EEA's projections does not in-
dicate any additional means by which GM and Ford
could improve their MY 1987-88 CAFE levels,
beyond those already taken into account above, or
any reason why the manufacturers' assumptions con-
cerning such things as carline fuel economy levels or
mix are incorrect. The agency notes that much of the
difference between EEA's and GM's and Ford's pro-
jections reflects the fact that the companies have
more up-to-date data concerning the fuel economies
their various carlines will achieve.
Manufacturer Compliance Efforts
While there is now insufficient leadtime for GM
and Ford to initiate further significant technological
improvements to achieve CAFE of 27.5 mpg in MY
1987-88, the standards have been in existence since
1975. Thus, as part of deciding whether to exercise its
discretion to reduce the standards to the maximum
feasible average fuel economy level, NHTSA has
evaluated whether the manufacturers made suffi-
cient efforts through September 1986 to meet the
standard.
As discussed in the MY 1986 proceeding and noted
above, the agency does not consider it appropriate to
judge each and every manufacturer product action by
20-20 hindsight. Rather, in assessing the sufficiency
of the manufacturers' fuel economy efforts, it is
necessary to take account of the information
available to the manufacturers at the time product
decisions were being made.
Much of the analysis NHTSA conducted with
respect to this issue in the MY 1986 rulemaking is
relevant to this proceeding. Among other things, the
agency discussed the impressive progress GM and
Ford have made since the mid-1970's in improving
their fuel economy. The agency concluded for pur-
poses of the MY 1986 standard that GM and Ford had
made sufficient efforts through September 1985 to
improve their fuel economy to comply with the Cost
Savings Act, but that those efforts had been over-
taken by unforeseen events whose effects could not be
overcome by available means within the time avail-
able. In particular, due to unexpected declines in the
PART 531-PRE 117
price of gasoline, there had been a substantial shift in
expected consumer demand toward larger cars and
larger engines, and away from the sales mixes that
had been anticipated by GM and Ford for that model
year.
As indicated above, the agency's determinations in
the MY 1986 proceeding concerning sufficiency of ef-
forts are not determinative with respect to MY
1987-88. Thus, the agency has evaluated this issue
for those model years.
As part of evaluating whether GM and Ford made
sufficient efforts to achieve a 27.5 mpg CAFE, the
agency has evaluated changes in MY 1987-88 projec-
tions submitted to it by GM and Ford since late 1983.
NHTSA used the 1983 projections as the baseline for
its evaluation for several reasons. First, both com-
panies projected in 1983 that they would exceed 27.5
mpg CAFE in MY 1987-88. Thus, the agency wanted
to determine why the companies are now unable to
implement their earlier product plans. Also, by late
1983, gasoline prices had been declining for two
years, and the distribution of vehicle sales was
roughly comparable to today's levels. Thus, sales pat-
terns at that time did not reflect the high consumer
demand for smaller cars and cars with less perfor-
mance that was typical of the 1980-81 period when
fuel prices and consumer demand for fuel efficiency
were at their peak.
The approach taken by NHTSA in evaluating the
changes in fuel economy projections is similar to that
recommended by DOE. That commenter suggested
using the 1983 projections as a reference, "since both
Ford and GM had forecasts exceeding 27.5 mpg in
1987 and 1988," and "the 1983 submissions also pro-
vide adequate lead time for introducing new tech-
nologies as products in 1987 and 1988."
In conducting its evaluation, NHTSA selected
several major projections for MY 1987-88 submitted
by GM and Ford since 1983. While GM and Ford sub-
mitted several other projections as well, the agency
concluded that the ones it selected would enable it to
understand the major trends and reasons for the
decline in projected CAFE.
For purposes of consistency, the agency deleted
EPA test credit adjustments in analyzing the dif-
ferent projections, since slightly different assump-
tions about the magnitude of the adjustments were
made by GM and Ford at different times. Thus, the
projections discussed in this section, below, are slight-
ly lower (by 0.1 to 0.3 mpg) than the numbers in the
manufacturers' submissions.
GM: GM projected in December 1983 that it could
achieve a CAFE of 27.6 mpg for MY 1987. In a carry-
back plan dated November 1984, GM raised its MY
1987 projection to 28.1 mpg. A mix shift toward more
fuel-efficient models accounts for 0.3 mpg of the in-
crease. A certain product plan change accounts for
the other 0.2 mpg increase.
Between November 1984 and February 1985, GM
lowered its MY 1987 projection by 0.2 mpg, to 27.9
mpg. Mix effects account for 0.1 mpg of the decline,
while a product plan change and miscellaneous
reasons account for the other 0.1 mpg decline.
GM lowered its MY 1987 projection by an addi-
tional 1.7 mpg between February 1985 and April
1986. Almost half, about 0.8 mpg, of the decline
relates to changes in vehicle mix. Model mix changes
account for 0.5 mpg of the decline, while engine mix
changes account for 0.3 mpg of the decline. The re-
maining 0.9 mpg CAFE decline is distributed among
a large number of items. About 0.4 mpg is due to GM
achieving lower-than-anticipated fuel economy levels
on certain engines, 0.1 mpg is due to GM not achiev-
ing expected gains related to a certain technology, 0.1
mpg is associated with increased axle ratios on
several carlines, and 0.1 mpg relates to a one-year
deferral of a technological change due to an inability
to complete tooling in a timely manner. The remain-
ing 0.2 mpg decline is attributable to a number of
minor factors, each affecting GM's CAFE by well
under 0.1 mpg.
Between April 1986 and July 1986, GM lowered its
MY 1987 projection by an additional 0.1 mpg, due to
a number of reasons, each of which has only a small
impact on CAFE.
For MY 1988, GM projected in December 1983 that
it could achieve a CAFE of 29.3 mpg. While the agen-
cy does not have a November 1984 projection from
GM for MY 1988 as it does for MY 1987, GM's
February 1985 projection for MY 1988 was still as
high as 29.2 mpg. Thus, as with GM's MY 1987 pro-
jection, the major decline in GM's projected MY 1988
CAFE occurred after February 1985.
Between February 1985 and April 1986, GM lowered
its MY 1988 projection by 2.0 mpg. Relatively little
of this change relates to mix effects. There is only a
slight loss, 0.1 mpg, due to engine mix changes. A
certain product plan change accounts for a 0.2 mpg
decline in CAFE, minor changes in average test
weights result in a 0.1 mpg decline, lower-than-ex-
pected gains related to transmissions result in a 0.1
mpg decline, lower-than-expected gains related to
tires result in a 0.1 mpg decline, increased axle ratios
result in a 0.2 mpg decline, deferring certain plans
relating to technology due to, among other things,
durability concerns, results in a 0.2 mpg decline, a
slowdown in the application of a certain technology to
avoid disrupting production capacity results in a 0.1
mpg decline, and miscellaneous technical changes
result in a 0.1 mpg decline. The remaining 0.8 mpg
PART 531-PRE 118
decline appears to be due almost exclusively to
engines achieving lower than anticipated fuel
economy levels.
Between April 1986 and July 1986, GM lowered its
MY 1988 projection by an additional 0.5 mpg. The
most significant factors accounting for this reduction
include mix changes, the inability to make certain
product plan changes as fast as once thought possible,
increased test weight for certain cars, and changes
related to increasing performance.
Ford: For MY 1987, Ford projected in October 1983
that it could achieve a CAFE of 29.3 mpg. Between
October 1983 and December 1984, Ford lowered its
projection by 0.8 mpg, to 28.5 mpg. Only about 0.1
mpg of the drop is attributable to carline mix shifts.
Failure to achieve anticipated gains from engine pro-
grams accounts for 0.4 mpg of the decline, and weight
increases in certain planned carlines contribute 0.3
mpg to the decline. Net increases in average dyna-
mometer power absorber settings account for a 0.1
mpg decline. Minor shifts in engine mix and applica-
tions offset 0.1 mpg of the decline.
In February 1985, Ford projected a MY 1987 CAFE
of 28.6 mpg. While this projection was only slightly
different from its December 1984 projection, 0.1 mpg
higher, there were a number of major changes in
Ford's product plan. One product plan change ac-
counts for a 0.1 mpg gain, certain marketing actions
account for a 0.3 mpg gain, miscellaneous reasons ac-
count for another 0.1 mpg gain, a deletion of tech-
nology in certain cars accounts for a 0.2 mpg loss, and
a change related to model year timing results in a 0.2
mpg loss.
Between February 1985 and May 1986, Ford
lowered its MY 1987 projection by 1.7 mpg, to 26.9
mpg. Mix shifts, including engine mix shifts, account
for 0.6 mpg of the decline. Changes in dynamometer
power absorber settings, attributable to both new test
information and a draft EPA advisory circular con-
cerning coastdown testing, account for an additional
0.5 mpg decline. A decision by Ford not to include the
potential efforts of extraordinary marketing and in-
centive programs in its basic projections accounts for
0.3 mpg of the decline. Newer assessments of fuel
economy data account for another 0.3 mpg of the
decline. A number of other minor changes, each hav-
ing an impact of less than 0.1 mpg, offset each other.
These include minor losses due to test weight in-
creases, losses due to axle and transmission final
drive ratio changes, and gains due to reductions in
anticipated technical risks.
For MY 1988, Ford projected in October 1983 that it
could achieve a CAFE of 29.0 mpg. Between October
1983 and December 1984, Ford lowered its projection
by 1.5 mpg, to 27.5 mpg. The most significant reason
for this decline, causing a 1.0 mpg decline, is a mix
shift away from smaller cars toward larger cars. This
is attributable to certain product plan changes and
model year timing. Increased weight on certain plan-
ned carlines accounts for an additional 0.3 mpg
decline. Increases in projected dynamometer power
absorber settings cause a 0.2 mpg fuel economy
decline. Lower-than-anticipated fuel economy gains
on certain engines cause a 0.3 mpg decline. Minor
engine mix shifts and changes in engine applications
offset part of these declines, by 0.1 mpg. Also, a
number of miscellaneous changes also partially offset
the declines, adding 0.2 mpg to Ford's CAFE.
Between December 1984 and February 1985, Ford
raised its MY 1988 projection by 0.1 mpg, to 27.6
mpg. A product plan change adds 0.1 mpg to Ford's
CAFE, and certain marketing actions add 0.2 mpg.
These gains are partially offset by a deletion of
technology, which causes a 0.2 mpg decline.
Between February 1985 and May 1986, Ford
lowered its MY 1988 projection by 1.4 mpg, to 26.2
mpg. Mix effects cause a 0.2 mpg decline, changes in
dynamometer power absorber values account for a
0.4 mpg decline. Ford's decision not to include the
potential effects of extraordinary marketing and in-
centive programs in its projections accounts for a 0.2
mpg decline, and newer assessments of fuel economy
data account for a 0.3 mpg decline. An additional 0. 1
mpg decline is attributable to slight increases in
weight on certain vehicles. Minor changes in axle
ratio and transmission final drive ratios cause a 0.1
mpg decline. The remaining 0.1 mpg CAFE decline is
caused by a number of miscellaneous factors.
In evaluating the reasons for changes in GM's and
Ford's MY 1987-88 CAFE projections since late 1983,
it is apparent that both manufacturers are generally
still planning to apply the same technologies to their
fleets as planned in late 1983. The two major reasons
for the decline in GM's CAFE projections have been
net engine and model mix shifts, and engine and
transmission improvement programs not yielding
projected gains. The great majority of the factors
reducing Ford's CAFE projections have been due to
net shifts in projected sales for models and engines,
engine efficiency improvements not yielding projected
gains, and new models not meeting initial weight
targets. Thus, the major reasons for the decline in
both GM's and Ford's MY 1987-88 CAFE projections
have largely been beyond those companies' control.
As indicated above, Chrysler alleged that GM and
Ford chose corporate strategies that emphasized
short-term profit maximizations over a longer-term
strategy of meeting the law. That company cited past
and current decisions by GM and Ford to continue
selling what it termed "older technology rear wheel
PART 531-PRE 119
drive cars," and listed a number of technological im-
provements which it argued GM and Ford could have
taken to meet the standards within the available
time. Chrysler specifically cited, in part from the
PRIA, refinement of the basic discrete ratio auto-
matic transmission and its further penetration into
the fleet, additional weight savings, material
substitution, refinement of aerodynamic drag, engine
modifications, and additional front-wheel drive. That
commenter argued that the agency had not addressed
"the reasons why GM and Ford failed to make the
technological improvements identified as feasible by
the agency," or clearly acknowledged that "the ques-
tion is whether the changes were economically prac-
ticable if begun on a timely basis, not whether they
are still practicable today." Chrysler also argued that
its experience demonstrates that a 27.5 mpg standard
is feasible, and that a prudent manufacturer would
build a margin of error into its product plans for un-
foreseen circvunstances.
Many of the issues raised by Chrysler were also
raised by that company in the MY 1986 proceeding.
Much of the agency's discussion of Chrysler's com-
ments in that proceeding remains relevant.
First, the legislative history of the Cost Savings Act
clearly indicates that NHTSA has the authority to
reduce fuel economy standards. The determination of
maximum feasible average fuel economy level is
made as of the time of the amendment. The agency
has emphasized, however, that it would not reduce a
standard if a current inability to meet the standard
simply resulted from manufacturers previously
declining to take reasonable steps to improve their
average fuel economy as required by the Act.
With respect to Chrysler's argument that its ex-
perience demonstrates that a 27.5 mpg standard is
feasible, the primary reason that GM's and Ford's
cafe's are lower than Chrysler's is that Chrysler
does not compete in all the market segments in which
GM and Ford sell cars. Unlike GM and Ford, Chrysler
does not offer any vehicles that are defined by EPA
as "large cars" or "large station wagons." These
vehicles, which account for 20 to 25 percent of Ford's
and GM's sales, are generally less fuel-efficient than
the size cars Chrysler sells. As discussed in the MY
1986 proceeding, Chrysler vehicles often have fewer
fuel economy enhancing technologies than those of
GM or Ford. While a particular manufacturer may
choose to comply with fuel economy standards by
various strategies, including not producing large
cars, the agency would not consider standards which
require full-line manufacturers to stop producing
large cars to be consistent with the statutory
criterion of economic practicability, since such stan-
dards would unduly restrict consumer choice.
In February 1985, both GM and Ford projected that
they would meet or exceed a 27.5 mpg CAFE in MY
1987-88. Since that time, both manufacturers' CAFE
projections have fallen, for reasons largely beyond
their control. Given the timing, the manufacturers
have had insufficient leadtime to make major techno-
logical changes in their product plans to offset the
declines in their projected CAFE. For example,
Chrysler's comment stated that "(i)t is important to
recognize that the leadtime required to implement
these improvements in engines, transmissions, aero-
dynamics and rolling resistance, is usually three to
four years."
CFAS, as well as Chrysler, focused on decisions by
GM and Ford to continue selling cars that they once
planned to delete. As the agency stated in the MY
1986 proceeding, the fact that GM and Ford may at
one time have considered deleting certain models
does not commit those manufacturers to now do so.
Manufacturers' product plans are constantly
changing over time in response to market conditions.
Given the dynamic nature of the market, what is
economically practicable at one time may not be so at
another.
While Chrysler argued that the changes in market
conditions on which GM and Ford base their present
CAFE difficulties were plainly in evidence as long
ago as 1982, the record is clear, as discussed in the
MY 1986 proceeding, that the drop in gasoline prices
during the early 1980's was expected to be tem-
porary. See 50 FR 40541-40542. For example, con-
verting past gasoline price forecasts to constant 1985
dollars. Data Resoiu-ces, Inc. (DRD forecast in the
spring of 1983 that gasoline would cost $1.35 in 1986,
$1.41 in 1987, and $1.45 in 1988. In the winter of
1983-84, DRI was still forecasting that gasoline
would cost as high as $1.33 in 1986 and 1987, and
$1.38 in 1988. By comparison, DRI forecast in May of
1986 that gasoline would cost $0.91 in 1987 and $0.92
in 1988.
NHTSA has not concluded, however, that a decision
by a manufacturer to continue selling certain cars in-
definitely, without redesigning the cars to incor-
porate new technology, is reasonable under all cir-
cumstances. As a general matter, if application of
fuel efficiency enhancing technology is required to
meet fuel economy standards and is economically
practicable and not inconsistent with the other fac-
tors of section 502(e), the manufacturers must make
such changes.
The agency believes, however, that several factors
are relevant to GM's and Ford's decisions to continue
the sale of models that they once planned to delete.
First, GM and Ford did not rely on the discontinua-
tion of models to avoid making technological changes
PART 531-PRE 120
and then request that the CAFE standards be re-
duced in order to avoid having to carry out their
plans. Rather, as is clear in the record, GM and Ford
made their decisions in response to changes in con-
sumer demand. Indeed, as noted in the preamble for
the MY 1986 final rule, Chrysler has acknowledged
doing the same type of thing.
Second, by the time GM and Ford made their deci-
sions to continue the sale of certain models, there was
insufficient time to design new replacement models
or make significant technological improvements to
the older models. In some instances, the manufac-
turers had nothing in their product plans to replace
the vehicles. In other instances, the older vehicles of-
fered a variety of attributes which significant
numbers of consumers prefer to newer models which
were once intended as replacement vehicles. GM com-
mented, for example, that some of its customers
prefer a 5 percent larger passenger compartment
(comparing its "G" car to its "A" car) or a 30 percent
larger trunk (comparing its "B" car to its "H" car).
Third, as discussed above, both GM and Ford have
continued to make significant technological im-
provements in their fleets and have had reasonable
plans to meet CAFE standards. In a situation where
unforeseen events, including changes in consumer de-
mand or changes in the competition's product offer-
ings, overtake a manufacturer's reasonable product
plan to comply with a standard, the agency does not
consider it consistent with the Act to "hold" the
manufacturer to carrying out a product plan that has
become economically impracticable. GM noted that
the cars that CFAS has argued should be discon-
tinued accounted for more than 25 percent of its pro-
duction last year, or 14.8 percent of total U.S.
passenger car production.
On the other hand, as it becomes apparent that ad-
ditional application of technology, such as further
penetration of front- wheel drive or additional use of
material substitution, is necessary to meet CAFE
standards, manufacturers must initiate efforts to
redesign and replace their older cars as necessary to
meet such standards. Given the leadtime required to
make significant technological improvements, how-
ever, it is not surprising that the dramatic change in
consumer demand which has taken place has affected
GM's and Ford's ability to comply with the 27.5 mpg
standard for more than one model year.
With respect to Chrysler's comment that a prudent
manufacturer would build a margin of error into its
product plans for unforeseen circumstances, the agen-
cy notes that at the time GM and Ford planned their
basic MY 1987-88 fleets, they reasonably projected
cafe's exceeding 27.5 mpg by a comfortable margin.
One other issue which is relevant to considering
the sufficiency of manufacturer efforts to meet the
27.5 mpg standard relates to captive imports. DOE
commented that one factor limiting GM's and Ford's
ability to improve their CAFE is their "aggressive"
captive import strategies. NHTSA notes first that
such captive import strategies have no effect on
energy conservation. While GM's and Ford's domes-
tic CAFE levels are affected by whether a particular
car they sell is an import or not, the country of origin
of the car does not affect the amount of gasoline it
consumes. Moreover, GM and Ford are pursuing
their captive import strategies due to market condi-
tions that have nothing to do with CAFE. Due to
substantial cost advantages of producing small cars
abroad, imports comprise a large portion of the small
car fleet. GM's and Ford's captive import strategies
are primarily in response to vigorous competition
from abroad. Indeed, if GM and Ford did not import
particular small cars, other manufacturers would
likely import additional small cars. For all of these
reasons, the agency does not believe that GM's and
Ford's captive import strategies are unreasonable
with respect to their efforts to meet CAFE standards
for their domestically produced cars.
Other Federal Standards
EPA published a final rule in the Federal Register
(50 FR 27172) on July 1, 1985, to provide CAFE ad-
justments for the effects of past test procedure
changes. The final rule adopted a formula approach
for calculating CAFE adjustments. As indicated
above, the manufacturer projections discussed in this
notice include the effect of the EPA adjustment
credit, unless noted otherwise. Due to the formula ap-
proach, the specific value of the credit may vary for
different model years and among manufacturers. A
typical credit for the MY 1987-88 time period would
be 0.1 or 0.2 mpg.
Another issue related to EPA's test procedure con-
cerns dynamometer power absorber (DPA) values.
Both GM and Ford commented that their CAFE pro-
jections have declined as a result of higher DPA
values under a draft Advisory Circular (A/C 55C)
issued by EPA. NHTSA contacted EPA concerning
this issue. EPA indicated in a letter dated August 8,
1986, that, as a result of its increased oversight and
enforcement concerning vehicle road-load horsepower
specifications, manufacturers' projected CAFE levels
could decline. EPA indicated that as part of re-
minding the manufacturers of what it believes their
responsibility has been all along under the regula-
tions it is considering revisions to its advisory Cir-
cular No. 55B which deals with the general subject of
road-load determination. That agency noted, however.
PART 531-PRE 121
that it expects to continue its increased enforcement
whether or not it updates its advisory guidance.
NHTSA has accounted for a CAFE decline due to
revised road-load values in assessing manufacturers'
capabilities. The latest projections provided by GM
and Ford include the effects of the revised road-load
values.
EPA has not announced any plans to modify its cur-
rent exhaust emission control requirements, ap-
plicable to cars, for hydrocarbons, carbon monoxide,
and oxides of nitrogen. Therefore, the agency has not
considered any further impacts on fuel economy from
control of these pollutants. The agency has previously
analyzed the effects of the current requirements on
fuel economy.
EPA added a requirement for control of particulate
matter in MY 1985, which will be tightened in MY
1987. While this requirement applies to all vehicles,
the only current production engine which will have
difficulty meeting this requirement is the diesel. EPA
has indicated that there is a 1 to 2 percent fuel
economy penalty for diesel -powered vehicles which
require a particulate trap to comply with the stan-
dard. However, it is believed that only a very small
fraction of diesel vehicles will need traps for
compliance.
GM has discontinued production of its larger
domestically produced diesels, which comprised less
than 1 percent of its total MY 1985 sales, and Ford
does not offer a domestically produced diesel. While
both of these manufacturers offer cars with imported
diesel engines, the sales of the vehicles are very
small. Also, the engines are of small displacement
and therefore will probably not require the use of a
particulate trap for compliance. Therefore, the more
stringent particulate standard is not expected to have
any significant effect on their CAFE levels.
Mercedes-Benz and BMW have argued that the par-
ticulate standard is affecting their CAFE capability.
BMW stated that the 1986 California Air Resources
Board standard for particulates prevented it from
selling any diesel cars in California, a loss of approx-
imately 30 percent of total California sales. Mercedes
asserts that the California standard and the 1987
Federal standard would require the use of diesel
engine trap technology in order to achieve com-
pliance. Mercedes argued that Federal and state
emissions regulations that became effective in the
past several years and will become more stringent in
MY 1987 and 1989 have forced technological changes
that were and will be very detrimental to the fuel effi-
ciency of the diesel engine. That company argued
that the impact on fuel economy is much more signifi-
cant than projected by EPA. According to Mercedes,
there is a penalty of 3.9 mpg, which is a 13 percent
penalty rather than the one to two percent penalty
estimated by EPA. Mercedes did not provide any data
in support of its position.
NHTSA notes that diesel sales have fallen drasti-
cally in recent years, declining from a peak of 6.0 per-
cent of the total fleet in 1981 to 0.9 percent of the fleet
in 1985. This decline has been primarily due to de-
clining gasoline prices and a decline in the price ad-
vantage of diesel fuel as compared to unleaded gaso-
line. The decline in the popularity of diesels has little
or nothing to do with emissions standards. However,
the more stringent particulate standard does result
in additional development and certification expenses
for those manufacturers that choose to use diesels.
The agency is not aware of any plans on the part of
EPA to promulgate noise regulations during the MY
1987-88 time period and therefore does not anticipate
any attendant fuel economy penalties.
As discussed in the FRIA, several relatively recent
changes in Federal safety and damageability re-
quirements may affect CAFE. These include a May
1982 amendment to the Part 581 Bumper Standard
reducing the standard's impact protection re-
quirements and thereby permitting weight savings;
several amendments to the agency's lighting stan-
dard, which permit greater aerodynamic efficiency;
and the fact that the automatic restraint re-
quirements of standard No. 208, with attendant
adverse weight and fuel economy penalties, are being
phased in beginning in MY 1987.
The FRIA concludes that the potential weight
savings associated with the Bumper Standard
amendment could produce a gain of 0.2 to 0.5 mpg.
However, both GM and Ford have indicated that
market demand has led them to retain 5 mph bumper
systems (generally Phase D on most of their product
lines. Consequently, relatively little weight has been
removed from the GM and Ford fleets due to the
change in the standard. The agency endorses the
voluntary use of 5 mph bumper systems as consistent
with congressional intent in enacting Title I of the
Motor Vehicle Information and Cost Saving Act,
Bumper Standards. Accordingly, the agency will not
consider the possible 0.2 to 0.5 mpg gain associated
with potentially lighter bumpers as part of its con-
sideration of "technological feasibility."
With respect to the amendments to the agency's
lighting standard, the FRIA concludes that the 2 to 3
percent improvement in aerodynamic drag associated
with the new headlamp assemblies now permitted by
the standard could produce a 0.4 to 0.9 percent im-
provement in fuel economy. For a 27.5 mpg fleet, this
would equate to a 0.11 to 0.25 mpg improvement in
CAFE if all vehicles in the fleet employed the new
lamp designs. Several manufacturers are utilizing
PART 531-PRE 122
•
these headlamps. For MY 1986, Ford is using aero
headlamps on its Taurus/Sable, Escort, Tempo, SVO
Mustang, and Lincoln Mark VII. Similarly, GM is
also making extensive use of composite headlamps
and Type LF/UF sealed beam headlamps for MY
1986. The fuel economy benefits from these new
headlamp assemblies are factored into the manufac-
turers' CAFE projections.
The FRIA concludes that the weight penalty asso-
ciated with the phase-in of the automatic restraint re-
quirements is likely to be 2.2 to 3.0 pounds in MY
1987 and 5.5 to 7.5 pounds in MY 1988. This assumes
that the principal means of compliance, at least in-
itially, will be through the use of automatic belts. The
estimated weight penalty is for illustration purposes,
since the impact on an individual manufactiu"er will
depend on the choice of occupant protection system,
weight efficiency of the particular design, size of vehi-
cle, and other factors. The weight penalty is expected
to have only a very minor impact on CAFE.
Safety Considerations
CEI argued that NHTSA should set the MY 1987-88
standards at what it termed a "non-forcing level,"
perhaps 22 mpg, based on safety considerations. That
commenter argued that a standard of 27.5 mpg, as
compared to one of 26.0 mpg, would result in an in-
crease of 300 to 400 fatalities per year. In making this
argument, CEI assumed, among other things, that
GM and Ford would need to reduce the weight of
their cars by an average of 200 pounds, or 6.5 percent,
to improve fuel economy from 26.0 to 27.5 mpg. CEI
argued further that NHTSA should consider safety
effects from a market-based baseline rather than
from 26.0 mpg. That commenter suggested that 22.0
mpg would be a reasonable market-based baseline,
citing an estimate by Robert W. Crandall of the
Brookings Institution that CAFE did not begin to af-
fect the market until MY 1981, when the standard
was 22.0 mpg. According to CEI, a 27.5 mpg standard
might entail considerably more than 1,000 additional
fatalities per year as compared to a 22.0 mpg
standard.
IIHS also commented on the relationship of CAFE
standards and safety, arguing that CAFE standards
can have a potentially adverse effect on vehicle safety
because vehicle size is an important factor in safety.
IIHS stated that occupants of smaller cars are at
much greater risk of death and injury than occupants
of larger cars, citing data from Maryland and the
agency's Fatal Accident Reporting System.
Failure Analysis Associates also submitted a com-
ment on safety, arguing, among other things, that
downsizing has resulted in missed opportunities to
avoid significant numbers of passenger car injuries
and fatalities. That commenter stated that further
"enfoi-ced" downsizing through more stringent CAFE
standards would cause an additional toll in fatalities
and injury compared to the alternative of maintain-
ing the current size/weight sales picture.
NHTSA agrees that there is a relationship between
safety and car size and weight, in a crash. The rela-
tionship is a very complex one, however. For example,
while it is true that smaller cars are generally less
crashworthy for their occupants than larger ones,
everything else being equal, they are also less ag-
gressive to occupants of other vehicles. Both effects
must be considered in order to determine the effect on
fatalities if the market share of smaller vehicles in-
creases. Moreover, in analyzing accident data, it is
extremely difficult to adequately separate out rele-
vant factors other than car size and weight that affect
safety. These include both vehicle differences, i.e.,
vehicle factors related to safety other than size and
weight, and driver differences, e.g., age differences,
etc.
While the agency recognizes the relationship be-
tween safety and vehicle size and weight, in a crash,
it nonetheless concludes that CAFE standards in the
range of 26.0 mpg to 27.5 mpg need not have a signifi-
cant effect on safety. In the MY 1986 proceeding,
NHTSA addressed the issue of safety as follows:
The agency does not believe that there is any
basis for concluding that a 26.0, or even a 27.5
mpg standard, would represent any significant
increased risk of injury or death for passenger
car occupants. It is true that in a crash between
cars of different sizes, everything else being
equal, the occupants of the smaller car are at
greater risk of injury. However, as large cars
are reduced in size, the mass differences be-
tween large and small cars diminish, along with
the potential for injury. In addition, the agency
is taking steps to ensure that smaller vehicles
provide sufficient crash protection. Also, small
cars may have crash-avoidance advantages com-
pared to heavier vehicles. Passenger car occu-
pant deaths have in fact dropped from 28,200 in
1978 to 23,500 in 1984, a 17 percent decline.
This occurred during a time when the average
new car's weight was reduced by 1000 pounds.
50 FR 40547 to 40548.
The agency notes first that CEI's arugment that
CAFE standards higher than 26.0 mpg will result in
decreased safety is premised on the assumption that
GM and Ford can achieve CAFE higher than 26.0
mpg only by "forcing" consumers to purchase a
higher-than-preferred percentage of smaller cars.
Similarly, IIHS's and Failure Analysis Associates'
PART 531-PRE 123
concern that CAFE standards may affect safety
assumes that CAFE standards will require con-
sumers to purchase smaller cars.
During the MY 1987-88 time period, GM and Ford
are largely improving their fuel economy through
technological improvements other than weight reduc-
tion. Between 1986 and 1988, GM's fleet is expected
to be reduced in average weight by only 1.5 percent
while Ford's is expected to increase in average weight
by 3 percent.
There are a number of specific methodological
shortcomings to CEI's analysis. First, CEI assumes
that fuel economy is improved only by reducing
weight, and thus does not account for improved
technology. Thus, the weight differences between a
26.0 mpg fleet and a 27.5 mpg fleet are exaggerated.
Second, CEI applies the weight differences, along
with other factors, to the total of highway fatalities,
including pedestrian fatalities, bicyclist deaths,
single vehicle heavy truck accidents, etc. Clearly, a
reduction in passenger car weight will not result in a
greater likelihood of death for pedestrians, bicyclists,
and occupants of tractor-trailers which run off the
road. At most, CEI should have applied its factors to
only passenger car occupant deaths, a number which
is approximately one-half of that used by CEI. Third,
the CEI estimate of 300 additional fatalities is
predicated on a model used in a recent Brookings In-
stitution publication. Regulating the Automobile.
This model shows a statistically significant effect for
a change in passenger car weight on pedestrian,
bicyclist, and other nonpassenger car occupant
fatalities. However, the model shows that the effect
on passenger car occupant fatalities is not statistical-
ly significant. In addition to being counterintuitive,
the model argues against the very premise of CEI's
claim, that vehicle weight will be a major deter-
minant of highway fatalities.
Moreover, while manufacturers have used and are
generally planning to continue to use weight reduc-
tion as a means of improving fuel efficiency, NHTSA
believes that this weight reduction is largely related
to consumer demand. CEI itself stated that in the
absence of CAFE standards, "the general downsizing
of the American passenger car fleet . . . accompanied
by improved energy efficiency. . .for cars in all size
categories would have occurred in any case." While it
is true that consumers place less emphasis on fuel
economy and more emphasis on such things as size
and performance when gasoline prices are low, fuel
efficiency remains an important factor in consumers'
purchasing decisions. For example, GM commented
that a recent market research program shows that
even though stabilization of fuel prices had caused
new car intenders to shift their preferences toward
more acceleration performance, their preference
toward expected fuel economy increases had also
risen. Thus, even if there were no CAFE standards,
there is no reasons to assume that consumers would
return to leirger and heavier cars.
For all of these reasons, NHTSA concludes that
there is no basis for the fatality estimates provided by
CEI. While the agency has concluded that CAFE
standards in the 26.0 mpg to 27.5 mpg range need
not have a significant effect on safety, it recognizes
that to the extent that manufacturers may in the
short run, be able to improve their CAFE
only by product restrictions, individual consumers
could be denied the opportunity to purchase the
larger, safer cars that they may desire. Moreover, it is
possible CAFE standards above 27.5 mpg could have
a significant effect on safety, even in the longer run,
to the extent that they might "force" consumers into
significantly smaller and lighter cars. Thus, were
NHTSA to consider setting standards above 27.5 mpg
in the future, it agrees that the issue of safety would
warrant further attention.
The Need to Conserve Energy
Since 1975, when the Energy Policy and Conserva-
tion Act was passed, this nation's energy situation
has undergone a great deal of change. In particular,
oil markets have been deregulated and the Strategic
Petroleum Reserve (SPR) has been established.
The United States imported 15 percent of its oil
needs in 1955. By 1977, the import share was 46.4
percent and the value of imported crude oil and re-
fined petroleum products was $67 billion (stated in
1984 dollars). While the import share of total
petroleum demand declined after that year, the cost
continued to rise to a 1980 peak level of $93.2 billion
(1984 dollars). By 1985, the import share had declined
to 28.7 percent at a cost of $48.3 billion (1984 dollars).
Through 1985, imports from OPEC sources declined,
from a high of 6.2 million barrels per day and 70.3
percent of all imports in 1977 to 1.8 billion barrels per
day and 36.2 percent of imports in 1985. As imports
have shifted to non-OPEC sources, the United States'
supply of petroleum has become less vulnerable to the
political instabilities of some OPEC countries, as
compared to the situation in the mid-1970's.
By 1985, the U.S. was much more energy indepen-
dent than it was a decade ago, when Congress
established the fuel economy standards program.
From 1976 to 1984, energy efficiency in the U.S.
economy improved by 21 percent (1984 Annual
Energy Review, Energy Information Administration,
U.S. Department of Energy, p. 41) and passenger car
petroleum consumption was actually lower than it
PART531-PRE124
t
was in 1975, even though travel has increased 25 per-
cent since then. Domestic oil production was higher
in 1985 than it was in 1975, total imports have drop-
ped 18 percent, and on a net import basis the value of
the nation's imported oil bill fell nearly 50 percent
from 1980 to 1985. The amount of imported oil from
OPEC has dropped by 71 percent since the peak of
1977. As a percentage share of GNP, the net oil im-
port bill fell from 2.8 percent in 1980 to 1.2 percent in
1985. In addition, the price of oil is now fully decon-
trolled, permitting the market to adjust quickly to
changing conditions, and the SPR is well on its way
to being filled. The 451 million barrels in the SPR at
year-end 1984 were equal to 141 days or 38.6 percent
of non-SPR crude oil imports that year. Thus, by any
measure, the nation is currently in a stronger energy
position than it was a decade ago.
According to Energy Information Administration
(EIA) and Data Resources, Inc. (DRD, projections,
however, domestic production is expected to decline
from a stable level of 10.6 MMB/D to between 7.5
MMB/D (DRI) and 8.3 MMB/D (EIA) by 1995. Net im-
ports are expected to rise from 4.2 MMB/D to between
7.7 MMB/D (EIA) and 9.9 MMB/D (DRD by 1995.
NHTSA thus recognizes that available projections in-
dicate a general consensus that imports may ap-
proach or exceed 50 percent of U.S. petroleum use by
1995. Future projections about petroleum imports
are, of course, subject to great uncertainty. Indeed, oil
imports are very difficult to project beyond a year or
two. For example, the EIA's 1977 Annual Report to
Congress projected that net oil imports by the U.S.
would, in the "reference case," reach 11 million
barrels per day by 1985. Net imports in 1985 actually
turned out to be 4.2 million barrels per day, less than
half the level predicted in 1977.
Chrysler argued that long-term risks remain with
respect to the nation's need to conserve energy and
alleged that NHTSA is apparently prepared to act on
the assumption that America no longer has an
energy problem and no longer needs to woiry about
conservation. That commenter argued that abundant
supplies and falling prices are killing all incentive for
oil exploration and energy conservation, and quoted
former Energy Secretary James R. Schlesinger as
saying that "(t)he United States is now in the process
of creating a substantially increased oil dependency
for the 1990's. . . . We are sowing the seeds of the next
oil crisis." Chrysler also argued that it is no answer
that the nation can trust the market because oil
prices have been decontrolled. That commenter
stated that in 1975, when the Act was passed. Con-
gress was concerned that artificially low prices would
send the wrong signals about long-term conservation
needs. Chrysler argued that oil prices are again arti-
ficially low— to a large extent because one major
foreign supplier has decided to "swamp" the market
with supply in an effort to discipline other producers,
thereby hoping to restore the conditions that pro-
duced two previous oil crises.
The Center for Auto Safety argued that the recent
drop in oil prices clearly increases the chance of yet
another energy disruption and underscores the
urgent necessity of maintaining the current fuel
economy standards. That commenter also argued
that the agency had overemphasized the added
security provided by the current level of the SPR.
CFAS quoted a report prepared by the National
Academy of Sciences for the U.S. Department of
Energy as indicating that given the demand and pro-
duction rates projected for the 1990's, the SPR will
provide only a 50 days supply instead of the current
100 days supply.
GM commented that the risk of increased imports
does not imply any increased vulnerability to a new
energy crisis. That commenter stated that it is not at
all certain, or even likely, that the primary source of
these increased imports would be Persian Gulf oil,
noting that the potential exists for further increases
in supply from non-OPEC countries such as Mexico,
Norway, Columbia, India, and others.
NHTSA agrees with GM that if imports do once
again reach the 50 percent level, the nation will re-
main in a much stronger energy position than was
the case in the mid-1970's. The nation's sources of oil
imports are more diverse and less vulnerable to dis-
ruption, the nation's energy efficiency is much
higher, there is greater ability to substitute alter-
native sources of energy, and the absence of price con-
trols permits the market to more easily respond to
changes in supply and demand.
As discussed below, the need to conserve energy is
only one of four factors that NHTSA is required to
consider in establishing fuel economy standards at
the maximum feasible level. NHTSA rejects
Chrysler's allegation, however, that the agency
assumes that America no longer has an energy prob-
lem and no longer needs to worry about conservation.
The prospect of increasing oil imports does raise con-
cerns about national security and balance of pay-
ments difficulties. Moreover, quite apart from the
issue of whether oil imports are likely to increase in
the next decade, petroleum is a vital natural resource
which is nonrenewable.
While the agency agrees that the need to conserve
energy is important, it also notes that Congress' goal
of energy conservation by improved automotive fuel
efficiency has largely been realized. In MY 1986, for
the first time, the average fuel economy of the total
fleet of new cars will in fact exceed 27.5 mpg. A major
PART 531-PRE 125
reason that GM and Ford are having difficulty
achieving CAFE of 27.5 mpg, apart from the unex-
pected drop in gasoHne prices since their MY 1987-88
product plans were developed, is that the smallest,
most fuel-efficient GM and Ford cars are largely im-
ports, which cannot be included in their domestic
CAFE. The reason for producing small cars abroad
relates to cost advantages, rather than anything
having to do with CAFE. However, with respect to
the need to conserve energy, it makes no difference
whether a manufacturer produces a fuel-efficient car
abroad or in the United States.
Amending the MY 1987-88 Standards
As discussed above, section 502(aX4) provides that
the 27.5 mpg standard can be amended if the agency
determines that some other standard represents the
maximum feasible average fuel economy level. In
making this determination, the agency must consider
the four factors of section 502(e): technological
feasibility, economic practicability, the effect of other
Federal motor vehicle standards on fuel economy,
and the need of the nation to conserve energy.
A. Interpretation of "Feasible"
Based on dictionary definitions and judicial inter-
pretations of similar language in other statutes, the
agency has traditionally interpreted "feasible" to
refer to whether something is capable of being done,
taking into account the four statutory criteria:
technology, economic practicability, the effect of
other Federal standards, and the need of the nation to
conserve energy. The statute does not elevate any one
of these criteria above the others, nor does it provide
guidance to the agency on weighing any of these
criteria more heavily than any others. For example,
the agency's determination of the "maximum feasi-
ble" standard cannot be that level which is merely
the maximum technologically feasible without
regard to the economic practicability of such a level.
Also, as discussed elsewhere in this notice, the agen-
cy has traditionally included a small margin to ac-
count for technological and economic risks when
establishing CAFE standards, and believes this is
consistent with the statutory instruction to consider
and balance all four criteria.
B. Industrywide Considerations
The statute does not expressly state whether the
concept of feasibility is to be determined on a
manufacturer-by-manufacturer basis or on an in-
dustrywide basis. Legislative history may be used as
an indication of congressional intent in resolving am-
biguities in statutory language. The agency believes
that the Conference Report to the 1975 Act, quoted
below, provides guidance on the meaning of "max-
imum feasible average fuel economy level." In the re-
cent case of Center for Auto Safety v. NHTSA,
upholding the MY 1985-86 light truck fuel economy
standards, the United States Court of Appeals (D.C.
Circuit) indicated that this language is relevant to
determining congressional intent concerning the set-
ting of fuel economy standards. (D.C. Cir. No.
85-1231, June 20, 1986, slip op. at p. 34)
The Conference Report to the 1975 Act (S. Rep. No.
94-516, 94th Cong., 1st Sess. 154-5 (1975)), states:
Such determination [of maximum feasible
average fuel economy level] should therefore
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 manufacturers.
Such difficulties, however, should be given ap-
propriate weight in setting the standard in light
of the small number of domestic manufacturers
that currently exist, and the possible implica-
tions for the national economy and for reduced
competition association [sic] with a severe strain
on any manufacturer. . . .
It is clear from the Conference Report that Con-
gress did not intend that standards simply be set at
the level of the least capable manufacturer,
regardless of market share. Rather, NHTSA must
take industrywide considerations into account in
determining maximum feasible average fuel
economy level. On the other hand, the Conference
Report indicates that the circimistances of the
domestic manufacturers are to be given appropriate
weight in assessing "industrywide considerations."
C. The MY 1987-88 Standards— Overview
Based on the analysis discussed above, NHTSA has
determined that GM can achieve a MY 1987 CAFE
no higher than 26.3 mpg to 26.4 mpg, and Ford can
achieve a MY 1988 CAFE no higher than 26.4 mpg.
These figures are subject to a number of uncertainties
not already accounted for. Ford's MY 1987 capability
is somewhat higher than GM's, while GM's MY 1988
capability is somewhat higher than Ford's.
Chrysler, American Motors, Volkswagen, Hyundai,
and the Japanese manufacturers are expected to
PART 531-PRE 126
achieve CAFE levels above 27.5 mpg, due to the mix
of vehicles they sell. The European manufacturers,
including Mercedes-Benz, Volvo, BMW, Peugeot,
Saab, and Jaguar will generally achieve CAFE levels
below those achievable by GM and Ford in MY
1987-88.
In proceeding from an analysis of manufacturer
CAFE capabilities to the setting of standards,
NHTSA notes that the setting of maximum feasible
average fuel economy standards, based on the con-
sideration of the four required factors of section
502(e), is not a mere mathematical exercise but is a
matter of agency judgment that takes account of
many considerations relevant to those factors, in-
cluding uncertainties. NHTSA has concluded that
26.0 mpg is the maximum feasible average fuel
economy level for the 1987-88 model years. This level
balances the small potential petroleum savings
associated with higher standards against the
substantial difficulties of individual manufacturers,
especially domestic manufactiu*ers, facing potentially
higher standards and the impacts of such standards
on the automotive industry and the economy as a
whole.
D. Economic Impacts of Not Amending the 27.5
mpg Standard
NHTSA's analysis indicates that the only actions
available to GM and Ford in the near-term to achieve
CAFE levels of 27.5 mpg, i.e., for MY 1987-88, would
involve a combination of drastic product restrictions
and foreign outsourcing of their larger cars. Such
product restrictions would result in significant
adverse economic impacts and restrict consumer
choice to an unreasonable degree.
The unacceptability of the product mix that would
result from GM and Ford achieving 27.5 mpg CAFE
in MY 1987-88 from product restrictions would likely
result in sales losses well into the hundreds of
thousands of units and resultant job losses well into
the tens of thousands. The agency considers these ef-
fects to be beyond the realm of economic practicabili-
ty. To the extent that these economic impacts could
be partially offset by the foreign outsourcing of larger
cars, there would be absolutely no energy conserva-
tion benefits, but American workers would lose jobs.
Moreover, any combination of such product restric-
tions and foreign outsourcing would significantly in-
crease an already serious U.S. balance of trade prob-
lem. The U.S. trade deficit reached $148.5 billion in
1985 and is running at an annualized rate of $175
billion for 1986. Through the first seven months of
1986 the imbalance in trade in passenger cars ac-
counted for 22.5 percent of the total U.S. trade deficit.
While foreign outsourcing would involve a direct
transfer of U.S. jobs overseas, product restrictions
would permit foreign manufacturers, which achieve
higher CAFE due to their emphasis on smaller cars,
to substantially increase their penetration of the
larger car market at the expense of the domestic
manufacturers.
E. Determining the Levels of the MY
1987-88 Standards
In setting the standard at 26.0 mpg for both model
years, NHTSA has followed its traditional approach
of setting standards at the level achievable by the
least capable manufacturer with a substantial share
of sales, and considering risks in determining that
level. For MY 1987, GM is the least capable
manufacturer, with a capability no higher than 26.3
mpg to 26.4 mpg. For MY 1988, Ford is the least
capable manufacturer, with a capability no higher
than 26.4 mpg.
1 . Consideration of risks
In determining the levels of the MY 1987-88 stand-
ards, NHTSA considered the appropriate margin, if
any, to account for risks beyond the manufacturers'
control. Standards set at 26.0 mpg provide a small
margin, i.e., 0.3 mpg to 0.4 mpg, to account for risks.
This is similar in magnitude to the risk factor
adopted by NHTSA in setting the MY 1986 standard,
and substantially smaller than the downward ad-
justments provided in 1977 for the MY 1981 stand-
ard. In light of differences in this record when com-
pared to the MY 1986 rulemaking, the agency con-
sidered whether a smaller risk factor, or no risk fac-
tor at all, should be provided. While there was a
significant risk in the MY 1986 rulemaking that
gasoline prices would continue to fall, that risk is
smaller now. Also, despite the unexpectedly lairge
magnitude of the drop in gasoline prices that did
occur during MY 1986, GM and Ford were able to
achieve or exceed their projected CAFE levels.
Another difference in the record is the risk of in-
creased Japanese imports. That risk is lower now
than in the MY 1986 rulemaking given the decline in
the value of the dollar that has occurred, although, as
discussed below, currency values could change again.
While NHTSA recognizes the differences in the
record, it also recognizes the inherent difficulties in
evaluating the potential impact of the uncertainties
that do exist. It, therefore, concludes that a small, i.e.,
0.3-0.4 mpg, risk factor should continue to be pro-
vided. NHTSA has traditionally provided a small
margin for risks related to uncertainties and believes
PART 531-PRE 127
it is appropriate to continue to do so for MY 1987-88.
In setting the MY 1981-84 standards, for example,
NHTSA specifically provided an allowance for unfor-
seen contingencies. See 42 FR 33548, June 30, 1977.
The agency noted then that this approach was consis-
tent with that of the Senate Commerce Committee in
establishing the 1980 average fuel economy stand-
ard. That committee concluded that a fuel economy
goal of 21 mpg, representing a 50 percent improve-
ment over 1974, was reasonable. In reaching this
decision, the committee considered a report in-
dicating that up to a 63 percent improvement was
possible. The committee concluded, however, that
calling for a 50 percent improvement would provide
"ample cushion for unforeseen contingencies." See S.
Rep. No. 94-179, 94th Cong., 1st Sess. 10 (1975).
It is true, of course, that in amending the MY 1987
standard just prior to the start of the model year and
the MY 1988 standard approximately a year before the
start of the model year, there is less technological
uncertainty than when standards are set several yeai's
in advance. On the other hand, there is now little or no
opportunity for the manufacturers to plan further tech-
nological changes as a margin of safety to rely on if un-
foreseen contingencies arise. Thus, if such events did
occur, the manufacturers might only be able to achieve
the levels of the standards by product restrictions.
Past experience clearly indicates that there is a
significant risk that unexpected uncertainties may
occur, which could lower expected CAFE values. A
comparison of manufacturers' CAFE estimates as
shown in their pre-model year reports, which are sub-
mitted in late December of the then-current model
year (i.e., at a time when many vehicles are well into
production), and their mid-model year reports, which
are submitted in late July, near the end of the model
year, illustrates the difficulties in predicting CAFE
values even at the beginning of a particular model
year. For example, GM's and Ford's MY 1982-83
CAFE levels declined by an average of 0.7 mpg be-
tween the pre-model year report and the mid-model
year report. While GM's and Ford's CAFE levels
have not declined between those two reports for the
last two model years, past experience nonetheless in-
dicates the risk that such declines may occur.
Similarly, manufacturers are imable to predict
sales levels for particular carlines or for their overall
fleets with precision, even at the start of the model
year. For example, in Ford's MY 1986 fleet, Crown
Victoria/Grand Marquis sales were 10 percent higher
than expected, Mustang/Capri sales were 12 percent
higher than expected, Thunderbird/Cougar sales
were almost 16 percent higher than planned, and
EXP sales were almost 16 percent below pre-model
year report projections. In GM's MY 1985 fleet,
G-special (e.g., Buick Regal) sales were 9 percent
higher than projected in the pre-model year report,
and P-body (Pontiac Fiero) sales were lower than pro-
jected by more than 1 1 percent.
The primary risk affecting GM's and Ford's MY
1987-88 CAFE projections is that their car and
engine mix assumptions could turn out to be incor-
rect. NHTSA's analysis indicates that potential mix
shifts could reduce GM's MY 1987 CAFE to 26.0 mpg.
As discussed below, such mix shifts could be triggered
by events beyond GM's control. For example, 10 to 25
percent increases in sales of less fuel-efficient carlines
and 10-20 percent decreases in sales of more fuel-
efficient carlines, ranges consistent with those ex-
perienced recently, could result in a 26.0 mpg CAFE
for GM's MY 1987 fleet. Such shifts are consistent
with GM's capacity constraints. This scenario is
based on the assumption that average fuel economy
for each carline remains unchanged from GM's basic
projection. K there were shifts toward less fuel-
efficient engines within many of these carlines, a mix
shift of even lesser magnitude could result in CAFE
of 26.0 mpg for GM's MY 1987 fleet. Ford has pro-
vided data indicating that mix shifts could reduce its
MY 1988 CAFE to below 26.0 mpg.
Outside events, beyond the manufacturers' control,
could change consumer demand, resulting in the mix
shifts toward larger cars and larger engines postu-
lated above. Should gasoline prices fall below the
values estimated by the manufacturers, there could
be a downward effect on CAFE. While industry
analysts are not currently projecting lower gasoline
prices, these same analysts have been unable to ac-
curately predict gasoline prices for the past several
years. Moreover, while consumers have not respond-
ed as strongly as might have been expected to the fall
in gasoline prices during 1986, there could be a lag in
consumer response to a fall of that magnitude, e.g.,
consumers may have expected a compensating up-
ward trend, which has not materialized, or they may
hold off purchasing a less fuel-efficient car until they
feel more certain fuel prices will stay relatively low.
The agency notes that Ford's gasoline price projec-
tions are somewhat higher than those of GM. Thus,
should GM's estimates prove correct, there will be a
downward pressure on Ford's projected CAFE.
Another uncertainty related to consumer demand
is how MY 1987-88 sales may be affected by the ex-
tremely low interest rates offered by the manufac-
turers toward the end of MY 1986. For example, some
consumers who would have purchased MY 1987-88
cars may have made their purchases earlier as a
result of the low financing, while other consumers
might delay purchasing cars in the hope that such
financing plans will be offered again.
PART 531-PRE 128
Still another uncertainty is how car buyers may
respond to expected changes in the tax code. Changes
of particular relevance include the lower individual
tax rates and repeal of deductions of sales taxes and
interest on auto loans. It is very difficult to predict
the impacts of these changes on consumer demand for
cars. With respect to the overall impacts of the
legislation, Senate Finance Committee Chairman
Robert Packwood, the tax bill's chief Senate author,
recently commented that he had rejected a proposal
for extensive hearings on the bill, noting that "(y)ou
could hold three or four weeks of hearings and have
15 economists in to testify and we still wouldn't know
the effect of it." See Washington Post, September 14,
1986, p. K7. The tax bill does create economic uncer-
tainties, however, which could affect consumer de-
mand for cars and thus CAFE. For example, the
lower tax rates for individuals could increase after-
tax income and thereby stimulate consumer demand
for more expensive, less fuel-efficient cars, resulting
in lower CAFE. Or, the repeal of deductions on in-
terest for car loans and sales taxes on car purchases
could have a disproportionate impact on sales of
economy cars, whose buyers may be more sensitive to
the overall costs of purchasing and operating a car,
and more expensive cars, whose buyers may be less
sensitive to such costs. As with many of the other
uncertainties, NHTSA is not attempting to predict
any particular impact from the tax bill with respect
to consumer demand for cars in general or CAFE in
particular, but is instead pointing out the kinds of
market uncertainties that could have an impact on
CAFE. The agency also notes that, quite apart from
how consumer demand may change in response to
particular events, consumer demand is by its nature
highly uncertain, since it is largely dependent on
changing tastes and preferences that may defy
precise analysis.
GM and Ford may also face greater than expected
competition from foreign manufacturers of small
cars, which could reduce the sales of the domestic
manufacturers' more fuel efficient cars, thereby
lowering their CAFE levels. While the yen has been
rising in value against the dollar, currency values are
always subject to fluctuation, and that trend could
reverse. Also, the Japanese manufacturers may ad-
just to the currency changes and, in light of their still
significant cost advantage, compete more aggressive-
ly in the U.S. market despite a higher yen. The agen-
cy notes that Toyota has recently called for the end of
restraints on Japanese car exports and also suggested
that by 1988 it could compete at an exchange rate of
140 yen to the dollar as compared to the current 155
rate. See Washington Post, August 28, 1986; Wall
Street Journal, September 9, 1986. Finally, Korea
could sell more cars than expected. Hyundai, which
became the leading Canadian import within two
years of introduction into that country, is selling well
during the first year of sales in the United States.
While Hyundai was a late introduction for the 1986
model year, it has recently been selling ars at a rate of
about 20,000 units per month. It was reported in the
July 7, 1986, issue of Automotive News, p. 20, that,
after just four months in the United States, Hyundai
sold the most cars sold by any importer in the first six
months of operations. The same issue of Automotive
News, at p. 20, reported the following with respect to
total expected Korean vehicle production:
"The Korean government is predicting a 60 per-
cent increase in capacity over 1985 to 600,000
units this year. Next year, capacity will in-
crease by another 60 percent to nearly 1 million
units, according to S. Kim Song, commodity
manager of GM's Purchasing Activities Staff.
"In a presentation for the Sixth United States-
Japan Auto Industry Conference at the Univer-
sity of Michigan, Song estimated that Hyundai
would have capacity for 450,000 units, Daewoo,
300,000 and Kia, 200,000. Hyundai has since
upped its estimate to 600,000 units."
In addition, quite apart from changes in the com-
petitive environment, the manufacturers' CAFE pro-
jections are dependent on numerous assumptions
relating to production of the cars they plan to sell.
Even relatively minor difficulties, beyond the
manufacturers' control, relating to such things as
delays in start-up times for new plants or equipment,
technical or labor difficulties of particular suppliers,
etc., could adversely affect the manufacturers' CAFE.
NHTSA concludes that in choosing between stand-
ards incorporating a risk factor and not doing so, the
potential harms of setting the standard too high are
far outweighed by any risks of setting it too low. In
reaching this conclusion, NHTSA recognizes that
some uncertainties can go in both directions.
However, if the agency changed its past practice and
did not include a risk factor in setting the MY
1987-88 CAFE standards, the occurrence of even
relatively minor uncertainties could place the
manufacturers in a position of being able to achieve
the levels of the standards only by product restric-
tions. On the other hand, the record indicates that
GM and Ford are continuing to make reasonable ef-
forts to achieve and, to the extent possible, exceed
CAFE standards, particularly in light of their desire
to earn credits. Thus, providing a small risk factor
will not provide any incentive for GM and Ford to do
PART 531-PRE 129
anything other than achieve their highest possible
CAFE levels.
2. Consideration of standards above GM's and/or
Ford's capability
As part of taking industrywide considerations into
account, NHTSA has considered whether a standard
could or should be set at levels above the capabilities
of GM and/or Ford. As indicated above, the Con-
ference Report states that the "Secretary must weigh
the benefits to the nation of a higher average fuel
economy standard against the difficulties of in-
dividual manufacturers," and that "(s)uch difficulties
should be given appropriate weight in setting the
standard in light of the small number of domestic
manufacturers that currently exist, and the possible
implications for the national economy and for re-
duced competition association [sic] with a severe
strain on any manufacturer."
With respect to light truck standards, NHTSA has
consistently taken the position that it has a respon-
sibility to set standards at a level that can be achiev-
ed by manufacturers of a substantial share of sales.
See 49 FR 41251; October 22, 1984. The agency once
set the MY 1982 light truck standards at a level
which it recognized might be above the maximum
feasible average fuel economy capability of Chrysler,
based on the conclusion that the energy savings
benefits associated with the higher standard would
outweigh the harm to Chrysler. See 45 FR 20871,
20876; March 31, 1980. Although the House Commit-
tee on Interstate and Foreign Commerce later stated
that it "generally agreed with DOT," (see House
Report No. 96-1026; May 16, 1980; p. 17), the Con-
gress swiftly enacted special provisions for adjusting
the MY 1982 light truck fuel economy standards to
provide greater flexibility in dealing with the kinds
of potential problems then faced by Chrysler, in part
responding to Chrysler's arguments that it should
not be forced to choose between paying millions of
dollars in fines for violating the law and closing
plants in order to meet the law.
NHTSA believes its practice of setting standards at
a level that can be achieved by manufacturers of a
substantial share of sales is consistent with its obliga-
tion to take industrywide considerations into ac-
count. Since GM produces more than 40 percent, and
Ford approximately 18 percent, of all cars sold in the
United States, the agency believes that CAFE stand-
ards set at the level of the least capable of these
manufacturers represents an appropriate balancing
of "the benefits to the nation of a higher average fuel
economy stnadard against the difficulties of in-
dividual manufacturers." Given GM's very large
market share, the agency does not believe that a
standard set about its level would be consistent with
the requirement that industrywide considerations be
taken into account. Moreover, given Ford's market
share, which is larger than Chrysler's share of the
light truck market in 1982, the agency believes that a
standard set at a level above its capability would be
inconsistent with that requirement.
Therefore, NHTSA concludes that any benefits of a
higher standard would not outweigh the difficulties
that would face GM and Ford. While NHTSA believes
that energy conservation is important, it concludes
that the possible small energy savings associated
with maintaining the 27.5 mpg standard for MY
1987-88 (discussed below) do not justify the potential
major economic hardships discussed above. Moreover,
as indicated above, given GM's and Ford's desire to
earn credits in the MY 1987-88 time period, setting
the standard at 26.0 mpg versus some level slightly
above 26.0 mpg does not create any incentive for GM
and Ford to achieve other than their highest possible
CAFE levels.
3. Economic impacts of standards set at 26.0 mpg
As discussed above, the agency has concluded that
GM and Ford can both meet the 26.0 mpg MY
1987-88 standards without engaging in harmful
product restrictions and without any significant
restrictions on consumer choice. Thus, no job losses
will result from GM and Ford meeting these stand-
ards, and there will be no adverse economic impacts
on automobile dealers, suppliers, or automotive
employees, including minorities.
NHTSA recognizes that the 26.0 mpg standard for
MY 1987-88 is above the capabilities of some Euro-
pean manufacturers. For Jaguar and Mercedes-Benz,
the standard is several mpg above those companies'
capabilities.
Some of the European companies may thus be
limited to two options: paying the statutory penalties
associated with failure to comply with fuel economy
standards or drastic product actions which, in the
case of some, could require radical changes in the mix
of cars they import. While the agency appreciates
these difficulties, it also concludes that amending the
MY 1987-88 standards to levels below 26.0 mpg
would be inconsistent with a determination of max-
imum feasibility that takes industrywide considera-
tions into account. Both the individual market share
of each European manufacturer and the combined
market share of all the European manufacturers is
very small. For example, for January to May 1986
sales, Mercedes-Benz accounted for only 0.8 percent
of U.S. sales, and Volvo accounted for only 1.1 percent.
PART 531-PRE 130
4. Potential impacts on energy conservation
In analyzing the potential energy savings asso-
ciated with standards within a range of 26.0 mpg to
27.5 mpg, the agency believes that it is appropriate to
focus on GM and Ford. Since the Japanese manufac-
turers have CAFE levels well above 27.5 mpg, as a
result of focusing on smaller cars, a reduction in the
MY 1987-88 standards does not create an incentive
for those companies to change their product plans.
Similarly, given Chrysler's current CAFE projections
and its MY 1986 experience, the agency has no rea-
son to assume that company would change its product
plans as a result of reduced standards. Finally, the
agency does not have any reason to assume that the
European manufacturers would change their product
plans as a result of reduced standards. While some of
those manufacturers project MY 1987-88 CAFE levels
not only below 27.5 mpg but also below 26.0 mpg, they
have not indicated any plans to attempt to achieve
higher CAFE levels in order to meet the standards.
The precise magnitude of the energy savings, if
any, which could result from maintaining the 27.5
mpg standard is uncertain, although a maximum
bound can be calculated. As discussed above, GM and
Ford could achieve CAFE of 27.5 mpg only by (1)
restricting the sale of their larger cars and engines,
and/or (2) transferring the production of large cars
outside the United States.
To the extent that GM and Ford restricted the
availability of their larger cars and engines, some
consumers would likely keep their older, less fuel-
efficient cars in service longer or purchase large
pickup trucks and vans to obtain the room, power, and
load-carrying capacity they desire. Professor Leone
presented an analysis in the MY 1986 proceeding
demonstrating that if as a result of product restric-
tions one consumer in five purchased a light truck,
specialty vehicle or van, or decided to keep driving an
old 18 mpg vehicle, gasoline consumption for the fleet
as a whole would remain the same or even increase.
As discussed above, to the extent that GM and Ford
improved their CAFE by transferring the production
of large cars or parts of large cars outside of the
United States, there would be absolutely no energy
conservation benefits associated with their higher
domestic CAFE levels. Given the severe economic im-
pacts associated with product restrictions, NHTSA
believes that such outsourcing is the most likely first
option manufacturers would take in an effort to com-
ply with overly stringent CAFE standards, to the ex-
tent that there is available leadtime to take such ac-
tion. As indicated above. Ford has indicated that it
could take such action to improve its MY 1988 CAFE
by 0.6 mpg.
The maximum hypothetical difference in gasoline
consumption between GM and Ford achieving 26.0
mpg in MY 1987-88, as compared to those companies
achieving 27.5 mpg, would be 3.28 billion gallons
over the 20-year life of the MY 1987-88 fleets. This
would represent 0.29 percent of projected national
passenger car gasoline consumption over that time
period. As indicated above, the agency cannot con-
clude that such savings would justify the potential
sales losses and job losses associated with maintain-
ing the 27.5 mpg standard for those two model years.
Moreover, the agency concludes, for the reasons
discussed above, that actual gasoline savings would
be much lower than the above figiu^es suggest, and
possibly so low as to be negligible. The calculated
maximum hypothetical difference in gasoline con-
sumption assumes that GM and Ford would achieve
CAFE levels of 27.5 mpg in MY 1987-88 by means
whereby the higher domestic CAFE levels are fully
translated into gasoline savings. As discussed above,
however, this is not the case for product restrictions
and outsourcing of larger cars and engines, the only
two means by which GM and Ford could achieve a
27.5 mpg CAFE in those model years.
NHTSA has considered the potential energy
savings of standards higher than 26.0 mpg but lower
than 27.5 mpg. The agency does not believe that any
such savings would justify the potential economic
h£U*dships. As indicated above, the record indicates
that GM and Ford are continuing to make efforts to
achieve and, to the extent possible, exceed CAFE
standards, particularly in light of their desire to earn
credits. Thus, setting standards at 26.0 mpg does not
provide any incentive for GM and Ford to do any-
thing other than achieve their highest possible CAFE
levels.
5. Credits/penalties
In determining the maximum feasible average fuel
economy levels for MY 1987-88, and hence the stand-
ards, NHTSA has followed its consistent approach of
analyzing the ability of manufacturers to meet the
standards. It has not included as part of its calcula-
tion of standards the ability to pay penalties for not
meeting the standards, or the availability of, or need
for, credits.
An industrywide standard set at a level above the
capabilities of the major manufacturers would by
definition not be capable of being done and would
thus not meet the requirement that standards be
feasible. In the MY 1985-86 light truck fuel economy
rulemaking, NHTSA rejected the suggestion that it
set standards that would require the payment of
penalties. The agency emphasized that in assessing
PART 531-PRE 131
economic practicability, it must consider the ability
to meet a standard rather than the ability to pay the
penalties for not meeting a standard. See 50 FR
11164, March 20, 1985. This approach was upheld by
the U.S. Court of Appeals (D.C. Circuit) in Center for
Auto Safety v. NHTSA, No. 85-1231, slip op. at 39-40
(June 20, 1986).
The agency does not, however, believe it should
depart from its normal practice of accounting for
uncertainties in an attempt to prevent the earning of
credits. In establishing the credit provisions. Con-
gress was necessarily aware of the tension between
"maximum feasible" standards and manufacturers
exceeding such standards in order to earn credits. A
particular manufactiu^er may be able to exceed a
"maximum feasible" industrywide standard for a
particular model year because its CAFE is higher
than that of the least capable manufacturer for that
model year. For example, the agency recognizes that
Ford may earn some credits in MY 1987 because its
capability is higher than the standard, i.e., the level
of least capable manufacturer with a substantial
share of sales, GM. GM may do the same for MY
1988. It is also possible that a manufacturer may be
able to exceed the "maximum feasible" level by
taking certain actions that are not taken into account
by the agency as part of "economic practicability,"
e.g., actions that may be so expensive in relation to
CAFE benefit, or so uncertain, that the agency would
not factor them into its determination of a manufac-
turer's CAFE capability. For example, in one of its
comments to the docket, GM indicated that if the
standards were set at 26.0 mpg, it might be able to
generate enough credits to remain in compliance by
taking measures it characterized as "very costly and
contrary to expected consumer demand."
If GM is successful in its extraordinary efforts to off-
set its MY 1985 shortfall by exceeding MY 1987-88
standards, the credit provisions would have the effect
intended by Congress of encouraging manufacturers
to do more to improve fuel economy than they other-
wise might. Moreover, NHTSA concludes that it
would be particularly inappropriate to change its
traditional method of setting standards at this time,
for the purpose of somehow preventing particular
manufacturers from earning credits. As discussed
above and in the MY 1986 proceeding, GM and Ford
failed to achieve a CAFE level of 27.5 mpg by MY
1985, and thus incurred the shortfalls, because their
reasonable plans to meet the standard were over-
taken by events beyond their control.
In this rulemaking, GM specifically argued that
NHTSA should take into account the industry's need
to earn carryback credits to offset MY 1984-85 short-
falls in determining the maximum feasible average
fuel economy levels for MY 1987-88. As noted above,
NHTSA published an SNPRM requesting comment
on a tentative conclusion by the agency that GM's
argument concerning credits should be rejected.
However, since NHTSA is basing this decision to
establish the MY 1987-88 standards at 26.0 mpg on
other grounds, the arguments set forth by GM do not
need to be addressed here. The agency notes that if it
did include GM's desire to earn carryback credits to
offset its MY 1985 shortfall as part of the calculation
of the MY 1987-88 standards, the record would dic-
tate standards below 26.0 mpg for both model years.
NHTSA also notes that both GM and Ford argued
as part of their comments on the SNPRM that the
agency has the authority to retroactively amend the
MY 1984-85 CAFE standards to the maximum feasi-
ble level, and urged the agency to consider doing so.
The requests to retroactively amend the MY 1984-85
standards are not being addressed in this notice.
6. Other issues
CFAS argued that NHTSA should consider the
issue of job losses associated with GM and Ford ex-
porting American small car jobs to foreign countries.
According to that commenter, higher CAFE stan-
dards could prevent such job losses.
As discussed above, in enacting EPCA, Congress
was concerned that the fuel economy program could
have directly encouraged increased importation of
small, fuel-efficient cars. The domestic manufac-
turers were already importing some fuel-efficient
cars, and Congress was concerned that the manufac-
turers might decide to meet fuel economy standards
largely by increasing such imports. Therefore, Con-
gress included the provision in EPCA requiring
manufacturers to meet fuel economy standards
separately for their imported and domestically
manufactured fleets. While Congress did not want
the fuel economy program to encourage imports
directly, however, it also did not intend that CAFE
standards could or should be set artificially high as a
means of direct protectionism.
Moreover, the record does not support CFAS's argu-
ment that maintaining the 27.5 mpg standard for MY
1987-88 would increase American jobs. The economic
reality is that small car jobs have been lost due to
competition from foreign manufacturers which enjoy
large cost advantages. Higher CAFE standards
would not bring those jobs back. The domestic
manufacturers are importing or planning to import
additional small cars in response to that competition.
If GM and Ford did not import particular small cars,
other import manufacturers would likely import
additional such cars. It is generally recognized, for
PART 531-PRE 132
example, that as the Japanese manufacturers concen-
trated on larger cars as a response to export
restraints, Korean manufacturers moved into the
smaller car market. Far from increasing American
jobs, the agency's analysis indicates, as discussed
above, that the actions GM and Ford would need to
take to achieve CAFE of 27.5 mpg in MY 1987-88
would result in enormous job losses. NHTSA notes
that even if some particular small car jobs could
somehow be saved by a 27.5 mpg standard, the
number of such jobs would be outweighed many times
over by the job losses associated with restricting sales
of larger cars and transferring production of larger
cars outside the United States.
CEI argued that NHTSA has failed to consider the
fact that as energy costs drop, the value of energy con-
servation also declines. That commenter suggested
that the agency should estimate the cost per gallon
saved as a percentage of fuel costs to illustrate what
it called the "increasing absurdity of mandated
savings of an increasingly inexpensive commodity."
While, as discussed in the MY 1986 and earlier pro-
ceedings, the agency does not believe that the
statutory criteria necessarily require fuel economy
standards to be cost-beneficial, it has traditionally
considered costs and benefits. As gasoline prices
decline, it is true that the cost effectiveness of im-
proving fuel economy also declines. However, as il-
lustrated by DOE's comments, virtually all the fuel-
eflEiciency-enhancing technologies being used by the
manufacturers to improve their fuel economy remain
cost effective, or at least cost neutral, even with the
current very low price of gasoline.
As in the MY 1986 proceeding, Chrysler argued
that reducing the MY 1987-88 standards is anti-
competitive to those companies which are able to
meet the standards. NHTSA recognizes the equity
issues involved in amending fuel economy standards
and has considered this factor. However, the agency
must consider the feasibility of the standards for the
industry as a whole, as discussed above, in accor-
dance with the statutory criteria. Indeed, since the
Act specifically permits the amendment of its
previously set fuel economy standards, it necessarily
contemplates the possibility of differing impacts on
different manufacturers. Any change in a standard
will result in varying impacts, because different
manufacturers will be at different stages along vary-
ing paths toward complying with the previous stand-
ard. As in the MY 1986 proceeding, NHTSA
believes that any impacts on Chrysler are heavily
outweighed by the possibility of serious adverse
economic consequences to the industry and economy
as a whole if the standards were not reduced. The
agency notes that the MY 1981 light truck standard
was lowered in response to a petition for rulemaking
submitted by Chrysler. Thus, that company has re-
quested and received the benefit from the same type
of rulemaking action to which it now objects.
Impact Analyses
1. Economic impacts
The agency considered the economic implications of
the amendments to the fuel economy standards made
by this rule and determined that the rule is major
within the meaning of Executive Order 12291, and
significant within the meaning of the Department's
regulatory procedures. The agency's detailed
analysis of the economic effects is set forth in a final
regulatory impact analysis, copies of which are
available from the Docket Section. The contents of
that analysis are generally described above.
2. Environmental impacts
The agency has considered the environmental im-
plications of these amendments to the MY 1987-88
passenger automobile average fuel economy stand-
ards in accordance with the National Environmen-
tal Policy Act of 1969 and determined that the
amendment will not significantly affect the human
environment. An Environmental Assessment (EA)
was prepared and placed in the public docket in con-
nection with the NPRM. A Supplement to the En-
vironmental Assessment has been prepared, which
responds to the comments received concerning the
EA. Based on the agency's review of the comments
and all available information, the agency has deter-
mined that this rulemaking action will not have a
significant effect upon the environment.
3. Impacts on small entities
Pursuant to the Regulatory Flexibility Act, the
agency has considered the impact this rulemaking
action will have on small entities. I certify that this
action will not have a significant economic impact on
a substantial number of small entities. Therefore, a
regulatory flexibility analysis is not required for this
action. No passenger car manufacturer subject to the
amended passenger automobile average fuel economy
standards would be classified as a "small business"
under the Regulatory Flexibility Act. In the case of
small businesses, small organizations, and small
governmental units which purchase passenger cars,
the amendments will not affect the availability of
fuel-eflficient passenger cars or have a significant ef-
fect on the overall cost of purchasing and operating
passenger cars.
PART 531-PRE 133
Department of Energy Review
In accordance with section 502(j) of the Cost
Savings Act, the agency submitted this final rule to
the Department of Energy for review. There were no
unaccommodated comments.
List of Subjects in 49 CFR Part 531
Energy conservation, Gasoline, Imports, Motor
vehicles.
In consideration of the foregoing, 49 CFR Part 531
is amended as follows:
1. The authority citation for Part 531 is revised to
read as follows:
Authority: 15 U.S.C. 2002, delegation of authority
at 49 CFR 1.50.
The table in § 531.5(a) is revised to read as follows:
§ 531.5 Fuel economy standards.
(a) * * *
Model
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989 and thereafter
Average
fuel
economy
standard
(miles per
gallon)
18.0
19.0
20.0
22.0
24.0
26.0
27.0
27.5
26.0
26.0
26.0
27.5
Issued on Oct. 1 1986
Diane K. Steed
Administrator
51 F.R. 35594
October 6, 1986
PART531-PRE134
»
PREAMBLE TO AN AMENDMENT TO PART 531
Passenger Automobile Average Fuel Economy
Standards for Model Year 1989
(Docket No. FE-88-01 ; Notice 3)
(RIN No. 2127-AB75)
ACTION: Final rule.
SUMMARY: The Department of Transportation's
National Highway Traffic Safety Administration is
setting the passenger automobile average fuel
economy standard for Model Year (MY) 1989 at 26.5
miles per gallon (mpg), an increase of 0.5 mpg over
the 1988 level. NHTSA is taking this action because
it has determined that 26.5 mpg is the "maximum
feasible average fuel economy level," after balancing
the statutory criteria of economic practicability,
technological feasibility, the effect of other Federal
motor vehicle standards, and the need of the Nation
^^to conserve energy. The standard is a decrease of 1.0
^^mpg from the statutory level.
EFFECTIVE DATE: The amendments made by this
rule to the Code of Federal Regulations are effective
November 7, 1988. The standard is applicable to the
1989 model year.
SUPPLEMENTARY INFORMATION:
Contents
L Overview of Decision
n. Background
II-A. Corporate average fuel economy statutory
provisions
II-B. Setting and implementing the MYs 1981-84
standards
II-C. Rulemakings to amend the MYs 1986-88
CAFE standards
II-D. Petitions to amend the MYs 1989-90 CAFE
standards
in. NPRM for MYs 1989-90
rV. Public Comments
V. Analytic Approach
V-A. The "reasonable efforts" test
V-B. The maximum feasible determination
VI. Manufacturer Capabilities for MY 1989
t
VI- A. Manufacturer projections
1. General Motors
2. Ford
3. Chrysler
4. Other manufacturers
VI-B. Possible actions to improve MY 1989 CAFE
VIC. Manufacturer-specific CAFE capabilities
1. GM
2. Ford
VII. Manufacturer Compliance Efforts
VIII. The Effect of Fuel Economy Standards on
Safety
IX. The Effect of Other Federal Standards on Fuel
Economy
IX-A. NHTSA standards
1. Lighting
2. Automatic occupant crash protection
3. Rear seat lap/shoulder belts
4. Side impact protection
5. New car assessment program
6. Voluntarily installed safety features
IX-B. EPA standards
1. Noise standards
3. Emissions standards
3. Fuel economy test procedure
X. The Need of the Nation to Conserve Energy
XI. Amending the MY 1989 Standard
XI-A. Interpretation of "feasible" and "economic
practicability"
XI-B. Industrywide considerations
XI-C. Determining the level of the MY 1989
standard
I. Overview of Decision
In each of the last three years, the Department of
Transportation has closely examined the effects of the
corporate average fuel economy (CAFE) standard on
the U.S. auto industry. We concluded that a standard
of 27.5 mpg for MYs 1986-1988 posed a threat to the
PART 531-PRE 135
jobs of U.S. auto workers, workers in industries that
supply parts and equipment to the auto industry, and
employees of the auto dealerships. On the other hand,
we concluded that the energy conservation benefits
of a higher standard were speculative and small.
After balancing these and other considerations, we
set the standard for each of those years at 26.0 mpg.
Those rulemaking actions as well as this one should
be considered in light of the fact that the fleet of new
cars sold in the United States has never been more
fuel efficient. Congress' statutory goal of reaching an
average fuel economy of 27.5 mpg for new cars has
been met and exceeded. In MY 1988, the average fuel
economy of the combined new car fleet of all manufac-
turers was 28.7 mpg. The domestic automobile in-
dustry has spent billions of dollars to achieve this
goal, while continuing to provide a wide variety of
vehicles to meet consumer demands. Yet, despite this
remarkable industrywide improvement in fuel
economy, a CAFE standard of 27.5 mpg for MY 1989
poses significant threats to the competitiveness of
U.S. manufacturers, which in turn raises serious,
continuing concerns about retaining jobs at those
companies.
The threat to American jobs arises primarily
because of two provisions of the CAFE law: first, the
requirement that compliance be demonstrated on a
corporate fleet average basis, and second, the require-
ment that U.S. manufacturers separate their fleets
into two categories— domestic and "not domestically
manufactured," or imported.
The first of these, the fleet averaging requirement,
was originally intended to ensure that manufacturers
could continue to offer consumers a wide choice of
makes and models, because compliance with the
standard would be measured on a fleet average basis.
In other words, a manufacturer could continue to offer
models that achieved fuel economy levels below the
standard, as long as it sold a sufficient number of
models that exceeded the standard. While intended
as a means to preserve consumer choice, the provi-
sion gives a real advantage to Asian and some Euro-
pean manufacturers that generally have not been
manufacturing large, family-size, or luxury vehicles.
The setting of the standards largely based on the
capabilities of the major domestic manufacturers
results in standards that are well below the
capabilities of these foreign manufacturers, giving
them substantial latitude in designing and introduc-
ing new models to take advantage of changing
consumer preferences. While the full-line U.S.
manufacturers must struggle to adjust their fleet
mixes to meet the standard on a fleet average basis,
these other companies are manufacturing fleets that
are automatically more fuel efficient by virtue of their
sales mix, but not by virtue of any inherent fuel effi-
ciency superiority of their individual models. Thus,
they need not be concerned with the adverse CAFE
effects of their new, higher performing, less fuel-
efficient models that the market now demands. And,
as discussed below, they are actively entering the
larger and luxury car markets in the U.S., posing a
real competitive threat to the U.S. manufacturers in
this segment.
The second provision that seriously threatens U.S.
competitiveness is the "domestic content" provision,
also known as the "two-fleet rule." This provision was
originally intended to protect U.S. jobs, but now
perversely threatens them by providing a positive in-
centive to ship U.S. jobs out of the country. As noted
briefly above, the law requires U.S. manufacturers
to separate their fleets into two categories for com-
pliance purposes: a "domestic" fleet and a "not
domestically manufactured" (or, import) fleet. In fact,
the law's definition of "domestically manufactured"
is so strict that many cars assembled in the U.S. (in-
cluding all U.S.-built Japanese models and all models
built at U.S.-Asian joint venture plants) fail to qualify
as "domestically manufactured." The result is that
each Asian and European manufacturer has only one
CAFE fleet (an imported fleet), while each U.S.
manufacturer has a domestic fleet and an imported
fleet, each of which has to meet the CAFE standard
separately. Thus, while the two-fleet rule theoret-
ically applies to all manufacturers, as a practical
matter, only the U.S. manufacturers are subject to the
two-fleet rule and suffer its perverse consequences.
As we have noted in several previous CAFE
rulemaking proceedings, this "domestic content" pro-
vision encourages auto makers to move production of
their larger models, or parts of those cars, out of the
U.S. in order to average those models with their
smaller models. This action is known as "outsourc-
ing." In his comments to us on this proceeding, Mr.
Owen Bieber, the president of the United Auto
Workers, characterized this incentive to outsource as
the statute "stood on its head." He urged us to con-
sider that outsourcing threatens "good paying
jobs ... for American workers with no improvements
in overall fuel economy or environmental benefits."
NHTSA concurs with Mr. Bieber's assessment of the
adverse impact of outsourcing due to the two-fleet
rule. However, the agency is unable to change the
practice, because it is mandated by the statute.
PART 531-PRE 136
The adverse competitive effects of the two-fleet rule
are all the harder to accept when one observes that
GM would exceed the 27.5 mpg level if it could com-
bine its domestic and import fleets. However, the
agency has no authority to permit it to do so, since
the two-fleet rule is statutorily mandated. Never-
theless, it is important to remember that this entire
proceeding is focusing on a statutorily created, arti-
ficial subset of the new car fleet: the domestic fleet
of the two largest U.S. manufacturers.
After separating the fleets, each manufacturer's
fleet must meet the CAFE standard separately.
However, for the reasons described above, the U.S.
manufacturers cannot average together their own
imported cars (which are generally more fuel-efficient
than the average U.S. -made cars) with their U.S.-
made cars, although GM would easily comply with
the standard if it could do so. As an example, the
Chevrolet Sprint (Geo Metro) is rated by the Environ-
mental Protection Agency as the most fuel-efficient
car sold in the United States, but GM cannot average
its fuel economy with larger domestic cars because
the Sprint must be classified as part of GM's import
fleet.
The Japanese manufacturers, however, can average
together their smallest, most fuel-efficient models
(e.g., the Honda CRX, Toyota Corolla, or Nissan
Sentra) with their higher -performance or luxury
models (such as the Acura Legend and the upcoming
Infiniti and Lexus) because the two-fleet rule does not
affect them except to the extent that one of their
models exceeds 75 percent domestic content. This
places U.S manufacturers at a relative disadvantage.
As Congressman Bob Carr testified during the public
hearing in this proceeding, "If I were a Japanese auto
manufacturer, and I wanted to write a law in the
United States that would help me and hinder
American automobile manufacturers, I couldn't have
written a better law than the CAFE law that we have
today."
Since the Japanese and other Asian manufacturers
can freely introduce new, higher -performance large
or luxury models (with lower fuel economy) without
fear of CAFE noncompliance, they are free to adopt
strategies that attempt to secure their position in the
marketplace for these luxury cars. According to the
comments submitted by the Department of Com-
merce, it is likely that the Japanese will aggressively
seek to expand market share in the segments in
which they compete. And the wave of new introduc-
tions into this market segment is expected to con-
tinue. The trade press is widely reporting that Nissan
and Toyota are planning to introduce new luxury car
models in the next few years, some of which are
planned to be larger than the full-size Oldsmobile 98
offered today by General Motors. Based on the past
practices of these companies, it is likely that they will
seek to capture a significant portion of the market
segment for these new models.
The comments of the Department of Commerce,
Bureau of Economics at the Federal Trade Commis-
sion, and the Council of Economic Advisors explain
that when the U.S. manufacturers are forced to re-
spond to high CAFE standards, they must consider
adopting pricing and marketing strategies on their
models which distort consumer demand, in order to
discourage buyers from the larger or luxury models
with lower fuel economy and encourage the purchase
of the smaller, more fuel-efTicient models. The Com-
merce Department notes that CAFE-induced price in-
creases on larger (or higher performance) domestic
cars may well result in further market share loss for
U.S. manufacturers because it will tend to shift
consumers toward competing models from foreign
manufacturers who are not forced to impose CAFE
price hikes. Perversely, the CAFE law affirmatively
encourages consumers to buy foreign models and
discourages them from buying U.S. -made cars. As a
result, the competitiveness of American manufac-
turers is harmed and jobs in domestic auto manufac-
turing are reduced.
Based on its concerns about adverse competitive
effects, the Department has recommended repeal of
the CAFE law. However, unless and until Congress
acts, NHTSA must and will continue to administer
the CAFE law in its current form and to be faithful
to the intent of Congress.
As discussed above, we have closely studied the
adverse effects of the CAFE program on the U.S. auto
industry. We have attempted to administer the
statute entrusted to our care by taking seriously the
congressional directive to ensure that the program
does not threaten U.S. jobs or the health of the U.S.
auto industry while still meeting the needs of energy
conservation. After balancing these concerns, we set
the standard for MYs 1986-1988 at 26.0 mpg. We did
this in accordance with a methodology that we believe
is faithful to the statutory purposes. As noted herein,
this methodology includes a review of whether the
manufacturers had made "reasonable efforts" to
reach the statutorily set level of 27.5 mpg, and a
review of what the "maximum feasible" CAFE level
is, taking into account the four statutory criteria. This
methodology also includes analyzing the technologi-
PART 531-PRE 137
cal and economic capabilities of the manufacturers,
considering the effects of major changes in consumer
demand, and weighing the outcome of that analysis
against the need of the Nation to conserve energy.
This methodology was affirmed in general by the U.S.
Circuit Court of Appeals for the D.C. Circuit when
it recently upheld our decision to set the 1986 stand-
ard at 26.0 mpg. The court noted that Congress had
provided no "precise balancing formula for the agen-
cy to apply" to the four statutory criteria, leaving that
balancing to the agency's judgment. Public Citizen v.
NHTSA, 848 F.2d 256, 265 (D.C.Cir. 1988). See Sec-
tion II-A infra.
The U.S. auto industry, and GM in particular, con-
tinues to be faced with the significant competitive
threat of foreign, particularly Asian, manufacturers.
The Department of Commerce estimates that U.S.
producer sales in the small car segment of the market
will decline from an estimated 590,000 vehicles in
1988 to 350,000 in 1990, with the Asian manufac-
turers gaining the difference with small cars they
plan to build in the United States. Further, the
Department of Commerce estimates that U.S. auto
manufacturers will face growing foreign competition
in the mid-size car segment and large/luxury car
segment during 1989 and 1990. At the same time, it
appears that the larger car segment of the market is
shrinking in absolute terms, due in part to the growth
of demand for luxury mid-size and compact models.
As a result of a shrinking larger car market overall,
and a shrinking share of small car sales for U.S.
manufacturers, it appears that the U.S. manvifac-
turers must increase their share of the compact and
mid-size segments if they are to remain fully com-
petitive in the total automotive market. Of course,
these are the market segments where the Asian
manufacturers have either recently demonstrated
considerable strength, or where they plan additional
market penetration with new luxury, "high" per-
formance models (which generally have low fuel effi-
ciency). Although U.S. manufacturers plan new prod-
ucts in this market segment, they will face
significantly more competitive pressure than they
anticipated when the models were first conceived
several years ago. Accordingly, the manufacturers
must be able to accommodate consumer demand for
such attributes as larger engines, better performance,
and larger interior space. These actions come at a
CAFE price, however, since they generally reduce the
fuel efficiency of the model.
At the same time that the domestic manufacturers
must gear up for this increased pressure from the
foreign manufacturers in a market segment now
dominated by the Asians, GM is entering this period
after losing substantial market share in most market
segments. GM argues strenuously that much of its
lost market share is attributable to the CAFE law.
In order to generate enough fuel economy credits to
offset a substantial shortfall from MY 1985, GM
argues that it had to exceed substantially the
applicable CAFE standard in each of MYs 1986-1988.
GM believes that many of its product decisions for
those years to improve their overall fuel economy
went beyond the bounds of what should be considered
"reasonable."
Although U.S. auto employment in the aggregate
remained approximately the same in 1986-1988, a
closer look reveals a significant trend in the U.S.
employment picture: the workers are now being
employed in larger and larger numbers by the U.S.
outposts of Asian companies, and the number of auto
workers employed by U.S. auto makers (particularly
GM) is shrinking. At the same time, those workers
remaining in the U.S. industry are being told by their
employers that their jobs are threatened by the CAFE
program. GM has revealed in this proceeding that the
jobs of workers at the GM plant in Arlington, Texas,
among other plants, may be in danger if the CAFE
standard is set at 27.5 mpg. GM has stated that the
Arlington plant, which makes the largest cars sold
by GM, might be targeted for product restriction or
possible closure, if GM is compelled to achieve a 27.5
mpg standard for MY 1989. Several thousand
workers, retirees, and family members from that
plant have written to the agency, urging that the
standard be set at 26.5 mpg in order to let them keep
their jobs.
It is significant that GM's achievement of 27.6 mpg
in MY 1988 can be traced in part to its smaller share
of the large car market. While the market share loss
may have occurred for a variety of reasons, the results
were nonetheless dramatic. The decline in market
share led both to a high CAFE last year and to the
laying off of thousands of workers, estimated by GM
to be a loss of 75,000 workers in the past three years.
In contrast, as GM lost market share in the larger
car segment. Ford Motor Company stood ready with
the capacity to pick up some substantial amount of
the mid/large car market segment. Although it is true
that the segment is shrinking overall, it is growing
substantially as a share of Ford's domestic fleet.
Ford's comment noted that while mid/large cars as
a percentage of GM's fleet fell from 65.4 percent in
1986 to 59.7 percent in 1988, Ford's fleet showed an
PART 531-PRE 138
t
increase in those cars from 49.6 percent to 56.3 per-
cent over the same time period. However, just as GM's
market loss produced a CAFE gain, Ford's market
gain prevented CAFE improvement: Ford projects a
CAFE of only 26.4 mpg for MY 1988 and 26.5 mpg
for MY 1989.
In point of fact, it is likely that GM plant closings
and the other GM product decisions over the past few
years are due in part to overcapacity in the auto in-
dustry generally and in part to the market converging
on the medium, "compact" car. It is widely reported
in the trade press that the Arlington, Texas, plant
(and other GM plants that make larger cars) are also
slated for closure or cutbacks as a result of over-
capacity in the larger car market segment. That is,
any decisions to close plants may be independent of
CAFE concerns. But, the larger car market, while
shrinking, is not disappearing in the short term, and
it is clear from Ford's experience that the CAFE of
a company that serves that market segment will be
lower than if the company does not serve that market.
This is the segment where the U.S. manufacturers
have traditionally been the strongest, but the
experience of both Ford and GM over the last few
years proves that there is a CAFE price to pay for
serving that market, and a price in reduced com-
petitiveness for not serving that market.
This year, we are faced with the possibility of
significant erosion in the U.S. industrial base as the
manufacturers must compete on the unlevel playing
field of an auto market in which U.S. manufacturers,
but few foreign manufacturers, must price and
market their cars against their own interests, just to
achieve a particular CAFE level.
Although NHTSA has been concerned about the
competitiveness issues raised by the CAFE program
for several years, this concern was underscored by
Congress in the recent enactment of the Omnibus
Trade and Competitiveness Act of 1988, a bill
characterized as the "most comprehensive restructur-
ing of basic U.S. trade policy since . . . 1974." (House
Report 100-40, 100th Cong., 1st Sess., 1987.) There,
Congress directed that Federal agencies place the
highest priority on considering the trade and com-
petitiveness implications of its programs. The House
report describes the law as a "response to the serious
decline in United States competitiveness." The com-
mittee noted the serious damage that has already
been done to our economy as a result of shrinking
markets for American products and rapid increases
in imports of products into the U.S. In this regard,
the committee stated that
"even more troubling is the apparent decline in
the international competitiveness of American
products .... This reflects a number of disturb-
ing developments— ranging from domestic policy
failures to foreign trade barriers and distor-
tions—but its ramifications for the future are in-
deed disturbing. If the United States is unsuc-
cessful in restoring its international com-
petitiveness, we will almost certainly experience
a dramatic decline in our living standards and
a lessening of our influence throughout the globe
to promote American free market values."
House report at page 3.
Although the committee was mindful of the
generally good condition of the U.S. economy— noting
as examples the low interest rates and inflation rate
of the past several years— the report states that "these
positive signs belie a clear and present danger con-
fronting this country." The danger, the committee
said, is that today's trade deficit must be repaid
through future trade surpluses of significant size, and
the current competitive posture of the U.S. industrial
sector is so weak that it will be difficult or impossible
to generate a trade surplus. On this point, the com-
mittee noted,
"Many of the markets already lost to U.S. firms
will be jealously protected by our foreign
competitors— protected, if necessary, with the
help of government resources. Most of our
trading partners are now accustomed to running
large and persistent trade surpluses with the
United States, and they may invoke extreme
measures to protect that advantage even in the
face of a weakened dollar." House report at
page 5.
The committee report concludes with these
observations:
"Ultimately, the trade policy of this country
should be designed to ensure economic prosper-
ity, to guarantee a stable industrial and
agricultural base, to promote a competitive
world economy in which American workers and
firms have fair opportunities to compete.
. . . This legislation is a recognition of the fact
that our Federal Government bears an obliga-
tion to protect the rights of its industries and
workers in a highly mercantilist world economy.
That obligation cannot be discharged by ignor-
ing the difficult decisions. It must be met
through assertive but fair actions which will
guarantee reciprocal trade around the world."
House report at p. 6.
PART 531-PRE 139
In the first section of the legislation itself, the Con-
gress found that
"... it is essential, and should be the highest
priority of the United States Government, to pur-
sue a broad array of domestic and international
policies—
(A) to prevent future declines in the United
States economy and standards of living,
(B) to enstire future stability in external trade
of the United Stats, and
(C) to guarantee the continued vitality of the
technological, industrial, and agricultural base
of the United States." Section 1001(aX4),
emphasis supplied.
We have taken this congressional guidance seri-
ously and believe it is consistent with Congress' in-
tentions in enacting the trade law that we redouble
our efforts to ensure that the CAFE program does not
have adverse consequences for American competitive-
ness. We also believe that our consideration of the
competitiveness effects is entirely consistent with our
treatment of this issue in the past several years,
which has been to evaluate it in the context of
"economic practicability." We believe that a stand-
ard of 26.5 mpg strikes the proper balance, pursuing
energy conservation while taking into account the
anti-competitive effects of a higher standard, con-
sistent with our past practice and the newest congres-
sional guidance.
II. Background
II-A. Corporate average fuel economy statutory
provisions
In December 1975, Congress enacted the Energy
Policy and Conservation Act (EPCA). One provision
of EPCA established an automotive fuel economy
regulatory program and was added as a new Title V
to the existing Motor Vehicle Information and Cost
Savings Act (the Act, 15 U.S.C. §2001 et seq.). The
program includes corporate average fuel economy
(CAFE) standards for passenger automobiles.
Title V specified CAFE standards for passenger
automobiles of 18, 19, and 20 mpg, for MY 1978, 1979,
and 1980, respectively. The Secretary of Transporta-
tion (as delegated to the NHTSA Administrator) was
required to establish standards for MYs 1981-1984.
For MY 1985 and thereafter, Title V specifies a stand-
ard of 27.5 mpg.
However, the Act specifically authorizes the
Secretary to amend the CAFE standard "to a level
which he determines is the maximum feasible average
fuel economy level" for each model year. 15 U.S.C.
§2002(aX4) (emphasis added). In determining the
"maximum feasible average fuel economy level," the
agency is required by section 503(e) of the Act to con-
sider the following four factors: (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.
The statute contains no guidance about whether or
how the agency should amend a CAFE standard,
except that the newly set level must satisfy the four
statutory criteria. However, it is clear that the statute
vests wide discretion in the Department to set a
CAFE standard at a level other than 27.5 mpg. As
the United States Court of Appeals for the District
of Columbia Circuit stated in upholding the agency's
MY 1985 light truck fuel economy standard, "(t)he
agency's interpretation of the statutory requirements
is due considerable deference and must be found ade-
quate if it falls within the range of permissible con-
structions." Center for Auto Safety v. NHTSA, 793
F.2d 1322, 1338 (D.C. Cir. 1986). The court described
the setting of the standard as "the result of a balanc-
ing process specifically committed to the agency by
Congress." 793 F.2d at 1341.
Again in its recent opinion upholding the Depart-
ment's passenger car CAFE standard for MY 1986,
the court stated:
"Congress 'specifically delegated the process of
setting. . .fuel economy standards with broad
guidelines concerning the factors that the
agency must consider.' (Emphasis in original).
Had Congress offered a more precise balancing
formula for the agency to apply to the four
§ 2002(e) factors, we could more confidently
discern the agency's compliance with the con-
gressional mandate. In the absence of a sharper
congressional delineation, we are unable to con-
clude that NHTSA's decision did not represent
a 'reasonable accommodation of conflicting
policies that were committed to the agency's
care by the statute' or was 'not one that Con-
gress would have sanctioned.' " Public Citizen v.
NHTSA, 848 F.2d 256, 265 (D.C. Cir. 1988) (cita-
tions omitted).
While compliance with fuel economy standards is
determined by averaging the various models produced
by each manufacturer, enabling them to produce
vehicles with fuel economy below the level of the
standard if they produce sufficient numbers of
PART 531-PRE 140
•
vehicles with fuel economy above the level of the
standard, manufacturers may not average their im-
ported cars together with their domestically manufac-
tured cars. Instead, as noted above, manufacturers
must meet fuel economy standards separately for
their imported and domestically manufactured fleets.
(See section 503 of the Act.) Cars are considered to
be domestically manufactured if they have at least
75 percent domestic content. Conversely, cars are con-
sidered to be imports, or as the statute characterizes
them, "not domestically manufactured," if they have
less than 75 percent domestic content. One result of
this provision is that domestic automakers are unable
to take advantage of the higher fuel economy of
smaller imported vehicles which they sell, for pur-
poses of CAFE compliance of their domestic fleets.
While a separate fuel economy standard is set for
each model year, the Cost Savings Act does not re-
quire absolute achievement of the standard by
manufacturers within each year. Instead, it allows a
shortfall in one year (or years) to be offset if a
manufacturer exceeds the standard for another year
(or years). Under the Act, as amended by the
Automobile Fuel Efficiency Act of 1980, manufac-
turers earn credits for exceeding average fuel
economy standards which may be carried back for
three model years or carried forward for three model
years. If a manufacturer still does not meet the stand-
ard, after taking credits into account, it has commit-
ted "unlawrful conduct" under section 508 of the Act,
and is liable to the Federal government for civil
penalties.
In recent years, the Department increasingly has
become aware of— and concerned by— the discrimina-
tory effects and adverse impacts of the CAFE pro-
gram, and of its limited effect on real fuel economy.
On August 5, 1987, the Secretary of Transportation
submitted to Congress draft legislation that would
repeal the corporate average fuel economy standards
for new model years. The bill would also retain and
update the Environmental Protection Agency's (EPA)
fuel economy labeling requirements, and revise
EPA's automotive fuel economy testing procedxares to
require that results simulate conditions of actual use.
The Congress has not yet taken any action on the
Department's legislative proposal. Unless and until
the draft legislation becomes law, NHTSA must con-
<^inue to administer the law as it is currently written
nd as it has been construed by the courts. Thus,
today's notice is based on that existing law.
II-B. Setting and implementing the MY 1981-84
standards
On June 30,1977, NHTSA published in the Federal
Register (42 FR 33534) a final rule establishing the
MY 1981-1984 passenger automobile CAFE standrds.
The selected standards were 22.0 mpg for 1981, 24.0
mpg for 1982, 26.0 mpg for MY 1983, and 27.0 mpg
for MY 1984. For a description of the analysis
underlying those standards, see the August 1988
NPRM. 53 FR 33080, August 29, 1988.
Between January and May of 1979, NHTSA re-
ceived a number of submissions from Ford and
General Motors on the 1981-1984 fuel economy stand-
ards for passenger automobiles asserting that those
standards should be reduced. In response to these sub-
missions, the agency published a document entitled
"Report on Requests by General Motors and Ford to
Reduce Fuel Economy Standards for MY 1981-85
Passenger Automobiles," DOT HS-804 731, June
1979. The report concluded that the standards were
technologically feasible and economically practicable
and noted that both companies had submitted product
plans for meeting the standards. Report, p. 14.
One year later, the Nation was in the midst of
another energy crisis, brought on by events in Iran.
Gasoline prices were rising rapidly, creating
significantly increased consumer demand for small
cars. The U.S. city average retail price for gasoline
rose from 88 cents per gallon in 1979 to $1.22 in 1980.
(In 1986 dollars, this increase was from $1.33 in 1979
to $1.63 in 1980.) In light of these changed conditions,
the industry announced plans to significantly exceed
the 27.5 mpg standard for 1985. Both Ford and GM,
as well as Chrysler and American Motors (now a part
of Chrysler), indicated that they expected to achieve
average fuel economy in excess of 30 mpg for that
model year. Product plans submitted to NHTSA by
those companies indicated that the projections
assumed significant mix shifts toward smaller cars
and rapid introduction of new technology.
Conditions affecting fuel economy changed
dramatically in the early 1980's, following comple-
tion of decontrol of domestic oil and other external
factors increasing available supplies. Gasoline prices
did not continue to rise but instead declined over time.
This, combined with economic recovery, caused con-
sumer demand to shift back toward larger cars and
larger engines. Data submitted to the agency by GM
and Ford in mid-1983 indicated that instead of achiev-
ing fuel economy well in excess of the 27.5 mpg stand-
PART 531-PRE 141
ard for MY 1985, they would be unable to meet the
level prescribed by the standard.
II-C. Rulemakings to amend the MYs 1986-1988
CAFE standards
In response to petitions from GM and Ford, the
agency exercised its statutory discretion and in two
separate rulemakings set the MY 1986 and MY
1987-88 passenger automobile CAFE standards at the
maximum feasible level, 26.0 mpg. (For MY 1986, see
50 FR 40528, October 4, 1985; for MY 1987-88, see
51 FR 35594, October 6, 1986.) (The agency denied
petitions by Mercedes-Benz and GM to amend retroac-
tively the MYs 1984-85 passenger automobile CAFE
standards. (See 53 FR 15241, April 28, 1988))
The rulemakings reducing the MY 1986-1988
CAFE standards were consistent with the Cost Sav-
ings Act and its legislative history, both of which
clearly indicate that NHTSA has the authority to
reduce fuel economy standards. The determination of
maximum feasible average fuel economy level is
made as of the time of the amendment. The agency
has emphasized, however, that it could not reduce a
standard under the Act if a current inability to meet
the standard resulted from manufacturers previously
declining to take reasonable steps to improve their
average fuel economy as required by the Act.
For MY 1986, the agency evaluated the manufac-
turers' past efforts to achieve higher levels of fuel
economy as well as their immediate capabilities.
Based on the information received, the agency con-
cluded that Ford and GM, constituting a substantial
part of the industry, had taken or planned appropriate
steps to meet the 27.5 mpg standard in MY 1986 and
made significant progress toward doing so, but were
prevented from fully implementing those steps by un-
foreseen events. The decline in gasoline prices, which
began in 1982, had been expected to be temporary and
quickly reversed, but instead continued. The agency
concluded that, among other things, there had been
a substantial shift in expected consumer demand
toward larger cars and engines, and away from the
more fuel-efficient sales mixes previously anticipated
by GM and Ford. The agency's analysis indicated that
this shift was largely attributable to the continuing
decline in gasoline prices and that the only actions
available to those manufacturers to improve their fuel
economy in the remaining time for MY 1986 would
have involved product restrictions likely resulting in
significant adverse economic impacts, including sales
losses well into the hundreds of thousands and job
losses well into the tens of thousands, and
unreasonable restrictions on consumer choice. That
action was recently upheld by the D.C. Circuit Court
of Appeals as consistent with the provisions of the Act
and within the agency's discretion. Public Citizen v.
NHTSA, 848 F.2d 256, 264 (D.C. Cir. 1988).
For MY 1987-88, the agency set the standards at
26.0 mpg. The agency determined that manufacturers
had made reasonable efforts at compliance, but that
these efforts had been overtaken by unforeseen
events, whose effects could not be overcome by
available means within the time available. NHTSA
stated: "[B]oth GM and Ford have continued to make
significant technological improvements in their fleets
and have had reasonable plans to meet CAFE stand-
ards. In a situation where unforeseen events, in-
cluding changes in consumer demand or changes in
the competition's product offerings, overtake a
manufacturer's reasonable product plan, the agency
does not consider it consistent with the Act to "hold"
the manufacturer to ceirrying out a product plan that
has become economically impracticable." (51 FR
35611)
In evaluating the reasons for GM's and Ford's
declining MY 1987-88 CAFE projections, the agency
noted that the companies appeared to be applying the
same technologies as planned in late 1983. In the case
of GM, NHTSA stated that the two major reasons for
the decline in GM's CAFE projections were net engine
and model mix shifts and engine and transmission im-
provement programs not yielding projected gains, The
great majority of the factors reducing Ford's CAFE
projections were due to net shifts in projected sales
for models and engines, engine efficiency im-
provements not yielding projected gains, and new
models not meeting initial weight targets. The agency
thus concluded that the major reasons for the decline
in both GM's and Ford's MY 1987-88 CAFE projec-
tions were largely beyond those companies' control.
(51 FR 35610) NHTSA's analysis further indicated
that the only actions then available to those manufac-
turers to raise the fuel economy of their domestic
fleets to 27.5 mpg in MY 1987-88 would involve a com-
bination of (1) product restrictions likely resulting in
significant adverse economic impacts, including
substantial job losses and sales losses and
unreasonable restrictions on consumer choice, and (2)
transfer of the production of large cars outside of the
United States, thereby costing American jobs, while
having no energy conservation benefits. (51 FR 35594)
PART 531-PRE 142
II-D. Petitions to amend the MY 1989-90 CAFE
standards
The agency received five petitions to amend the
passenger car CAFE standards for MY 1989-90. The
petitioners included the Automobile Importers of
America, Inc. (AIA), GM, Mercedes-Benz, Austin
Rover, and the Competitive Enterprise Institute
(CEI). All of the petitioners sought rulemaking to set
those CAFE standards below 27.5 mpg, with four of
them requesting a lower standard based on the
reported prospective inability of automobile manufac-
turers to meet the statutorily set standgird of 27.5
mpg. The fifth petitioner requested a lower standard
based on the contention that the CAFE program has
caused an increase in motor vehicle fatalities.
III. NPRM for MYs 1989-90
On August 29, 1988, NHTSA published in the
Federal Register (53 FR 33080) an NPRM to amend
the MY 1989-90 passenger automobile average fuel
economy standards, within a range of 26.5 mpg to 27.5
mpg for each model year. The agency invited and
received both written and oral comments on the
proposal. A public meeting was held on September 14,
1988, in Washington, D.C., to receive the oral com-
ments. Among other things, the NPRM summarized,
and responded to, the five petitions cited above.
Due to limited remaining time for amending the
MY 1989 standard following its receipt of important
additional manufacturer submissions in early
August, NHTSA provided an abbreviated comment
period for the proposed MY 1989 standard, which
closed on September 15, 1988. The agency provided
a 60-day comment period for the proposed MY 1990
standard, which closes on October 28, 1988.
IV. Public Comments
Comments were received from numerous com-
menters, including Federal agencies, vehicle
manufacturers, vehicle dealers, manufacturer
associations, unions, members of Congress and State
legislatures, and members of the general public. Some
parties strongly supported a reduction in the MY 1989
passenger automobile CAFE standard, while others
strongly opposed such action.
Petitioner GM urged the agency to amend the MY
1989 CAFE standard to 26.5 mpg "so as to lessen the
competitive distortions and inevitably severe conse-
quences for American workers that would accompany
attaining the statutory 27.5 mpg level." GM said that
market conditions it faces today are more intractable
than in earlier years. According to GM, it has become
an "overachiever" in response to the competitive
distortions caused by the CAFE program, which has
resulted in loss of market share and volume to com-
petitors. GM emphasized that, while it improved the
fuel efficiency of its fleet during MY 1986-88, its con-
tinued CAFE progress results from "random testing
benefits on top of 'ultra-reasonable' efforts" which GM
stated cannot be sustained indefinitely without fur-
ther jeopardizing GM production and jobs. GM urged
the agency to realize that GM's CAFE improvements
during recent years do not disprove the reasonable-
ness of its competitors' efforts. In discussing the poten-
tial impact of retaining a standard of 27.5 mpg, GM
drew a distinction between "compliance" with the
statute, which may involve the use of credits to make
up the difference between the CAFE of a manufac-
turer's fleet of cars and the standard, and "meeting
the standard," which necessitates producing a fleet
that year whose CAFE at least equals the standard
without reference to credits. GM noted that while its
compliance plan was based in part on applying
credits, but not on closing any plants, its producing
a fleet of cars that actually achieved 27.5 mpg in MY
1989 would necessitate such closings. GM stated that
even without plant closings, jobs losses were possible
to the extent that its compliance plan included
measures that resulted in "competitive distortions."
In its comment supporting a lowering of the CAFE
standard, Ford said that it projects its 1989 CAFE
level to be about 26.5 mpg. Ford said its inability to
meet the 27.5 mpg CAFE standard for 1989 is not
because of lack of effort, but instead is due to substan-
tial market and economic changes. According to Ford,
it did not anticipate the market conditions, i.e., lower
gasoline prices and interest rates, that have con-
tributed to today's popularity of larger cars and
higher-performance engines. Ford said that the com-
pany realized in 1986 that it might not be able to
achieve the 27.5 mpg standard for MY 1989. How-
ever, Ford stated that the actions necessary to raise
its projected 26.5 mpg CAFE level did not accord with
its product development lead time requirements, nor
were such actions economically practical. Ford em-
phasized that the CAFE standard limits the com-
pany's ability to improve customer satisfaction and
meet market demand. Ford said that exercise of this
ability, which is responsible for much of the com-
pany's recent success, could be constrained so that
foreign manufacturers will gain competitive advan-
tages in the large and luxury car market.
PART 531-PRE 143
The Automobile Importers of America (AIA) urged
NHTSA to expand the scope of its inquiry in deter-
mining whether manufacturers made reasonable
efforts to meet the CAFE standard. In particular, AIA
asked that NHTSA consider "the significant market
segment which encompasses larger, better perform-
ing cars" in the agency's assessment of reasonable
efforts, instead of only that market segment that
represents a substantial share of the industry. AIA
also said that the agency should provide "adequate
notice" to manufacturers of any changes in the
reasonable efforts test so that they can conform their
actions to the agency's expectations.
AIA's belief that NHTSA should consider the efforts
of limited line manufacturers to meet the CAFE
standard was shared by several European manufac-
turers. In urging NHTSA to set the standard at 26.0
mpg in this rulemaking, BMW said that limited line
European manufacturers such as itself have "par-
ticular. . .compliance difficulties" in meeting the
CAFE standards due to the demand for high perform-
ance vehicles in BMW's market "niche" in this coun-
try. Volvo supported a reduction of the standard to
26.5 mpg. It said that it has already introduced almost
all the fuel economy-related improvements envisioned
by Congress in 1975, and that it is not possible to
make major changes that could significantly improve
the fuel economy of its MY 1989 vehicles given the
relatively long lead times that are needed to create
or significantly alter its product lines. Volvo also
noted its fuel economy was affected by the weight not
only of the safety features added in compliance with
the Federal motor vehicle safety standards, but also
of the safety features voluntarily added.
In its comments, Mercedes-Benz stated that NHTSA
has misinterpreted the term "industrywide considera-
tions." Mercedes said that Congress "did not in-
tend. . .that the Agency's assessment of technological
and economic capability should turn on a model mix
analysis that is inherently biased in favor of a few
large manufacturers." Instead, stated Mercedes,
NHTSA is obliged to consider the capabilities of "the
entire universe of manufacturers" when setting an
"industr5rwide" standard. Mercedes said that NHTSA
did not adequately explain why the agency would
decline to base a determination of reasonable efforts
or maximum feasible level solely on a market seg-
ment that does not represent a substantial share of
the market. Mercedes argued that unless NHTSA im-
poses a standard that is attainable by limited line
manufacturers, the agency will be acting in an ar-
bitrary and capricious manner in penalizing those
manufacturers that have no small cars to balance
against their large cars.
The National Automobile Dealers Association
(NADA) supported a reduction in the 1989 standard
to a level that will "assure continued consumer choice
through unimpeded product availability." While
NADA did not recommend a particular level at which
NHTSA should set the 1989 standard, NADA stated
that the CAFE level should "preserve the ability of
consumers to purchase and dealers to sell those large
or more powerful vehicles demanded by consumers."
Mr. William Hancock of Autochoice shared the view
expressed by many other commenters that customers
today are more interested in comfort and performance
than in fuel economy, and that consumer demand has
made it difficult for the domestic automobile industry
to meet a 27.5 mpg standard.
The Recreational Vehicle Industry Association
(RVIA) and several other commenters stated that con-
tinuation of the 27.5 mpg standard could create a lack
of tow vehicles to safely pull travel trailers and other
items of equipment. The American Motorcyclist Asso-
ciation believed that a lowering of the standard could
facilitate the manufacture of a "modestly priced,
decently powered" automobile suitable for towing
motorcycles on trailers.
The DepEulment of Energy's (DOE) comments
focused on whether General Motors could achieve the
27.5 mpg standard in MY 1989. However, DOE also
said it "remains unconvinced that the [CAFE] stand-
ards are useful in actually achieving energy savings
in today's market." DOE analyzed GM's 1989 fuel
economy capability. GM achieved a CAFE of 27.6 mpg
in 1988. Since GM is continuing to improve its prod-
ucts, DOE expected GM's CAFE to reach or exceed
27.6 mpg in 1989. DOE noted that GM's projected in-
ability to meet even the 27.5 mpg standard in 1989
appeared to be largely a result of decreasing projected
fuel economy at the detail level of model/engine/
transmission. Based on the information presented in
the NPRM, DOE commented that it appeared that
although the majority of the project CAFE decline is
due to decreasing CAFE estimates for existing makes
and engines, the reasons for this phenomenon were
not explained in the NPRM.
DOE disagreed with NHTSA's analysis of fuel
economy technology that had concluded that "no
great amount of new technologies is expected to be
available between now and 1990." DOE stated that
there are proven technologies in widespread use not
considered in the NPRM that could have been used
PART 531-PRE 144
by GM to improve fuel economy beyond present levels.
Two important technologies are the four valve engine
and engine friction reduction. DOE estimated that
these two technologies alone can improve automotive
fuel economy by an estimated 20 percent. In any
event, according to DOE, the fact that GM will ex-
ceed 27.5 mpg by 0.1 mpg in 1988 demonstrates the
technological feasibility of the MY 1989 standard.
DOE further noted that the trade-off between fuel
economy and vehicle performance is germane to the
NPRM, but the information and analysis presented
are insufficient to determine the impact of increased
consumer demand for performance on fuel economy.
DOE cited an analysis of the Environmental Protec-
tion Agency showing that with technology remain-
ing constant, a 10 percent increase in horsepower will
cause a 2-3 percent loss of fuel economy. DOE said
that it needs to be shown how much impact increased
horsepower will have on GM's capability to meet the
existing standard for MY 1989. A second important
issue is whether vehicles with slightly lower per-
formance and slightly higher mpg would cause a sig-
nificant loss in market share or sales for GM.
DOE also commented on transportation's role in
U.S. oil use and the importance of rising fuel effi-
ciency. DOE noted that the transportation sector is
crucial to the Nation's energy security problem since
its petroleum use exceeds total domestic production.
Excluding petroleum used as an industrial feedstock,
the 11 MMB/D of motor fuel use comprises 80 percent
of total U.S. oil use and 90 percent of light product
use. Oil demand forecasts referenced in the NPRM
assume continued new car and light truck fuel
economy improvement. Without this improvement,
DOE said that future oil consumption and the
problems of oil import dependence will be greater.
While the Council of Economic Advisors (CEA) indi-
cated its support for the Secretary's proposal to repeal
the CAFE standards for all new model yegirs, the CEA
recognized that NHTSA is required to administer the
CAFE statute as it currently exists. CEA accordingly
recommended that NHTSA set the MY 1989 CAFE
standard at 26.5 mpg since the commenter believed
setting the standard at this level would "reduce the
aggregate economic cost." CEA argued that a CAFE
standard of 27.5 mpg would have an economically im-
practicable impact on the productivity and com-
petitiveness of the U.S. automobile industry and on
the level of employment in that industry. CEA also
emphasized its belief that safety is adversely affected
by shifts to smaller, more fuel-efficient automobiles.
It cited an article by Robert Crandall and John
Graham (see discussion of CEI petition, infra) to sup-
port CEA's contention that increased fatalities and
injuries result from manufacturers' responses to
CAFE standards. CEA argued that the increased
fatalities and injuries make the standards economi-
cally impracticable. CEA said this was particularly
so since fuel savings and any associated emissions
reductions are of questionable magnitude. CEA said
that NHTSA should make clear what economic value
NHTSA is imputing to the alleged adverse safety con-
sequences in the agency's analysis of economic prac-
ticability. CEA noted that setting the standard at 26.5
mpg instead of 27.5 mpg "would, if Crandall and
Graham are correct, result in between 600 and 1,100
fewer deaths and between 3,100 and 5,600 fewer
serious injuries over" the lifetime of the MY 1989
autos.
The Bureau of Economics of the Federal Trade Com-
mission (FTC staff) submitted a theoretical model that
estimates the production shifts, price changes,
employment, and fuel consumption effects that would
result from a 27.5 mpg CAFE standard. The FTC
Staff analysis concluded the following:
"We estimate that imposing a 27.5 MPG stand-
ard instead of a 26.6 MPG standard in MY 1989
would cost consumers almost $650 million
(because of increased prices for large cars with
low MPG ratings) in MY 1989. Domestic auto
industry profits would fall by about $1,553
billion that same year. Total employment in
domestic auto and auto-related industries would
likely decline about 11,500 jobs. Meanwhile, we
estimate that the higher standard would, by
decreasing the retirement rate for existing large
cars and increasing the rates of production and
utilization of new small cars, actually increase
gasoline consumption by a total of approximate-
ly 245 million gallons over the next 15 year
period following the imposition of the standard."
NHTSA notes that one of the assumptions of the
FTC staff analysis was that "(a)bsent the standard,
GM expects to reach 26.86 mpg in MY 1989 "
That agency also stated that "(s)hould GM prevail in
its ciurent court challenge, and win additional CAFE
mileage credits, it expects to reach 27.1 mpg in MY
1989 " NHTSA notes that the difference between
the 26.86 mpg and 27.1 mpg figures cited by FTC ap-
pears to be the Environmental Protection Agency test
adjustment credits. As discussed below, the test ad-
justment credits are provided to compensate for the
effects of past test procedure changes. The credits for
MY 1989 were not dependent on GM prevailing in its
PART 531-PRE 145
coiirt challenge, which NHTSA assumes refers to the
case of Center for Auto Safety v. Thomas. GM's cur-
rent MY 1989 projection is in fact 27.2 mpg, a figure
which includes the test adjustment credits. NHTSA
also notes that it is not correct to characterize GM's
projection as what it would achieve "absent the stand-
ard," since GM's projection reflects a product plan
that was devised in response to the 27.5 mpg stand-
ard. A further discussion of this issue is provided
below.
The U.S. Department of Commerce (DOC) believed
that the 1989 MY standard should be set at 26.5 mpg,
stating that retaining a 27.5 mpg standard would
have a significant adverse effect on the competitive-
ness of the U.S. auto industry and on employment in
this country. DOC said that its analysis showed that
a large part of the U.S. automobile industry will be
unable to produce a fleet of cars that achieves the 27.5
mpg standard unless it reduces its domestic fleet prod-
uct offerings and adjusts its output mix, which in turn
would have economically damaging consequences for
U.S. automobile producers, workers, and consumers.
DOC said that these compliance difficulties arise in
part from the fact that the manufacturers "face a
market strongly influenced by significantly reduced
gasoline prices. Today's real price of gasoline is lower
than at any time since the mid-1970's." DOC esti-
mates that severe competition in the small car market
will cause U.S. producer sales to decline from an
estimated 590,000 vehicles in 1988 to 350,000 in
1990, and will limit the ability of full-line U.S. pro-
ducers to use price incentives to stimulate small car
sales to meet a 27.5 mpg standard for their domestic
fleet. Further, DOC said that U.S. manufacturers will
also face increasing foreign competition in the mid-
size/intermediate and large/luxury car markets dur-
ing 1989 and 1990, and it will become increasingly
difficult for full-line manufacturers to use price dis-
counting of their smaller cars to shift effective con-
sumer demand in the direction of small, domestically
manufactured cars. DOC believes U.S. producers need
greater freedom to compete in the extremely com-
petitive automobile market that it forecasts than
would be permitted by a 27.5 mpg standard. That
department also believes that maintaining a 27.5 mpg
CAFE standard would not produce important benefits
for the country's energy security.
A variety of other groups urged that the MY 1989
CAFE standard be reduced. Consumer Alert urged
relaxation of CAFE standards, although it did not
suggest any specific level. That group's primary con-
cern was that higher CAFE standards lead to smaller
cars, which inevitably lead to increased highway
fatalities. They urged NHTSA to disclose the number
of fatalities resulting from the imposition of 26.5 mpg
or 27.5 mpg for MY 1989.
The National Safety Council did not state an opin-
ion whether the CAFE standard should be amended.
Expressing concern about the effect of CAFE stand-
ards on car weight and safety and about the possibil-
ity that a lower CAFE standard would lead to more
high-performance, high-speed cars, that group urged
NHTSA to conduct a comprehensive analysis of the
safety question.
The Competitive Enterprise Institute (CEI) cited
reports and safety literature to support its assertion
that large cars are safer than small cars. Particular
reliance was placed on the work of Robert Crandall
and John Graham. The CEI argued that CAFE stand-
ards produce a reduction in weight of the vehicle
population and thereby increase the number of
highway deaths and injuries. That group dismissed
as speculative the possibility that less stringent
CAFE standards would lead to a resurgence of "per-
formance" cars which will adversely affect safety. The
CEI further commented that the fleet of performance
cars was too small to serve as an offsetting factor in
discussing CAFE's net impact on traffic safety.
Testimony was presented by Robert W. Crandall of
the Brookings Institution and John D. Graham, asso-
ciate professor at the Harvard School of Public
Health, who coauthored an often-cited study that
found excessive fuel economy standards can adversely
affect automobile safety. Their study was submitted
as an attachment to CEI's rulemaking petition earlier
this year and is part of the record of this rulemaking.
Robert Crandall testified in opposition to any CAFE
standard other than one at the level of CAFE which
would be produced by a free market. He summarized
his research with Graham, which suggested that a
1989 CAFE standard of 27.5 mpg would increase occu-
pant fatalities by 14 to 27 percent, assuming 1985
gasoline price expectations were fulfilled. In contrast,
a 26.5 mpg CAFE standard would lead to an increase
in occupant fatalities of 8 to 16 percent, assuming that
vehicle producers have sufficient time to adjust their
vehicle designs. Crandall noted that designs for
1989-1990 passenger car weights were already locked
into place, but argued that adoption of the higher
CAFE standard would lead manufacturers to raise
prices on large cars and reduce prices on small cars
in order to meet the standard. He said that such
government-imposed distortion in vehicle offeringsi
PART 531-PRE 146
would lower new car sales, while drivers of older gas
guzzlers, unaffected by CAFE, would continue to buy
more gasoline. Finally, Crandall said that the Na-
tion's need to conserve energy was declining and said
that the Secretary of Transportation may reduce
CAFE standards if he makes such a determination
about the national need to conserve.
John D. Graham spoke as a public health profes-
sional with concerns about the adverse effects of fuel
economy standards on the incidence and severity of
crash-related injuries. He supplemented Crandall's
comments with three points. First, he recommended
that DOT use this rulemaking proceeding to publicly
acknowledge the adverse effects of CAFE standards
on vehicle safety. If DOT does not believe CAFE
adversely affects safety, he said that it should publish
the rationale for that conviction. Second, safety is an
important consideration in determining the proper
standards for 1989 and 1990. He asserted that a
stricter standard will force manufacturers to manip-
ulate marketing and pricing programs in favor of
lighter, less crashworthy vehicles. Third, he argued
that there is no scientific basis for believing that
CAFE will make beneficial contributions to vehicle
safety. Finally, he noted that the Crandall-Graham
study predicts that CAFE will be responsible for 2,200
to 3,900 additional fatalities over the life of 1989
models.
The Insurance Institute for Highway Safety (IIHS)
examined the relationship between CAFE standards
and vehicle safety. The IIHS urged NHTSA to
evaluate the overall safety effect of CAFE re-
quirements, and not, as was done in the past, assume
that these requirements had no significant effect on
future deaths and injuries in motor vehicle crashes.
The HHS comments concluded that the present CAFE
standard imposes constraints on car manufacturers,
and these constraints affect safety. To the extent that
these constraints increase the production of cars that
are small (in terms of size, not weight), that effect is
negative, but if the standard also restricts the pro-
duction of high performance cars, that effect is
positive. IIHS did not express a judgment as to which
effect would be greater.
Two staff members of the Heritage Foundation,
writing to express their personal opinions, urged
NHTSA not to allow the CAFE standard to rise to
27.5 mpg. In addition to generally restricting con-
sumer choice, they stated that the higher standard
could trigger a loss of tens of thousands of jobs in the
U.S. automobile industry. In determining "maximum
feasible" average fuel economy, they argued NHTSA
should consider safety in considering technological
feasibility and economic practicability. They felt it
NHTSA's duty to estimate the likely safety effect of
any CAFE level selected, including, if possible, the
number of lives placed at risk. Although this did not
mean NHTSA could not adopt a standard with a
negative effect on safety, they said that the agency
should, in such a case, describe why safety would be
outweighed by other considerations.
The United Automobile, Aerospace & Agricultural
Implement Workers of America (UAW) supported con-
tinued efforts to conserve nonrenewable resources
such as fossil fuels. At the same time, it expressed
concern about the employment implications of requir-
ing compliance with the statutory 27.5 mpg standard
for MY 1989. (See the discussion above of the
testimony of UAW President Bieber regarding the in-
centive created by the law for the domestic manufac-
turers to outsource production of their larger cars.)
Other groups opposed any reduction in the MY 1989
standard from the 27.5 mpg statutory level. The
American Council for an Energy-Efficient Economy
(ACEEE) opposed any rollback in the CAFE standard.
ACEEE argued that reducing CAFE standards would
lead to higher oil consumption and imports, which in
turn would reduce national security, increase the
trade deficit, increase air pollution levels, and
generate more climatic change. Because of recent ex-
perience and developments within the auto industry,
ACEEE said that there is no reason why GM and
other domestic manufacturers could not meet a 27.5
mpg CAFE standard in MY 1989, given reasonable
efforts. The organization stated that maintaining a
27.5 mpg CAFE standard could help protect jobs in
the United States, and would not have to be at the
expense of auto safety.
The Center for Auto Safety (CFAS) argued that
strong CAFE standards save American jobs and that
relaxation of the 27.5 mpg CAFE standard would cost
jobs. The Center estimated that when CAFE stand-
ards were set at 26.0 mpg for 1986-1988, GM and Ford
exported production of over 500,000 small cars an-
nually at a loss of 175,000 jobs in the U.S.
The Americans for Energy Independence (AEI)
argued that a reduction in CAFE standards is bad
policy. Their major concern was that oil consumption
levels in the U.S. thwarted energy independence. As
the transportation sector accounted for 60 percent of
American oil consumption, the AEI argued that con-
servation gains in transportation could be enough to
offset oil production losses in the 1990's. Because cars
PART 531-PRE 147
account for most of the oil consumption in transpor-
tation, AEI said that more must be done to conserve
oil consumption in cars.
The Energy Conservation Coalition (ECC) strongly
opposed any reduction of the CAFE standards. The
ECC questioned NHTSA's determination that a
standard below 27.5 mpg would be the "maximum
feasible" level.
The Natural Resources Defense Council (NRDC)
strongly urged that the CAFE standard for MY 1989
remain at the 27.5 mpg level. They expressed strong
disagreement with NHTSA's determination that the
proposed action will result in "insignificant" en-
vironmental impacts, and that no Environmental Im-
pact Statement was necessary. Most of NRDC's com-
ment focused on NHTSA's alleged failure to comply
with the National Environmental Policy Act and on
the perceived inadequacies of the Environmental
Assessment.
The Fossil Fuels Policy Action Institute endorsed
the comments of NRDC, ECC, and CFAS, while
noting concern for the safety arguments raised by
CEI.
Congressional correspondents were divided on the
proposal. Senate Majority Leader Byrd, House
Speaker Wright, and more than 50 other members of
Congress wrote letters in support of lowering the
CAFE standard for MY 1989, stating that the CAFE
program has created some serious problems for
domestic manufacturers of full-line automobiles. Con-
gressman Carr testified at the public hearing in this
proceeding, and Congressman Oxley submitted writ-
ten testimony, in support of reducing the standard.
These members believe that CAFE is jeopardizing the
production of many popular American-made, family-
size sedans and station wagons, threatens the loss of
American jobs, restricts consumer choices, and can
also adversely affect automotive safety. In addition,
Congressman Dingell, chairman of the House Com-
mittee, on Energy and Commerce, supported reduc-
tion of the MY 1989 standard, saying that such ac-
tion would "help preserve U.S. jobs in the auto in-
dustry and its suppliers consistent with the Congres-
sional objectives of the U.S. Trade legislation recent-
ly enacted into law, particularly section 1001(aX4)."
Chairman Dingell raised several other issues, noting
reports that large cars are generally safer than small
ones and suggesting that any possible contribution
of this fuel economy rulemaking to the greenhouse
phenomenon was too remote and small to be relevant.
Senator Wirth submitted written testimony oppos-
ing the proposed lowering of the fuel economy stand- ^^
ard, citing a need to promote the efficient use of fuels ^P
in order to trim this country's growing dependence
on oil imports and begin addressing major environ-
mental problems facing oiu- nation and the rest of the
world. Approximately 20 other members of Congress
expressed strong opposition to lower CAFE standards
for MY 1989. In light of rising oil imports, a severe
trade deficit, and the threat of catastrophic global
climatic change due to the burning of fossil fuels,
several members urged this agency to raise CAFE
standards above 27.5 mpg, not lower them.
Sixty-fovu- state legislators, eight mayors, eight
State officials, and the governors of Indiana,
Michigan, Missouri, Tennessee, and Wisconsin also
wrote to Secretary Burnley urging a CAFE standard
of 26.5 mpg for MY 1989.
Finally, thousands of letters were received from the
general public and from GM employees, the majority
of them supporting a 26.5 mpg standard.
V. Agency's Analytic Approach
The agency is following the same basic analytic ap-
proach it used in the MY 1986 and MY 1987-88
rulemaking proceedings when it also considered set- |^
ting the standard below 27.5 mpg. This approach can ^^
be described as a two-prong analysis. First, the agency
assesses whether the industry (or a company
representng a substantial share of the industry) has
taken reasonable steps to achieve the statutory goal
of 27.5 mpg, the standard that would apply in the
absence of an amendment by this agency. This assess-
ment, which GM describes in its comments as "an
auditing device," is used by the agency to help it
determine whether there is any reason why it should
exercise its discretion to amend the statutory stand-
ard. If the agency is satisfied that manufacturers did
make reasonable efforts to achieve 27.5 mpg, then the
agency focuses on the second prong of the analysis:
setting the standard at the "maximum feasible" fuel
economy level, taking into account the four statutory
criteria: technological feasibility, economic prac-
ticability, the effect of other Federal motor vehicle
standards on fuel economy, and the need of the nation
to conserve energy. To the extent that the "reasonable
efforts" test is met, and the "maximvun feasible" level
is below 27.5 mpg, the standard would be reduced to
the new, maximum feasible level. This methodology
and comments specifically addressing the
methodology will be discussed in this section. Com- ^^
ments directed to the application of the methodology m^
PART 531-PRE 148
(such as opinions about the sufficiency of manufac-
turer efforts to achieve 27.5 mpg or views regarding
the maximum feasible level) will be addressed
elsewhere in this decision.
V-A. The "reasonable efforts" test
In the model year 1986 proceeding, the agency
described the "reasonable efforts" test as follows:
"... Since the Cost Savings Act imposed a long-
term obligation on manufacturers to achieve a
27.5 mpg fuel economy level, it would be
inappropriate to reduce the standard if a current
inability to meet the standard simply resulted
from manufactm-ers previously declining to take
appropriate steps to improve their average fuel
economy as required by the Act. Therefore, the
agency must evaluate the manufacturers' past
efforts to achieve higher levels of fuel economy
as well as their current capabilities.
"On the other hand, the agency does not con-
sider it appropriate to judge each and every
manufacturer product action by 20-20 hindsight.
In assessing the sufficiency of manufacturers'
fuel economy efforts, it is necessary to take
account of the information available to manufac-
turers at the time product decisions were being
made.
"Manufacturers had an obligation to take
whatever steps were necessary, consistent with
the factors of section 502(e), to meet the 27.5 mpg
standard. To the extent that manufacturers had
plans to meet the standard which subsequently
became infeasible due to unforeseen events,
NHTSA does not believe the manufacturers
should be charged with a failure to make a suf-
ficient effort." 50 FR 40533 (October 4, 1985;
quoted in MY 87-88 rule at 51 FR 35599 (Oc-
tober 6, 1986)).
As noted above, this approach was affirmed recently
by the U.S. Court of Appeals (D.C. Cir). Public Citizen
V. NHTSA, op. cit.
Several commenters addressed the methodology of
the agency's "reasonable efforts" test. GM urges the
agency to take account of the four statutory criteria,
including "economic practicability," when assessing
whether manufacturers have made reasonable efforts.
GM also believes that a manvifacturer's declining
CAFE performance does not, by itself, dictate a con-
clusion that the manufacturer failed to make
reasonable efforts to achieve 27.5 mpg. In GM's view,
the agency should consider the reasonableness of the
manufacturers' efforts over the long term, taking into
account the enormous improvements in automobile
fuel efficiency of the past decade, because these large
improvements make it more difficult for manufac-
turers to continue to make further improvements. GM
specifically urged NHTSA to "take care not to aban-
don the methodology that was developed in its first
passenger car amendment proceeding."
GM emphasizes that it has focused on the "sequen-
cing" of the two steps of NHTSA's analysis as ar-
ticulated in the first passenger car amendment pro-
ceeding. In other words, GM placed great importance
on the order in which NHTSA conducts the two-prong
analysis, noting that the "reasonable efforts test
should not be a "threshold condition that presumes
the validity of a standard whose maximum feasibil-
ity has never been determined." GM urges NHTSA
to conclude that " 'reasonable efforts' to improve fuel
economy do not become unreasonable simply due to
the passage of time." GM also urges NHTSA to con-
clude that, once manufacturer efforts are found to be
reasonable, "no additional actions should be expected
of them," regardless of the timing of the manufac-
turer's identification of compliance difficulties. GM
expresses puzzlement about the agency's references
to a "second round of investments or product deci-
sions." In sum, GM urges NHTSA to remain faithful
to the analytic approach it articulated in the MY 1986
proceeding.
Ford's comments imply a continuing fundamental
disagreement with the application of the "reasonable
efforts" test, noting that such a requirement "is not
found in the statute." Ford argues that setting a
standard above the capacity of a manufacturer in a
given model year could violate congressional intent,
whether or not the capacity is affected by the prior
efforts of that manufacturer. Ford analogizes the
"reasonable efforts" test to an "exercise in second
guessing based on hindsight," which Ford believes is
inappropriate. Ford also complains that there are "no
stated guidelines used in applying this test," render-
ing the test "undefined" and "subjective."
The Automobile Importers of America complain
that the "reasonable efforts" test as articulated in the
NPRM for MY 1989-1990 departed in some material
way from the "sufficient efforts" test described in the
agency's first rulemaking proceeding to reduce a
passenger car CAFE standard (MY 1986). ALA argues
that there is no requirement in the statute or the
legislative history for NHTSA to examine manufac-
turers' efforts under a "reasonable efforts" test. ALA
also complains about the lack of an "articulate stand-
PART 531-PRE 149
ard of what constitutes reasonable efforts." AIA also
objects that NHTSA appears to have elevated the
"reasonable efforts" test to a "threshold question"
that would govern "even the institution of a Model
Year 1989 rulemaking." This, maintains AIA, would
be a change from prior year proceedings. AIA would
like the agency to define the test as "reasonable ef-
forts to improve the fuel efficiency of a vehicle in light
of consumer demand and normal business considera-
tions."
Responding first to the general comment of GM and
AIA that NHTSA may have changed its view of the
"reasonable efforts" test since the MY 1986 pro-
ceeding, NHTSA assures the commenters that it
neither changed its methodology, nor did intend to
signal any change in it. In that regard, NHTSA
agrees with both GM and AIA that the original
methodology need not be changed, since in our view,
it has served well. While we acknowledge that some
terminology has shifted, that is due as much to others
(such as the D.C. Circuit Court of Appeals) using dif-
ferent words as it is to NHTSA's own differing termi-
nology. The agency neither sees nor intends any dif-
ference among terms such as "reasonable efforts,"
"sufficient efforts," or "reasonable plans to achieve
27.5 mpg." The agency means no difference by the
different terms, and does not intend to imply any
change in the methodology it articulated in the MY
1986 proceeding.
With respect to GM and AIA's concerns about the
sequencing of the two prongs of the analysis, the
agency does not agree that there is any substantive
significance to the sequence of the analyses, and
therefore does not agree that there is any importance
to be attached to the apparent "elevation" of the
"reasonable efforts" test in this proceeding. In fact,
the agency continues to place great importance on
both prongs of the analytic approach, and notes that
the sequence of conducting the two analyses should
make no difference at all in the outcome of the pro-
ceeding. On the other hand, there is potentially a
significant savings in NHTSA resources as well as
resources of the public that elects to comment on our
proceedings, if we first conduct the analysis that
appears less likely to support an amendment of the
standard. Then, if the analysis turns out to support
an amendment, the second prong of the analytic ap-
proach is conducted. Under some factual settings, the
"reasonable efforts" test may appear at first glance
to be the one less likely to yield a result that supports
amendments; in other cases, the "maximum feasible"
evaluation may appear to be less likely to support a
value different from 27.5 mpg. In any event, NHTSA
intended no substantive change by suggesting that ^^
the sequence of the analyses could be reversed, since |^^
our traditional approach has always made clear that
a negative result under either prong of the analysis
would result in no amendment to the standard.
GM specifically, and Ford implicitly, seek a judg-
ment by the agency that it is sufficient to have once
made "reasonable efforts" to achieve 27.5 mpg. The
agency cannot agree with this suggestion stated as
broadly as GM would have it; however, the agency
does agree with both companies that there are limits
to the doctrine of "reasonable efforts." For example,
the levels of investment which manufacturers must
make to remain in compliance with the 27.5 mpg level
is limited by "economic practicability." With respect
to the notion that a single "reasonable effort" is all
that is required by the law, the agency simply does
not agree. As we have consistently observed since first
articulating the "reasonable efforts" test, we believe
that the statute imposes a long-term obligation on
manufacturers to attempt to comply with the statute,
including its prescribed level of 27.5 mpg for model
years 1985 and thereafter.
We do agree with GM that the "reasonableness" of
a manufacturer's plans to comply must be judged with
consideration of factors such as the economic prac- ^^
ticability of the elements of the plan. Clearly, the ^^
agency does not intend to impose an obligation on a
manufacturer to carry out a compliance plan, no mat-
ter how costly. However, the agency does believe that
the statute compels the manufacturers to have a com-
pliance plan and, if it is not to be implemented for
reasons of cost or feasibility, the manufacturer must
pursue additional compliance plans, unless there is
no reasonable, alternative compliance plan available
in the same time period. And, given the agency's
obligation to review (or audit) the compliance plans
of the manufacturers, there may be instances when
the agency will not agree with a manufacturer about
the reasonableness of the compliance plan, either
because it projected compliance on the basis of
unreasonable assumptions, or because it would not
have achieved compliance, even if earned out. Also,
the agency may disagree with the r lanufacturer
about the reasonableness of its decision to drop the
plan. We do not believe that such disagreements are
tantamount to "20-20 hindsight," which we agree is
inappropriate in the CAFE regulatory context.
However, there is a middle ground between the in-
appropriate exercise of "20-20 hindsight" and the
mere "rubber stamping" of a manufacturer's state- ^^
ment of its previous intentions to comply. We believe (^P
that we have correctly discerned that middle ground
PART 531-PRE 150
in our previous articulation of our view of the
"reasonable efforts" test, and we reaffirm that posi-
tion today.
As to GM's suggestion that a one-time-only com-
pliance plan is sufficient, we do not agree for the
reasons stated above. If that plan is stale or overtaken
by changing events, and sufficient time reasonably
remains for the manufacturer to develop a new com-
pliance plan to achieve the statutory 27.5 mpg goal,
we believe that the statute contemplates that the
manufacturer will do so.
This view, that manufacturers must continue to
make efforts to reach 27.5 mpg, is entirely consistent
with the approach described in the MY 1986 decision.
In that rule, the agency observed:
"While the agency believes that [certain]
product plan changes . . . are consistent with
statutory criteria, since they reflect changes in
what is economically practicable, manufacturers
continue to have an obligation to make all
necessary efforts consistent with those statutory
criteria to meet CAFE standards. To the extent
that changes in product plans result in manufac-
turers not being able to meet a standard, the
manufacturers must pursue additional means,
consistent with the factors of section 502(e) to
meet the standard." (Emphasis supplied.) 50 FR
40542, October 4, 1985.
A similar discussion was included in the preamble
to the final rule amending the MY 1987-1988 stand-
ard, and today's decision reiterates this principle, con-
sistent with the language as it was articulated in
1985.
The agency does not agree with ALA that the agency
should examine only the efforts made by a company
to improve the fuel efficiency of its vehicles without
regard to the target fuel economy of that company.
Since the rule reducing the MY '86 standard, we have
clearly articulated our view that the agency's assess-
ment of reasonable efforts is viewed in terms of the
company's efforts to achieve the statutory target of
27.5 mpg. We do not believe that we could reasonably
exercise our discretion to amend the 27.5 mpg stand-
ard, if we could not find a company with a lower
CAFE projection that was reasonably trying to
achieve the 27.5 standard. NHTSA recognizes that
several ALA member companies (e.g., limited-line
European manufacturers) face severe obstacles in
achieving the 27.5 level, not unlike the problems of
full-line U.S. manufacturers. That is the result of the
fleet averaging requirement, which the agency
believes is a fundamental flaw of the statute.
However, NHTSA has no choice but to cEirry out the
law as it is written.
Both Ford and AIA object to the subjectivity of the
"reasonable efforts" test, suggesting that there are
no standards to govern the manufacturers' decisions.
Ford suggests that such standards could be developed
in a rulemaking proceeding, while AIA makes a
similar suggestion that manufacturers should be
given some notice of the agency's expectations.
However, AIA also acknowledged during the public
meeting on this rulemaking proceeding that manufac-
turers have an obligation— independent of NHTSA's
"reasonable efforts" test— to try to comply with the
statute, which sets the standard at 27.5 mpg in the
absence of a regulatory amendment. AIA also agreed
that they have had notice at least since 1985 of
NHTSA's intention to review the sufficiency of the
manufacturers' plans for reaching 27.5 mpg, which
is just another way of describing the "reasonable ef-
forts" test.
As to objective standards for such an audit, NHTSA
does not agree that it is desirable or necessary (or even
practical) to articulate such standards, since the prod-
uct decisions under review wall, in the first place, have
been made by the manufacturer. A decision to delete
a product or add a less fuel-efficient option may be
reasonable for one manufactxu-er that needs to re-
spond to certain competitive demands, and be un-
reasonable for another manufacturer. The agency
fully agrees with the commenters that the agency
should conduct the "reasonable efforts" test by plac-
ing itself in the shoes of the manufacturer at the time
the product decisions were made, and making a judg-
ment about whether those decisions were reasonable
at the time. That is not 20-20 hindsight; however, it
does involve a judgment that, as noted above, could
differ from the judgment made by the manufacturer
about the reasonableness of the product action. But,
this "test" is reviewing nothing more than the
manufacturer's progress toward trying to meet the
statutory standard, an obligation that existed prior
to NHTSA's articulation of a "reasonable efforts" test.
It is important to keep in mind that NHTSA's
"reasonable efforts" test is conducted for a very
limited purpose: to decide whether to exercise our
discretion to amend the statutorily set standard. We
do this in order to demonstrate to the public and a
reviewing court that we exercised our limited discre-
tion under the statute rationally and reasonably.
PART 531-PRE 151
V-B. The maximum feasible determination
The second prong of the agency's analysis is the
determination of "maximum feasible" fuel economy.
The agency has always followed the same approach
of considering separately each of the four statutory
criteria: economic practicability, technological
feasibility, the effect of other Federal motor vehicle
standards on fuel economy, and the need of the Na-
tion to conserve energy. The factors will have dif-
ferent influences on the outcome. Some factors tend
to suggest a higher "maximum feasible" level, while
others tend to suggest a lower level. Since Congress
provided no guidance on the weight to be given any
of the factors, we have exercised judgment in order
to accommodate the conflicting policies of the statute.
And, the weight we give any factor will depend on
the circumstances in the Nation at the time the deci-
sion is made, both wdth respect to economic health and
energy conservation needs. Although many com-
menters offered opinions about the weight to be given
one or more of the factors, no commenter offered
substantive opinions about the manner in which the
agency has conducted this prong of its analysis. The
comments that discuss the weighting of the factors
will be addressed in another section of this decision.
In the NPRM, the agency requested comments on
the possible situation involving one company that
made reasonable efforts, and another company (that
had not made reasonable efforts) that has a lower cur-
rent CAFE capability than the company that did
make reasonable efforts. GM suggested that NHTSA
should determine the CAFE level that would have
been achievable by the company that did not make
reasonable efforts, calculated as if it had made
reasonable efforts, and compare that level to the level
achievable by the company that did make reasonable
efforts. GM suggests that the CAFE level should then
be set at the lower of the two levels. Ford commented
that the agency could violate congressional intent if
it set a standard above the capacity of a major
manufacturer, without regard to the question of
whether that company made reasonable efforts. Since
it happens that we will not be setting the standard
higher than the capability of a substantial share
manufacturer, we need not resolve here the
methodological question.
VI. Manufacturer Capabilities for MY 1989
As part of its consideration of technological feasibil-
ity and economic practicability, NHTSA has
evaluated the manufacturers' fuel economy
capabilities for MY 1989. In past fuel economy
rulemakings, the agency has focused on the manufac- ^^
turers' current projections and underlying product ^9
plans, using the CAFE levels actually achieved in the
most recent model year(s) as a baseline. The agency
has then considered what, if any, additional
economically practicable actions the manufacturers
could take to improve their fuel economy, given the
available leadtime.
While NHTSA believes that this tjT)e of analysis
should be part of the evaluation of manufacturer
capabilities, it believes that a focus on current CAFE
projections and recent CAFE achievements can be
overly narrow in some circumstances. In particular,
as discussed below, NHTSA is concerned that too nar-
row a focus on GM's MY 1988 CAFE achievement
could have the effect of casting in concrete a signifi-
cant loss in market share which that company has
experienced over the past several years, and the
significant job losses which accompanied that market
loss. The same result could occur from too narrow a
focus on GM's MY 1989 CAFE projection, which
reflects a product plan devised in light of a 27.5 mpg
CAFE standard. The agency believes that it should
also look at the broader picture of how the standard
could affect product availability, jobs, and the com-
petitiveness of U.S. manufacturers. ^^k
VI-A. Manufacturer projections
GM and Ford have submitted a number of different
projections of their MY 1989 CAFE levels over the
past several years, reflecting changing product plans
and market conditions. This section addresses the
manufacturers' latest projections, since those projec-
tions reflect the manufacturers' current product
plans. The current MY 1989 projections of both GM
and Ford are lower than earlier projections. The
reasons for the change are discussed below in the sec-
tion entitled "Manufacturer Compliance Efforts."
The agency notes that one factor that complicates
a discussion of manufacturer projections is En-
vironmental Protection Agency (EPA) test adjustment
credits. Between 1983 and 1985, EPA engaged in
rulemaking to provide CAFE adjustments to compen-
sate for the effects of past test procedure changes,
ultimately adopting a formula approach for
calculating CAFE adjustments. While the CAFE ad-
justment differs among manufacturers due to their
different vehicle mixes, a tj^jical adjustment for MY
1989 is 0.2 or 0.3 mpg. In the discussion of manufac-
turer projections in this notice, the projections include ^^
PART 531-PRE 152
the EPA test credit adjustment unless it is noted
otherwise.
1. General Motors
GM indicated in its September 1988 comment that
its current product plan is expected to result in a MY
1989 CAFE level of 27.2 mpg. GM's projection is the
same as that provided to the agency in April 1988.
GM's comment, as well as its mid-model year report
for 1988, indicates that its MY 1988 CAFE will be
27.6 mpg. Thus, that company expects its CAFE to
decline by 0.4 mpg between MY 1988 and MY 1989.
GM provided detailed information explaining the ex-
pected decline. The information showed that much of
the decline is due to the uncertain effects on fuel
economy of new hardware introduced to improve
customer satisfaction with that company's 2.8 and
2.5L engines in MY 1989. The information also
showed that another reason for the decline is that GM
does not expect to replicate better-than-expected 1988
test results on its 2.8L and 3.8L engines, which is at-
tributable to test-to-test variability.
The record for this rulemaking indicates that QWs
27.6 mpg CAFE for MY 1988 is in part due to adverse
mix shifts, reflecting lower-than-anticipated sales of
that company's larger and luxury cars, and a signifi-
cant loss in overall market share for that company.
GM noted in its August 8, 1988, submission that its
share of total U.S. passenger car sales fell three points
between 1984 to 1986, and another six points between
1986 to 1988. That company also noted that major
contributors to this decline came in its traditionally
strong luxury and mid-size market segments. GM
stated that this loss of msirket share caused its active
hourly workforce to decline by over 75,000 workers
between June 1986 and June 1988, and that total jobs
lost at GM and its suppliers due to this decline in
market share may have been in excess of 200,000.
Between MY 1985 and MY 1988, the time GM was
losing market share, that company's CAFE rose from
25.8 mpg to 27.6 mpg. By contrast. Ford's MY 1988
CAFE level is very similar to its MY 1985 level (a
period of rising market share), 26.4 mpg versus 26.6
mpg. In the same period, a number of import
manufacturers' CAFE levels also declined. While the
decline in some of the import manufacturers' CAFE
levels was relatively small, BMW's CAFE declined
from 26.4 mpg in MY 1985 to 21.6 mpg in MY 1988.
GM argued in its August 8, 1988, submission that
while the contribution to its lost market share and
job losses resulting from efforts to comply with CAFE
may be impossible to isolate and quantify, it is no
mere coincidence that, during the period when its
CAFE performance and projections have been increas-
ing as those of its principal domestic and foreign com-
petitors have been directionally opposite, its percent-
age of total industry sales has declined. GM stated
in its September 1988 comment that as gas prices con-
tinued to decline during 1986, the demand for larger
cars and for engines with improved performance and
driveability continued unabated. That company noted
that despite this favorable sales environment, it suf-
fered both an absolute volume decline in full-size and
mid-size car production during MY 1986-88 and a
substantial loss of market share to its less fuel-
efficient competitors. GM observed that its production
of full-size cars, which reached more than 1.1 million
units in MY 1985, was off by nearly 300,000 units in
MY 1988. GM also noted that it introduced two new
full-size carlines during this period, among the most
fuel-efficient in their class, but sales of its downsized
models languished far below projected levels.
GM also suggested that some of its cars, most
notably the third-generation E/K models introduced
in MY 1986, may have pushed too far in the direc-
tion of downsizing and fuel-efficiency at the expense
of other attributes considered more important by the
consumer. That company added that, ironically, the
lost volume of these fuel-efficient larger cars had the
effect of improving GM's CAFE still further, while
depressing the CAFE of other manufacturers whose
share of less fuel-efficient models increased.
NHTSA notes that, for CAFE purposes, GM's MY
1986-88 market behavior does not merely reflect the
26.0 mpg level to which those standards were even-
tually amended. As indicated above, GM's initial
product plans for those model years were made in
light of the statutory 27.5 mpg standard expected to
be in place. In addition, GM was making every effort
during those model years to exceed the 26.0 mpg
standard in order to earn sufficient carryback credits
to offset a substantial MY 1985 shortfall. Thus, for
CAFE compliance purposes, GM did not enjoy the
flexibility of being content with achieving a CAFE
of only 26.0 mpg for MYs 1986-88, since that could
well have resulted in insufficient carryback credits
and thus a final determination of noncompliance and
a finding of "unlawful conduct" under section 508 of
the Act.
GM's current MY 1989 plan, which would likely
result in a CAFE of 27.2 mpg, again reflects the com-
pany's expectation of the statutory 27.5 mpg standard
that would be in effect unless changed through this
rulemaking. That company indicated in its August
PART 531-PRE 153
1988 submission that, looking to the future, it hopes
to increase sales of its mid-size, larger, and luxury
models and restore employment with restylings and
driveability improvements, albeit while trying to
minimize the CAFE penalty that will occur with those
changes. GM also indicated at the September 14,
1988, public hearing that it is doing everything it can
to try and get its lost market share back, but that it
is seriously constrained by CAFE standards in doing
that. While GM's current MY 1989 product plan does
reflect some technological improvements to improve
customer satisfaction, the agency does not believe
that it reflects the kinds of actions GM might wish
to take to restore market share and jobs if it were not
constrained by the 27.5 mpg standard.
2. Ford
Ford indicated in its September 1988 comment it
could achieve a MY 1989 CAFE level of "about 26.5
mpg." As noted in the NPRM, Ford estimated in April
1988 that it could achieve a MY 1989 CAFE level of
26.6 mpg. Thus, Ford currently projects essentially
the same CAFE level as it did earlier this year. Ford's
mid-model year report for 1988 indicates that its MY
1988 CAFE will be 26.4 mpg, or almost the same as
it projects for MY 1989.
While GM's MY 1988 CAFE achievement of 27.6
mpg in part reflects a significant loss in market share
since 1985, Ford increased its market share during
that time period. Ford's comment indicated that its
overall market share in 1988 is 21.4 percent, up from
19.7 percent in 1985.
3. Chrysler
Chrysler projected in April 1988 that it would
achieve a CAFE of 27.6 for MY 1989. At that time,
Chrysler projected a MY 1988 CAFE of 27.8 mpg. In
its July 1988 mid-model year report, however,
Chrysler indicated that it will achieve a MY 1988
CAFE of 28.4 mpg. NHTSA notes that, as discussed
in the MY 1986 and MY 1987-88 CAFE proceedings,
Chrysler's CAFE has been higher than that of GM
and Ford in recent years primarily because it does not
compete in all the market segments in which GM and
Ford sell cars (i.e., no "large" cars, which have lower
fuel economy ratings than other size classes).
4. Other manufacturers
The Japanese and other Asian manufacturers are
expected to easily exceed the current 27.5 mpg stand-
ard for MY 1989, in light of their traditional strength
in smaller cEirs. Also, all of these manufacturers' cars,
whether more or less fuel-efficient, are considered im-
ports under the statute, since their domestic content ^^
is less than 75 percent, even for those models pro- j^B
duced at U.S. plants. Therefore, unlike the domestic
manufacturers, the least fuel-efficient cars of the
Asian manufacturers are not, for CAFE purposes, in
a different fleet from their most fuel-efficient cars.
Thus, the fleet averaging requirements of the CAFE
law allows those companies to use the higher fuel
economy ratings of small cars to offset those with
lower ratings.
Nissan projects a MY 1989 CAFE level of 29.5 mpg
to 29.7 mpg. While the agency does not have MY 1989
CAFE projections for the other Asian manufacturers,
their MY 1988 CAFE levels, as reported in their mid-
model year reports, are well above 27.5 mpg.
Daihatsu will achieve a MY 1988 CAFE of about 46.5
mpg, Honda 32.0 mpg, Hyundai 35.0 mpg, Isuzu 32.6
mpg, Mazda 28.7 mpg, Mitsubishi 29.8 mpg, Subaru
31.8 mpg, Suzuki 50.3 mpg, and Toyota 32.6 mpg. The
agency notes that some of the Japanese manufac-
turers have experienced decreases in their fuel
economy during recent years as they have begun to
sell larger, more performance-oriented vehicles, e.g.,
Honda, which began marketing the Acura Legend in
1986 in the U.S., has dropped from 34.5 mpg in 1985
to 32.0 mpg in 1988. ^^
The import fleets of GM, Ford, and Chrysler are also |^P
expected to easily exceed 27.5 mpg for MY 1989. GM
projects a MY 1989 CAFE level of 39.3 mpg for its
import fleet, and Ford projects a CAFE level of 31.6
mpg. While the agency does not have a MY 1989
CAFE projection for Chrysler's import fleet, that com-
pany's mid-model year report indicated that its im-
port fleet will achieve a CAFE level of 30.3 mpg for
MY 1988. But as noted previously, the two-fleet rule
of the statute prevents the three U.S. companies from
using those higher fuel economy ratings to offset the
lower ratings of the rest of their fleets.
Most of the European manufacturers are expected
to be below the 27.5 mpg level for MY 1989. Austin
Rover projects a MY 1989 CAFE level of 23.5 mpg,
BMW 21.9 mpg. Jaguar 21.7 mpg, Mercedes-Benz
21.0 mpg, Peugeot 24.5 mpg, Porsche 23.5 mpg, Saab
26.6 mpg, and Volvo 25.7 mpg. The agency does not
have MY 1989 projections for Alfa-Romeo, Volks-
wagen, or Yugo. Those companies' mid-model year
reports indicated that their MY 1988 CAFE levels
will be 25.6 mpg, 30.3 mpg, and 33.8 mpg,
respectively.
VI-B. Possible actions to improve MY 1989 CAFE
The possible additional actions that manufacturers ^^
might be able to take to improve their projected CAFE ^^
PART 531-PRE 154
may be divided into four categories: further
^ technological changes (beyond what is contained in
H their product plans), increased marketing efforts for
their more fuel-efPcient cars, restricting the sale of
their less fuel-efficient cars and engines, and transfer-
ring the production of their less fuel-efficient vehicles,
or parts of those vehicles, outside of the United States.
GM and Ford have indicated in the past that they
might outsource some of their less fuel-efficient cars
to enable those cars to be averaged in with their
highly fuel-efficient captive imports.
Since the 1989 model year begins this fall, there is
insufficient time for the manufacturers to make
further significant technological changes in their
product plans. For example, once a new design is
established and tested as feasible for production, the
leadtime necessary to design, tool, and test com-
ponents such as new body sheet-metal systems for
mass production is typically 22 to 29 months. Other
potential major changes often take longer.
Similarly, there is insufficient time to transfer the
production of less fuel-efficient vehicles, or significant
parts of those vehicles, outside the United States
before the beginning of MY 1989. However, manufac-
turers could begin the steps necessary to outsource
^ large car production in a later model year. NHTSA
^^ has previously noted that there is a complete absence
^^ of energy conservation benefits to the U.S. from out-
sourcing. In addition. Congress has spoken clearly
about its desire that fuel economy standards should
not induce manufacturers to increase their importa-
tion of foreign-produced cars. Thus, NHTSA has said
that it does not consider outsourcing for CAFE pur-
poses to be reasonable and will not require manufac-
turers to consider outsourcing as part of their
"reasonable efforts" to achieve 27.5 mpg. See 51 FR
35604, October 6, 1986.
As to marketing efforts, the agency in the past has
concluded that GM and Ford both have made efforts
to promote the sales of fuel-efficient cars and deter-
mined that the manufacturers have undertaken ex-
tensive and significant marketing efforts to shift con-
sumers toward their more fuel-efficient vehicles and
options. The agency also has stated previously that
it believes that the ability to improve CAFE by addi-
tional marketing effors is relatively small. As a prac-
tical matter, marketing efforts to improve CAFE are
largely limited to techniques which either make fuel-
efficient cars less expensive or less fuel-efficient cars
more expensive. Moreover, the ability to increase
^^ sales of fuel-efficient cars largely relates to either in-
^A creasing market share at the expense of competitors
PART 531
or pulling ahead a manufacturer's own sales from the
future. Neither approach produces net energy savings
for the U.S. A factor that makes it difficult for the
domestic manufacturers to sell domestically produced,
fuel-efficient cars is the growing competition of lower-
priced small cars from countries such as Yugoslavia
and South Korea, which have significant cost
advantages.
Another consideration in this area is that the
manufacturer's success in improving the fuel effi-
ciency of large cars has itself made it more difficult
to sell smaller cars. The reason for this is that there
are diminishing returns in terms of greater fuel
economy from purchasing small cars as the fuel effi-
ciency of larger cars increases. Similarly, as gasoline
prices have declined, there are diminishing returns
to the consumer from purchasing more fuel-efficient
vehicles. Under current gasoline projections, a one
mpg increase in fuel economy from 15 to 16 mpg
would decrease lifetime operating costs by about $371.
By contrast, at a CAFE level of 26.5 mpg, the cor-
responding potential decrease in operating costs is
$122.
There is a problem with pulling ahead sales, as
mentioned above, which consists of the manufac-
turer's CAFE for subsequent years being reduced. For
example, if a manufacturer increases its MY 1989
CAFE by pulling ahead sales of fuel-efficient cars
from MY 1990, the MY 1990 CAFE will decrease,
compared with the level it would have been in the
absence of any pull-ahead sales attributable to
marketing efforts. For this reason, a manufacturer
cannot continually improve its CAFE simply by pull-
ing ahead sales.
As indicated in the NPRM, Ford and GM have both
provided specific information concerning their
marketing programs. GM indicated that its total cost
for numerous incentive programs for its fuel-efficient
cars during MY 1987-88 was over $2.0 billion. Ford
indicated that its expenditures for its marketing pro-
gram approached $3.0 billion for the years 1982-1988.
Ford also stated that its marketing support costs are
disproportionately greater for its fuel-efficient models
than its largeAuxury models.
NHTSA notes that the Department of Commerce
(DOC) commented that due to severe competition, it
expects U.S. producer sales in the small car segment
will decline from an estimated 590,000 vehicles in
1988 to 445,000 in 1989 and 350,000 in 1990. That
Department stated that this competition will limit the
ability of full-line U.S. manufacturers to use price in-
centives to stimulate small car sales. DOC com-
-PRE 155
mented further that U.S. automobile manufacturers
will also face growing foreign competition in the mid-
size and large/luxury car markets during 1989 and
1990, and that in this intensely competitive market
for larger as well as small cars, profit margins in all
lines will be under intense competitive pressure. That
Department concluded that it will thus become in-
creasingly difficult for full-line manufacturers to use
price discounting of their smaller cars to shift effec-
tive consumer demand in that direction.
For all of the reasons discussed above, and in light
of the expected market conditions described by DOC,
NHTSA does not believe that GM and Ford can signif-
icantly improve their CAFE levels by increased
marketing efforts of domestic fuel-efficient models
beyond what they have already been doing.
Any additional efforts by the manufacturers to in-
crease their MY 1989 CAFE, therefore, would be
limited largely to attempts to change product mixes
through product restrictions.
In looking at the potential methods for improving
CAFE, the agency also has recognized in the past that
manufacturers could improve their CAFE by restrict-
ing their product offerings, e.g., deleting less fuel-
efficient car lines or dropping higher performance
engines. However, as discussed in previous rulemak-
ings, such product restrictions undoubtedly will have
significant adverse economic impacts on jobs, the in-
dustry, and the economy as a whole— effects which
would run counter to the statutory criterion of
economic practicability and the congressional intent
that the CAFE program not unduly limit consumer
choice.
VI-C. Manufacturer-specific CAFE capabilities
In analyzing manufacturer-specific CAFE
capabilities, the agency has focused on the domestic
fleets of GM and Ford, because they have the lowest
individual projected MY 1989 CAFE levels among
manufacturers with a substantial share of the
market, and no combination of manufacturers with
lower projected CAFE levels would constitute a
substantial share of the market.
1. GM: NHTSA has analyzed GM's MY 1989 CAFE
projection and underlying plan. As discussed above,
GM indicated in its September 1988 comment that
its current product plan is expected to result in a MY
1989 CAFE level of 27.2 mpg. If NHTSA focused nar-
rowly on GM's MY 1989 CARE projection and its MY
1988 CAFE achievement, it would presumably con-
clude that GM's MY 1989 capability is above that of
Ford. While manufacturer product plans are subject
to risks, GM's 27.2 mpg projection reflects that com-
pany's best estimate of its MY 1989 CAFE, in light ^^
of its current product plan. ^^
As discussed above, however, NHTSA believes that
too narrow a focus on GM's MY 1988 CAFE achieve-
ment and MY 1989 CAFE projection could have the
effect of ratifying the significant loss in market share
that company has experienced over the past several
years and the significant job losses that accompanied
that market loss. The agency believes that its analysis
of GM's capability should also consider the CAFE
level that company might achieve if it more ag-
gressively seeks to regain, in MY 1989, a portion of
its lost market share. As indicated above, GM's cur-
rent product plan reflects the constraints of a 27.5
mpg standard, and the agency does not believe that
it reflects the kinds of actions GM might wish to take
to restore market share and jobs if there were a lower
MY 1989 CAFE standard.
NHTSA recognizes that it is difficult to estimate
what GM's CAFE capability would be under a
scenario of seeking to regain lost market share and
jobs. Ford's recent CAFE experience suggests that a
full-line manufacturer can achieve approximately
26.5 mpg, while remaining fully competitive in all
market segments. The agency has analyzed GM's ^
product plan and concluded that efforts by that com- (^
pany to restore its market share in less fuel-efficient
market segments could, consistent with its capacity
restraints, result in a MY 1989 CAFE of 26.5 mpg
or below. These efforts could include pricing and other
actions to promote sales of compact, intermediate, and
luxury cars. In light of Ford's experience and
NHTSA's analysis of the kinds of actions GM might
take to restore lost market share and jobs, the agency
concludes that 26.5 mpg appropriately represents
GM's MY 1989 CAFE capability.
NHTSA notes that the Department of Energy com-
mented that it is its judgment that the 27.5 mpg
standard is achievable by GM in MY 1989. This
conclusion was largely based on the fact that GM
achieved a CAFE of 27.6 mpg in MY 1988. Several
other commenters also cited GM's MY 1988 achieve-
ment as evidence that GM can achieve 27.5 mpg in
MY 1989. DOE suggested that some of the decreases
in GM's MY 1989 CAFE were unexplained. However,
NHTSA believes that GM's August 1988 and
September 1988 submissions fully explain the ex-
pected decline in its MY 1989 CAFE, as compared to
MY 1988. The agency believes that GM's MY 1989
CAFE projection of 27.2 mpg reasonably reflects that ^
company's current product plan. While NHTSA does A
PART 531-PRE 156
not agree that GM could necessarily achieve 27.5 mpg
CAFE in MY 1989 without some product restrictions,
it does agree with DOE and other commenters that,
using GM's MY 1988 experience as a baseline, that
company could achieve a CAFE above 26.5 mpg (and
might well experience further losses in market share
and jobs as well). However, as discussed above,
NHTSA believes that the approach of narrowly focus-
ing on GM's MY 1988 CAFE achievement and MY
1989 CAFE projection could have the effect of casting
in concrete the signficant loss in market share that
company has experienced over the past several years,
and the significant job losses which accompanied that
market loss.
The Natural Resources Defense Council (NRDC)
also cited GM's MY 1988 CAFE performance, and
argued that GM's claim that its CAFE will drop
should be viewed skeptically, especially since that
company asserts that its lagging large cars sales are
an aberration even though they reflect a nationwide
trend toward smaller vehicles. That commenter
argued that GM's loss in market share is not due to
CAFE.
As discussed above, NHTSA acknowledges that the
Igirger car segment of the market has been shrinking
in absolute terms. Between MY 1984 and MY 1987,
the share of sales taken by mid-size and larger cars
declined from 42.7 percent of the market to 36.4 per-
cent. During this time period, the smallest car seg-
ment also declined. The share captured by subcom-
pact and smaller models fell from 29.4 percent in MY
1984 to 23.6 percent in MY 1987. The growth has
been in the compact segment, as its share grew from
27.9 percent to 40.0 percent over the same time
period.
However, NHTSA believes that in order for GM to
be able to adequately compete in today's intensely
competitive market, it must be able to accommodate
consumer demand for such attributes as larger
engines and larger interior space. These actions come
at a CAFE price, however, since they generally reduce
the fuel efficiency of a model. To the extent that GM
is able to so accommodate consvuner demand or other-
wise increase the sales of its less fuel-efficient
vehicles, including less fuel-efficient compacts as well
as larger vehicles, its CAFE will decline, relative to
what it achieved in MY 1988. This decline is in addi-
tion to that portion of the decline that reflects unex-
pectedly high EPA test results in MY 1988.
2. Ford: NHTSA has analyzed Ford's MY 1989
CAFE projection and underlying product plan. As in-
dicated above, Ford stated in its September 1988 com-
ment that it projects its 1989 model year CAFE level
at about 26.5 mpg. Ford indicated further at the
September 14, 1988, public hearing that while there
is a set of assumptions with its product plan, it pro-
jects achieving the 26.5 mpg level for MY 1989 with
some level of confidence.
In light of Ford's statements and the agency's
analysis of Ford's product plan, NHTSA has con-
cluded that 26.5 mpg represents Ford's MY 1989
CAFE capability, taking account of possible uncer-
tainties. In reaching this conclusion, the agency notes
that Ford achieved a similar level, 26.4 mpg, in Model
Years 1987-88, and that it did so while generally in-
creasing its market share of larger cars and remain-
ing fully competitive in all market segments. Ford
was able to hold its CAFE about steady while increas-
ing its market share of large cars, but only by taking
a number of offsetting fuel-efficiency enhancing
actions.
VII. Manufacturer Compliance Efforts
While there is now insufficient leadtime for GM and
Ford to initiate further significant technological im-
provements to achieve CAFE of 27.5 mpg in MY 1989,
the standards have been in existence since 1975.
Thus, as part of deciding whether to exercise its
discretion to reduce the standards to the maximum
feasible average fuel economy level, NHTSA has
evaluated whether the manufacturers made sufficient
efforts through September 1988 to meet the standard.
As discussed in the MY 1986 and MY 1987-88 pro-
ceedings and noted above, the agency does not con-
sider it appropriate to judge each and every manufac-
turer product action by 20-20 hindsight. Rather, in
assessing the sufficiency of the manufacturers' fuel
economy efforts, it is necessary to take account of the
information available at the time product decisions
were being made.
For MY 1986, and again for MY 1987-88, the agency
determined that GM and Ford had plans adequate to
meet the 27.5 mpg standard, but that these plans
were overtaken by unforeseen events in the eairly
1980's. The agency identified a number of factors
which led to lower-than-expected CAFE levels, in-
cluding the declining price of gasoline and a related
increase in expected consumer demand for larger and
more powerful cars. The agency concluded that the
manufacturers did not have time to offset the impact
of these unexpected events by developing and im-
plementing supplementary or alternate plans for
meeting the CAFE standard of 27.5 mpg for MY
1986-88.
PART 531-PRE 157
NHTSA observed in the NPRM for this proceeding
that given the passage of time since those unforeseen
events in the early 1980's, coupled with the agency's
understanding of traditional auto industry leadtimes
to introduce new technologies or new vehicles, the
agency could not reasonably base an exercise of its
discretion to amend the MY 1989 standard on the
same set of facts that supported the reduction of the
MY 1986-88 standards. NHTSA explained that it
would need to know whether, and to what extent, the
industry as a whole made new reasonable plans to
comply with the 27.5 mpg standard after the unan-
ticipated events of the early 1980's overtook the
previous plans.
As part of evaluating whether GM and Ford made
sufficient efforts to achieve a 27.5 mpg CAFE for MY
1989, the agency has evaluated the manufacturer's
MY 1989 CAFE projections and product plans sub-
mitted to the agency over time.
GM projected in February 1985 that it could achieve
a CAFE of 30.1 mpg for MY 1989. Between February
1985 and August 1985, GM lowered its projection by
1.5 mpg, to 28.6 mpg.
Ford projected in February 1985 that it could
achieve a CAFE of 28.3 mpg for MY 1989. Between
February 1985 and August 1985, Ford lowered its pro-
jection by 1.5 mpg, to 26.8 mpg. In October 1985,
however, Ford projected that it could achieve 27.6
mpg.
In this proceeding, both GM and Ford cited substan-
tial unforeseen changes in market conditions which
occxirred after the early 1980's, including a precipitous
unexpected drop in gasoline prices during 1986, as the
primary cause for their MY 1989 CAFE projections
falling below 27.5 mpg after 1985. Between 1981 and
1985, real gasoline prices dropped a total of 25 per-
cent, from $1.63 per gallon to $1.22 (1986 dollars).
During 1986, however, gasoline prices unexpectedly
dropped another 24 percent, to $0.93 (1986 dollars),
and have remained at a low level.
Ford indicated that it recognized by early 1986 that
its earlier product plan to achieve 27.5 mpg for MY
1989 had been overtaken by events. GM indicated
that it recognized by mid- 1986 that its earlier product
plan to achieve 27.5 mpg for MY 1989 had been over-
taken by events.
NHTSA believes that the events described by the
manufacturers raise three basic issues: (1) whether
GM and Ford had reasonable plans to achieve 27.5
mpg CAFE for MY 1989 prior to 1986, (2) whether
the fall in gasoline prices and other events cited by
the manufacturers were of a nature that overtook the ^^
manufactxirers' previous product plans, and (3) ^
whether the manufacturers made sufficient efforts,
under the statute, to achieve 27.5 mpg after early to
mid-1986. Each of these issues is addressed below.
The fu-st of the three issues is whether GM and Ford
had reasonable plans to achieve 27.5 mpg CAFE for
MY 1989 prior to 1986, i.e., before the occurrence of
events which the manufacturers assert overtook their
plans. Based on its review of GM's August 1985
product plan for MY 1989, the agency believes that
GM's plan was reasonably calculated, as of that time,
to meet the 27.5 mpg standard. NHTSA notes that
GM expected to exceed the 27.5 mpg by more than
1.0 mpg, an amount which, among other things, may
be viewed as representing a margin of safety for
meeting the standard.
The agency does not have as detailed information
regarding Ford's 1985 product plans for MY 1989.
Among other things, it does not have detailed infor-
mation concerning why Ford revised its estimates
downward in August 1985 and back upward in Octo-
ber 1985. As always, however, the agency would not
be judging any such plan with 20-20 hindsight. In-
stead, the agency would consider whether the product
decisions were reasonable when they were made. ^k
Examination of the resisonableness of manufacturer
plans in this proceeding includes consideration of
whether the fall in gasoline prices and other events
cited by the manufacturers were in fact unexpected,
in light of the manufacturers' reliance on this argu-
ment to explain the change in their projections.
NHTSA believes that a second drop in gasoline prices
of this magnitude was unexpected at the time
manufacturers were first developing their MY 1989
product plans. For example, during the fall of 1983,
the Energy Information Administration (EIA) was
forecasting essentially constant gasoline prices be-
tween 1985 and 1986, $1.22 per gallon in 1985 and
$1.20 in 1986 (1985 dollars). Similarly, during the
winter of 1983-84, Data Resources, Inc. (DRI) was
forecasting essentially constant gasoline prices
between 1985 and 1986, $1.30 per gallon in 1985 and
$1.31 in 1986 (1985 dollars). While EIA and DRI both
expected by the sum ner of 1985 that gasoline prices
would decline between 1985 and 1986, even at that
late date they did not anticipate the magnitude of the
decline. EIA forecast in July 1985 that gasoline prices
would decline from $1.19 per gallon in 1985 to $1.11
in 1986 (1985 dollars). DRI forecast in the summer
of 1985 that gasoline prices would decline from $1.20 ^
PART 531-PRE 158
in 1985 to $1.14 in 1986 (1985 dollars). By com-
parison, the actual decline in gasoline prices between
1985 and 1986 was from $1.20 per gallon to $0.91
(1985 dollars).
NHTSA also believes it is clear that the magnitude
of the changes in the competitive market facing GM
was also unexpected. The agency notes that GM's
July 1986 product plan for MY 1988 forecast total GM
production of nearly 4.6 million cars, while that com-
pany now expects to produce fewer than 3.5 million
cars. This change in expected volume reflects GM's
loss in market share since 1985.
As to Ford, NHTSA believes that company has
made significant attempts over time to improve its
CAFE. Ford commented that for MY 1987 through
1989, it will have spent $3 billion on programs that
will improve fuel economy. According to that com-
pany, this figure exceeds the level submitted to the
agency in 1985 by more than $500 million and in-
cludes more than 60 product improvement actions
that have had a beneficial effect on fuel economy.
Ford also indicated that from 1986 to 1988, it will
have spent nearly $2 billion on marketing actions
alone to improve sales of its fuel-efficient car lines.
The agency notes that Ford's significant attempts to
improve CAFE have enabled it to hold its CAFE level
essentially constant in recent model years despite ex-
periencing significant mix shifts toward larger,
higher performance cars that are less fuel efficient.
The second of the three issues is whether the fall
in gasoline prices and other events cited by the
manufacturers were of a nature that overtook the
manufacturers' previous product plans. NHTSA
agrees that the precipitous fall in gasoline prices dur-
ing 1986 did result in a substantial shift in consumer
demand toward less fuel-efficient vehicles, overtak-
ing GM's and Ford's earlier MY 1989 product plans.
As gasoline prices decrease, the costs of operating cars
that are larger or have more performance decrease.
Therefore, all other things being equal, consumer de-
mand for larger cars and higher performance in-
creases. The Department of Commerce noted that the
latest (1987) J. D. Power survey of consumer purchas-
ing attitudes indicated that performance ranks above
fuel economy by twelve percentage points. Moreover,
both Ford and GM provided data showing an increase
in customer satisfaction as performance increases.
GM and Ford also cited other unexpected events
which contributed to the decline in their MY 1989
CAFE levels. GM indicated that competitive
pressures, affecting both its product and engine
lineups as well as capital spending programs, also im-
pacted its plan. That company stated that anticipated
further increases in consumer demand for improved
powertrains led to product changes. GM stated that
in substantial part due to the investment needed to
accomplish these necessary changes, other previously
planned new vehicles and engine programs had to be
deferred or cancelled.
NHTSA notes that the Department of Commerce
commented that the domestic manufacturers face an
intensely competitive market for larger as well as
smaller cars and that Japanese manufacturers will
be making a strong push into the compact, inter-
mediate, and luxury segments during the next five
years. A July 4, 1988, Automotive News article, cited
by GM, indicates that Japanese automakers are
preparing a massive onslaught of new products for the
U.S. market over the next four years, especially in
performance-luxury and other segments traditionally
dominated by the domestics.
NHTSA agrees that the competitive pressures fac-
ing GM have contributed to the decline in its expected
MY 1989 CAFE. In order to be competitive, GM has
needed to make some changes in its product plan to
increase performance, with some negative impact on
CAFE. Also, given those pressures, that company has
needed to focus its limited capital resources on
meeting the competition.
Ford stated that interest rates have had a negative
impact on its MY 1989 CAFE level. That company
stated that in 1985 it was forecasted that interest
rates would be 11.8 percent in both 1988 and 1989.
However, interest rates are now predicted to be 9.4
percent in 1988. Ford stated that lower finance costs
shift some additional sales to larger cars.
The last of the three issues is whether the manufac-
turers made sufficient efforts, under the statute, to
achieve 27.5 mpg after early to mid-1986, the times
GM and Ford indicated that they recognized their
earlier plans had been overtaken by events.
NHTSA believes it is clear that GM made sufficient
efforts after mid- 1986, the time it recognized its MY
1989 CAFE would be below 27.5 mpg, to meet that
standard.
First, GM reexamined its product plans in an effort
to identify fuel economy improvements, beyond those
already planned, that might be implemented within
the available leadtime. GM then made the changes
it found feasible. For example, in the fall of 1986, GM
made a product plan change to reduce aerodynamic
drag of certain cars. In the spring of 1987 and fall of
1988, GM revised certain product plans to obtain
PART 531-PRE 159
lower rolling resistance for tires. Following its July
1986 forecast, GM implemented another technological
change to improve fuel economy, but the projected
benefit was not obtained. GM also made a number of
product plan changes related to engine utilization and
powertrains, although one of the changes needed to
be rescinded in response to negative press and
customer reaction regarding performance.
Second, GM planned a number of market forcing ac-
tions to improve CAFE, including plans to increase
smaller car sales via incentives and to increase the
penetration of 4-cylinder engines and 4-speed
automatic transmissions in certain cars. GM im-
plemented its plan until May 1988, the time it
submitted its petition for rulemaking, when the com-
bined effects of a number of developments led to
further necessary adjustments to its plan.
NHTSA concludes that GM had a plan to meet the
27.5 mpg standard for MY 1988, but that plan was
overtaken by events beyond GM's control that
occurred during the time period beginning in late
1985 through mid-1986. Among other things, a
substantial shift in consumer demand occurred
toward cars with better performance. The agency also
concludes that after GM recognized in mid-1986 that
its plan had been overtaken by events, that company
took appropriate compensating actions in a continu-
ing effort to meet the 27.5 mpg standard.
With respect to whether Ford made reasonable ef-
forts to achieve 27.5 mpg CAFE after early 1986, the
time it recognized its MY 1989 CAFE would be below
that level, NHTSA notes that the availability of
credits makes it difficult to analyze the sufficiency of
that manufacturer's efforts. The agency notes that
Ford expected during much of the period from 1986
to 1988 to have substantial credits that could be car-
ried forward to MY 1989. (GM's credit situation was
much more uncertain during this period.) While the
statutory 27.5 mpg CAFE standard for future model
years creates a continuing duty for manufacturers to
achieve 27.5 mpg CAFE in the long run, the statute
also permits manufacturers to use credits to comply
with the standard for a particular model year. We
note that the obligation under the statute for a
particular model year is compliance, rather than pro-
ducing a fleet in that year which achieves the level
of the standard for that year and, thus, the existence
of credits may influence manufacturer decisions about
CAFE compliance.
To the extent that Ford expected through most of
the 1986 to 1988 time period to be able to meet the
MY 1989 standard by using credits, that company in
fact had no legal duty to make additional efforts to |^
achieve 27.5 mpg. Since the concept of "reasonable" ^
or "sufficient" efforts ultimately owes its existence
to a legal duty, the concept has little meaning where
a manufacturer does not have a duty, due to credits.
NHTSA observed in the NPRM that Ford, in an
earlier submission, indicated that its compliance with
the statute would be achieved by using credits earned
by exceeding the standard in other years. The agency
noted that if that company decided not to make
product-related efforts to achieve 27.5 mpg in MY
1989-90 in light of credits from other years, such a
decision would be acceptable under the statute. The
agency also observed, however, that if a manufactvu^er
chooses, in light of the flexibility offered by the credit
provisions, not to make the efforts necessary to
achieve the level of a standard for a particular model
year, it would be inconsistent with the statutory
scheme for the agency then to exercise its discretion
to lower the standard solely on the basis of that
manufacturer's inability to meet the standard.
NHTSA is not exercising its discretion to lower the
standard solely on the basis of Ford's capability.
Therefore, there is no need to resolve the issue of how
to analyze the "reasonableness" of a manufacturer's ^
efforts to achieve 27.5 mpg in light of the availabil- W
ity of credits. NHTSA notes again, however, that Ford
has made significant progress in trying to improve
its CAFE, especially in the last few years.
VIII. The Effect of Fuel Economy
Standards on Safety
One of the petitions filed in this proceeding was
from the Competitive Enterprise Institute (CEI),
asking the agency to reduce the CAFE standards for
model years 1989 and 1990 to 24.0 mpg, the fuel
economy level CEI asserts would be achieved if there
had never been any fuel economy standards and
would be none in future years. The basis for this
request is CEI's further contention that CAFE stand-
ards that exceed 24.0 mpg would have adverse safety
consequences.
After the agency's proposal was published for com-
ment, CEI and several other commenters again asked
the agency to conclude that CAFE standards result
in vehicle downsizing, and that downsizing, in turn,
degrades safety. CEI and the other commenters ad-
vocate a CAFE standard around 24.0 mpg, which they
believe would be the CAFE level of the fleet in the
absence of CAFE standards. ^
PART 531-PRE 160
CEI's argument is based on finding a direct rela-
tionship between vehicle weight and vehicle safety
and saying that the CAFE program has caused
manufacturers to reduce vehicle size. CEI claims that
a standard set at 26.5 mpg will cause 1,500-2,800 ex-
cess fatalities in the MY 1989 fleet as compared to
the fatalities that would have occurred in the absence
of the CAFE standards.
CEI relies on the premise that heavier cars are
generally safer for vehicle occupants than smaller
cars, other things being equal. CEI then notes that
downsizing (reducing vehicle weight and exterior
dimensions) has been extensively used by the
manufacturers as a means of improving CAFE. CEI
states that these reductions in car size and weight
have resulted in less protection for occupants of these
cars. CEI concludes that the CAFE standards are
responsible for current car sizes and weights and thus,
the CAFE standards are also responsible for a reduc-
tion in the level of safety otherwise available to the
vehicle occupants. CEI further concludes that if there
were no CAFE standards, or if the standard were set
so low as to be the substantial equivalent of no stand-
ard, the size and weight of current cars would be
significantly greater.
In support for these assertions, CEI attached a copy
of a paper entitled "The Effect of Fuel Economy
Standards on Automobile Safety" by Robert W. Cran-
dall and John D. Graham (1988). For convenience,
this paper is referred to as "Crandall/Graham"
throughout the remainder of this discussion. Cran-
dall/Graham estimated that a 27.5 mpg standard for
the 1989 model year would result in 2,200 to 3,900
additional occupant fatalities and 11,000 to 19,500 ad-
ditional serious injuries to occupants, as compared to
expected fatalities and serious injuries absent any
CAFE standard.
CEI concluded its argument with the following
statement of its position:
"Neither Congress nor this agency has made
any express determination that energy conser-
vation under CAFE should require the loss of
human life. It is CEI's position that, absent such
a determination, a CAFE standard which does
result in the loss of life is impracticable and is
beyond the "need of the Nation to conserve
energy" under [15 U.S.C.] subsection 2002(e). In
short, such a standard has no statutory
authorization." (Emphasis in original.)
Other commenters and participants at the public
meeting also addressed the question of whether there
would be safety impacts associated with the 1989
model year CAFE standards. Most of the other com-
menters that addressed the safety issue associated
themselves with the Crandall/Graham theory. These
commenters included Consumer Alert, the Heritage
Foundation, and the Council of Economic Advisors.
Making a similar point, but based on different in-
formation, was the Insurance Institute for Highway
Safety (IIHS). IIHS claimed that car size (defined as
wheelbase length), as opposed to weight, is an impor-
tant factor in the protection afforded to vehicle oc-
cupants, because large cars, due to their larger crush
space, offer greater occupant protection than small
cars. IIHS asked the agency to carefully evaluate the
effects of the CAFE standard for the 1989 model year,
to ensure that the CAFE standard will not degrade
the level of occupant protection offered in 1989 cars
by forcing manufacturers to decrease the size of those
cars. The IIHS testimony at the public hearing stated:
"... there is a point beyond which weight can-
not be reduced writhout making vehicles smaller
and thereby compromising safety. Furthermore,
it seems probable that much of the potential
weight reduction possible from the use of lighter
weight materials has already been accom-
plished. Therefore, NHTSA must carefully
evaluate the regulatory effects of the fuel
economy standards to ensure that they do not
degrade safety by forcing decreases in car size.
At this time, it seems certain that any toughen-
ing of the CAFE requirements would lead to
smaller and therefore less safe cars."
Conversely, IIHS suggested that safety could be
affected negatively by a lower CAFE standard for
1989, if a lower standard results in larger numbers
of larger displacement, high performance engines.
IIHS suggested that larger engines would lead to
greater performance, and that increases in perfor-
mance increase the chances of a car being in a crash
and the chances of the occupants being killed or
injured. The National Safety Council filed comments
making points similar to those raised by IIHS.
The Center for Auto Safety (CFAS), on the other
hand, stated at the public meeting that there is no
evidence that CAFE standards have a negative im-
pact on the safety of vehicle occupants. CFAS stated
that, in 1975, when the average fuel economy of the
new car fleet was about 14 mpg, there were 3.6
fatalities per 100 million vehicle miles traveled. In
1988, when the average fuel economy of the new car
fleet was about 28.4 mpg, fatalities per 100 million
PART 531-PRE 161
vehicle miles traveled had decreased to 2.4. According
to CFAS, these statistics suggest that manufacturers
can improve both safety and fuel economy at the same
time.
CEI's comments on the NPRM for the 1989 model
year CAFE standard made two additional points
about the safety implications of CAFE standards.
First, CEI alleged that smaller cars are less compati-
ble with roadside objects, such as guardrails and
break-away light poles, that were designed for a
heavier vehicle population. CEI suggested that this
poses additional hazards to occupants of smaller cars.
Second, CEI stated that it knew of no evidence to sug-
gest that cars with higher performance, because of
larger engines, negatively affect the safety of oc-
cupants. Moreover, CEI argued that even if high per-
formance cars present a real safety hazard in their
own right, such cars would have little impact on
overall safety because of their small mairket share.
In its comments on the NPRM, CFAS stated that
it disagreed with CEI's basic thesis that CAFE stand-
ards have a negative impact on safety by forcing
manufacturers to sell less safe, smaller cars. Accord-
ing to CFAS, fuel-efficient large cars can be and have
been built, while small cars with very effective occu-
pant protection can be and have been built. Further,
CFAS suggested that any reduction of the CAFE
standard for the 1989 model year would result only
in higher performance and bigger engines in existing
car designs, which would negatively affect occupant
safety, instead of resulting in larger vehicles.
NHTSA notes that it has previously considered and
rejected a similar contention by CEI with respect to
the safety conseqences of the CAFE standards for the
1987-1988 model year CAFE standards. See 51 FR
35612-35613. While the new CEI arguments are very
similar to the arguments they made in the previous
proceeding, CEI now relies on the Crandall/Graham
analysis discussed above.
The Crandall/Graham study relies on the assump-
tion that the CAFE program has forced the downsiz-
ing of the fleet and is responsible for the fact that the
current fleet of new cars is lighter than it would have
been in the absence of CAFE. The agency agrees that
cars in the new car fleet are, on average, about 1,000
pounds lighter now than they were in 1975. But, as
the agency has noted several times in the past, this
downsizing occurred primarily as a result of consumer
demand for more fuel-efficient models, rather than a
result of the CAFE standards. See, e.g., the preamble
to the final rule for MY 1987-1988, 51 FR 35613. And,
most downsizing occurred in the 1970's, when
manufacturers were easily exceeding the applicable
CAFE standards. The agency also observes that the ^
weight of the new car fleet has not changed ^
appreciably since the early 1980's, although the
average fuel economy has improved each year. Thus,
the agency does not agree that the CAFE program
is the primary reason for the fact that the average
new car is lighter than it was a decade ago.
On the other hand, NHTSA has noted in the past
the possibility that higher CAFE standards could
have an adverse effect on safety. For example, in the
preamble to the final rule for MY 1987-1988, the
agency stated,
"Moreover, it is possible CAFE standards above
27.5 mpg could have a significant effect on
safety, even in the longer run, to the extent that
they might 'force' consumers into significantly
smaller and lighter cars. Thus, were NHTSA to
consier setting standards above 27.5 mpg in the
future, it agrees that the issue of safety would
warrant further attention." 51 FR 35613
(October 6, 1986).
Thus, while we do not agree with Crandall/Graham
about the historic influence of the CAFE program on
downsizing, we do agree with the assertion that in ^
crashes involving vehicles of different sizes, with w
everything else being equal, the occupants of the
smaller vehicle are at greater risk of serious injury
than the occupants of the larger vehicle in multi-
vehicle crashes. The agency also agrees that signifi-
cant amounts of further downsizing could raise safety
implications that should be considered if the agency
were to consider higher CAFE standards in the
future.
With regard to this proceeding, however, NHTSA
concludes, for the reasons discussed below, that there
is no evidence demonstrating adverse safety conse-
quences that would be associated with a CAFE stand-
ard for the 1989 model year in the range of 26.5 mpg
to 27.5 mpg.
First, it is clear that there is not a direct, linear rela-
tionship between a manufacturer's CAFE and the
average weight of his fleet. For example, in Model
Year 1988, the average weight of the GM fleet was
3,329 pounds, at a CAFE of 27.6 mpg, while the Ford
fleet weighed an average of 3,248 pounds, with a
CAFE of 26.5 mpg. This example illustrates the point
that not all CAFE gains come at a price of reducing
weight. Further, the new Ccir fleet as a whole can il-
lustrate the same point. The overall new car fleet (all |^
domestics and imports combined) had an average fuel
PART 531-PRE 162
economy of 28.2 mpg in MY 1987; yet, the average
weight of a new car in MY 1987 was 3,100 pounds,
a two pound increase in weight over the average
weight of a 1982 new car, when the overall fleet
average fuel economy was 26.6 mpg. Thus, it is clear
that there are methods of improving fuel economy
that do not depend on downsizing or weight reduction.
Second, based on the record of this proceeding,
NHTSA concludes that the large manufacturers are
unlikely to take any actions to add weight to the
models already planned for sale during MY 1989.
While the agency does anticipate mix shifts as a
result of this proceeding, these shifts should occur as
a result of the larger manufacturers capturing sales
of comparably sized vehicles that would otherwise
have been made by other manufacturers. Also, the
standard set at 26.5 mpg should permit manufac-
turers to retain passenger car customers that might
otherwise have purchased a light truck or van. This
conclusion is consistent with the agency's overall con-
clusion that this decision will have a negligible effect
on energy consumption, because consumers will be
shifting their purchases from one car manufacturer
to another or from the light truck (minivan) fleet back
to the passenger car fleet. So, if the market shifts
result in a heavier fleet for the company that gains
the sales in the larger/luxury car segment, those
shifts would also result in a lighter fleet for the com-
pany that loses the sales. The overall net effect on the
average vehicle weight for the new car fleet for MY
1989 should be negligible.
This conclusion is supported in the record by the
testimony of the large car manufacturers, both of
which testified at the hearing that they would not
make design changes (such as adding or deleting
weight) to their MY 1989 models as a result of this
rulemaking. The manufacturers also strongly agree
with the agency's conclusions about mix shifting,
because they have experienced such shifts. They
believe that consumers who intend to purchase a
larger vehicle will do so; they will not be "forced" into
a smaller vehicle than wanted. If GM and Ford cannot
produce such a vehicle, due to CAFE, then the con-
sumer will buy a large car from another manufac-
turer, or will buy a minivan, or will keep his older,
large car. One of those outcomes is more likely than
the possibility that the consumer will buy a smaller
car than he wanted to buy.
While the agency generally agrees with the princi-
ple that, in multi-vehicle crashes, heavier cars are
safer than lighter cars, other things being equal, we
also believe that any implications of that principle for
the CAFE program are appropriately considered in
the longer term, not the short, one-year time frame
of this rulemaking proceeding. This agency would
closely examine the safety consequences of any regu-
latory proposal to raise the CAFE standard if the ef-
fect of a standard set too high were to force drastic
mix shifts for the fleet as a whole toward very small
cars. If the agency concluded that such a shift would
be adverse to safety, it would not set the standard at
that level.
In response to the CEI comment that neither this
agency nor Congress has considered the potential
safety consequences of the CAFE standards, the
agency notes that it has considered the safety impacts
of CAFE standards in its rulemaking actions since
the beginning of the CAFE program. The agency's
first final rule on CAFE established passenger car
standards for the 1981-1984 model years included a
discussion of the safety impact of the standards. See
42 FR 33534, at 33551, June 30, 1977. The relation-
ship between safety and fuel economy standards was
also discussed in the final rule amending the
passenger car futl economy standards for the 1986
model year (50 FR 40547-40548, October 4, 1985), and
in the final rule amending the 1987-88 passenger car
fuel economy standards (51 FR 35612-35613, October
6, 1986). Hence, the agency does not agree with the
contention that it has not considered the safety issue
in issuing CAFE standards. As to congressional con-
sideration of the safety consequences of CAFE, the
agency points to the 1974 report to Congress from the
Department of Transportation and the Environ-
mental Protection Agency entitled "Potential for
Motor Vehicle Fuel Economy Improvements: Report
to the Congress," October 24, 1974. This report, which
was considered by Congress during the decision to
enact the CAFE program, contained a discussion of
the possible trade-offs in the areas of improved fuel
economy, lower emissions, and increased occupant
safety. The report summary noted that a sustained
or increased shift to small cars, without a concurrent
upgrading of their occupant protection capability,
would likely lead to an increase in the rate of highway
deaths and serious injuries. Thus, the agency cannot
agree that Congress was unaware of the potential
safety consequences of a downsized fleet of cars.
In response to the CFAS comment that there are
a number of improved safety technologies that could
offer better crash protection to occupants of some
small cars than is afforded in some larger cars
currently on the road, the agency does not disagree.
However, if those same technologies were installed
PART 531-PRE 163
on the larger cars, as well, then the occupants of the
larger car would be safer than the occupants of the
equally equipped smaller car in a multi-vehicle crash.
In sum, the agency agrees with the commenters
that NHTSA should consider whether there would be
adverse effects on safety of a CAFE standard that
forced manufacturers to do substantial additional
downsizing of the passenger car fleet. Consistent with
its past regulatory practices, the agency would care-
fully evaluate whether there were any such adverse
effects in future CAFE rulemakings, and would not
tolerate any CAFE standard that presented signifi-
cant threats to safety.
IX. The Effect of Other Federal Standards
on Fuel Economy
In determining the maximum feasible fuel economy
level, the agency must take into consideration the
potential effects of other Federal standards. The
following section discusses: (a) other government
regulations, both in process and recently completed,
that may have an impact on fuel economy capability;
and (b) comments received on this issue. As to the
latter, the agency notes that this general area
generated relatively few comments as compared to
other areas addressed by the NPRM. Mercedes
commented generally that the CAFE law can have
a significant adverse effect on innovation in vehicle
design, including safety aspects. While this commen-
ter said airbags and antilock braking systems "add
to vehicle weight and handicap achievement of the
required CAFE," Mercedes did not provide specific
information in its discussion that would enable the
agency to ascertain exactly what those negative ef-
fects would be. Ford and GM commented briefly on
certain issues in this area.
IX-A. NHTSA standards
As discussed in both the FRIA and NPRM, several
relatively recent changes in Federal safety and
damageability requirements could have an effect on
CAFE. These include an amendment to the agency's
lighting standard, which permits greater aero-
dynamic efficiency and implementation of automatic
restraint requirements.
1. Lighting: With respect to the amendments to
Federal Motor Vehicle Safety Standard 108, Lamps,
Reflective Devices, and Associated Equipment, to
permit the use of replaceable light source headlamps,
smaller sealed beam headlamps, and lower headlamp
mounting height, the FRIA concludes that the 2 to
3 percent improvement in aerodynamic drag
associated with the new headlamp assemblies could
produce a 0.4 to 0.9 percent improvement in fuel ^^
economy. For a 27.5 mpg fleet, this would equate to
a 0.11 mpg to 0.25 mpg improvement in CAFE if all
vehicles in that fleet employed the new lamp designs.
Both Ford and GM are making extensive use of this
new flexibility, and NHTSA estimates that there
could be some slight gain (probably less than 0. 1 mpg
on a fleet average basis) in fuel economy from
previous projections.
Related to this issue is the NPRM's reference to an
assertion made by GM in its August 1988 docket sub-
mission that composite headlamps have been
partially responsible for its "C" and "H" carlines
moving into a higher EPA test weight category,
producing a negative CAFE effect. NHTSA notes that
in its September 14, 1988, testimony and in its
September 15, 1988, docket submission, GM stated
that the aerodynamic improvements made possible
by the use of composite headlamps would produce a
CAFE benefit in most cases. GM's latter statements
accord with the agency's belief (that was formulated
based on data supplied in 1983 by Ford relating to
the amendment of Standard No. 108) that the new
headlamps would produce a CAFE benefit.
2. Automatic occupant crash protection: A July ^^
1984 amendment to Federal Motor Vehicle Safety ^^
Standard 208, Occupant Crash Protection, specified
the phase-in of automatic protection requirements
beginning in model year 1987, with 40 percent phased
in by MY 1989 and 100 percent implementation by
MY 1990. The agency has developed its own estimate
of the average incremental weight of automatic
restraint systems. As noted in the FRIA, the agency's
current best estimates of typical system incremental
primary weights over manual belts are as follows:
front seat airbag, approximately 21 pounds; non-
motorized automatic belts, approximately 11 pounds;
and motorized automatic belts, approximately 15
pounds. Neither GM nor Ford claimed during the
Standard No. 208 rulemaking a specific weight
penalty associated with these 208 requirements. Both
stated, however, that there would be weight increases,
and depending on the success or failure of weight-
reducing efforts, as well as some weight-increasing
pressures (options packages), that it is not unlikely
that certain vehicles equipped with automatic
restraints could result in the vehicle being placed in
the next higher EPA test weight class. This would
have a negative effect on EPA fuel economy rating
for these vehicles and thus on the manufacturer's ^^
CAFE levels as well. ^
PART 531-PRE 164
In its comment on the present rulemaking, Ford
said that passive restraints on its 1987 Escort and
1988 Tempo/Topaz added significant weight (approx-
imately 26-27 pounds). However, Ford did not provide
any basis for this estimation that could help explain
the marked difference between the agency's estimate
of the average weight of a motorized automatic belt
system and Ford's estimated weight of its system.
Accordingly, since the agency's 15 pound figure is an
average based on teardown studies of various
motorized belt systems, NHTSA believes it is the best
estimate of a typical system and an appropriate
measure to use when calculating the average effect
of the passive restraint requirement on the weight of
the 1989 MY fleet.
Ford did not provide the agency with specific infor-
mation on the type and quantity of the passive
restraints it will use to certify its vehicles to Stand-
ard No. 208 in MY 1989. However, since only 40 per-
cent of the 1989 MY fleet need meet the automatic
restraint requirements and because information
available to the agency indicates that the principal
means of compliance with those requirements will be
through automatic belts, the FRIA estimates the fleet
average weight effect of Standard No. 208 for the 1989
MY fleet would be approximately 6 pounds (.4 x 15
pounds). That weight penalty is expected to have only
a very minor impact on CAFE. For those vehicles
equipped with air bags, the penalty will be somewhat
higher.
3. Rear seat lap/shoulder belts: On June 16, 1987,
the agency published an advance notice of proposed
rulemaking (52 FR 22818) requesting comments on
the possible requirement to install lap/shoulder belts
in rear seating positions of passenger cars, multi-
purpose vehicles and small buses. In its Preliminary
Regulatory Analysis for the ANPRM, the agency
estimated that each single outboard seating position
would incur a marginal weight increase of 0.6 pounds
for attaching hardware and belt webbing. The
marginal weight increase for each center seating posi-
tion was estimated to be 2.4 pounds since a reinforce-
ment plate and retractor and housing would also be
required. However, for models that are near the limit
of an EPA test weight class, even this relatively small
change could move some vehicles into a higher weight
class, decreasing its measured fuel economy. The
agency notes that GM expects all of its carlines to
have such restraints installed in MY 1989.
4. Side impact protection: On January 27, 1988,
the agency published a proposed rule (53 FR 2239) to
upgrade its test procedures and performance require-
ments for side impact protection for passenger cars.
The agency is focusing on two ways of improving the
side impact performance of passenger cars: adding
padding on the door and increased structure to reduce
intrusion. Specific weight penalties are not known
yet, and will depend on such factors as final perform-
ance requirements, chosen countermeasure, and
baseline vehicle performance. The agency has not con-
sidered any negative effect of this proposed standard
on CAFE performance, since any final rule on this
subject would not apply to the MY 1989 under con-
sideration in this rulemaking.
5. New car assessment program: Title 11 of the Cost
Savings Act requires NHTSA to develop and
disseminate comparative information on the
crashworthiness, damage susceptibility and ease of
diagnosis and repair of motor vehicles. The agency's
experimental New Car Assessment Program (NCAP)
addresses the crashworthiness aspect of Title II by
providing comparative frontal crashworthiness safety
performance information, in the form of dummy
injury measurements, on selected vehicles which are
crashed head-on into a fixed barrier at 35 mph. Due
to the very nature of NCAP that encourages con-
sumers to compare products, and because the vehicles
tested in NCAP are subjected to a crash that is
approximately 36 percent more severe than the 30
mph crash required by Standard No. 208, the agency
believes that the program induces many manufac-
turers to make voluntary improvements in front end
design and occupant compartment protection
features. One such feature is the air bags, which has
a weight penalty.
6. Voluntarily installed safety features: The agen-
cy notes that manufacturers are also increasing the
weight of their vehicles, at the cost of losing CAFE,
by voluntarily installing safety features in their cars.
The use of airbags in place of automatic safety belts
and the production of rear seat shoulder belts and
antilock brakes are items of safety equipment that
improve occupant safety while adding weight to the
vehicle. GM, for example, is the leader in installing
rear seat shoulder belts (all of its MY 1989 cars will
have them as standard equipment) and offering anti-
lock brakes (offered on 8 carlines in MY 1988). In
addition, other safety devices could be added to
vehicles were it not for CAFE constraints. For
example, GM told the agency it could not offer
daytime running lamps on its cars because their
CAFE would decline by almost 0.3 mpg as a result.
The agency is concerned that overly stringent CAFE
standards might discourage manufacturers from
these and other voluntary safety actions.
PART 531-PRE 165
IX-B. EPA standards
1. Noise standards
The agency is not aware of any plans on the part
of the Environmental Protection Agency to pro-
mulgate noise regulations during the time period
under discussion. Accordingly, no fuel economy
penalties from noise regulations have been forecast.
2. Emissions standards
EPA has not announced any plans to modify its
current exhaust emission control requirements for
hydrocarbons, carbon monoxide, and oxides of
nitrogen. Therefore, the agency has not considered
any further impacts on fuel economy from control of
these pollutants. As discussed in the FRIA, the
agency has analyzed previously the effects of the
current requirements on fuel economy.
Also discussed in the FRIA is EPA's tightening
control of particulate matter that became effective in
MY 1987. While this requirement applies to all
vehicles, the only current production powerplant
which will have difficulty meeting this requirement
is the diesel engine. EPA has indicated that there is
a 1 to 2 percent fuel economy penalty for diesel
powered vehicles that require a particulate trap to
comply with the standard; however, the agency
believes that only a very small fraction of the diesel
vehicles (those with larger displacement engines) will
need traps for compliance. GM and Ford have both
discontinued all domestically produced diesels. Thus,
the more stringent particulate standard will not have
an impact on the CAFE capability of these two
manufacturers.
In July 1987, EPA issued a proposed rule on the
onboard control of refueling emissions. The proposal
would limit gasoline vapor emissions to 0.10 grams
of vapor per gallon of dispensed fuel. The agency has
not taken this future rulemaking into its estimates
of CAFE levels for two reasons. First, it is still only
a proposal. NHTSA and others have expressed safety
concerns, which must be resolved before a final
decision is made on whether to require such systems.
Second, the final rule, if and when issued, would not
take effect until at least two model years after that
point, which is beyond the model years that are the
subject of this rulemaking.
The California Air Resources Board (CARB) has
adopted a new requirement that will require 50 per-
cent of all MY 1989 light duty passenger cars and 90
percent of MY 1990 passenger cars to meet a 0.4
gm/mi NOx standard. GM has indicated that this
requirement will result in a 4 to 5 percent negative ^
impact on the fuel economy of approximately 300,000 ^^
of its vehicles. Ford has not claimed specific CAFE
losses due to the California NOx requirements. Half
of all vehicles certified to the Federal NOx standard
are already below the California standard of 0.4
gm/mi level. While they may not be far enough below
to ensure compliance, CARB believes that its stand-
ard can be met with little or no degradation in fuel
economy using refined emission control technology
calibrations and higher catalyst loadings. NHTSA
has accepted GM's assertion of a CAFE reduction in
this area for MY 1989, since more stringent emission
standards generally have a more pronounced impact
during the first few years following their implemen-
tation. The agency notes, however, that data from
CARB and EPA indicate that it is unlikely this
penalty will last past a several year period during
which manufacturers will be gaining experience
certifying at the new CARB level.
3. Fuel economy test procedure
The Environmental Protection Agency published a
final rule on July 1, 1985, providing CAFE ad-
justments to compensate for the effects of past test
procedure changes (See 50 FR 27172). The final rule
adopted a formula approach for calculating CAFE M^
adjustments. The manufacturer projections discussed
above include the effect of the EPA test adjustment
credit. Due to the formula approach, the specific value
of the credit may vary for different model years and
among manufacturers. A typical credit for the model
years in question would be 0.2-0.3 mpg.
X. The Need of the Nation to Conserve Energy
Since 1975, when the Energy Policy and Conser-
vation Act was passed, this Nation's energy situation
has changed significantly. Oil markets were
deregulated in 1981, permitting consumers to make
choices in response to market signals and allowing
the market to adjust quickly to changing conditions.
The U.S. Strategic Petroleum Reserve (SPR) was built
to ensure a supply of oil during any major supply dis-
ruption. In July 1988, the SPR contained 551 million
barrels of oil, stored principally in underground
caverns, that could be pumped back to the surface if
needed.
The United States imported 15 percent of its oil
needs in 1955. The import share had reached 36.8 per-
cent by 1975, and peaked at 46.4 percent in 1977, at
a cost of $71 billion (stated in 1986 dollars). While the Jk
import share of total petroleum supply declined after ^
PART 531-PRE 166
I
that year, the cost continued to rise to a 1980 peak
level of $99 billion (1986 dollars). By 1985, the im-
port share had declined to 28.7 percent at a cost of
$52 billion (1986 dollars). In addition, imports from
OPEC sources declined through 1985, from a high of
6.2 million barrels per day (MMB/D) and 70.3 percent
of all imports in 1977 to 1.8 MMB/D and 36.2 percent
of imports in 1985.
Since 1985, the import share of petroleum supply
has been increasing. Between 1985 and 1986, net
imports rose from 28.7 percent of the U.S. petroleum
supply to 34.6 percent. In 1987 that figure was 37.1
percent, and for the first six months of 1988, net
imports accounted for 38.1 percent of total supply.
Due to sharply lower petroleum prices, however, the
value of imports declined from 1985 to 1987, from $52
billion to $43 billion (1986 dollars).
Imports from OPEC sources have also increased.
Between 1985 and 1986, imports from OPEC rose
from 36.2 peixent of all imports to 45.6 percent. In
1987 that figure was 45.8 percent, and for the first
six months of 1988, imports from OPEC accounted for
47 percent of all imports.
In its comment to the docket, which neither sup-
ported nor opposed NHTSA's proposal, the Depart-
ment of Energy (DOE) expressed concurrence with
NHTSA's description of the current energy situation,
but DOE emphasized several issues about transpor-
tation's role in U.S. oil use and the importance of
rising fuel efficiency. DOE said that the 11 MMB/D
used by the transportation sector in 1986 is almost
80% of total U.S. fuel use of oil and over 90% of the
critical light product use. Thus, DOE wanted NHTSA
to consider that any significant moderation in grow-
ing oil demand will require large transportation effi-
ciency improvements. DOE also emphasized that the
1987 Energy Information Administration's (EIA) oil
demand forecasts used in the NPRM assume that
average new car efficiency will continue to improve,
which DOE said does not seem likely given fuel
economy trends (at least to the levels assumed by
EIA), and that even with these projected increases in
fuel efficiency U.S. oil demand is projected to increase
over 1.5 MMB/D by 2000.
Several other commenters also expessed concerns
about the need of the Nation to conserve energy. The
American Council for an Energy-Efficient Economy
(ACEEE) opposed the agency's proposal based on the
commenter's concerns that reducing the CAFE stand-
ard would lead to higher oil consumption and imports,
with an attendant reduction in national security and
increases in the trade deficit, air pollution levels, and
environmental change. The Americans for Energy
Independence (AEI) opposed a reduction, stating that
oil consumption levels in the U.S. thwarted energy
independence and that conservation gains in trans-
portation could be enough to offset oil production
losses in the 1990's. The Natural Resources Defense
Council (NRDC) said that NHTSA should increase
and not decrease the 1989 MY CAFE standard due
to an "overriding economic national security and
environmental importance."
NHTSA concurs with the commenters that the cur-
rent energy situation and emerging trends illustrate
the continued importance of oil conservation. As ex-
plained in the NPRM, oil continues to account for well
over 40 percent of U.S. energy use, and 97 percent
of the energy consumed in the transportation sector.
While the U.S. is the second-largest oil producer, it
contains only 3 percent of the world's proved oil
reserves. Moreover, proved reserves have declined
from a peak of 39.0 billion barrels in 1970 to 26.9
billion barrels in 1986. The NPRM also referenced
1987 Energy Information Administration (EIA) pro-
jections which found a decline in domestic production
of oil and an increase in net imports. (See, 53 FR
33089 and NHTSA's final regulatory impact analysis
which has been placed in the agency's docket section.)
That discussion of the EIA projections was a subject
of concern for DOE, which wanted to make clear
NHTSA's understanding that the EIA forecasts
assumed continued improvements in average new car
efficiency. NHTSA acknowledges DOE's remark and
notes that the comment reinforces NHTSA's belief
that the level of oil imports, and the Nation's need
to conserve energy, remains an issue for the Nation
as a whole.
While the agency has concluded that there is a
continuing need for the Nation to conserve energy,
NHTSA would like to emphasize the following five
points in light of their importance for this rulemaking
action. First, future projections about petroleum
imports are subject to great uncertainty. For example,
the EIA's 1977 Annual Report to Congress projected
that net oil imports by the U.S. would, in the
"reference case," reach 11 MMB/D by 1985. Net
imports in 1986 actually were 5.4 MMB/D, less than
half the level predicted in 1977.
Second, related to the above, the agency believes
that the Nation is in a stronger energ>' position than
was the case in the mid-1970's. The Nation's sources
of oil imports are more diverse and less vulnerable
to disruption, the Nation's energy efficiency is much
higher, and the absence of price controls permits the
PART 531-PRE 167
market to more easily respond to changes in supply
and demand.
Third, NHTSA must balance the need to conserve
energy with three other factors in determining the
maximum feasible level for the 1989 MY fuel
economy standard. However, as noted above.
Congress has given the Department wide latitude in
balancing these conflicting policies. Thus, the agency
cannot deem this or any other factor to be the "over-
riding" one, as suggested implicitly by NRDC. As the
court noted in affirming the agency's MY 1985 light
truck CAFE standard,
"[I]t would clearly be impermissible for NHTSA
to rely on consumer demand to such an extent
that it ignored the overarching goal of fuel con-
servation. At the other extreme, a standard with
harsh economic consequences for the auto in-
dustry also would represent an unreasonable
balancing of EPCA's policies." Center for Auto
Safety v. NHTSA, 793 F.2d at 1340.
Fourth, while NHTSA agrees that the need to con-
serve energy is important, the agency believes that
Congress' quantified goal of energy conservation
through improved automotive fuel efficiency has been
realized (even though much of that improvement ap-
pears to be the result of market forces, instead of the
operation of the CAFE law). The FRIA finds that
passenger automobile fuel consumption decreased
from an estimated 5.13 MMB/D in 1973 to 4.64
MMB/D in 1986, a 10 percent reduction. The
passenger automobile share of total highway fuel con-
sumption decreased from 71.2 percent in 1973 to 56.8
percent in 1986. The passenger automobile portion
of total transportation oil consumption decreased from
56.7 percent in 1973 to 49.0 percent in 1980 and 45.5
percent in 1986. The passenger automobile fleet's
share of total oil consumption declined slightly from
29.6 percent in 1973 to 28.5 percent in 1986. (The fuel
economy of the total new car fleet is now even higher
than the goal set by Congress-28.7 mpg for MY 1989,
compared to the 27.5 mpg target in the statute.) These
decreases in actual fuel consumption and in the
passenger automobile fleet's share of fuel consump-
tion took place even as the numhep of passenger
automobiles registered increased froni 102 million in
1973 to 135 milHon in 1986, and totaHravel increased
from 1.05 trillion miles to 1.30 trillion miles.
Fifth, to the extent there is still a "need" to
stimulate further fuel efficiency and energy conser-
vation, the CAFE mechanism is largely ineffective.
As discussed previously, the likely effect of a higher
standard in MY 1989 would be to shift sales and jobs
away from domestic manufacturers and toward
foreign manufacturers, with little or no improvements
in actual fuel economy. As the Department of Energy
noted in its comments: "the Department is completely
unconvinced that the standards are useful in actually
achieving energy savings in today's market."
XI. Amending the MY 1989 Standard
As discussed above, section 502(a)(4) gives the
Department considerable discretion in setting a
CAFE standard below 27.5 mpg. Public Citizen v.
NHTSA, 848 F.2d 256 (D.C. Cir. 1988); Center for
Auto Safety v. NHTSA, 793 F.2d 1322 (D.C. Cir.
1986). In determining the maximum feasible average
fuel economy level, and hence the level of the stand-
ard, section 502(e) requires the agency to consider four
factors: technological feasibility, economic prac-
ticability, the effect of other Federal motor vehicle
standards on fuel economy, and the need of the Nation
to conserve energy.
XI-A. Interpretation of "feasible" and "economic
practicability"
In the August NPRM, the agency noted that it has
traditionally interpreted "feasible" to refer to
"whether something is capable of being done, taking
into account the four statutory criteria mentioned
above." As discussed several times in this notice, the
statute does not elevate any one of these criteria
above the others, nor does it provide guidance to the
agency in weighing any of these criteria more heavily
than any others. Rather, the standard set is "the
result of a balancing process specifically committed
to the agency by Congress." Center for Auto Safety
V. NHTSA, 793 F.2d 1322, 1341 (D.C. Cfr. 1986). For
example, the agency's determination of the
"maximum feasible" standard cannot be that level
which is merely that maximum technologically feasi-
ble without regard to the economic practicability of
such a level.
In the final rule reducing the MY 1986 CAFE stand-
ard for cars, the agency stated the following about
"economic practicability":
"NHTSA has always considered market demand
in establishing CAFE standards as that factor
is an implicit part of the consideration of
economic practicability. In a free market
economy, market demand is one of the primary
determinants of what manufacturers will be
able to sell. As the agency has noted before, con-
sumers need not purchase what they do not
want. A standard set without regard to market
PART 531-PRE 168
demand could be overly stringent and
economically practicable." 50 FR 40546, October
4, 1985.
And the Circuit Court upheld this view against sug-
gestions that the agency "improperly elevated con-
sideration of market forces and consumer demand,
and impermissibly subordinated the statute's
'technology -forcing' design." Public Citizen v.
NHTSA, 848 F.2d 256, 259 (D.C. Cir. 1988).
Again this year we believe that understanding the
significance of market trends in assessing "economic
practicability" is crucial to this rulemaking and the
current competitive posture of the U.S. auto industry.
This concern is underscored by Congress' recent
enactment of the Omnibus Trade and Compet-
itiveness Act discussed above. The major domestic
manufactiu-ers are confronting serious competitive
forces. Among the most striking aspects of these forces
are the decreases in the mid-size and large car size
classes, the two classes in which the domestic
manufacturers have been strongest and increases in
the compact class, largely as a result of increased
sales of compact cars manufactured by • Asian
manufacturers abroad or in this country. The shrink-
ing large car sales jeopardize one of the domestic
manufacturers' principal sources of income and earn-
ings, as well as jobs in that segment. These funds will
be needed to help finance the actions necessary to
attempt to bolster sales of compact, mid-size and large
cars, as well as to finance research into new tech-
nologies for safety, fuel economy, performance, and
customer comfort and convenience. It is anticipated
that the domestic manufactxu"ers will have to supple-
ment their efforts to accommodate consumer demand
and to respond to competitive pressures from foreign
manufacturers through new model offerings with in-
creased performance and luxury options. Taking
these steps will necessitate that the CAFE standard
for MY 1989 provide latitude for the domestic
manufactvu-ers since the steps will adversely affect
their CAFE (although not overall energy consump-
tion as explained below).
XI-B. Industrywide considerations
In the NPRM, the agency noLed that setting the
CAFE standards must be based on "industrywide con-
siderations." As the courts have found, "[standards
have an industry-wide effect and must take account
of industry-wide concerns." Center for Auto Safety v.
NHTSA, 793 F.2d 1322, 1339 (D.C. Cir. 1986).
The CAFE statute requires that, for each model
year, there be a single standard for all passenger
automobile manufacturers not exempted under
section 502(c). Section 502 does not state expressly
whether the concept of feasibility is to be determined
in setting passenger automobile standards on a
manufacturer-by-manufacturer basis or on an
industrywide basis. The agency has therefore long in-
terpreted this section in a manner that is consistent
with the legislative history of Title V. The conference
report accompanying Title V states, with respect to
determining the maximum feasible average fuel
economy level:
"Such determinations should therefore 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 [Administrator] must
weigh the benefits to the nation of a higher
average fuel economy standard against the dif-
ficulties of individual automobile manufac-
turers. 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 com-
petition will suffer significantly if penalties are
imposed." (S. Rep. No. 94-516, 94th Cong., 1st
Sess. 154-5 (1975))
In the NPRM, the agency explained the term
"industrywide considerations," and the conference
report discussion cited above, as follows:
"This language expresses two themes: first, a
Congressional goal of improved fuel economy for
the nation and second, fuel economy standards
which are set at the maximum feasible level.
NHTSA has construed this language many
times. For example, as the agency stated in the
1977 notice establishing the MYs 1981-84 stan-
dards for passenger automobiles, Congress did
not intend that standards simply be set at the
level of the single least capable manufacturer.
Setting standards in that fashion would have
vitiated the CAFE program. This point can be
illustrated by considering the effects of setting
a standard at 19.0 mpg, based on the capability
of a single manufacturer with a market share
PART 531-PRE 169
of less than one percent. Such a standard would
have no possible impact on the balance of the
manufacturers which, together produce more
than 99 percent of all cars and have higher
average fuel economies.
"Since this initial interpretation, the agency has
expanded its position, noting that the statute
comtemplated that standards should not be set
above the capability of manufacturers whose
sales represent a substantial share of the
market. (50 FR 29912, 29923) This would apply
either to a single larger such manufacturer or
to a combination of smaller manufacturers con-
stituting together a substantial share of the
market. In the final rule reducing the MYs
1987-88 standards, the agency concluded that
the particular compliance difficulties of several
of the European manufacturers, whose com-
bined market share is relatively small, was not
legally sufficient to justify a standard set far
below the capabilities of the other manufac-
turers. (51 FR 35617)
"The agency does not believe that Congress
intended the CAFE standards to be governed by
the abilities of a single, narrow segment of the
industry, such as the projected 0.8 percent
market share of Mercedes in MY 1988, or even
the 6.7 percent combined market share of Euro-
pean manufacturers in that model year. (It also
should be noted that the 6.7 percent reflects all
European manufacturers; 3.2 of those 6.7 per-
centage points represent European manufac-
turers that already achieve or exceed 27.5 mpg,
i.e., Volkswagen/Audi and Yugo.)" 53 FR 33085.
Mercedes-Benz and AIA took exception to the
agency's position regarding "industrywide considera-
tions" and the setting of CAFE standards. Mercedes-
Benz stated that although limited line manufacturers
like itself have taken all feasible measures to improve
fuel economy, consumer demand prevents such manu-
facturers not only from meeting the existing standard
of 27.5 mpg for MY 1989, but also the lowest proposed
standard of 26.5 mpg. Mercedes argued that the
CAFE standards were irrelevant and discourage
safety innovation and that therefore the balancing of
competing considerations dictated that the agency
should set a standard attainable by limited line
manufacturers. Mercedes stated in its petition that
such a standard would be approximately 22 mpg.
Mercedes argued there that NHTSA had the
authority to promulgate a standard of 22 mpg, citing
Immigration and Nationalization Service v. Chadha,
462 U.S. 919 (1983) and Gulf Oil Corp. v. Dyke, 734
F.2d 797, 802 (T.E.C.A. 1984) cert, den., Dyke v. Gulf
Oil Corp. 469 U.S. 852 (1984). The latter case, involv-
ing provisions of EPCA relating to decontrol of crude
oil, residual fuel oil, or any refined petroleum product,
held the legislative veto provision in section 551 of
EPCA to be severable from the rest of the statute.
Mercedes argued alternatively, focusing on the
language in section 502 of EPCA regarding the
legislative veto, that Congress would have preferred
a statute providing for improved motor vehicle energy
efficiency and permitting reduction of the 27.5 mpg
goal as necessary to no statute at all.
Mercedes argued that NHTSA's current approach
to taking industrywide considerations into account
focuses only on the two large, multi-line manufac-
turers. Ford and General Motors. This approach,
according to Mercedes, confers a competitive
advantage for those large manufacturers, and results
in standards whose effect is not to produce additional
energy savings, but only to impose penalties on
limited line manufacturers.
AIA, which represents most of the limited line
manufacturers which are the focus of Mercedes'
comments, also argued against the agency's approach
to "industrywide considerations." AIA said that
approach "conflicts with both the technological
feasibility and the economic practicability factors
because it gives insufficient weight to consumer
demand." If the standard were set based on proper
consideration of the limited line manufacturers, AIA
said that the standard would be less than 26 mpg.
However, AIA believes that NHTSA is barred from
setting a standard below 26 mpg because, in its view,
the agency's authority to do so is inseverable from the
legislative veto to which the exercise of that authority
was subject before Chadha.
The agency believes that its approach to industry-
wide considerations is fully consistent with EPCA.
Although the conference report on EPCA clearly
states a congressional interest that NHTSA be par-
ticularly mindful of the effects of implementing the
CAFE program on the domestic manufacturers
(S. Rep. No. 94-516, 94th Cong., 1st Sess. 154-5
(1975)), the agency's analysis is not limited to those
manufacturers. NHTSA's approach involves con-
sideration of the capabilities of 100 percent of the
manufacturers and the energy savings and com-
pliance difficulties associated with different levels of
standards. The approach results in the selection of a
PART 531-PRE 170
•
standard achievable by virtually all U.S. and Asian
manufacturers and some European manufacturers
that together represent over 95 percent of all cars sold
in this country. Only certain European manufac-
turers, which concentrate on the production of larger,
generally high-performance luxury cars and represent
approximately 3.5 percent of all cars sold in this coun-
try, have not been projected to be capable of meeting
the standards in recent years.
NHTSA believes that setting the standards at the
level achievable by the least capable of the manufac-
turers (or group of manufacturers) with a substantial
share of the market instead of the level of the limited
line manufacturers of larger, luxury cars is most
consistent with the energy saving goals of EPCA.
While the agency believes that the bulk of the fuel
economy improvements over the last decade were due
to market forces (rising fuel prices, changing
consumer demand, and greater foreign competition),
the goal of the statute was to provide an additional
incentive for the manufacturers to achieve and main-
tain levels of CAFE reflecting their maximum
capabilities. Even if the contribution of CAFE stand-
ards to energy conservation appear to have been
slight, EPCA reflects a congressional judgment about
the value of standards making such contributions.
This agency is bound by that judgment. Setting the
standards at the level requested by Mercedes would
vitiate the fuel economy program and require NHTSA
to disregard Congress' judgment regarding the CAFE
standards.
XI-C. Determining the level of the MY 1989 standard
Taking account of the fovir factors of section 502(e),
NHTSA determines that the maximum feasible
average fuel economy level for MY 1989 is 26.5 mpg.
This level balances the small potential petroleum
savings, discussed elsewhere in this notice, associated
with higher standards against the substantial
difficulties of individual manufacturers, especially
domestic manufacturers, facing potentially higher
standards and the impacts of such standards on the
automotive industry and the economy as a whole.
In making this determination, the agency has
followed its consistent approach of analyzing the
ability of manufacturers to meet the standard. It has
not included as part of its calculation of the standard
the ability to pay penalties for not meeting the stand-
ard, or the availability of, or need for, credits.
NHTSA recognizes, however, that the record of this
rulemaking indicates that the availability of credits
lis relevant to how at least one manufactiu-er, Ford,
is likely to respond to an amended MY 1989 standard.
As indicated earlier, there is a distinction between
meeting a standard for a given model year, i.e., achiev-
ing the level of the standard for that model year, and
complying with the standard. Ford stated at the
September 14 public hearing that it would not do
anything different if the standard remained at 27.5
mpg than if it were reduced, since it has a compliance
plan using credits. The credits in question are carry-
forward credits that have already been earned during
MY 1986-88. The MY 1986 credits will expire if they
are not used during MY 1989.
The issue of whether GM would have any carry-
forward credits available for MY 1989 was dependent
throughout much of this proceeding on the outcome
of a case before the U.S. Court of Apeals for the D.C.
Circuit, Center for Auto Safety v. Thomas, which was
decided on September 16, 1988. Now that the en banc
court has vacated its opinion and judgment of May
17, 1988, denying the original petition for review and
leaving EPA's decision in effect, GM will have some
carryforward credits earned in MY 1988 that could
be applied against a MY 1989, MY 1990, and/or MY
1991 shortfall. Thus, GM, like Ford, could comply
with a 27.5 mpg standard for MY 1989 by use of carry-
forward credits that have already been earned, even
if it achieves a MY 1989 CAFE level somewhat under
27.5 mpg. The agency assumes that GM would prefer
to retain its MY 1988 credits as insurance against
possible shortfalls in MY 1990-91, rather than to use
them in MY 1989. NHTSA also notes that there could
be further appeal of Center for A uto Safety v. Thomas,
and that litigation is pending that challenges
NHTSA's reduction of the MY 1987-88 passenger car
CAFE standards, which raises at least some possi-
bility that those MY 1988 credits may not be
available.
As discussed above, NHTSA has concluded that the
26.5 mpg level represents the MY 1989 CAFE
capabilities of both GM and Ford in their domestic
fleets. Since GM produces about 36 percent and Ford
about 21 percent of all cars sold in the U.S., and since
the manufacturers responsible for most of the balance
of the cars sold in the U.S. achieve higher CAFE's,
the agency believes that CAFE standards set at the
level of the least capable of the two major domestic
manufacturers ensures that the standards can be met
by manufacturers representing a very high per-
centage of the total car production for the U.S. In light
of the language of the conference report, cited above,
the agency believes that standards set in this fashion
represent an appropriate balancing of "the benefits
PART 531-PRE 171
to the nation of a higher average fuel economy stand-
ard against the difficulties of individual manufac-
turers," particularly in light of the competitive
threats faced by GM. NHTSA also believes that given
GM's and Ford's large market shares, a CAFE stand-
ard set at a level above either of their capabilities
would be inconsistent with taking industrywide con-
siderations into account.
A higher CAFE standard would substantially
complicate the efforts of GM to respond to the com-
petitive pressures confronting it. Such a standard
would limit its efforts through product and marketing
actions to regain lost market shares since those
actions would entail increased sales of cars and
options likely to reduce its CAFE. In addition, a
standard set at the level of GM's projection, 27.2 mpg,
would not adequately take into account some
uncertainties associated with the GM projection that
could , if they materialized, cause a reduction in GM's
actual CAFE for MY 1989. These include EPA test
result variability.
The agency has concluded that GM and Ford, as
well as the manufacturers of most other cars sold in
this country, can meet the 26.5 mpg standard for MY
1989 without engaging in harmful production restric-
tions and without any significant restrictions on
consumer choice. Thus, no job or sales losses should
result from GM and Ford, as well as the manufac-
turers of most foreign vehicles sold in this country,
meeting the standard; indeed, that standard should
help preserve the ability of the two domestic
companies to recapture sales and jobs from
competitors. Further, there should be no adverse
economic impacts on automobile dealers, suppliers,
or automotive employees resulting from this
standard.
NHTSA recognizes that the 26.5 mpg standard for
MY 1989 is above the capabilities of approximately
eight European manufacturers. For some of those
manufacturers, the standard is several mpg above
their capabilities.
Some of the European companies may thus be
limited to two options: (1) paying the statutory
penalties associated with failure to comply with fuel
economy standards, or (2) drastic product actions
which, in the case of some, could require radical
changes in the mix of cars they import. While the
agency appreciates these difficulties, the agency does
not believe there is any alternative available under
the statute. NHTSA concludes that amending the MY
1989 standard to levels below 26.5 mpg would be
inconsistent with a determination of maximum
feasibility that takes industrywide considerations into j^^
account, as required by statute. Both the individual ^^
market share of each of these European manufac-
turers and the combined market share of all eight of
those manufacturers is very small, i.e., less than 4
percent.
While NHTSA believes that energy conservation is
important, it does not believe that the slight potential
petroleum savings associated with a higher standard
would justify setting the standard at a higher level,
particularly given the competitive pressures facing
the domestic auto industry. In analyzing the potential
energy savings associated with standards within a
range of 26.5 mpg to 27.5 mpg, the agency believes
that it is appropriate to focus on GM and Ford. Since
the Asian manufacturers, as well as several of the
European manufacturers, have CAFE levels well
above 27.5 mpg, reflecting their concentration in the
smaller size classes, a reduction in the MY 1989
standard does not create an incentive for those
companies to change their product plans. Similarly,
given Chrysler's current CAFE projections, the
agency does not have any reason to assume that
company would change its product plans as a result
of a reduced standard. Finally, the agency does not ^^
have any reason to assume that the European ^^P
manufacturers below the standard would change
their product plans as a result of the reduced stand-
ard. They have not indicated any plans to attempt to
achieve higher CAFE levels in order to meet even the
reduced standard.
It is doubtful whether there would be any quan-
tifiable energy savings resulting from maintaining
the 27.5 mpg standard, although a maximum bond
can be calculated. NHTSA notes that this conclusion
is consistent with the Department of Energy's
comment that it is completely unconvinced that the
standards are useful in actually achieving energy
savings in today's market.
NHTSA expects that GM will respond to the 26.5
mpg standard by attempting to increase its market
share by selling larger or higher -performance cars
that would otherwise have been sold by other
manufacturers. While this course of action would _
reduce the CAFE of GM's domestic fleet, it would not '
increase overall energy consumption. Conversely, if
GM were faced with a standard higher than 26.5 mpg,
it would sell fewer larger cars and engines. However,
in place of the vehicle sales foregone by GM, there
would be sales of foreign, typically high-performance, j^^
PART 531-PRE 172
compact, and mid-size cars whose CAFE in many in-
stances would not differ significantly from that of the
GM cars that would have been sold in their place. To
the extent that GM responded to a standard higher
than 26.5 mpg by restricting availability of its larger
cars and engines, some consumers might keep their
older, less fuel-efficient cars in service longer. Alter-
natively, they might choose to purchase large pickup
trucks and vans to obtain the room, power, and load-
carrying capacity they desire. Obviously, neither of
these possibilities would improve energy
conservation.
NHTSA expects that Ford, consistent with its state-
ment at the September 14 public hearing, will not
change its product plan as a result of the 26.5 mpg
standard.
Notwithstanding the improbability of any signif-
icant impact on conservation, the agency has
calculated the maximum hypothetical difference in
gasoline consumption between GM and Ford achiev-
ing 26.5 mpg in MY 1989 and their achieving 27.5
mpg. The amount would be 0.9 billion gallons over
the 20-year life of the MY 1989 fleet. The maximum
increase in any individual year would be about 122
million gallons, approximately 0.05 percent of current
oil consumption levels. The agency does not believe
that hypothetical savings of this magnitude would
justify the significant competitive harm to GM that
could result from a standard higher than 26.5 mpg.
Conversely, it can also be argued that the higher
27.5 mpg CAFE standard might actually result in
increased gasoline consumption. Dr. Crandall stated
at the public hearing that the short-run effect of
tightening CAFE would clearly be to increase the con-
sumption of fossil fuels, because it would result in
consumers postponing the decision to replace older,
less fuel-efficient cars with new, more fuel-efficient
cars. NHTSA notes that there are two ways in which
a higher CAFE standard could result in a possible
increase in gasoline consumption: (1) if the higher
standard caused manufacturers to restrict product
offerings, which in turn encouraged consumers to
keep older (less fuel-efficient) cars, or to purchase pick-
ups or vans (which are less fuel-efficient), or (2) if the
higher standard impeded the ability of the U.S.
manufacturers to compete vigorously in luxury/per-
formance segments, and sales shifted to competing
models of Asian manufacturers with lower fuel
economy ratings. GM noted that larger domestic cars
t -e often more fuel-efficient than smaller imported
cars, citing, among other models, the large Buick
Rlectra (3.8L/6 cylinder engine), with a fuel economy
of 26 mpg, and the compact Acura Legend (2.7L/6
cylinder engine) and Toyota Cressida (2.8L/6 cylinder
engine), which have fuel economies of 23 mpg and 24
mpg, respectively. While such effects may seem
incongruous, it is important to remember that the
CAFE law does not measure real fuel efficiency in the
automotive sector, but instead uses an artificial book-
keeping system with numerous distortions (such as
corporate averaging, the two-fleet rule, and separa-
tion of cars and light trucks).
The magnitude of this potential impact can be sug-
gested with the following example: If, to meet a 27.5
mpg CAFE standard, GM curtailed production of its
large (B-body) station wagons, which achieve 22.9
mpg, but these lost sales went to GM's own minivan,
the Astrovan (which is a light truck for fuel economy
calculation purposes), GM's passenger car CAFE
would rise by about 0.1 mpg, but total fuel consump-
tion would actually increase. This would occur
because the Astrovan achieves a fuel economy about
1 mpg lower than that of the B-wagon. This switch,
from station wagons to minivans, would raise
passenger car CAFE but actually result in an
additional 10 million gallons of gasoline being
consumed over the life of those vehicles.
The agency does not believe that either "worst-case"
scenario on the issue of energy conservation is likely.
On the contrary, NHTSA believes the impact of the
MY 1989 standard on actual gasoline consumption
will be negligible. The agency notes that, for MY
1986-88, when the CAFE standard was set at 26.0
mpg, the actual CAFE of the total new car fleet still
increased, from 27.9 mpg to 28.7 mpg. Moreover, the
manufacturers have indicated their product plans for
MY 1989 are fixed; and there are no signs of product
restrictions. There may be shifts in sales among
manufacturers (which may be influenced by CAFE),
but the CAFE of the total MY 1989 fleet is unlikely
to be affected by any NHTSA decision on CAFE in
the 26.5 to 27.5 range.
To show how a given manufacturer's CAFE can
increase while not positively affecting total fuel con-
sumption, consider the following: if GM curtailed
production of its Cadillac Brougham, its CAFE would
increase by 0.06 mpg. If consumers desirous of this
type of luxury car instead purchased a Lincoln Town
Car (Ford has extensive credits which currently
enable it to sell additional less fuel-efficient cars),
total fleet fuel consumption would actually increase
by 26 million gallons over the lifetime of the affected
fleets.
PART 531-PRE 173
Just as it is doubtful whether there will be any
quantifiable increase in energy consumption
resulting from reducing the 27.5 mpg standard to 26.5
mpg, it is doubtful that this action will have any
impact on the environment. A number of commenters
expressed concern that a reduced standard would
result in increased emissions of a number of
pollutants, including hydrocarbons, carbon monoxide,
nitrogen oxides, chlorofluorocarbons, and carbon
dioxide. Commenters particularly focused on carbon
dioxide, since it contributes to the "greenhouse
effect." NHTSA addressed the potential environ-
mental impacts associated with this rulemaking in
an environmental asessment. In addition, the agency
has prepared a supplement to the Environmental
Assessment in order to address comments submitted
by various organizations and individuals. The agency
observes here that carbon dioxide emissions are
produced in direct proportion to gasoline consump-
tion. Therefore, the reasons discussed above concern-
ing why a reduced standard is unlikely to result in
any quantifiable increase in gasoline consumption
also mean that a reduced standard is unlikely to
result in any quantifiable increase in carbon dioxide
emissions.
The Center for Auto Safety (CFAS) argued that
relaxation of the CAFE standard would permit the
domestic auto companies to export small car produc-
tion and U.S. jobs abroad. That commenter argued
that the record is clear that CAFE relaxation costs
U.S. jobs and CAFE strengthening saves U.S. jobs,
since GM and Ford have increased their sales of
captive imports during the last several years. CFAS
argued that GM and Ford could have improved their
CAFE and created more domestic jobs if they had
produced these cars in the U.S. Also, Mr. Owen
Bieber, president of the UAW, urged NHTSA to con-
sider both the implications of not lowering the stand-
ards and of lowering the standards. Mr. Bieber stated
that the lowering of the standards should not provide
the companies with an incentive to outsource small
cars.
The record does not support the belief that
maintaining the 27.5 mpg standard for MY 1989
would increase American jobs. The economic reality
is that small car jobs have been lost due to competi-
tion from foreign manufacturers which enjoy large
cost advantages. Higher standards would not bring
those jobs back. The domestic manufacturers import
small cars in response to that competition. If GM and
Ford did import particular small cars, a greater
number of small cars would be imported by other
manufacturers.
GM stated at the September 14 public hearing that
the fuel-efficient Chevette, a domestic small car that
company once produced, was not redesigned because
GM couldn't compete in that market. GM emphasized
that its inability to compete in that market is the
reason it is working on Saturn at this point in time,
which will probably come out in 1990 as a 1991 model.
GM emphasized that it has increased its import fleet
from zero in 1984 to over 300,000 in 1988 to main-
tain a presence in that market until it can get Saturn
on the street. GM's August 1988 submission included
an article on Saturn which characterized the project
as a "development program for a new family of
import-fighting subcompact cars planned for produc-
tion in the United States." The article indicated that
GM is spending $2 billion on the first phase of Saturn.
A higher MY 1989 standard would not bring Saturn
along sooner. Moreover, given the importance of
Saturn to GM, NHTSA agrees with that company
that Saturn could not, and cannot, be "rushed." Given
the current competitive market, it is essential that
the car be "right" when it is introduced. NHTSA also
observes that while Saturn will not help GM's MY
1989 CAFE, the Saturn project is an added reason to
find that GM has continued to make reasonable
efforts to achieve the 27.5 mpg standard.
Just as the agency cannot justify a standard of 27.5
mpg for MY 1989, neither can it justify keeping the
standard at the level of the MY 1988 standard, i.e.,
26.0 mpg. NHTSA is mindful of the statutory
command to set the MY 1989 standard at the
maximum feasible level. Since its review of the
market suggests that even a fully competitive U.S.
auto industry would achieve a fuel economy higher
than 26.0 mpg, a higher standard must be set. The
agency is also commanded by the CAFE law to give
due weight to all statutory factors, including the need
of the Nation to conserve energy. NHTSA is reminded
by the Department of Energy in its comments to this
proceeding that the Nation's conservation needs are
greater now than they were in 1985, when the agency
first set the standard at 26.0 mpg. Balancing the
agency's view about what level of standard is
economically practicable for MY 1989 against the
Nation's conservation needs, NHTSA believes that a
proper balance between these factors can be reached
by increasing the standard to 26.5 mpg, a 0.5 mpg
increase over the 1988 level. This increase also
demonstrates the agency's recognition of the role of
fossil fuel conservation in reducing carbon dioxide
emissions, which are thought to be a major factor in
the "greenhouse" effect. While NHTSA has
concluded, and firmly believes, that a standard at 26.5
PART 531-PRE 174
mpg will have no significant effect on the human
environment, as compared with a standard of 27.5
mpg, the agency also sees the increase in the stand-
ard to 26.5 mpg as appropriately taking into account
the need of the Nation to conserve energy. Moreover,
taking this step can be made without threatening the
competitiveness to the U.S. auto industry. It is
important to note at this point the results of the
agency's analysis (described more fully in the
accompanying regulatory impact analysis and
environmental assessment) demonstrating that the
maximum hypothetical increase in fuel consumption
of a standard set at 26.5 mpg as compared with 27.5
mpg is substantially less than a fraction of 1 percent.
Indeed, this figure probably overstates the actual
results as noted in those supporting documents.
Further, as noted elsewhere in this notice, the Depart-
ment of Energy has expressed strong doubts about the
effect of CAFE standards on energy savings under
current market conditions.
Model
year
Average fuel
economy
standard
(miles per gallon)
1978 . .
18.0
1979 . .
19.0
1980 . .
20.0
1981 . .
22.0
1982 . .
24.0
1983 . .
26.0
1984 . .
27.0
1985 . .
27.5
1986 . .
26.0
1987 . .
26.0
1988 . .
26.0
1989 . .
26.5
1990 an
d thereafi
;er
27.5
In consideration of the foregoing, 49 CFR Part 531
is amended as follows:
Issued: September 30, 1988
Diane K. Steed
Administrator
53 F.R. 39275
October 6, 1988
PART 531-PRE 175-176
PREAMBLE TO AN AMENDMENT TO PART 531
Passenger Automobile Average Fuel Economy Standards
Final Decision to Grant Exemption
(Docket No. LVM 86-02; Notice 2)
ACTION: Final decision granting exemption from
average fuel economy standards and establishing an
alternative standard.
SUMMARY: This decision is issued in response to a
petition filed by Rolls-Royce Motors, Ltd. (Rolls-Royce)
requesting that it be exempted from the generally
applicable average fuel economy standard of 27.5 miles
per gallon (mpg) for model year (MY) 1990 and 1991
passenger automobiles, and that lower alternative
standards be established for it. This decision grants
Rolls-Royce that exemption and establishes an alter-
native standard of 12.7 mpg for MY 1990 and 12.7 for
MY 1991.
EFFECTIVE DATE: October 16, 1989. This exemption
and alternative standard apply to Rolls-Royce for
model years 1990 and 1991.
SUPPLEMENTARY INFORMATION: NHTSA is
exempting Rolls-Royce from the generally applicable
average fuel economy standard for 1990 and 1991
model year passenger automobiles and establishing an
alternative standard applicable to Rolls-Royce for
those model years. This exemption is issued under the
authority of section 502(c) of the Motor Vehicle In-
formation and Cost Savings Act, as amended ("the
Act") (15 U.S.C.2002(c)). Section 502(c) provides that a
passenger automobile manufacturer which manu-
factures fewer than 10,000 passenger automobiles
annually may be exempted from the generally appli-
cable 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 NHTSA establishes an alternative
standard for the manufacturer at its maximum feasible
level. Section 502(e) of the Act (15 U.S.C. 2002(e))
requires NHTSA, in determining maximum feasible
average fuel economy, 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 decision was preceded by a proposed
decision announcing the agency's tentative conclusion
that Rolls-Royce should be exempted from the generally
applicable 1990 and 1991 passenger automobile average
fuel economy standards, and that an alternative stan-
dard of 12.7 mpg should be established for Rolls-Royce
in those model years (54 FR 37443, September 8, 1989).
No comments were received on the proposed decision.
The agency is adopting the tentative conclusions set
forth in the proposed decision as its final conclusions,
for the reasons set forth in the proposed decision.
Based on the conclusions that the maximum feasible
average fuel economy level for Rolls-Royce in Model
Years 1990 and 1991 is 12.7 mpg, that other Federal
motor vehicle standards will not affect achievable fuel
economy beyond the extent considered in the proposed
decision, and that the national effort to conserve
energy will not be affected by granting this requested
exemption, NHTSA hereby exempts Rolls-Royce from
the generally applicable passenger automobile average
fuel economy standard for the 1990 and 1991 model
years and establishes an alternative standard of 12.7
miles per gallon for Rolls-Royce in those years.
NHTSA has analyzed this decision, and determined
that neither Executive Order 12291 nor the Department
of Transportation's regulatory policies and procedures
apply, because this decision is not a "rule," which term
is defined as "an agency statement of general applic-
ability and future effect.". This exemption is not
generally applicable, since it applies only to Rolls-
Royce. If the Executive Order and the Department
policies and procedures were applicable, the agency
would have determined that this action is neither
"major" nor "significant." The principal impact of
this exemption is that Rolls-Royce will not be required
to pay civil penalties if it achieves its maximum
feasible average fuel economy, and purchasers of its
vehicles will not have to bear the burden of those civil
penalties in the form of higher prices. Since this
decision sets an alternative standard at the level
determined to be Rolls-Royce's maximum feasible
average fuel economy, no fuel would be saved by
establishing a higher alternative standard. The impacts
for the public at large will be minimal.
PART 531-PRE 177
In consideration of the foregoing, 49 CFR Part 531 is
amended by revising § 531.5(b)(2) to read as follows:
*****
(b) The following manufacturers shall comply
with the standards indicated below for the
specified model years:
4: * * * *
(2) Rolls-Royce Motors, Inc.
MODEL YEAR AVERAGE FUEL ECONOMY
STANDARD
(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
1986
11.0
1987
11.2
1988
11.2
1989
11.2
1990
12.7
1991
12.7
Issued on October 10, 1989
Jeffrey R. Miller
Acting Administrator
54 F.R.42303
October 16, 1989
PART 531-PRE 178
PREAMBLE TO AN AMENDMENT TO PART 531
Passenger Automobile Average Fuel Economy Standards
(Docket No. LVM 89-01; Notice 2)
ACTION: Final rule.
SUMMARY: This decision is issued in response to
individual petitions filed by three low volume man-
ufacturers, Officine Maserati S.p.A. (Maserati), Lam-
borghini of North America (Lamborghini), and Lon-
donCoach Co., Inc. (LondonCoach). Each company
requested that it be exempted from the generally
applicable passenger automobile average fuel economy
standards, and sought establishment of lower alterna-
tive standards for each model year (MY) from which it
sought exemption. This notice grants exemptions and
establishes alternative standards as follows:
Lamborghini petitioned to be exempted for MYs
1983 and 1984. This notice grants that exemption
and establishes alternate standards for Lambor-
ghini of 13.7 mpg for MYs 1983 and 1984.
LondonCoach petitioned to be exempted for MYs
1985 through 1987. This notice grants that exemp-
tion and establishes alternate standards for London-
^k Coach of 21.0 mpg for MYs 1985 through 1987.
^y Maserati petitioned to be exempted for MYs 1984
and 1985. This notice grants that exemption and
establishes alternate standards for Maserati of 17.9
mpg for MY 1984 and 16.8 mpg for MY 1985.
DATES: Effective Date: April 4, 1990. These exemp-
tions and alternative standards apply to the respec-
tive above mentioned manufacturers for the stated
model years.
SUPPLEMENTARY INFORMATION: NHTSA is ex-
empting three low volume manufacturers from the
generally applicable average fuel economy standards
for passenger automobiles and establishing alterna-
tive standards applicable to those companies for the
petitioned model years as follows: Lamborghini for
MYs 1983 and 1984; LondonCoach for MYs 1985
through 1987; and Maserati for MYs 1984 and 1985.
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
U.S.C. 2002(c)). Section 502(c) provides that a pas-
senger automobile manufacturer which manufac-
tures 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 manufac-
turer's maximum feasible average fuel economy and
if NHISA establishes an alternative standard appli-
cable to that manufacturer at its maximum feasible
average fuel economy. In determining the manufac-
turer's maximum feasible average fuel economy,
section 502(e) of the Act (15 U.S.C. 2002(e)) requires
NHTSA to consider:
(1) Technological feasibility;
(2) Economic practicability;
(3) The effect of other Federal motor vehicle stan-
dards on fuel economy; and
(4) The need of the Nation to conserve energy.
This final decision was preceded by proposed deci-
sions announcing the agency's tentative conclusion
that the subject manufacturers should be exempted
from the generally applicable average fuel economy
standards for the petitioned model years, and that
alternative standards should be established for the
manufacturers for each of the model years; 54 FR
40689 (October 3, 1989), for Lamborghini, London-
Coach, and Maserati.
The agency received one comment on the October
3, 1989 notice from Maserati. Maserati endorsed the
establishment of alternative standards for Maserati
for MYs 1984 and 1985, but noted a "typographical
error" in the summary section of the notice of
proposed rulemaking (NPRM) where it was stated
that the proposed alternative standards for Maserati
was 17.3 mpg for MY 1984 and 16.6 mpg for MY
1985 rather than 17.9 mpg for MY 1984 and 16.8
mpg for MY 1985 as shown in the proposed amend-
ment language at the end of the NPRM. The agency
agrees with Maserati that the values in the sum-
mary of the NPRM are outdated. The discrepancy is
that the first set of values were those requested in
Maserati's petition while the second set are values
that reflect Maserati's final adjusted CAFE as con-
firmed by the Environmental Protection Agency.
Since 17.9 mpg for MY 1984 and 16.8 mpg for MY
1985 are the actual final CAFE values for Maserati,
it is these values that will be used as the alternative
fuel economy standards for Maserati.
Therefore, the agency is adopting the tentative
conclusions set forth in the proposed decisions as its
PART 531; PRE 179
final conclusions, for the reasons set forth in the
proposed decisions. Based on the conclusions that
the maximum feasible average fuel economy levels
for each of the petitions during the applicable model
years would be as shown below, that other Federal
motor 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
three petitioners from the generally applicable aver-
age fuel economy standards and establishes alterna-
tive standards for the three petitioners for the model
years and at the levels shown below.
Section 531.5(b) is amended by revising (bX7) and
by adding (bX8) and (bX9). The introductory text of (b)
is republished 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:
(7) Officine Alfieri Maserati S.p.A.
(8) Lamborghini of North America
MODEL YEAR
AVERAGE FUEL
ECONOMY STANDARD
(miles per gallon)
1983
13.7
1984
13.7
(9) LondonCoach Co., Inc.
MODEL YEAR
AVERAGE FUEL
ECONOMY STANDARD
(miles per gallon)
1985
21.0
1986
21.0
1987
21.0
Issued on: March 30, 1990
MODEL YEAR
AVERAGE FUEL
ECONOMY STANDARD
(miles per gallon)
1978
12.5
1979
12.5
1980
9.5
1984
17.9
1985
16.8
Jeffrey R. Miller
Deputy Administrator
55 F.R. 12485
April 4, 1990
PART 531; PRE 180
PREAMBLE TO AN AMENDMENT TO PART 531
Passenger Automobile Average Fuel Economy Standards
(Docket No. 90-18; Notice 1)
ACTION: Final decision.
SUMMARY: This decision is issued in response to a
petition filed by Dutcher Motors, Inc. (Dutcher) re-
questing that it be exempted from the generally appli-
cable average fuel economy standard of 26.0 miles per
gallon (mpg) for model year (MY) 1986, 1987, and 1988
passenger automobiles, and that lower alternative
standards be established for it. This decision exempts
Dutcher and establishes alternative standards of 16.0
mpg for MY 1986, 16.0 mpg for MY 1987, and 16.0
mpg for MY 1988. The decision was preceded by
publication of a notice requesting public comments.
DATES: Effective Date: August 21, 1990. These
exemptions and alternative standards apply to
Dutcher for Model Years 1986, 1987 and 1988.
SUPPLEMENTARY INFORMATION: NHTSA is ex
empting Dutcher from the generally applicable aver-
age fuel economy standard for 1986, 1987 and 1988
model year passenger automobiles and establishing an
alternative standard applicable to Dutcher for those
model years. This exemption is issued under the au-
thority of section 502(c) of the Motor Vehicle Informa-
tion and Cost Savings Act, as amended ("the Act") (15
U.S.C. 2002(c)). Section 502(c) provides that a passen-
ger automobile manufacturer which manufactures
fewer than 10,000 passenger automobiles annually
may be exempted from the generally applicable aver-
age fuel economy standard for a particular model year
if that standard is greater than the low volume man-
ufacturer's maximum feasible average fuel economy
and if NHTSA establishes an alternative standard for
the manufacturer at its maximum feasible level. Sec-
tion 502(e) of the Act (15 U.S.C. 2002(e)) requires
NHTSA, in determining maximum feasible average
fuel economy, to consider:
(1) Technological feasibility;
(2) Economic practicability;
(3) The effect of other Federal motor vehicle stan-
dards on fuel economy; and
(4) The need of the Nation to conserve energy.
This final decision was preceded by a proposed
decision announcing the agency's tentative conclusion
that Dutcher should be exempted from the generally
applicable 1986, 1987 and 1988 passenger automobile
average fuel economy standards, and that an alterna-
tive standard of 16.0 mpg should be established for
Dutcher in each of those model years (55 FR 14439,
April 18, 1990). No comments were received on the
proposed decision.
The agency is adopting the tentative conclusions
set forth in the proposed decision as its final conclu-
sions, for the reasons set forth in the proposed
decision. Based on the conclusions that the maxi-
mum feasible average fuel economy level for Dutcher
in Model Years 1986, 1987 and 1988 is 16.0 mpg,
that other Federal motor vehicle standards will not
affect achievable fuel economy beyond the extent
considered in the proposed decision, and that the
national effort to conserve energy will not be af-
fected by granting this requested exemption,
NHTSA hereby exempts Dutcher from the generally
applicable passenger automobile average fuel econ-
omy standard for the 1986, 1987 and 1988 model
years and establishes an alternative standard of 16.0
miles per gallon for Dutcher for each of those years.
In consideration of the foregoing, 49 CFR Part 531
is amended by adding §531.5(bXll) to read as fol-
lows. The introductory text of fb) is shown for the
convenience of the reader and remains unchanged.
(b) The following manufactiu-ers shall comply with
the standards indicated below for the specified model
years:
* *
* * *
(11) Dutcher Motors
, Inc.
MODEL YEAR
AVERAGE FUEL
ECONOMY STANDARD
(miles per gallon)
1986
16.0
1987
16.0
1988
16.0
Issued
on: August
14,
1990
Jeffrey R. Miller
Deputy Administrator
55 F.R. 34017
August 21, 1990
PART 531; PRE 181-182
»
PREAMBLE TO AN AMENDMENT TO FEDERAL MOTOR VEHICLE
SAFETY STANDARD NO. 531
Passenger Automobile Average Fuel Economy Standards
(Docket No. LVM 89-01; Notice 6)
ACTION: Final Decision.
SUMMARY: This decision is issued in response to a
petition filed by Rolls-Royce Motors, Ltd. (Rolls-Royce)
requesting that it be exempted from the generally
applicable average fuel economy standard of 27.5 miles
per gallon (mpg) for model year (MY) 1992, 1993, and
1994 passenger automobiles, and that lower alternative
standards be established for it. This decision exempts
Rolls-Royce and establishes alternative standards of
13.8 mpg for MY 1992, 13.8 mpg for MY 1993, and
13.8 mpg for MY 1994. The decision was preceded by
publication of a notice requesting public comments.
DATES: Effective Date: October 11, 1990. These
exemptions and alternative standards apply to Rolls-
Royce for model years 1992, 1993 and 1994.
K
#
SUPPLEMENTARY INFORMATION: NHTSA is
xempting Rolls-Royce from the generally applicable
average fuel economy standard for 1992, 1993 and
1994 model year passenger automobiles and
establishing an alternative standard applicable to Rolls-
Royce for those model years. This exemption is issued
under the authority of section 502(c) of the Motor
Vehicle Information and Cost Savings Act, as amended
("the Act"X15 U.S.C. 2002(c)). Section 502(c) provides
that a passenger automobile manufactiu-er which
manufactures fewer than 10,000 passenger
automobiles 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 NHTSA establishes an
alternative standard for the manufacturer at its
maximum feasible level. Section 502(e) of the Act (15
U.S.C. 2002(e)) requires NHTSA, in determining
maximum feasible average fuel economy, 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 decision was preceded by a proposed
cision annoimcing the agency's tentative conclusion
that Rolls-Royce should be exempted from the
generally applicable 1992, 1993 and 1994 passenger
automobile average fuel economy standards, and that
an alternative standard of 13.8 mpg should be
established for Rolls-Royce in each of those model years
(55 FR 21626, May 25, 1990). No comments were
received on the proposed decision.
The agency is adopting the tentative conclusions set
forth in the proposed decision as its final conclusions,
for the reasons set forth in the proposed decision.
Based on the conclusions that the maximum feasible
average fuel economy level for Rolls-Royce in model
years 1992, 1993 and 1994 is 13.8 mpg, that other
Federal motor vehicle standards will not affect
achievable fuel economy beyond the extent considered
in the proposed decision, and that the national effort
to conserve energy will not be affected by granting this
requested exemption. NHTSA hereby exempts Rolls-
Royce from the generally applicable passenger
automobile average fuel economy standard for the
1992, 1993 and 1994 model years and establishes an
alternative standard of 13.8 miles per gallon for Rolls-
Royce for each of those years.
NHTSA has analyzed this decision, and determined
that neither Executive Order 12291 nor the
Department of Transportation's regulatory policies and
procedures apply, because this decision is not a "rule,"
which term is defined as "an agency statement of
general applicability and future effect." This exemption
is not generally applicable, since it applies only to Rolls-
Royce. If the Executive Order and the Departmental
policies and procedures were applicable, the agency
would have determined that this action is neither
"major" nor "significant." The principal impact of this
exemption is that Rolls-Royce will not be required to
pay civil penalties if they achieve CAFE levels
equivalent to the alternative standards established in
this notice. Since this decision sets an alternative
standard at the level determined to be Rolls-Royce's
maximum feasible average fuel economy, no fuel would
be saved by establishing a higher alternative standard.
The impacts for the public at large will be minimal.
PART 571; S531-PRE 183
The agency has also considered the environmental
implications of this decision in accordance with the
National Environmental Policy Act and determined
that this decision will not significantly affect the human
environment. Regardless of the fuel economy of a
vehicle, it must pass the emissions standards which
measure the amount of emissions per mile travelled.
Thus, the quality of the air is not affected by this
exemption and alternative standard. Further, since
Rolls-Royce's MY 1992, 1993 and 1994 automobiles
cannot achieve better fuel economy than 13.8 mpg,
granting this exemption will not affect the amount of
gasoline available.
Since the Regulatory Flexibility Act may apply to a
decision exempting a manufacturer from a generally
apphcable standard, I certify that this decision will not
have a significant economic impact on a substantial
nimiber of small entities. This decision does not impose
any burden on Rolls-Royce. It does relieve the company
from having to pay civil penalties for noncompliance
with the generally applicable standards for model years
1992, 1993, and 1994. Since the prices of 1992, 1993
and 1994 Rolls-Royce automobiles will not be affected
by this decision, the purchasers will not be affected.
Generally, small businesses, small governmental
jurisdictions, and small nonprofit entities are not
purchasers of Rolls-Royce automobiles.
In consideration of the foregoing, 49 CFR Part 531
is amended to read as follows.
(b) The following manufacturers shall comply with
the standards indicated below for the specified model
years:
* * * *
(2) Rolls-Royce Motors, Ltd.
MODEL YEAR
AVERAGE FUEL
ECONOMY STANDARD
(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
1986
11.0
1987
11.2
1988
11.2
1989
11.2
1990
12.7
1991
12.7
1992
13.8
1993
13,8
1994
13.8
PART 531 -[AMENDED]
1. The authority citation for Part 531 continues to
read as follows:
Authority: 15 U.S.C. 2002, delegation of authority
at 49 CFR 1.50.
2. Section 53 1 .5(b) is amended by revising (bX2). The
introductory text of (b) is republished to read as follows:
§ 531.5 Fuel economy standards.
Issued on: September 5, 1990.
Jeffrey R. Miller
Deputy Administrator
55 F.R. 37326
September 11, 1990
PART 571; S531-PRE 184
PREAMBLE TO AN AMENDMENT TO PART 531
Passenger Automobile Average Fuel Economy Standards
(Docket No. LVM 89-01; Notice 10)
ACTION: Final rule.
SUMMARY: This decision is issued in response to a
petition filed by Dutcher Motors, Inc. (Dutcher)
requesting that it be exempted from the generally
applicable average fuel economy standard of 27.5 miles
per gallon (mpg) for model year (MY) 1992 passenger
automobiles, and that a lower alternative standard be
established for it for each of these model years. This
decision exempts Dutcher and establishes an alternate
standard of 17.0 mpg for each of MY 1992. The deci-
sion was preceded by publication of a notice request-
ing public comments.
EFFECTIVE DATE: June 3, 1991. Thie exemption and
the alternative standard apply to Dutcher for MY 1992.
SUPPLEMENTARY INFORMATION: NHTSA is exempt-
ing Dutcher from the generally applicable average fuel
economy standard for 1992 model year passenger au-
tomobiles and establishing an alternative standard ap-
plicable to Dutcher for that model year. This exemption
is issued under the authority of section 502(c) of the
Motor Vehicle Information and Cost Savings Act, as
amended (the Act) (15 U.S.C. 2002(c)). Section 502(c)
provides that a passenger automobile manufacturer
which manufactures fewer than 10,000 passenger auto-
mobiles 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 NHTSA establishes an
alternative standard for the manufacturer at its
maximum feasible level. Section 502(e) of the Act (15
U.S.C. 2002(e)) requires NHTSA, in determining
maximum feasible average fuel economy, 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 decision was preceded by a proposed deci-
sion announcing the agency's tentative conclusion that
Dutcher should be exempted from the generally
applicable MY 1992 passenger automobile average fuel
economy standard of 27.5 mpg, and that an alterna-
tive standard of 17.0 mpg should be established for
Dutcher for each of these model years (56 FR 3441,
January 30, 1991). No comments were received on the
proposed decision.
The agency is adopting the tentative conclusions set
forth in the proposed decision as its final conclusions,
for the reasons set forth in the proposed decision.
Based on the conclusions that the maximum feasible
average fuel economy level for Dutcher in each of MYs
1993, 1994, and 1995 is 17.0 mpg, that other Federal
motor vehicle standards will not affect achievable fuel
economy beyond the extent considered in the proposed
decision, and that the national effort to conserve
energy will not be affected by granting this exemption,
NHTSA hereby exempts Dutcher from the generally
applicable passenger automobile average fuel economy
standard for the 1992 model year and establishes an
alternative standard of 17.0 miles per gallon for
Dutcher for each of these years.
Section 531.5 is amended by revising paragraph
(bXll); the introductory text of paragraph (b) is repub-
lished to read as follows:
§ 531.5 Fuel economy standards.
* * * * *
(6) The following manufactiirers shall comply with
the standards indicated below for the specified model
years:
(11) Dutcher Motors, Inc.
Model '
year
Average Fuel Economy Standard
(miles per gallon)
1986
16.0
1987
16.0
1988
16.0
1992
17.0
1993
17.0
1994
17.0
1995
17.0
Issued on: August 1, 1991.
Jerry Ralph Curry
Administrator
56 F.R. 20362
May 3, 1991
PART 531-PRE 185-186
PREAMBLE TO AN AMENDMENT TO PART 531
Passenger Automobile Average Fuel Economy Standards
(Docket No. LVM 89-01; Notice 101)
ACTION: Final decision.
SUMMARY: This decision is issued in response to a
petition filed by Dutcher Motors, Inc. (Dutcher) re-
questing that it be exempted from the generally ap-
plicable average fuel economy standard of 27.5 miles
per gallon (mpg) for model years (MY) 1993, 1994, and
1995 passenger automobiles, and that a lower alterna-
tive standard be established for it for each of these
model years. This decision exempts Dutcher and estab-
lishes an alternate standard of 17.0 mpg for each of
MYs 1993, 1994, and 1995. The decision was preceded
by publication of a notice requesting public comments.
EFFECTIVE DATE: September 23, 1991.
This exemption and the alternative standards apply to
Dutcher for MYs 1993, 1994, and 1995.
SUPPLEMENTARY INFORMATION: NHTSA is ex-
empting Dutcher from the generally applicable aver-
age fuel economy standard for 1993, 1994, and 1995
model year passenger automobiles and establishing al-
ternative standards applicable to Dutcher for each of
these model years. This exemption is issued under the
authority of section 502(c) of the Motor Vehicle Infor-
mation and Cost Savings Act, as amended ("the Act")
(15 U.S.C. 2002(c)). Section 502(c) provides that a
passenger automobile manufacturer which manufac-
tures fewer than 10,000 passenger automobiles an-
nually 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 NHTSA establishes an alternative
standard for the manufacturer at its maximum feasi-
ble level. Section 502(e) of the Act (15 U.S.C. 2002(e))
requires NHTSA, in determining maximum feasible
average fuel economy, 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 decision was preceded by a proposed deci-
sion announcing the agency's tentative conclusion that
Dutcher should be exempted from the generally ap-
plicable MY 1993, 1994, and 1995 passenger automo-
bile average fuel economy standard of 27.5 mpg, and
that an alternative standard of 17.0 mpg should be
established for Dutcher for each of these model years
(56 FR 21653, May 10, 1991). No comments were
received on the proposed decision.
The agency is adopting the tentative conclusions set
forth in the proposed decision as its final conclusions,
for the reasons set forth in the proposed decision.
Based on the conclusions that the maximum feasible
average fuel economy level for Dutcher in each of MYs
1993, 1994, and 1995 is 17.0 mpg, that other Federal
motor vehicle standards will not affect achievable fuel
economy beyond the extent considered in the proposed
decision, and that the national effort to conserve
energy will not be affected by granting this exemption,
NHTSA hereby exempts Dutcher from the generally
applicable passenger automobile average fuel economy
standard for the 1993, 1994, and 1995 model years and
establishes an alternative standard of 17.0 miles per
gallon for Dutcher for each of these years.
Section 531.5 is amended by revising paragraph
(bXll); the introductory text of paragraph (b) is repub-
lished to read as follows: $ 531.5 Fuel economy
standards.
PART 531— PRE 187
The following manufacturers shall comply with the Issued on: August 1, 1991.
standards indicated below for the specified model
years: J«iTy Ralph Curry
• • • • • Administrator
(11) Dutcher Motors, Inc. 56 F.R. 37478
August 7, 1991
AVERAGE FUEL
ECONOMY STANDARD
MODEL YEAR (miles per gallon)
1986 16.0
1987 16.0
1988 16.0
1992 17.0
1993 17.0
1994 17.0
1995 17.0
PART 531— PRE U
PART 531 — PASSENGER AUTOMOBILE AVERAGE FUEL ECONOMY STANDARDS
5531.1 Scope.
This part establishes average fuel economy
standards pursuant to section 502(a) of the Motor ^'^£'^7'
Vehicle Information and Cost Savings Act, as Model year per gallon)
amended, for passenger automobiles. 7~7
1979 19.0
1980 20.0
»».. « n 1981 22.0
5531.2 Purpose. ^932 24.0
The purpose of this part is to increase the fuel 1983 26.0
• • 1984 27 0
economy of passenger automobiles by establishing . „„^ 275
minimum levels of average fuel economy for those j^ggg 26.0
vehicles. 1987 26.0
1988 26.0
1989 26.5
1990 and thereafter 27.5
5531.3 Applicability.
^, . ^ ,. ^ J. ^ n (b) The following manufacturers shall comply
This part applies to manufacturers of passenger ^^^^ ^^^ standards indicated below for the
automobiles. specified model years:
(1) Avanti Motor Corporation.
5531.4 Definitions. Average Fuel Economy Standard
(a) Statutory terms. (1) The terms "average Miles per
fuel economy," "manufacture," "manufacturer," Model year gaUon
and "model year" are used as defined in section ^^73 lel^
501 of the Act. 1979 14.5
(2) The terms "automobile" and "passenger . „„. ^g'g
automobile" are used as defined in section 501 of 1932 18.2
the Act and in accordance with the determination 1983 16.9
in part 523 of this chapter. 1984 16.9
^ ^ 1985 16.9
(b) Other terms. As used in this part, unless
otherwise required by the context- (2) Rolls-Royce Motors, Inc.
(1) "Act" means the Motor Vehicle Informa- Average Fuel Economy Standard
tion and Cost Savings Act, as amended by Pub. L.
94-163 Miles per
Model year gallon
1978 10.7
5531.5 Fuel economy standards. 1979 10.8
1980 11 1
(a) Except as provided in paragraph (b) of this ^^g^^ ^q'^
section each manufacturer of passenger auto- ^932 lO^e
mobiles shall comply with the following standards 1933 9.9
in the model years specified: 1984 10.0
PART 531-1
1985 10.0
1986 11.0
1987 11.2
1988 11.2
1989 11.2
1990 12.7
1991 12.7
1992 13.8
1993 13.8
1994 13.8
(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
(7) Officine Alfieri Maserati S.P.A.
Average Fuel Economy Standard
Model year
Miles per
gallon
1978 12.5
1979 12.5
1980 9.5
1984 17.9
1985 16.8
(8) Lamborghini of North America
Average Fuel Economy Standard
Model year
Miles per
gallon
1983
13.7
1984
13.7
(9) London Coach Co., Inc.
Average Fuel Econon^y Standard
Model year
Miles per
gallon
1985
21 0
1986
21.0
1987
21.0
(6) (Reserved)
(10) (Reserved)
(11) Dutcher Motors, Inc.
Average Fuel Economy Standard
MiUs per
Model year gallon
1986 16^0
1987 16.0
1988 16.0
11992 17.0
1993 17.0
1994 17.0
1995 17.0
56 F.R. 37478— August 7, 1991. Effective: September
23. 1991)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
Administrator 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. 8/7/91)
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 veliicle 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-
ing world petroleum supply and the uncertain
availability to this Xation of existing foreigii
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
Administration
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.
Suvvmar'y 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 XPRil, 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-
hicles in this subclassification of nonpassenger
automobiles. The 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. Xotwithstanding their criticisms
all manufacturers indicated that 18.7 mpg to 19.0
mpg, assuming 1976 Federal emissions and test-
ing procedures, was achievable 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
consider those criticisms in future rulemaking.
PART 533— PRE 2
Scope of the average fuel economy standard.
International Harvester commented that, al-
though the preamble to the NPRM indicated
that only vehicles 6,000 pounds or less, GV~\VR,
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 GVAVR 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.
Off-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 argimient 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 ofl'-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 sfet 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.
PART 533— PRE 3
Congress clearly intended that vehicles capable
of off-higliway 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 Agnetc, the Supreme Court had to
decide whether a securities firm which earned
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 alwaj's mean
"first," and stated, "An activity may be primary
... if it is substantial." 329 U.S. at 426. Thus,
under Agneio, 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"
under 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, the
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 are on-road vehicles, with a capability
for off-highway operation.
After more than a decade of regulation under
the Vehicle Safety Act, both Ford and AMC
have acted consistentl}' with the view that ve-
hicles referred to here were "motor veliicles."
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.Kept. No. 92^13, 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 history of
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 Ford 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 pri7narily for off-road
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 Congress
intended not to be subject to fuel economy stand-
ards under the Title, e.g., agricultural equipment
and construction equipment, those vehicles are
PART 533— PEE 4
not characterized by the features wliich are
claimed by the manufacturers to establisli that a
vehicle was not manufactured for highway use.
Furthermore, the language which Ford under-
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 oif-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. Therefore, 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 Senate. 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 w off-
highxoay 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-16957 (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 tlie
scope of the Title. Second, the definition of
"passenger automobile," vmlike 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 XHTSA
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 United
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. AJMC 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 anj-one
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 the shipment and import dtities
on tlie 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. Rept. No. 340,
94th Cong., 1st Sess. 91 (1975).
The provision in section 503(b)(1) for count-
ing most captive import passenger automobiles
together with the domestically produced pas-
senger automobiles in model years 1978 and 1979
provides the affected manufacturers with an
opportunity to adjust to the separate ti'eatment
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 produced 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 Ford's and General Motors' share
of it, have been fairly 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 manufactui'es 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 tlie limitation.
Glasses of nonpassenger automobihs. 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
differentiating between or among classes, or the
effect 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 thi; 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 ^-ery fuel uneconomical, 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 vith 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
agencj' 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 detei'inine 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 8
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 severely strain any manufacturer. (S.
Kept. No. 516, 94th Cong., 1st Sess. 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 appropi'iate 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.
Toyota 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 economy 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 reduce competition in the general utility,
jeep-type market under 6000 GVWR 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 veliicles 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 must 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.
Responsibility for compliance. 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 manufacturers 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 fi'om
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
economy 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
NPEM 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 pei'cent. 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 NHTSA to
change the final standard for model year 1979
in light of those comments. The proper level of
the standaixl 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 EmissioTis Standa.Tds and
Testing Procedures. EPA has established more
stringent emission standards for model year 1979.
EPA has also modified the testing procedures for
measui'ing 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 take
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 Chrj-sler 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 the data supplied by the manufactur-
ers, the NHTSA has concluded that the manu-
facturers have failed to show 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.
The change in the EPA emissions standard
that affects fuel economy is the lowering of the
standard for XOx from 3.1 grams per mile
(gpm) to 2.8 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 eleetronic
EGR, exist and could be used for nonpassenger
automobiles, although 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 would 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 manufacturer
failed to show that 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 from 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 EGR 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 the same engine family showed small
reductions in fuel 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 Motoi-s testing methodologj- 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 £GR 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 NOx 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 NHTSA 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 XOx 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 sj'stems 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, XHTSA considei-s 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 leadtime 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 manufacturei-s' 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 nmnber of vehicles tested (96 vehicles) in
.'JSO 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, tMs
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 cai-eful
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-
dustrj'wide 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
ai-ea is larger than the industry average, which
would cause a higher percentage of increase in
road load. Both of these 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 these 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, which are more stringent than the
1979 Federal standards, will result in its Cali-
fornia fleet of nonpassenger antomobiles having
an average fuel economy appi'oximately 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 veliicles sold in California and
the different mix of vehicles sold in California
may have the effect 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 because 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 avei'age 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
be capable of achieving a level of fuel economy
under 1976 Federal emissions standards and test-
ing procedui'es that is higher than the 18.7 pro-
posed in the NPKM. 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 effect
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.
Compamon of proposed stamdard for nonpas-
senger automobiles with standard established for
passenger automobiles. In section 502(a)(1) of
Title V, Congress established an average fuel
economy standai'd for passengei' 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 wMch 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 standard 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. AVliat
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 533— 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 than the earlier analysis of
Congress.
Cost and Benefit Analysis. The NPKM 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 that 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 stat«d in the NPKM,
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 simimary 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 mandatory 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 tenns of reduced utility, these nonquantifiable
costs were not contained in the sununary of costs
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 that an en-
tirely new vehicle is not necessary to test each
base level. Changes in recalibration and axle
ratios can be made to vehicles, and allow some
of the testing costs to be spread over a number
of tests. Therefore, Ford's estimate of testing
costs seems higli. However, even assuming that
Ford's estimates of the cost of testing are cor-
rect, that 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 Nonpassenger Automobiles. . . .
(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 definition 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, nimiber 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 contrary 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- Stat. 901 (15 U.S.C. 2002) ; delegation of au-
istration has determined that this document does thority at 41 FR 25015, June 22, 1976.
not contain a significant regulation requiring a -jhe" principal drafter of this document is
regulatory analysis under Executive Order 12044. „ /-. t^^ ■ lu
„* , -^ y. . , . Roger C. Fairchild.
J^ urthermore, this action does not require an en-
vironmental impact statement under the National Issued on October 2, 1978.
Environmental Policy Act (49 U.S.C. 4321 et
T ■ ■, ,. , ^ ■ ^T-.^ Joan Claybrook
In consideration oi the foregoing. 49 CFR . , • .
/-,. . ,x • J J Administrator
Chapter v is amended. . . .
Authority: Sec. 9, Pub. L. 89-670, 80 Stat. 931 43 F.R. 46546
(49 U.S.C. 1657); sec. 301, Pub. L. 94-163, 89 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 fuel 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 information contact:
Mr. Francis J. Turpin, Oflice of Automotive
Fuel Economy Standards (NEM-21),
National Highway Traffic Safety Adminis-
tration, 400 Seventh Street, S.W., Washing-
ton, D.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 improvement* 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 veliicle
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.
SIBIMARY 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 fi-om 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. "WHiile 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 l)e
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 mai-keting
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 533— 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, copiers
of which are available from the individual listed
as the "information contact" at the beginning
of this notice.
EXPLANATION OF DECISION
(a) Reduction in engine di.^placement 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
amount 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
Chrysler 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,
Chrysler has provided information from which
the agency calculated Chi-ysler's planned re-
ductions in CID X N/V for model year 1981.
These reductions appear to closely 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 GVIVR 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 5 percent lower than Chiysler 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 performance 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 Clirysler
'The abbreviation "DN" followed by a number refers
to the docket number of material in XHTSA docket
FE-77-O.5-N'06. This docket is located in Room 5108
of the Nassif BuildiuK, 400 Seventh Street, S.W., Wash-
ington, D.C., and is open to tlie public during normal
business liours. References to tlie 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 very
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 been
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 the
current trend in the automobile and light truck
market, the agency cannot accept Chrysler's un-
supported 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 should 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 rulemaking.
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 rulemaking on the 1980-81 stand-
ards is valid or even conservative. EPA's
anal5'sis 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 lias used the same rela-
tionsliip between CID x N/V reductions and
fuel economj' improvements for the analj'sis of
the Chiysler 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
mentionetl 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 argiunent 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 maximinn
feasible fuel economy improvement on their part.
If AM makes only half the CID x \/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 irrbfrovements. 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 these 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 re.sult. This conclusion was based upon
earlier development testing of 1979 vehicles
which showed a 3 percent emission standard re-
lated fuel economy penalty and Chiysler'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 tiiat 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 tlie 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 Decemlier
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 tiie 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 calilira-
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 pi'ojected 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 infonna-
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. "\^^lile 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 redwHan. In the 1980-81 rule-
making, the agency projected that the light tnick
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 projex^ts 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 djTiamometer set-
tings on these characteristics, while the previous
procedures relied solely on vehicle weight. In
this analysis of the Chrysler 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 Chrj-sler
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 w
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 under 6000
pounds GVWR) and its regression equation to
project fuel economy data for the entire 0-8500
pound GVWR 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 G\^^T{ range
(for which fuel economy data were extrapolated
from the under-6000 pound GVWR 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 to 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 Chrj^sler'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 Chrysler 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 oflF-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
economy 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
efficient vehicles, and thereby improve its aver-
age fuel economy. DN-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. DN-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 assumption 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 trucks 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 with the light truck fuel economy
standards.
(g) Revision to EPA\s ^^car line" def?iition 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
eqiiipment being applietl 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, lief ore 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 evidence 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 that the lubri-
cant improvement be deleted from XHTSA'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 cai"s 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 t^st
program showed only 0..5 percent improvement
for these lubricants (DN-91, p. 8). down from
the 12 percent projex?ted in the 1980-81 rule-
making. GM has apparently not changed its
plan to delay use of friction modified oils imtil
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 lesser 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
base 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. Sim
Oil Company projected an improvement of 2-3
percent for the crankcase 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
voluminoiis 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 by 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 manufacturere
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 laas 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 efficient 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.
Xevertheless, the current substantial imcertainty
about the prospects for success leads the agency
to be conservative. Therefore, the agency is not
including this transmission improvement in pro-
jecting Chrj'sler'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 3 15.5
GM 17.2 15.8
The agency has not reassessed the capabilities
of the other manufacturers (e.g., Nissan, Toyo
Kogj'o, Volkswagen, etc.) since only Toyota
commented on the proposal. The absence of
comments from most foreign 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 agencj'
concluded in this case that the additional diffi-
culties involved with these measures would out-
' Ford's own projection is 17.6 mpg, witti minimal
benefits ftx)m 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 for 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 efficiency improvements, mix
shifts, and engine displacement/axle ratio reduc-
tions. The agency is unable 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. Ruckelshaus, 478 Fy2d 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 harm from setting too
stringent 4X2 standards was foimd 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 (DX-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 corrvments 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 manufacturers 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 tracks. 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 economy 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
the fuel economy of the currently regulated fleet
of 0-8500 pounds GVWR is the rerating of ve-
hicles above 8500 pounds GVWR. 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 GT\VR. 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) * * *
Limited
Model
2-wheel drive
If-xrheel drive
product line
Year
light trucks
light trucks
light trucks
Captive
Captive
Imports Other Imports Other
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 standard.s are 0.5 mile per gallon les.s if, by
.January 1, 1980, the Environmental Protection Agency
has not fully approved improved luliricants 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
PART 533— PRE 35
and Programs, Room 5212 of the Nassif Build- Issued on June 20, 1979.
ing, Washington, D.C. 20590. j^^^ Claybrook
(Sec. 9, Pub. L. 89-670, 80 Stat. 931 (49 U.S.C. Administrator
1657) ; Sec. 301, Pub. L. 94-163, 89 Stat. 901
(15 U.S.C. 2002) ; delegation of authority at 41 44 F.R. 36975
FR 25015, June 22, 1976 and 43 FR 8525, March June 25, 1979
2, 1978)
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. Inclusion 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 compliance 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
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
^xist 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
levelsof ISmpgfor 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 ins ituting 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 Hne" 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, 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
l-wheel drive
light trucks
Limited
product line
Captive
imports
Other
Captive
imports
Other
light trucks
1979 .
1980 .
1981 .
1982 .
II 16.0
16.7
18.0
17.2
16.0
16.7
18.0
14.0
15.0
16.0
15.8
14.0
15.0
16.0
14.0
14.5
Issued on March 27, 1980.
Joan Claybrook
Administrator
45 F.R. 20871
March 31, 1980
PART 533; PRE 47-48
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 automobile 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 light 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 Hght 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-
PART 533 -PRE 53
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 CaUfornia
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
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 oil and help limit foreign oil 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
CaseB
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 i3 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 in
passenger automobile fleets might lower both car
and truck CAFE's) for reducing the weight of
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
hght 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 TO PART 533 and 526
Petitions Under the Automobile Fuel Efficiency Act of 1980;
Procedures Relating to Light Truck Fuel Economy Standards
(Docket No. 82-01; Notice 1)
ACTION: Interim final rule.
SUMMARY: The notice establishes requirements for
the contents of petitions filed under Automobile Fuel
Efficiency Act of 1980 ("the 1980 Act"). The 1980
Act authorizes the granting of relief from certain
requirements related to the automobile fuel economy
standards established under Title V of the Motor
Vehicle Information and Cost Savings Act ("the Cost
Savings Act"). This notice is being issued to inform
manufacturers about types of information which
must be submitted in support of the various types of
relief petitions and plans. This notice also explains
the flexibility of manufacturers in determining how to
group their vehicles for the purposes of compliance
with the MY 1982 light truck fuel economy standards.
EFFECTIVE DATE: February 18, 1982.
SUPPLEMENTARY INFORMATION:
The Automobile Fuel Efficiency Act of the 1980 (94
Stat. 1821) amended the fuel economy provisions of
the Motor Vehicle Information and Cost Savings Act
to assist the automobile manufacturers in complying
with fuel economy standards and to promote
employment in the U.S. automotive industry. To
obtain this relief, the 1980 Act requires manu-
facturers first to file petitions or plans with the
agency and make certain specified showings. This
notice establishes an interim final regulation
concerning the specific information which manu-
facturers must submit in their petitions and plans.
This notice addresses four different types of relief
authorized under the 1980 Act. The agency has
previously issued a rule under the 1980 Act relating
to the availability of monetary credits for exceeding
the light truck average fuel economy standards. See
45 FR 83233, December 19, 1980, and section 6(b) of
the 1980 Act.
The first set of requirements established in this
notice applies to the exemption provided by section
4(a) of the 1980 Act from the domestic content
requirement in section 503 of the Cost Savings Act.
The requirement specifies that if at least 75 percent
of the cost to the manufacturer of an automobile is
attributable to value added in the United States or
Canada, the automobile is considered domestically-
manufactured. If the percentage is below that level,
the automobile is considered to be foreign-
manufactured. See section 503(b)(2)(E). Under that
requirement, if a manufacturer produces cars both in
this country and abroad for sale in this country and it
raises the domestic content of the cars produced in
this country above 75 percent, it must ensure that its
domestically-produced cars and its foreign-produced
cars separately meet the fuel economy standards.
Thus, the manufacturer could not average high fuel
economy imported cars with lower fuel economy
domestically-manufactured cars as a strategy for
complying with the fuel economy standards.
The domestic content provision was originally
included in the Cost Savings Act to promote
employment in the U.S. automobile industry by
encouraging manufacturers to produce high fuel
economy vehicles in this country, instead of relying
on the importation of high fuel economy cars which
they produce or purchase abroad. However, the
requirement for separate compliance has had the
opposite effect on U.S. employment in its application
to foreign manufacturers. Foreign manufacturers
which seeli or might seek to produce high fuel
economy cars in the U.S. are penalized under the
original domestic content provision. If they produce
their high fuel economy cars in the country and
PART 533-PRE 60A
eventually exceed 75 percent domestic content, they
would lower the average fuel economy of their
remaining foreign-produced fleet. As a result, a
manufacturer's foreign fleet might not comply with
the fuel economy standards, although its combined
foreign and domestic fleet would probably exceed the
standard substantially.
To reduce this disincentive for foreign manu-
facturers to initiate production in this country and to
achieve high levels of domestic content, Congress
amended section 503(b) of the Cost Savings Act by
adding a new subsection (3). Under that provision, a
manufacturer which completes its first model year of
domestic production of automobiles between 1975
and 1985 may petition the agency for exemption from
the requirement for separate compliance so that it
does not apply when the domestic content of the U.S.
produced fleet exceeds 75 percent. Section 503 (b)(3)
requires that the agency grant such a petition unless
it finds that doing so would "result in reduced
employment in the United States related to motor
vehicle manufacturing." Employment reductions
could occur if, for example, granting the petition
resulted in the petitioner's capturing increased sales
from current U.S. manufacturers whose vehicles
have a higher domestic content. The agency has
already granted a petition under this provision to
Volkswagen of America. (See 46 FR 54453;
November 2, 1981.) It appears that in most instances,
increasing U.S. content for one company should
produce net increases in overall U.S. employment.
To determine whether to grant a petition filed
under this provision, the agency needs information on
the magnitude of these possible adverse employment
effects, if any. The agency would also need to know
the magnitude of the positive employment effects
resulting from the decision to begin domestic
production or increase domestic content. Therefore,
the regulations or petitions and plans for relief set
forth below specifies that a petitioning manufacturer
submit information describing insofar as possible the
vehicles it plans to sell in the United States during the
exemption period, the projected sales of those
vehicles, the domestic content of those vehicles and
plans for obtaining components from domestic
sources. Information is also required on the extent, if
any, to which additional sales of the petitioner's
vehicles are expected to be gained at the expense of
current U.S. manufacturers, and the net employment
impact of the shift in sales. The petitioner must also
submit data on the yearly total employment related to
its U.S. production operations to give an overview of ^
the positive impact of granting petition. Finally, S
information is required on the extent to which the
petitioner's product plan and component sourcing
decisions would be affected by the agency's granting
or denial of the petition.
The second relief provision added by the 1980 Act is
intended to encourage manufacturers to transfer
production of a foreign-produced vehicle to this
country. Section 503(b)(4) of the Coast Savings Act
authorizes a temporary exemption from the domestic
content requirement in section 503. Under that
requirement, an automobile whose domestic content
is less than 75 percent must be treated as a foreign-
produced automobile. This poses a problem
particularly if a manufacturer wishes to transfer
production of a high fuel economy car and average it
with its domestic fleet. The exemption is available to
any manufacturer which plans to phase-in domestic
production of a new vehicle by gradually increasing
its domestic content to 75 percent. A manufacturer
which satisfies the satutory requirements is
permitted to include up to 150,000 automobiles in its
domestic fleet if the automobiles have at least 50
percent domestic content initially and if the
manufacturer submits and the agency approves a ^^
plan for achieving 75 percent domestic content by the ^^
fourth year of the exemption.
In considering whether to approve a plan under this
provision, the agency must determine whether the
plan is adequate. To verify achievement of the 50 and
75 percent domestic content levels, the regulation
specifies that information must be provided on the
total manufacturing costs of the vehicles whose
production is to be transferred to this country. In
addition, information is required on the changes in
domestic content of the vehicles to be produced in this
country during each of the four years covered by the
plan, including information on the timing and nature
of the change.
The third relief provision relates to compliance with
fuel economy standards for 4-wheel drive light
trucks. This provision, which was added by the 1980
Act to the Coast Savings Act as section 502(k),
authorizes the agency to adjust the manner in which
average fuel economy is calculated for a petitioner's
4-wheel drive light truck fleet or to provide other
relief with respect to a fuel economy standard for
4-wheel Hght trucks. To obtain this relief, the
petitioner must show that it would be unable to
comply with such a standard "without causing service
economic impacts such as plant closings or reduction
PART 533-PRE GOB
in employment in the United States related to motor
vehicle manufacturing." (Section 502(k)).
To enable the agency to assess the impacts on a
petitioning manufacturer of compliance with a fuel
economy standard for 4-wheel drive light trucks, the
regulation requires that information be submitted on
the changes planned by the manufacturer to achieve
compliance and the cost and fuel economy impacts of
each of those changes. The manufacturer must also
identify the particular compliance steps which the
manufacturer believes would cause "severe economic
impacts" and the nature of those impacts. This
information will permit the agency to determine what
level of rule economy the petitioner is capable of
achieving without experiencing "severe economic
impacts."
Information must also be submitted on monetary
credits likely to be earned in the three model years
preceding and the three model years following model
year for which relief is sought. This information will
permit the agency to assess the effect of available
credits on the need for relief. Credits are earned at the
rate of five dollars per vehicle for each tenth of a mile
per gallon by which a manufacturer's fleet exeeds a
average fuel economy standard. Earned credits may
be used to offset civil penalties (accrued at the same
rate) for the manufacturer's falling below a standard in
one or more of the three model years before or after
the model year in which the credit was earned.
Finally, the petitioner must specify the precise type
and extent of relief being sought.
The final relief provision is section 502(1) of the
Cost Savings Act which was added by section 6(b) of
the 1980 Act. Section 502(1) authorizes a
manufacturer which expects to fail to meet a fuel
economy standard in a particular model year to file a
plan with NHTSA regarding the prospects for
earning credits in the next three model years. The
plan must set forth the individual actions comprising
the plan and the schedule for accomplishing those
actions. If NHTSA approves the plan, the credits are
available immediately to offset the civil penalty for
the model year in which the manufacturer failed to
meet the standard. The benefit of having such a plan
approved is that the manufacturer can avoid ever
being deemed to have violated the fuel economy
standard for the model year if it actually earns the
projected credits. If such a manufacturer does not
obtain the agency's approval for a plan under section
502(1), the manufacturer may have to pay the civil
penalty and then seek a refund if credits are
subsequently earned.
Section 502(1) directs the agency to approve any
plan submitted by a manufacturer under that section
unless the agency determines that "it is unlikely that
the plan will result in the manufacturer earning
sufficient credits" to offset the civil penalty. The
agency might make such a finding if either the
technological or other steps planned by the
manufacturer will fail to produce the levels of
average fuel economy necessary to earn the credits.
Therefore, the regulation specifies that the manu-
facturer must submit information demonstrating the
feasibility of its plan. Among types of required
information are descriptions of planned product
actions which will affect fuel economy (e.g., the
introduction of a new model), and the effect of that
product action on the manufacturer's average fuel
economy.
In addition to establishing a regulation regarding
certain types of submissions under provisions added
to the Cost Savings Act by the 1980 Act, this notice
also adopts a simple change relating to how light
trucks are grouped for purposes of compliance with
the light truck fuel economy standards for model year
1982. The change would give manufacturers the same
latitude in grouping their light trucks in the model
year the they presently have for model years
1983-1985. On December 31, 1979, the NHTSA
published a proposal to establish separate standards
for 2-wheel drive and 4-wheel drive light trucks for
model years 1982-1985. Due to a statutory deadline
for issuing the model year 1982 standards, the agency
published them on March 31, 1980. The standards
were 16 miles per gallon for 4-wheel drive light trucks
and 18 miles per gallon for 2-wheel drive light trucks.
The NHTSA then sought further comment on the
model year 1983-1985 standards and expressly
focused public attention on the concept of a combined
stancard. Whe the agency published its decision on
December 11, 1980, it provided manufacturers with
an option of complying with separate standards or a
single combined standard. The NHTSA did not,
however, then go back and provide the same option
for model year 1982.
Over the past year, the agency has been reviewing
its existing procedures and regulations pursuant to
E.O. 12291 to determine the need for any
amendments to eliminate ineffective or unnecessarily
burdensome or inflexible regulations. However, it
was only in December that the agency received
informaton indicating the value of increasing the
flexibility of the manufacturers in grouping their light
trucks for compliance purposes. In that month, the
PART 533-PRE 60C
manufacturers submitted their semi-annual fuel
economy reports required by 49 CFR 537. The
agency's analysis of the information in those reports
revealed for the first time the value of giving
manufacturers the same flexibility in grouping their
light trucks for model year 1982 as they already have
for model years 1983-1985. By placing all of its light
trucks in a single group, a manufacturer has greater
freedom to choose how it allocates its efforts to
improve fuel economy between technology changes
and sales mix changes.
Accordingly, the agency has decided to provide
manufacturers with the option of complying with a
single, combined standard, in terms of required fuel
savings, the separate standards of 16 and 18 miles per
gallon are essentialy the equivalent of a single
standard of 17.5 miles per gallon for all light trucks
together. The single standard has therefore been set
at the level. The figure of 17.5 was calculated by
harmonically weighting the separate standards based
on the 75 percent/25 percent sales mix of 2-wheel
drive light trucks and 4-wheel drive light trucks used
in the 1983-1985 proceeding. This notice adopts that
combined standard of 17.5 miles per gallon. As noted
above, this action makes no change in the level of fuel
economy required of manufacturers, but does allow a
manufacturer the choice of placing all of its 2-wheel
drive and 4-wheel drive light trucks together in a
single group or maintaining two separate groups for
compliance purposes. It also provides an additional
method of compliance, i.e., selling larger numbers of
the higher fuel economy 2-wheel driven light trucks.
The actions taken by this notice are being issued as
an interim final rule because they are essentially
procedural and therefore notice and opportunity for
comment is not required by the Administration
Procedures Act. Neverless, the agency is providing
an opportunity to comment. Appropriate changes
warranted by the comments will be incorporated in
the permanent final rules.
The agency also notes and expressly finds there is
good cause for proceeding directly to an interim final
rule. As noted above, the need for their amendment
was identified by the agency as a result of its
evaluation of the recently submitted pre- model year
fuel economy reports. Those reports were submitted
to the agency last month. If manufacturers are to
have a meaningful opportunitiy to take advantange of
the change, it must be adopted now. Typical
production runs for 1982 light trucks of major
domestic manufactuers end in June 1982. That is only
about four months away. If the rule were not adopted
and made effective until after a comment period and
the issuance of another Federal Register, little or no
time would remain for the manufacturers to take
advantage of the additional flexibility being provided
through the combined standard. Extensive comment
has already been solicited and obtained on the
concept of an optional combined standard for the
immediately following model years. Applying the
concepts to model year 1982 does not appear to raise
any issues not considered in the rulemaking. For
these reasons and because this amendment relieves a
restriction, the agency finds good cause also for
making the amendment effective upon publication in
the Federal Register.
The petitions and plans regulation also is being
made effective immediately. The agency finds good
cause for doing so since it will facilitate the
submission of any requests for relief.
For the reasons set forth in the preamble. Chapter
V of Title 49, Code of Federal Regulation, is amended
as set forth below.
Issued on February 11, 1982.
Raymond A. Peck, Jr.,
Administrator
33 F.R. 7245
February 18, 1982
PART 533-PRE 60D
PREAMBLE TO AN AMENDMENT TO PART 533 and 526
Petitions Under the Automobile Fuel Efficiency Act of 1980;
Procedures Relating to Light Truck Fuel Economy Standards
(Docket No. 82-01; Notice 2)
ACTION: Final rule.
SUMMARY: This notice issues in final form certain
fuel economy procedural rules which were initially
implemented on an interim basis. Most of the
procedures relate to provisions in the Automobile
Fuel Efficiency Act of 1980 for granting relief to
manufacturers from automobile fuel efficiency
requirements. The balance relate to compliance with
light truck fuel economy standards. Since no
comments were received on the interim procedures,
this notice establishes final procedures identical to
the interim ones.
EFFECTIVE DATE: July 29, 1982.
SUPPLEMENTARY INFORMATION:
The Automobile Fuel Efficiency Act of the 1980 (94
Stat. 1821) amended the fuel economy provisions of
the Motor Vehicle Information and Cost Savings Act
to assist the automobile manufacturers in complying
with fuel economy standards and to promote
employment in the U.S. automotive industry. To
obtain this relief, the 1980 Act requires manu-
facturers first to file petitions or plans with the
agency and make certain specified showings. On
February 18, 1982, the agency published interim
procedures on the required contents of these petitions
and invited comment on those procedures. See 47 FR
7245. That notice also specified an optional procedure
for complying with 1982 light truck standards. Since
no comments were received on the interim pro-
cedures during the established public comment
period, the agency is now adopting those procedures
in final form without change.
Two of the petition procedures in the interim rules
relate to fuel economy domestic content require-
ments. The Cost Savings Act specifies that, in
general, each manufacturer's domestically manu-
factured (i.e., those with at least 75 percent U.S. or
Canadian content) and imported automobiles must
comply separately with average fuel economy
standards. This provision was originally enacted to
discourage domestic auto manufacturers from merely
importing increasing numbers of fuel efficient,
foreign produced vehicles to comply with standards,
thereby adversely affecting U.S. employment.
However, the original provision could, in certain
situations, penalize manufacturers which intended to
transfer production of a foreign automobile to the
United States or, in the case of a foreign
manufacturer, to begin U.S. production of an existing
model. Therefore, Congress enacted the previously
mentioned two exemption provisions.
The first provision applies to foreign manufacturers
which begin U.S. production. Such manufacturers
may be exempted from domestic content require-
ments if they submit, and NHTSA approves, a
petition demonstrating that granting the requested
relief would not adversely affect employment in the
U.S. automobile industry. The second provision
applies to the situation where a manufacturer
transfers a foreign produced automobile to U.S.
production. To obtain exemption from domestic
content requirements under that provision, a
petitioner must show (among other things) that it will
achieve at least 75 percent U.S. content with the
transferred automobiles by the fourth model year
after U.S. assembly begins. The interim procedures
specify the required contents for both types of
petitions.
The 1980 Act also authorized special relief for
manufacturers which plan to exceed fuel economy
standards for a year prior to that future one. Under
the current statutory scheme, manufacturers earn
credits for any model year in which they exceed a fuel
economy standard. These credits may be used to
offset civil penalties which would otherwise be
assessed for falling short of a standard in any of the
three prior or subsequent model years. The 1980 Act
PART 533-PRE 60E
authorized these credits to be available in advance
where a manufacturer submits and the agency
approves a plan for earning the necessary credits in
the future. Approval of such a plan eliminates the
need for manufacturers to pay civil penalties and
subsequently apply for a refund when credits are
earned, and also eliminates any stigma associated
with being in violation of a standard.
The fourth provision of the 1980 Act authorizes
special relief for manufacturers which are unable to
comply with one or more of the four-wheel drive light
truck fuel economy standards in model years 1982-85.
Such manufacturers may petition the agency to
adjust the manner in which average fuel economy is
calculated for these truck. The 1980 Act requires
petitioning manufacturers to submit information on
their abilities to comply with the standard and the
economic consequences of their efforts to comply.
The final provision in the interim rule permitted
manufacturers to combine their two-wheel drive and
four-wheel drive light truck fleets in order to comply
with the 1982 model year fuel economy requirements
for light trucks. When those requirements were
originally established, 1982 model year light trucks
were required to comply with separate two-wheel
drive and four-wheel drive standards. Manufacturers'
fleets of two-wheel drive trucks were required to
comply with a standard of 18 miles per gallon, while
the average fuel economy of each company's four-
wheel drive trucks was required to be at least 16 miles
per gallon. When standards were later established for
the 1983-85 model years, the agency set separate
standards for each of these classes of trucks.
However, it also set an optional combined standard
for each manufacturer's entire light truck fleet. The
combined standard was intended to achieve
essentially the same overall fuel efficiency
improvement as the separate standards, while giving
manufacturers the flexibility of making greater
improvements to one class or the other. When the
1983-85 standards were established, the agency did
not make corresponding changes to the 1982
standards by adding a separate combined standard
option for that year. However, that conforming
change was made in the February 18 interim pro-
cedures, by establishing a 17.5 mile per gallon
optional combined standard.
Further information on the final procedures can be
found at 47 PR 7245 with the actual text of the
procedures appearing at 47 FR 7248-50.
Since this notice makes final existing procedures, it
is effecive immediately
For the reasons set forth in the preamible, the
agency adopts as final the amendments made to
Chapter V of Title 49 , Code of Federal Regulation, in
47 FR 7248-50.
List of Subjects in 49 CFR Parts 526 and 533
Energy conservation
Gasoline
Imports
Motor vehciles
National Highway Traffic Safety Administration
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 and 2003); delegation of authority at 49
CFR 1.50.)
Issued on July 2, 1982.
Raymond A. Peck, Jr.,
Administrator
47 F.R. 32721
July 29, 1982
PART 533-PRE 60F
PREAMBLE TO AN AMENDMENT PART 533
Light Truck Average Fuel Economy Standards
Model Years 1985-86
[Docket No. FE 7801; 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 tfie 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
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 avail-
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. NHTTSA 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.
In 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 flexibUity
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 costA)enefit 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 cost/benefit 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 modeUyear 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, 7i0 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.)
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. Schiveiker,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 Gulp 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 cem-
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 Y
Captive
imports
Other
Captive _.,
. ^ , Other
imports
C"P"7 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
t
PREAMBLE TO AN AMENDMENT TO 533
Light Truck Average Fuel Economy Standards
Model Year 1987
[Docket No. FE-84-01: Notice 4]
ACTION: Finat rule.
SUMMARY: This notice establishes a new light
truck average fuel economy standard for model
year 1987. The standard is required to be
established at the maximum feasible level, under
section 502(b) of the Motor Vehicle Information and
Cost Savings Act. The 1987 light truck fleet will
consume 520 million fewer gallons of gasoline over
its lifetime than it would have consumed if light
truck average fuel economy were to remain at the
levels of the 1986 standards.
EFFECTIVE DATE: The amendments made by this
rule to the Code of Federal Regulations are effec-
tive November 4, 1985. The standard is applicable
to the 1987 model year.
SUPPLEMENTARY INFORMATION:
Background
On March 8, 1984, NHTSA published in the
Federal Register (49 FR 8637) a notice of proposed
rulemaking (NPRM) on the establishment of light
truck average fuel economy standards for model
years 1986 and 1987. The issuance of the st.andards
is required by section 502(b) of the Motor Vehicle
Information and Cost Savings Act, 15 U.S.C.
2002(b). That provision requires 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 effect of
other Federal motor vehicle standards on fuel
economy, and the need of the Nation to conserve
energy. See 15 U.S.C. 2002(e).
The agency's March 1984 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
composite standard to be set within the range of
20.0 to 22.5 mpg. Separate ranges of standards
were also proposed for two-wheel drive and four-
wheel drive light trucks. These separate standards
were proposed as optional means of compliance,
consistent with the agency's practice in previous
proceedings. The separate standards account for
the fact that different manufacturers' fleets con-
tain significantly different proportions of four-
wheel drive trucks, which tend to have lower fuel
economy.
On October 22, 1984, NHTSA published in the
Federal Register (49 FR 41250) a final rule
establishing a light truck average fuel economy
standard for model year 1986. That notice also
amended the light truck average fuel economy
standard for model year 1985. NHTSA stated that
a light truck fuel economy standard for model year
1987 would be issued at a later date. The agency
stated that it needed additional time to complete
its analysis of issues relating to a standard for that
model year, noting that some of the issues, par-
ticularly those relating to market trends, are
characterized by uncertainty and complexity.
The 1987 standard established by this notice is
based on the same NPRM as the 1986 standard
adopted by NHTSA in October 1984. There is a
large degree of commonality of facts and cir-
cumstances in setting standards for these two
model years. NHTSA relied in part on analyses
developed for the October 1984 notice in develop-
ing this final rule. Accordingly, the agency incor-
porates by reference that notice and its accompa-
nying analyses as part of the rulemaking record
for this final rule. Also, this notice freely adopts
some of the discussion presented in that notice.
Among other things, the October 1984 notice and
accompanying analyses provide a more complete
discussion of the background for this rulemaking,
including analysis of a continuing shift in con-
PART 533-PRE 71
sumer demand for light trucks. The demand shifts,
which are due primarily to the recent trend of
stable or diminishing gasoline prices, have resulted
in higher levels of sales of larger light trucks and
larger displacement engines than were previously
anticipated by either the manufacturers or the
agency.
On December 10, 1984, NHTSA published in the
Federal Register (49 FR 48064), a questionnaire re-
questing data from manufacturers and the general
public on the ability to increase average fuel
economy levels for passenger car and light truck
fleets during MY's 1985-90. The responses received
from manufacturers in late February and early
March 1985 updated earlier data submitted in
response to the agency's March 1984 NPRM. Also,
on June 7, 1985, Ford submitted a revised projec-
tion of its fuel economy capability for MY 1987
light trucks. The agency considered these updated
data in determining the appropriate levels of the
MY 1987 standards.
Summary of Decision
Based on the agency's analysis of projections of
future gasoline prices, current sales data, and the
manufacturers' most recent projections for future
sales, NHTSA believes that market trends toward
large vehicles and engines are likely to continue
through 1987. Our analysis leads us to establish
a composite average fuel economy standard of 20.5
mpg for model year 1987 light trucks. Separate
standards of 21.0 mpg for two- wheel drive light
trucks and 19.5 mpg for four-wheel drive light
trucks are also established.
Basis for the Final Standards
a. Technological feasibility.
The agency focused its detailed analysis of
manufacturer capabilities on General Motors (GM),
Ford and Chrysler, which together account for over
three-quarters of light truck sales. Other light
truck manufactvu-ers have significantly higher
average fuel economy capabilities than the three
largest domestic manufacturers because they do
not offer the larger, less fuel efficient, light trucks
made by domestic manufacturers to satisfy the
needs of business users. These other manufacturers
are thus not significantly affected by fuel economy
standards which are set primarily on the basis of
the capabilities of GM, Ford and Chrysler.
In evaluating the MY 1987 fuel economy
capability of GM, Ford and Chrysler, the agency
analyzed data submitted over a several-year
period. As anticipated by the NPRM, projections
submitted by the manufacturers in response to an
October 1982 questionnaire had largely been
negated by events, including a shift in consumer
demand, attributable to economic recovery and
steady or falling gasoline prices, toward larger
light trucks and larger displacement engines.
Ford's comments on the March 1984 NPRM in-
dicated that it believed it could achieve 20.4 mpg
for its combined fleet in MY 1987, a figure which
was later revised to 20.3 mpg based on errors in
calculating the projection. That projection included
a 0.5 mpg fuel economy penalty due to anticipated
increases in the stringency of the Environmental
Protection Agency's (EPA's) oxides of nitrogen
(NOx) standards and a 0.2 mpg fuel economy pen-
alty due to EPA's "Extended Useful Life" (EUL)
regulation, which took effect in MY 1985. (EPA's
final rule, issued after the submission of Ford's
original comments, increased the stringency of the
NOx standards for MY 1988 rather than MY 1987.)
Ford's comments indicated that it might be able
to achieve a 0.7 mpg increase over its adjusted 20.3
mpg projection, based on several potential pro-
grams (primai-ily powertrain improvements) which
had not yet been approved by senior management.
As part of this potential increase. Ford believed it
might be able to achieve a 0.2 mpg gain through
powertrain recalibrations to minimize the claimed
fuel economy losses associated with EPA's NOx
and EUL regulations.
Ford also indicated that its MY 1987 fuel
economy could be lower than 20.3 mpg due to
market risks. This possibility existed for both MY
1986 and MY 1987, and was discussed in the MY
1986 final rule. Ford submitted a "high risk"
scenario, including greater consumer demand for
large trucks, which could result in a fuel economy
loss of 0.6 mpg. That company indicated that its
fuel economy could decline by another 0.2 mpg if
standard full-size van production remained at plant
capacity (as it was for MY 1984 and is currently
for model year 1985). Thus, Ford projected a
capability of between 19.5 mpg and 21.0 mpg.
In response to NHTSA's December 1984 ques-
tionnaire. Ford indicated (in a submission dated
February 28, 1985) that its MY 1987 fuel economy
could be as high as 21.8 mpg. This number included
several technological improvements not included
in its 20.3 mpg projection, the details of which are
subject to a claim of confidentiality. That response
PART 533-PRE 72
also indicated, however, that the 21.8 mpg projec-
tion was subject to both market and technological
risks. Ford projected that potential mix shifts could
reduce its fuel economy capability by 0.6 mpg. That
company also identified technological risks, e.g.,
lower than anticipated gains in fuel economy for
specific "hardware" improvements, which could
reduce Ford's fuel economy by an additional 0.8
mpg. Thus, in its February 1985 submission, Ford
projected a capability of between 20.4 mpg and 21.8
mpg.
Ford's most recent update of its model year 1987
fuel economy projections, submitted on June 7,
1985, indicated that its maximum fuel economy is
21.0 mpg, a number which is subject to possible
adverse mix shifts of 0.4 mpg and technological
risks totaling 0.3 mpg. A June 14, 1985, submis-
sion by that company indicated that the 0.8 mpg
reduction from its February 1985 upper limit
capability projection of 21.8 mpg occurred
specifically because actual test data regarding
some progi-ams have indicated smaller fuel eco-
nomy improvements than projected, and because
leadtime problems prevented the incorporation of
one of its anticipated fuel economy improvement
programs on the 1987 models. That program will
now be incorporated for 1988 models. Ford also
stated that an anticipated shift in mix, based on
actual sales experience and current sales trends,
caused a 0.2 mpg reduction from the prior projec-
tion. More detailed information, subject to a claim
of confidentiality, was also submitted to the
agency. Hence, this latest Ford projection anti-
cipates a maximum capability of between 20.3 mpg
and 21.0 mpg.
NHTSA has analyzed the projections and data
submitted by Ford and concludes that the 20.3 mpg
to 21.0 mpg range represents that company's max-
imum fuel economy capability for its light truck
fleet in model year 1987. In the final rule for MY
1986, NHTSA projected that Ford could achieve no
higher than 20.4 mpg for that year. Currently, that
company projects it can achieve 20.2 mpg in MY
1986. The 0.2 mpg difference is attributable to a
loss due to not meeting certain technological ob-
jectives, which is partially offset by minor changes
in actual test fuel economy values.
The 21.0 mpg upper limit figure for model year
1987 would thus represent a 0.8 mpg improvement
in Ford's fuel economy over model year 1986. It
ass nes that Ford can achieve a 0.8 mpg gain by
making a variety of technological improvements.
generally relating to improved engines, the details
of which are subject to a claim of confidentiality.
That figure also assumes that Ford can raise its
fuel economy by 0.1 mpg due to maturity of cer-
tain engine control systems. The improvements
would be slightly offset by a 0.1 mpg loss due to
minor model mix shifts toward less fuel-efficient
vehicles as well as minor changes in engine and
transmission usage within model lines.
The 20.3 mpg figure for model year 1987 is based
on the possibility of continued sales shifts toward
larger engines and vehicles, with a potential 0.4
mpg loss (from the above-mentioned 21.0 mpg
figure), as well as technological risks totaling
0.3 mpg.
The agency has concluded that other technolo-
gical actions, including those discussed in Ford's
submissions, are either unlikely to be feasible due
to leadtime limitations or they present too high a
risk of being successfully implemented by the 1987
model year to be relied on by the agency for the
purpose of setting standards. NHTSA's considera-
tion of the technological and marketing risks
associated with the 20.3 mpg figure is discussed
later in this document. In evaluating the potential
magnitude of these risks, the agency has concen-
trated its analysis on Ford because that company
is the "least capable" manufacturer, with regard
to fuel economy capability for MY 1987.
As suggested above, NHTSA projects that both
GM and Chrysler can achieve higher fuel economy
than Ford for their MY 1987 light truck fleets. In
GM's comments on the NPRM, that company in-
dicated that it believed it could achieve 23.5 mpg
for MY 1987. This figure was revised downward
in GM's latest projection, provided on March 1,
1985, in response to the December 1984 question-
naire. GM now projects that its MY 1987 light
truck fuel economy will be between 21.1 and 22.4
mpg. GM's estimated MY 1986 light truck fuel
economy is 20.3 mpg.
A large portion of the improvement in GM's
estimated fuel economy results from the an-
ticipated introduction of new full-size pickups in
MY 1987. As a consequence of weight reduction
and improved aerodynamic drag associated with
these new vehicles, GM's fuel economy capability
rises 1.0 mpg. A number of other technological im-
provements in the GM fleet are expected to add an
additional 1.4 mpg to that company's fuel economy,
although these will be partially offset by another
change (subject to a claim of confidentiality) caus-
PART 533-PRE 73
ing a 0.3 mpg decline. These additions and subtrac-
tions to GM's estimated MY 1986 capability result
in the 22.4 mpg estimate of possible MY 1987 light
truck fuel economy.
GM's March 1985 submission also indicated that
a program risk (the details of which are subject to
a claim of confidentiality) could result in a decline
in its MY 1987 fuel economy of up to 1.3 mpg. If
this should occur, GM's fuel economy would be
21.1 mpg, not significantly higher than the max-
imum estimated by Ford (21.0 mpg).
NHTSA believes that Chrysler could achieve a
MY 1987 fuel economy of 21.6 mpg, which is that
company's estimate provided in its February 8,
1985, response to the December 1984 questionnaire
and in its March 20, 1985, carry-back plan. This
is a minor change from Chrysler's 21.8 mpg pro-
jection provided in response to the NPRM, and
would represent a 1.7 mpg improvement over its
current projection of 19.9 mpg for MY 1986.
Chrysler's current MY 1986 projection is
significantly lower than that projected by NHTSA
in the MY 1986 final rule primarily due to the
deferral of introducing a new compact pickup from
MY 1986 to MY 1987.
The weight and aerodynamic drag reductions
associated with the introduction of a new compact
pickup would add 0.9 mpg to Chrysler's projected
MY 1986 fuel economy. The use of more fuel-
efficient transmissions on several vehicles adds
another 0.6 mpg to that company's capability.
Various changes in engines add an additional 0.4
mpg. One factor which is likely to have a small
negative impact on Chrysler's composite fuel
economy is the anticipated introduction of a new
four-wheel-drive compact pickup, which would
raise the proportion of four-wheel drive vehicles in
the company's fleet. This contributes to a 0.2 mpg
decline in Chrysler's composite fuel economy. The
resultant value is 21.6 mpg.
As in the case of Ford, the agency concluded that
fuel economy improvements beyond those
discussed above are not feasible for GM and
Chrysler.
b. Economic practicability.
The agency has thoroughly considered economic
factors in its standard-setting analysis, particularly
the potential costs incurred by manufacturers
should standards necessitate the sale of a restricted
model mix.
It is always possible that higher levels of fuel
economy could be achieved by the domestic
manufacturers if they were to restrict severely
their product offerings. For example, sales of par-
ticular larger light truck models and larger
displacement engines could be limited or
eliminated entirely. As discussed by the October
1984 notice. Ford submitted 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 through
such restrictions, 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. The agency believes
this analysis to be a reasonable projection of the
impacts of restricting the availability of larger
light trucks in the current market.
Impacts of this magnitude go beyond the realm
of "economic practicability" as contemplated in the
Act. This is particularly true since it is likely that
a standard set at a level resulting in impacts of this
magnitude would result in little or no net fuel
economy benefit. This is because consumers could
meet their demand for larger light trucks by
merely shifting their purchases to other manufac-
turers which continue to offer such trucks. The
other manufacturers could increase sales of these
vehicles without risking noncompliance with the
standards. An additional possible negative econo-
mic consequence would be reduced competition in
the market for larger light trucks. Given the small
number of manufacturers producing larger light
trucks, a decision by Ford (or GM or Chrysler) to
significantly reduce its role in this market could
have serious consequences for competition.
Achieving an average fuel economy benefit of
somewhat less than 1.5 mpg through restrictions
would result in similar types of effects, but of a
lesser magnitude. Again, however, a standard
resulting in such impacts would likely achieve lit-
tle or no net fuel economy benefit, since consumers
could easily meet their demand for larger light
trucks by shifting purchases to other manufac-
turers. A standard could conceivably be set at a
level to require an industrywide mix shift. Con-
sumers would then be unable to obtain the vehicles
they demand by shifting purchases of larger light
trucks from one manufacturer to another. The
negative economic consequences would be much
greater than those discussed above, however, and
clearly beyond the realm of "economic practica-
bility" as contemplated in the Act.
The agency's analysis of the economic impacts
associated with the manufacturers' efforts to im-
prove the fuel economy of individual light truck
PART 533-PRE 74
models for model year 1987 is set forth in a Final
Regulatory Impact Analysis, copies of which are
available in the agency's Docket Section. The
agency projects an average retail price increase of
$130 per vehicle to result from product improve-
ments designed to enhance fuel economy. This
price increase would be offset by estimated
operating cost savings of $155 for the average 1987
light truck, due to reduced lifetime gasoline con-
sumption. Overall, the agency projects the domes-
tic manufacturers' automotive operations to re-
main profitable for the 1987 model year, based on
current market trends.
c. Effects of other Federal standards on fuel
economy.
As discussed by the October 1984 notice, three
new light truck exhaust emission requirements
were cited by several commenters as having
possible adverse impacts on fuel economy. The first
requirement is a change in stringency of hydrocar-
bon and carbon monoxide emissions standards,
which took effect in the 1984 model year. The sec-
ond requirement extends the useful life period for
which manufacturers must certify compliance with
emissions standards, beginning with the 1985
model year. The third requirement was the anti-
cipated increase in stringency of light duty truck
emission standards for oxides of nitrogen.
With regard to 1984 emissions standards changes
and the extended useful life regulation, the agency
concurs in a technical analysis provided by the En-
vironmental Protection Agency (EPA) which in-
dicates that there is no causal link between these
regulations and any loss in fuel economy exper-
ienced by the manufacturers. An assessment of the
1984-85 emissions regulations prepared by the
Transportation Systems Center, Research and
Special Programs Adminstration, Department of
Transportation, supported the EPA conclusions.
Therefore, the agency has concluded that these
changes will not affect the 1987 light truck fuel
economy levels.
On October 15, 1985, EPA issued an NPRM
covering a number of light duty and heavy duty
truck emission standards, including a more
stringent NOx standard for MY 1987. As indicated
above, EPA issued a final rule on March 15, 1985,
which implemented the more stringent light duty
truck NOx standard for MY 1988 rather than MY
1987.
In addition to the three EPA requirements cited
by several commenters. General Motors and Amer-
ican Motors each cited other EPA emissions re-
quirements that could affect light truck fuel
economy. General Motors argued that future light
truck diesel particulate emission standards could
effectively ban diesel engines in such vehicles,
reducing fuel economy levels accordingly. EPA has
indicated that these standeirds can be met with
available 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, however, the impact on fuel economy
would be very small. Due to the small number of
diesel light trucks which are produced, the poten-
tial effect on the domestic manufacturers' average
fuel economy levels projected above would be much
less than 0.1 mpg.
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 loss, 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 ad-
justment in the standards to account for this poten-
tial effect.
As discussed in the agency's Final Regulatory
Impact Analysis, changes in Federal Motor Vehicle
Safety Standard No. 108, Lamps, Reflective Devices
and Associated Equipment, could permit reduced
weight and greater flexibility to design vehicles
with improved aerodynamics. However, leadtime
constraints preclude manufacturers from utilizing
this additional flexibility beyond what is already
reflected in their current model year 1987 fuel
economy estimates. A proposed change in Federal
Motor Vehicle Safety Standard No. 208, Occupant
Crash Protection, relating to enhanced comfort and
convenience of safety belts, could result in a slight
increase in weight. Since the increase in weight
would be less than five pounds, however, there
PART 533-PRE 75
would be a neglible effect on light truck fuel
economy.
d. Need of the nation to conserve energy.
The United States imported 15 percent of its oil
needs in 1955. By 1977, the import share was 46.4
percent and the value of imported crude oil and
refined petroleum products was $67 billion (stated
as 1984 dollars). While the import share of total
petroleum demand declined after that year, the
cost continued to rise to a 1980 peak level of $93.2
billion (1984 dollars). By 1984, the import share
had declined to 30.9 percent at a cost of $54.2
billion. Thus, the concern over dependence on im-
ported petroleum, as measured by these indicators,
has lessened in the past several years.
Moreover, imports from OPEC sources have been
declining, from a high of 6.2 million barrels per day
and 70.3 percent of imports in 1977 to 2.0 million
barrels per day and 37.6 percent of imports in 1984.
Imports from non-OPEC sources have risen slightly
from a low of 2.0 million barrels per day or 28.5
percent of imports in 1976, to 2.6 million barrels
per day or 56.7 percent in 1984. In 1984, Mexico
was the largest supplier to the U.S. of crude oil and
petroleum products, followed by Canada. As im-
ports have shifted to non-OPEC sources, the United
States' supply of petroleum has become less
vulnerable to the political instabilities of some
OPEC countries, as compared to the situation in
the mid-1970's.
Overall, the Nation is much more energy in-
dependent than it was a decade ago, when Con-
gress passed the Energy Policy and Conservation
Act, which established the automotive fuel
economy regulatory program. Domestic oil produc-
tion is higher than it was in 1975, total import have
dropped 20 percent since then, the value of the Na-
tion's imported oil bill has declined 27 percent since
1977 (on a net import basis the value of the Na-
tion's imported oil bill fell nearly 45 percent from
1980 to 1984), and the amount of imported oil from
OPEC has dropped by 67 percent since the peak
of 1977. In addition, the price of oil is now fully
decontrolled, permitting the market to adjust
quickly to changing conditions, and the Strategic
Petroleum Reserve is well on its way to being filled.
According to Energy Information Administration
(EIA) and Data Resources, Inc., projections,
however, domestic production is expected to decline
from a stable level of 10 MMB/D to about 18.5
MMB/D by 1995. Net imports are expected to rise
from 4.5 to 5 MMB/D to about 7.5 (EIA) to 9.0 (DRD
MMB/D by 1995. This would result in imports ap-
proaching 50 percent of U.S. petroleum use by
1995. However, future projections about petroleum
imports are subject to great uncertainty and may
be overtaken by new domestic discoveries. Indeed,
oil imports are very difficult to project beyond a
year or two. For example, the EIA's 1977 Annual
Report to Congress projected that net oil imports
by the U.S. would, in the "reference case," reach
11 million barrels per day by 1985. Net imports for
this year are now forecast to be less than 4.5
million barrels per day, substantially less than half
the level predicted in 1977.
The agency believes that energy conservation is
important and notes that the 1987 light truck fleet
will consume 520 million fewer gallons of gasoline
over its lifetime than it would have consumed if
light truck average fuel economy were to remain
at the levels of the 1986 standards. This will make
a positive contribution to the goal of petroleum
conservation,
e. Setting the average fuel economy standard.
The agency is required to set light truck stan-
dards at the "maximum feasible average fuel
economy level," taking account of the four factors
discussed above. In determining this level, the
agency must take industrywide considerations into
account. The Conference Report on Title V of the
Motor Vehicle Information and Cost Savings Act
provides in this regeird 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
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 cur-
rently exist, and the possible implications for
the national economy and for reduced competi-
tion 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 508fb) in
situations where competition will suffer
significantly if penalties are imposed.
Senate Report 94-516, 94th Cong. 1st Sess. (1975),
at 154-5.
PART 533-PRE 76
As in the NPRM, NHTSA's analysis concludes
that Ford is the "least capable" manufacturer in
regard to improving the average fuel efficiency of
its light trucks. The agency projects that Ford could
achieve an average fuel economy level between
20.3 and 21.0 mpg, while GM could achieve
between 21.1 to 22.4 mpg and Chrysler could
achieve 21.6 mpg.
As indicated above, the 21.0 figure for Ford is
subject to a potential 0.4 mpg loss due to sales
shifts toward larger engines and vehicles, and a
potential 0.3 mpg loss due to technological risks.
GM also faces a serious program risk which could
lower its maximum fuel economy capability from
22.4 mpg to 21.1 mpg.
In this rulemaking, as in any rulemaking con-
cerning fuel economy standards, it is difficult for
the agency to project with any precision the effects
of extra marketing programs on average fuel
economy levels. This difficulty has several origins.
First, the amount of improvement in average fuel
economy through the use of such programs is fairly
small. Second, there is considerable uncertainty in-
volved in projecting sales involved in projecting
sales mixes and the effects of extra marketing pro-
grams on those mixes. The further in advance of
a model year that an agency attempts to make such
projections, the greater the uncertainty in making
them.
In deciding on the level of the MY 1987 stan-
dards, the agency nevertheless considered the
possible effects of extra marketing actions in deter-
mining manufacturers' fuel economy capabilities
for MY 1987 light trucks. Based on the agency's
analysis of available data, including information
provided by Ford concerning the effectiveness of
past marketing efforts, the agency has concluded
that the effect of such efforts on improving Ford's
(the least capable manufacturer's) MY 1987
average fuel economy is likely to be minimal. In
Ford's petition to amend the model year 1985 light
truck fuel economy standards, the company indi-
cated that it could achieve up to a 0.4 mpg increase
in its projected model year 1985 fuel economy
through the use of marketing measures to shift
sales mixes. However, 0.2 of this gain was projected
to come at the expense of Ford's model year 1986
fuel economy. Thus, sales of certain fuel-efficient
vehicles were merely being shifted from one model
year to another, and any long-run improvement in
fuel economy was very small. According to Ford,
it did implement some of these programs for model
year 1985, and achieved a gain of only 0.1 to
0.2 mpg.
The setting of maximum feasible fuel economy
standards, based on consideration of the four re-
quired factors, is not a mere mathematical exer-
cise but requires agency judgment. The agency has
concluded that 20.5 mpg is the maximum feasible
composite standard for the 1987 model year. This
level balances the potentially serious adverse
economic consequences associated with market and
technological risks against Ford's opportunities, as
the least capable manufacturer, to further increase
its fuel economy levels. As the agency has con-
sistently stated in the past, it has a responsibility
to set standards at a level that can be achieved by
manufacturers having a substantial share of light
truck sales. Since Ford produces more than 30 per-
cent of all light trucks subject to fuel economy stan-
dards, its capability has a significant effect on the
level of the industry's capability and, therefore, on
the level of the standards.
The agency's consideration of uncertainties is
both prudent and required by the statute when
selecting final standards. Uncertainties are part
of the consideration of both technological feasibility
and economic practicability. NHTSA believes that
Ford faces a substantial risk that market demand
for large vehicles and engines may be higher than
that reflected by the 21.0 mpg figure representing
the upper end of the range for Ford's MY 1987 fuel
economy capability. This risk is also faced by the
other manufacturers. The uncertainty of market
demand projections has clearly been indicated by
consumer behavior over the past several years. As
noted above, these shifts in market demand are
discussed at greater length in the October 1984
notice and accompanying analyses. Data Re-
sources, Inc.'s, Spring 1985 U.S. Long Term Review
includes the projection that gasoline prices will
drop about eight percent in real terms between
1985 and 1987. Such a drop could trigger further
market shifts toward larger vehicles and engines.
The agency also believes that there is a substan-
tial risk that Ford and other manufacturers may
not be able to meet all of their engineering goals.
Past experience indicates that manufacturers often
are unable to achieve all of the fuel economy gain
they project from technological improvements.
A standard which is set at too high a level may
result in serious economic problems. As a model
year approaches, it is too late for manufacturers
to make major technological changes (e.g., new
PART 533-PRE 77
engines or drivetrains which typically require
three to five years of leadtime) or develop new pro-
grams to compensate for market shifts or techno-
logical problems. If the agency were to set a MY
1987 standard at too high a level, Ford might be
required to make drastic product restrictions,
adversely affecting employment at Ford. Such
actions by Ford would likely result in the shifting
of sales of larger light trucks with large engines
to other manufacturers, thereby achieving little or
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 projected
levels for those companies are based on the product
mixes they plan to sell. Further, GM indicated in
its comments that setting standards at a level
below its planned levels would not cause GM to
revise its plans. Therefore, the agency concludes
that the risks associated with setting standards
above Ford's maximum feasible level, taking ac-
count of uncertainties, and possibly forcing that
company to adopt severe product restrictions,
outweigh the potential benefits from setting stan-
dards at a higher level.
The agency has decided to continue setting 4x2
and 4x4 standards for each year as an alternative
to the composite standard. Separate 4x2/4x4 stan-
dards allow manufacturers greater flexibility in
planning their fuel economy improvements and do
not discriminate against firms with truck fleets
heavily weighted toward four-wheel drive models.
As discussed above. Ford is the least capable
manufactiu*er with respect to meeting a composite
standard. In setting separate standards, the agency
considered Ford's average fuel economy capability
for 4x2 and 4x4 light trucks. The selected stan-
dards are consistent with the composite standard.
American Motors, the manufacturer which has
primarily been concerned about separate standards
in past years due to the high percentage of 4 x 4
light trucks in its fleet, is estimated to easily meet
the composite standard.
The final composite standard for MY 1987 is 20.5
mpg; the final 4x2 standard is 21.0 mpg; and the
final 4x4 standard is 19.5 mpg.
Issued on September 30, 1985
Diane K. Steed
Administrator
50 F.R. 40398
October 3, 1985
PART 533-PRE 78
PREAMBLE TO AN AMENDMENT TO PART 533
Light Truck Average Fuel Economy Standards Model Year 1988
(Docket No. FE-8601, Notice 2)
ACTION: Final rule.
SUMMARY: This notice establishes new light
truck average fuel economy standards for model
year 1988. The standards are required to be
established at the maximum feasible level under sec-
tion 502(b) of the Motor Vehicle Information and
Cost Savings Act. Based on its analysis, the agency
is establishing a combined average fuel economy
standard of 20.5 mpg for model year 1988 light
trucks. Optional separate standards of 21.0 mpg for
two- wheel drive light trucks and 19.5 mpg for four-
wheel drive light trucks are also established.
DATES: The amendments made by this rule to the
Code of Federal Regulations are effective May 23,
1986. The standards are applicable to the 1988 model
year. Petitions for reconsideration must be sub-
mitted within 30 days of publication.
SUPPLEMENTARY INFORMATION:
Background
On January 24, 1986, NHTSA published in the
FEDERAL REGISTER. (51 FR 3221) a notice of
proposed rulemaking (NPRM) on the establishment
of light truck average fuel economy standards for
model years 1988 and 1989. The issuance of the
standards for those years 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 model
year 1978. In determining the "maximum feasible"
level, the Secretary is directed to consider four fac-
tors: technological feasibility, economic practica-
bility, the effect of other Federal motor vehicle
standards on fuel economy, and the need of Nation
to conserve energy. See 15 U.S.C. 2002(e).
The agency's January 1986 NPRM proposed
ranges of possible standards for all types of light
trucks, with the 1988 combined standard to be set
within the range of 20.5 mpg to 22.0 mpg, and the
1989 combined standard to be set within the range
of 20.5 mpg to 22.5 mpg. As a compliance alternative
to the combined standard, the agency also proposed
separate standards for two- and four-wheel drive
vehicles. The agency stated that in view of factual
uncertainties, the setting of standards outside the
proposed ranges was possible depending on the com-
ments that might be submitted.
NHTSA received comments on the NPRM from
General Motors, Ford, Chrysler, American Motors,
Volkswagen, the National Automobile Dealers
Association (NADA), the Center for Auto Safety
(CFAS), numerous employees of light truck
manufacturers, dealers, and private individuals. The
issues raised by the commenters are discussed
below.
Summary of Decision
At this time, the agency has concentrated its ef-
forts on analyzing issues relating to the 1988 stand-
ard. Based on its analysis, NHTSA is establishing
a conibined average fuol economy standard of 20.5
mpg for model year 1988 light trucks. Optional
separate standards of 21.0 mpg for two-wheel drive
(2 WD) light trucks and 19.5 mpg for four-wheel
drive (4WD) light trucks are also established. Both
the combined and optional separate standards are
being set at the same levels as the MY 1987 light
truck fuel economy standards. A decision will be
reached at a later date with respect to the proposed
model year 1989 standards.
Manufacturer Capabilities for MY 1988
As part of its consideration of technological
feasibility and economic practicability, the agency
has evaluated the manufacturers' fuel economy
capabilities for MY 1988. In making this evaluation,
the agency has analyzed manufacturers' current
projections and underlying product plans and has
considered what, if any, additional actions the
manufacturers could take to improve their fuel
economy.
PART 533-PRE 79
A. Manufacturer Projections
General Motors: As discussed in the NPRM,
General Motors (GM) projected in March 1985 that
it could achieve a CAFE level of 22.6 mpg in MY
1988. That projection was 0.2 mpg higher than that
company's 22.4 mpg projection for MY 1987. While
GM's March 1985 submission indicated that program
risks (the details of which are subject to a claim of
confidentiality) could result in a decline in its
projected MY 1987 CAFE of up to 1.3 mpg, the
NPRM stated that the agency did not believe that
particular risks affected GM's projection for MY
1988.
The NPRM noted that GM had emphasized the
following in its March 1985 submission:
All estimates and future product plans contained
in this submission are but a 'snapshot in time'.
As we have stated on a number of occasions . . .,
changes in the economic outlook, in fuel avail-
ability, in fuel prices or in consumer preference
significantly affect GM's CAFE. The unpredic-
tability of the market, the unknown effect of
future light duty truck emission regulations and
the unproven results of future combinations of
technology cause CAFE projections to be . . .
tentative . . .
In GM's February 1986 comment on the NPRM,
the company lowered its CAFE projections for MY
1987 and MY 1988 to levels no higher than 20.5 mpg
and 20.7 mpg, respectively.
One reason for the reduced MY 1987 projection
is the realization of the program risk noted above,
which accounts for 0.9 mpg of the decline. Additional
reasons, together accounting for another 0.9 mpg
of the decline, include the achievement of lower-
than-anticipated fuel economy from certain pro-
grams, the purchase by consumers of more options
than expected and certain changes to meet con-
sumer demand for higher performance. A small por-
tion of the reduction, 0.1 mpg, is associated with in-
creased sales of certain larger engines and heavier
trucks.
(The details of the changes are subject to a claim
of confidentiality as confidential business informa-
tion whose release could cause competitive harm.
This is also true with respect to this notice's discus-
sion of GM's MY 1988 projection and to the projec-
tions of other manufacturers.)
These changes, other than the program risks, also
affect GM's MY 1988 projection, together accoun-
ting for a 1.0 mpg decline in that projection. The
company also identified a number of other reasons
for the reduced projection. The company no longer
plans to make certain product changes which it
once planned for that model year. Reasons for not
making the changes relate to such concerns as
durability, cost, results of market research, and the
unavailability of certain equipment it planned to use.
GM also now expects to include additional standard
equipment on certain vehicles. These changes
together accoimt for an additional 0.6 mpg of the
decline. GM also identified an apparent error in its
earlier projection, accounting for 0.2 mpg of the
decline, and cited miscellaneous reasons for the re-
maining 0.1 mpg loss.
GM's comment on the NPRM indicated that uncer-
tainties such as the future price of fuel, small truck
sales by foreign competitors and potential less-than-
anticipated gains through the use of technology
could result in its MY 1988 CAFE level being below
its current projection of 20.7 mpg.
GM presented three possible scenarios to illustrate
how factors such as these could influence its MY
1988 CAFE. The first scenario assumes constant
rather than rising fuel prices and an economic
outlook which reflects the former price pattern in-
stead of the latter. According to GM, there would
be a reduced incentive under this scenario for con-
sumers to buy smaller vehicles with more fuel effi-
cient powertrains, and the company would ex-
perience a model and powertrain mix change
estimated to cause a 0.3 mpg to 0.4 mpg decline in
its MY 1988 CAFE projection. GM's second scenario
develops that company's sensitivity to an unan-
ticipated increase in import light truck sales above
its current forecasts. According to that company,
this could result in a 0.2 mpg to 0.3 mpg decline in
its MY 1988 CAFE projection. GM's third scenario
focuses on the introduction of emission controls
which will cause heavy duty engines in trucks over
8500 pounds gross vehicle weight rating (GVWR) to
be equipped with catalytic converters and use
unleaded gasoline just as the trucks with lower
GVWR's have been. This regulatory change creates
the potential for a shift in consumer purchases from
vehicles which are just over 8500 pounds GVWR and
thus not subject to the fuel economy standards to
vehicles which are between 7000 pounds and 8500
pounds GVWR and within the ambit of those stand-
ards. According to GM, this potential increase in the
sales of the high GWVR light trucks could reduce
its CAFE projection below 20.7 mpg by approx-
imately 0.1 mpg.
Ford: As discussed in the NPRM, Ford projected
in February 1985 that it could achieve a CAFE level
of up to 22.5 mpg in MY 1988. This number was
PART 533-PRE 80
. adjusted in the NPRM to 22.2 mpg, however, in light
of later technical information provided by Ford. The
primary reason for the reduction was that actual test
data regarding some programs had indicated smaller
fuel economy improvements than projected. The
22.2 mpg level was 1.2 mpg higher than Ford's 21.0
mpg projection for MY 1987. The NPRM noted,
however, that 0.4 mpg of the increase was attribu-
table to mix shifts toward more fuel-efficient
vehicles, which the agency considered unlikely given
the recent and expected continued declines in
gasoline prices. Thus, if these mix shifts were
deleted, the upper end projection for MY 1988 would
be 21.8 mpg.
The NPRM noted that Ford had identified several
risks to its MY 1988 projection. These included both
technological risks, i.e., risks that technological pro-
grams might not achieve expected fuel economy
gains, and mix shift risks, i.e., risks that the sales
mix of Ford's light truck fleet might shift toward
less fuel-efficient vehicles. Ford identified additional
technological risks totaling 0.9 mpg and mix shift
risks totalling 0.6 mpg, for a total risk of 1.5 mpg.
However, the agency had already incorporated 0.7
mpg in technological and sales mix risks in the 21.8
mpg figure, reducing the remaining risk to 0.8 mpg.
Thus, if the events creating these risks occurred
simultaneously, the lower end figure for MY 1988
would have been 21.0 mpg as of the time of the
NPRM.
In Ford's February 1986 comment on the NPRM,
the company lowered its CAFE projections for both
MY 1987 and MY 1988. For MY 1987, Ford pro-
jected a CAFE level of 20.2 mpg to 20.4 mpg. For
MY 1988, it projected a CAFE level of 20.2 mpg to
20.8 mpg. In explaining its lower projections, Ford
stated that "... recent development testing of new
hardware and technology has yielded lower levels
of fuel economy benefit than had been predicted
earlier in the program."
In the final rule for MY 1987, published in the
Federal Register (50 FR 40398) on October 3, 1985,
the agency noted that Ford's then latest projection
for that year was for a CAFE level of no higher than
21.0 mpg. Even that figure was subject to possible
adverse mix shifts of 0.4 mpg and technological risks
totalling 0.3 mpg. The decline in Ford's upper end
projection from 21.0 mpg to 20.4 mpg is attributable
to technological reasons, almost entirely related to
certain programs not achieving expected fuel
economy. Of particular significance is a drop in pro-
jected fuel economy for the electronic fuel injection
program for Ford's 4.9 liter 1-6 engine. A very
small portion of the decline, less than 0.1 mpg, is
related to small increases in weight and perform-
ance. Technological risk explains the difference in
Ford's low and high end current CAFE projections
for MY 1987.
The drop in Ford's MY 1988 CAFE from the 21.8
mpg value used in the NPRM to the company's cur-
rent maximum projection of 20.8 mpg is also at-
tributable to technological reasons. The most signifi-
cant factor in the decline is the drop in projected fuel
economy for the 4.9 liter fuel injection program,
which carries over from MY 1987. In addition. Ford
no longer plans to make a certain technological
change due to durability concerns. A number of
small factors, primarily engine calibration issues, ex-
plain the remaining decline. Some of the engine
calibration changes are being made to ensure com-
pliance with emissions standards.
Ford's 20.8 mpg projection is subject to both fur-
ther technological risks and mix shift risks. The com-
pany identified technological risks of 0.3 mpg, which
are related to certain programs possibly not achiev-
ing projected fuel economy levels. Ford also
presented a mix risk scenario in which sales were
higher for standard trucks and lower for compact
trucks, resulting in a potential 0.3 mpg CAFE loss.
Ford's 20.2 mpg to 20.8 mpg range is explained by
these risks. The company also indicated that its
CAFE could decline an additional 0.2 mpg as a fur-
ther mix shift risk if gasoline prices remain below
$1.00 per gallon on a sustained basis.
Chrysler: As discussed by the NPRM, Chrysler
projected in August 1985 that it could achieve a
CAFE level of 22.3 mpg in MY 1988. This projec-
tion was 1.1 mpg higher than that company's then
latest MY 1987 projection. The NPRM stated that
the bulk of the improvement would be attributable
to technological improvements, especially transmis-
sion improvements. The NPRM noted that Chrysler
also expected slight mix shifts toward smaller, more
fuel-efficient trucks.
In March 1986, Chrysler provided new projections
of 20.4 mpg to 21.3 mpg for MY 1987 and 21.5 mpg
to 22.3 mpg for MY 1988. The company stated the
following:
There is considerable uncertainty associated with
predicting any specific single level of annual
CAFE for the 1987-89 time frame because we are
in the process of revising our long range plan. For
this reason, our new estimates for model years
1987-89 are presented as ranges to indicate the
effects of various marketing alternatives available
PART 533-PRE 81
to Chrysler. The high ends of our ranges repre-
sent Chrysler's fuel economy capabilities, given
our current product plan. These numbers are
similar to those previously submitted to
[NHTSA], although 1987 estimates are now much
firmer due to actual test data being available. The
low ends of the ranges represent the results of
a new analysis in which it was assumed we would
sell our products in a completely free market with
no attempt on our part to force the sales mix to
a desired fuel economy target.
Both product plans contain the same fuel
economy improving technologies and our new
Dakota N-Body truck previously described to you.
Projected CAFE differences are solely a result
of mix shifts. . . . Should international economic
conditions continue to change, even the low end
of these estimates may ultimately require market
forcing and/or product limiting actions by
Chrysler.
The 22.3 mpg estimate at the high end of
Chrysler's Projection for MY 1988 is thus the same
mix of vehicles and technology as discussed in the
NPRM. The 21.5 mpg estimate at the low end of that
company's range for MY 1988 is based on mix shifts
toward larger, less fuel-efficient trucks.
American Motors: In February 1985, American
Motors (AMC) projected 4WD CAFE levels of 18.5
mpg to 22.2 mpg for MY 1987 and 19.0 mpg to 22.7
mpg for MY 1988. The company projected 2WD
CAFE levels of 21.5 mpg to 24.3 mpg for MY 1987
and 21.5 mpg to 24.2 mpg for MY 1988. These pro-
jections, for which no supporting data were pro-
vided, were the latest available to the agency at the
time the NPRM was issued. Since AMC had pro-
jected in its mid-model year report for MY 1985 that
its CAFE levels for that model year would be 20.3
mpg for its 4WD fleet and 23.5 mpg for its 2WD
fleet, the agency placed greater credence in the
upper ends of the company's CAFE projections for
MY 1987-88. The NPRM noted, however, that AMC
had recently advised NHTSA that it was revising
its projections.
In AMC's February 1986 comment on the NPRM,
the company projected that its 4WD CAFE levels
would be 19.2 mpg for MY 1987 and 19.3 mpg for
MY 1988. AMC projected that its 2WD CAFE levels
would be 21.3 mpg for both MY 1987 and MY 1988.
With 4WD vehicles accoimting for most of AMC's
light truck fleet, these figures result in composite
CAFE levels of 19.7 mpg for MY 1987 and 19.9 mpg
for MY 1988.
AMC provided the following explanation for the
decline in its CAFE projections:
... As has been widely reported in the press, our
Jeep products have experienced record sales,
which have substantially changed oiu* model mix
projections. Lower-than-anticipated fuel economy
performance for some future models, coupled
with some administrative changes to reduce prod-
uct complexity are also expected to measureably
alter the fleet average values. In addition, our 2-
and 4-wheel drive pickup trucks, which had not
yet been introduced last February, are now on the
market, giving us some actual sales information
for developing future model mix projections.
NHTSA's analysis of the data provided by AMC in-
dicated that most of the reason for the decline in that
company's CAFE projections was a drop-off in
average fuel economy for each truckline and not
sales mix changes between trucklines. For 2WD
vehicles, the fuel economy declines within each
truckline caused all of the drop in the projections for
both MY 1987 and MY 1988. For 4WD vehicles, the
drop in the MY 1987 projection was attributable to
both a shift in sales mix and lower fuel economy
levels for individual trucklines. The drop in the MY
1988 projection, however, was attributable entirely
to lower fuel economy levels for individual
trucklines.
AMC's comment on the NPRM stated that uncer-
tainties related to lower gasoline prices and market
trends toward greater performance could signifi-
cantly lower its CAFE beyond its projections. AMC
stated that there is a level of uncertainty with
respect to engine mix in Jeep XJ vehicles and a
possibility that sales of larger model "senior Jeeps"
such as the Grand Wagoneer and J-series pickup
trucks will escalate. That company also stated that
sales of its smaller Commanche pickups could decline
as buyers "move up" to larger trucks.
Volkswagen: Volkswagen (VW) currently offers
only one light truck model, the Vanagon compact
bus. In February 1985, VW projected a CAFE level
of 21 mpg through MY 1990. In VW's March 1986
comment on the NPRM, the company provided a MY
1988 CAFE projection of 19.1 mpg. VW stated that,
in response to constmier demand, it has had to make
performance improvements in the Vanagon vehicles.
The company also stated that it has introduced a new
4WD version of the Vanagon, to increase the util-
ity of the vehicle to the consumer.
PART 533-PRE 82
Other manufacturers: Foreign manufacturers
other than VW compete only in the small vehicle por-
tion of the light truck market and are therefore ex-
pected to achieve CAFE levels well above GM, Ford,
and Chrysler, which offer full ranges of light truck
models.
NHTSA is aware of one other domestic manufac-
turer. Lands Motor Company, whose light truck fuel
economy capability is expected to be below that of
GM, Ford, Chrysler and AMC. While that company
did not submit comments on the NPRM, it has sub-
mitted a petition requesting that the agency estab-
lish a separate class of light truck for its precedent
model and provide a separate fuel economy stand-
ard for that class. (This issue and a similar one raised
by Volkswagen are addressed below in the section
entitled Setting the MY 1988 Standards.) Lands
Motor Company has a production goal of 500 vehicles
for MY 1988, with a CAFE level of 16.9 mpg.
B. Possible Additional Actions to Improve
MY 1988 CAFE
The possible additional actions which manufac-
turers may be able to take to improve their MY 1988
CAFE above the levels which are currently pro-
jected may be divided into three categories: further
technological changes to their product plans (beyond
what they are already planning), increased
marketing efforts, and product restrictions.
1. Further Technological Changes
Ford commented that it is unaware of any new
technology which could be executed within available
leadtime to improve its CAFE significantly.
Chrysler commented that "(i)t is important to
recognize that the leadtime required to implement
improvements in engines, transmissions, aero-
dynamics and rolling resistance, is usually three to
four years." That company argued that "as of to-
day, it is too late in the engineering cycle to design,
develop, and implement any further major tech-
nological CAFE improvements on 1988-89 model
year light trucks."
In light of limited leadtime, the agency agrees that
it is too late at this time to initiate further major
technological improvements. Once a new design is
established and tested as feasible for production, the
leadtime necessary to design, tool, and test com-
ponents such as new body sheet-metal subsystems
for mass production is typically 22 to 29 months.
Other potential major changes, such as those cited
by Chrysler, often take longer. Leadtimes for new
vehicles are typically at least three years.
However, there may be sufficient leadtime for
manufacturers to make more minor technological
changes, such as changes in axle ratios, refinement
of engine calibrations, and changes in horsepower.
In analyzing specific manufacturer capabilities
below, the agency has considered whether manufac-
turers can make these types of changes.
2. Increased Marketing Efforts
As discussed in the NPRM, the agency believes
that the ability to improve light truck CAFE by
marketing efforts is relatively small. Light trucks
are generally purchased for their work-performing
capabilities. This is particularly true for the larger,
less fuel-efficient light trucks. Since the smaller light
trucks cannot meet the needs of many users, the
manufacturers' abilities to use marketing efforts to
encourage consumers to purchase smaller light
trucks instead of larger light trucks are limited.
As a practical matter, marketing efforts to im-
prove CAFE are largely limited to techniques which
either make fuel-efficient vehicles less expensive or
less fuel-efficient vehicles more expensive.
Moreover, the ability of a manufacturer to increase
sales of fuel-efficient light trucks depends in part on
increasing its market share at the expense of com-
petitors or pulling ahead its own sales from the
future. The ability of domestic manufacturers to
make such sales increases is also affected by the
strong competition in that market from Japanese
manufacturers. While Japanese manufactiu^ers cur-
rently have an overall combined market share of
about 20 percent of light trucks, their share for the
smaller, more fuel-efficient pickup trucks is about
50 percent.
The agency also notes that the improved fuel effi-
ciency of all sizes of modern light trucks makes it
more difficult to sell the small light trucks on the
basis of significant operating cost savings. The
reason for this is that there are diminishing returns
in terms of fuel economy from purchasing smaller
light trucks as the fuel efficiency of larger light
trucks increases. The average fuel economy of large
pickup trucks rose from 13.1 mpg in 1975 to 18.4
mpg in 1985, and the average fuel economy of large
vans rose from 13.1 mpg to 17.5 mpg during this
time period. The average fuel economy of small
pickup trucks rose from 22.1 mpg to 26.2 mpg, and
the average fuel economy of small vans rose from
20.7 mpg to 23.9 mpg. (SAE Paper No. 850550,
"Light Duty Automotive Fuel Economy . . . Trends
Thru 1985.") The fuel economy of large pickup
trucks and vans has thus improved more than the
PART 533-PRE 83
fuel economy of small pickup trucks and vans, both
in absolute and percentage terms.
Also, as gasoline prices have declined, there are
diminishing returns from purchasing more fuel-
efficient vehicles. For example, an improvement in
fuel efficiency from 20 mpg to 25 mpg at a gasoline
price of $1.50 per gallon would save a truck owner
about $150.00 per year, assuming 10,000 miles
driven annually. However, at a gasoline price of
$1.00 per gallon, which more closely reflects today's
market, the annual savings drop to about $100.00.
The financial savings for smaller changes in fuel
economy will, of course, be even lower. Hence, an
economically rational consumer will not be as con-
cerned with improving fuel efficiency as gasoline
prices decline, making it more difficult for a
manufacturer to market its most fuel-efficient
vehicles.
A problem with pulling ahead sales is that the
manufacturers' CAFE levels for subsequent years
are reduced. For example, if a manufacturer in-
creases its MY 1988 CAFE by pulling ahead sales
of fuel-efficient light trucks from MY 1989, its MY
1989 CAFE will decrease, compared with the level
it would have been in the absence of any pull-ahead
sales attributable to marketing efforts. For this
reason, a manufacturer cannot continually increase
its CAFE simply by pulling ahead sales.
GM commented that "(i)t would be difficult, if not
impossible, to predict any gains in CAFE through
marketing incentives based on present and future
projections of consumer purchasing preferences,
particularly in view of the uncertain future of world
oil price." Ford commented that "because of the
nimiber of competitive entries in the compact seg-
ment, potential coimtering actions by each com-
petitor, and the price/cost advantage of imported
models, . . . marketing actions cannot be relied upon
to produce the desired effect."
Chrysler commented that "(t)ruck buyers are
much more sensitive to functional needs in making
their purchase decisions and in many cases they
must consider their product selection as a longer
term decision than a passenger car customer." That
company stated that "(f)uel efficiency must often be
downgraded in priority for many truck buyers
because vehicle function is often paramount to the
purchaser's livelihood." The National Automobile
Dealers Association commented that because light
trucks are most often purchased for capability and
practicability reasons, a decision to buy a larger,
more powerfiil vehicle cannot be changed by
marketing incentives. That organization emphasized
that there are no available alternatives at any price
for a consumer that needs a heavier light truck.
Given all of these factors, the agency does not
believe that the domestic manufacturers can
significantly improve their CAFE levels by increas-
ing marketing efforts.
3. Product Restrictions
As discussed in the NPRM, manufacturers could
improve their CAFE by restricting their product of-
ferings, e.g., limiting or deleting particular larger
light truck models or larger displacement engines.
However, such product restrictions could have
significant adverse economic impacts on the industry
and the economy as a whole. In the final rule reduc-
ing the light truck fuel economy standard for MY
1985, the agency concluded that sales reductions to
a manufacturer of 100,000 to 180,000 units, with
resulting employment losses of 12,000 to 23,000, "go
beyond the realm of 'economic practicability' as con-
templated in the Act " 49 FR 41252, October 22,
1984. These impacts were believed by the agency
to be a reasonable projection of the impacts to Ford
of restricting the availability of larger trucks and
engines in order to achieve a 1.5 mpg average fuel
economy benefit.
In addition to the adverse impacts on the
automotive industry, a wide range of businesses
could be seriously affected to the extent they could
not obtain the light trucks they need for business
use. Also such product restrictions could run counter
to the congressional intent that the CAFE program
not unduly limit consumer choice. See H.R. Rep. No.
93-340, 94th Cong., 1st Sess. 87 (1975).
GM commented that CAFE standards that are set
at too stringent a level could require full-line
manufacturers to consider product restrictions as a
last resort. GM stated that this would occur only
after incentives had been applied and other
reasonable steps taken, including the application of
carryforward credits. That company stated that pro-
duct restrictions would be harmful to the vehicle
manufacturer, its employees and suppliers, to the
consumer and to the nation's economy. Ford com-
mented that establishing truck fuel economy stan-
dards above manufacturers' capability could result
in substantial sales decline, adverse employment ef-
fects, and a threat of substantial economic hardship.
That company stated that should the MY 1988
standard be set above its capability, it may be forced
to restrict the availability of certain V-8 engines in
full-size light trucks, vans, club wagons and large
PART 533-PRE 84
utilities, and possibly delete some of its full-size prod-
ucts entirely. The company stated that market
research data show that the vehicles that would most
likely be restricted are used for a combination of
commercial as well as personal uses.
Given all of these considerations, NHTSA con-
cludes that significant product restrictions should
not be considered as part of manufacturers'
capabilities to improve CAFE.
C. Manufacturer-Specific CAFE Capabilities
In analyzing manufacturer-specific CAFE
capabilities, the agency has focused on GM, the
largest domestic manufacturer and one of the two
"least capable manufacturers" with a substantial
share of 4WD sales; Ford, the "least capable
manufacturer" with a substantial share of both com-
bined light truck sales and 2 WD sales; and AMC,
the other "least capable manufacturer" with a
substantial share of 4WD sales.
General Motors: As discussed above, while GM
projected in March 1985 that it could achieve a
CAFE level of 22.6 mpg for MY 1988, it now pro-
jects a CAFE level no higher than 20.7 mpg. The
agency's analysis indicated that some of the reasons
for the decline in GM's projected MY 1988 CAFE
level were within that company's control. The com-
pany made a number of changes in its product plan
which, in the agency's judgment, were not consis-
tent with its long-range maximum fuel economy
capability. Other reasons for the decline in GM's pro-
jected MY 1988 CAFE level were outside the com-
pany's control, including changing sales mixes of
vehicles and engines due to consumer demand and
achieving lower-than-anticipated gains from the in-
troduction of new technologies.
Some of the product plan changes that were within
GM's control cannot be reversed within available
leadtime. However, the agency's analysis has con-
cluded that GM can still incorporate certain other
of the product actions it identified in its March 1985
submission. The agency believes that GM has time
to reverse its plans for increasing horsepower and
that doing so would not have a significant effect on
sales. While GM claimed that this action was
necessary to compete in the marketplace, its sup-
porting documentation did not provide a sufficient
rationale for the agency to change its conclusion that
reversing this action would not result in competitive
or other economic harm. Achieving lower horse-
power levels would have the effect of increasing
GM's CAFE by an additional 0.2 mpg. In addition,
GM indicated in its NPRM comments that two other
planned actions (the details of which are subject to
a claim of confidentiality) will reduce its CAFE by
0.2 mpg. However, the agency believes that those
actions can be undertaken without adversely affect-
ing CAFE.
NHTSA thus concludes that GM's MY 1988 CAFE
could be as high as 21.1 mpg. However, the agency
agrees with GM's comment that it faces a mix shift
risk of 0.2 mpg to 0.3 mpg due to continued declines
in gasoline prices and concomitant shifts toward
larger trucks and engines for MY 1988. NHTSA is
not including a risk associated with increased import
light trucks in GM's capability. While manufacturers
face a continuing challenge to meet possible increased
light truck competition from abroad, the agency does
not believe this issue, in the particular case of MY
1988 light truck sales, is likely to adversely affect
domestic CAFE values. Moreover, the agency does
not believe that mix shift risks and potential risks
related to increased imports are additive, since lower
fuel prices should enhance the domestic manufac-
turers' competitive positions. NHTSA believes that
the issue should instead be recognized as a limitation
on manufacturers' abilities to increase their market
share of compact trucks beyond their present projec-
tions. NHTSA concludes that GM's MY 1988 fuel
economy capability is 20.8 mpg to 21.1 mpg.
The agency has also evaluated GM's fuel economy
capability for its 4WD fleet for MY 1988. The ac-
tions discussed above to raise GM's combined CAFE
above its projection would also raise its 4WD CAFE.
Taking these additional actions into accoimt,
NHTSA has concluded that GM's MY 1988 4WD
capability could be as high as 19.5 mpg.
The agency has concluded that there is insufficient
time for GM to introduce additional programs or
technologies beyond those discussed above to im-
prove its MY 1988 fuel economy level.
Ford: As discussed above, while at the time of
the NPRM the agency believed that Ford might be
able to achieve a MY 1988 CAFE level of as high
as 21.8 mpg, the company now projects a CAFE
level of 20.2 mpg to 20.8 mpg. The agency's analysis
indicates that virtually all of the decline in Ford's
CAFE was due to reasons beyond that company's
control. The bulk of the decline in Ford's projected
MY 1988 CAFE level is attributable to lower-than-
anticipated fuel economy levels for the 4.9 liter fuel
injection program. Given the aggressive fuel econ-
omy goals of the program when it was approved, the
agency does not consider it surprising that the
PART 533-PRE 85
goal has not been, and is not likely to be, fully at-
tained. More stringent EPA emissions requirements
also added to the difficulty of meeting the original
fuel economy goal. The only significant change in
Ford's MY 1988 product plan that reduced its pro-
jected CAFE was the deletion of a certain confiden-
tial technological change due to durability concerns.
The agency concurs with Ford's concern about this
particular issue.
The agency does not consider it likely that Ford
can achieve the 20.8 mpg upper end of its range of
MY 1988 CAFE values. The sales mix included in
Ford's 20.8 mpg projection for MY 1988 is com-
parable to the mix Ford now expects for MY 1986.
The agency believes that Ford's actual MY 1988
sales mix could experience some further shift toward
larger trucks and engines, should gasoline prices
continue to decline. Thus, the agency agrees with
Ford's assessment that it faces mix shift risks of 0.3
to 0.5 mpg. As discussed above. Ford also faces
technological risks of 0.3 mpg. Taking all of these
risks into account. Ford's maximum achievable
CAFE could be as low as 20.0 mpg. The agency
believes it likely that some but not all of these risks
will occur and concludes that Ford's MY 1988
capability does not exceed 20.5 mpg.
The agency has also evaluated Ford's 2WD and
4WD fuel economy capabilities. Since the company's
projected 2WD CAFE is higher than those projected
by Chrysler, GM and AMC, the agency did not focus
on Ford in establishing the separate 2WD standard.
Ford's 4WD projection is slightly lower than those
projected by Chrysler, GM and AMC. With the con-
sideration of the risks to Ford's projected 2WD
CAFE, the agency concluded that company's 2WD
CAFE does not exceed 21.0 mpg.
As with GM, NHTSA concludes that there is in-
sufficient leadtime for Ford to introduce additional
new programs or technologies to increase its MY
1988 CAFE.
AMC: AMC projects that its 4WD CAFE will
decline from 20.0 mpg for MY 1986 to 19.3 mpg for
MY 1988. In analyzing AMC's fuel economy capa-
bility, NHTSA looked closely at the changes that are
projected to lower that company's CAFE. The
agency has concluded that certain changes related
to that company's efforts to reduce product complex-
ity, in an effort to improve its profitability, could be
reversed within available leadtime, thereby raising
AMC's 4WD CAFE by 0.2 mpg. The agency has also
concluded that AMC could take certain development
and refinement actions that would raise its 4WD
CAFE by 0.1 mpg to 0.2 mpg. The agency therefore
concludes that AMC's MY 1988 4WD CAFE could
be as high as 19.7 mpg.
NHTSA believes that AMC faces some mix shift
risks, as well as risks that it may not be able to
achieve all of the additional gains identified by the
agency's analysis. Because the agency believes that
some but not all of these risks will occur, it concludes
that 19.5 mpg is that company's maximum 4WD fuel
economy capability. The agency concludes that there
is insufficient leadtime for AMC to introduce addi-
tional new programs or technologies to increase its
MY 1988 CAFE.
Other Federal Standards
A. Safety Standards
As discussed by the NPRM, several recent and
proposed changes in Federal safety requirements
may affect CAFE. These include several amend-
ments to NHTSA's lighting standard, which permit
reductions in aerodynamic drag and slight weight
savings; an amendment to the agency's occupant
crash protection standard to promote the comfort
and convenience of safety belts, and a proposal to
extend the applicability of the agency's standard
concerning steering control rearward displacement
to additional light trucks.
The NPRM stated that while the agency has
estimated that passenger car fuel economy could be
increased by 0.4 to 0.9 percent by using aerodynamic
headlamps, it is likely that the potential fuel
economy improvement for light trucks by adoption
of this feature is less. The reason for this is that the
basic shape of light trucks is often dictated by load
carrying capability or other functional attributes,
thereby making it more difficult to reduce aero-
dynamic drag. Ford commented that it agrees with
the agency's conclusion in the PRIA that the poten-
tial for CAFE improvement from vehicle aero-
dynamics is minimal due to the higher frontal area
and drag coefficients inherent in light trucks com-
pared with passenger cars. GM commented that
aerodynamic headlamps will not have an impact on
light truck CAFE in the 1988-89 timeframe. That
company also noted that truck designs which in-
cluded improved aerodjoiamics through the use of
lower profile headlamps and more rounded sheet
metal were not well received by the public in recent
design clinics.
The NPRM cited the PRIA's conclusion that the
effect of the comfort and convenience requirements
on light truck CAFE will be negligible, since both
PART 533-PRE 86
the number of affected vehicles and weight impact
are small. GM and Ford agreed that these re-
quirements will not significantly affect CAFE.
With respect to the proposal to extend the ap-
plicability of the agency's standard on steering con-
trol rearward displacement, the NPRM cited the
PRIA's similar conclusion that CAFE would not be
significantly affected since the number of affected
vehicles is believed to be small and the required
modifications minimal. GM disagreed with this con-
clusion, stating that the standard would primarily
affect the older model lines in its fleet and that
significant mass increases may result from required
vehicle changes. That company stated that the
magnitude of the mass increases associated with the
vehicle changes has not been determined, but may
be relatively large and could negatively affect
CAFE. Ford commented that the Econoline is its
only vehicle anticipated to have significant poten-
tial for weight increase due to this proposal. It stated
that since baseline testing has not been completed,
specific corrective actions have not been identified
and the weight effect of these changes remains an
open issue. NHTSA currently anticipates that any
final rule concerning this proposal would have an
effective date of September 1, 1988, or later and
therefore should not impact manufacturers' MY
1988 CAFE levels significantly, if at all. The agency
will address these comments to the extent necessary
in establishing the MY 1989 light truck fuel economy
standards.
B. Evironmental Standards
The NPRM cited several final and proposed
changes in environmental standards which may
affect CAFE.
The Environmental Protection Agency (EPA)
published a proposal on July 1, 1985 (50 FR 27188)
to provide test adjustment credits to light truck
manufacturers for changes made in test procedures.
Assuming that EPA's final rule is along the lines of
the proposal, the rulemaking is not likely to have any
significant effect on the manufacturers' projections
discussed above.
The EPA requirement for control of diesel par-
ticulate matter becomes more stringent in MY 1987.
NHTSA's NPRM noted that in the preamble to the
final rule establishing MY 1987 light truck fuel
economy standards, the agency concluded that any
impact of the diesel particulate requirement on fuel
economy would be very small, i.e., much less than
0.1 mpg. GM commented that the standard will have
a negative impact on its CAFE but that the impact
will be small since diesel sales have declined. Accord-
ing to that company, the maximum impact on its MY
1988 CAFE is estimated to be 0.05 mpg. AMC com-
mented that more stringent standards are reducing
diesel engines, not solely because of technological
difficulties, but because with the low sales volume
it would be impossible to recover the engineering
costs associated wath development of control
systems. That company argued that the impact on
CAFE of a more stringent emissions standard is the
total removal of a fuel-efficient engine from the
market, not just an incremental loss in fuel economy
due to meeting more stringent standards. After
analyzing the comments, the agency continues to
believe that there will be little CAFE effect from
the more stringent particulate standard since
manufacturers do not plan on offering significant
volumes of diesel engines that would require
changes. The agency agrees with AMC that when
volumes for an engine family drop below certain
levels, it may become economically unattractive to
spend the money necessary to certify compliance
with the emissions standards. However, this is a
business decision and not a direct result of the more
stringent requirements to control emissions.
The EPA requirement for control of oxides of
nitrogen (NOx) becomes more stringent in MY 1988.
As noted in NHTSA's NPRM, EPA estimates that
with the use of three-way catalyst technology, there
will be no net loss in fuel efficiency and possibly even
small gains. Moreover, since the EPA regulation
provides for averaging compliance with the more
stringent particulate standard and the oxides of
nitrogen standard, manufacturers have greater flex-
ibility to help ensure that there are little or no
attendant fuel economy penalties.
GM commented that the recalibration required to
meet the 1988 NOx standard decreases its light
truck CAFE 0.3 mpg to 0.35 mpg from the level at-
tainable if the standard were not changed. The com-
pany stated that this reduction assumes across-the-
board use of closed loop throttle body injection and
three-way catalysts for gasoline vehicles, and has
been factored into its CAFE projections. Ford stated
that it does not believe that EPA's overall assess-
ment that there vnll be no net loss in fuel efficiency
associated with the NOx standards is applicable to
its vehicles. Ford argued that paired fuel economy
data from its MY 1985 Federal and California
vehicles show a fuel economy penalty of 1.3 percent
to 5.3 percent (0.4 to 1.2 mpg) between the versions
having the same control technologies. (California
vehicles were required to meet a MY 1985 NOx
PART 533-PRE 87
standard that was more stringent than either the
current or MY 1988 Federal standard.) According
to that company, these data are consistent with its
conclusion presented earlier to the agency that a
light truck fuel economy penalty of 0.5 mpg may be
encountered from the new Federal standard. Ford
stated that a reassessment of its 1988 capabilities
indicates a fuel economy penalty of about 0.2 mpg
for its fleet, and that it still anticipates some degree
of risk that the penalty is understated. That com-
pany also stated that it does not see any benefit in
using the NOx averaging concept adopted by EPA
in light of the restrictions imposed by the conditional
certificates of conformity and the engine family
emission limits provisions. Ford stated that it had
included a fuel economy penalty of 0.2 mpg in its
MY 1988 projection.
NHTSA believes that GM's and Ford's arguments
about a fuel economy penalty associated with the
more stringent NOx standards are consistent with
EPA's position presented in the NPRM. That posi-
tion is that with the use of three-way catalyst
technology, the new NOx standard will not cause
any net loss in fuel efficiency, compared to the fuel
efficiency levels under the current NOx standard.
There might even be small gains as a result of the
new standard. The losses to which GM and Ford
refer are actually "gains foregone" in the context
of EPA's analysis, i.e., the loss is the difference in
fuel economy capability of a closed loop three-way
catalyst system calibrated to meet the current and
new NOx standards. Thus, by adopting three-way
catalyst technology, the manufacturers avoid any
losses in fuel economy associated with the new NOx
standards but do not achieve the gains that would
be associated with such technology in the absence
of the new standards. AMC commented that other
emission-related considerations are the increase in
the useful life interval, limited maintenance inter-
vals, and warranty liability. That company argued
that because of these restrictions, manufacturers
must reduce compliance/warranty risks by utilizing
current technology with proven durability in the
field. AMC stated that this has a direct effect on
decisions to adopt newer fuel-efficient technology,
especially for the lower volume manufacturers, un-
til after the technology has proven its durability in
the field for 11 years/120,000 miles. AMC did not
provide any data concerning how these types of con-
siderations affect its CAFE. As a general matter,
NHTSA believes it would be inappropriate to
assume that manufacturers need to wait 11 years
before deciding to adopt new technology for pur-
poses of emissions and/or fuel economy.
NHTSA is not aware of any plans on the part of
EPA to promulgate noise regulations applicable to
MY 1988 light trucks and therefore does not an-
ticipate any attendent fuel economy penalties.
GM and Ford cited several other standards which
could potentially affect CAFE after MY 1988. The
agency will address those comments to the extent
necessary in establishing the MY 1989 light truck
fuel economy standards.
Need to Conserve Energy
Since 1975, when the Energy Policy and Conser-
vation Act was passed, this nation's energy situa-
tion has changed significantly. For example, oil
markets have been deregulated and the Strategic
Petroleum Reserve has been established.
In 1977, the United States imported 46.4 percent
of its oil needs and the value of imported crude oil
and refined petroleum products was $67 billion
(stated in 1984 dollars). While the import share of
total petroleum demand declined after that year, the
cost continued to rise to a 1980 peak level of $93.2
billion (1984 dollars). By 1985, the import share had
declined to 28.7 percent at a cost of $48.3 billion.
Moreover, imports from OPEC sources have
declined, from a high of 6.2 million barrels per day
and 70.3 percent of all imports in 1977 to 1.8 bilhon
barrels per day and 36.2 percent of imports in 1985.
As imports have shifted to non-OPEC sources, such
as Mexico, Canada and the United Kingdom and as
this country builds up its strategic stockpile, the
United States' petroleum market has become less
vulnerable to the political instabilities of some OPEC
countries, as compared to the situation in the
mid-1970's.
Overall, the nation is much more energy indepen-
dent than it was a decade ago, when Congress
established the fuel economy standards program.
From 1975 to 1984, energy efficiency in the economy
improved by 21 percent {WSJf. Annual Energy
Review, Energy Information Administration (EIA),
U.S. Department of Energy, p. 47). Domestic oil pro-
duction is higher than it was in 1975, total imports
have dropped 18 percent since then, the value of the
nation's imported oil bill has declined 35 percent in
the last five years, and the amount of imported oil
from OPEC has dropped by 71 percent since the
peak of 1977. As a percentage share of GNP, the
net oil import bill fell from 2.8 percent in 1980 to
1.2 percent in 1985. Future trends, as history has
demonstrated, are subject to great uncertainty.
However, the price of oil is now fully decontrolled,
permitting consimiers to make choices in response
PART 533-PRE 88
to market signals and allowing the market to adjust
quickly to changing conditions. The Strategic
Petroleum Reserve now contains approximately 500
million barrels that can be used to ameliorate the
effect of supply interruptions. Thus, by any measure,
the nation is in a stronger, and more efficient,
energy position than it was a decade ago.
GM's comment on the NPRM stated that the ef-
fect of "the deregulation of the oil industry and the
existence of the Strategic Petroleum Reserve as well
as continued conservation and the development of
alternative energy sources, such as methanol, has
been to place the U.S. in a much more secure energy
position." That commenter urged that it is "impor-
tant that NHTSA take these developments into ac-
count in explaining the 'need of the nation to con-
serve energy.'"
Chrysler commented that it believes that the need
to conserve petroleum-based energy should remain
a national priority, despite the transient period of
falling fuel prices we are now experiencing. That
company stated that there is every reason to expect
that oil will again be in short supply, even within the
lifetime of vehicles produced in the 1988-89 models
years.
The Center for Auto Safety commented that the
nation is facing a future of greater reliance on im-
ported petroleum to fuel a vehicle fleet which in-
cludes an increasing share of light trucks. That
organization argued that the Iraq-Iran war and other
Middle East instabilities continue to threaten our na-
tional security, and cited a study by the National
Academy of Sciences noting that the oil in the
Strategic Petroleum Reserve will equal a decreas-
ing number of days supply in future years.
Since the NPRM was prepared, world oil prices
have dropped precipitously, from $28 to $30 a bar-
rel late last year to close to $10 a barrel this year
in some cases. While the fall in oil prices offers
significant benefits to consumers and other users of
oil, it may also result in decreased domestic produc-
tion and increased reliance on foreign imports. The
most recent available long term projections by EIA
and Data Resources, Inc. (DRI), which are based on
late 1985 data, indicate that domestic production
could decline from a stable level of 10.6 MMB/D to
about 8.2 MMB/D by 1995, and net imports could
rise from 4.2 MMB/D to about 7.7 (EIA) to 9.1 (DRI)
MMB/D by 1995. If this occurred, imports could
reach 50 percent of U.S. petroleum use by 1995. As
noted by the NPRM, however, experience has shown
that future projections about petroleum supply,
prices and imports are subject to great uncertainty.
MY 1988 light trucks meeting the 20.5 mpg stan-
dard established by this rule will be more fuel-
efficient than the average vehicle in the current light
truck fleet in service, thus making a positive con-
tribution to petroleum conservation. Further, the
agency believes that many of the changed conditions
since 1975, including decontrol of oil, establishment
of the Strategic Petroleum Reserve, and diversifica-
tion of the sources of oil imports, ensure that the
nation will remain in a strong energy position, even
if imports should rise to earlier levels.
Determining the Maximum Feasible Average
Fuel Economy Level
As discussed above, section 502(b) requires that
light truck fuel economy standards be set at the
maximum feasible average fuel economy level. In
making this determination, the agency must con-
sider the four factors of section 502(e): technological
feasibility, economic practicability, the effect of
other Federal motor vehicle standards on fuel
economy, and the need of the nation to conserve
energy.
A. Interpretation of "Feasible"
Based on dictionary definitions and judicial inter-
pretations of similar language in other statutes, the
agency has in the past interpreted "feasible" to refer
to whether something is capable of being done. The
agency has thus concluded in the past that a stan-
dard set at the maximum feasible average fuel
economy level must: (1) be capable of being done and
(2) be at the highest level that is capable of being
done, taking accoimt of what manufacturers are able
to do in light of available technology, economic prac-
ticability, how other Federal motor vehicle stan-
dards affect average fuel economy, and the need of
the nation to conserve energy. In this rulemaking,
as in earlier rulemakings, NHTSA has considered
and weighed all four statutory factors of section
502(e) and has not merely adopted a level based on
what was technologically capable of being done.
B. Industrywide Considerations
The statute does not expressly state whether the
concept of feasibility is to be determined on a
manufacturer-by-manufacturer basis or on an in-
dustryvdde basis. Legislative history may be used
as an indication of congressional intent in resolving
ambiguities in statutory language. The agency
believes that the below-quoted language provides
guidance on the meaning of "maximum feasible
average fuel economy level."
PART 533-PRE 89
The Conference Report to the 1975 Act (S. Rep.
No. 94-516, 94th Cong., 1st Sess. 154-5 (1975)),
states:
Such determination (of maximum feasible
average fuel economy level) should therefore take
industrywide considerations into account. For ex-
ample, 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 in-
dividual manufacturers. Such difficulties,
however, should be given appropriate weight in
setting the standard in light of the small number
of domestic manufacturers that currently exist,
and the possible implications for the national
economy and for reduced competition associ-
ation (sic) with a severe strain on any
manufacturer. . . .
It is clear from the Conference Report that Con-
gress did not intend that standards simply be set at
the level of the least capable manufacturer. Rather,
NHTSA must take industrywide considerations in-
to account in determining the maximum feasible
average fuel economy level. The focus, thus, must
be on the manufacturers' collective ability to meet
a standard, rather than any particular manufac-
turer's ability to meet it.
NHTSA has consistently taken the position that
it has a responsibility to set light truck standards
at a level that can be achieved by manufacturers
whose vehicles constitute a substantial share of the
market. See 49 FR 41251, October 22, 1984. The
agency did set the MY 1982 light truck fuel economy
standards at a level which it recognized might be
above the maximum feasible fuel economy capability
of Chrysler, based on the conclusion that the energy
benefits associated with the higher standard would
outweigh the harm to Chrysler (45 FR 20871, 20876;
March 31, 1980). However, as the agency noted in
deciding not to set the MY 1983-1985 light truck
standards above Ford's level of capability, Chrysler
had only 10-15 percent of the light truck domestic
sales, while Ford had about 35 percent. (45 FR
81593, 81599; December 11, 1980).
C. Setting the MY 1988 Standards
Based on the analysis described above and on
manufacturer projections, the agency concludes that
manufacturers can achieve the combined fuel
economy levels in the following table:
Approximate
Manufacturer Market Share Combined CAFE
Chrysler
13%
21.5 mpg to 22.3
mpg
GM
33%
20.8 mpg to 21.1
mpg
Ford
25%
20.5 mpg
AMC
5%
*19.9 mpg
Volkswagen
0.5%
19.1 mpg
Lands less than 0.01%
16.9 mpg
* AMC's MY 1988 combined projection, unadjusted for
the additional 4WD fuel-economy improving actions iden-
tified by NHTSA's analysis.
As indicated above, foreign manufacturers other
than Volkswagen only compete in the small vehicle
portion of the light truck market and are therefore
expected to achieve CAFE levels well above GM,
Ford and Chrysler, which offer full ranges of light
truck models.
NHTSA has concluded that among the manufac-
turers with a substantial share of combined light
truck sales, Ford is the least capable manufacturer,
with a maximum MY 1988 combined fuel economy
capability no higher than 20.5 mpg. WhUe AMC has
a lower combined capability than Ford, due to
AMC's model mix being heavily weighted toward
4WD vehicles, AMC does not have a substantial
share of combined light truck sales. Further, the
agency has again adopted the approach of setting
optional separate 2WD and 4WD standards in light
of model mixes that are heavily weighted toward
4WD vehicles. Since, as discussed below, AMC can
meet both the 2WD and 4WD standards, it is un-
necessary for it to be able to meet the combined
standard.
NHTSA has concluded that 20.5 mpg is the max-
imum feasible combined standard for the 1988 model
year. This level balances the potential petroleum sav-
ings associated with higher standards against the
difficulties of individual manufacturers facing poten-
tially higher standards.
The setting of maximum feasible fuel economy
standards, based on consideration of the four re-
quired factors, is not a mere mathematical exercise
but requires agency judgment. In setting the MY
1988 standards, the agency believes that the current
plummeting of gasoline prices affects both the
benefit of differing levels of average fuel economy
standards and the difficulties of individual auto-
•
PART 533-PRE 90
mobile manufacturers facing higher standards, i.e.,
both of the considerations NHTSA must balance in
setting maximum feasible standards taking in-
dustrywide considerations into account. (See the
language of the Conference Report quoted above.)
The main benefit from setting higher fuel economy
standards is the potential additional petroleum sav-
ings which would result. Since rapidly falling
gasoline prices result in reduced consumer demand
for higher fuel economy, individual manufacturers
whose maximum fuel economy capabilities may be
above the level of the industrywide standard may
have less incentive to achieve their maximum capa-
bihties. This may explain GM's business decision to
cancel some technological programs to improve fuel
economy and Chrysler's current reconsideration of
its product mix for future model years. There may,
of course, be counterbalancing motivations for
achieving higher fuel economy, Such as a need or
desire to earn credits for exceeding fuel economy
standards.
The 20.5 mpg standard will be challenging for
Ford, without causing significant economic distor-
tion, and act as an incentive for that company to
achieve its maximum fuel economy capability. Since
Ford produces more than 25 percent, of all light
trucks subject to fuel economy standards, a standard
set at its level can make a substantial contribution
to petroleum conservation.
NHTSA believes there are serious questions
whether a standard set at a level above Ford's
capability would be consistent with the requirement
that standards be set taking industrywide considera-
tions into account, given that company's more than
25 percent market share. Even if the MY 1988
standard could be set at a level above Ford's capa-
bility, however, the agency believes that it clearly
could not be set above both Ford's and GM's
capabilities, since those companies' combined
market share approaches 60 percent. As noted
previously, the agency's estimate of GM's maximum
capability for MY 1988 is 20.8 to 21.1 mpg. Thus,
any higher standard than 20.5 mpg could not exceed
that range.
The precise effects on petroleum conservation of
a standard set at GM's projected capability are
uncertain, although the effects can be bounded. The
maximum theoretical additional energy savings
associated with a standard set at that higher level
can be determined by comparing hypothetical situa-
tions where GM and Ford would have combined
average fuel economy levels of 21.0 mpg versus 20.5
mpg. Since most other manufacturers in the in-
dustry project MY 1988 CAFE above that of GM's
capability, a standard set at 21.0 mpg would not be
expected to affect the petroleum consumption of
trucks manufactured by that part of the industry.
The difference in total gasoline consumption be-
tween these two hypothetical situations, over the
lifetime of the MY 1988 fleet, would be 419 million
gallons. The maximum yearly impact on U.S.
gasoline consumption would be 48.3 million gallons,
or roughly five hundredths of one percent of total
motor vehicle gasoline consumption.
The agency believes, however, that any actual
gasoline savings associated with a higher standard
would be much less. While GM would have an added
incentive to achieve its maximum fuel economy
capability, it is not clear in light of possible carryfor-
ward/carryback credits whether this would actually
occur. Ford could not likely improve its CAFE other
than by restricting sales of its larger light trucks and
engines. To the extent that would-be purchasers of
such vehicles and engines transferred their pur-
chases to GM and Chrysler without those companies
otherwise changing their product plans, there could
be little or no effect on petroleum consumption.
While the agency recognizes that a higher stan-
dard could have some effect on gasoline consump-
tion, it concludes that the effect would be much less
than the theoretical maximum noted above and could
be negligible.
A higher standard than 20.5 mpg could result in
serious economic difficulties for Ford. NHTSA
believes that the first potential fuel-efficiency
enhancing actions that Ford or any other manufac-
turer would consider in response to a higher stand-
ard would primarily consist of marketing actions.
For the reasons discussed earlier in this notice,
however, the agency does not believe that marketing
actions can be relied upon to significantly improve
fuel economy. Assuming that such marketing actions
were unsuccessful in whole or in part. Ford would
likely have to engage in product restrictions, in-
cluding limiting the sales of larger engines and/or
vehicles to improve its fuel economy. Such product
restrictions could result in adverse economic conse-
quences for Ford, its employees, and the economy
as a whole and unduly limit consumer choice,
especially with regard to the load carrying needs of
light truck purchasers.
The agency believes that the current situation of
plummeting gasoline prices can create significant
difficulties for individual manufacturers facing
higher CAFE standards. As gasoline prices fall, con-
PART 533-PRE 91
sumer demand shifts toward larger vehicles and
more powerful engines. While the magnitude of such
shifts is limited to some extent by the fact that
trucks are purchased largely with respect to work-
performing capabilities, lower gasoline prices can
nonetheless result in mix shifts which lower
manufacturers' CAFE. The large magnitude of the
recent drop in gasoline prices makes it particularly
difficult for manufacturers such as Ford to attempt
to use marketing efforts to overcome such shifts in
consumer demand.
Given Ford's more than 25 percent share of the
light truck market, its capability has a significant
effect on the level of the industry's capability and,
therefore, on the level of the standards. The agency
believes that for Ford, the 20.5 mpg standard
balances the potentially serious adverse economic
consequences associated with market and tech-
nological risks against that company's opportimities
as the least capable manufacturer with a substan-
tial share of sales. The agency concludes, in view of
the statutory requirement to consider several fac-
tors, that the relatively small and uncertain energy
savings associated with setting a standard above
Ford's capability would not justify the economic
harm to that company and the economy as a whole.
The agency recognizes that a 20.5 mpg standard
is above the capabilities of Volkswagen and Lands
Motor Company. Given the limited remaining lead-
time for both companies and the limited financial
resources of Lands, the agency does not believe that
either company could change its product plans to
meet the 20.5 mpg standard. In the absence of some
type of alternative light truck standard which these
companies could meet (an issue which is addressed
further below), the companies would therefore be
limited to two options: paying the statutory penalties
associated with failure to comply with fuel economy
standards (to the extent credits are not available)
or drastic product actions which, in the case of
Lands, could include ceasing production. While the
agency appreciates these difficulties, it also con-
cludes that establishment of a standard less than
20.5 mpg would reduce or eliminate the incentives
for Ford to achieve its maximum capability and
essentially render meaningless any impact the light
truck CAFE program has on petroleum conserva-
tion. Given that Volkswagen and Lands Motor Com-
pany together represent less than one-half of one
percent of the light truck market and in light of the
above factors, NHTSA believes that it would be in-
appropriate to set industrywide standards based on
these manufacturers' capabilities. In light of the
statutory criteria, NHTSA concludes that the
petroleum savings associated with the 20.5 mpg
standard outweigh the difficulties to these two
companies.
A combined standard of 20.5 mpg was supported
by some manufacturers. Ford's comment on the
NPRM recommended a MY 1988 standard of 20.5
mpg. Ford noted that although the level of its recom-
mended standard is higher than the low end of its
estimated capability when all potential risks are
taken into account, it believes that the 20.5 mpg
level represents a reasonable balancing of the risks
and opportunities facing the company and, there-
fore, reflects its best estimate of Ford's maximum
feasible average fuel economy capability. Chrysler
stated that given the present circumstances and
uncertainties, it would not object if the agency sees
fit to carry over the present 1987 light truck CAFE
standard of 20.5 mpg to MY 1988.
GM commented that due to such uncertainties as
potential further mix shifts and increased imports,
beyond what it is currently projecting, a 20.5 mpg
standard might be too stringent. That company
stated that if its current forecasts prove to be un-
duly optimistic, it would then have to either petition
for a lower standard or resort to product restrictions
with attendant layoffs and negative impact on the
economy in order to remain in compliance.
NHTSA disagrees with this comment of GM. As
discussed above, the agency has concluded that GM
can take additional technological actions beyond
what it is now planning to achieve, a MY 1988
CAFE of 20.8 mpg to 21.1 mpg. If that company
now believes that there is a significant question
concerning whether its current product plan can
meet the 20.5 mpg standard, it can take the addi-
tional technological actions to ensure compliance.
Moreover, as GM stated elsewhere in its comment
and as noted above, product restrictions would oc-
cur only after incentives and available credits had
been applied.
The Center for Auto Safety (CFAS) urged that the
MY 1988 standard be set at 23.5 mpg. That com-
menter's request appears to have been based on the
manufacturers' projections cited in the NPRM, on
its assertion that the manufacturers' projections are
"considerably below true manufacturing potential,"
and on its contention that changing market condi-
tions will help light truck fuel economy rather than
cause it to deteriorate, as the percentage sales of
compact and more fuel-efficient light trucks is
expected to increase. CFAS also argued that GM
and Ford have had at least five years leadtime to
•
PART 533-PRE 92
introduce new models and technologies for the 1988
standard.
NHTSA disagrees with CFAS's arguments sup-
porting a 23.5 mpg standard. The agency's analysis
of changes in the manufacturers' projections is fully
discussed above. CFAS did not support its allega-
tion concerning manufacturers' projections being
below true manufacturing potential, other than to
reference a comment it has made in the agency's
ongoing passenger automobile fuel economy rule-
making. The agency has analyzed the data underly-
ing the manufacturers' light truck CAFE projections
and has no reason to give this allegation any
credence. While it is true that the percentage sales
of compact light trucks is expected to increase, the
agency agrees with a comment by Ford that this
shift is unlikely to cause any significant increase in
its CAFE because estimated sales of its products are
heavily weighted toward the larger vehicles. As
stated by that company, significantly increasing its
share of the compact truck market beyond projec-
tions would be difficult, since the Japanese manufac-
turers have emphasized that market. Ford also
pointed out that competitive reports indicate that
competition is expected to intensify in that market
as the Japanese work to strengthen their market
share at the expense of the domestic manufacturers.
NHTSA also disagrees with CFAS's argument that
GM and Ford have had at least five years leadtime
for the 1988 standard. Unlike the situation with
passenger automobile fuel economy standards,
where a 27.5 mpg standard is in place indefinitely
unless it is amended by the agency, no light truck
fuel economy standard is in place until it is estab-
lished by the agency.
As in past years, the agency has decided to con-
tinue setting 2WD and 4WD standards as an alter-
native to the combined standard. Separate 2WD/
4WD standards allow manufacturers greater flex-
ibility in planning to meet CAFE standards and do
not discriminate against firms with truck fleets
heavily weighted toward 4WD models.
NHTSA has concluded that AMC and GM are the
least capable manufacturers with substantial shares
of 4 WD light trucks, and has focused on these
manufacturers' capabilities in establishing the
separate 4WD standard. As discussed earlier in the
notice, the agency concluded that 19.5 mpg is AMC's
maximum 4WD fuel economy capability and that
GM's 4WD fuel economy capability could be as high
as 19.5 mpg. The final 4WD standard is being
established at 19.5 mpg.
AMC has traditionally been the manufacturer
primarily concerned about separate standards due
to the high percentage of 4WD light trucks in its
fleet. AMC requested in its comment that the 4WD
standard be set at 19.0 mpg. NHTSA has concluded,
however, that AMC can achieve a MY 1988 4WD
CAFE of 19.5 mpg by making relatively minor
changes in its product plan and thereby meet the
19.5 standard. While the agency recognizes that the
19.5 mpg standard will be challenging for AMC, it
believes that it is appropriate under the statutory
requirement for "maximum feasible" standards.
The agency notes that Chrysler has a lower 4WD
fuel economy capability than GM, AMC, or Ford.
Chrysler projects that its 4WD CAFE could be as
low as 17.4 mpg. However, in 1985, Chrysler's share
of the 4WD market was less than five percent. Thus,
that company did not have a substantial share of
4WD light truck sales. Moreover, since Chrysler can
meet the combined standard, it is unnecessary for
it to be able to meet the separate standards.
NHTSA has concluded that Ford is the least
capable manufacturer with a substantial share of
2WD light trucks, and has focused on that manufac-
turer's capabilities in establishing the separate 2 WD
standard. As discussed earlier in the notice, the
agency concluded that Ford's maximum 2 WD fuel
economy capability is 21.0 mpg. The final 2 WD
standard is being set at 21.0 mpg.
AMC requested in its comment that the 2WD
standard be set at 20.3 mpg. The company projects
its MY 1988 2WD CAFE at 21.3 mpg. NHTSA has
concluded, based on its analysis of that company's
projection, underlying product plan, and expected
market conditions, that AMC can meet the 2WD
separate standard of 21.0 mpg.
Volkswagen suggested as an alternative to
establishing a combined standard within its capa-
bility that the agency consider alternate special con-
sideration for limited product line truck manufac-
turers. In establishing the MY 1980-81 light truck
CAFE standards, the agency did establish a
separate standard in light of International
Harvester's (IH) limited product line. (See 43 FR
11995, March 23, 1978.) The agency noted that IH
had unique problems given its limited sales volume,
restricted product line, the fact that its engines were
derivatives of medium duty truck (above 10,000
pounds GVWR) engines, and the fact that it did not
have experience with state-of-the-art emission con-
trol technology which the other manufacturers had
obtained in the passenger automobile market. The
agency emphasized, however, that the separate class
PART 533-PRE 93
was being established for only two model years'
duration, concluding that IH should be able to
achieve levels of fuel efficiency in line with other
manufacturers within that time period either
through purchasing engines from outside sources or
by making improvements to current engines. The
agency does not believe that Volkswagen's situation
is similar to that of IH. While IH's difficulties were
related to being newly subject to the fuel economy
program, Volkswagen's CAFE difficulties are not.
Moreover, establishing a separate standard for
Volkswagen would be outside the scope of notice of
the NPRM.
The agency will address Lands Motor Company's
petition requesting a separate fuel economy stan-
dard for its precedent model in a separate notice.
Impact Analyses
1. Executive Order 12291
The agency considered the economic implications
of the fuel economy standards established by this
rule and determined that the rule is major within
the meaning of Executive Order 12291 and signifi-
cant within the meaning of the Department's
regulatory procedures. The agency believes that
many of the changed conditions since 1975, including
decontrol of oil, establishment of the Strategic
Petroleum Reserve, and diversification of the
sources of oil imports, ensure that the nation will
remain in a strong energy position, even if imports
should rise to earlier levels. The agency believes also
that the standards established by this notice can be
met without significant economic distortion. The
agency's detailed analysis of the economic effects
is set forth in its regulatory impact analysis. The con-
tents of that analysis are generally described in the
above sections of this preamble.
2. Environmental Impacts
The agency has analyzed the potential environ-
mental impacts of these light truck fuel economy
standards in accordance with the requirements of
the National Environmental Policy Act of 1969 and
concluded that the rule it is adopting will not
significantly affect the human environment. An En-
vironmental Assessment (EA) was prepared and
placed in the public docket in conjunction with the
NPRM and made available to the public for com-
ment. The EA analyzed the potential environmen-
tal effects for the range of standards proposed by
the NPRM. The EA stated that the agency expected
to make a finding that the rulemaking would not
have a significant impact on the human environ-
ment. No comments were received on the EA.
As indicated in the EA, any fuel savings that
might have resulted from the establishment of stan-
dards at the high end of the proposed range would
have been minimal. With respect to any possible ef-
fects on air pollution, the agency notes that a recent
letter to NHTSA from the Environmental Protec-
tion Agency (EPA), in another fuel economy
rulemaking, discussed a number of considerations
concerning why little change in air quality can be
expected from different levels of fuel economy stan-
dards. (Docket No. FE-85-01, Notice 2, Item 121.)
Among other things, the letter indicated that ex-
haust emissions will not change because EPA mobile
source standards for oxides of nitrogen (NOx), car-
bon monoxide (CO), and hydrocarbons (HC) are ex-
pressed in grams/mile. While the EPA mobile source
standard for lead (Pb) is expressed in grams per
gallons of gasoline, compliance with that standard
would not be affected by a change in fuel consump-
tion because MY 1988 light trucks must use unlead-
ed fuel. NHTSA concludes that little change in air
quality is expected as a result of the adoption of
these regulations.
Based on all available information, including the
analysis presented in the E A, the agency has deter-
mined that this rulemaking action will not have a
significant effect upon the environment. The agency
is therefore making a finding of no significant impact
(FONSI).
3. Facts on Small Entities
Pursuant to the Regulatory Flexibility Act, the
agency has considered the impact this rulemaking
action will have on small entities. I certify that this
action will not have a significant economic impact
on a substantial number of small entities. Therefore,
a regulatory flexibility analysis is not required for
this action. Only one light truck manufacturer,
Lands Motor Company, might be classed as a "small
business" under the Regulatory Flexibility Act. In
the case of small businesses, organizations and
governmental units which purchase light trucks,
those entities which purchase a 1988 truck might
achieve again in fuel economy as compared to a
situation in which there was no standard. The cost
impact of this rulemaking action is not high enough
to reduce the ability of these groups to purchase new
vehicles.
PART 533-PRE 94
Department of Energy Review
In accordance with section 502(j) of the Act, the
agency has submitted this rule to the Department
of Energy for review. The Department made no
unaccommodated comments.
List of Subjects in 49 CFR Part 533
Energy conservation, Gasoline, Imports, Motor
vehicles.
PART 533-[AMENDED]
In consideration of the foregoing, 49 CFR Part
533 is amended as follows:
1. The authority citation for Part 533 continues
to read as follows:
Authority: 49 U.S.C. 1657; 15 U.S.C. 2002; delega-
tion of authority at 49 CFR 1.50.
2. Table II in § 533.5(a) is revised to read as
follows:
S533.5 Requirements
(a) * * *
TABLE II
Combined
2-wheel drive
i-wheel drive
standard
light
trucks
light
trucks
Model
Captive
Captive
Captive
Year
imports
Others
imports
Others
imports
Others
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
1987
20.5
20.5
21.0
21.0
19.5
19.5
1988
20.5
20.5
21.0
21.0
19.5
19.5
3. § 533.5(d) is revised to read as follows:
(d) For model years 1982-88, each manufacturer
may:
(1) Combine its 2- and 4-wheel drive light trucks
(segregating captive import and other light trucks)
and comply with the combined average fuel economy
standard specified in paragraph (a) of this section; or
(2) Comply separately with the 2-wheel drive
standards and the 4-wheel drive standards
(segregating captive import and other light trucks)
specified in paragraph (a) of this section.
Issued on:
Diane K. Steed
Administrator
51 F.R. 15335
April 23, 1986
PART 533-PRE 95-96
•
•
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PREAMBLE TO AN AMENDMENT TO PART 533
Light Truck Average Fuel Economy Standards
Model Year 1989
[Docket No. FE-86-01; Notice 3]
ACTION: Final rule.
SUMMARY: This notice establishes new light truck
average fuel economy standards for model year
1989. The standards are required to be estab-
lished at the maximum feasible level under sec-
tion 502(b) of the Motor Vehicle Information and
Cost Savings Act. Based on its analysis, the
agency is establishing a combined average fuel
economy standard of 20.5 mpg for model year
1989 light trucks. Optional separate standards of
21.5 mpg for two-wheel drive light trucks and
19.0 mpg for four-wheel drive light trucks are also
established.
EFFECTIVE DATE: The amendments made by this
rule to the Code of Federal Regulations are effec-
tive April 3, 1987. The standards are applicable to
the 1989 model year.
SUPPLEMENTARY INFORMATION:
Background
On January 24, 1986, NHTSA published in the
Federal Register (51 FR 3221) a notice of proposed
rulemaking (NPRM) on the establishment of light
truck average fuel economy standards for model
years (MY) 1988 and 1989. The issuance of the
standards for those years 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 aver-
age fuel economy level" for each model year after
MY 1978. In determining the "maximum feasible"
level, the Secretary is directed to consider four
factors: technological feasibility, economic prac-
ticability, the effect of other Federal motor vehi-
cle standards on fuel economy, and the need of the
Nation to conserve energy. See 15 U.S.C. 2002(e).
The agency's January 1986 NPRM proposed
ranges of possible standards for all types of light
trucks, with the MY 1988 combined standard to
be set within the range of 20.5 mpg to 22.0 mpg,
and the MY 1989 combined standard to be set
within the range of 20.5 mpg to 22.5 mpg. As a
compliance alternative to the combined standard,
the agency also proposed separate standards for
two- and four-wheel drive vehicles. The agency
stated that in view of factual uncertainties, the
setting of standards outside the proposed ranges
was possible depending on the comments that
might be submitted.
NHTSA received comments on the NPRM from
General Motors, Ford, Chrysler, American
Motors, Volkswagen, the National Automobile
Dealers Association (NADA), the Center for Auto
Safety (CFAS), numerous employees of light truck
manufacturers, dealers, and private individuals.
On April 23. 1986, NHTSA published a final
rule in the Federal Register (51 FR 15335) estab-
lishing light truck fuel economy standards for
MY 1988. Based on all available information, in-
cluding that provided by commenters,\NHTSA set
the MY 1988 combined light truck fUel economy
standard at 20.5 mpg. Optional separate stand-
ards of 21.0 mpg for two-wheel drive (2 WD) light
trucks and 19.5 mpg for four-wheel drive (4WD)
light trucks were also established. The agency
indicated that a decision would be reached at a
later date with respect to the proposed MY 1989
standards.
Summary of Decision for MY 1989
NHTSA has now reached its decision for the
MY 1989 light truck average fuel economy stand-
ards. Based on its analysis, the agency is estab-
lishing a combined average fuel economy standard
of 20.5 mpg. Optional separate standards of 21.5
mpg for two-wheel drive (2WD) light trucks and
19.0 mpg for four-wheel drive (4WD) light trucks
are also established. The combined standard is at
the same le^ el as the MY 1988 standard. The op-
tional 2WD standai'd is 0.5 mpg higher than the
MY 1988 standard, while the optional 4WD
standard is 0.5 mpg lower than the MY 1988
standard.
PART 533-PRE 97
Manufacturer Capabilities for MY 1989
As part of its consideration of technological
feasibility and economic practicability, the agency
has evaluated the manufacturers' fuel economy
capabilities for MY 1989. In making this evalua-
tion, the agency has analyzed manufacturers' cur-
rent projections and underlying product plans and
has considered what, if any, additional actions the
manufacturers could take to improve their fuel
economy.
A. Manufacturer Projections
General Motors: As discussed in the NPRM,
General Motors (GM) projected in March 1985
that it could achieve a CAFE level of 23.1 mpg in
MY 1989. The agency adjusted that figure down-
ward to 23.0 mpg to correct errors in GM's
submission.
The NPRM noted that GM had emphasized the
following in its March 1985 submission:
All estimates and future product plans contained
in this submission are but a 'snapshot in time'.
As we have stated on a number of occasions . . . ,
changes in the economic outlook, in fuel avail-
ability, in fuel prices or in consumer preference
significantly affect GM's CAFE. The unpredic-
tability of the market, the unknown effect of
future light duty truck emission regulations
and the unproven results of future combina-
tions of technology cause CAFE projections to
be . . . tentative . . .
In GM's February 1986 comment on the NPRM,
the company lowered its CAFE projection for MY
1989 to a level no higher than 20.9 mpg. By com-
parison, GM projected at the same time that its
MY 1988 CAFE would be no higher than 20.7 mpg.
GM identified nine identifiable causes which
had reduced its MY 1989 CAFE by a total of 2.2
mpg. The company also indicated that its CAFE
had declined by an additional 0.3 mpg due to cer-
tain "miscellaneous" reasons. The decline was
partially offset by a certain change in model offer-
ings, which improved GM's CAFE by 0.3 mpg.
Some of the decline in GM's CAFE relates to
decisions by that company to cancel or defer cer-
tain product changes which it once planned. GM's
reasons for not making the changes relate to such
concerns as cost, results of market research, and
the unavailability of certain motor vehicle equip-
ment it planned to use on some trucks. Other
reasons for the decline include achieving , less
than the expected benefit from certain technolog-
ical changes, the purchase by consumers of more
options than once expected, certain changes to
meet consumer demand for higher performance, a
change in model offerings, and increased sales of
certain larger engines and heavier trucks. GM
indicated that 0.2 mpg of the decline is attrib-
utable to an error in the March 1985 submission.
(The details of the changes are subject to a claim
of confidentiality as confidential business infor-
mation whose release could cause competitive
harm. This is also true with respect to this
notice's discussion of the projections of other
manufacturers.)
GM's comment on the NPRM indicated that
uncertainties such as the future price of fuel,
small truck sales by foreign competitors and
potential less-than-anticipated gains through the
use of technology could result in its MY 1989
CAFE level being below its current projection of
20.9 mpg.
GM presented three possible scenarios to illus-
trate how factors such as these could influence its
MY 1989 CAFE. The first scenario assumed con-
stant rather than rising fuel prices and an eco-
nomic outlook which reflects the former price pat-
tern instead of the latter. While GM's basic MY
1989 CAFE projection assumed that fuel prices
(in constant 1984 dollars) would gradually rise
from $1.09 in MY 1987 to $1.16 in MY 1989, that
company's alternative scenario assumed that fuel
prices would remain at $1.09 for all three model
years. According to GM, there would be a reduced
incentive under this scenario for consumers to
buy smaller vehicles with more fuel efficient
powertrains, and the company would experience a
model and powertrain mix change estimated to
cause a 0.3 mpg to 0.4 mpg decline in its MY 1989
CAFE projection. GM's second scenario develops
that company's sensitivity to an unanticipated
increase in import light truck sales above its cur-
rent forecasts. According to that company, this
could result in a 0.3 mpg decline in its MY 1989
CAFE projection. GM's third scenario focuses on
the introduction of emission controls which will
cause heavy duty engines in trucks over 8500
pounds gross vehicle weight rating (GVWR) to be
equipped with catalytic converters and use unleaded
gasoline just as the trucks wih lower GVWR's
have been. This regulatory change creates the
#
•
•
PART 533-PRE 98
potential for a shift in consumer purchases from
vehicles which are just over 8500 pounds GVWR
and thus not subject to the fuel economy stand-
ards to vehicles which are between 7000 pounds
and 8500 pounds GVWR and within the scope of
those standards. According to GM, this potential
increase in the sales of the high GVWR light
trucks could reduce its CAFE projection below
20.9 mpg by approximately 0.1 mpg.
Ford: As discussed in the NPRM, Ford projected
in February 1985 that it could achieve a CAFE
level of up to 22.6 mpg in MY 1989. This number
was adjusted in the NPRM to 22.3 mpg, however,
in light of later technical information provided by
Ford. The primary reason for the reduction was
that actual test data regarding some programs
had indicated smaller fuel economy improvements
than projected. While the 22.3 mpg level was
similar to that projected by Ford for MY 1988, it
was 1.3 mpg higher than that company's projection
for MY 1987. The NPRM noted that 0.4 mpg of the
increase was attributable to mix shifts toward more
fuel-efficient vehicles, which the agency considered
unlikely given the recent and then expected con-
tinued declines in gasoline prices. Thus, if these
mix shifts were deleted, the upper end projection
for MY 1989 would be 21.9 mpg.
The NPRM noted that Ford had identified
several risks to its MY 1989 projection. These
included both- technological risks, i.e., risks that
technological programs might not achieve ex-
pected fuel economy gains, and mix shift risks,
i.e., risks that the sales mix of Ford's light truck
fleet might shift toward less fuel-efficient vehicles.
Ford identified additional technological risks
totalling 0.9 mpg and mix shift risks totalling 0.6
mpg, for a total risk of 1.5 mpg. However, the
agency had already incorporated 0.7 mpg in tech-
nological and sales mix risks in the 21.9 mpg
figure, reducing the remaining risk to 0.8 mpg.
Thus, if the events creating these risks occurred
simultaneously, the lower end figure for MY 1989
would have been 21.1 mpg as of the time of the
NPRM.
In Ford's February 1986 comment on the
NPRM, the company lowered its CAFE projection
for MY 1989 to a level between 20.4 mpg to 21.3
mpg. In explaining its lower projections. Ford
stated that ". . . recent development testing of
new hardware and technology has yielded lower
levels of fuel economy benefit than had been
predicted earlier in the program."
The drop in Ford's MY 1989 CAFE from the
21.9 mpg value used in the NPRM to the com-
pany's current maximum projection of 21.3 mpg
is attributable to technological reasons. The most
significant factor in the decline is a drop in pro-
jected fuel economy for Ford's 4.9 liter fuel injec-
tion program. A number of small factors, primarily
engine calibration issues, explain the remaining
decline. Some of the engine calibration changes
are being made to ensure compliance with emis-
sions standards.
Ford's 21.3 mpg projection is subject to both fur-
ther technological risks and mix shift risks. The
company identified technological risks of 0.5 mpg,
which are related to certain programs possibly
not achieving projected fuel economy levels and a
delay in introducing a technological improvement.
Ford also presented a mix risk scenario in which
sales were higher for standard trucks and lower
for compact trucks, resulting in a potential 0.4
mpg CAFE loss. Ford's 20.4 mpg to 21.3 mpg
range is explained by these risks. The company
also indicated that its CAFE could decline an
additional 0.2 mpg as a further mix shift risk if
gasoline prices remain below $1.00 per gallon on
a sustained basis.
Chrysler: As discussed by the NPRM, Chrysler
projected in August 1985 that it could achieve a
CAFE level of 23.3 mpg in MY 1989. This projec-
tion was 2.1 mpg higher than that company's
then latest MY 1987 projection and 1.0 mpg
higher than its MY 1988 projection. The NPRM
stated that the bulk of the improvement would be
attributable to technological improvements, espe-
cially transmission improvements. The NPRM
noted that Chrysler also expected slight mix
shifts toward smaller, more fuel-efficient trucks.
In March 1986, Chrysler provided new projec-
tions of 20.4 mpg to 21.3 mpg for MY 1987, 21.5
mpg to 22.3 mpg for MY 1988, and 21.8 mpg to
23.3 mpg for MY 1989. The company stated the
following:
There is considerable uncertainty associated
with predicting any specific single level of annual
CAFE for the 1987-89 time frame because we
are in the process of revising our long range
plan. For this reason, our new estimates for
model years 1987-89 are presented as ranges to
PART 533-PRE 99
indicate the effects of various marketing alter-
natives available to Chrysler. The high ends of
our ranges represent Chrysler's fuel economy
capabilities, given our current product plan.
These numbers are similar to those previously
submitted to [NHTSA], although 1987 estimates
are now much firmer due to actual test data
being available. The low ends of the ranges
represent results of a new analysis in which it
was assumed we would sell our products in a
completely free market with no attempt on our
part to force the sales mix to a desired fuel
economy target.
Both product plans contain the same fuel econ-
omy improving technologies and our new Dakota
N-Body truck previously described to you. Pro-
jected CAFE differences are solely a result of
mix shifts. . . Should international economic
conditions continue to change, even the low end
of these estimates may ultimately require mar-
ket forcing and/or product limiting actions by
Chrysler.
The 23.3 mpg estimate at the high end of
Chrysler's projection for MY 1989 is thus the
same mix of vehicles and technology as discussed
in the NPRM. The 21.8 mpg estimate at the low
end of that company's range for MY 1989 is based
on mix shifts toward larger, less fuel-efficient
trucks.
American Motors: In February 1985, American
Motors (AMC) projected a MY 1989 4WD CAFE
level of 21.0 mpg to 24.2 mpg, and a MY 1989
2WD CAFE level of 21.5 mpg to 24.2 mpg. These
projections, for which no supporting data were
provided, were the latest available to the agency
at the time the NPRM was issued. The NPRM
noted, however, that AMC had recently advised
NHTSA that it was revising its projections.
In AMC's February 1986 comment on the
NPRM, the company projected that its 4WD
CAFE level would be 19.4 mpg for MY 1989, and
its 2 WD CAFE level 21.3 mpg. These projections
would result in that company having a combined
CAFE estimate for MY 1989 of 19.9 mpg, which is
lower than that of the other domestic manufacturers.
NHTSA's analysis of the reasons for the decline
in AMC's projections indicated that the most sig-
nificant reason for the decline was a decision by
that company to introduce a new 4.0 liter six-
cylinder engine, beginning in the 1987 model
year, to replace the 2.8 liter six-cylinder engine it
had been purchasing from GM. The new engine
has 50 percent more horsepower and 47 percent
more torque than the GM engine.
In September 1986, NHTSA contacted the Envi-
ronmental Protection Agency to determine
whether that agency had MY 1987 certification
data for 4.0 liter AMC light trucks. EPA had
limited test data on the new engine which indi-
cated that the engine was achieving higher fuel
economy levels than AMC had projected in its
February 1986 submission. NHTSA then contacted
AMC to determine the impact of those higher fuel
economy levels on that company's MY 1989
CAFE projections. AMC indicated that, with the
revised fuel economy projections for the 4.0 liter
engine, its MY 1989 2WD CAFE rises from 21.3
to 22.6 mpg, and its MY 1989 4WD CAFE rises
from 19.4 mpg to 20.8 mpg. These revised projec-
tions result in a combined projection of 21.3 mpg.
Volkswagen: Volkswagen (VW) currently offers
only one light truck model, the Vanagon compact
bus. In February 1985, VW projected a CAFE level
of 21 mpg through MY 1990. In VW's March 1986
comment on the NPRM, the company provided a
MY 1989 CAFE projection of 19.1 mpg. VW stated
that, in response to consumer demand, it has had
to make performance improvements in the Vanagon
vehicles. The company also stated that it has in-
troduced a new 4WD version of the Vanagon, to
increase the utility of the vehicle to the consumer.
Other Manufacturers: Foreign manufacturers
other than VW compete only in the small vehicle
portion of the light truck market and are therefore
expected to achieve CAFE levels well above GM,
Ford, and Chrysler, which offer full ranges of
light truck models.
B. Possible Additional Actions to Improve MY
1988 CAFE
There are additional actions which, given suffi-
cient time and resources, manufacturers may be
able to take to improve their CAFE above the
levels which are currently projected for MY 1989.
These actions may be divided into three categories:
further technological changes to their product
plans (beyond what they are already planning), in-
creased marketing efforts, and product restrictions.
1. Further Technological Changes
Ford commented that it is unaware of any new
technology which could be executed within avail-
•
PART 533-PRE 100
able leadtime to improve its CAFE significantly.
Chrysler commented that "(i)t is important to rec-
ognize that the leadtime required to implement
improvements in engines, transmissions, aero-
dynamics and rolling resistance, is usually three
to four years." That company argued that "as of
today, it is too late in the engineering cycle to
design, develop, and implement any further major
technological CAFE improvements on 1988-89
model year light trucks."
In light of limited leadtime, the agency agrees
that it is too late at this time to initiate further
major technological improvements. Once a new
design is established and tested as feasible for
production, the leadtime necessary to design, tool,
and test components such as new body sheet-metal
subsystems for mass production is typically 22 to
29 months. Other potential major changes, such
as those cited by Chrysler, often take longer.
Leadtimes for new vehicles are typically at least
three years.
There may be sufficient leadtime for manufac-
turers to make more minor technological changes,
such as changes in axle ratios, refinement of
engine calibrations, and changes in horsepower.
In analyzing specific manufacturer capabilities
below, the agency has considered whether manu-
facturers can make these types of changes.
2. Increased Marketing Efforts
As discussed in the NPRM, the agency believes
that the ability to improve light truck CAFE by
marketing efforts is relatively small. Light trucks
are generally purchased for their work-performing
capabilities. This is particularly true for the
larger, less fuel-efficient light trucks. Since the
smaller light trucks cannot meet the needs of
many users, the manufacturers' abilities to use
marketing efforts to encourage consumers to pur-
chase smaller light trucks instead of larger light
trucks are limited.
As a practical matter, marketing efforts to im-
prove CAFE are largely limited to techniques
which either make fuel-efficient vehicles less
expensive or less fuel-efficient vehicles more
expensive. Moreover, the ability of a manufac-
turer to increase sales of fuel-efficient light trucks
depends in part on increasing its market share at
the expense of competitors or pulling ahead its
own sales from the future. The ability of domestic
manufacturers to make such sales increases is
also affected by the strong competition in that
market from Japanese manufacturers. While
Japanese manufacturers currently have an over-
all combined market share of about 20 percent of
light trucks, their share for the smaller, more
fuel-efficient pickup trucks is about 50 percent.
The agency also notes that the improved fuel ef
ficiency of all sizes of modern light trucks makes
it more difficult to sell the small light trucks on
the basis of significant operating cost savings.
The reason for this is that there are diminishing
returns in terms of fuel economy from purchasing
smaller light trucks as the fuel efficiency of larger
light trucks increases. The average fuel economy
of large pickup trucks rose from 13.1 mpg in 1975
to 18.4 mpg in 1985, and the average fuel economy
of large vans rose from 13.1 mpg to 17.5 mpg dur-
ing this time period. The average fuel economy of
small pickup trucks rose from 22.1 mpg to 26.2
mpg, and the average fuel economy of small vans
rose from 20.7 mpg to 23.9 mpg. (SAE Paper No.
850550, "Light Duty Automotive Fuel Economy . . .
Trends Thru 1985.") The fuel economy of large
pickup trucks and van has thus improved more
than the fuel economy of small pickup trucks and
vans, both in absolute and percentage terms.
Also, as gasoline prices have declined, there are
diminishing returns from purchasing more fuel-
efficient vehicles. For example, an improvement
in fuel efficiency from 20 mpg to 25 mpg at a
gasoline price of $1.50 per gallon would save a
truck owner about $150.00 per year, assuming
10,000 miles driven annually. However, at a
gasoline price of $0.85 per gallon, which more
closely reflects today's market, the annual sav-
ings drop to about $85.00. The financial savings
for smaller changes in fuel economy will, of
course, be even lower. Hence, an economically
rational consumer will not be as concerned with
improving fuel efficiency as gasoline prices
decline, making it most difficult for a manufac-
turer to market its most fuel-efficient vehicles.
A problem with pulling ahead sales is that the
manufacturers' CAFE levels for subsequent years
are reduced. For example, if a manufacturer in-
creases its MY 1989 CAFE by pulling ahead sales
of fuel-efficient light trucks from MY 1990, its
MY 1990 CAFE will decrease, compared with the
level it would have been in the absence of any
pull-ahead sales attributable to marketing efforts.
For this reason, a manufacturer carmot continually
increase its CAFE simply by pulling ahead sales.
PART 533-PRE 101
GM commented that "'(i)t would be difficult, if
not impossible, to predict any gains in CAFE
through marketing incentives based on present
and future projections of consumer purchasing
preferences, particularly in view of the uncertain
future of world oil price." Ford commented that
"because of the number of competitive entries in
the compact segment, potential countering actions
by each competitor, and the price/cost advantage
of imported models, . . . marketing actions cannot
be relied upon to produce the desired effect."
Chrysler commented that "(t)ruck buyers are
much more sensitive to functional needs in mak-
ing their purchase decisions and in many cases
they must consider their product selection as a
longer term decision than a passenger car cus-
tomer." That company stated that "(Ouel efficiency
must often be downgraded in priority for many
truck buyers because vehicle function is often
paramount to the purchaser's livelihood." The
National Automobile Dealers Association com-
mented that because light trucks are most often
purchased for capability and practicability
reasons, a decision to buy a larger, more powerful
vehicle cannot be changed by marketing incen-
tives. That organization emphasized that there
are no available alternatives at any price for a
consumer that needs a heavier light truck.
Given all of these factors, the agency does not
believe that the domestic manufacturers can sig-
nificantly improve their CAFE levels by increas-
ing marketing efforts.
3. Product Restrictions
As discussed in the NPRM, manufacturers
could improve their CAFE by restricting their
product offerings, e.g., limiting or deleting par-
ticular larger light truck models or larger dis-
placement engines. However, such product
restrictions could have significant adverse
economic impacts on the industry and the econ-
omy as a whole. In the final rule reducing the
light truck fuel economy standard for MY 1985,
the agency concluded that sales reductions to a
manufacturer of 100,000 to 180,000 units, with
resulting employment losses of 12,000 to 23,000,
"go beyond the realm of 'economic practicability'
as contemplated in the Act. . . ." 49 FR 41252,
October 22, 1984. These impacts were believed by
the agency to be a reasonable projection of the im-
pacts to Ford of restricting the availability of
larger trucks and engines in order to achieve a 1.5
mpg average fuel economy benefit.
In addition to the adverse impacts on the auto-
motive industry, a wide range of businesses could
be seriously affected to the extent they could not
obtain the light trucks they need for business use.
Also such product restrictions could run counter
to the congressional intent that the CAFE pro-
gram not unduly limit consumer choice. See H.R.
Rep. No. 93-340, 94th Cong., 1st Sess. 87 (1975).
GM commented that CAFE standards that are
set at too stringent a level could require full-line
manufacturers to consider product restrictions as
a last resort. GM stated that this would occur only
after incentives had been applied and other rea-
sonable steps taken, including the application of
carryforward credits. That company stated that
product restrictions would be harmful to the vehi-
cle manufacturer, its employees and suppliers, to
the consumer and to the nation's economy. Ford
commented that establishing light truck fuel
economy standards above manufacturers' capa-
bility could result in substantial sales decline,
adverse employment effects, and a threat of sub-
stantial economic hardship. That company stated
that should the MY 1989 standard be set above its
capability, it may be forced to restrict the avail-
ability of certain V-8 engines in full-size light
trucks, vans, Club Wagons and large utilities,
and possibly delete some of its full-size products
entirely. The company stated that market research
data show that the vehicles that would most likely
be restricted are used for a combination of com-
mercial as well as personal uses.
Given all of these considerations, NHTSA con-
cludes that significant product restrictions should
not be considered as part of manufacturers' capa-
bilities to improve CAFE.
C. Manufacturer-Specific Capabilities
As discussed later in this notice, NHTSA is
directed to take "industrywide considerations"
into account in setting fuel economy standards. In
carrying out this direction, the agency focuses on
the capabilities of the least capable manufacturers
with substantial shares of light truck sales. In
analyzing manufacturer-specific CAFE capabil-
ities for MY 1989, the agency has focused on GM
and Ford. Those manufacturers are the two "least
capable manufacturers" with substantial shares
of combined light truck sales and 2WD sales.
•
PART 533-PRE 102
Also, GM is the least capable manufacturer with
a substantial share of 4WD sales.
General Motors: As discussed above, while GM
projected in March 1985 that it could achieve, a
combined CAFE level of 23.1 mpg for MY 1989, it
now projects a CAFE level no higher than 20.9
mpg. The agency's analysis indicated that some of
the reasons for the decline in GM's projected MY
1988 CAFE level were within that company's con-
trol. Other reasons for the decline in GM's pro-
jected MY 1989 CAFE level were outside the com-
pany's control, including changing sales mixes of
vehicles and engines due to consumer demand
and achieving lower-than-anticipated gains from
the introduction of new technologies.
In the final rule for MY 1988, on a similar
record, NHTSA concluded that some product plan
changes within GM's control that reduced its fuel
economy capability could not be reversed within
available leadtime. The agency's analysis also
concluded that GM could still incorporate certain
other of the product actions it identified in its
March 1985 submission, thereby improving its
CAFE. NHTSA stated the following:
The agency believes that GM has time to reverse
its plans for increasing horsepower and that
doing so would not have a significant effect on
sales. While GM claimed that this action was
necessary to compete in the marketplace, its
supporting documentation did not provide a suf-
ficient rationale for the agency to change its
conclusion that reversing this action would not
result in competitive or other economic harm.
Achieving lower horsepower levels would have
the effect of increasing GM's CAFE by an addi-
tional 0.2 mpg. In addition, GM indicated in its
NPRM comments that two other planned actions
(the details of which are subject to a claim of
confidentiality) will reduce its CAFE by 0.2
mpg. However, the agency believes that those
actions can be undertaken without adversely
affectmg CAFE. 51 FR 15339.
NHTSA thus concluded that GM's MY 1988
CAFE could be as high as 21.1 mpg, although this
number was subject to mix shift risks.
While the actions discussed above would raise
GM's MY 1988 CAFE by a total of 0.4 mpg, they
would raise GM's MY 1989 CAFE by only 0.2
mpg. This is due to different mixes of the affected
vehicles for the two model years.
For this final rule, NHTSA has concluded that
these actions should not be considered as part of
GM's MY 1989 CAFE capability. With respect to
GM's decision to increase certain horsepower, the
agency has concluded that this is an appropriate
market-related action for the purpose of compet-
ing with certain vehicles produced by Ford,
Chrysler, AMC, Nissan and Toyota. Beginning
with MY 1986, Nissan introduced a 3.0 liter V-6
engine of 140 horsepower in its compact pickups.
Ford increased the displacement of its V-6 engine
to 2.9 liters and raised the horsepower to 140, and
Toyota added turbocharging to its 4-cylinder
engine to raise the horsepower to 135. This was
followed in MY 1987 by the introduction of a
slightly larger, mid-size pickup by Chrysler using
a new 3.9 liter V-6 engine of 124 horsepower and
the replacement by AMC of the lower horsepower
version of the GM 2.8 liter engine with its own 4.0
liter engine, with 173 horsepower. Thus, by MY
1987, most small pickup manufacturers had in-
creased the horsepower of the 6-cylinder or turbo-
charged engines that they are offering in compact
and mid-size pickups. In addition to obtaining
new data related to 1987 models, the agency also
examined sales data, not available at the time of
the MY 1988 final rule, which showed that 1986
sales of these higher horsepower vehicles were 15
percent higher than anticipated. Therefore,
NHTSA concludes that market forces necessitate
GM's increase in horsepower, and the agency will
not consider the effects of reversing that decision
as part of GM's capability.
Moreover, NHTSA now has new data relevant
to the two actions which it believed GM could
take without an adverse impact on that
company's CAFE. The two actions, which were
also incorporated in certain of GM's MY 1986
trucks, were changes in axle ratios and increased
purchases by consumers of certain optional equip-
ment which could affect aerodynamic drag. The
available evidence before NHTSA at the time of
the MY 1988 final rule suggested that these
changes were not having an impact on GM's
CAFE. However, the agency's analysis of GM's
1986 mid-model year report, which provides later
and more complete data, does indicate an adverse
impact on CAFE. Also, in a letter dated March 27,
1986, GM provided additional data concerning in-
creased purchases of the optional equipment.
NHTSA now concludes that these actions by GM
PART 533-PRE 103
are market-related and do have an adverse
impact on that company's CAFE.
Based on its analysis, NHTSA concludes that
there is insufficient leadtime for GM to introduce
additional new progi-ams or technologies to increase
its MY 1989 CAFE above its projection of 20.9
mpg. Moreover, the agency believes it is unlikely
that GM can achieve that projected CAFE level.
The sales mix included in GM's 20.9 mpg projec-
tion is comparable, on balance, to the mix of
models and engines that company experienced for
MY 1986. However, production mixes for the entire
1986 model year do not fully reflect the dramatic
fuel price reductions which took place during the
early part of calendar year 1986. Also, the fuel
prices on which GM based its MY 1989 projec-
tions are higher than those currently believed by
NHTSA to be likely. Based on its analysis, the
agency agrees with GM s comment that it faces a
mix shift risk of up to 0.4 mpg due to lower gaso-
line prices and concomitant shifts toward larger
trucks and engines for MY 1989.
NHTSA also agrees with GM's comment that
the introduction of emission controls for heavy
duty engines may cause some increase in sales of
trucks with GVWR just under 8500 pounds, thereby
adversely affecting GM's CAFE. The agency is
not including a risk associated with increased
import light trucks in GM's capability. While
manufacturers face a continuing challenge to
meet possible increased light truck competition
from abroad, the agency does not believe this
issue, in the particular case of MY 1989 light
truck sales, is likely to adversely affect domestic
CAFE values. Imported light trucks are subject to
a 25 percent tariff, which substantially offsets the
cost advantages of foreign producers. Also, the
rising value of the yen against the dollar makes it
rtiore difficult for the Japanese manufacturers to
increase their market shares at the expense of the
domestic manufacturers. Moreover, the agency
does not believe that mix shift risks and potential
risks related to increased imports are additive,
since lower fuel prices should enhance the domes-
tic manufacturers' competitive positions. NHTSA
believes that the issue should instead be recog-
nized as a limitation on manufacturers' abilities
to increase their market share of compact trucks
beyond their present projections.
Taking account of these risks, NHTSA concludes
that GM's combined capability is 20.5 mpg. The
agency has also evaluated GM's fuel economy
capability for its 2WD and 4WD fleets for MY
1989. GM's current projections for those fleets are
21.6 mpg and 19.2 mpg, respectively. The agency
believes it is unlikely that GM can achieve these
projected CAFE levels, for the reasons discussed
above. Thus, based on its analysis, NHTSA con-
cludes that GM's MY 1989 capability for its 2WD
fleet is 21.5 mpg, and its capability for its 4WD
fleet is 19.0 mpg.
Ford: As discussed above, while at the time of
the NPRM the agency believed that Ford might
be able to achieve a MY 1989 CAFE level of as
high as 21.9 mpg, the company now projects a
CAFE level of 20.4 mpg to 21.3 mpg. The agency's
analysis indicates that virtually all of the decline
in Ford's CAFE was due to reasons beyond that
company's control. The bulk of the decline in
Ford's projected MY 1989 CAFE level is attrib-
utable to lower-than-anticipated fuel economy
levels for the 4.9 liter fuel injection program.
Given the aggressive fuel economy goals of the
program when it was approved, the agency does
not consider it surprising that the goal has not
been, and is not likely to be, fully attained. More
stringent EPA emissions requirements also added
to the difficulty of meeting the original fuel
economy goal.
The agency does not consider it likely that Ford
can achieve the 21.3 mpg upper end of its range of
MY 1989 CAFE values. The sales mix underlying
that projection is biased slightly more toward
more fuel-efficient models and engines than Ford
has experienced for MY 1986. With a likelihood
that fuel prices will be lower in MY 1989 than
those assumed by Ford in developing its projec-
tions and that continued lower fuel prices will en-
courage consumers to shift toward less fuel-
efficient models and engines, the agency believes
that Ford's actual MY 1989 sales mix will experi-
ence some further shift toward larger trucks and
engines. Thus, the agency agrees with Ford's
assessment that it faces mix shift risks of 0.4 to
0.6 mpg. As discussed above. Ford also faces tech-
nological risks of 0.5 mpg. Taking all of these
risks into account. Ford's maximum achievable
CAFE could be as low as 20.2 mpg. The agency
believes it likely that some but not all of these
risks will occur and concludes that Ford's MY
1989 capability is 21.0 mpg. As discussed below,
this level reflects Ford's best estimate of its max-
#
PART 533-PRE 104
imum feasible average fuel economy capability,
and is the level it recommended for the combined
standard.
The agency has also evaluated Ford's 2WD and
4WD fuel economy capabilities. Since the com-
pany's projected 4WD CAFE of 20.4 mpg is higher
than those projected by GM and Chrysler, the
agency did not focus on Ford in establishing the
separate 4WD standard. Ford's 2WD projection of
21.7 mpg is similar to that of GM and below that
of Chrysler and AMC. With the consideration of
the risks to Ford's projected 2WD CAFE, the
agency concludes that company's 2WD CAFE
capability is 21.5 mpg.
As with GM, NHTSA conclud«3 that there is in-
sufficient leadtime for Ford to introduce addi-
tional new programs or technologies to increase
its MY 1989 CAFE.
Other Federal Standards
A. Safety Standards
As discussed by the NPRM, several recent and
proposed changes in Federal safety requirements
may affect CAFE. These include several amend-
ments to NHTSA's lighting standard, which per-
mit reductions in aerodynamic drag and slight
weight savings; an amendment to the agency's oc-
cupant crash protection standard to promote the
comfort and convenience of safety belts, and a pro-
posal to extend the applicability of the agency's
standard concerning steering control rearward
displacement to additional light trucks.
The NPRM stated that while the agency has
estimated that passenger car fuel economy could
be increased by 0.4 to 0.9 percent by using aero-
dynamic headlamps, it is likely that the potential
fuel economy improvement for light trucks by
adoption of this feature is less. The reason for this
is that the basic shape of light trucks is often dic-
tated by load carrying capability or other func-
tional attributes, thereby making it more difficult
to reduce aerodynamic drag. Ford commented that
it agrees with the agency's conclusion in the
PRIA that the potential for CAFE improvement
from vehicle aerodynamics is minimal due to the
higher frontal area and drag coefficients inherent
in light trucks compared with passenger cars. GM
commented that aerodynamic headlamps will not
have an impact on light truck CAFE in the
1988-89 timeframe. That company also noted
that truck designs which included improved aero-
dynamics through the use of lower profile head-
lamps and more rounded sheet metal were not
well received by the public in recent design clinics.
The NPRM cited the PRIA's conclusion that the
effect of the comfort and convenience require-
ments on light truck CAFE will be negligible,
since both the number of affected vehicles and
weight impact are small. GM, Ford and Chrysler
agreed that these requirements will not signifi-
cantly affect CAFE.
With respect to the proposal to extend the ap-
plicability of the agency's standard on steering
control rearward displacement, the NPRM cited
the PRIA's similar conclusion that CAFE would
not be significantly affected since the number of
affected vehicles is believed to be small and the
required modifications minimal. GM disagreed
with this conclusion, stating that the standard
would primarily affect the older model lines in its
fleet and that significant mass increases may
result from required vehicle changes. That com-
pany stated that the magnitude of the mass in-
creases associated with the vehicle changes has
not been determined, but may be relatively large
and could negatively affect CAFE. Ford com-
mented that the Econoline is its only vehicle an-
ticipated to have significant potential for weight
increase due to this proposal. It stated that since
baseline testing has not been completed, specific
corrective actions have not been identified and the
weight effect of these changes remains an open
issue. NHTSA currently anticipates that any final
rule concerning this proposal would have an effec-
tive date of September 1, 1989, or later and
therefore should not impact manufacturers' MY
1989 CAFE levels, significantly, if at all.
B. Environmental Standards
The NPRM cited several final and proposed
changes in environmental standards which may
affect CAFE.
The Environmental Protection Agency (EPA)
published a proposal on July 1, 1985 (50 FR
27188), to provide test adjustment credits to light
truck manufacturers for changes made in test
procedures. Assuming that EPA's final rule is
along the lines of the proposal, the rulemaking is
not likely to have any significant effect on the
manufacturers' projections discussed above.
The EPA requirement for control of diesel par-
ticulate matter became more stringent in MY
19L 7. NHTSA's NPRM noted that in the preamble
PART 533-PRE 105
to the final rule establishing MY 1987 light truck
fuel economy standards, the agency concluded
that any impact of the diesel particulate require-
ment on fuel economy would be very small, i.e.,
much less than 0.1 mpg. GM commented that the
standard will have a negative impact on its CAFE
but that the impact will be small since diesel
sales have declined. According to that company,
the maximum impact on its CAFE in the MY
1988-89 timeframe is estimated to be 0.05 mpg.
AMC commented that more stringent standards
are reducing diesel engines, not solely because of
technological difficulties, but because with the
low sales volume it would be impossible to recover
the engineering costs associated with develop-
ment of control systems. That company argued
that the impact on CAFE of a more stringent
emissions standard is the total removal of a fuel-
efficient engine from the market, not just an in-
cremental loss in fuel economy due to meeting
more stringent standards.
After analyzing the comments, the agency con-
tinues to believe that there will be little CAFE ef-
fect from the more stringent particulate standard
since manufacturers do not plan on offering sig-
nificant volumes of diesel engines that would
require changes. The agency agrees with AMC
that when volumes for an engine family drop
below certain levels, it may become economically
unattractive to spend the money necessary to cer-
tify compliance with the emissions standards.
However, this is a business decision and not a
direct result of the more stringent requirements
to control emissions.
The EPA requirement for control of oxides of
nitrogen (NOx) becomes more stringent in MY
1988. As noted in NHTSA's NPRM, EPA esti-
mates that with the use of three-way catalyst
technology, there will be no net loss in fuel effi-
ciency and possibly even small gains. Moreover,
since the EPA regulation provides for averaging
compliance with the more stringent particulate
standard and the oxides of nitrogen standard,
manufacturers have greater flexibility to help
ensure that there are little or no attendant fuel
economy penalties.
GM commented that the recalibration required
to meet the 1988 NOx standard decreases its light
truck CAFE 0.3 mpg to 0.35 mpg from the level
attainable if the standard were not changed. The
company stated that this reduction assumes
across-the-board use of closed loop throttle body
injection and three-way catalysts for gasoline
vehicles, and has been factored into its CAFE pro-
jections. Ford stated that it does not believe that
EPA's overall assessment that there will be no
net loss in fuel efficiency associated with the NOx
standards is applicable to its vehicles. Ford argued
that paired fuel economy data from its MY 1985
Federal and California vehicles show a fuel econ-
omy penalty of 1.3 percent to 5.3 percent (0.4 to
1.2 mpg) between the versions having the same
control technologies. (California vehicles were re-
quired to meet a MY 1985 NOx standard that was
more stringent than either the current or MY
1988 Federal standard.) In a subsequent submis-
sion dated March 26, 1986, Ford clarified its posi-
tion, stating that the claimed penalty was actually
a reduction in the potential benefit of new tech-
nology which would have accrued if it had not
been employed to offset the change in emissions
standards.
NHTSA believes that GM's and Ford's argu-
ments about a fuel economy penalty associated
with the more stringent NOx standards are con-
sistent with EPA's position presented in the
NPRM. That position is that with the use of three-
way catalyst technology, the new NOx standard
will not cause any net loss in fuel efficiency, com-
pared to the fuel efficiency levels under the cur-
rent NOx standard. There might even be small
gains as a result of the new standard. The losses
to which GM and Ford refer are actually "gains
foregone" in the context of EPA's analysis, i.e.,
the loss is the difference in fuel economy capabil-
ity of a closed loop three-way catalyst system
calibrated to meet the current and new NOx
standards. Thus, by adopting three-way catalyst
technology, the manufacturers avoid any losses in
fuel economy associated with the new NOx stand-
ards but do not achieve the gains that would be
associated with such technology in the absence of
the new standards.
AMC commented that other emission-related
considerations are the increase in the useful life
interval, limited maintenance intervals, and war-
ranty liability. That company argued that because
of these restrictions, manufacturers must reduce
compliance/warranty risks by utilizing current
technology with proven durability in the field.
AMC stated that this has a direct effect on deci-
sions to adopt newer fuel-efficient technology,
•
PART 533-PRE 106
especially for the lower volume manufacturers,
until after the technology has proven its durability
in the field for 11 years/120,000 miles. AMC did
not provide any data concerning how these types
of considerations affect its CAFE. As a general
matter, NHTSA believes it would be inappro-
priate to assume that manufacturers need to wait
11 years before deciding to adopt new technology
for purposes of emissions and/or fuel economy.
Manufacturers can instead use a combination of
short-term testing that acts as a surrogate for real
time testing and engineering judgment to make
appropriate decisions concerning the adoption of
new technology.
On September 8, 1986, EPA published an ad-
vance notice of proposed rulemaking (ANPRM)
concerning more stringent HC exhaust emissions
standards for light-duty trucks. EPA indicated
that compliance with such standards could be re-
quired as early as MY 1989. The original comment
closing date for the ANPRM was October 8, 1986,
but the comment period was later extended to
November 21, 1986. At this point, it is unclear
what, if any, impact the proposed rule would have
on fuel economy. If EPA should issue a final rule
that affects MY 1989 fuel economy, NHTSA will
consider at that time whether any action is
appropriate.
Ford commented that EPA is expected to pro-
pose requiring on-board refueling vapor control
systems and an increase in the nominal Reid
vapor pressure of certification gasoline (fuel
volatility level), which could be effective as early
as MY 1989. NHTSA will consider the fuel econ-
omy implications of these changes if and when
EPA takes action.
The California Air Resources Board (CARB) at
its April 24-25, 1986, public hearings adopted
more stringent NOx standards for compact
trucks. Beginning in MY 1989, 50 percent of light
trucks weighing from 0 to 4000 pounds inertia
weight must meet a 0.4 gpm NOx standard. For
models 1990 through 1993, 85 percent of compact
light trucks must certify to the 0.4 mpg NOx
standard. Ford, in a letter to NHTSA dated
December 12, 1986, has claimed a 1990-91 CAFE
risk of 0.05 mpg due to this phased-in NOx re-
quirement. The effect on MY 1989 would be
smaller, given the phase-in.
NHTSA is not aware of any plans on the part of
EPA to promulgate noise regulations applicable
to MY 1989 light trucks and therefore does not
anticipate any attendant fuel economy penalties.
Need to Conserve Energy
Since 1975, when the Energy Policy and Con-
servation Act was passed, this nation's energy
situation has changed significantly. For example,
oil markets have been deregulated and the
Strategic Petroleum Reserve has been established.
In 1977, the United States imported 46.4 per-
cent of its oil needs and the value of imported
crude oil and refined petroleum products was $67
billion (stated in 1984 dollars). While the import
share of total petroleum demand declined after
that year, the cost continued to rise to a 1980
peak level of $93.2 billion (1984 dollars). By 1985,
the import share had declined to 28.7 percent at a
cost of $46.7 billion (1984 dollars). During the
first 10 months of 1986, the net import share rose
somewhat, to 33.3 percent. (The dollar value of
1986 imports was not available at the time this
notice was prepared.)
Moreover, imports from OPEC sources have
declined, from a high of 6.2 million barrels per
day and 70.3 percent of all imports in 1977 to 1.8
million barrels per day and 36.2 percent of imports
in 1985. During the first 10 months of 1986, OPEC
imports increased to 2.7 million barrels per day,
representing 45.7 percent of total imports, but re-
mained well below 1977 levels. As imports have
shifted to non-OPEC sources, such as Mexico,
Canada and the United Kingdom and as this
country builds up its strategic stockpile, the
United States' petroleum market has become less
vulnerable to the political instabilities of some
OPEC countries, as compared to the situation in
the mid-1970's. The level of OPEC imports, how-
ever, does not by itself indicate the degree of U.S.
vulnerability to an oil supply disruption caused
by political instabilities in some OPEC countries.
The market for crude oil is worldwide, and a supply
disruption anywhere could lead to an increase in
world price.
Overall, the nation is much more energy inde-
pendent than it was a decade ago, when Congress
established the fuel economy standards program.
From 1975 to 1984, energy efficiency in the econ-
omy improved by 21 percent (1984 Annual Energy
Review, Energy Information Administration
(EIA), U.S. Department of Energy, p. 47). Domes-
tic oil production was 5 percent higher in 1986
PART 533-PRE 107
than it was in 1975, the value of the nation's im-
ported oil bill declined 35 percent between 1980
and 1985, and the amount of imported oil from
OPEC is 56 percent lower than the peak of 1977.
As a percentage share of GNP, the net oil import
bill fell from 2.8 percent in 1980 to 1.2 percent in
1985. In addition, the price of oil is now fully
decontrolled, permitting consumers to make
choices in response to market signals and allow-
ing the market to adjust quickly to changing con-
ditions. The Strategic Petroleum Reserve now
contains over 500 million barrels that can be used
to ameliorate the effect of supply interruptions.
Thus, by any measure, the nation is in a stronger,
and more efficient, energy position than it was a
decade ago.
According to Energy Information Administration
(EIA) and Data Resources, Inc. (DRI), projections,
however, domestic production is expected to decline
from a stable level of 10.6 MMB/D to between 7.5
MMB/D (DRI) and 8.3 MMB/D (EIA) by 1995. Net
imports are expected to rise from 4.2 MMB/D to
between 7.7 MMB/D (EIA) and 9.9 MMB/D (DRI)
by 1995. NHTSA thus recognizes that available
projections indicate a general consensus that im-
ports may approach or exceed 50 percent of U.S.
petroleum use by 1995. Future projections about
petroleum imports are, of course, subject to great
uncertainty. Indeed, oil imports are very difficult
to project beyond a year or two. For example, the
EIA's 1977 Annual Report to Congress projected
that net oil imports by the U.S. would, in the
"reference case," reach 11 million barrels per day
by 1985. Net imports in 1985 actually turned out
to be 4.2 million barrels per day, less than half
the level predicted in 1977.
GM's comment on the NPRM stated that the ef-
fect of "the deregulation of the oil industry and
the existence of the Strategic Petroleum Reserve
as well as continued conservation and the devel-
opment of alternative energy sources, such as
methanol, has been to place the U.S. in a much
more secure energy position. That commenter
urged that it is "important that NHTSA take
these developments into account in explaining
the 'need of the nation to conserve energy.'"
Chrysler commented that it believes that the
need to conserve petroleum-based energy should
remain a national priority, despite the transient
period of falling fuel prices we are now experi-
encing. That company stated that there is every
reason to expect that oil will again be in short
supply, even within the lifetime of vehicles pro-
duced in the 1988-89 models years.
The Center for Auto Safety commented that the
nation is facing a future of greater reliance on
imported petroleum to fuel a vehicle fleet which
includes an increasing share of light trucks. That
organization argued that the Iraq-Iran war and
other Middle East instabilities continue to
threaten our national security, and cited a study
by the National Academy of Sciences noting that
the oil in the Strategic Petroleum Reserve will
equal a decreasing number of days, supply in
future years.
The prospect of increasing oil imports does raise
concerns about national security and the total
cost of imported oil. Quite apart from the issue of
whether oil imports are likely to increase in the
next decade, petroleum is a vital natural resource
which is nonrenewable. The level of imports taken
by itself, however, does not measure the vulner-
ability of the U.S. in these respects. The Nation's
ability to handle a major oil supply disruption
depends, among other factors, on the size and
timely use of the Strategic Petroleum Reserve, on
the extent to which energy markets are free of
price and allocation controls, on fuel switching
and substitution possibilities throughout the
economy, and on the stocks held by other oil
importing nations.
MY 1988 light trucks meeting the 20.5 mpg
standard established by this rule will be more
fuel-efficient than the average vehicle in the cur-
rent light truck fleet in service, thus making a
positive contribution to petroleum conservation.
In addition, NHTSA believes that if imports do
once again reach the 50 percent level, the Nation
will remain in a much stronger energy position
than was the case in the mid-1970's. The Nation's
sources of oil imports are more diverse and less
vulnerable to disruption, the Nation's energy effi-
ciency is much higher, there is greater ability to
substitute alternative sources of energy, and the
absence of price controls permits the market to
respond more easily to changes in supply and
demand.
Determining the Maximum Feasible
Average Fuel Economy Level
As discussed above, section 502(b) requires that
PART 533-PRE 108
light truck fuel economy standards be set at the
maximum feasible average fuel economy level. In
making this determination, the agency must con-
sider the four factors of section 502(e): techno-
logical feasibility, economic practicability, the
effect of other Federal motor vehicle standards on
fuel economy, and the need of the Nation to con-
serve energy.
A. Interpretation of "Feasible"
Based on dictionary definitions and judicial
interpretations of similar language in other
statutes, the agency has in the past interpreted
"feasible" to refer to whether something is capable
of being done. The agency has thus concluded in
the past that a standard set at the maximum
feasible average fuel economy level must: (1) be
capable of being done and (2) be at the highest
level that is capable of being done, taking account
of what manufacturers are able to do in light of
available technology, economic practicability,
how other Federal motor vehicle standards affect
average fuel economy, and the need of the Nation
to conserve energy. In this rulemaking, as in
earlier rulemakings, NHTSA has considered and
weighed all four statutory factors of section 502(e)
and has not merely adopted a level based on what
was technologically capable of being done.
B. Industrywide Considerations
The statute does not expressly state whether
the concept of feasibility is to be determined on a
manufacturer-by-manufacturer basis or on an
industrywide basis. Legislative history may be
used as an indication of congressional intent in
resolving ambiguities in statutory language. The
agency believes that the below-quoted language
provides guidance on the meaning of "maximum
feasible average fuel economy level."
The Conference Report to the 1975 Act (S. Rep.
No. 94-516, 94th Cong., 1st Sess. 154-5 (1975)),
states:
Such determination [of maximum feasible
average fuel economy level] should therefore
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 dif-
ficulties of individual manufacturers. Such dif-
ficulties, however, should be given appropriate
weightjn setting the standard in light of the
small number of domestic manufacturers that
currently exist, and the possible implications
for the national economy and for reduced com-
petition association (sic) with a severe strain on
any manufacturer. . . .
It is clear from the Conference Report that Con-
gress did not intend that standards simply be set
at the level of the least capable manufacturer.
Rather, NHTSA must take industrywide consid-
erations into account in determining the max-
imum feasible average fuel economy level.
NHTSA has consistently taken the position
that it has a responsibility to set light truck
standards at a level that can be achieved by
manufacturers whose vehicles constitute a sub-
stantial share of the market. See 49 FR 41251,
October 22, 1984. The agency did set the MY 1982
light truck fuel economy standards at a level
which it recognized might be above the maximum
feasible fuel economy capability of Chrysler,
based on the conclusion that the energy benefits
associated with the higher standard would out-
weigh the harm to Chrysler (45 FR 20871, 20876;
March 31, 1980). However, as the agency noted in
deciding not to set the MY 1983-85 light truck
standards above Ford's level of capability,
Chrysler had only 10-15 percent of the light
truck domestic sales, while Ford had about 35 per-
cent. (45 FR 81593, 81599; December 11, 1980).
C. Setting the MY 1989 Standards
Based on the analysis described above and on
manufacturer projections, the agency concludes
that manufacturers can achieve the combined
fuel economy levels in the following table:
Approximate
Manufacturer
Market Share
Combined CAFE
Chrysler
13.0%
21.8-23.3 mpg
AMC
5.0%
23.3 mpg
Ford
25.0%
*21.0 mpg
GM
33.0%
20.5 mpg
Volkswagen
0.5%
19.1 mpg
*AMC's projection is unadjusted for risks.
As indicated above, foreign manufacturers
other than Volkswagen only compete in the small
PART 533-PRE 109
vehicle portion of the light truck market and are
therefore expected to achieve CAFE levels well
above GM, Ford and Chrysler, which offer full
ranges of light truck models.
NHTSA has concluded that among the manu-
facturers with a substantial share of combined
light truck sales, GM is the least capable manu-
facturer, with a MY 1989 combined fuel economy
capability of 20.5 mpg.
The setting of maximum feasible fuel economy
standards, based on consideration of the four
required factors, is not a mere mathematical exer-
cise but requires agency judgment. In setting the
MY 1989 standards, the agency believes that the
current very low gasoline prices affect both the
benefits of differing levels of average fuel economy
standards and the difficulties of individual auto-
mobile manufacturers facing higher standards,
i.e., both of the considerations NHTSA must
balance in setting maximum feasible standards
taking industrywide considerations into account.
(See the language of the Conference Report
quoted above.)
NHTSA has concluded that 20.5 mpg is the
maximum feasible combined standard for the
1989 model year. This level balances the poten-
tial petroleum savings associated with higher
standards against the difficulties of individual
manufacturers facing potentially higher standards.
The main benefit from setting higher fuel econ-
omy standards is the potential additional petroleum
savings which would result. Since significantly
lower gasoline prices result in reduced consumer
demand for higher fuel economy, individual
manufacturers may have less incentive, and ability,
to improve their average fuel economy. This fact
explains GM's difficulty in marketing techno-
logical improvements which increase fuel economy
and Chrysler's current reconsideration of its prod-
uct mix for future model years. There may, of
course, be counterbalancing motivations for
achieving higher fuel economy, such as a need or
desire to earn credits for exceeding fuel economy
standards.
The 20.5 mpg standard will be challenging for
GM, without causing significant economic distor-
tion, and act as an incentive for that company to
achieve its maximum fuel economy capability.
Since GM produces a third of all light trucks sub-
ject to fuel economy standards, a standard set at
its level can make a substantial contribution to
petroleum conservation.
NHTSA does not believe that a standard set at a
level above GM's capability would be consistent
with the requirement that standards be set tak-
ing industrywide considerations into account,
given that company's market share. Even if the
MY 1989 standard could be set at a level above
GM's capability, however, the agency believes
that it clearly could not be set above both Ford's
and GM's capabilities, since those companies'
combined market share approaches 60 percent.
As noted previously, the agency estimate of
Ford's maximum capability for MY 1989 is 21.0
mpg. Thus, any higher standard than 20.5 mpg
could not exceed that value.
The precise effects on petroleum conservation of
a standard set at Ford's projected capability are
uncertain, although the effects can be bounded.
The maximum theoretical additional energy sav-
ings associated with a standard set at that higher
level can be determined by comparing hypothetical
situations where GM and Ford would have com-
bined average fuel economy levels of 21.0 mpg
versus 20.5 mpg. Since most other manufacturers
in the industry project MY 1989 CAFE above that
of Ford's capability, a standard set at 21.0 mpg
would not be expected to affect the petroleum con-
sumption of trucks manufactured by that part of
the industry. The difference in total gasoline con-
sumption between these two hypothetical situa-
tions, over the lifetime of the MY 1989 fleet,
would be 429 million gallons. The maximum
yearly impact on U.S. gasoline consumption'
would be 49.5 million gallons, or roughly five
hundredths of one percent of total motor vehicle
gasoline consumption.
The agency believes, however, that any actual
gasoline savings associated with a higher standard
would be much less. While Ford would have an
added incentive to achieve its maximum fuel
economy capability, it is not clear in light of possi-
ble carryforward/carryback credits whether this
would actually occur. GM could not likely improve
its CAFE other than by restricting sales of its
larger light trucks and engines. To the extent
that would-be purchasers of such vehicles and
engines transferred their purchases to Ford and
Chrysler without those companies otherwise
changing their product plans, there could be little
or no effect on petroleum consumption.
•
PART 533-PRE 110
While the agency recognizes that a higher
standard could have some effect on gasoline con-
sumption, it concludes that the effect would be
much less than the theoretical maximum noted
above and could be negligible.
A higher standard than 20.5 mpg could result in
serious economic difficulties for GM. NHTSA
believes that the first potential fuel-efficiency
enhancing actions that GM or any other manufac-
turer would consider in response to a higher
standard would primarily consist of marketing
actions. For the reasons discussed earlier in this
notice, however, the agency does not believe that
marketing actions can be relied upon to signifi-
cantly improve fuel economy. Assuming that such
marketing actions were unsuccessful in whole or
in part, GM would likely have to engage in prod-
uct restrictions, including limiting the sales of
larger engines and/or vehicles to improve its fuel
economy. Such product restrictions could result in
adverse economic consequences for GM, its em-
ployees, and the economy as a whole and unduly
limit consumer choice, especially with regard to
the load carrying needs of light truck purchasers.
The agency believes that the current situation
of very low gasoline prices can create significant
difficulties for individual manufacturers facing
higher CAFE standards. As gasoline prices fall,
consumer demand shifts toward larger vehicles
and more powerful engines. While the magnitude
of such shifts is limited to some extent by the fact
that trucks are purchased largely with respect to
work-performing capabilities, lower gasoline
prices can nonetheless result in mix shifts which
lower manufacturers' CAFE. The large magni-
tude of the recent drop in gasoline prices makes it
particularly difficult for manufacturers such as
GM to attempt to use marketing efforts to over-
come such shifts in consumer demand.
NHTSA is particularly concerned about the
impact of overly stringent CAFE standards on
American jobs. In assessing this issue, NHTSA
estimated the sales and job effects associated with
the product restrictions that would be required to
raise GM's CAFE by 0.5 mpg. As discussed in the
agency's Final Regulatory Impact Analysis, such
product restrictions could result in a sales loss to
GM of 156,000 light trucks, which could translate
into 9,180 lost jobs at GM and an additional 9,180
to 18,350 lost jobs in supplier companies.
Given GM's one-third share of the light truck
market, its capability has a significant effect on
the level of the industry's capability and, there-
fore, on the level of the standards. The agency
believes that for GM, the 20.5 mpg standard
balances the potentially serious adverse economic
consequences associated with market and techno-
logical risks against that company's oppor-
tunities as the least capable manufacturer with a
substantial share of sales. The agency concludes,
in view of the statutory requirement to consider
several factors, that the relatively small and
uncertain energy savings associated with setting
a standard above GM's capability would not justify
the economic harm to that company, American
workers, and the economy as a whole.
The agency recognizes that a 20.5 mpg standard
is above the capabilities of Volkswagen. In the
absence of some type of alternative light truck
standard which it could meet (an issue which is
addressed further below), Volkswagen would
therefore be limited to two options: paying the
statutory penalties associated with failure to com-
ply with fuel economy standards (to the extent
credits are not available) or drastic product
actions. While the agency appreciates these dif-
ficulties, it also concludes that establishment of a
standard less than 20.5 mpg would reduce or
eliminate the incentives for GM to achieve its
maximum capability and essentially render
meaningless any impact the light truck CAFE
program has on petroleum conservation. Given
that Volkswagen represents less than one-half of
one percent of the light truck market and in light
of the above factors, NHTSA believes that it would
be inappropriate to set industrywide standards
based on its capability. In light of the statutory
criteria, NHTSA concludes that the petroleum
savings associated with the 20.5 mpg standard
outweigh the difficulties to this company.
Manufacturer commenters suggested a number
of different levels for the combined standard.
Chrysler stated that given the present circum-
stances and uncertainties, it would not object if
the agency sees fit to carry over the present 1987
light truck CAFE standard of 20.5 mpg to MY
1988-89. AMC stated that it should be considered
the "primary manufacturer for the purpose of set-
ting standards" and recommended a combined
standard of 20.0 mpg. GM argued that due to such
uncertainties as potential further mix shifts and
PART533-PRE 111
increased imports, beyond what it is currently
projecting, a 20.5 mpg standard might be too
stringent. That company stated that if its current
forecasts prove to be unduly optimistic, it would
then have to either petition for a lower standard
or resort to product restrictions with attendant
layoffs and negative impact on the economy in
order to remain in compliance. Ford's comment
on the NPRM recommended a MY 1989 standard
of 21.0 mpg. Ford noted that although the level of
its recommended standard is higher than the low
end of its estimated capability when all potential
risks are taken into account, it believes that the
21.0 mpg level represents a reasonable balancing
of the risks and opportunities facing the company
and, therefore, reflects its best estimate of Ford's
maximum feasible average fuel economy capability.
NHTSA notes that AMC recommended a 20.0
mpg standard before revising upward its MY
1989 projection from 19.9 mpg to 21.3 mpg. While
the 21.3 mpg figure does not include any adjust-
ment to account for risks, the agency concludes
that AMC can achieve a CAFE higher than the
20.5 mpg level of the MY 1989 standard.
The agency disagrees with GM's suggestion
that a standard of 20.5 mpg might be too strin-
gent in light of potential further mix shifts and
increased imports. As discussed above, GM cur-
rently projects a MY 1989 CAFE of 20.9 mpg,
based on a mix of models and engines that is com-
parable to what it experienced for MY 1986. The
agency believes that a standard of 20.5 mpg ade-
quately provides for the risks facing that com-
pany. With respect to Ford's suggestion for a
standard of 21.0 mpg, the agency notes that it sets
standards based on industrywide considerations.
The Center for Auto Safety (CFAS) urged that
the MY 1989 standard be set at 24.0 mpg. That
commenter's request appears to have been based
on the manufacturers' projections cited in the
NPRM, on its assertion that the manufacturers'
projections are "considerably below true manu-
facturing potential," and on its contention that
changing market conditions will help light truck
fuel economy rather than cause it to deteriorate,
as the percentage sales of compact and more fuel-
efficient light trucks is expected to increase.
CFAS also argued that GM and Ford have had at
least five years leadtime to introduce new models
and technologies for the 1989 standard.
NHTSA disagrees with CFAS's arguments sup-
porting a 24.0 mpg standard. The agency's
analysis of changes in the manufacturers' projec-
tions is fully discussed above. CFAS did not sup-
port its allegation concerning manufacturers'
projections being below true manufacturing
potential, other than to reference a comment it
made in the agency's passenger automobile fuel
economy rulemaking. The agency has analyzed
the data underlying the manufacturers' light
truck CAFE projections and has no reason to give
this allegation any credence. While it is true that
the percentage sales of compact light trucks is ex-
pected to increase, the agency does not believe
that this shift is likely to cause any significant
increase in the CAFE of GM and Ford, since esti-
mated sales of their products are heavily weighted
toward the larger vehicles. Ford indicated in its
comment that significantly increasing its share of
the compact truck market beyond projections
would be difficult, since the Japanese manufac-
turers have emphasized that market. The agency
agrees with that comment and believes that the
same is true for GM. NHTSA also disagrees with
CFAS's argument that GM and Ford have had at
least five years leadtime for the 1989 standard.
Unlike the situation with passenger automobile
fuel economy standards, where a 27.5 mpg stand-
ard is in place indefinitely unless it is amended by
the agency, no light truck fuel economy standard
is in place until it is established by the agency.
As in past years, the agency has decided to con-
tinue setting 2WD and 4WD standards as an
alternative to the combined standard. Separate
2WD/4WD standards allow manufacturers greater
flexibility in planning to meet CAFE standards
and do not discriminate against firms with truck
fleets heavily weighted toward the generally less
fuel efficient 4WD models.
NHTSA has concluded that GM is the least
capable manufacturer with a substantial share of
4WD light truck sales, and has focused on its
capability in establishing the separate 4WD
standard. As dis assed earlier in the notice, the
agency concluded that 19.0 mpg is that company's
maximum 4WD fuel economy capability. The
final 4WD standard is being established at 19.0
mpg.
AMC has traditionally been the manufacturer
primarily concerned about separate standards
due to the high percentage of 4WD light trucks in
PART533-PRE 112
its fleet. AMC requested.in its comment that the
4WD standard be set at 19.0 mpg. Moreover, that
company subsequently raised its 4WD projection
from 19.4 mpg to 20.8 mpg. Therefore, AMC will
have no difficulty meeting the selected standard.
The agency notes that Chrysler has a lower
4WD fuel economy capability than GM, Ford and
AMC. Chrysler projects that its 4WD CAFE could
be as low as 17.5 mpg. However, in MY 1986,
Chrysler's share of the 4WD market was less
than 3 percent. Thus, that company did not have
a substantial share of 4WD light truck sales.
Moreover, since Chrysler can meet the combined
standard, it is unnecessary for it to be able to
meet the separate standards.
NHTSA has concluded that GM and Ford are
the least capable manufacturers with substantial
shares of 2WD light truck sales, and has focused
on those manufacturers' capabilities in establish-
ing the separate 2WD standard. As discussed
earlier in the notice, the agency concluded that
those companies' maximum, 2WD fuel economy
capabilities are 21.5 mpg. The final 2WD standard
is being set at 21.5 mpg.
AMC requested in its comment that the 2WD
standard be set at 20.3 mpg. The company subse-
quently raised its MY 1989 2WD CAFE projection
from 21.3 mpg to 22.6 mpg. NHTSA has concluded,
based on its analysis of that company's projection,
underlying product plan, and expected market
conditions, that AMC can meet the 2WD separate
standard of 21.5 mpg.
Volkswagen suggested as an alternative to
establishing a combined standard within its capa-
bility that the agency consider alternate special
consideration for limited product line truck
manufacturers. In establishing the MY 1980-81
light truck CAFE standards, the agency did
establish a separate standard in light of Interna-
tional Harvester's (IH) limited product line. See
43 FR 11995, March 23, 1978. The agency noted
that IH had unique problems given its limited
sales volume, restricted product line, the fact that
its engines were derivatives of medium duty truck
(above 10,000 pounds GVWR) engines, and the
fact that it did not have experience with state-of-
the-art emission control technology which the
other manufacturers had obtained in the pas-
senger automobile market. The agency emphasized,
however, that the separate class was being estab-
lished for only two model years' duration, con-
cluding that IH should be able to achieve levels of
fuel efficiency in line with other manufacturers
within that time period either through purchas-
ing engines from outside sources or by making
improvements to current engines. The agency
does not believe that Volkswagen's situation is
similar to that of IH. While IH's difficulties were
related to being newly subject to the fuel economy
program, Volkswagen's CAFE difficulties are
not. Moreover, establishing a separate standard
for Volkswagen would be outside the scope of
notice of the NPRM.
In consideration of the foregoing, 49 CFR Part
533 is amended as follows:
Table II in § 533.3(a) is revised to read: S533.5
Requirements.
(a) * * *
§ 533.5(d) is revised to read:
(d) For model years 1982-89, each manufac-
turer may:
(1) Combine its 2- and 4-wheel drive light trucks
(segregating captive import and other light
trucks) and comply with the combined average
fuel economy standard specified in paragraph (a)
of this section; or
(2) Comply separately with the 2-wheel drive
standards and the 4-wheel drive standards
(segregating captive import and other light
trucks) specified in paragraph (a) of this section.
PART533-PRE 113
TABLE II
Model
Combined
2-wheel drive
4-wheel drive
Year
standard
light trucks
light trucks
Captive
Others
Captive
Others
Captive
Others
imports
imports
imports
1982
17.5
17.5
18.0
16.0
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
1987
20.5
20.5
21.0
21.0
19.5
19.5
1988
20.5
20.5
21.0
21.0
19.5
19.5
1989
20.5
20.5
21.5
21.5
19.0
19.0
Issued on: Feb 27, 1987
Diane K. Steed
Administrator
52 F.R. 6564
March 4, 1987
PART533-PRE 114
PREAMBLE TO AN AMENDMENT TO PART 533
Light Truck Average Fuel Economy Standards
Model Years 1990-91
(Docket No. FE-87-01 ; Notice 2)
ACTION: Final rule.
SUMMARY: This notice establishes average fuel
economy standards for light trucks manufactured in
Model Years 1990 and 1991. The issuance of the
standards is required by Title V of the Motor Vehicle
Information and Cost Savings Act. As in past years,
the agency is establishing a combined standard for
all light trucks, as well as alternate standards for
two-wheel drive (2WD) and four-wheel drive (4WD)
vehicles. Manufacturers may comply with either the
combined standard or the alternate standards. For
Model Year 1990, the combined standard is 20.0 mpg,
and the alternate standards are 20.5 mpg for 2WD,
and 19.0 mpg for 4WD. For Model Year 1991, the com-
bined standard is 20.2 mpg, and the alternate stand-
ards are 20.7 mpg for 2WD, and 19.1 mpg for 4WD.
EFFECTIVE DATE: The amendments to the CAFE
standards are effective May 5, 1988. The standards
apply to the 1990 and 1991 model years.
Background
In December 1975, during the aftermath of the
energy crisis created by the oil embargo of 1973-74,
Congress enacted the Energy Policy and Conserva-
tion Act. Congress included a provision in that Act
establishing the automotive fuel economy regulatory
program. That provision added a new title. Title V,
"Improving Automotive Efficiency," to the Motor
Vehicle Information and Cost Saving Act. Title V
provides for the establishment of average fuel econ-
omy standards for cars and light trucks.
Section 502(b) of the Act requires the Secretary of
Transportation to issue light truck fuel economy •
standards for each model year. The Act provides that
the fuel economy standards are to be set at the max-
imum feasible average fuel economy level. In deter-
mining the maximum feasible average fuel economy
level, the Secretary is required under section 502(e)
of the Act to consider four factors: technological feas-
ibility, economic practicability, the effect of other
Federal motor vehicle standards on fuel economy, and
the need of the nation to conserve energy. (Respon-
sibility for the automotive fuel economy program was
delegated by the Secretary of Transportation to the
Administrator of NHTSA. (41 FR 25015, June 22,
1976)
Light truck average fuel economy standards have
been established previously for model years through
MY 1989. Recent rulemaking proceedings for light
truck standards have reflected the fact that while
manufacturers have implemented a number of tech-
nological changes to improve their light truck fuel
economy, the manufacturers' fuel economy improve-
ment capabilities have been limited by strong con-
sumer demand for larger light trucks and larger
displacement engines. The consumer demand for
these vehicles is attributable largely to low gasoline
prices and the vehicles' superior work-performing
capabilities.
In light of higher consumer demand for larger
trucks and engines, NHTSA found it necessary to
reduce the MY 1985 light truck fuel economy stand-
ard from 21.0 mpg to 19.5 mpg (with corresponding
changes in the alternative two- and four-wheel drive
standards). (49 FR 41250, October 22, 1984) In that
same final rule, the agency established a MY 1986
standard of 20.0 mpg. NHTSA subsequently set the
MY 1987-89 standards at 20.5 mpg (50 FR 40398,
October 3, 1985; 51 FR 15335, April 23, 1986; 52 FR
6564, March 4, 1987) This series of level standards
reflects the effects of consumer demand.
On August 5, 1987, the Secretary of Transportation
submitted to Congress draft legislation that would:
(1) repeal the corporate average fuel economy stand-
ards for new model years, (2) retain and update the
Environmental Protection Agency's (EPA) fuel econ-
omy labeling requirements, and (3) revise EPA's
automotive fuel economy testing procedures to re-
quire that results simulate conditions of actual use.
The legislation was proposed in light of a number of
considerations, including the fact that the energy con-
servation goals that Congress sought to achieve by
the CAFE program largely have been realized. An-
other is that a considerable body of economic opinion
holds, however, that it was primarily the decontrol
of the price of oil and changes in gasoline prices, not
the fuel economy standards, that led to the increase
PART 533-PRE 115
in fuel efficiency over the past decade. The nation
might well have achieved similar results simply
through the natural operation of the market. More-
over, it is clear that CAFE standards cause serious
economic distortions in the marketplace. For exam-
ple, while the standards exert pressure on manufac-
turers to sell a mix of vehicles to meet the required
CAFE level, they do nothing to ensure that consumers
will want to buy the mix the manufacturers offer. In-
deed, if standards are set at too high a level, the
manufacturers may only be able to meet the stand-
ards by restricting the sale of their larger vehicles and
engines, resulting in the loss of American jobs and
less choice for consumers. Also, CAFE standards place
U.S. companies at a competitive disadvantage. The
Secretary noted that there is strong evidence that the
market will continue to provide the proper balancing
of fuel efficient vehicles versus other vehicle charac-
teristics such as size, safety, and performance, and
concluded that the most sensible public policy is to
repeal the CAFE standards program.
Until the draft legislation becomes law, NHTSA
will continue to administer the existing law. Thus,
this notice adopts CAFE standards for light trucks
for Model Years (MY) 1990 and 1991.
NHTSA Questionnaire and Proposed Rule
On September 16, 1986, NHTSA published in the
Federal Register a questionnaire requesting data on
manufacturers' light truck fuel economy capabilities
for MY 1990-1991. The agency requested specific in-
formation concerning manufacturers' product plans
for MY 1990 and 1991. All of the American manufac-
turers responded to the questionnaire. One foreign
manufacturer, Volkswagen, submitted a comment,
indicating that there were no current forecasted
changes to its 1987 product plan.
After analyzing the responses to the agency's ques-
tionnaire and reviewing other available data, >rHTSA
published a notice of proposed rulemaking (NPRM)
on the establishment of light truck average fuel
economy standards for MY 1990 and 1991. (See the
November 12, 1987, issue of the Federal Register, 52
FR 43366.) The agency's November 1987 NPRM pro-
posed ranges of possible standards for light trucks,
with the combined standard for all light trucks within
a range of 20.0 mpg to 21.0 mpg. As a compliance
alternative to the combined standard, the agency also
proposed separate standards for two-wheel (2WD) and
four-wheel (4WD) drive vehicles. For 2WD vehicles,
the agency proposed a range of 20.5 mpg to 21.5 mpg,
and for 4WD vehicles a range of 19.0 mpg to 20.0 mpg.
The agency stated that in view of factual uncertain-
ties, the setting of standards outside the proposed
ranges was possible, depending on the comments that
might be submitted.
The agency received comments from Greneral Mo-
tors, Ford, Chrysler (which now includes AMC),
Volkswagen, the Department of Energy, and the Na-
tional Automobile Dealers Association. These com-
ments, and the agency's response to the comments
will be discussed in subsequent sections on manufac-
turer projections and manufacturer capabilities.
Summary of Decision for MY's 1990 and 1991
Based on its analysis, the agency is establishing a
combined average fuel economy standard for 1990 at
20.0 mpg, and a standard for 1991 of 20.2 mpg. Al-
ternative separate standards of 20.5 mpg for 2WD
light trucks and 19.0 mpg for 4WD are established
for MY 1990, and standards of 20.7 mpg for 2WD and
19.1 mpg for 4WD are established for MY 1991.
Elements of Maximum Feasible Average
Fuel Economy
The Need of the Nation to Conserve Energy
Since 1975, when the Energy Policy and Conserva-
tion Act was passed, this nation's energy situation has
changed significantly. Oil markets were deregulated
in 1981, permitting consumers to make choices in
response to market signals and allowing the market
to adjust quickly to changing conditions. The U.S.
Strategic Petroleum Reserve (SPR) was built to en-
sure a supply of oil during any major supply disrup-
tion. In December 1987, the SPR contained 541 mil-
lion barrels of oil, stored principally in underground
caverns, that could be pumped back to the surface if
needed.
Petroleum Imports and Prices. Since the 1975-80
period, significant progress has been made in the
area of energy imports. In 1977, net oil imports were
46 percent of total supply, compared to 35 percent in
1986. The value of imported oil was $99 million in
1980, compared to a value of $38 million in 1986 (1986
dollars). (Note: these figures, and all later referenced
figures in this document represent the most current
data available to the agency.)
Gasoline prices declined dramatically until Decem-
ber 1986, when prices began to increase somewhat.
While substantially lower oil prices in 1986 were
welcomed by consumers, the lower prices increase
concerns about the U.S. dependence on imported
petroleum, particularly from the Middle East. Since
the U.S. is a high cost producer of oil, relative to the
rest of the world, lower prices make operation of some
domestic wells unprofitable and reduce the incentives
for future exploration. Also, lower prices increase
consumer demand for oil. Since practically all of the
world's excess production capacity is in OPEC coun-
tries, these factors contribute to increased levels of
OPEC imports. In December 1986 and June 1987,
OPEC, through agreement for production control,
PART 533-PRE 116
achieved a price of $18 a barrel. This price continued
through most of 1987, when prices slipped slightly
due to some members exceeding production. It is ex-
pected that oil prices will remain near $18 a barrel
during 1988.
Imports from OPEC were 36 percent of total imports
in 1985 and 46 percent of total imports in 1986, as
compared to 60 percent in 1975. In addition, even
though the nation's volume of net imports increased
0.3 MMB/D during the first eleven months of 1987
(from the 1986 level of 4.29 MMB/D of 1986), OPEC's
share of imports has remained at 46 percent. On
balance, these factors indicate progress is being made.
The current supply of oil appears more secure while
the percent of imports attributable to OPEC oil has
remained steady. Much of this progress is attributable
to successful energy conservation efforts, both within
and outside the transportation sectors of the economy.
Continued Need for Progress. Despite the progress
which has been made, the current energy situation
and emerging trends point to the continued impor-
tance of oil conservation. Oil continues to account for
well over 40 percent of U.S. energy use, and 97 per-
cent of the energy consumed in the transportation
sector. While the U.S. is the second-largest oil pro-
ducer, it contains only four percent of the world's
proved oil reserves. Moreover, proved reserves have
declined from a peak of 39.0 billion barrels in 1970
to 28.4 billion barrels in 1985.
According to 1986 Energy Information Administra-
tion (EIA) projections, domestic production is expected
to decline from 10.3 MMB/D in 1986 to between 8.0
and 9.1 MMB/D in 1995 and between 6.9 and 9.1
MMB/D in 2000, depending on the price of oil. (Data
available for the first eleven months of 1987 indicate
domestic production at 10.0 MMB/D.) Net imports are
projected to increase from 5.3 MMB/D in 1986 to be-
tween 6.4 and 9.6 MMB/D in 1995 and between 7.3
and 11.9 MMB/D in 2000. Thus, as a percentage of
total U.S. petroleum use, EIA expects imports to rise
from a 1986 level of 35 percent to between 41 and
55 percent of total supply in 1995 and between 45 and
63 percent in 2000. NHTSA notes, however, that
future projections about petroleum imports are sub-
ject to great imcertainty. For example, the EIA's 1977
Annual Report to Congress projected that net oil im-
ports by the U.S. would, in the "reference case," reach
11 MMB/D by 1985. Net imports in 1986 actually
were 5.4 MMB/D, less than half the level predicted
in 1977. (Data available for the first eleven months
of 1987 indicate net imports at 5.8 MMB/D.) The level
of oil imports remains an issue for the nation as a
whole. In 1986, the U.S. imported $368.7 billion worth
of goods and exported $224.4 billion, resulting in a
deficit of $144.3 billion. To the extent the level of oil
imports remains steady or decreases there is a posi-
tive effect on the nation's balance of trade problem.
In March 1987, the Department of Energy sub-
mitted a report to the President entitled "Energy
Security." NHTSA believes that the following quota-
tion from tha't report represents a useful summary of
the current energy situation and national security:
Although dependence on insecure oil supplies is
. . . projected to grow, energy security depends
in part on the ability of importing nations to re-
spond to oil supply disruptions; and this is im-
proving. The decontrol of oil prices in the United
States, as well as similar moves in other coun-
tries, has made economies more adaptable to
changing situations. Furthermore, the large
strategic oil reserves that have been established
in the United States (and to a lesser extent, in
other major oil-importing nations) will make it
possible to respond far more effectively to any
future disruptions than has been the case in the
past.
The cuirent world energy situation and the out-
look for the future include both opportunities
and risks. The oil price drop of 1986 showed how
consumers can be helped by a more competitive
oil market. If adequate supplies of oil and other
energy resources continue to be available at
reasonable prices, this will provide a boost to the
world economy. At the same time, the projected
increase in reliance on relatively few oil sup-
pliers implies certain risks for the United States
and the free world. These risks can be summa-
rized as follows: If a small group of leading oil
producers can dominate the world's energy
markets, this could result in artificially high
prices (or just sharp upward and downward price
swings), which would necessitate difficult econ-
omic adjustments and cause hardships to all con-
sumers. Revolutions, regional wars, or aggres-
sion from outside powers could disrupt a large
volume of oil supplies from the Persian Gulf, in-
flicting severe damage on the economies of the
United States and allied nations. Oil price in-
creases precipitated by the 1978-79 Iranian rev-
olution contributed to the largest economic re-
cession since the 1930's. Similar or larger events
in the future could have far-reaching economic,
geopolitical, or even military implications.
The Role of Light Trucks in Energy Conservation.
Total energy consumed by commercial, industrial,
and transportation use sectors of the economy peaked
in 1979, at 78.9 quadrillion Btu's, fell to a low of 70.5
quadrillion Btu's in 1983 and rose to 74.3 quadrillion
Btu's in 1986. In 1986, petroleum accounted for 43
percent of all energy consumed by these three sectors.
In the first eleven months of 1987, the transportation
sector accounted for 63 percent of all petroleum con-
sumed, with light trucks playing a growing role in
this consumption.
Light truck registrations nearly doubled between
1973 and 1986 and light truck sales are projected to
PART 533-PRE 117
increase 21 percent over the 1987-2000 period, com-
pared to 14 percent for passenger cars. The light
truck fleet's share of total oil consumption increased
steadily from 6.4 percent in 1973 to 9.0 percent in
1980 and 12.1 percent in 1986. This increase in the
light truck fleet's share of fuel consumption took
place even as the average fuel economy of the on-
road fleet of light trucks increased from an esti-
mated 10.5 mpg in 1973 to 12.9 mpg in 1986. Clearly,
light truck fuel economy will be an increasingly im-
portant determinant of the nation's level of petro-
leum consumption.
In its comments on the agency's NPRM, the Depart-
ment of Energy (DOE) indicated that light trucks are
driven farther annually (11,016 miles versus 9,560
miles) and last longer (14.9 years versus 10.9 years)
than passenger cars. From this information, NHTSA
has derived that the MY 1987 light truck fleet will
consume 91 percent as much fuel as the MY 1987
passenger car fleet, even though light truck sales
were 44 percent of the passenger car total.
All of these factors result in the conclusion that im-
proved light truck fuel economy contributes to the na-
tion's efforts at conserving fuel. Light trucks meeting
the standards established by this rulemaking will
continue to exceed the average fuel economy of the
current light truck fleet in service, and will make a
positive contribution to petroleum conservation.
Effect of Other Federal Standards.
In determining the maximum feasible fuel economy
level, the agency must take into consideration the
potential effects of other Federal standards. The fol-
lowing section discusses other government regula-
tions — both in process and recently completed — that
may have an impact on fuel economy capability.
Safety Standards. The agency has evaluated the
potential impact on fuel economy of its safety stand-
ard rulemakings in the following areas: Federal Mo-
tor Vehicle Safety Standard (FMVSS) 208, Occupant
Crash Protection; FMVSS 204, Steering Control Rear-
ward Displacement; and FMVSS 108, Lamps, Reflec-
tive Devices and Other Associated Equipment.
FMVSS 208. As noted in the CAFE NPRM, the
agency published a proposed rule on April 12, 1985,
which would extend to light trucks FMVSS 208's dy-
namic testing requirements for manual lap/shoulder
belts installed at the front outboard seating positions.
As proposed, the standard would require dynamic
testing using test dummies in 30 mile per hour bar-
rier crashes to measure the level of protection offered
by the vehicle's manual lap/shoulder belts. The pro-
posed effective date was September 1, 1989, which
would include MY 1990 and later vehicles.
The Final Regulatory Analysis (FRIA) to this CAFE
rulemaking discusses the fact that the proposed reg-
ulatory impact analysis for the FMVSS 208 proposed
rule notes that structural changes to a vehicle may
be necessary to meet the standard, and that these
changes could result in possible weight increases.
However, the FMVSS 208 Preliminary Regulatory
Impact Analysis (PRIA) also contains a performance
comparison of three different vehicles with weight
differences of nearly 1,000 pounds, with all of the
vehicles meeting the standard. The PRIA goes on to
state that there is no apparent relationship between
the FMVSS 208 performance requirement and the
weight of the vehicles, and that vehicles in the
examined weight range could meet the standard.
Thus, although the agency acknowledges that weight
may have a potential negative effect on fuel economy
levels, no commenter on the CAFE NPRM provided
any data for the agency to review which would indi-
cate that its analysis concerning weight effects should
be reconsidered.
The agency published a final rule adopting the
dynamic testing requirements for multipurpose pas-
senger vehicles and trucks with a gross vehicle weight
rating of 8,500 pounds or less and an unloaded vehi-
cle weight of 5,500 pounds or less, with an effective
date of September 1, 1991. While the agency con-
cluded that it was practicable for these vehicles to
comply with the standard, it also noted that there are
a large number of vehicles that must be modified to
meet the requirements. The first full model year
covered by the FMVSS final rule will be MY 1992.
However, Ford stated in its comments to this fuel
economy rulemaking that compliance with FMVSS
208 will "undoubtedly result in higher weights and
lower fuel economy, and many of these changes will
begin to be phased-in during the 1990 and 1991 model
years."
As indicated above, neither Ford, nor any other
commenter on this fuel economy rulemaking provided
any data to support this statement, and the agency
has no data indicating specific weight increases or ac-
tual effect on fuel economy levels. To the extent that
manufacturers' CAFE projections factor in structural
changes to comply with FMVSS 208, the agency has
not discounted this estimate. However, the agency
has not made any specific adjustment to CAFE capa-
bilities in consideration of the FMVSS 208 dynamic
testing requirements.
FMVSS 204. The CAFE NPRM noted that the
agency had published a proposed rule (see 50 FR
13402, April 4, 1985) which would extend the applic-
ability of FMVSS 204 to light trucks with an unloaded
vehicle weight of 4,000 pounds to 5,500 pounds. (The
standard already applies to light trucks under 4,000
pounds unloaded vehicle weight.) In the PRIA to the
FMVSS 204 proposal, the agency concluded that the
proposed extension of the standard would not have
a significant impact on weight. The agency published
a final rule adopting the provisions of the proposed
rule on November 23, 1987 (see 52 FR 44893), with an
effective date of September 1, 1991. As with FMVSS
PART 533-PRE 118
208, the first full model year covered by FMVSS 204
is MY 1992.
In extending FMVSS 204, the agency concluded
that steering system modific^ions necessary to com-
ply with the standard generally would entail an ad-
^^ ditional intermediate steering shaft with a co-axial
^^ slip joint for most light trucks, and that some vehicles
might need additional structure to assure compli-
ance, but that significant additional structure would
not be necessary. While there may be some necessary
changes which may be phased in before MY 1992,
neither Ford nor GM commented on this standard in
their CAFE comments. Chrysler indicated that the
possible weight increase could decrease its CAFE
estimates by 0.1 mpg, but provided no data to sub-
stantiate their views. To the extent that the manu-
facturers' projections take into account structural
changes to comply with FMVSS 204, the agency has
not discounted these. However, the agency made no
specific adjustments in manufacturers' MY 1990-1991
fuel economy capabilities to reflect the extension of
FMVSS 204.
FMVSS 108. Changes to the agency's lighting
standard permit the use of smaller sealed beam head-
lamps, replaceable light sovu-ce headlamps and lower
mounting height. All of these changes should give
a manufacturer greater design freedom to achieve
lower aerodynamic drag and some weight reduction.
While the agency believes that this opportunity could
result in a positive effect on CAFE levels, it does not
have specific data indicating possible drag reduction
for light trucks. These positive effects may be counter-
balanced by possible slow consumer acceptance of
light truck styling for certain models which have been
influenced by aerodynamic considerations. In the MY
1988-1989 CAFE rulemaking, GM stated that its
1988 pickup designs which have included aerody-
namic features were not well received by the public
in design clinics.
Noise standards. NHTSA is not aware of any plans
on the part of EPA to promulgate noise regulations
during the MY 1990-1991 time period, and therefore,
does not anticipate any attendant fuel economy
impacts.
Emission Regulations. In the NPRM, the agency
discussed several actions by the Environmental Pro-
tection Agency (EPA) in the area of emissions, in-
cluding: diesel particulate matter; control of oxides
of nitrogen (NOx); HC exhaust emission require-
ments; and on-board vapor recovery.
Diesel Particulate Matter. On June 4, 1987, EPA
proposed to amend the exhaust emission control re-
quirements for particulate matter for 1987 and later
model years. The proposal would apply to light-duty
diesel trucks of 3,751 pounds or greater loaded vehi-
cle weight, with standards becoming progressively
more stringent in later model years. The particulate
standard for light-duty diesel trucks with a loaded
vehicle weight of 3,750 pounds or less would remain
unchanged. The proposal was in response to a GM
petition, which outlined a plan to develop control tech-
nology to substantially reduce particulate emissions
from current control levels. In its comments on this
CAFE rulemaking, GM indicated that it did not know
what effect on fuel economy would result from the
EPA rulemaking, but stated that "... any required
technology such as a particulate trap may adversely
impact fuel economy." VW stated in its response to
the agency's CAFE questionnaire that "... Federal
exhaust emission standards have prevented Volks-
wagen from continuing to provide the consumer with
the previously offered Vanagon Diesel, the most fuel
efficient version of the Vanagon. However, neither
GM nor VW submitted any date for the agency to
review. Ford data show no diesel engines in its 0-8,500
pound fleet, so there would be no impact for Ford.
Since EPA has not issued a final rule, and NHTSA
has received no data on which to base any adjustment
in manufacturer CAFE capabilities, the agency has
not made any adjustments in manufacturer CAFE
capabilities for MY 1990-1991.
Oxides of Nitrogen. EPA established more stringent
NOx standards for model year 1988, which typically
require the use of a 3-way catalyst technology for
spark ignition engines to avoid a fuel economy pen-
alty. Essentially all spark ignition engines for MY
1988 have incorporated this technology.
On December 16, 1987, EPA published a final rule
deferring the MY 1988 NOx standard to MY 1990 for
some light trucks. (52 FR 47858) In its comments on
the MY 1990-1991 CAFE rulemaking, Ford claims a
reduction in fuel economy based on compliance with
this more stringent NOx standard.
Since Ford already uses 3-way catalyst technology
on all of its spark ignition light truck engines, the
agency agrees that there may be some reduction in
current fuel economy levels for the heavier light
trucks when the NOx standard becoms more strin-
gent in MY 1990. In determining Ford's capability,
NHTSA has accepted the very slight fuel economy
loss projected by Ford in its MY 1990 projections.
However, the agency concludes that by MY 1991, as
the company gains experience with calibrating en-
gines to the more stringent NOx standard. Ford
should be able to eliminate or substantially reduce
the projected penalty. Accordingly, the agency has
eliminated this claimed penalty in assessing Ford's
MY 1991 fuel economy capability.
California NOx. In a related rulemaking, on April
25, 1986, the California Air Resources Board (CARB)
adopted more stringent NOx standards for compact
trucks sold in the state. The regulation phases in
compliance, with 50 percent of light trucks weighing
from 0 to 4,000 pounds inertia weight subject to the
PART 533-PRE 119
standard in 1989, and 85 percent of vehicles in this
class required to meet the standard for Model Years
1990 through 1993. Both Ford and GM have claimed
that this standard will have a small negative effect
on their fuel economy capability.
As in the case of the MY 1990 Federal NOx stand-
ard, NHTSA has concluded that there may be some
initial fuel economy loss as the companies gain expe-
rience with calibrations for the more stringent stand-
ard. Therefore, in determining manufacturer capabil-
ities, NHTSA has accepted the slight fuel economy
loss projected for that model year. However, the
agency has concluded that by MY 1991 companies
should be able to eliminate or substantially reduce
the projected penalty. Therefore, the agency has
eliminated this claimed penalty in assessing MY 1991
fuel economy capabilities.
Hydrocarbon Emissions. On September 8, 1986,
EPA published an Advance Notice of Proposed Rule-
making concerning more stringent HC exhaust emis-
sions for light duty trucks. In their December 1986
responses to NHTSA's CAFE questionnaire, both GM
and Ford commented that more stringent HC stand-
ards may have a negative effect on fuel economy
capabilities. While GM did not quantify its concern.
Ford estimated a risk of up to 1.0 mpg loss in CAFE.
Ford iterated its comment in response to the current
CAFE rulemaking.
It is unclear whether the HC rulemaking would
have ^ny effect on CAFE capabilities, and it also is
not clear that EPA will issue its final regulations in
time to affect MY 1990 and 1991 vehicles. In its
ANPRM, EPA requested comment on its statutory
authority to provide less than four years' leadtime for
any change in standards for heavier light duty trucks.
NHTSA will consider any potential impact on light
truck fuel economy if and when EPA issues a final
rule.
On-Board Refueling Vapor Control. On July 22,
1987, EPA proposed requirements for on-board refuel-
ing vapor control. In its NPRM, EPA estimated that
on-board controls could result in a net weight gain
of 4-5 pounds per vehicle. NHTSA estimates that this
weight increase could reduce average measured fuel
economy for the MY 1990-91 GM or Ford light truck
fleets by about 0.01 mpg, if there were no secondary
weight effects (such as weight increases for springs
or vehicle structure to compensate for the added com-
ponent weight) or changes made in the vehicle to off-
set the small performance loss due to the on-board
weight addition. In its comments on the agency's
NPRM, GM stated that it estimated a probable
weight increase of 10 pounds.
NHTSA has concluded that there will be no effect
on MY 1990 or 1991 light trucks. The principal
reasons for this are first, EPA has not issued a final
rule, and its NPRM indicated that the effective date
for such a rule would be two or more years after the
issuance of the final rule, and second, there is not
enough information to assess what, if any, possible
changes may occur should this rule become final.
EPA Test Procedures.
Adjustment Credits. On July 1, 1985, EPA pub-
lished a proposed rule to adjust the CAFE of light
truck manufacturers to offset changes that had been
made in fuel economy test procedures. (50 FR 27188)
In the agency's CAFE proposed rule, we stated that
"the rulemaking is not likely to have any significant
effect on the manufacturers' projections." On Novem-
ber 24, 1987, EPA withdrew its proposed rule, stating
that its original assumptions regarding baseline
model years were "overly simplistic" and that "the
potential CAFE adjustments are relatively small and
tend to sum to zero when considered over the model
years involved." (52 FR 44996) The CAFE projections
provided by the manufacturers in response to the
agency's CAFE NPRM did not include any potential
EPA test procedures adjustments. No changes have
been made in NHTSA's fuel economy capability an-
alysis to reflect such adjustments.
Gear Shift Indicator Lights. By letter to vehicle
manufacturers, EPA has proposed to eliminate one
of the two methods currently authorized to determine
the fuel economy benefits of gear shift indicator
lights. These dashboard lights are designed to inform
drivers about the optimal speed, from a fuel economy
standpoint, for shifting gears. EPA proposes to elim-
inate the driver usage rate survey, the method prefer-
red by GM as a "more representative credit for ac-
tual shift indicator lights usage than the on-road
survey." Whether EPA will eliminate one method is
still an open question. In addition, although GM
stated in its comments on the fuel economy NPRM
that limiting the shift indicator lights usage verifica-
tion to the on-road survey method "could further
reduce fuel economy," they did not provide any data
on which the agency could base a determination of
effect on CAFE capability.
Other Standards.
On January 29, 1986, EPA proposed prohibiting
"the manufacture, importation, and processing of
asbestos in certain products," and the phasing out of
asbestos in all other products. The implication of this
rulemaking for motor vehicles is eliminating the use
of asbestos in brake linings. The agency has no infor-
mation to date which would indicate any fuel economy
effects from replacing asbestos with another sub-
stance, although GM claimed in its comments on the
agency's CAFE NPRM that this rule could add five
pounds to a vehicle's weight. The agency has not
made any determination concerning the effects of this
rulemaking on CAFE, since EPA has not published
PART 533-PRE 120
a final rule, and it appears that there will be no
significant impact on brake designs for the MY
1990-1991 vehicles.
Industry Capability: Technological Feasibility
and Economic Practicability
As part of its consideration of technological feasi-
bility and economic practicability, the agency has
evaluated both domestic and foreign manufacturers'
fuel economy capabilities for MY 1990 and 1991.
In making this evaluation, the agency has analyzed
the manufacturers' current projections, and underly-
ing product plans submitted to it in response to the
NPRM, and has considered what, if any, additional
actions the manufacturers could take to improve their
fuel economy.
Manufacturer CAFE Projections
Ford
As discussed in the NPRM, Ford projected in
December 1986 that it could achieve the following
CAFE levels for MY 1990:
a combined range of 19.2 mpg to 20.5 mpg;
a 2 WD range of 19.7 mpg to 21.0 mpg; and
a 4WD range of 18.4 mpg to 19.5 mpg.
For MY 1991, Ford's December 1986 projections were:
a combined range of 19.8 mpg to 20.5 mpg;
for 2WD, a range of 20.3 mpg to 21.1 mpg; and
for 4WD, a range of 18.7 mpg to 19.5 mpg.
In its December 1987 response to the agency's
NPRM, Ford submitted the following estimates of its
MY 1990 capabilities:
for its combined CAFE, a range of 19.9 mpg to 20.4
mpg;
for 2WD, a range of 20.3 mpg to 20.7 mpg; and
for 4WD, a range of 19.0 mpg to 19.9 mpg.
In this same submission, Ford estimated its MY 1991
capabilities as follows:
for its combined CAFE, a range of 19.9 mpg to 20.5
mpg;
for 2WD, a range of 20.3 mpg to 20.7 mpg;
and for 4WD a range of 19.0 mpg to 20.1 mpg.
By comparison. Ford's PMY (Pre-Model Year) 1988
report projects a combined CAFE of 20.3 mpg, 0.1 mpg
lower than the high range of its December 1987
NPRM comment.
The NPRM noted that the December 1986 submis-
sion indicated that Ford considered the high ends of
its projected ranges to be its most likely CAFE levels.
The lower ends represent certain risks which were not
taken into account in its primary estimates. While
the total risk for both model years is the same — 1.3
mpg — Ford also identified possible technical oppor-
tunities for MY 1991 which could be used to offset
some of the risk for that model year.
In its response to the NPRM, Ford indicated that
its lower figures may more accurately represent
achievable CAFE levels for both MY's 1990 and 1991.
Ford's Decenjber 1987 estimates for its nominal com-
bined MY 1990 and 1991 CAFE levels are lower than
those it projected in December 1986. Ford attributes
the lower estimate of December 1987 to a number of
small adjustments, both positive and negative. Ford's
concern is that the lower end of its estimates (19.9
mpg for both MY 1990 and 1991) is based on esti-
mated risks which will impede achieving the esti-
mated capability.
In its NPRM comments, Ford discussed its product
plans to achieve its maximum CAFE level. Such
plans include the use of electronic fuel injection across
all trucks, improved new transmissions, reduced fric-
tion/parasitics in every truck model and the introduc-
tion of improved combustion features in many
engines. Affecting the possible benefits of these plans,
however, include the relatively low fuel prices pro-
jected through the 1990's, attendant mix shifts, strong
competition within the compact classes, competitive
product actions, potential effects of proposed Federal
emissions standards and lower than projected benefits
from new technology.
Model Year 1990. For MY 1990, the combined
estimate includes refinements such as adjustments
for actual MY 1988 fuel economy figures, tech-
nological changes, the impact of emissions standards,
and vehicle design and mix changes.
Model Year 1991. For MY 1991, the changes in
Ford's combined estimates relative to a year ago are
the result of very similar adjustments to those made
for MY 1990, with a 0.1 mpg possible increase in the
combined estimate. For MY 1991, Ford's December
1987 submission indicates a slightly lower projection
than its December 1986 projection for 2WD, but a
small increase in capability level for its 4 WD CAFE.
These estimates can be ascribed to increased sales of
new models.
(The details of Ford's and all other manufacturers'
changes are subject to claims of confidentiality for
confidential business information whose release could
cause competitive harm. This requires the agency's
discussion of Ford's projections, as well as the other
manufacturers' projections, to be of a general nature.)
In discussing its current projections. Ford ascribes
its lower CAFE capabilities to a number of risks,
which, in Ford's view, make the lower estimated
figure that which it will be likely to achieve for both
MY's 1990 and 1991. In its comment on the proposed
rule, Ford stated that:
Incorporation of all containable technology has
yielded a combined CAFE nominal forecast of
20.4 mpg for 1990 and 20.5 mpg for 1991.
However, we believe that future CAFE levels
reflecting "high probability" risks will keep our
1990-1991 CAFE status at 20.0 mpg. . . Ad-
ditional market mix risks, which were an ex-
PART 533-PRE 121
trapolation of market trends, have been included
in the potential CAFE levels . . . thus identify-
ing the full range of CAFE possibilities that
could be as low as 19.9 mpg.
The risks projected by Ford fall into the following
categories: the effect of other Federal standards; two
levels of market risk, including mix shifts; techno-
logical risks; and other risks. The largest risk, esti-
mated at about 0.3 mpg for MY 1990 and 0.3 mpg for
MY 1991, is ascribed to volume shifts following cur-
rent market trends. (This "risk mix" scenario re-
flects the mix projected in Ford's Pre-model Year
Report for MY 1988. Ford also discusses a risk mix
scenario, which estimates a risk 0.2 mpg for MY 1990
and 0.2 mpg for MY 1991.) Ford notes that this risk
is due primarily to higher than planned market de-
mand for full-size trucks, as well as customer demand
for higher option content and higher performance
vehicles. These trends have resulted in increased
vehicle weight, engine size and axle ratios.
General Motors
As discussed in the NPRM, GM projected in
December 1986 that it could achieve the following
CAFE levels for MY 1990:
a combined CAFE of 20.5 mpg;
a 2WD CAFE level of 20.9 mpg; and
a 4WD CAFE level of 19.2 mpg.
For MY 1991, GM's December 1986 projections were:
a combined CAFE of 20.6 mpg;
for 2WD, a CAFE level of 21.0 mpg; and
for 4WD, a CAFE level of 19.3 mpg.
By way of comparison, GM's 1988 Pre-model Year
report projects a combined CAFE level of 20.2 mpg
for that year.
In its December 1987 response to the agency's
NPRM, GM submitted the following MY 1990 CAFE
levels:
for its combined CAFE, a range of 20.0 mpg to 20.4
mpg;
for 2WD, a CAFE level of 21.0 mpg; and
for 4WD, a CAFE level of 19.0 mpg.
In this same submission, GM estimated its MY 1991
CAFE levels as follows:
for its combined CAFE, a range of 20.0 mpg to 20.4
mpg;
for 2 WD, a CAFE level of 21.0 mpg; and
for 4WD, a CAFE level of 19.1 mpg.
GM also noted in its comments to the NPRM that the
combined CAFE for both years could be 0.4 mpg
lower, due to possible increased consumer demand for
performance.
Model Year 1990. The December 1987 estimates are
slightly lower than the December 1986 estimates for
the combined CAFE and the alternate 4WD CAFE,
but its 1987 estimate indicates a slight increase of 0.1
mpg for its CAFE for 2WD vehicles. The change in
the estimated combined CAFE level reflects the in-
teraction of several fairly large changes. The principal
reason, according to GM's submission, is due to pro-
duct program changes such as engine changes, vehi-
cle design and drive train changes. Other changes in
the estimate reflect consideration of such things as
more recent CAFE test results and anticipated model
mix shifts.
Model Year 1991. The December 1987 estimates are
slightly lower than the December 1986 estimates for
the combined CAFE and the alternate 4WD, but also
reflect a slight increase of 0.1 mpg for its CAFE for
2WD vehicles. These revised estimates reflect similar
reasons for changes in the 1990 projections — that is,
changes in product plans, CAFE test procedures,
drive train changes and anticipated model mix shifts.
In its December 1987 submission, GM shows no
change in its estimates between MY 1990 and MY
1991 for the combined or 2WD standards, but does
indicate an increase of 0.1 mpg between MY's 1990
and 1991 for its 4WD vehicles. GM's submission in-
dicates that several changes will occur between these
two model years, but that the CAFE levels will re-
main relatively stable. The changes can be described
generally as technological improvements and possi-
ble countervailing model mix shifts.
In its December 1987 submission, GM notes that
substantial uncertainties "... make CAFE forecast-
ing tenuous at best," and that although it projects its
combined CAFE to be in the range of 20.0 mpg to 20.4
mpg for both MY's 1990 and 1991, even a standard
of 20.0 mpg may be too stringent for these model
years. As an example, GM states that these uncer-
tainties, and in particular strong consumer demand
for larger light trucks and larger displacement
engines, have resulted in current projections for MY
1988 and 1989 that place GM below the combined
CAFE standards. In its MY 1989 light truck rulemak-
ings the agency noted that it thought it unlikely that
GM could meet its projected CAFE level of 20.9 mpg.
GM's comment discussed at length what it considers
to be these "substemtial uncertainties," which include
uncertainty over the price of gasoline, changing con-
sumer purchasing patterns, the level of import truck
sales, and the realization of product plans. GM goes
on to state that:
One of the most difficult uncertainties to forecast
in the 1990-1991 time frame is the level of con-
sumer demand for vehicle performance. With
decreasing fuel prices, customers have been
demanding more performance in the light-duty
truck fleet .... This shows a marked increase in
the sales weighted ratio of engine horsepower
to vehicle weight (a commonly used performance
indicator) between 1983 and 1987. Appendix B-
n indicates this trend toward higher perfor-
PART 533-PRE 122
mance is forecasted to continue through 1990
and 1991 MY.
Although our current CAFE forecast of 20.4 mpg
for both 1990 and 1991 MY incorporates some
of this continued market demand for increased
performance, we anticipate that to remain com-
petitive in the area of performance, additional
product programs may have to be developed for
those model years. Analysis indicates this could
result in an estimated decrease in CAFE of 0.4
mpg for each year and represents the lower
CAFE value in ovu- forecasted range of 20.0 mpg
to 20.4 mpg for 1990-1991 MY.
GM emphasizes in its comments that its projections
for MY's 1990 and 1991 try to capture the possible
increase in consumer demand for performance, but
the projections themselves do not include adjustments
for such unanticipated uncertainties as fuel prices,
model mix shifts, realization of product programs and
increases in import truck sales. GM states that these
uncertainties could decrease its current CAFE
forecasts, and its current estimates of the potential
impact on employment, sales and consumer choice.
GM presents three separate scenarios, based on three
different CAFE standards, to indicate the possible im-
pact on employment, sales, and consumer choice.
While much of GM's submission is subject to a claim
of confidentiality, the three scenarios can be described
generally as follows.
Scenario 1 assumes that the MY 1987-1989
combined CAFE standard of 20.5 mpg will be the
standard for MY's 1990 and 1991. If GM realizes the
upper end of its estimated CAFE level (20.4 mpg), it
states that actions needed to stay in compliance could
mean the loss of 4,000 GM and suppliers' jobs. If GM
only realizes the lower end of its estimated CAFE
level (20.0 mpg), actions taken to remain in com-
pliance would mean job losses totaling 10,000. GM
also provided estimated volumes of vehicles most
susceptible to restrictions (as well as specific models
affected), to indicate the impact on consumer choice.
Scenario 2 assumes that 21.0 mpg will be the stand-
ard for MY's 1990 and 1991. If GM realizes the up-
per end of its estimated CAFE level (20.4 mpg), it
states that actions needed to stay in compliance could
have "dire effects" on GM, as well as the loss of 25,000
GM and suppliers' jobs. If GM only realizes the lower
end of its estimated CAFE level (20.0 mpg), actions
taken to remain in compliance would mean job losses
totaling 42,000.
Scenario 3 assumes a CAFE standard of 20.0 mpg
for MY's 1990 and 1991. While this coincides with
GM's lower end forecast, GM states continuing con-
cern that this CAFE level itself may be too high,
given the number of substantial uncertainties outside
of the manufacturers' control.
Chrysler
[NOTE: Since the time that responses to the agen-
cy's questionnaire were received in December 1986,
Chrysler has purchased American Motors Corpora-
tion (AMC) and continues to produce many of its light
truck product lines. Responses to the agency's 1986
questionnaire were submitted by both Chrysler and
AMC. Comments on the agency's 1987 proposed rule
were submitted by Chrysler, which includes data on
its AMC vehicles. To facilitate the comparison of
estimates submitted in December 1986 and December
1987, the agency has combined the separate submis-
sions received from Chrysler and AMC in 1986. In
consolidating the numbers, the agency did not make
any adjustments for possible changes in the fleet since
the two companies have become one. For example,
AMC's full-size 4 WD pickup and 4 WD passenger-car
based Eagle have been dropped during MY 1988.
Since changes such as this represent a very small por-
tion of Chrysler's fleet, the failure to make ad-
justments such as this should have negligible, if any,
impact on the accuracy of the 1986 estimates. All
future discussion will refer only to Chrysler.]
As discussed in the NPRM, Chrysler projected in
December 1986 that it could achieve the following
CAFE levels for MY 1990:
a combined CAFE of 23.1 mpg;
a 2WD CAFE level of 23.9 mpg; and
a 4WD CAFE level of 21.2 mpg.
For MY 1991, Chrysler's December 1986 projections
were:
a combined CAFE of 23.1 mpg;
for 2WD, a CAFE level of 23.7 mpg; and
for 4WD, a CAFE level of 21.6 mpg.
By way of comparison, Chrysler's 1988 Pre-model
Year report projects a combined CAFE level of 21.6
mpg for that year.
In its December 1987 response to the agency's
NPRM, Chrysler submitted the following MY 1990
CAFE levels:
for its combined CAFE, 21.4 mpg;
for 2WD, a CAFE level of 22.0 mpg; and
for 4WD, a CAFE level of 20.0 mpg.
In this same submission, Chrysler estimated its MY
1991 CAFE levels as follows:
for its combined CAFE, 21.5 mpg;
for 2WD, a CAFE level of 22.0 mpg; and
for 4WD, a CAFE level of 20.2 mpg.
Model Year 1990. The December 1987 estimates are
consistently lower than the December 1986 estimates
for all three categories of CAFE standards: the com-
bined CAFE, the alternate 4 WD and alternate 2 WD
vehicle CAFE. Chrysler ascribes these drops to bas-
PART 533-PRE 123
ing fuel economy levels for certain vehicles on more
complete fuel economy data, as well as some reduc-
tion in the combined level due to engine changes and
volume mix shifts.
Model Year 1991. The December 1987 estimates
also are lower than the December 1986 estimates for
all three categories of CAFE standards. Chrysler
ascribes these lower estimates for MY 1991 to similar
circumstances as those affecting its MY 1990 fleet.
There may, however, be some increase in fuel
economy due to technological improvements.
In its December 1987 submission, Chrysler shows
some improvement in its CAFE between MY 1990
and MY 1991 for the combined and 4WD standards.
It indicates no increase between MY 1990 and 1991
for its 2WD vehicles. Chrysler's submission indicates
that several changes will occur between these two
model years, but that the CAFE levels will remain
relatively stable. The changes can be described
generally as technological improvements and possi-
ble countervailing model mix shifts.
Chrysler did not provide detailed descriptions of its
fleets for analysis, but the agency used its 1988 Pre-
model Year (PMY) report as a baseline to analyze its
MY 1990 and 1991 fleet fuel economy performance.
The 1988 PMY report indicates a higher CAFE than
Chrysler now forecasts for MY 1990-91. The agency
believes that the changes between 1988 and
1990-1991 can be attributed to small mix shifts to
large vehicles and engines and to changes in certain
engine families. In addition, Chrysler has identified
some technological improvements for MY 1990 and
1991 that have a countervailing positive effect on its
fuel economy.
Chrysler did not identify risks in its comments, but
it did note that its projections are based on three
assumptions: (1) that the projected model mix accu-
rately reflects future market demands; (2) that the
variability of actual certification fuel economy test
values is no greater than anticipated; and (3) that run-
ning changes in the products do not have an adverse
cumulative effect. Chrysler requests the agency to
establish the combined CAFE standard for both MY
1990 and 1991 at 20.5 mpg. While this is lower than
its current projected capabilities, Chrysler argues that
it is faced with many factual xmcertainties, uncertain-
ties acknowledged by the agency in its NPRM as
possibly affecting CAFE levels. Chrysler states that
"[i]n evaluating our product plans for the early 1990's,
it is possible that certain programs could be delayed
or canceled due to economic uncertainties, potentially
affecting our current CAFE projections for that time
period. Additionally, as we continue the process of
refining Chrysler and AMC's product plans into one,
our CAFE projections could be affected." Finally it
states that market shifts to larger trucks or the ef-
fect of other Federal standards may have a greater
than expected impact on CAFE capabilities.
Volkswagen
In its December 1986 response to the agency ques-
tionnaire concerning product plans, Volkswagen (VW)
did not provide specific data, noting rather that its
product plans for 1990 would not differ substantially
from those of MY 1987. It did not include any infor-
mation concerning its MY 1991 fleet. In response to
the NPRM, VW did not provide any additional infor-
mation on its future product plans. Rather, VW
iterated its concern as a "single line" manufacturer,
requesting that the agency consider this type of
manufacturer's "unique situation" in establishing
CAFE standards.
In assessing the data available to the agency, we
note that VW's 1987 Mid-model Year Report indicates
a combined CAFE of 18.9 mpg, but its 1988 Pre-model
Year Report projects a combined CAFE of 20.5 mpg.
This increase appears to be due to engine im-
provements and sales mix shifts.
Other manufacturers
Foreign manufacturers compete primarily in the
small vehicle portion of the light truck market. While
no comments were received from these manufac-
turers, the agency expects these companies in general
to achieve CAFE levels well above GM, Ford, and
Chrysler, which offer full ranges of light truck models.
Based on 1988 Pre-model Year reports, the expected
average fuel economy of the import fleet for the cur-
rent model year is 24.2 mpg. (The agency notes,
however, that the import fleet CAFE levels for light
trucks have declined steadily from a high of 27.4 mpg
in MY 1981, to its MY 1988 projected level of 24.2
mpg.) Except for Range Rover, with an expected
CAFE level of 16.7 mpg for its single line of 4 WD
vehicles, all import manufacturers are projecting MY
1988 CAFE levels higher than GM, Ford, and
Chrysler. The projection closest to the American
manxifacturers is Isuzu's 4WD fleet, with a projected
level of 20.0 mpg. In contrast, Toyota projects a 2WD
CAFE of 26.1 mpg, a 4WD CAFE of 23.0 mpg and
Mazda projected a combined CAFE level of 24.8 mpg.
Possible Additional Actions to Improve
MY 1990-91 CAFE
There are additional actions which, given sxifficient
time and resources, manufacturers may be able to
take to improve their CAFE above the levels which
are currently projected for MY 1990 and 1991. These
actions may be divided into three categories: further
technological changes to their product plans, in-
creased marketing efforts, and product restrictions.
PART 533-PRE 124
Further Technological Changes
The ability to improve CAFE by further tech-
nological changes to product plans is dependent on
the availability of fuel-efficiency enhancing
technologies which manufacturers are able to apply
within available time.
The agency's FRIA discusses the panoply of fuel-
enhancing technologies that may be available to im-
prove CAFE performance. Some of these technologies
have been incorporated already into all manufac-
turers' product lines, so no further CAFE improve-
ment can be expected. Some of the technological im-
provements apply to diesel engines, which have
limited potential since the use of diesel engines has
dropped dramatically since the drop in gasoline prices
in the early 1980's.
In considering which technologies to pursue as feasi-
ble, the agency considered the real constraint of ade-
quate leadtime. Most commenters argued that inade-
quate leadtime is an impediment to technological
changes. Ford, in its comment on the NPRM, stated
that: "Additional actions to raise the 1990 and 1991
CAFE above the projected levels are limited by the
lack of identifiable technologies or product actions
which could be employed. Even if such actions could
be identified, there exists insufficient lead time,
engineering workload limitations and insufficient ad-
ditional production capacity to effectuate reasonable
changes."
The agency agrees that leadtime constraints limit
the ability of manufacturers to achieve major
technological improvements in their projected CAFE
levels. For example, technological actions which
would result in weight reduction of a vehicle are most
likely infeasible except in the context of the retool-
ing of a model or in the application of materials
substitution. Materials substitution, however, which
is feasible in the timeframe of this rulemaking would
have limited fuel economy benefit. Once such a new
design is established and tested as feasible for pro-
duction, the leadtime necessary to design, tool, and
produce components such as new body sheet-metal
subsystems for mass production could be 22 to 29
months. Other potential major changes take even
longer. Leadtimes for new vehicles are typically at
least three years.
However, manufacturers may be able to achieve
some additional CAFE improvements by increasing
the penetration of technologies already in production
for MY 1991. There are some opportunities to reduce
engine friction, such as with roller cam followers or
with reduced piston ring friction. Roller cam followers
and piston ring friction reduction have the potential
of increasing CAFE levels by up to 0.1 to 0.3 mpg,
depending on manufacturer and scope of additional
application. Another area of improvement for MY
1991 is the extension of some type of electronic con-
trol for automatic transmissions. The value of this
technology to CAFE levels would depend on the ex-
tent to which these transmissions are in use and could
be extended to further applications, or could be incor-
porated into the manufacturer's product plans.
In its comments on the NPRM, the Department of
Energy provided a draft report on light truck fuel
economy projections for MY 1990 and MY 1995,
which was prepared by Energy and Environmental
Analysis, Inc. (EEA). This draft report includes
estimates of fuel economy benefits and costs for
various technological improvements, similar to those
described in Chapter III of the agency's FRIA. EEA's
analysis of CAFE improvements for MY 1990 for dif-
ferent technologies were in the same range as the
agency's except in three areas: individual port fuel
injection, diesel engines, and reduced viscosity
lubricants. EEA's cost estimates were similar or lower
than the agency's, except in two areas: tires and
aerodynamic improvements.
In estimating fuel economy improvements, EEA
uses a baseline of MY 1986, while the agency used
a baseline of MY 1988. In many cases, EEA's
estimates prove inaccurate because of changes which
have occurred since 1986, such as low gasoline prices.
This situation has resulted in consumer demand for
larger engines within each truck line, as well as
larger versions of smaller trucks. While the agency's
baseline figures reflect these trends, EEA's do not.
In addition, some of the improvements anticipated
by EEA already have been incorporated into the MY
1988 fleets, thus negating the value of these as poten-
tial increases to fuel economy levels. For example,
EEA ascribes fuel economy improvements to such
things as low tension rings, port fuel injection, serpen-
tine belts, throttle body injection, and roller cam
followers. Some of the improvements introduced be-
tween 1986 and 1988 were used to offset the effects
of complying with new emissions regulations. Fur-
ther, EEA does not recognize changes in market con-
ditions which have added to the effect of most fuel
economy measures being negated. For example, in
MY 1988 the manufacturers' fleets consist of bigger
engines and bigger versions of smaller trucks.
We agree with EEA on the possible improvements
due to roller cam followers and low tension rings,
because manufacturers have either not implemented
these changes, or have implemented them only par-
tially. With regard to the other projected im-
provements, most were included in the manufac-
;urers' December 1987 CAFE projections for MY 1990
and 1991.
In particular, EEA's report projects a two percent-
age point higher gain for individual port fuel injec-
tion than the agency's estimate. However, EEA also
states that this technological improvement is not
clearly cost-eff"ective for CAFE improvement. For
PART 533-PRE 125
direct fuel injection diesel and indirect injection diesel
engines, EEA estimates a 5 to 10 percent greater im-
provement in CAFE than the agency. However, the
agency notes that these estimates reflect replacing
a gasoline engine with a diesel engine. However, if
there were an actual substitution in comparable
engine size, there would be degradation in perform-
ance. For equivalent performance levels, the improve-
ment with diesel engines would be similar to the
agency's estimate.
Finally, EEA projects higher improvements than
the agency in the area of lubricants. Its report predicts
a one percentage point higher upper range improve-
ment for reduced viscosity lubricants and three
percentage points for friction modified lubricants. The
agency cannot assess these figures without more
specific information about the baseline figures used
by EEA in making its estimates. For example, pro-
jections based on older data can make assessment of
the baseline unclear. In the area of lubricants this is
especially important, since the kind of lubricant used
before changing to a reduced viscosity lubricant can
affect significantly the observed "improvement" in
CAFE performance. (For example, if the lubricant
used in a baseline engine was of a very high viscosi-
ty, the use of a low viscosity lubricant will improve
significantly the fuel economy of the engine. The
engine often must be redesigned, however, to operate
satisfactorily with the lower viscosity lubricant.)
EEA's cost estimates were higher than the agen-
cy's for tires and aerodynamic improvements. The
agency believes that there is no specific unit cost for
aerodynamic improvements, since these changes are
incorporated during the basic design phase of the
vehicle and result from changing sheet metal con-
tours. While the agency differs on the cost of tires,
there does not appear to be practical room for im-
provement in this area, since most manufacturers
already equip vehicles with tires of low rolling
resistance.
Increased Marketing Efforts
As discussed in the NPRM, NHTSA believes that
the ability to improve light truck CAFE by market-
ing efforts is relatively small. Light trucks are often
purchased for their work-performing capabilities.
This is particularly true for the larger, less fuel-
efficient light trucks. Since the smaller light trucks
cannot meet the needs of all light truck users, the
manufacturers' ability to use marketing efforts to
encourage consumers to purchase smaller light trucks
instead of larger light trucks is limited.
As a practical matter, marketing efforts to improve
CAFE are largely limited to techniques which either
make fuel-efficient vehicles less expensive or less fuel-
efficient vehicles more expensive. Moreover, the abil-
ity of a manufacturer to increase sales of fuel-efficient
light trucks depends in part on increasing its mar-
ket share at the expense of competitors or pulling
ahead its own sales from the future. The ability of
domestic manufacturers to make such sales increases
is also affected by the strong competition in that
market from Japanese manufacturers. While the
Japanese manufacturers currently have an overall
combined market share of about 21 percent of light
trucks, their share for the smaller, more fuel-efficient
light trucks is about 45 percent.
In addition, the improved fuel efficiency of all sizes
of modern light trucks makes it more difficult to sell
the small light trucks. The reason for this is that there
are diminishing returns for consumers in terms of fuel
economy from purchasing smaller light trucks as the
fuel efficiency of larger light trucks increases. Also,
as gasoline prices have declined, there are diminish-
ing returns in terms of fuel cost savings from purchas-
ing more fuel-efficient vehicles. Hence, an economi-
cally rational consumer will not be as concerned with
improving fuel efficiency when gasoline prices are
low, making it more difficult for a manufacturer to
market its most fuel-efficient vehicles.
A problem with pulling ahead sales is that the
manufacturers' CAFE levels for subsequent years
are reduced. For example, if a manufacturer improves
its MY 1990 CAFE by pulling ahead sales of fuel-
efficient light trucks from MY 1991, its MY 1991
CAFE will decrease, compared with the level it would
have been in the absence of any pull-ahead sales.
GM's comments on the NPRM noted particularly
the difficulty in predicting any gains in CAFE
through marketing incentives based on present and ^^
future projections of consumer purchasing prefer- ^^
ences. What makes estimating these types of gains
so difficult includes such factors as the uncertain
future of world oil prices, the number of competitive
entries in the compact segment, potential market
countering actions by each competitor, and the price/
cost advantage of imported models.
Given all of these factors, NHTSA concludes that
the domestic manufacturers cannot significantly im-
prove their MY 1990-91 CAFE's by increased mar-
keting efforts.
Product Restrictions
As the agency discussed in its proposed rule,
manufacturers could improve their CAFE by restrict-
ing their product offerings, e.g., limiting or deleting
production of particular larger light truck models and
larger displacement engines. However, such product
restrictions could have significant adverse economic
impacts on the industry and the economy as a whole.
For example, the FRIA presents a scenario in which
GM and Ford are assumed to restrict production of
sufficient numbers of their least fuel-efficient light
truck models to obtain a 0.5 mpg improvement in
CAFE for MY 1990-1991. Under this scenario, for MY ^
1990 GM could suffer a sales loss of more than ^^
PART 533-PRE 126
157,000 light trucks, while Ford could experience a
sales loss of more than 122,000 light trucks. For MY
1991, the FRIA indicates that GM could suffer a sales
loss of up to 156,000 units of Its projected MY 1991
light truck production, while Ford could suffer a sales
loss of up to 126,000 units of its projected MY 1991
light truck production.
Because of the uncertainty regarding actual sales
losses and the nature of personnel adjustments that
would have to be made by manufacturers, no precise
estimate of net employment effects can be made under
this scenario. However, a rough estimate based on
estimated lost sales indicates a potential loss of
18,600-56,000 jobs in the manufacturing and supplier
industries. The gross estimates are the same for MY
1991. NADA, in its comments on the NPRM, asked
the agency to consider the impact on motor vehicle
dealers, as well as the effects on manufacturers and
suppliers. NADA estimates that in 1987 there were
880,000 employees of franchised new-car dealers, of
which approximately 200,600 were new and used
vehicle salespersons. Assuming sales personnel are
those most likely to be affected by a short-term de-
crease in sales volume, and using a similar "worst-
case" scenario as above, the agency estimates a possi-
ble job loss of 2,300 for each model year.
In addition to the adverse sales and jobs impacts on
the automotive industry, a wide range of businesses
could be seriously affected to the extent that they
could not obtain the light trucks they need for
business use. Also, such product restrictions could run
counter to the congressional intent that the CAFE
program not unduly limit consumer choice. See H.R.
Rep. No. 93-340, 94th Cong., 1st Sess. 87 (1975).
Given these considerations, NHTSA believes that
significant product restrictions should not be con-
sidered as part of a manufacturer's capabilities to im-
prove MY 1990-91 CAFE levels.
Manufacturer-Specific CAFE Capabilities
As discussed later in this notice, NHTSA is directed
to take "industrywide considerations" into account
in setting fuel economy standards. In carrying out this
direction, the agency focuses on the least capable
manufacturers with substantial shares of light truck
sales.
For MY 1990-91, Ford is the "least capable manu-
facturer" with a substantial share of the combined
and 2WD light truck sales, while GM is the "least
capable manufacturer" with a substantial share of the
market for 4WD light truck sales. (From calendar
year 1987 sales figures, the agency estimates that
Ford's share of the entire light truck market is 30
percent, while GM's is 32 percent. Chrysler's antici-
pated share is 17 percent.) Chrysler's CAFE projec-
tions for MY 1990-91 are higher than both GM's and
Ford's, primarily because the Chrysler fleet is biased
toward smaller trucks and does not cover as wide a
range of models. While VW's achievable level may
or may not be below that of GM and Ford, it does not
have a substantial share of industry sales. (As re-
flected in its 1988 PMY report, VW estimates that
its CAFE level for MY 1988 will be 20.5 mpg. Based
on calendar year 1987 sales data, the agency esti-
mates that VW will have less than 0.2 percent of light
truck sales.)
Ford
Ford's MY 1990-91 CAFE projections are subject to
a number of uncertainties, which Ford describes as
risks.
Model Year 1990. While Ford projects a possible
CAFE level of 20.0 mpg to 20.4 mpg, its comments
argue that its actual CAFE could be as low as 19.9
mpg. The agency has analyzed the current projections
by Ford and has made specific determinations con-
cerning the validity of each of the risks detailed by
Ford, as well as possible opportunities for Ford to in-
crease its fuel economy. As stated previously, much
of the data used to analyze manufacturer capabilities
is subject to a claim of confidentiality. The agency
summarizes its determinations as follows:
In its December 1987 comments on the NPRM, Ford
stated that its nominal combined MY 1990 CAFE pro-
jection of 20.4 mpg could drop as low as 19.9 mpg, if
all potential risks are realized. In its comments. Ford
attributes a drop of 0.4 mpg in CAFE to technical
risks, other risks (powertrain mix, capacity, etc.), and
volume risk scenarios. Ford's baseline projections for
MY 1990 included some increase in the compact truck
share (relative to MY 1988 projections) of Ford's total
volume. The company provided two potential volume
risk scenarios for MY 1990: one in which the compact
truck share grows at a slower rate than the baseline
projection and one in which the compact truck share
does not grow at all. Both scenarios result in a reduc-
tion of the company's MY 1990 projection, but the one
in which the compact truck share does not grow at
all results in an additional reduction over the scenario
in which compact sales grow at a slower rate. Ford
ascribes the additional drop in CAFE to the poten-
tial effects of the MY 1988 mix. Ford states:
. . . recent market shifts have caused additional
reductions in Ford's 1988 and 1989 CAFE pro-
jections, and will necessitate difficult and costly
actions in an effort to shift mix back toward
smaller trucks. This current difficulty is the
result of higher than planned full-size market
demand, as well as, customer demand for higher
option content and higher performance vehicles.
These trends have increased vehicle weight,
engine size and axle ratios.
The agency acknowledges that customer preference
limits the ability of the manufacturer to change vehi-
PART 533-PRE 127
cle mix. Given the dynamic and interactive nature
of an individual manufacturer's product plan, the
product plans of the manufacturer's competitors, and
consumer demand, analyzing mix assumptions is a
highly complex matter. The agency notes that since
many factors affect mix, sales mix changes between
model years for a particular manufacturer may relate
to several factors and may or may not indicate a trend
with respect to overall industry consumer demand.
For example, if a manufacturer introduces a new
model, the high level of sales ordinarily associated
with a new model may result in increased sales of
whatever size class the vehicle happens to be, thereby
altering the mix. Similarly, the removal from the
market of a particular model, or the gradual aging
and resultant reduction in popularity of a particular
model also may result in mix effects. Thus, mix ef-
fects between model years for a particular manufac-
turer, which can have substantial effects on the
manufacturer's CAFE level, need not result from a
change in overall consumer demand.
Given these considerations, the agency has con-
cluded that it is very unlikely that Ford will ex-
perience no growth in the compact truck share of the
company's volume by MY 1990. First, it should be
noted that Ford's projected MY 1988 mix has a
smaller compact truck share than the company's most
recent data for MY 1987. While the agency considers
the 1988 Pre-model Year report to be reliable, to the
extent that it contains data reflecting the three most
recent sales months, it does not reflect the introduc-
tion by Ford of some new and smaller products by MY
1990. The introduction of new models almost cer-
tainly will result in some increase in small truck
share and thus, CAFE performance.
In addition, while Ford is one of three manufac-
turers offering a full range of vehicles, which can bias
sales toward larger vehicles, there has been a strong
trend in the industry toward compact trucks. In MY
1987, compact pickups accounted for 35 percent of
light truck production, compact vans and buses ac-
counted for 18 percent of production and compact
utility vehicles accounted for 12 percent of production.
In consideration of all of the preceding, the agency
accepts Ford's "1990" scenario projecting a risk of a
slower rate in compact truck sales growth to chang-
ing market demands, but does not consider the addi-
tional "MY 1988" model shift risk of a decrease in
mpg to be one which will affect Ford's MY 1990-1991
capability.
A related risk, raised by Ford as well as GM, is the
concern that these manufacturers will lose market
shares to imports in the compact area. The agency
notes that there has not been a significant increase
in the imported vehicles' market share in recent
years. Much of this can be ascribed to the current
strong value of the yen as opposed to the dollar, as
well as the 25 percent tariff imposed on imported light
trucks, which has reduced the previous price advan-
tage of imported vehicles. However, in accepting
Ford's "1990" risk scenario, the agency implicitly ac-
cepts the possibility that import truck sales may in-
crease if the dollar begins to strengthen in relation
to the yen.
Ford ascribes a further negative effect on CAFE
levels to technological risks associated with introduc-
ing engine and transmission changes on certain
models, the unavailability of certain parts to complete
planned drive train changes, as well as issues related
to CAFE testing. NHTSA consistently has recognized
that there is a certain risk outside of the manufac-
turer's control which may result in lower than an-
ticipated CAFE benefits from introducing new
technologies. The introduction of a new technology
may yield lower than expected benefits, which has
nothing to do with the efforts of the manufacturer to
introduce successfully such a change. Further, the
agency accepts Ford's statements that it may need to
make adjustments to its CAFE testing. And, finally,
the agency acknowledges that Ford may plan the in-
troduction of certain improvements, but that the
amount of these improvements may be limited by ac-
tual personnel, supplies or plant restrictions. For ex-
ample, while market demand may seem to create the
opportunity for CAFE benefit through the introduc-
tion of planned technological improvements, actual
physical constraints such as the availability of parts
may restrict the realization of the entire benefit of
the planned improvement, within the time between
now and production of MY 1990 vehicles.
Finally, Ford ascribes risk in achieving its MY 1990
CAFE level due to changes in the California NOx
regulations. As described in detail in the Federal
Standards section of this preamble, there will be
stricter Federal NOx standards for the heavier light
trucks beginning in MY 1990. In determining Ford's
capabilities, the agency included the very slight fuel
economy loss projected by Ford for this model year.
On April 24 and 25, 1986, the California Air
Resources Board adopted more stringent NOx stand-
ards for compact trucks. For model years 1990
through 1993, 85 percent of compact light trucks
(weighing under 4,000 pounds inertia weight) must
certify to a 0.4 grams per mile NO^ standard. Ford
ascribes a 0.05 mpg negative CAFE impact for both
MY 1990 and 1991 due to this requirement. The agen-
cy acknowledges, as it does with the Federal NOx
standard, that there may be a slight fuel economy loss
for MY 1990 as Ford gains experience with calibra-
tions for the more stringent standard.
In conclusion, the agency agrees with Ford that it
faces certain risks, beyond the ability of the company
to control or offset, that may result in its fuel economy
level only reaching the lower end of its projected
range of 20.0 mpg. The agency does not agree with
the further reduction of 0.1 mpg based on Ford's PMY
PART 533-PRE 128
1988 model mix projections. Further, the agency also
believes that some, but not all risks actually will oc-
cur, or have fuel economy reducing results. In addi-
tion, although the agency has identified some specific
technological improvements that may be im-
plemented by manufacturers, it has determined that
there is not adequate lead time for Ford to implement
these changes for its MY 1990 fleet. Accordingly, the
agency has determined that Ford's maximum feas-
ible fuel economy capability for MY 1990 is 20.0 mpg.
MY 1991. Ford's projected range for MY 1991
reflects a possible 0.1 mpg increase, although it
asserts that the risks present for the MY 1990 fleet
continue to be risks for MY 1991. While the agency
acknowledges the validity of the risks to the extent
discussed above, we also have determined that addi-
tional leadtime for the MY 1991 fleet lessen the ef-
fect of certain risks. In addition, the agency believes
that certain of the technological improvements
discussed in B.l. of this preamble are possible to im-
plement for MY 1991. Among the more promising of
these technical opportunities for Ford are engine fric-
tion reduction programs such as low friction piston
rings, roller cam followers and further application of
certain transmission improvements. The agency also
believes that, while gasoline prices have declined
substantially since the early 1980's, these prices
should remain stable through the early 1990's. Other
risks anticipated for MY 1990 and 1991 may also be
overcome by 1991, to the extent they are within the
range of actions possible for Ford to make. For exam-
ple, if the planned implementation of a certain
technological improvement has been delayed because
of plant capacity, this type of problem should be able
to be worked out by MY 1991.
Regarding the Federal and California NOx stand-
ards, the agency has concluded that by MY 1991, as
the company gains experience with calibrating
engines to the more stringent NOx standard. Ford
should be able to eliminate or substantially reduce
the projected penalty. Therefore, the agency has
eliminated this claimed penalty in assessing Ford's
MY 1991 fuel economy capability.
Accordingly, the agency believes that with the
added leadtime afforded Ford for MY 1991, several
of the risks ascribed to MY 1990 can be overcome.
Technological improvements identified as feasible
earlier in this preamble should, to some degree, be
able to be implemented by MY 1991. Consumer de-
mand remains a continuing concern for Ford's fleet,
but the introduction of new models should attract con-
sumers to more fuel efficient vehicles. Further, the
additional time to calibrate engines should dissipate
the risk identified in connection with compliance with
NOx requirements. For all of the above stated
reasons, the agency has concluded that Ford's max-
imum feasible CAFE capability for MY 1991 is 20.2
mpg.
General Motors
GM attributes the 0.4 mpg risk in its MY 1990 and
1991 CAFE projections entirely to the possibility that
continued market demand for performance will force
a shift to higher horsepower engines in its truck fleet
with the corresponding loss in fuel economy. As
already discussed in the Manufacturer Estimates sec-
tion of this preamble, GM also identified several other
circumstances which it believes will affect its CAFE
capability. These include GM product plans related
to engine changes, model modification and drive train
changes, as well as modification to previous estimates
due to CAFE testing and other unplanned for model
mix shifts. Although not quantified, GM also lists in
its comments the potential risk possible in other
Federal safety standards, emission standards, import
fleet competition, and low gasoline prices.
In support of its position that demand for higher per-
formance creates a real risk to its fuel economy per-
formance, GM submitted a letter to the agency on
January 15, 1988, describing the results of a con-
sumer satisfaction survey of GM's light trucks. The
data were acquired during each of the quarters of MY
1987 from buyers of GM and three competitive makes
of trucks. The survey results indicated levels of con-
sumer satisfaction with acceleration performance
among a number of light truck manufacturers. While
few details of the survey were provided (and those are
subject to a claim of confidentiality), the agency notes
from its own data, that GM's buyer satisfaction data
do not correlate with the fleet average horsepower-
to-weight ratio of the MY 1987 light trucks of the
surveyed manufacturers.
In NHTSA's final rule on MY 1989 light truck
CAFE standards (see 52 FR 6564), the agency con-
cluded that GM's decision to increase horsepower in
certain cases was an appropriate market-related ac-
tion for the purpose of competing with certain vehicles
produced by Ford, Chrysler, AMC, Nissan and Toyota.
While the agency maintains this position, GM did not
provide adequate information for the agency to assess
the market demand for such plans for MY 1990 and
1991. Furthermore, GM's projections for MY 1990 and
1991 include a higher rate of increase in performance
than in previous years. From the available data, the
agency concludes that GM would have to affirma-
tively change its plans to lower its CAFE levels by
0.4 mpg. The agency has determined that GM's max-
imum feasible fuel economy level for MY 1990 is in
a range from 20.0 mpg to 20.4 mpg. For MY 1991,
GM's maximum feasible fuel economy level is in a
range from 20.2 mpg to 20.4 mpg.
PART 533-PRE 129
Other Manufacturers
Chrysler requested that CAFE standards be set
within the range of the NPRM (20.0 mpg to 21.0 mpg),
even though it projects combined CAFE levels of 21.4
mpg for MY 1990 and 21.5 mpg for MY 1991.
Chrysler's 1988 PMY report estimates a CAFE level
of 21.6 mpg. Chrysler's request that the agency
establish a standard below its current projections ap-
pears to reflect its uncertainty concerning product
plans since its acquisition of AMC. Chrysler does not
constitute a least capable manufacturer with a
substantial share of the market and, as in the past,
the agency has not considered it appropriate to set
the CAFE level based on Chrysler's capabilities. The
agency also notes, however, that Chrysler should ex-
ceed the established CAFE standards for both MY
1990 and 1991.
The import manufacturers, except for VW, did not
respond to the NPRM. In the past, the light truck fuel
economy standards have not been difficult for most
importers to achieve, because their fleets have been
composed almost exclusively of small pickups, vans,
and utility vehicles. VW's CAFE levels have not been
as high as the CAFE standard in some of the
preceding years, but VW currently is projecting a
CAFE level of 20.5 mpg for MY 1988. This is above
the standard established for MY 1990 and 1991 in this
rulemaking.
The only other light truck import manufactiu-er
that has not met the CAFE standards in recent years
is Range Rover, which projects a 4WD CAFE of 16.7
mpg for MY 1988. Range Rover offers only one model
for sale in the United States, a relatively heavy (4,750
pound equivalent test weight), 4WD utility vehicle
that is imported in small quantities (3,600 units pro-
jected for MY 1988).
Several importers have 4WD fleets that will be close
to the 4WD alternate standeird of 19.5 mpg for MY
1988, including Nissan, Isuzu at 20.0 mpg, and
Chrysler Imports. All of these importers also have
2WD vehicles, so they have the option of meeting the
combined standard, which the agency believes they
can do easily. Further, all of these importers' MY
1988 projections exceed the alternate 4WD CAFE
standards for MY 1990 and 1991 established by this
rule.
DOE's comment (in a draft report on light truck fuel
economy prepared by EEA) on the NPRM contained
projections for MY 1990 of 21.8 mpg for Ford, 22.0
mpg for GM, and 22.9 mpg for Chrysler. (The agency
combined DOE's projections for Chrysler and AMC
to achieve this latter number.) The EEA projection
for Ford differs from the agency's projection of 20.0
mpg and exceeds Ford's actual and projected truck-
line fuel economies by one to two mpg. EEA's analysis
does not recognize market trends toward heavier
average weights within each truckline due to con-
sumer demand for higher option content and larger
PART 533-
versions within each truckline ("king cabs," etc.). For
example, between MY 1986 and 1988, the average
weights for types of light trucks (i.e., standard pick-
ups, compact bus, etc.) within Ford's product line
typically have risen by 100-200 pounds. This trend
is projected to continue between MY 1988 and 1990,
and is not captured in EEA's analysis. Thus, the new
or expanded applications of fuel economy improving
technologies tend to be offset by these market trends.
Ford's model specific fuel economies have not, on
average, improved between MY 1986 and its MY 1990
projection. Therefore, the agency has concluded that
EEA's projections overstate the maximum feasible
fuel economy levels.
EEA's projected average fuel economies for MY
1990, by truckline, are close to GM's, but typically
are higher by several tenths of an mpg. These dif-
ferences can be ascribed to different assumptions
concerning sales mix of various truck types, and the
application of certain technologies that are not con-
sistent with GM's product line. For example, EEA's
projections include the application of throttle body
fuel injection on some engines on certain models that
were already equipped with this feature in MY 1986.
In addition, EEA ascribed value to the introduction
of roller cam followers to more engines than is feasi-
ble to receive them by MY 1990. While we agree with
EEA that the introduction or expansion of roller cam
followers is a technology possible to be introduced in
the time available for MY 1991, EEA's use of MY
1986 as a baseline skews the value of many of its pro-
jected possible improvements. EEA also ascribes a
possible CAFE improvement for LT metric tires. The
agency does not consider LT metric tires to be of any
CAFE value, since it is the agency's understanding
that these tires are merely the metrification of tire
sizes, and provide no actual reduction in rolling re-
sistance. In addition, as in the case of Ford, GM has
experienced increased consumer demand for heavier
versions within each truckline between MY 1986 and
1988, resulting in typical average weight increases
of 125 to over 400 pounds. Furthermore, GM's
average engine size within trucklines has risen be-
tween MY 1986 and 1988. These market trends are
not captured in EEA's analysis. Thus, as in the case
of Ford, NHTSA has concluded that EEA's projections
overstate GM's maximiun feasible fuel economy level.
2WD and 4WD CAFE levels. For alternate CAFE
standards for 2WD and 4WD, the agency again looks
to the least capable manufacturer with a substantial
share of the market. For 4WD, this is GM with pro-
jected nominal CAFE levels of 19.0 mpg in MY 1990
and 19.1 mpg for MY 1991. The agency believes that
these numbers represent fairly the capabilities of GM
as a manufacturer of a 4WD fleet with the least fuel
economy capability and that GM faces no unusual
risk in meeting these levels. For 2WD, Ford appears
to be the least capable manufacturer with the 2WD
-PRE 130
CAFE range of 20.3 mpg to 20.7 mpg for both model
years. The agency believes that all risk factors in-
cluded in the lower value of this range will not oc-
cur, and, accordingly, Ford's \2WD CAFE capability
for MY 1990 is 20.5 mpg. For MY 1991, as in the case
of the combined standard, the agency believes that
there is sufficient leadtime for Ford to apply some,
if not all, of the technological improvements previ-
ously discussed, and to eliminate the negative CAFE
effects of complying with the new California NOx
standards. Accordingly, the agency concludes that
Ford's 2WD CAFE capability for MY 1991 is 20.7
mpg.
Agency Determination of the Maximum
Feasible Fuel Economy Level
As discussed above, section 502(b) requires that
light truck fuel economy standards be set at the
maximum feasible average fuel economy level. In
making this determination, the agency must consider
the four factors of section 502(e): Technological
feasibility, economic practicability, the effect of other
Federal motor vehicle standards on fuel economy, and
the need of the nation to conserve energy.
Interpretation of "Feasible"
Based on dictionary definitions and judicial inter-
pretations of similar language in other statutes, the
agency has in the past interpreted "feasible" to refer
to whether something is capable of being done. The
agency has thus concluded in the past that a standard
set at the maximum feasible average fuel economy
level must: (1) be capable of being done and (2) be at
the highest level that is capable of being done, tak-
ing account of what manufacturers are able to do in
light of available technology, economic practicability,
how other Federal motor vehicle standards affect
average fuel economy, and the need of the nation to
conserve energy.
Industrywide Considerations
The statute does not expressly state whether the
concept of feasibility is to be determined on a manu-
factiu-er-by-manufacturer basis or on an industrywide
basis. Legislative history may be used as an indica-
tion of congressional intent in resolving ambiguities
in statutory language. The agency believes that the
below-quoted language provides guidance on the
meaning of "maximum feasible average fuel economy
level."
The Conference Report to the 1975 Act (S. Rep. No.
94-516, 94th Cong., 1st Sess. 154-5 (1975)) states:
"Such determination [of maximum feasible
average fuel economy level] should take indus-
trywide considerations into account. For exam-
ple, a determination of maximum feasible aver-
age 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 in-
dividual manufacturers. Such difficulties, how-
ever, should be given appropriate weight in
setting the standard in light of the small num-
ber of domestic manufacturers that currently
exist, and the possible implications for the na-
tional economy and for reduced competition
association (sic) with a severe strain on any
manufacturer. ..."
It is clear from the Conference Report that Congress
did not intend that standards simply be set at the
level of the least capable manufacturer. Rather,
NHTSA must take industrywide considerations into
account in determining the maximum feasible
average fuel economy level.
NHTSA has consistently taken the position that it
has a responsibility to set light truck standards at a
level that can be achieved by a manufacturer or
manufacturers whose vehicles constitute a substan-
tial share of the market. See 49 FR 41251, October
22, 1984. The agency did set the MY 1982 light truck
fuel economy standards at a level which it recognized
might be above the maximum feasible fuel economy
capability of Chrysler, based on the conclusion that
the energy benefits associated with the higher stand-
ard would outweigh the harm to Chrysler. (45 FR
20871, 20876; March 31, 1980) However, as the
agency noted in deciding not to set the MY 1983-85
light truck standards above Ford's level of capabil-
ity, Chrysler had only 10-15 percent of the light truck
domestic sales, while Ford had about 35 percent. (45
FR 81593, 81599; December 11, 1980) More recently,
both the MY 1988 and 1989 CAFE rulemakings
acknowledged that the standards established would
most likely be at levels higher than those achievable
by VW. (51 FR 15335, 15345, April 23, 1986, and 52
FR 6564, 6575, March 4, 1987.)
Petroleum Consumption
The precise magnitude of energy savings associated
with alternative light truck fuel economy standards
is uncertain. The FRIA provides calculations for the
hypothetical lifetime fuel consumption of the MY
1990-1991 domestic light truck fleets assuming those
same fleets could and would achieve alternative
CAFE levels. In estimating the effect of the proposed
range of mpg values being considered on lifetime fuel
consumption of the MY 1990 and 1991 fleets, the
agency considered only the GM and Ford light truck
fleets, since the product plans of other light truck
manufacturers are unlikely to be affected by this rule.
PART 533-PRE 131
Based on the average projected sales for GM and
Ford during the 1990 and 1991 model years, a CAFE
level of 21.0 mpg could hypothetically result in the
use of 433 million fewer gallons over the fleet's
lifetime compared to the MY 1989 standard of 20.5
mpg. A fuel economy level of 20.5 mpg would save
455 million gallons relative to a fuel economy level
of 20.0 mpg. Relative to a CAFE of 20.0 mpg, a CAFE
level of 20.2 mpg would save 185 million gallons. Cor-
responding estimates for 1991 are a savings of 448
million gallons for 21.0 mpg over 20.5 mpg, a savings
of 471 million gallons for 20.5 mpg over 20.0 mpg, and
a savings of 191 million gallons for 20.2 mpg over 20.0
mpg.
However, it is possible that manufacturers may be
able to achieve higher CAFE levels only by restrict-
ing the sales of their large light trucks or more power-
ful engines. If this occurred, consumers might tend
to keep their older, less fuel-efficient light trucks in
service longer. Also, to the extent that a particular
manufacturer might find it necessary to restrict sales
of particular engines or vehicles, consumers may be
able to transfer their purchases to another manufac-
turer which may have less difficulty meeting the
CAFE standard, but can offer comparable engines or
vehicles. Thus, the agency believes that the actual im-
pacts, if any, on energy consumption of alternative
higher fuel economy standards, could be much less
than the theoretical calculations comparing different
levels of industrywide CAFE.
Setting the 1990 and 1991 Standards
Based on the analysis described above and on
manufacturer projections, the agency concludes that
the manufacturers can achieve the combined fuel
economy levels in the following table:
truck sales, Ford is the least capable manufacturer,
with a MY 1990 combined fuel economy capability
of 20.0 mpg.
The setting of maximum feasible fuel economy
standards, based on consideration of the four required
factors, is not a mere mathematical exercise, but re-
quires agency judgment. In determining the maxi-
mum feasible CAFE standard, NHTSA must weigh
the benefits to the nation of a higher average fuel
economy standard against the difficulty of individual
manufacturers facing potentially higher fuel economy
standards and industrywide considerations, as indi-
cated in the legislative history of the fuel economy
act. (See the language of the Conference Report
quoted above.)
NHTSA has concluded that 20.0 mpg is the maxi-
mum feasible combined standard for MY 1990, and
20.2 mpg is the maximum feasible combined stand-
ard for MY 1991.
Ford projects a CAFE range of 19.9 mpg to 20.4 mpg
for MY 1990, and a CAFE range of 19.9 mpg to 20.5
mpg for MY 1991. As discussed at length previously,
the agency believes that several of the risks identi-
fied by Ford must be anticipated as happening, which
limits their ability to achieve the higher end of their
CAFE estimates. The principal factor offsetting these
risks for MY 1991 is additional leadtime, which pro-
vides Ford the opportunity to implement alternative
methods of improving its CAFE. Setting the MY 1990
standard at 20.0 mpg and the MY 1991 standard at
20.2 is well within the range of Ford's projections,
without causing significant economic distortion. Fur-
ther, it should act as an incentive for that company
to achieve its maximum fuel economy capability.
Since Ford represents nearly a third of all light trucks
subject to fuel economy standards, a standard set at
Ford's maximum feasible level can make a substan-
Manufacturer
1990
Combined
CAFE (mpg)
1991
Combined
CAFE (mpg)
Approximate
Market Share*
(percent)
Chrysler
Ford
GM
Volkswagen
21.4
20.0
20.0-20.4
20.5**
21.5
20.2
20.2-20.4
20.5**
17
30
32
less than 0.2
*Based on Calendar Year 1987 sales figures.
**VW submitted no CAFE projections in its comments on the NPRM. The values shown are from its 1988
PMY Report.
As noted previously, foreign manufacturers other
than VW only compete in the small vehicle portion
of the light truck market and are therefore expected
to achieve CAFE levels well above Ford, GM and
Chrysler, which offer full ranges of light truck models.
NHTSA has concluded that among the manufac-
turers with a substantial share of combined light
tial contribution to petroleum conservation.
NHTSA does not believe that a standard set at a
level above Ford's capability would be consistent with
the requirement that standards be set taking indus-
trywide considerations into account, given that com-
pany's market share and given the questionable
effects of a higher standard on petroleum consump-
PART 533-PRE 132
tion. Even if the MY 1990 and 1991 standards could
be set at a level above Ford's capability, however, the
agency believes that it could not be set above both
Ford's and GM's capabilities, since those companies'
combined market share exceeds 60 percent. As noted
previously, the agency's estimate of GM's maximum
capability for MY 1990 is 20.0 mpg-20.4 mpg and for
MY 1991 is 20.2 mpg-20.4 mpg, similar to the stand-
ards being adopted for the two model years in this
rulemaking.
The precise effects on petroleum conservation of a
standard set higher than Ford's projected capability
are uncertain. Since most other manufacturers in the
industry project MY 1990 and 1991 CAFE levels
above that of Ford's capability, a standard set at
20.5 mpg would not be expected to affect the petro-
leum consumption of trucks manufactured by that
part of the industry. The agency believes that any ac-
tual gasoline savings associated with a standard set
higher than Ford's capabilities would be minimal,
given the comparative capabilities of other light truck
manufacturers.
Restricting sales of its larger light trucks by either
GM or Ford could result in purchasers of these ve-
hicles and engines looking elsewhere for the same
product. To a certain extent, sales of many light
trucks are relatively inelastic; that is, purchasers buy
light trucks with certain specifications based on ac-
tual work or recreational needs. To the extent that
purchasers do transfer their sales to other manu-
facturers, there is little or no effect on petroleum
consumption.
A higher standard than 20.0 mpg for MY 1990 or
20.2 mpg for MY 1991 could result in serious eco-
nomic difficulties for Ford. While the agency con-
cluded that Ford's capability for MY 1989 was 21.0
mpg, it also stated in the MY 1989 final rule that
Ford's maximum achievable CAFE could be as low
as 20.2 mpg. This conclusion was based primarily on
the agency's analysis that virtually all of the decline
in Ford's CAFE was due to reasons beyond the com-
pany's control. NHTSA believes that the first poten-
tial fuel-efficiency enhancing actions that Ford or any
other manufacturer would consider in response to a
higher standard with a short leadtime would consist
primarily of marketing actions. For the reasons dis-
cussed earlier in this notice, however, the agency does
not believe that marketing actions can be relied upon
to significantly improve fuel economy. Assuming that
such marketing actions were unsuccessful in whole
or in part, Ford would likely have to engage in prod-
uct restrictions, including limiting the sales of larger
engines and/or vehicles to improve its fuel economy.
Such product restrictions could result in adverse
economic consequences for Ford, its employees, and
the economy as a whole and unduly limit consumer
choice, especially with regard to the load carrying
needs of light truck purchasers.
The agency believes that the current situation of
low, stable gasoline prices can create significant dif-
ficulties for individual manufacturers facing higher
CAFE standards. Steady, low prices for gasoline have
resulted in many consumers choosing larger vehicles
and more powerful engines. While the magnitude of
such shifts is limited to some extent by the fact that
trucks are purchased largely with respect to work-
performing or specific recreational capabilities, low
gasoline prices can nonetheless result in mix shifts
which lower manufacturers' CAFE. The magnitude
of the recent drop in gasoline prices makes it partic-
ularly difficult for manufacturers such as Ford to at-
tempt to use marketing efforts to overcome such shifts
in consumer demand.
NHTSA is particularly concerned about the impact
of CAFE standards on American jobs. In assessing
this issue, NHTSA estimated the sales and job effects
associated with the product restrictions that would
be required for Ford to raise its CAFE by 0.5 mpg.
As discussed previously, such product restrictions
could result in a sales loss to Ford of as many as
122,000 light trucks for MY 1990 and 126,000 for MY
1991. This would translate into significant lost jobs
at Ford and supplier companies.
Given Ford's thirty percent sh£u-e of the light truck
market, its capability has a significant effect on the
level of the industry's capability and, therefore, on
the level of the standards. The agency believes that
for Ford, the MY 1990 CAFE standard of 20.0 mpg
and the MY 1991 CAFE standard of 20.2 mpg bal-
ance the potentially serious adverse economic conse-
quences associated with market and technological
risks against that company's capabilities as the least
capable manufacturer with a substantial share of
sales. The agency concludes, in view of the statutory
requirement to consider several factors, that the rel-
atively small and uncertain energy savings associated
with setting a standard above Ford's capability would
not justify the economic harm to that company, Amer-
ican workers, and the economy as a whole.
All of the comments submitted on this rulemaking
recommended that the agency adopt a combined
CAFE standard within the range of 20.0 mpg-20.5
mpg. Different manufacturers requested different
specific levels, based on their specific capabilities
assessment. Ford requested that the standard be set
"at levels no higher than 20.0 mpg" for both model
years. Ford stated that "the very real uncertainties
with respect to forecasts of future market conditions,
technology and the effects of other Federal standards
warrant establishment of the standards at a level no
higher than the lower end of the range proposed by
NHTSA." GM argued that the MY 1990 and 1991
combined CAFE standards need to be established "no
higher than the lower proposed limit of 20.0 mpg. GM
cited as uncertainties facing manufacturers factors
such as "future fuel prices, market share of small
PART 533-PRE 133
truck sales achieved by foreign manufacturers, and
changes in consumer purchasing patterns." GM went
on to say that "These uncertainties combine to place
a full-line manufacturer, such as GM, at risk of fail-
ing to achieve CAFE forecasts. Therefore, light-duty
truck standards established at the bottom of the range
proposed by NHTSA (20.0 mpg) may prove to be too
stringent for these model years."
Chrysler, while projecting fuel economy levels of
21.4 mpg for MY 1990 and 21.5 mpg for MY 1991,
also requested that the combined CAFE standards for
MY 1990 and 1991 be set within the proposed range.
Chrysler faces somewhat different uncertainties than
those faced by Ford and GM, since it is involved in
reviewing product plans for the company in light of
its recent purchase of AMC. Given this, Chrysler's
comment indicated that it "would be supportive of
NHTSA carrying over the present 1989 light truck
combined CAFE standard of 20.5 mpg for the 1990-
1991 model years."
In response to the NPRM, VW submitted only gen-
eral comments, iterating its concern about its com-
pliance efforts in light of the fact that it is a "single
line" manufacturer, and renewing its earlier request
that the agency establish separate standards for man-
ufacturers in this situation. In its MY 1989 rulemak-
ing, the agency explained that it had established a
separate standard for MY 1980-81 for International
Harvester (IH). In doing so, the agency acknowledged
circumstances unique to IH, including not just its
restricted product line, but also its limited sales vol-
ume, engines derived from medium duty truck (above
10,000 pound Gross Vehicle Weight Rating) engines,
and that IH had no experience with state-of-the-art
emission control technology which other manufac-
turers had gained in the passenger automobile mar-
ket. The agency emphasized in this rulemaking that
the alternate standard was being established only for
two years, concluding that IH should be able to
achieve levels of fuel efficiency in line with other
manufacturers within that time period— either
through purchasing engines from outside sources or
by making improvements to current engines. In its
MY 1989 rulemaking, NHTSA noted that VW's cir-
cumstances are not analogous to those of IH, for the
above reasons, but also because most of IH's difficulty
resulted from its newness at having to comply with
fuel economy standards. Since VW has extensive ex-
perience in complying with the passenger car CAFE
standards, this is not the case for them.
In the MY 1990-1991 NPRM, the agency again
stated that it did not consider VW's request appro-
priate, noting that it tentatively declined to propose
a separate standard to accommodate VW's limited
line product status. VW's comments on the NPRM in-
cluded the position that specific CAFE standards were
difficult for a single line manufacturer, since they
were denied the benefits of averaging. Finally, VW
requested that "Should NHTSA be compelled to pro-
pose a specific standard for 1990-1991 model years,
[we suggest] NHTSA establish CAFE standards no
more stringent than the current standards and pref-
erably set the new CAFE standards at or below the
low end of the proposed range." VW provided no
specific data with its comments. However, in its 1988
PMY Report, VW projects a CAFE level of 20.5 mpg,
which is higher than the standards being established
in this rulemaking for both MY 1990 and 1991. Ac-
cordingly, the agency does not believe that VW has
further need to request special consideration for be-
ing a single line manufacturer, since its estimates
exceed the new standard.
The only other comment submitted on this rule-
making was from the National Automobile Dealers
Association (NADA). NADA supports the lower fig-
ure of each of the proposed standards, recommending
that NHTSA establish 1990-1991 CAFE standards of
20.0 mpg for the combined standard, 20.5 mpg for the
2WD standard, and 19.0 mpg for the 4WD standard.
NADA bases its recommendations on the current low
fuel prices. In addition, however, NADA states that
such actions as product restrictions to meet CAFE
standards, by definition, make the standard econom-
ically impracticable, because consumer decisions to
purchase specific types of light truck vehicles cannot
be shifted by market incentives. NADA states what
the agency has acknowledged in previous rulemak-
ings, as well as elsewhere in this document: light
trucks are most often purchased for their utility and
performance characteristics. NADA states:
Potential purchasers focus on vehicle utility and
durability. Four-wheel drive options are essen-
tial for off-road commercial and recreational use
and increasingly are purchased as an on-road
safety feature. Four-wheel drive options add
weight and lower vehicle fuel economy. Towing
configurations or "packages" also add weight
through larger engines and equipment. Towing
characteristics are essential to meet the require-
ments of a booming recreational market as well
as the needs of the farmer or construction con-
tractor. Large vans have replaced over sized
buses for moving smaller groups of people such
as sports teams or workers. At the same time,
small vans have replaced station wagons as the
family vehicle and are increasingly equipped
with four-wheel drive.
As in previous rulemakings, the agency has decided
to continue 2WD and 4WD standards as an alterna-
tive to the combined standard. Separate 2WD/4WD
standards allow manufacturers greater flexibility in
planning to meet CAFE standards and do not discrim-
inate against firms with truck fleets heavily weighted
toward the generally less fuel efficient 4WD models.
PART 533-PRE 134
NHTSA has concluded that GM is the least capa-
ble manufacturer with the substantial share of 4 WD
light truck sales, and has focused on its capability in
establishing the separate 4WD standard. As discussed
earlier in the notice, the agehcy concluded that 19.0
mpg is that company's maximum 4WD fuel economy
capability for MY 1990, and 19.1 mpg for MY 1991.
Both Ford and Chrysler appear likely to meet the
4WD standard. VW did not submit current data in
response to the NPRM, and said in its December 1986
response to the agency's questionnaire that its prod-
uct plans were not different from those of MY 1987.
These projections included a 4WD CAFE level of 18.4
mpg. VW's 1988 PMY report projects a 4WD level of
18.6 mpg. The 18.4 mpg figure is below GM's esti-
mated 19.0 mpg figure for 1990, although it is the
same as Ford's broad estimate submitted for MY
1990. (Ford projects a MY 1990 4WD CAFE level in
the range of 18.4 mpg to 19.5 mpg.) There is no other
manufacturer close to this situation except Range
Rover, a limited line manufacturer of a 4,750 pound
4WD utility vehicle. While Range Rover has no other
models against which to balance its low 4WD CAFE
level, VW projects a combined CAFE level of 20.5 mpg
for MY 1988. If this trend continues VW will meet
both the MY 1990 and 1991 CAFE combined stand-
ard. Since VW can meet the combined standard, it is
unnecessary for it to be able to meet the separate
standards.
NHTSA has concluded that Ford is the least capa-
ble manufacturer with a substantial share of 2WD
light truck sales, and has focused on Ford in estab-
lishing the separate 2WD standard. Ford's projected
2WD capability for MY 1990 is a range of 20.4 mpg
to 20.7 mpg and for MY 1991 20.3 mpg to 20.7 mpg.
GM is projecting a 2WD CAFE level of 21.0 mpg for
both model years and Chrysler is projecting 22.0 mpg
for both years. Volkswagen did not submit current
data, but indicated a MY 1988 2WD capability of 20.5
mpg in its Pre-model Year Report. As discussed ear-
lier in the notice, the agency concludes that Ford's
maximum 2WD fuel economy capability is 20.5 mpg
for MY 1990 and 20.7 mpg for MY 1991. Accord-
ingly, these are the 2WD CAFE levels adopted by the
agency.
In consideration of the foregoing, 49 CFR Part 533
is amended as follows:
Table II in § 533.5(a) is revised as set forth below:
§533. 5(d) is revised to read as follows:
(d) For model years 1982-91, each manufacturer
may:
(1) Combine its 2- and 4-wheel drive light trucks
(segregating captive import and other light trucks)
and comply with the combined average fuel economy
standard specified in paragraph (a) of this section; or
(2) Comply separately with the 2-wheel drive stand-
ards and the 4-wheel drive standards (segregating
captive import and other light trucks) specified in
paragraph (a) of this section.
Table II
Combined
2-wheel drive
4-wheel drive
Standard
light
trucks
light trucks
Model Year
Captive
Imports
Others
Captive
Imports
Others
Captive
Imports
Others
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
1987
. 20.5
20.5
21.0
21.0
19.5
19.5
1988
20.5
20.5
21.0
21.0
19.5
19.5
1989
. 20.5
20.5
21.5
21.5
19.0
19.0
1990
. 20.0
20.0
20.5
20.5
19.0
19.0
1991
. 20.2
20.2
20.7
20.7
19.1
19.1
Issued on Mar. 31, 1988.
Diane K. Steed
Administrator
53 F.R. 11074
April 5, 1988
PART 533-PRE 135-136
PREAMBLE TO AN AMENDMENT TO PART 533
Light Truck Average Fuel Economy Standards
(Docket No. FE-88-03; Notice 3)
RIN 2127-AC51
ACTION: Final rule.
SUMMARY: This notice establishes the average fuel
economy standard for light trucks manufactured in
model year (MY) 1992. Issuance of the standard is
required by Title V of the Motor Vehicle Information
and Cost Savings Act. For MY 1992, the combined
standard for all light trucks manufactured by a
manufacturer is 20.2 mpg. The agency is not setting
optional separate two-wheel drive and four-wheel
drive standards.
DATES: The amendment is effective May 4, 1990.
The standard applies to the 1992 model year.
I. Background
Issuance of light truck fuel economy standards is
required by section 502(b) of the Motor Vehicle
Information and Cost Savings Act (15 U.S.C.
2002(b)). That section requires the Secretary of
Transportation to set light truck fuel economy stan-
dards at the maximum feasible average fuel econ-
omy level for each model year after 1978. In deter-
mining maximum feasible average fuel economy
levels, the Secretary is required under section 502(e)
of the Act to consider four factors: technological
feasibility, economic practicability, the effect of other
Federal motor vehicle standards on fuel economy,
and the need of the nation to conserve energy. See 15
U.S.C. 2002(e). Responsibility for the automotive
fuel economy program was delegated by the Secre-
tary of Ti-ansportation to the Administrator of
NHTSA (41 FR 25015, June 22, 1976)). Pursuant to
this authority, the light truck standards set most
recently by the agency have been 20.0 mpg for MY
1990 and 20.2 mpg for MY 1991.
On January 6, 1989, NHTSA published in the
Federal Register a Request for Comments seeking
data on manufacturers' light truck fuel economy
capabilities for model years (MY) 1992-94 (54 FR
436). All of the domestic light truck manufacturers
responded, as did several foreign manufacturers.
Aftf^f analyzing the responses to the Request for
)mi. mts and reviewing other available data,
v'HTSA published a notice of proposed rulemaking
NPR-I) proposing ranges of standards for light
truck average fuel economy standards for MY 1992-
94. 55 FR 3608 (February 2, 1990). For MY 1992, the
proposed range was between 20.2 mpg and 21.0 mpg.
For MY 1993, the proposed range was between 20.2
mpg and 21.5 mpg. The proposed range for MY 1994
was between 20.2 mpg and 22.0 mpg. These ranges
were based on the agency's tentative evaluation of
manufacturer capabilities. In past light truck CAFE
rulemakings, the agency has provided manufactur-
ers with the option of dividing their light trucks into
two fleets, a two-wheel drive (2WD) fleet and a
four-wheel drive (4WD) fleet and meeting a separate
standard for each fleet. However, the NPRM noted
NHTSA's intention to discontinue setting these sep-
arate alternative standards, in favor of a single
standard, beginning with MY 1992. As discussed
below, the final rule adopts this approach, and sets a
single combined standard for MY 1992.
NHTSA has postponed final rulemaking for model
years 1993 and 1994. The limited time available to
promulgate a final rule for MY 1992 has precluded a
thorough consideration of issues related to light
truck CAFE standards for those latter model years.
The later issuance of the final MY 1993-94 stan-
dards may also have the advantage of giving NHTSA
the benefit of more definitive information about
amendments to the Clean Air Act and their poten-
tial impact on fuel economy for those model years.
The agency received comments from (General Mo-
tors, Ford, Chrysler, Nissan, the U.S. Department of
Energy, the Natural Resources Defense Council, the
Western Interstate Energy Board, the Energy Con-
servation Coalition and the National Automobile
Dealers Association. The issues raised by the com-
menters are discussed below.
II. Summary of Decision for Model Year 1992.
Based on its analysis, the agency is establishing a
combined average fuel economy standard for MY
1992 at 20.2 mpg. Alternative separate standards for
2WD and 4WD light trucks are not being estab-
lished. A decision will be reached later this year
with respect to the light truck standards for MY
1993-94.
PART 533; PRE 137
III. Manufacturer Capabilities for MY 1992.
As part of its consideration of technological feasi-
bility and economic practicability, the agency has
evaluated manufacturers' fuel economy capabilities
for MY 1992-94. In making this evaluation, the
agency has analyzed manufacturers' current projec-
tions and underlying product plans and has consid-
ered what, if any, additional actions the manufactur-
ers could take to improve their fuel economy. A more
detailed discussion of these issues is contained in the
agency's Final Regulatory Impact Analysis (FRIA),
which has been placed in the docket for this rulemak-
ing. Some of the information included in the FRIA,
including the details of manufacturers' future product
plans, has been determined by the agency to be confi-
dential business information, release of which could
cause competitive harm. The public version of the
FRIA omits the confidential information.
A. Manufacturer Projections
General Motors: As discussed in the NPRM, Gen-
eral Motors (GM) projected in March 1989 that it
could achieve a combined CAFE level of 20.6 mpg in
MY 1992. In its March 1990 comments on the
NPRM, GM has revised its projection slightly up-
ward, to 20.7 mpg. GM attributes this slight in-
crease in its MY 1992 projection to adjustments to
projected powertrain and model mixes, and to minor
adjustments of estimated MY 1992 fuel economy for
certain models.
By comparison, in a pre-model year report submit-
ted in December 1989, GM projected a MY 1990
CAFE of 19.6 mpg. The improvement projected by
GM between MY 1990 and MY 1992 is attributable
to several factors, including the introduction of the
GEO Tracker to the domestic 4WD fleet, increased
penetration of certain engine technologies and aero-
dynamic improvements, a slight weight decrease
and a shift toward more efficient models, for a net
improvement by MY 1992 over MY 1990 of 1.1 mpg.
However, in making its projection for MY 1992,
GM noted that the actual level it achieved could be
lower due to various uncertainties such as fuel
prices, consumer demand for increased power and
performance, new safety requirements and increas-
ing competition in the light truck market. GM also
stated that certain program risks (subject to a claim
of confidentiality) could cause a decline in GM's
projected MY 1992 CAFE to 20.5 mpg. GM recom-
mended that the MY 1992 standard be set at or near
the low end of the proposed range.
Ford
Ford projected in March 1989 that it could achieve
CAFE levels of 19.9 mpg to 20.2 mpg in MY 1992. By
comparison, in a pre-model year report submitted in
December 1989, Ford projected a MY 1990 combined
light truck CAFE of 20.1 mpg. In its March 1990
comments on the NPRM, Ford has revised its MY
1992 projection upward, to a range of between 20.1-
20.5 mpg. Ford attributes the increase to several
minor adjustments to its computer-generated projec-
tion, and to a number of small technology improve-
ments. In addition. Ford's projection now takes into
account the fuel economy benefits expected from the
use of Fuel Economy Data Vehicles (FEDV's) in fuel
economy testing. These changes raise Ford's MY
1992 projection to 20.5 mpg. However, the company
believes this figure should be adjusted to account for
risks and optJortunities, and that when adjusted, the
revised figure, corresponding to the low end of Ford's
projection, is 20.1 mpg. These considerations include
such factors as whether FEDV fleet testing will
produce a benefit as high as that projected by Ford in
its 20.5 mpg projection and by NHTSA in the NPRM
(a 0.3 mpg gain), certain technological improve-
ments achieving results higher or lower than antic-
ipated, and potential mix shifts. Ford provides a 0.3
mpg increase based on potential FEDV testing ben-
efits, but then factors in a 0.2 mpg risk for potential
FEDV results below that level. In support of its
analysis. Ford indicates that it only achieved a 0.04
mpg benefit from FEDV testing for MY 1989.
In its response to the NPRM, Ford also empha-
sized the potential effect on CAFE of factors beyond
its control, including unforeseen but normal techno-
logical shortfalls from the technological changes
listed in its comments, the potential for increased
import market share and concomitant loss of domes-
tic share in the compact truck market segment, and
the pending safety requirements for light trucks. In
addition. Ford indicated that continued low fuel
prices could further increase the market demand for
full-size light trucks, larger engines and increased
optional equipment, causing a decline in its CAFE.
Ford recommended that the MY 1992 standard be
set at 20.2 mpg.
Chrysler
Chrysler projected in March 1989 that it could
achieve a CAFE level of 21.0 mpg in MY 1992. By
comparison, Chrysler's December, 1989 pre-model
year report for MY 1990 indicated a MY 1990 CAFE
of 21.6 mpg. The 0.6 mpg decline from MY 1990 to
MY 1992 is a result of product changes and revised
fuel economy estimates for certain models. In its
March 1990 response to the NPRM, Chrysler pro-
jected its MY 1992 CAFE at 21.2 mpg. This addi-
tional projected increase is the result of several
technical improvements now planned for MY 1992
along with revised fuel economy projections, which
would raise Chrysler's fuel economy level 0.5 mpg
However, these changes are offset in part by revisei
m
PART 533; PRE 138
mix projections and product changes, for a net im-
provement of 0.2 mpg.
Several assumptions underlie Chrysler's fuel econ-
omy projection. These include assuming that the
• projected model mix accurately reflects market de-
mands, that the variability of actual fuel economy
test values is no greater than anticipated, and that
running changes to its products do not have an
adverse cumulative effect. Chrysler also pointed to
the U.S. economy as a factor which could negatively
impact its CAFE if economic conditions worsen to
the point that they necessitate the delay or postpone-
ment of certain plans. The company also expressed
concern about the potential CAFE impact of the
increased safety requirements due to be imposed on
light trucks by MY 1992. Because of these factors,
Chrysler recommended a standard of 20.2 mpg for
MY 1992, even though its current MY 1992 projec-
tion is 21.2 mpg.
Other Manufacturers
Volkswagen (VW) currently offers only one light
truck model, the Vanagon compact bus. Volkswa-
gen's combined light truck CAFE for MY 1990 is
estimated at 21.0 mpg. VW indicated in its response
to the January 1989 questionnaire that it has no
significant plans to increase fuel economy by MY
1992. The company's product plans are indefinite,
but may involve a larger engine, or a front wheel
drive model.
Range Rover projected its light truck CAFE for
MY 1989 at 15.3 mpg in April 1989. At that time,
the company did not expect any significant fuel
economy improvement by MY 1992. However, the
company has projected its 1990 CAFE at 16.3 mpg,
1.0 mpg higher than their MY 1989 projection.
Other foreign light truck manufacturers only com-
pete in the small vehicle portion of the light truck
market and are therefore expected to achieve CAFE
levels well above GM and Ford.
B. Possible Additional Actions to Improve MY
1992 CAFE
There are additional actions which the agency ana-
lyzed to improve manufacturers' CAFE's above the
levels which they currently project for MY 1992. These
actions may be divided into three categories: further
technological changes to their product plans, increased
marketing efforts, and product restrictions.
1. Further Technological Changes
The ability to improve CAFE by further techno-
logical changes to product plans is dependent on the
availability of fuel efficiency enhancing technologies
which manufacturers are able to apply within the
available leadtime.
The agency's FRIA discusses the fuel efficiency
enhancing technologies which are expected to be
available by MY 1992. Limited leadtime is a con-
straint for MY 1992 on the increased use of these
technologies. NHTSA recognizes that the leadtime
necessary to implement significant improvements in
engines, transmissions, aerodynamics and rolling
resistance is typically about three years. Also, as the
agency discussed in establishing the final rule for
MY 1990-91, once a new design is established and
tested as feasible for production, the leadtime neces-
sary to design, tool, and test components such as new
body sheet-metal subsystems for mass production is
typically 22 to 29 months. Other potential major
changes may take longer. Leadtimes for new vehicles
are usually at least three years.
Given leadtime constraints, the agency does not
believe that manufacturers can achieve significant
improvements in their projected MY 1992 CAFE
levels by additional technological actions. Some im-
provements are, of course, possible due to slight
increases in the penetration of more fuel efficient
technology or changes in model mix. However, such
changes are likely to be market driven, and are not
likely to provide an increase of more than 0.1 mpg
for any manufacturer.
2. Increased Marketing Efforts
As discussed in the NPRM, NHTSA believes that
the ability to improve light truck CAFE by market-
ing efforts is relatively small. Light trucks are often
purchased for their work-performing capabilities.
This is particularly true for the larger, less fuel-
efficient light trucks. Since the smaller light trucks
cannot meet the needs of all light truck users, the
manufacturers' ability to use marketing efforts to
encourage consumers to purchase smaller light
trucks instead of larger light trucks is limited.
As a practical matter, marketing efforts to im-
prove CAFE are largely limited to techniques which
either make fuel-efficient vehicles less expensive or
less fuel-efficient vehicles more expensive. Moreover,
the ability of a manufacturer to increase sales of
fuel-efficient light trucks depends in part on increas-
ing its market share at the expense of competitors or
pulling ahead its own sales from the future. The
ability of domestic manufacturers to make such
sales increases is also affected by the strong compe-
tition in that market from Japanese manufacturers.
While the Japanese manufacturers currently have
an overall combined market share of about 30 per-
cent of light trucks, their share for the smaller, more
fuel-efficient light trucks is about 45 percent.
A problem with pulling ahead sales is that the
manufacturers' CAFE levels for subsequent years
are reduced. For example, if a manufacturer im-
proves its MY 1992 CAFE by pulling ahead sales of
fuel-efficient light trucks from MY 1993, its MY
PART 533; PRE 139
1993 CAFE will decrease, compared with the level it
would have been in the absence of any pull-ahead
sales attributable to marketing efforts. For this
reason, a manufacturer cannot continually improve
its CAFE simply by pulling ahead sales.
Given these considerations, NHTSA concludes
that the domestic manufacturers cannot signifi-
cantly improve their MY 1992 CAFE levels through
increased marketing efforts.
3. Product Restrictions
As an alternative to technological improvements,
manufacturers could improve their CAFE by re-
stricting their product offerings (e.g., limiting or
deleting production of particular larger light truck
models and larger displacement engines). Such prod-
uct restrictions could have adverse economic impacts
on the industry and the economy as a whole. The
FRIA presents a scenario as an example in which
GM and Ford are assumed to restrict production of
sufficient numbers of their least fuel-efficient light
truck models to obtain a 0.5 mpg improvement in
CAFE beyond their projected capabilities for MY
1992. Under this scenario, GM could suffer a sales
loss of up to 171,000 light trucks for MY 1992, while
Ford could experience a sales loss of more than
168,000 light trucks in MY 1992. The potential job
losses under this scenario in manufacturing and
supplier industries could total 23,000 to 68,000 for
MY 1992. These numbers are probably overstated,
since, as GM has stated in past light truck rulemak-
ings, and Ford has stated in its comments on this
rule, product restrictions of the type envisioned
above would likely be considered only after attempt-
ing marketing efforts and restricting the availabil-
ity of particular engines and axle ratios. Ford and
GM both submitted analyses of the sales and em-
ployment impact of setting the standard at 0.5 mpg
beyond their respective capabilities. Both manufac-
turers' analyses show impacts much less than those
projected above. However, the scenario is illustrative
of the types of impacts that could result from stan-
dards that exceed manufacturers' true capabilities.
In addition to the adverse impacts on the automotive
industry, a wide range of businesses could be seri-
ously affected to the extent that they could not
obtain the light trucks they need for business use.
The U.S. Department of Energy (DOE) commented
that NHTSA's method of analysis yields estimates of
economic impacts that are so much larger than those
that would actually occur, that it may not be mean-
ingful to consider them. Although not advocating
the payment of fines as an alternative to compliance,
DOE suggests that the fines paid in such a circum-
stance would be a better context in which to evaluate
the maximum negative impacts of a standard 0.5
mpg above the manufacturers' capability.
DOE's illustration is as follows: A fine of $25 per
truck (which would be the fine for falling 0.5 mpg
below the standard) for approximately 4 million
trucks would amount to $100 million, or $230 per
truck for each truck that NHTSA assumes will not
be sold in the scenario presented in the FRIA. If the
fines were passed on to consumers in the form of
price increases, DOE estimates the net loss of truck
sales would be less than 10,000 vehicles. Using
NHTSA's figures on the number of jobs per vehicle,
DOE calculates that the maximum net loss of jobs
would be less than 2,000.
NHTSA does not dispute DOE's analysis for the
case where manufacturers choose to pay penalties
rather than comply with a standard beyond their
capability. However, NHTSA's analysis focuses on
the maximum impacts that would occur if manufac-
turers chose to comply with the standau-d through
product restrictions, or were forced to so comply be-
cause marketing or other measures were unsuccessful.
The agency believes it would be a meaningless
exercise to estimate employment losses based on the
assumption that manufacturers pay fines rather
than restrict production to meet standards. No fuel
savings would result from setting higher standards
if manufacturers paid fines instead of actually rais-
ing their CAFE values. Under this scenario, higher
fuel economy standards would merely result in
higher truck prices, lower sales, and increasing
unemployment, without any energy conservation
benefits. This scenario is not appropriate for the
agency to consider Moreover, the agency believes the
statute directs us to consider the maximum fuel
economy level that manufacturers can achieve,
rather than the impact of penalties paid if the
standards are not achieved.
Ford's comments expressed concern that establish-
ing a CAFE standard beyond its capability could
result in a substantial loss of sales, adverse employ-
ment effect, and economic hardship. The company is
also concerned that product restrictions could have a
substantial impact on Ford's competitiveness by
restricting the availability of certain engines in
larger models, and possibly by requiring the deletion
of some full-size products entirely. The company also
stated that market research data show that the
vehicles most likely to be restricted are used for a
combination of commercial as well as personal uses.
In its comments, GM expressed concern about the
impact of product restrictions on consumer choice
and industry employment. GM also provided data
showing the impact product restrictions would have
on the availability of various models in its light
truck fleet.
Given these considerations, NHTSA concludes
PART 533; PRE 140
that significant product restrictions should not be
considered as part of manufacturers' capabilities to
improve MY 1992 CAFE levels.
C. Manufacturer-Specific CAFE Capabilities
As discussed later in this notice, NHTSA is di-
rected to take "industrywide considerations" into
account in setting fuel economy standards. In carry-
ing out this direction, the agency focuses on the least
capable manufacturer with substantial shares of
light truck sales. For MY 1992, the agency has
determined that Ford is the least capable manufac-
turer with a substantial share of sales. During MY
1989, Ford had a 26 percent share of combined light
truck sales. By comparison, GM had a 33 percent
share, and Chrysler a 21 percent share. VW does not
have a substantial share of industry sales. Its MY
1989 market share was 0.08 percent.
GM, Ford and Chrysler's MY 1992 CAFE projec-
tions are subject to a number of uncertainties which
are discussed above. NHTSA has fully considered
these uncertainties in determining manufacturer-
specific capabilities.
Ford: As discussed above, in March 1989, Ford
projected a MY 1992 CAFE of 19.9 mpg to 20.2 mpg.
In its March 1990 comments. Ford projects a CAFE
of 20.1 mpg to 20.5 mpg. This range is the result of
risks and opportunities which Ford believes could
lead to a decrease of 0.4 mpg. Many of the technical
risks and opportunities are each quite small. The
agency believes they are likely to result in a small
net gain of under 0.1 mpg. A more substantial
uncertainty is the potential benefit, discussed above,
for Ford to have additional vehicles tested as part of
the fuel economy data vehicle (FEDV) program. In
the NPRM, NHTSA stated that Ford could obtain a
0.3 mpg benefit from this test procedure, and ad-
justed its projection of Ford's capability accordingly.
In Ford's comments on the NPRM, the company
takes issue with NHTSA's analysis, pointing to its
MY 1989 FEDV benefit of only 0.04 mpg. Ford also
argued that correlation testing can have negative
results.
Ford's CAFE projection for MY 1992 also shows a
risk of nearly 0.3 mpg due to a potential mix shift
toward less-efficient models. The agency believes this
risk, although certainly possible, may be overstated.
On the other hand, the agency does not consider it
likely that Ford can achieve the 20.5 mpg upper end
of its projection for MY 1992. NHTSA acknowledges
that Ford's MY 1992 CAFE could well be subject to
at least some risk from both unfavorable mix shifts
and FEDV testing shortfalls. The agency concludes
that the maximum feasible CAFE for Ford in MY
1992 is 20.2 mpg. The agency also concludes that
there is insufficient leadtime for Ford to introduce
new programs or technologies beyond those already
planned to increase its MY 1992 CAFE.
General Motors: In March, 1989, GM projected a
MY 1992 CAFE of 20.6 mpg. In its March 1990
comments on the NPRM, GM revised its projection
upward to 20.7 due to minor technical and mix
adjustments. However, GM also indicated several
uncertainties that could lower its projection by as
much as 0.2 mpg. These risks were tied to mix shifts
toward less efficient vehicles.
As with Ford's projection, NHTSA believes that
GM's risk estimate is likely overstated. The agency
concludes that GM is capable of achieving 20.8 mpg
in 1992. Its CAFE can be increased by 0.1 mpg above
its projection to 20.8 mpg if GM would drop the
low-volume offering of the inefficient 7.4 litre CIO
pickup.
DOE commented that the upper end of the CAFE
ranges proposed in the NPRM (21.0 mpg for MY
1992) were achievable and represented the maxi-
mum feasible level. DOE's analysis was based on a
linear interpolation between a base CAFE for each
domestic manufacturer for MY 1987 and DOE's
analysis of the manufacturers' capabilities for MY
1995. This methodology assumes both that DOE's
MY 1995 projection is actually achievable and that
each manufacturer has the capability to improve
each year by the same fixed amount (about 0.4 mpg
per model year). NHTSA questions both assump-
tions. Based on the manufacturers' submissions, GM
will improve about 1.1 mpg between MY 1990 and
MY 1992, but a large part of this is due to an
unfavorable model mix in MY 1990 due to a short
model year for compact pickups and utility vehicles.
Ford will improve by 0.4 mpg and Chrysler will
decline by 0.4 mpg between MY's 1990 and 1992.
The agency does not believe that DOE's extrapo-
lation of CAFE values is a meaningful method to
determine individual manufacturer capabilities for
specific years, nor is it as accurate as an examina-
tion of product plans in establishing short term
capabilities for individual manufacturers. NHTSA
has provided DOE with comments on the draft
report on which the MY 1995 projection is based,
and does not believe that all issues have been
resolved between DOE and NHTSA. NHTSA's con-
cerns include the use of an old baseline which is now
significantly out of date. The changes to the baseline
that have occurred are due to both the introduction
of new technology and market driven demand for a
different model mix and higher performance. These
changes make it difficult, if not impossible, for
manufacturers to return to DOE's linear path of
improvements, particularly given the leadtime re-
maining before the start of the 1992 model year. The
agency is not convinced that the level of fuel econ-
PART 533; PRE 141
omy improvements cited by DOE is either technolog-
ically achievable or economically practicable.
IV. Other Federal Standards
In determining the maximum feasible fuel econ-
omy level, the agency must take into consideration
the potential effects of other Federal standards. The
following section discusses other government regu-
lations, both in process and recently completed, that
may have an impact on fuel economy capability for
MY 1992. For this final rule, the agency has not
included any discussion of the impacts of regulations
that take effect in MY 1993 or 1994. Comments
received on those issues will be addressed during
final rulemaking for MY 1993-94.
1. Safety Standards
As discussed by the FRIA, NHTSA has evaluated
several safety rulemakings for their potential im-
pacts on light truck fuel economy in MY 1992. These
include revisions to FMVSS Nos. 208; Occupant
crash protection, 204; Steering control rearward dis-
placement, 202; Head restraints, 108; Lamps, reflec-
tive devices and associated equipment, 214; Side door
strength, and 216; Roof crush resistance-passenger
cars. In addition, the agency has evaluated proposed
revisions to 49 Part 523, addressing vehicle classifi-
cation for safety standards.
FMVSS Na 208. The agency published a final
rule on November 23, 1987 (52 FR 44898) which
requires that manual lap/shoulder belts installed at
the front outboard seating positions of light trucks
comply with the dynamic testing requirements of
Standard No. 208. The rule applies to multipurpose
passenger vehicles and trucks with a gross vehicle
weight rating of 8500 pounds or less and an un-
loaded vehicle weight of 5500 pounds or less, and is
effective September 1, 1991. In the MY 1990-91
light truck fuel economy rulemaking (53 FR 11074,
April 5, 1988), the agency concluded that this rule
was unlikely to have a significant negative impact
on fuel economy capabilities. Some existing light
truck designs currently meet the requirements, and
others may be able to meet the requirements with
relatively minor changes.
In its response to NHTSA's request for comments
on manufacturers' MY 1992-94 light truck fuel
economy capabilities. Ford indicated that compli-
ance with the dynamic testing requirement could
increase the weight of some of its trucks by 35 to 150
pounds, and require other changes to support cus-
tomer and competitive performance requirements.
In its comments on the MY 1992-94 fuel economy
NPRM, Ford reiterated its penalty estimates, and
also argued that NHTSA has not properly character-
ized the CAFE effect of safety standards such as
Standard No. 208. Ford argues that since some of the
effects of standards are included in the manufactur-
ers' fuel economy estimates, the manufacturers are
not being credited with application of fuel economy
improvements that are offset by the weight of addi-
tional safety requirements.
Chrysler, while noting that the added weight to
meet increased safety requirements for MY 1992
had resulted in a reduction of its fuel economy
projection for MY 1992, did not specify an estimated
fuel economy impact specifically for the dynamic
testing requirement.
In its comments on the fuel economy NPRM, GM
stated that the combined effects of the dynamic
testing requirement and Standard No. 204 would
result in weight increases from 28-57 pounds. How-
ever, GM noted that these effects are included in its
MY 1992 projection.
Since the agency has accepted the manufacturers'
weight projections for this rule, NHTSA believes no
specific adjustment to their projections is needed to
consider the impact of the dynamic testing require-
ment. The agency agrees with Ford's position that
maintaining a constant fuel economy standard, at a
time when safety and emissions standards are be-
coming stricter, effectively increases the stringency
of the fuel economy standard. However, the agency
carefully considers the impacts of safety and emis-
sions requirements when setting CAFE standards.
In November 1988, NHTSA proposed to require all
manufacturers to install lap/shoulder belts in all
forward-facing rear outboard seating position in pas-
senger cars, light trucks, multipurpose vehicles, and
small buses. 53 FR 47982 (November 29, 1988). The
proposed effective dates were September 1, 1989 for
passenger cars other than convertibles, and Septem-
ber 1, 1991 for convertibles, light trucks, multipur-
pose passenger vehicles, and small buses.
NHTSA published a final rule (54 FR 25275, June
14, 1989) requiring all passenger cars manufactured
after December 11, 1989 to be equipped with the
rear outboard lap/shoulder belts. Most recently (54
FR 46257, November 2, 1989), the agency published
a final rule extending these requirements to light
trucks and multipurpose vehicles effective Septem-
ber 1, 1991. The November 1988 NPRM noted that
manufacturers planned to voluntarily install the
rear-seat lap/shoulder belts in virtually all vehicles
by the effective date proposed in the rule for light
trucks. The projected weight increases were 1.1-5.5
pounds per vehicle, depending on vehicle type.
In its March 1990 comments on the fuel economy
NPRM, Ford claimed this requirement would result
in weight increases from 17-30 pounds per vehicle,
including secondary weight. These increases were
included in Ford's MY 1992 CAFE projections.
Ford's weight increases are substantially higher
than those included in the MY 1992-94 CAFE^
PART 533; PRE 142
NPRM because the agency erroneously used incor-
rect weight figures in that notice. NHTSA's revised
estimate, using figures from the final rule on rear
lap/shoulder belts, is a range of 8-40 pounds per
• vehicle.
Neither GM nor Chrysler provided specific esti-
mates of the fuel economy impact of this standard.
Because NHTSA has not altered the weight pro-
jections provided by manufacturers, no adjustment
in fuel economy projections is necessary to account
for the impact of this standard.
FMVSS Na 204. NHTSA has also published a
final rule extending the applicability of FMVSS No.
204; Steering control rearward displacement to cover
additional light trucks. This rule, published Novem-
ber 23, 1987 (52 FR 44893), and effective September
1, 1991, extends the standard to light trucks with an
unloaded vehicle weight of 4000 to 5500 pounds.
While NHTSA indicated its belief that the proposal
would not significantly affect weight (and hence
CAFE), GM and Ford argued in their comments on
the proposed rule that there could be significant
weight impacts. However, the agency concluded in
the final rule that the steering system modifications
necessary to comply with the standard would entail
only minor modifications that would not have signif-
icant additional weight or fuel economy impacts.
In comments responding to the fuel economy
NPRM, Ford agreed with NHTSA that weight im-
pacts from this standard were minimal. As discussed
above, GM indicated that it had combined the im-
pacts of this rule with those of the dynamic testing
requirement. Chrysler only indicated that its projec-
tion included the impact of this standard. Since
NHTSA has not altered the weight projections pro-
vided by the manufacturers, no adjustments to fuel
economy projections to consider the impact of this
standard are necessary.
FMVSS Na 202. On September 25, 1989, NHTSA
published a final rule (54 FR 39183) to amend
Standard No. 202 to extend the Standard's head
restraint requirement to light trucks and multipur-
pose passenger vehicles effective September 1, 1991.
This rule would have a very minor effect on MY 1992
light truck fuel economy. In the proposed rule,
NHTSA estimated that it would add an average of
seven pounds to each affected vehicle. The agency
has calculated that this increase would reduce meas-
ured fuel economy by approximately 0.03 mpg. How-
ever, the agency estimates that 30 percent of light
trucks are already equipped with head restraints,
and that the effect on the fleet would be reduced to
about 0.02 mpg.
Ford and Chrysler indicated in comments on the
NPRM that they planned to equip all of their light
trucks with head restraints by September 1, 1991.
Thus, their CAFE projections for MY 1992 already
include any negative weight effects. GM indicated in
its comments on the head restraint NPRM that it
planned to have head restraints on 80 percent of its
light truck fleet by MY 1992, with restraints being
phased in for the remainder of the fleet during MY
1993-94. Under the final rule on head restraints,
GM will need to add head restraints to 20 percent of
its MY 1992 light trucks. NHTSA has calculated
that these changes could reduce GM's CAFE projec-
tion by 0.005 mpg.
In its comments on the fuel economy NPRM, GM
stated that the weight impact of head restraints has
already been considered for all trucks except the S/T
and C/K models in MY 1992. The company indicated
that these models would suffer a 4 lb. weight pen-
alty. Ford estimated that the penalty would typically
be 10 lbs. per vehicle. Chrysler provided no specific
weight estimate. Each of these manufacturers indi-
cated that they had considered the effect of Standard
No. 202 in their MY 1992 projections. Since NHTSA
has not altered the weight projections provided by
the manufacturers, no adjustment to their fuel econ-
omy projections is needed.
FMVSS 108. Changes to the agency's lighting
standard permit the use of smaller sealed beam
headlamps, replaceable light source headlamps and
lower mounting height. All of these changes should
give manufacturers greater design freedom to
achieve lower aerodynamic drag and some weight
reductions, which could have positive impacts on
CAFE. However, the agency does not have any data
to estimate the reduction in drag that may be
economically achievable for light trucks as a result
of these changes. These positive effects may be
counterbalanced by possible slovi^ consumer accep-
tance of light truck styling for certain models which
have been influenced by aerodynamic consider-
ations. However, Ford indicated in its comments on
the fuel economy NPRM that the changes to Stan-
dard 108 may permit more aerodynamic front end
designs, and provide some opportunity for weight
reduction.
The agency is considering whether to propose
requiring new light trucks to be equipped with
Center High Mounted Stop Lamps (CHMSLs). How-
ever, it is unlikely at this time that NHTSA would
propose to make the requirement effective in MY
1992. Ford noted in its comments that if such a
requirement were adopted, it would result in a
weight increase of approximately two pounds.
FMVSS 216. On November 2, 1989 (54 FR 46275),
NHTSA published an NPRM proposing to extend the
roof crush protection requirements of Standard No.
216 to light trucks and multipurpose passenger
vehicles with GVWRs of 10,000 pounds or less, with
a proposed effective date of September 1, 1991. The
NPRM estimated that there is already widespread
PART 533; PRE 143
voluntary compliance with the requirements of
Standard No. 216. NHTSA tentatively concluded in
the fuel economy NPRM that since essentially all
vehicles already comply with the proposed require-
ment, and only modest increases are anticipated for
the few vehicles which do not meet the proposed
performance levels, the extension of Standard No.
216 to light trucks is not expected to affect MY 1992
fuel economy capabilities.
In its response to the fuel economy NPRM, Ford
commented that while most trucks meet the pro-
posed crush standards, the roofs of most truck lines
must be changed to enable all trucks to comply with
the proposed standard. Ford estimated that this
would add 2 to 10 pounds to the weight of affected
vehicles. GM indicated that certain of its vehicles
already comply, and that most other models would
suffer a weight penalty of nine pounds. Chrysler
provided no specific estimate on the impacts of
complying with the roof crush requirements.
Because each of the companies has included the
effect of FMVSS 216 in its fuel economy projection,
no adjustment to manufacturer fuel economy projec-
tions is needed to account for the impact of this
standard.
FMVSS 214. On December 22, 1989, the agency
published an NPRM (54 FR 52826), proposing to
extend the existing side-door strength requirements
of Standard No. 214 to trucks, buses and multipur-
pose passenger vehicles with a GVWR of 10,000
pounds or less, effective September 1, 1992.
NHTSA has estimated that the proposal, if
adopted, could result in an average weight increase
of 18-20 pounds per vehicle not including possible
secondary weight, or 31-35 pounds including possi-
ble secondary weight. If the requirement takes effect
as proposed, it would have no impact on MY 1992
fuel economy capabilities, except for new model
introductions in prior model years that were de-
signed to meet the proposed requirements. No man-
ufactui'ers raised compliance with Standard 214 as
having an impact on MY 1992 CAFE levels.
Vehicle classification. NHTSA proposed to estab-
lish a new vehicle classification system for determin-
ing the applicability of the Federal Motor Vehicle
Safety Standards on October 17, 1988. (53 FR
40463). The proposed rule would not affect the clas-
sification of vehicles for fuel economy standards. The
agency is not proposing to alter the definitions of
"passenger automobile" or "light truck" as they
appear in 49 CFR Part 523. However, vehicles that
are defined as light trucks for the purpose of fuel
economy standards would be the type of vehicle most
affected by the proposed classification changes. Ve-
hicles classified as light trucks for fuel economy
standards include many vehicles currently classified
as trucks or MPVs for the purpose of safety stan-
dards. However, as the agency proposed to amend its
safety regulations in such a way as to ensure that
re-classification, by itself, caused no change in the
applicability of safety standards, adoption of the
proposed classification rule would have no impact on
manufacturers' fuel economy capabilities for MY
1992.
2. Noise Standards
The agency is not aware of any plans on the part of
EPA to promulgate noise regulations during the MY
1992 time period, and therefore does not anticipate
any attendant fuel economy impacts.
3. Emission Standards
Because of the pending legislation to amend the
Clean Air Act, the potential fuel economy impact for
a number of possible environmental requirements
cannot be determined at this time. The primary
impacts of the requirements contained in the pro-
posed legislation would be concentrated in MY 1994
and later years. The Environmental Protection
Agency (EPA) has two rulemakings either in
progress or completed which could impact light
truck fuel economy during MY 1992. These include
a final rule addressing diesel particulate matter, and
a proposed rule addressing evaporative emissions.
Diesel Particulate Matter. On October 31, 1988,
EPA published a final rule at 53 FR 43870 amending
the particulate standards for light duty diesel trucks
with a loaded vehicle weight of more than 3,750
pounds. The amended standard is 0.13 gm/mi for
model years 1991 and beyond. This rule was the
result of a proposal in response to a petition from GM
which outlined a plan to develop control technology
to substantially reduce particulate emission from
current control levels. However, in its comments on
the MY 1990-91 proposed light truck standards, GM
indicated that it did not know what effect on fuel
economy would result from the EPA rulemaking, but
stated that ". . . any required technology such as a
particulate trap may adversely impact fuel econ-
omy." GM's MY 1992 light truck CAFE projections,
however, do not indicate that the new standard is
responsible for any loss of fuel economy. Thus,
NHTSA has not made any adjustment to GM's fuel
economy estimates to reflect the more stringent
particulate standard. Neither Chrysler nor Ford
have raised concerns about the fuel economy impact
of the new standard.
Evaporative emissions. On January 19, 1990, EPA
issued an NPRM proposing modifications to test
procedures for control of evaporative emissions from
running losses (55 FR 1914). This proposal would
affect light duty vehicles fueled by gasoline or meth-
anol. In its comments on the fuel economy NPRM,
Chrysler mentioned a potential fuel economy pen-
PART 533; PRE 144
alty for on-board vapor recovery. Since it appears
unlikely that the requirements, if adopted, would go
into effect by MY 1992, this impact has not been
considered for purposes of this final rule.
4. EPA Test Procedures
Gear shift indicator lights. During the MY 1990-
91 fuel economy rulemaking, EPA issued a letter to
manufacturers proposing to eliminate one of the two
methods currently authorized to determine the fuel
economy benefits of shift indicator lights. These
dashboard lights are designed to inform drivers
about the optimal speed, from a fuel economy stand-
point, for shifting gears. EPA proposes to eliminate
the driver usage rate survey, the method preferred
by GM as a "more representative credit for actual
shift indicator light usage than the on-road survey,"
and allow only an on-road shift light survey. At this
point, EPA has not made a decision on this issue. No
manufacturers raised the issue of shift indicator
lights in their comments in response to NHTSA's
request for comments on manufacturers' MY 1992-
94 light truck fuel economy capabilities. In its
comments on the MY 1992-94 fuel economy NPRM,
GM stated that its light truck CAFE could be
adversely affected if EPA were to eliminate the
driver usage rate survey. However, since EPA has not
made a decision on the issue, NHTSA has not made
any adjustment to fuel economy capabilities to con-
sider this factor.
5. Other Standards
Asbestos. On January 29, 1986, EPA proposed to
prohibit the "manufacture, importation, and proc-
essing of asbestos in certain products," and the
phasing out of asbestos in all other products. The
implication of this rulemaking for motor vehicles
would be to eliminate the use of asbestos in brake
linings, clutch facings, automatic transmissions and
gaskets.
On July 12, 1989, EPA published a final rule (54
FR 29460) phasing in a prohibition of asbestos in
almost all products. Asbestos brake linings are
banned for use by original equipment manufacturers
effective MY 1994. Asbestos clutch facings, automatic
transmission components and virtually all asbestos
gaskets are banned as of August 25, 1993. In its
comments on the MY 1990-91 light truck fuel econ-
omy rulemaking, GM indicated that the phase out
would increase vehicle weight approximately 5 pounds
and reduce CAFE. However, GM provided no substan-
tiation for its estimates. In response to NHTSA's re-
quest for comments on MY 1992-94 manufacturers'
CAFE capabilities, no manufacturer indicated that
this rule would have any potential impact on MY
1992 light truck fuel economy. However, in its com-
ments on the fuel economy NPRM, GM indicated
that while most necessary changes had been imple-
mented, and therefore are included in the company's
CAFE projections, certain changes had not yet been
made. Specifically, the company anticipates a seven
pound increase on the S/T models beginning in MY
1992. This increase will have a negligible impact
(less than .01 mpg) on GM's MY 1992 capability.
Because Ford is the least capable manufacturer for
MY 1992, this has no impact on the level of the
standard.
V^ The Need of the Nation to Conserve Energy
The United States imported 15 percent of its oil
needs in 1955. The import share had reached 35.8
percent by 1975, the year the Energy Policy and
Conservation Act was passed, and peaked at 46.5
percent in 1977, at a cost of $74 billion (stated in
1988 dollars). While the import share of total petro-
leum supply declined after that year, the cost con-
tinued to rise to a 1980 peak of $102 billion (1988
dollars).
While the import share of petroleum supply de-
clined through 1985, it has been increasing since
that time. In 1985, the import share was 27.3 per-
cent at a cost of $50 billion (1988 dollars). For 1988,
net imports were 37.0 percent of total supply. For
1989, net imports were 43.5 percent of total supply.
For January 1990, net imports reached 47.1 percent
of total supply. Due to sharply lower petroleum
prices, however, the value of imports declined from
1985 to 1988, from $50 billion to $37 billion (1988
dollars). Imports from OPEC also declined through
1985 but have been rising since that time. For 1989,
OPEC imports accounted for about 52 percent of
total import supply, up from almost 48 percent for
1988.
The nation's dependence on petroleum net imports
since 1975 is summarized in the following table:
Year
Net Imports as Percent of
U.S. Petroleum Products Supplied
From OPEC
From All Countries
1975 Average
1977 Average
* *
1985 Average
1988 Average
1989 Average
22.6%
33.5
* >
12.3
21.5
25.2
36.8%
46.4
28.7
40.2
43.5
The current energy situation and emerging trends
point to the continued importance of oil conserva-
tion. The United States now imports a higher per-
centage of its oil needs than it did during 1975, the
year EPC A was passed, and the percentage of its oil
supplied by OPEC is similar to that of 1975. Oil
continues to account for well over 40 percent of U.S.
energy use, and 97 percent of the energy consumed
PART 533; PRE 145
in the transportation sector While the U.S. is the
second-largest oil producer, it contains only three
percent of the world's proved oil reserves. Moreover,
proved reserves in the U.S. have declined from a
peak of 39 billion barrels in 1970 to 27 billion
barrels in 1987.
According to the Energy Information Administra-
tion's (EIA) 1989 Annual Energy Outlook, domestic
production for its "base case" projection is expected
to decline from 10.5 MMB/D in 1988 to 8.6 MMB/D
in 1995, and 8.5 MMB/D in 2000. Net imports are
projected to increase from 6.3 MMB/D in 1988 to 9.3
MMB/D in 1995 and 10.2 MMB/D in 2000. Thus, as
a percentage of total U.S. petroleum use, EIA ex-
pects imports to rise to 52 percent of total supply in
1995 (exceeding the previous 1977 high of 46.4
percent) and 55 percent in 2000.
In its comment to the docket for NHTSA's 1990
passenger car CAFE rulemaking, the Department of
Energy (DOE) emphasized several points about
transportation's role in U.S. oil use and the impor-
tance of rising fuel efficiency. DOE noted that the 1 1
MMB/D used by the transportation sector in 1986 is
almost 80% of total U.S. fuel use of oil and over 90%
of the critical light product use. Thus, DOE wanted
NHTSA to consider the fact that any significant
moderation in growing oil demand will require large
transportation efficiency improvements. DOE also
emphasized that the 1987 EIA oil demand forecasts
assume that average new car efficiency will continue
to improve, which DOE said does not seem likely
given fuel economy trends (at least to the levels
assumed by EIA), and that even with these projected
increases in fuel efficiency, U.S. oil demand is pro-
jected to increase over 1.5 MMB/D by 2000.
The level of petroleum imports is only one aspect
of the total energy conservation picture. Under
EPCA and NEPA, for example, national security,
energy independence, resource conservation, and
environmental protection must all be considered.
In March 1987, the Department of Energy submit-
ted a report to the President entitled "Energy Secu-
rity." NHTSA believes that the following quotation
from that report represents a useful summary of the
national security and energy independence aspects
of the current energy situation:
Although dependence on insecure oil supplies
is . . . projected to grow, energy security de-
pends in part on the ability of importing nations
to respond to oil supply disruptions; and this is
improving. The decontrol of oil prices in the
United States, as well as similar moves in other
countries, has made economies more adaptable to
changing situations. Furthermore, the large stra-
tegic oil reserves that have been established in the
United States (and to a lesser extent, in other
major oil-importing nations) will make it possible
to respond far more effectively to any future dis-
ruptions than has been the case in the past.
The current world energy situation and the
outlook for the future include both opportuni-
ties and risks. The oil price drop of 1986 showed
how consumers can be helped by a more compet-
itive oil market. K adequate supplies of oil and
other energy resources continue to be available
at reasonable prices, this will provide a boost to
a world economy. At the same time, the pro-
jected increase in reliance on relatively few oil
suppliers implies certain risks for the United
States and the free world. These risks can be
summarized as follows: If a small group of
leading oil producers can dominate the world's
energy markets, this could result in artificially
high prices (or just sharp upward and downward
price swings), which would necessitate difficult
economic adjustments and cause hardships to
all consumers.
Revolutions, regional wars, or aggression from
outside powers could disrupt a large volume of
oil supplies from the Persian Gulf, inflicting
severe damage on the economies of the United
States and allied nations. Oil price increases
precipitated by the 1978-79 Iranian revolution
contributed to the largest recession since the
1930's. Similar or larger events in the future
could have far-reaching economic, geopolitical,
or even military implications.
Light truck registrations nearly doubled between
1973 and 1986 and light truck sales are projected to
increase 21 percent over the 1987-2000 period, com-
pared to 14 percent for passenger cars. The light
truck fleet's share of total oil consumption increased
steadily from 6.4 percent in 1973 to 8.9 percent in
1980 to 12.1 percent in 1986 and to 12.3 percent in
1988. This increase in the light truck fleet's share of
fuel consumption took place even as the average fuel
economy of the on-road fleet of light trucks increased
from an estimated 10.5 mpg in 1973 to 13.4 mpg in
1988. Clearly, light truck fuel economy will be an
increasingly important determinant of the nation's
level of petroleum consumption.
Information provided to NHTSA by the Depart-
ment of Energy indicates that light trucks last
longer (14.9 years versus 10.9 years) than passenger
cars. Federal Highway Administration data indicate
light trucks are driven farther annually (11,846
miles versus 10,119 miles) than passenger cars.
All of these factors result in the conclusion that
improved light truck fuel economy contributes to the
nation's efforts at conserving fuel. Light trucks
meeting the standards proposed by this notice would
be more fuel-efficient than the average vehicle in the
PART 533; PRE 146
current light truck fleet in service, thus making a
positive contribution to petroleum conservation.
VI. Determining the Maximum Feasible Aver-
^^ age Fuel Economy Level
^y As discussed above, section 502(b) requires that
light truck fuel economy standards be set at the
maximum feasible average fuel economy level. In
making this determination, the agency must con-
sider the four factors of section 502(e): technological
feasibility, economic practicability, the effect of other
Federal motor vehicle standards on fuel economy,
and the need of the nation to conserve energy. As
with earlier CAFE rulemakings, NHTSA has con-
sidered and weighed all four statutory factors of
section 502(e) in reaching its decision.
A. Interpretation of "Feasible"
Based on definitions and judicial interpretations
of similar language in other statutes, the agency has
in the past interpreted "feasible" to refer to whether
something is capable of being done. The agency has
thus concluded in the past that a standard set at the
maximum feasible average fuel economy level must:
(1) be capable of being done and (2) be at the highest
level that is capable of being done, taking account of
what manufacturers are able to do in light of tech-
nological feasibility, economic practicability, how
other Federal motor vehicle standards affect average
^^ fuel economy, and the need of the nation to conserve
^P energy.
B. Industrywide Considerations
The statute does not expressly state whether the
concept of feasibility is to be determined on a
manufacturer-by-manufacturer basis or on an indus-
trywide basis. Legislative history may be used as an
indication of Congressional intent in resolving am-
biguities in statutory language. The agency believes
that the below-quoted language provides guidance
on the meaning of "maximum feasible average fuel
economy level."
The Conference Report to the 1975 Act (S. Rep. No.
94-516, 94th Cong., 1st Sess. 154-5 (1975)) states:
"Such determination [of maximum feasible av-
erage fuel economy level] should take industry-
wide considerations into account. For example,
a determination of maximum feasible average
fuel economy should not be keyed to the single
manufacturer which might have the most diffi-
culty achieving a given level of average fuel
economy. Rather, the Secretary must weigh the
benefits to the nation of a higher average fuel
economy standard against the difficulties of
individual manufacturers. Such difficulties,
however, should be given appropriate weight in
setting the standard in light of the small num-
ber of domestic manufacturers that currently
exist, and the possible implications for the na-
tional economy and for reduced competition
association (sic) with a severe strain on any
manufacturer. . . ."
It is clear from the Conference Report that Con-
gress did not intend that standards simply be set at
the level of the least capable manufacturer. Rather,
NHTSA must take industrywide considerations into
account in determining the maximum feasible aver-
age fuel economy level.
NHTSA has consistently taken the position that it
has a responsibility to set light truck standards at a
level that can be achieved by manufacturers whose
vehicles constitute a substantial share of the mar-
ket. See 49 FR 41251, October 22, 1984. The agency
did set the MY 1982 light truck fuel economy
standards at a level which it recognized might be
above the maximum feasible fuel economy capabil-
ity of Chrysler, based on the conclusion that the
energy benefits associated with the higher standard
would outweigh the harm to Chrysler. 45 FR 20871,
20876; March 31, 1980. However, as the agency
noted in deciding not to set the MY 1983-85 light
truck standards above Ford's level of capability,
Chrysler had only 10-15 percent of the light truck
domestic sales, while Ford had about 35 percent. 45
FR 81593, 81599; December 11, 1980.
C. Petroleum Consumption
The precise magnitude of energy savings associ-
ated with alternative light truck fuel economy stan-
dards is uncertain. The FRIA provides calculations
for the hypothetical lifetime fuel consumption of the
MY 1992 domestic light truck fleets assuming those
same fleets could and would achieve alternative
CAFE levels. For example, assuming that manufac-
turers could achieve an average CAFE of 21.0 mpg
for the MY 1992 domestic light truck fleet but
instead achieved 20.2 mpg with the same number of
sales, there could be a maximum difference in fuel
consumption of 638 million gallons over the lifetime
of the model year's fleet.
However, it is possible that manufacturers may be
able to achieve particular higher CAFE levels only
by restricting the sales of their large light trucks. If
this occurred, consumers might tend to keep their
older, less-fuel efficient light trucks in service
longer. Also, to the extent that a particular manu-
facturer might find it necessary to restrict sales of
its large light trucks, consumers may be able to
transfer their purchases of those same types of
vehicles to another manufacturer which may have
less difficulty meeting the CAFE standard. Thus,
the agency believes that the actual impacts, if any,
on energy consumption of alternative higher fuel
economy standards, would be less than the theoret-
PART 533; PRE 147
ical calculations comparing different levels of indus-
trywide CAFE.
D. The MY 1992 Standards
Based on its analysis described above and on
manufacturers' projections, the agency concludes
that the major domestic manufacturers can achieve
the combined fuel economy levels listed in the fol-
lowing table:
Manufacturer Approximate Combined CAFE
market share (MY 1989)
Chrysler
CM
Ford
21.0%
33.0%
26.0%
21.2 mpg
20.8 mpg
20.2 mpg
As indicated above, foreign manufacturers other
than Volkswagen and Land Rover compete in only
the small vehicle portion of the light truck market
and are therefore expected to achieve CAFE levels
well above those of GM, Ford and Chrysler, which
offer full ranges of light truck models.
Unlike past years, the agency is not setting sepa-
rate 2WD and 4WD standards as an alternative to
the combined standard. The agency's decision on
this issue is discussed in detail below.
The setting of maximum feasible fuel economy
standards, based upon consideration of the four
required factors, is not a mere mathematical exer-
cise but requires agency judgment. Based on the
preceding analysis and discussion, the agency con-
cludes that Ford is the least capable manufacturer
with a substantial share of sales and that 20.2 mpg
is the maximum feasible combined standard for the
1992 model year. For the reasons discussed below,
this level balances the potential petroleum savings
associated with higher standards against the difTi-
culties of manufacturers facing potentially higher
standards.
Notwithstanding the projected product plans that
the manufacturers have provided the agency and
that are discussed, there is the potential for some
decline in each manufacturer's CAFE. The above
analysis has not covered the potential of mix shifts
because of the possible adverse financial conse-
quences to manufacturers and national employment
of any large change in CAFE that is created by
forced mix shifts. Nevertheless, the market may
dictate changes in the light truck mix in response to
fuel prices and availability. Continuing low fuel prices
and plentiful supply may result in an increased de-
mand for power and performance, while an unantici-
pated substantial increase in fuel prices could increase
demand for more fuel-efficient models.
NHTSA believes there are serious questions
whether a standard set at a level above Ford's cap-
ability would be consistent with the requirement
that standards be set taking industrywide consider-
ations into account, given that company's market
share.
The precise effects on petroleum conservation of a
higher standard are uncertain. The maximum theo- j^^k
retical additional energy savings associated with a
standard set at a higher level can be determined by
comparing hypothetical situations where GM and
Ford would have combined average fuel economy
levels of 21.0 mpg. Since most other manufacturers
in the industry project MY 1992 CAFE above that of
GM's capability, a standard set at 21.0 mpg would
not be expected to affect the petroleum consumption
of trucks manufactured by that part of the industry.
The maximum difference in total gasoline consump-
tion between these two hypothetical situations over
the lifetime of the MY 1992 fleet would be 638
million gallons. The maximum yearly impact on
U.S. gasoline consumption would be 74 million gal-
lons, or roughly six hundredths of one percent of
total motor vehicle gasoline consumption.
The agency believes, however, that any gasoline
savings associated with a higher standard would
actually be less than indicated by this projection.
While such a standard would provide added incen-
tive for GM to achieve its maximum fuel economy
capability, it is not clear in light of earning possible
carryforward/carryback credits that they might not
achieve this increase anyway. Ford could not likely
improve its CAFE other than by restricting sales of
its larger light trucks and engines, lb the extent
that would-be purchasers of such vehicles and en-
gines transferred their purchases to GM and
Chrysler without those companies otherwise chang-
ing their product plans, there could be little or no
effect on overall petroleum consumption.
A higher standard than 20.2 mpg could result in
serious economic difficulties for Ford. Given lead-
time constraints, NHTSA believes that the primary
potential fuel-efficiency enhancing actions that Ford
or any other manufacturer would consider in re-
sponse to a higher standard would consist of market-
ing actions. For the reasons discussed earlier in this
notice, however, the agency does not believe that
marketing actions can be relied upon to significantly
improve fuel economy. If such marketing actions
were unsuccessful in whole or in part. Ford would
likely have to engage in product restrictions, includ-
ing limiting the sales of larger engines and/or vehi-
cles to improve its fuel economy. Such product
restrictions could result in adverse economic conse-
quences for Ford, its employees and the economy as a
whole and limit consumer choice, especially with
regard to the load carrying needs of light truck
purchasers.
Given Ford's 26 percent share of the light truck /^^
market in MY 1989, its capability has a significant
PART 533; PRE 148
effect on the level of the industry's capability and,
therefore, on the level of the standards. The agency
believes that the 20.2 mpg standard balances the
potentially serious adverse economic consequences
■^ associated with market and technological risks
^B against potential fuel economy improvements. The
agency concludes, in view of the statutory require-
ment to consider specified factors, that the relatively
small and uncertain energy savings associated with
setting a standard above Ford's capability would not
justify the potential economic harm to that company
and the economy as a whole.
In addition to the comments discussed above, the
agency received comments from Nissan, the Natural
Resources Defense Council (NRDC), the Energy Con-
servation Coalition (ECO, the Western Interstate
Energy Board (WINB) and the National Automobile
Dealers Association (NADA).
The ECC, in comments endorsed by NRDC, ar-
gued that in setting the CAFE standards, NHTSA
should double the 3% annual rate of increase pro-
vided by the high end of the ranges proposed. This
would result in a MY 1992 CAFE of 22.2 mpg, and
an MY 1994 CAFE of 25 mpg. The ECC also stated
it is essential to set standards now for model years
after 1994 to provide manufacturers with adequate
leadtime to achieve higher fuel economy levels. The
comments claimed these increases would be cost-
effective, and listed a number of potential technolog-
ical improvements available to manufacturers. Fi-
nally, ECC provided statistics on the potential fuel
savings achievable through higher CAFE standards
for light trucks, and emphasized the U.S. transpor-
tation sector's role as a source of greenhouse gas
emissions.
ECC does not explain the basis for their suggested
levels. The commenter did not demonstrate why
these levels would be feasible. As explained above,
the agency has determined that the maximum fea-
sible level for MY 1992 is 20.2 mpg. In addition, the
short statutory deadline makes it impractical for the
agency to set standards beyond MY 1992 at this
time. NHTSA also notes that much of the technology
listed in ECC's comments has already been exten-
sively incorporated in the light truck fleet. The
agency has included an analysis of carbon dioxide
emissions associated with this CAFE standard in
the Environmental Assessment prepared by the
agency for this rulemaking and available from the
Docket Section. Finally, the agency notes that the
fuel economy levels and time frames for their imple-
mentation advocated by ECC exceed the scope of the
NPRM.
NRDC, while endorsing the ECC comments, also
expressed concern that the NPRM did not discuss
NHTSA's decision to undertake a programmatic En-
vironmental Impact Statement (EIS) to examine
effects of the CAFE program. NRDC believes the
agency's handling of fuel economy issues violates
the National Environmental Policy Act, and that the
agency has not adequately analyzed the relationship
between fuel efficiency and carbon dioxide emis-
sions. In response, NHTSA notes that it has provided
an analysis of fuel economy and carbon dioxide
emissions in its Environmental Assessment for this
rulemaking, and is continuing its work toward the
publication of a programmatic EIS for the CAFE
program, lb that end, the agency has issued a notice
of intent to prepare a programmatic EIS (54 FR
37702, September 12, 1989), and is currently analyz-
ing comments received in response to that notice.
WINB supports higher fuel economy standards
than those proposed, although it does not provide
specific levels. The comments note that the growing
role of light duty trucks is a primary cause of the
stagnation in the fleetwide CAFE of all light duty
vehicles. WINB argues that the agency has not
considered the economic implications of failing to
increase light truck CAFE, and that domestic jobs
will be lost as rising fuel prices shift demand toward
more efficient, imported light trucks.
NHTSA believes that it has taken into account the
economic implications of not setting higher stan-
dards. This issue is discussed in detail in the FRIA
available from the Docket. The agency disagrees
with WINB's assumption that significantly higher
fuel prices are likely during the period affected by
this rulemaking, and that this will result in signif-
icantly increased demand for more fuel-efficient ve-
hicles. See the FRIA for a more detailed discussion of
future fuel prices. The agency also disagrees that
domestic jobs will be lost as a result of its decision. In
response to apparent consumer demands, import
manufacturers are now introducing larger, more
powerful and less efficient light trucks. This trend
gives no indication of reversing in the near future.
Finally, the agency notes that promulgation of stan-
dards beyond the range proposed in the NPRM
exceeds the scope of this rulemaking.
NADA recommended that the agency establish
CAFE standards no higher than 20.2 mpg. This is
the maximum feasible level in NADA's opinion,
because of new regulatory constraints and the need
to accommodate a wide range of consumer needs for
utility and durability. NADA stated that NHTSA
appears to have underestimated the potential im-
pact of safety and emissions standards for MY 1992-
94, although no specific data were provided.
NHTSA notes that, as discussed above, emissions
impacts stemming from the pending Clean Air Act
amendments are not anticipated until MY 1993 at
the earliest. The agency also believes that its anal-
PART 533; PRE 149
ysis has adequately accounted for the CAFE impacts
of safety requirements affecting the MY 1992 fleet.
In its comments, Nissan projected that it would be
in compliance with the upper end of the ranges
proposed in the NPRM, and was thus not opposed to
their adoption.
NHTSA has decided not to promulgate for MY
1992 the optional separate 2WD/4WD standards
that have been promulgated for previous model
years. A single combined standard is being issued
instead. NHTSA is concerned that retaining the
separate standards may actually decrease fuel econ-
omy by encouraging the production of the less fuel-
efficient 4WD vehicles by full line manufacturers
since these vehicles would not be averaged with
2WD trucks for compliance.
Separate 2WD and 4WD standards were origi-
nally intended to provide an alternative means of
compliance to manufacturers that manufactured pri-
marily 4WD vehicles that would reflect the special-
ized nature of their fleets without undue penalty.
Since the separate standards were established, the
manufacturers that were served by this system,
American Motors and International Harvester,
have, respectively, been acquired by Chrysler and
stopped manufacturing light trucks. Thus, the orig-
inal intended beneficiaries of the separate standards
have disappeared.
The combined standard is a benefit to any manu-
facturer making predominantly 2WD models. It is a
disadvantage to a manufacturer whose fleet consists
entirely or mostly of 4WD vehicles. It is intended to
take into account manufacturers that typically have
a fleet with a majority of 2WD vehicles. NHTSA
notes that there are only four manufacturers cur-
rently marketing fleets of predominantly 4WD vehi-
cles. These are Daihatsu, Suzuki, Subaru and Range
Rover. In MY 1990, Daihatsu, Suzuki and Subaru
exceed by substantial margins the MY 1992 com-
bined standard as well as the MY 1990 2WD stan-
dard by virtue of their fleets of small, fuel efficient
models. Range Rover, on the other hand, does not
meet the MY 1990 4WD standard because it mar-
kets only a single model, a 4WD utility vehicle with
a fairly large engine. ' In contrast to the circum-
stances that existed in 1980, when American Motors
and International Harvester had a combined share
of just over 7 percent of the light truck market, Range
Rover's projected share of the market for MY 1990 is
much less than one percent. Range Rover's limited
participation in the U.S. market does not warrant
establishing separate 2WD and 4WD standards.
At present, most domestic and most import man-
ufacturers choose to comply with the single, com-
bined standard instead of the separate 2WD and
4WD standards.
Chrysler supported NHTSA's proposed decision to
eliminate the separate 2WD and 4WD standards.
Ford expressed no objection to the proposal, and
NADA took no position on the issue. GM opposed the
proposal on grounds that it would restrict full-line
manufacturers' flexibility in complying with the
light truck standard. The company stated that the
separate standards moderate the adverse CAFE im-
pact of increased consumer demand for 4WD vehicles.
NHTSA does not agree that separate standards
are necessary to provide full-line manufacturers
with flexibility. As noted above, the original inten-
tion behind the separate standards was to enable
specialized manufacturers to more easily comply
with the standards. The separate standards no
longer serve this purpose. The agency believes that
it already properly accounts for the potential in-
creasing relative demand for 4WD vehicles and the
resulting CAFE risks and potential mix effects when
it sets the combined standard. Moreover, manufac-
turers are provided with flexibility in complying
with the standard through the use of carryforward
and carryback credits.
Based on these considerations, NHTSA has deter-
mined that the separate standards are no longer
necessary. Accordingly, the MY 1992 standard con-
tains only a combined standard for light trucks.
Manufacturers that have earned credits in past
model years by complying with the separate 2WD
and 4WD standards would still be able to use those
credits to offset CAFE shortfalls within the three
year carryforward period. See, 45 FR 83233 (De-
cember 18, 1980) and 44 FR 64943 (November 8,
1979).
In its March 1989 response to NHTSA's request for
comments, Volkswagen suggested as an alternative
to establishing a combined standard within its capa-
bility that the agency consider alternate special
consideration for limited product line truck manu-
facturers. In establishing the MY 1980-81 light
truck CAFE standards, the agency did establish a
separate standard in light of International Harvest-
er's (IH) limited product line. See 43 FR 11995,
March 23, 1978. The agency noted that IH had
unique problems given its limited sales volume,
restricted product line, the fact that its engines were
derivatives of medium duty truck (above 10,000
pounds GVWR) engines, and the fact that it did not
have experience with state-of-the-art emission con-
trol technology which the other manufacturers had
obtained in the passenger automobile market. The
agency emphasized, however, that the separate class
was being established for only two model years'
duration, concluding that IH should be able to
achieve levels of fuel efficiency in line with other
manufacturers within that time period either
through purchasing engines from outside sources or
by making improvements to current engines. The
PART 533; PRE 150
agency does not believe that Volkswagen's situation
is similar to that of IH. While IH's difficulties were
related to being newly subject to the fuel economy
program, Volkswagen's potential CAFE difficulties
are not. Under the Cost Savings Act, manufacturers
are required to meet average fuel economy standards
which are set based on industrywide considerations.
For MY 1992, Volkswagen is projected to be well
above the CAFE standard. Thus, NHTSA believes it is
not appropriate to set a separate standard to accom-
modate Volkswagen's limited product line status.
3. § 533.5(e) will be added to read as follows:
(e) For model year 1992, each manufacturer shall
comply with the average fuel economy standard
specified in paragraph (a) of this section (segregating
captive import and other light trucks).
Issued on March 30, 1990
PART 533-[AMENDEDj
In consideration of the foregoing, 49 CFR Part 533
is amended as follows:
Tkble III is added to § 533.5(a) to read as follows:
§ 533.5 Requirements.
(a) * * *
TABLE III
Model
year
Combined Standard
Captive Imports Others
1992
20.2
20.2
Jerry Ralph Curry
Administrator
55 F.R. 12487
April 4, 1990
PART 533; PRE 151-152
e
PREAMBLE TO AN AMENDMENT TO PART 533
Light Truck Average Fuel Economy Standards
Model Years 1993-1994
(Docket No. FE-88-03; Notice 4)
RIN:2127AD56
ACTION: Final rule.
SUMMARY: This notice establishes the average fuel
economy standards for light trucks manufactured in
model years (MY) 1993 and 1994. Issuance of the
standards is required by Title V of the Motor Vehicle
Information and Cost Savings Act. For MY 1993, the
combined standard for all light trucks manufactured
by a manufacturer is 20.4 mpg, an increase of 0.2 mpg
over the MY 1^92 standard. For MY 1994, the com-
bined standard is 20.5 mpg. The agency is not setting
optional separate two-wheel drive and four-wheel drive
standards.
DATES: The amendment is effective May 6, 1991. The
standards apply to the 1993 and 1994 model years.
Table of Contents
I. Background
II. Summary of Decision
III. Manufacturer Capabilities for Model Years
1993 and 1994
IV. Effect of Other Federal Standards
V. The Need of the Nation to Conserve Energy
VI. Determining the Maximum Feasible Average
Fuel Economy Level
I. Background
Issuance of light truck fuel economy standards is
required by section 502(b) of the Motor Vehicle Infor-
mation and Cost Savings Act (15 U.S.C 2002(b)). That
section requires the Secretary of Transportation to set
light truck fuel economy standards at the maximum
feasible average fuel economy level for each model year
after 1978. In determining the maximum feasible aver-
age fuel economy level, the Secretary is required under
section 502(e) of the Act to consider four factors: tech-
nological feasibility, economic practicability, the effect
of other Federal motor vehicle standards on fuel
economy, and the need of the nation to conserve
energy. See 15 U.S.C. 2002(e). Responsibility for the
automotive fuel economy program was delegated by
the Secretary of Transportation to the Administrator
of NHTSA (41 FR 25015, June 22, 1976). Prior to the
MY 1992-94 rulemaking, the light truck standards set
most recently by the agency had been 20.0 mpg for MY
1990 and 20.2 mpg for MY 1991. On January 6, 1989,
NHTSA published in the Federal Register a Request
for Comments seeking data on manufacturers' light
truck fuel economy capabilities for model years (MY)
1992-94 (54 FR 436). All of the domestic light truck
manufacturers responded, as did several foreign
manufacturers.
After analyzing the responses to the Request for
Comments and reviewing other available data, NHTSA
published a notice of proposed rulemaking (NPRM)
proposing ranges of standards for light truck average
fuel economy standards for MY 1992-94 (55 FR 3608,
February 2, 1990). For MY 1992, the proposed range
was between 20.2 mpg and 21.0 mpg. For MY 1993,
the proposed range was between 20.2 mpg and 21.5
mpg. The proposed range for MY 1994 was between
20.2 mpg and 22.0 mpg. These ranges were based on
the agency's tentative evaluation of manufacturer
capabilities. In a final rule published April 4, 1990 (55
FR 12487), NHTSA set the combined standard for MY
1992 at 20.2 mpg.
In prior light truck CAFE rulemakings, the agency
had provided manufacturers with the option of divid-
ing their light trucks into two fleets, a two-wheel drive
(2WD) fleet and a four-wheel drive (4WD) fleet and
meeting a separate standard for each fleet. However,
as explained in the final rule for MY 1992, the agency
decided to discontinue setting these separate alterna-
tive standards beginning with MY 1992.
In response to the February 2, 1990 NPRM, the
agency received comments from General Motors, Ford,
Chrysler, Nissan, the U.S. Department of Energy, the
Natural Resources Defense Council, the Western
PART 533-PRE 153
Interstate Energy Board, the Energy Conservation
Coalition and the National Automobile Dealers Associ-
ation. The issues raised by the commenters are dis-
cussed below.
II. Summary of Decision
Based on its analysis, the agency is establishing a
combined average fuel economy standard for MY 1993
at 20.4 mpg, and a combined average fuel economy
standard for MY 1994 at 20.5 mpg. Alternative
separate standards for 2HD and 4HD light trucks are
not being established.
III. Manufacturer Capabilities
for Model Years 1993 and 1994
As part of its consideration of technological feasi-
bility and economic practicability, the agency has evalu-
ated manufactiu-ers' fuel economy capabilities for MY
1993-94. In making this evaluation, the agency has
analyzed manufacturers' current projections and un-
derlying product plans and has considered what, if any,
additional actions the manufacturers could take to im-
prove their fuel economy. A more detailed discussion
of these issues is contained in the agency's Final
Regulatory Impact Analysis (FRIA), a public version
of which has been placed in the docket for this rulemak-
ing. There is also a nonpublic version which includes
some information, including the details of manufac-
turers' future product plans, that has been determined
by the agency to be confidential business information,
release of which could cause competitive harm. The
public version of the FRIA omits the confidential
information.
A. Manufacturer Projections
General Motors: As discussed in the NPRM,
General Motors (GM) projected in March 1989 that it
could achieve a combined CAFE level of 20.7 mpg in
MY 1993 and 20.8 mpg in MY 1994. In its March 1990
comments on the NPRM, GM repeated its projection
of 20.7 mpg for MY 1993, while lowering its projec-
tion for MY 1994 to 20.7 mpg. GM attributes this slight
decrease in its MY 1994 projection to adjustments to
projected powertrain and model mixes, and to minor
adjustments of estimated MY 1994 fuel economy for
certain models.
The 20.7 mpg figure represents an improvement
over the level of 19.7 mpg projected by GM for MY 1990
in a mid-model year report submitted in August 1990.
The improvement projected by GM after MY 1990 is
attributable to several factors, including increased
penetration of certain engine technologies and aero-
dynamic improvements, a slight weight decrease and
a shift toward more efficient models, for a net
improvement by MY 1992 over MY 1990 of 1.0 mpg.
Although the CAFE impacts of these changes
carry over into MY 1993-94, they are offset by volume
adjustments, corrected projections on new models, a
projected shift to heavier or less efficient options, and
new weight estimates for safety and environmentally ^k
related hardware, for a net projected increase of zero. ^^
For MY 1994, GM's adjustments are essentially the
same as for MY 1993.
However, in making its projections for MY
1993-94, GM noted that the actual level it achieved
could be lower due to various uncertainties such as fuel
prices, consimner demand for increased power and per-
formance, new safety requirements and increasing
competition in the light truck market. GM also stated
that certain program risks (subject to a claim of con-
fidentiality) could cause a decline in GM's projected MY
1993-94 CAFE to 20.4 mpg. GM recommended that
the MY 1993-94 standards be set at or near the low
end of the proposed range.
Ford: Ford projected in March 1989 that it could
achieve CAFE levels of 20.6 mpg combined in MY 1993
and 20.4 mpg combined for MY 1994. By comparison,
in a mid-model year report submitted in July 1990,
Ford projected a MY 1990 combined light truck CAFE
of 20.0 mpg. In its March 1990 comments on the
NPRM, Ford raised its projections for MY 1993-94.
At that time, Ford projected a CAFE of 20.9 mpg in
MY 1993, and 20.8 mpg for MY 1994. These most re- /^
cent projections were said to be subject to several risks,
discussed below, which could result of achieving a lower
level of CAFE.
In its comments on the NPRM, Ford projected a
MY 1992 CAFE of 20.5 mpg. The 0.4 mpg net increase
between MY 1992 and MY 1993 is due to several minor
improvements and other fleet changes that result in
a 0.5 mpg increase, and to product changes that result
in a decrease of 0.1 mpg. For MY 1994, Ford projected
that stricter emissions standards would decrease its
CAFE by 0.4 mpg, but that this would be offset in part
by minor improvements and a shift toward more effi-
cient models, for a net decrease of 0. 1 mpg, to 20.8 mpg
for MY 1994. The projected CAFE figures do not in-
clude the risks and opportunities raised by Ford which
are discussed in Section C, below.
In its response to the NPRM, Ford also emphasized
the potential effect on CAFE of factors beyond its con-
trol, including unforeseen but normal technological
shortfalls from the technological changes listed in its
comments, the potential for increased import market
share and concomitant loss of domestic share in the
compact truck market segment, and the pending safety
requirements for light trucks. In addition. Ford indi- ^^^
cated that continued low fuel prices could further
PART 533-PRE 154
increase the market demand for full-size light trucks,
larger engines and increased optional equipment, caus-
ing a decline in its CAFE. Ford recommended that the
light truck CAFE standard be set at 20.2 mpg in MY
1993 and no higher than 20.5 mpg for MY 1994.
Chrysler: Chrysler projected in March 1989 that
it could achieve a CAFE level of 21.0 mpg in MY 1992,
20.9 mpg in MY 1993 and 20.8 mpg in MY 1994. By
comparison, Chrysler's July 1990 mid-model year
report for MY 1990 indicated a MY 1990 CAFE of 21.7
mpg. As noted in the final rule for MY 1992, the decline
from MY 1990 to MY 1992 is a result of product
changes and revised fuel economy estimates for cer-
tain models. In its February 1990 response to the
NPRM, Chrysler projected its MY 1992 CAFE at 21.2
mpg, its MY 1993 CAFE at 20.9 mpg, and its MY 1994
CAFE at 21.4. These increases over the March 1989
projections are due to adjustments in Chrysler's fuel
economy program, amounting to a 0.4 mpg increase
each model year, offset by factors such as product in-
troduction revisions and volume adjustments amount-
ing to a 0.2 mpg decrease in MY 1992, and a 0.4 mpg
decrease in MY 1993-94. However, the March 1990
projection for MY 1994 also includes a 0.6 mpg increase
attributed to product changes which have since been
cancelled.
In its response to the NPRM, Chrysler suggested
that the CAFE standards for MY 1993-94 remain at the
same level as MY 1991 (20.2 mpg), despite Chrysler's
projections that it would exceed these levels by a con-
siderable margin. Chrysler's view on the appropriate
CAFE standards was based upon several uncertainties
that underlie its fuel economy projections for these model
years. These include the impact of revisions to the Clean
Air Act, market shifts to larger trucks, and the price of
gasoline. Chrysler also pointed to the U.S. economy as
a factor which could negatively impact its CAFE if
economic conditions worsen to the point that they neces-
sitate the delay or postponement of certain plans.
Other Manufacturers
Volkswagen (VW) currently offers only one light
truck model, the Vanagon compact bus. Volkswagen's
combined light truck CAFE for MY 1990 is estimated
at 20.8 mpg. VW indicated in its response to the Janu-
ary 1989 questionnaire that it has no significant improve-
ments planned to increase fuel economy by MY 1993-94.
The company's product plans are indefinite, but may in-
volve a larger engine, or a front wheel drive model.
Range Rover projected its light truck CAFE for
MY 1989 at 15.3 mpg in April 1989. At that time, the
company did not expect any significant fuel economy
improvement. However, the company has projected its
1990 and 1991 CAFEs at 16.3 mpg, 1.0 mpg higher
than its MY 1989 projection.
Other foreign light truck manufacturers only com-
pete in the small vehicle portion of the light truck mar-
ket and are therefore expected to achieve CAFE levels
well above those of GM and Ford, the manufacturers
whose fuel economy capabilities determine the MY
1993-94 standards.
B. Possible Additional Actions to
Improve MY 1993-94 CAFE
There are additional actions which the agency ana-
lyzed that could be implemented by manufacturers to
improve their CAFEs above the levels which they cur-
rently project for MY 1993-94. These actions may be
divided into three categories: further technological
changes to their product plans, increased marketing
efforts, and product restrictions or mix shifts.
1. Further Technological Changes
The ability to improve CAFE by further techno-
logical changes to product plans is dependent on the
availability of fuel efficiency enhancing technologies
which manufacturers are able to apply within the avail-
able leadtime.
The agency's FRIA discusses the fuel efficiency en-
hancing technologies which are expected to be availa-
ble by MY 1993-4. NHTSA recognizes that the
leadtime necessary to implement significant improve-
ments in engines, transmissions, aerodynamics and
rolling resistance is typically about three years. Also,
as the agency discussed in establishing the final rule
for MY 1990-91, once a new design is established and
tested as feasible for production, the leadtime neces-
sary to design, tool, and test components such as new
body sheet-metal subsystems for mass production is
typically 30 to 36 months. Other potential major
changes may take longer. Leadtimes for new vehicles
are usually at least three years.
Given leadtime constraints, the agency does not be-
lieve that manufacturers can achieve significant im-
provements in their projected MY 1993-94 CAFE
levels by additional technological actions. Some im-
provements are, of course, possible due to slight in-
creases in the extent of installation of more fuel
efficient technology or changes in model mix. However,
such changes are likely to be market driven, and are
not likely to provide a substantial increase for any
manufacturer.
2. Increased Marketing Efforts
As discussed in the NPRM, NHTSA believes that
the ability to improve light truck CAFE by marketing
efforts is relatively small. Light trucks are often pur-
chased for their work-performing capabilities. This is
particularly true for the larger, less fuel-efficient light
trucks. Since the smaller light trucks cannot meet the
needs of all light truck users, the manufacturers'
PART 533-PRE 155
ability to use marketing efforts to encourage con-
sumers to purchase smaller light trucks instead of
larger light trucks is limited.
As a practical matter, marketing efforts to improve
CAFE are largely limited to techniques which either
make fuel-efficient vehicles less expensive or less fuel-
efficient vehicles more expensive. Moreover, the ability
of a manufacturer to increase sales of fuel-efficient light
trucks depends in part on increasing its market share
at the expense of competitors or pulling ahead its own
sales from the future. The ability of domestic manufac-
turers to make such sales increases is also affected by
the strong competition in that market from Japanese
manufacturers. While the Japanese manufacturers cur-
rently have an overall combined market share of about
30 percent of light trucks, their share for the smaller,
more fuel-efficient light trucks is about 45 percent.
A problem with pulling ahead sales is that the
manufacturers' CAFE levels for subsequent years are
reduced. For example, if a manufacturer improves its
MY 1993 CAFE by pulling ahead sales of fuel-efficient
light trucks from MY 1994, its MY 1994 CAFE will
decrease, compared with the level it would have been
in the absence of any pull-ahead sales attributable to
marketing efforts. For this reason, a manufacturer can-
not continually improve its CAFE simply by pulling
ahead sales.
Given these considerations, NHTSA concludes that
the domestic manufacturers cannot significantly
improve their MY 1993-94 CAFE levels through
increased marketing efforts.
3. Product and Possible Mix Shifts
As an alternative to technological improvements,
manufacturers could improve their CAFE by restrict-
ing their product offerings (e.g., limiting or deleting
production of particular larger light truck models and
larger displacement engines). Such product restrictions
could have adverse economic impacts on the industry
and the economy as a whole.
The FRIA presents a scenario as an example in
which GM, Ford, and Chrysler (since Chrysler's pro-
jected capability for MY 1993 is below the range of up
to 21.5 mpg proposed in the NPRM for MY 1993) are
assumed to restrict production of sufficient numbers
of their least fuel-efficient light truck models to obtain
a 0.5 mpg improvement in CAFE beyond their pro-
jected capabilities for MY 1993. Under this scenario,
GM could suffer a sales loss of up to 175,000 light
trucks for MY 1993, while Ford could experience a
sales loss of more than 159,000 light trucks, and Chrys-
ler a sales loss of more than 89,000 light trucks in MY
1993. The potential job losses imder this scenario in
manufacturing and supplier industries could total
28,000 to 85,000 for MY 1993.
These numbers are probably quite overstated,
since, as GM has stated in past light truck rulemak-
ings, and Ford has stated in its comments on this rule,
product restrictions of the type envisioned above would
likely be considered only after attempting marketing ^^
efforts and restricting the availability of particular ^^
engines and axle ratios. Ford and GM both submitted
analyses of the sales and employment impact of set-
ting the standard at 0.5 mpg beyond their respective
capabilities. Both manufacturers' analyses show im-
pacts much smaller than those projected above.
However, the scenario is illustrative of the types of
impacts that could result from standards that exceed
manufacturers' true capabilities. In addition to the
adverse impacts on the automotive industry, a wide
range of businesses could be seriously affected to the
extent that they could not obtain the light trucks they
need for business use.
Although the current Mid-East crisis has, in the
short nm, somewhat tilted consumer demand toward
smaller and more fuel efficient light trucks, it is un-
clear whether this shift can be maintained, since work-
performing capability and load capacity are the primary
factors that determine consumers' long-term choices
when purchasing light trucks.
The U.S. Department of Energy (DOE) com-
mented that NHTSA's method of analysis yields esti-
mates of economic impacts that are so much larger than
those that would actually occur, that it may not be
meaningful to consider them. Although not advocat- ^^
ing the payment of fines as an alternative to compli- ^^
ance, DOE suggested that the fines paid in such a
circumstance would be a better context in which to
evaluate the maximum negative impacts of a standard
0.5 mpg above the manufacturers' capability.
NHTSA's response to this comment is discussed in
detail in the final rule for MY 1992. NHTSA does not
dispute DOE's analysis for the case where manufac-
turers choose to pay penalties rather than comply with
a standard beyond their capability. However, NHTSA's
analysis focuses on the maximum impacts that would
occur if manufactiu"ers chose to comply with the stand-
ard through product restrictions, or were forced to so
comply because marketing or other measures were un-
successful. Moreover, the agency believes the statute
directs it to consider the maximum fuel economy level
that manufacturers can achieve, rather than the impact
of penalties paid if the standards are not achieved.
Ford's comments expressed concern that establish-
ing a CAFE standard beyond its capability could result
in a substantial loss of sales, adverse employment effect,
and economic hardship. The company is also concerned
about the potential impact of product restrictions, and
indicated that market research data show that the
vehicles most likely to be restricted are used for a com- ^^^
bination of commercial as well as personal uses. ^^^
PART 533-PRE 156
In its comments, GM also expressed concern about
the impact of product restrictions on consumer choice
and industry employment.
NHTSA concludes based on these considerations
that significant product restrictions should not be
considered as part of manufacturers' capabilities to
improve MY 1993-94 CAFE levels.
C. Manufacturer-Specific CAFE Capabilities
As discussed later in this notice, NHTSA is
directed to take "industrywide considerations" into ac-
count in setting fuel economy standards. In carrying
out this direction, the agency focuses on the least capa-
ble manufacturer with substantial shares of light truck
sales. For MY 1993, the agency has determined that
Ford is the least capable manufacturer with a substan-
tial share of sales. For MY 1994, GM is the least capa-
ble manufacturer. During MY 1990, Ford had a 26
percent share of combined light truck sales. By com-
parison, GM had a 32 percent share, and Chrysler a
22 percent share. VW does not have a substantial share
of industry sales. Its MY 1990 market share was 0.17
percent. Similarly, Range Rover's sales accounted for
0.13 percent of the light truck market in MY 1990.
GM, Ford, and Chrysler's MY 1993-94 CAFE
projections are subject to a number of uncertainties
which are discussed above. NHTSA has fully consi-
dered these uncertainties in determining manufacturer-
specific capabilities.
Ford: As noted above, in March 1989, Ford
projected a MY 1993 CAFE of 19.8 mpg, and a MY
1994 CAFE of 20.0 mpg. In its March 1990 comments.
Ford projected a CAFE of 20.9 mpg for MY 1993, and
20.8 mpg for MY 1994, subject to risks and opportuni-
ties which Ford believes could lead to a decrease of
about 0.5 mpg in MY 1993, and 0.7 mpg in MY 1994.
Many of the technical risks and opportunities are each
quite small. Ford believes that its fuel economy test-
ing program may not yield the anticipated benefits,
resulting in a 0.2 mpg decrease for both MY 1993 and
MY 1994. This is offset, however, by minor technolog-
ical improvements in both years which would raise
Ford's CAFE by 0.2 mpg. Ford also anticipates that
new safety requirements which become effective in MY
1993 and MY 1994 could decrease CAFE by 0.1 mpg
in MY 1993 and 0.2 mpg in MY 1994 due to increased
weight. Ford also includes a risk that planned fuel
economy improvements may not achieve the projected
levels, resulting in a 0.2 mpg decrease for both model
years, and a 0.3 mpg decrease for both model years
based on potential market risks. Finally, Ford's base
projection includes a 0.4 mpg penalty in MY 1994 to
account for more stringent emissions standards.
Ford concludes that these factors could result
in adjusted CAFEs of 20.4 mpg for MY 1993 and
20.2 mpg for MY 1994. (The MY 1994 figure reflects
a correction for a 0.1 mpg error in Ford's fleet descrip-
tion.) The agency agrees that Ford's fuel economy data
vehicle testing program may not yield the entire benefit
that Ford anticipates, and that Ford's baseline should
be reduced by 0.2 mpg in both MY 1993 and MY 1994
to reflect this risk. NHTSA's analysis indicates that the
minor technological improvements planned by Ford
would be likely to result in a potential net gain of nearly
0.2 mpg in both model years. The agency also agrees
with Ford's assessment of the CAFE penalties for new
safety requirements in these model years. Further,
NHTSA does not wish to discourage the voluntary
installation of safety features such as automatic
occupant restraints by disallowing Ford's projected
penalty for increased safety features. NHTSA believes
that Ford's assessment of potential market risks is
overly pessimistic, and that all the events which com-
prise that risk are unlikely to occur simultaneously.
Thus, NHTSA has added 0.1 mpg to Ford's capability
for each year. In addition, the agency believes that
certain technological improvements which Ford dis-
counted from its baseline due to potential emissions
penalties should be reinstated. This would amount to
a negligible improvement for MY 1993, but would
increase Ford's CAFE by 0.1 mpg in MY 1994. Finally,
as discussed below in Section IV, the agency does not
believe that the recent Clean Air Act amendments are
likely to result in significant light truck fuel economy
impacts. The agency notes that no other manufacturer
claimed a specific emissions penalty in its MY 1994
CAFE projection. Moreover, the phase-in schedule in
the Clean Air Act was delayed by one year from that
in the draft legislation under consideration when Ford
made its estimate. Thus, in its analysis and compari-
son with other manufacturers' projections, NHTSA has
not included this 0.4 mpg MY 1994 penalty deducted
by Ford.
Taking these factors into account, NHTSA believes
that Ford is capable of a CAFE of 20.6 mpg in MY 1993
and 20.9 mpg in MY 1994.
General Motors: As noted above, in March 1989,
GM projected a MY 1993 CAFE of 20.7 mpg, and a
MY 1994 CAFE of 20.8. In its March 1990 comments
on the NPRM, GM revised its projection to 20.7 mpg
for both MY 1993 and 1994 due to minor technical and
mix adjustments. However, GM also indicated several
uncertainties that combined could lower its projection
by as much as 0.4 mpg for each year, for an adjusted
CAFE of 20.3 mpg for both years. These risks were
tied primarily to mix shifts toward less efficient
vehicles.
As with Ford's projection, NHTSA believes that
GM's market risk estimate is likely overstated. For ex-
ample, as noted in the MY 1992 final rule, GM's CAFE
can be increased if GM would drop the low-volume
PART 533-PRE 157
offering of the fuel-inefficient 7.4 litre ClO pickup.
Taking this consideration into account when analyzing
GM's market risk, the agency believes that a reason-
able adjustment for GM's market risk during MY's
1993 and 1994 is 0.1 mpg for each year. This decrease
is offset because NHTSA believes that GM omitted
from its baseline certain technological improvements
for which it projects increasing market share during
MY 1993-94, and which could produce a CAFE im-
provement of about 0.1 mpg in both model years.
NHTSA concludes that GM is capable of a CAFE for
MY 1993 and 1994 of 20.7 mpg.
As discussed at length in the MY 1992 final rule,
the U.S. Department of Energy (DOE) commented that
the upper end of the CAFE ranges proposed in the
NPRM were achievable and represented the maximum
feasible level. DOE's analysis was based on a linear
interpolation between a base CAFE for each domestic
manufacturer for MY 1987 and DOE's analysis of the
manufacturers' capabilities for MY 1995. This method-
ology assumes both that DOE's MY 1995 projection is
actually achievable and that each manufacturer has the
capability to improve each year by the same fixed
amoimt (about 0.4 mpg per model year). NHTSA ques-
tions both assumptions. Based on the manufacturers'
submissions, GM will improve about 1.0 mpg between
MY 1990 and MY 1994, but a large part of this is due
to an unfavorable model mix in MY 1990 due to a short
model year for compact pickups and utility vehicles.
Ford will improve by 0.6 mpg and Chrysler will decline
by 0.3 mpg between MY's 1990 and 1994.
The agency does not believe that DOE's extrapo-
lation of CAFE values is a meaningful method to de-
termine individual manufacturer capabilities for
specific years, nor is it as accurate as an examination
of product plans in establishing short-term capabilities
for individual manufacturers. As explained in the MY
1992 final rule, NHTSA has provided DOE with com-
ments on the draft report on which the MY 1995 projec-
tion is based, and does not believe that all issues have
been resolved between DOE and NHTSA.
IV. Effect of Other Federal Standards
In determining the maximimi feasible fuel economy
level, the agency must take into consideration the
potential effects of other Federal standards. The
following section discusses other government regula-
tions, both in process and recently completed, that may
have an impact on fuel economy capability for MY
1993-94.
1. Safety Standards
As discussed in the FRIA, NHTSA has evaluated
several safety rulemakings for their potential impacts
on light truck fuel economy in MY 1993-94. This final
rule does not address the impact of regulations that
take effect in MY 1992. The CAFE impact of those
regulations and issues raised by commenters concern-
ing those regulations were addressed in the final rule
for MY 1992.
The safety regulations evaluated by the agency for ^^
this rulemaking which are anticipated to become effec- ^^
tive during MY 1993-94 include revisions to FMVSS
Nos. 208; Occupant crash -protection, 108; Lamps,
reflective devices and associated equipment, 214; Side
door strength, and 216; Roof crush resistance-passenger
cars. In addition, the agency has evaluated proposed
revisions to 49 Part 523, addressing vehicle classifica-
tion for safety standards.
FMVSS No. 208. The agency published an NPRM
on January 9, 1990 (55 FR 747) proposing to require
automatic restraints on light trucks with a GVWR of
8,500 pounds or less and an unloaded vehicle weight
of 5,500 pounds or less. The proposal would phase in
the requirements, so that each manufacturer would be
required to equip 20 percent of its light trucks manufac-
tured between September 1, 1993 and August 31, 1994
with automatic restraints. From September 1, 1994
through August 31, 1995, 50 percent of each manufac-
turer's light trucks would have to be so equipped, and
from September 1, 1995 on, all light trucks would be
required to have automatic restraints. Thus, this
proposal would have no direct impact on MY 1993 light
trucks, and would affect only 20 percent of MY 1994
light trucks.
NHTSA has estimated the range of potential ^^^
weight impacts (including secondary weight) from this
proposed requirement to be between 5-36 poxmds.
Assuming manufacturers made changes to maintain
constant acceleration performance despite the weight
increases, fuel economy would be reduced about
0.05-0.10 mpg. However, since the requirement would
only affect 20 percent of the MY 1994 fleet, the nega-
tive CAFE effect would be only 0.01-0.02.
In its response to the NPRM, Ford indicated the
addition of driver-only passive restraints would add 20
to 50 pounds per affected vehicle, and that the addi-
tion of a passenger airbag would add 25 pounds, not
including structural support. GM projected in its com-
ments that airbags would add 17 to 24 pounds per af-
fected vehicle. Chrysler noted that it did not include
the impact of automatic restraints in its CAFE projec-
tions. No other comments were received on the poten-
tial impacts of automatic restraints on light truck
CAFE.
Although NHTSA has not yet issued a final rule
requiring automatic restraints for light trucks, the
agency has included the weight impacts outlined by the
manufacturers in assessing MY 1993-94 fuel economy
capabilities. Even if the agency decides not to require ^^
automatic restraints for light trucks in the proposed ^^
PART 533-PRE 158
time frames, it does not want this MY 1993-94 CAFE
rulemaking to discourage the voluntary installation of
these systems in light trucks.
FMVSS 2U. On December 22, 1989, the agency
published an NPRM (54 FR 52826), proposing to
extend the existing requirements of Standard No. 214
to trucks, buses, and multipurpose passenger vehicles
with a GVWR of 10,000 pounds or less, effective
September 1, 1992.
NHTSA has estimated that the proposal, if
adopted, could result in an average weight increase of
18-20 pounds per vehicle not including possible
secondary weight, or 31-35 pounds including possible
secondary weight. If the requirement takes effect as
proposed, it could reduce MY 1993 and MY 1994 fuel
economy levels by about 0.1 mpg.
Chrysler indicated in its comments that its projec-
tions included the effects of side door beams for MY
1993 and beyond. However, Chrysler did not provide
a specific estimate of the fuel economy impacts of the
proposed revisions to Standard No. 214. GM indicated
that the side impact proposal would result in a 12-24
pound weight increase due to redesigned doors and
glass. Ford stated that the proposal would result in a
weight increase of 20-35 pounds per vehicle, depend-
ing on vehicle size and door configuration.
The weight impact estimates provided by the
manufacturers are generally consistent with NHTSA's
estimates. Since NHTSA has not altered the manufac-
turers' weight estimates, the potential impacts of this
standard are included in the agency's fuel economy
capability assessments.
FMVSS 108. Changes to the agency's lighting
standard permit the use of smaller sealed beam head-
lamps, replaceable light source headlamps and lower
mounting height. All of these changes should give
manufacturers greater design freedom to achieve lower
aerodynamic drag and some weight reductions, which
could have positive impacts on CAFE . However, the
agency does not have any data to estimate the reduc-
tion in drag that may be economically achievable for
light trucks as a result of these changes. These posi-
tive effects may be counterbalanced by possible slow
consumer acceptance of light truck styling for certain
models which have been influenced by aerodynamic
considerations. However, Ford indicated in its com-
ments on the fuel economy NPRM that the changes to
Standard 108 may permit more aerodynamic front end
designs, and provide some opportunity for weight
reduction.
On May 31, 1990, the agency pubHshed a NPRM
(55 FR 22039) to require that new light trucks be
equipped with Center High Mounted Stop Lamps
(CHMSLs). The proposed effective date would be
September 1, 1992, affecting MY 1993 and later light
trucks. NHTSA estimates that this requirement would
result in a weight increase of about one pound and that
it would have a negligible impact on CAFE.
In its comments on the MY 1992-94 fuel economy
NPRM, Ford estimated that CHMSLs would result in
a two pound weight increase. This increase is included
in Ford's fuel economy projections. GM did not men-
tion FMVSS No. 108 in its response. Chrysler indicated
that it has included CHMSLs in its projections, but it
did not provide a specific estimate of the potential
impact.
FMVSS 216. On November 2, 1989 (54 FR 46275),
NHTSA published an NPRM proposing to extend the
roof crush protection requirements of Standard No.
216 to light trucks and multipurpose passenger vehi-
cles vnth GVWRs of 10,000 pounds or less, with a
proposed effective date of September 1, 1991.
GM, Ford, and Chrysler all indicated in their
comments that they had considered the fuel economy
impacts of the proposal in their fuel economy projec-
tions. Since most light trucks already comply with the
proposed requirements, and only modest weight in-
creases are anticipated for those vehicles not meeting
the proposal, the agency believes that this rulemaking
will have a negligible impact on automakers' MY
1993-94 fuel economy capabilities.
Vehicle classification. NHTSA proposed to estab-
lish a new vehicle classification system for determin-
ing the applicability of the Federal Motor Vehicle
Safety Standards on October 17, 1988 (53 FR 40463).
The proposed rule would not affect the classification
of vehicles for fuel economy standards. The agency is
not proposing to alter the definitions of "passenger
automobile" or "light truck" as they appear in 49 CFR
Part 523. However, vehicles that are defined as light
trucks for the purpose of fuel economy standards would
be the type of vehicle most affected by the proposed
classification changes. Vehicles classified as light trucks
for fuel economy standards include many vehicles
currently classified as trucks or MPVs for the purpose
of safety standards. However, as the agency proposed
to amend its safety regulations in such a way as to
ensure that re-classification, by itself, causes no change
in the applicability of safety standards, adoption of the
proposed classification rule would have no impact on
manufacturers' fuel economy capabilities for MY
1993-94.
2. Noise Standards
The agency is not aware of any plans on the part
of EPA to promulgate noise regulations during the MY
1993-94 time period, and therefore does not anticipate
any attendant fuel economy impacts.
PART 533-PRE 159
3. Emission Standards
The Clean Air Act Amendments of 1990 impose
new, more stringent emission standards on light trucks
beginning in MY 1994. The amendments require that
40 percent of all light duty trucks up to 6,000 lbs
GVWR meet more stringent standards for nonmethane
hydrocarbons (NMHC), total hydrocarbons (HC), nitro-
gen oxides (NOx) and carbon monoxide (CO) in MY
1994. The remaining 60 percent of light duty trucks
up to 6,000 lbs GVWR and those over 6,000 lbs GVWR
would not be required to comply with the existing light
duty standards until MY 1995 or 1996.
The Act includes new standards for CO emissions
at low temperatures, with the requirements for light
trucks beginning in MY 1994. The Act phases in CO
requirements, requiring 40 percent of vehicles to
comply in MY 1994. It also requires EPA to promul-
gate stricter evaporative HC emissions standards.
The revised Clean Air Act also requires light trucks
to be equipped with onboard refueling vapor recovery
systems. Such requirements must be effective in the
fourth model year after the standards are promulgated,
and EPA would be required to promulgate the
standards within one year from enactment of the
amendments. Thus, if the standards for onboard vapor
recovery were issued during MY 1991, they would not
take effect until MY 1995.
In their comments on the NPRM, manufacturers
provided little definitive information on the CAFE
impacts of the amendments since the future status of
the amendments was unclear at that time. Chrysler
indicated that it did "not know the task of meeting
these standards, nor what effect there will be on fuel
economy." GM assumed that stricter emissions stand-
ards coiild have a negative effect on fuel economy, and
indicated that if the final Federal requirements were
similar to the 1993 California standards, the fuel
economy of each of its engines could be expected to
decrease between 0 and 4V2 percent. In addition, GM
indicated that the more stringent HC standards could
limit the application of some manual transmissions.
Ford estimated that the proposed legislation would
reduce its MY 1994 CAFE by 0.4 mpg, and included
this penalty in its MY 1994 projection of 20.8 mpg.
None of the other manufacturers included any emis-
sions penalty in their CAFE projections.
EPA has indicated that, as a general rule, recent
developments in emission control technology in the
light duty fleet have allowed for decreases in emissions
without losses in fuel economy. As an example, the use
of computer controls to maintain the engine air-fuel
ratio within a narrow range has made the use of three-
way catalytic converters feasible. The use of these con-
verters has in turn enabled manufacturers to optimize
fuel economy while independently meeting emissions
standards. Additionally, manufacturers are increasing
the use of multipoint fuel injection on light trucks. This
will provide a slight increase in fuel economy if it is
not used to increase performance. EPA expects that
the entire Hght truck fleet will be equipped with mul-
tipoint fuel injection by the mid-1990s.
The more stringent standards mandated by the
Clean Air Amendments will likely be achieved by a
combination of engine recalibration, catalyst reformu-
lation, better air-fuel mixture control, and reformul-
ated gasoline. Most of these changes will not affect fuel
economy. Others are likely to provide some improve-
ment in in-use fuel economy, and may provide some
benefit during fuel economy testing for CAFE.
Although it appears that manufacturers can meet
the emissions standards for the mid-1990s without
suffering any significant fleet-wide fuel economy
penalty, it is possible that there may be some initial,
short-lived fuel economy losses. The limited emissions
control engineering resources of the auto manufac-
turers must be utilized to meet stricter standards for
both light trucks and passenger cars during these
model years. Given the task of meeting more stringent
standards on a wide variety of light truck powertrains,
it is possible that some of the initial technologies and
calibrations used to meet these standards may not be
optimized. Consequently, some small loss of fuel econ-
omy is possible. Given the uncertainty in the develop-
ment process, this effect cannot be precisely quantified.
However, the agency has given consideration to these
factors in setting the light truck CAFE standards in
this final rule.
Diesel fuel quality. EPA published a final rule on
August 21, 1990 (55 FR 34120) requiring a reduction
in the permissible level of sulphur in diesel fuel, and
a cap on aromatics at current levels for diesel fuel. The
rule becomes effective October 1, 1993. The effect of
this requirement will be to lower the particulate emis-
sions from diesel engines operating on the fuel. By
making it easier for diesel-powered vehicles to comply
with emissions standards, this requirement potentially
could improve the performance, and therefore market-
ability, of diesel-powered vehicles in the U.S., giving
manufacturers an additional means to improve light
truck CAFE.
Hydrocarbon emissions. On September 8, 1986,
EPA published an advance notice of proposed rule-
making (ANPRM) concerning more stringent HC
exhaust emissions for light-duty trucks. In December
1986, both GM and Ford commented that more strin-
gent HC standards could have a negative impact on
CAFE. This rulemaking has been superseded by the
Clean Air legislation. Therefore, no potential impacts
of this specific proposal were considered in determin-
ing the MY 1993-94 light truck CAFE standards.
PART 533-PRE 160
Evaporative emissions. On January 19, 1990, EPA
issued an NPRM proposing modifications to test proce-
dures for control of evaporative emissions from run-
ning losses (55 FR 1914). This proposal w^ould affect
light duty vehicles fueled by gasoline or methanol, but
it is expected to have no impact on fuel economy values
as measured on the EPA test cycle. The Clean Air Act
Amendments of 1990 require light trucks to be
equipped with onboard vapor recovery systems in the
fourth model year after standards are promulgated by
EPA, in consultation viith the Secretary of Transpor-
tation on the safety aspects of compliance. As men-
tioned above, NHTSA is not considering any impact
of these systems on light truck fuel economy capabili-
ties until MY 1995.
California air emissions standards. The Califor-
nia Air Resources Board (CARB) in 1986 adopted more
stringent NOx standards for compact trucks sold in the
state. The regulation phases in compliance, with 50 per-
cent of light trucks weighing up to 3,750 pounds loaded
vehicle weight subject to the standard in 1989, and 85
percent of vehicles in this class required to meet the
standard for MY 1990-93. Beginning in MY 1994, all
compact light trucks are subject to the standard. Both
Ford and GM claimed in the MY 1990-91 rulemaking
that this standard will have a small negative effect on
their fuel economy capability. However, in that
rulemaking, NHTSA concluded that by MY 1991,
manufacturers should be able to eliminate or substan-
tially reduce the projected penalty. California's stand-
ards for nonmethane hydrocarbons begin to become
more stringent in MY 1993. In its response to the
NPRM, GM indicated that the more stringent Califor-
nia HC standards scheduled to take effect in MY 1993
would result in a fuel economy loss from 0 to 1.5
percent depending on the characteristics of each
engine. Ford also indicated that the Califonia standards
would have a negative effect on fuel economy, although
Ford did not distinguish between the impact of the
California standards and the Federal Clean Air legis-
lation in assessing that effect. As discussed above,
NHTSA has considered the potential for reductions in
light truck fuel economy capability due to new emis-
sions requirements in setting the MY 1993-94
standards.
Chlorojluorocarbons. In response to the NPRM,
GM indicated that manufacturers must develop substi-
tutes for chlorofluorocarbons (CFCs) used in automo-
tive air conditioning designs. Vermont has banned the
registration of new vehicles using CFCs as a refriger-
ant beginning in MY 1993. GM indicated that replac-
ing CFCs will result in a weight increase of around
seven pounds per vehicle, and considerably more if
sheet metal changes are necessary to accommodate
new air conditioning systems. However, since NHTSA
has not altered manufacturer's weight projections for
this final rule, the potential impacts of this change are
included in the agency's fuel economy capability
assessments.
4. EPA Test Procedures
Gear shift indicator lights. During the MY
1990-91 fuel economy rulemaking, EPA issued a let-
ter to manufacturers proposing to eliminate one of the
two methods currently authorized to determine the fuel
economy benefits of shift indicator lights. These dash-
board lights are designed to inform drivers about the
optimal speed, from a fuel economy standpoint, for
shifting gears. EPA proposes to eliminate the driver
usage rate survey, the method preferred by GM as a
"more representative credit for actual shift indicator
light usage than the on-road survey," and allow only
an on-road shift light survey. At this point, EPA has
not made a decision on this issue. No manufacturers
raised the issue of shift indicator lights in their com-
ments in response to NHTSA's request for comments
on manufacturers' MY 1992-94 hght truck fuel econ-
omy capabilities. In its comments on the MY 1992-94
fuel economy NPRM, GM stated that its light truck
CAFE could be adversely affected if EPA were to
eliminate the driver usage rate survey. However, since
EPA has not made a decision on the issue, NHTSA has
not made any adjustment to fuel economy capabilities
to consider this factor.
5. Other Standards
Asbestos. On January 29, 1986, EPA proposed to pro-
hibit the "manufacture, importation, and processing of
asbestos in certain products," and the phasing out of
asbestos in all other products. The implication of this
rulemaking for motor vehicles would be to eliminate
the use of asbestos in brake linings, clutch facings, au-
tomatic transmissions, and gaskets.
On July 12, 1989, EPA published a final rule (54
FR 29460) phasing in a prohibition of asbestos in almost
all products. Asbestos brake linings are banned for use
by original equipment manufacturers effective MY
1994. Asbestos clutch facings, automatic transmission
components, and virtually all asbestos gaskets are
banned as of August 25, 1993. In its comments on the
MY 1990-91 light truck fuel economy rulemaking, GM
indicated that the phase-out would increase vehicle
weight approximately 5 pounds and reduce CAFE.
However, GM provided no substantiation for its esti-
mates. In response to NHTSA's request for comments
on MY 1992-94 manufacturers' CAFE capabilities, no
manufacturer indicated that this rule would have any
potential impact on MY 1992 light truck fuel economy.
However, in its comments on the fuel economy NPRM,
GM indicated that while most necessary changes had
been implemented, and therefore are included in the
company's CAFE projections, certain changes had not
yet been made. Specifically, the company anticipates
PART 533-PRE 161
a 7-pound increase on the S/T models beginning in MY
1992. The effects are included in the agency's
assessment of GM's fuel economy capability.
V. The Need of the Nation to Conserve Energy
The United States imported 15 percent of its oil
needs in 1955. The import share had reached 35.8 per-
cent by 1975, the year the Energy Policy and
Conservation Act was passed, and peaked at 46.5 per-
cent in 1977, at a cost of $62 billion (stated in 1982
dollars). While the import share of total petroleum
supply declined after that year, the cost continued to
rise to a 1980 peak of $87 billion (1982 dollars).
While the import share of petroleum supply
declined through 1985, it has been increasing since that
time. In 1985, the import share was 27.3 percent at
a cost of $45 billion (1982 dollars). For 1988, net
imports were 38.1 percent of total supply. For 1989,
net imports were 41.6 percent of total supply. For
January-August 1990, net imports reached 45.7 per-
cent of total supply. Due to sharply lower petroleimi
prices, however, the value of imports declined from
1985 to 1989, from $45 billion to $39 billion (1989 dol-
lars), but will undoubtedly be higher for 1990 because
of the rapid increases in oil prices since the Iraqi
invasion of Kuwait. Imports from OPEC also declined
through 1985 but have been rising since that time. For
the first 7 months of 1990, OPEC imports accounted
for about 54 percent of total import supply, up from
about 47 percent for 1989, and 51 percent for 1988.
The nation's dependence on petroleum net imports
since 1975 is summarized in the following table:
Net Imports as Percent of
Year U.S. Petroleum Products Supplied from
All
OPEC Countries
1975 Average
22.0%
35.8%
1977 Average
33.6
46.5
*
1985 Average
11.6
27.3
1988 Average
20.3
38.1
1989 Average
23.8
41.6
1990 Average
26.5
45.2
(First 6 mos.)
The current energy situation and emerging trends
point to the continued importance of oil conservation.
The United States now imports a higher percentage
of its oU needs than it did during 1975, the year EPCA
was passed, and the percentage of its oil supplied by
OPEC is also somewhat higher than that of 1975. Oil
continues to account for over 40 percent of U.S. energy
use, and 97 percent of the energy consumed in the
transportation sector. While the U.S. is the second-
largest oil producer, it contains only 3-percent of the
world's proved oil reserves. Moreover, proven reserves
in the U.S. have declined from a peak of 39 billion
barrels in 1970 to 27 billion barrels in 1988.
According to the Energy Information Administra-
tion's (EIA) 1990 Annual Energy Outlook, domestic
production for its "base case" projection is expected
to decline from 10.5 MMB/D in 1987 to 9.0 MMB/D in
1995, and 8.7 MMB/D in 2000. Net imports are pro-
jected to increase from 6.6 MMB/D in 1987 to 9.1
MMB/D in 1995 and 10.0 MMB/D in 2000. Thus, as a
percentage of total U.S. petroleum use, EIA expects
imports to rise to 50.3 percent of total supply in 1995
(exceeding the previous 1977 high of 46.4 percent) and
53.5 percent in 2000.
In its comment to the docket for NHTSA's 1990
passenger car CAFE rulemaking, the Department of
Energy (DOE) emphasized several points about trans-
portation's role in U.S. oil use and the importance of
rising fuel efficiency. DOE noted that the 11 MMB/D
used by the transportation sector in 1986 is almost 80
percent of total U.S. use of oil and over 90 percent of
the critical light product use. Thus, DOE wanted
NHTSA to consider the fact that any significant moder-
ation in growing oil demand will require large trans-
portation efficiency improvements. DOE also
emphasized that the 1987 EIA oil demand forecasts as-
sume that average new car efficiency will continue to
improve, which DOE said does not seem likely given
fuel economy trends (at least to the levels assumed by
EIA), and that even with these projected increases in
fuel efficiency, U.S. oil demand is projected to increase
over 1.5 MMB/D by 2000.
The level of petroleum imports is only one aspect
of the total energy conservation picture. Under EPCA
and NEPA, for example, national security, energy in-
dependence, resource conservation, and environmen-
tal protection must all be considered. The importance
of these issues is emphasized by the current conflict
in the Persian Gulf, as well as by the prospect of the
U.S.S.R. becoming an oil importer.
In March 1987, the Department of Energy sub-
mitted a report to the President entitled "Energy
Security." NHTSA believes that the following quota-
tion from that report represents a useful summary of
the national security and energy independence aspects
of the current energy situation:
Although dependence on insecure oil sup-
plies is . . . projected to grow, energy secu-
rity depends in part on the ability of
importing nations to respond to oil supply
disruptions; and this is improving. The
decontrol of oil prices in the United States,
as well as similar moves in other countries,
has made economies more adaptable to
changing situations. Furthermore, the large
PART 533-PRE 162
strategic oil reserves that have been estab-
Hshed in the United States (and to a lesser
extent, in other major oil-importing nations)
will make it possible to respond far more
effectively to any future disruptions than
has been the case in the past.
The current world energy situation and the
outlook for the future include both oppor-
tunities and risks. The oil price drop of 1986
showed how consumers can be helped by a
more competitive oil market. If adequate
supplies of oil and other energy resources
continue to be available at reasonable prices,
this will provide a boost to a world economy.
At the same time, the projected increase in
reliance on relatively few oil suppliers
implies certain risks for the United States
and the free world. These risks can be
summarized as follows: If a small group of
leading oil producers can dominate the
world's energy markets, this could result in
artificially high prices (or just sharp upward
and downward price swings), which would
necessitate difficult economic adjustments
and cause hardships to all consumers.
Revolutions, regional wars, or aggression
from outside powers could disrupt a large
volume of oil supplies from the Persian Gulf,
inflicting severe damage on the economies
of the United States and allied nations. Oil
price increases precipitated by the 1978-79
Iranian revolution contributed to the largest
recession since the 1930's. Similar or larger
events in the future could have far-reaching
economic, geopolitical, or even military
implications.
The continuing validity of the above quotation is
verified by the recent events surrounding the Iraqi
invasion of Kuwait in August 1990. Although there has
been no noticeable oil supply disruption since the
invasion, due in part to increased exports from other
OPEC members to make up for the embargoed oil
exports from Iraq and Kuwait, the market price of
crude oil had an initial dramatic increase, and remains
very unstable. This, coupled with the 5-cent per gallon
increase in the Federal gasoline tax in December 1990,
accentuates the need of the nation to conserve energy
and the importance of improved vehicle fuel efficiency,
both from an energy security and from an economic
viewpoint.
The agency recognizes that the energy situation is
affected in the near term by the current uncertainty
about the outcome and length of time to resolve the
situation in the Middle East. NHTSA believes it
important to note that the fuel economy standards in-
cluded in this final rule will not have near- term effects.
They will not affect light truck fuel economy until the
beginning of MY 1993, and then only gradually as these
trucks replace older trucks. The long-term energy
policy of the nation is being addressed by the National
Energy Strategy (NES), which is being developed by
the Department of Energy, with the cooperation of
other government agencies, including the Department
of Transportation.
This overall strategy will reflect careful examina-
tion of the need for energy conservation, and its impact
on the components of the nation's economy, including
the transportation sector. This examination includes
overall transportation energy consumption, and not
just increases in the fuel efficiency of the new vehicle
fleet. Vehicle fleet turnover and vehicle miles of travel
are critical determinants of energy consumption and
must be considered in any analysis of policies affect-
ing energy use by light duty vehicles. There are a
number of conservation and energy efficiency meas-
ures being analyzed that will produce near-term energy
savings that do not impose significant economic costs
on the automotive industry or the public. The NES is
due to be completed early this year.
With regard to this rulemaking, light truck regis-
trations more than doubled between 1973 and 1989,
and light truck sales are projected to increase 21 per-
cent over the 1987-2000 period, compared to 14 per-
cent for passenger cars. The light truck fleet's share
of total oil consumption increased steadily from 6.4 per-
cent in 1973 to 8.9 percent in 1980 to 12.1 percent in
1986 and to 12.5 percent in 1989. This increase in the
light truck fleet's share of fuel consumption took place
even as the average fuel economy of the on-road fleet
of light trucks increased from an estimated 10.5 mpg
in 1973 to 13.8 mpg in 1989. Clearly, light truck fuel
economy will be an increasingly important determinant
of the nation's level of petroleum consumption.
Information provided to NHTSA by the Depart-
ment of Energy indicates that light trucks are used for
a longer period of time (14.9 years versus 10.9 years)
than passenger cars. Federal Highway Administration
data indicate light trucks are driven farther annually
(12,062 miles versus 10,382 mUes) than passenger cars.
All of these factors result in the conclusion that
improved light truck fuel economy contributes to the
nation's efforts at conserving fuel. Light trucks meet-
ing the standards proposed by this notice would be
more fuel-efficient than the average vehicle in the
current light truck fleet in service, thus making a posi-
tive contribution to petroleum conservation.
VI. Determining the Maximum
Feasible Average Fuel Economy Level
As discussed above, section 502(b) requires that
light truck fuel economy standards be set at the maxi-
miun feasible average fuel economy level. In making
PART 533-PRE 163
this determination, the agency must consider the four
factors of section 502(e): technological feasibility, econom-
ic practicability, the effect of other Federal motor vehi-
cle standards on fuel economy, and the need of the nation
to conserve energy. As with earlier CAFE rulemakings,
NHTSA has considered and weighed all four statutory
factors of section 502(e) in reaching its decision.
A. Interpretation of "Feasible"
Based on definitions and judicial interpretations of
similar language in other statutes, the agency has in
the past interpreted "feasible" to refer to whether
something is capable of being done. The agency has
thus concluded in the past that a standard set at the
maximum feasible average fuel economy level must: (1)
be capable of being done and (2) be at the highest level
that is capable of being done, taking account of what
manufacturers are able to do in light of technological
feasibility, economic practicability, how other Federal
motor vehicle standards affect average fuel economy,
and the need of the nation to conserve energy.
B. Industrywide Considerations
The statute does not expressly state whether the
concept of feasibility is to be determined on a
manufacturer-by-manufacturer basis or on an industry-
wide basis. Legislative history may be used as an indi-
cation of Congressional intent in resolving ambiguities
in statutory language. The agency believes that the
below-quoted language provides guidance on the mean-
ing of "maximum feasible average fuel economy level."
The Conference Report to the 1975 Act (S. Rep.
No. 94-516, 94th Cong., 1st Sess. 154-5 (1975)) states:
"Such determination [of maximum feasible
average fuel economy level] should take in-
dustrywide considerations into account. For
example, a determination of maximum feasi-
ble average fuel economy should not be
keyed to the single manufacturer which
might have the most difficulty achieving a
given level of average fuel economy. Rather,
the Secretary must weigh the benefits to the
nation of a higher average fuel economy
standard against the difficulties of individual
manufacturers. Such difficulties, however,
should be given appropriate weight in set-
ting the standard in light of the small num-
ber of domestic manufacturers that
currently exist, and the possible implications
for the national economy and for reduced
competition association (sic) with a severe
strain on any manufacturer. . . ."
It is clear from the Conference Report that Con-
gress did not intend that standards simply be set at
the level of the least capable manufacturer. Rather,
NHTSA must take industrywide considerations into ac-
count in determining the maximum feasible average
fuel economy level.
NHTSA has consistently taken the position that it
has a responsibility to set light truck standards at a
level that can be achieved by manufacturers whose
vehicles constitute a substantial share of the market.
(See 49 FR 41251, October 22, 1984.) The agency did
set the MY 1982 light truck fuel economy standards
at a level which it recognized might be above the
maximum feasible fuel economy capability of Chrysler,
based on the conclusion that the energy benefits
associated with the higher standard would outweigh
the harm to Chrysler (45 FR 20871, 2086, March 31,
1989). However, as the agency noted in deciding not
to set the MY 1983-85 light truck standards above
Ford's level of capability, Chrysler had only 10-15
percent of the light truck domestic sales, while Ford
had about 35 percent (45 FR 81593, 81599; December
11, 1980).
C. Petroleum Consumption
The precise magnitude of energy savings assoc-
iated with alternative light truck fuel economy stand-
ards is uncertain. The FRIA provides calculations for
the hypothetical lifetime fuel consumption of the MY
1993-94 domestic light truck fleets assuming those
same fleets could and would achieve alternative CAFE
levels. For example, the maximmn difference in fuel
consumption between the manufacturers' (GM, Chrys-
ler, and Ford's) current capabUities for MY 1993 and
a 21.0 mpg CAFE standard would be 395 million
gallons over the lifetime of the model year's fleet.
However, it is possible that manufacturers may be
able to achieve particular higher CAFE levels only by
restricting the sales of their large light trucks. If this
occurred, consumers might tend to keep their older,
less-fuel efficient light trucks in service longer. Also,
to the extent that a particular manufacturer might find
it necessary to restrict sales of its large light trucks,
consumers may be able to transfer their purchases of
those same types of vehicles to another manufacturer
which may have less difficulty meeting the CAFE
standard. Thus, the agency believes that the actual
impacts, if any, on energy consumption of alternative
higher fuel economy standards, would be less than the
theoretical calculations comparing levels of indus-
trywide CAFE.
D. The MY 1993-94 Standards
Based on its analysis described above and on
manufacturers' projections, the agency concludes that
the major domestic manufacturers can achieve the com-
bined fuel economy levels listed in the following table:
Manufacturer Approximate market share Combined CAFE
MY 1989 MY 1993 MY 1994
Chrysler
21.0%
GM
34.1%
Ford
26.1%
20.9 mpg 20.8 mpg
20.7 mpg 20.7 mpg
20.6 mpg 20.9 mpg
PART 533-PRE 164
As indicated above, foreign manufacturers other
than Volkswagen and Range Rover compete in only the
small vehicle portion of the light truck market and are
• therefore expected to achieve CAFE levels well above
those of GM, Ford, and Chrysler, which offer full
ranges of light truck models.
As discussed in the MY 1992 final rule, beginning
with MY 1992, NHTSA has decided not to promulgate
separate 2WD and 4WD standards as an alternative
to the combined standard.
The setting of maximum feasible fuel economy
standards, based upon consideration of the four re-
quired factors, is not a mere mathematical exercise but
requires agency judgment. Based on the preceding
analysis and discussion, the agency concludes that Ford
is the least capable manufacturer with a substantial
share of sales for MY 1993, and that GM is the least
capable manufacturer with a substantial share of sales
for MY 1994. The agency has also concluded that 20.4
mpg is the maximum feasible combined standard for
MY 1993, and 20.5 mpg is the maximum feasible
combined standard for MY 1994.
As discussed above in Section IV, the Federal
Clean Air legislation will result in more stringent
vehicle emission standards. However, as stated by
EPA, recent developments in emission control technol-
ogy have allowed for decreases in emissions with no
loss in fuel economy. The more stringent standards
resulting from the legislation can probably be achieved
by a combination of engine recalibration, catalyst refor-
mulation, better air-fuel mixture control, and reformu-
lated gasoline, without any resulting fleet- wide fuel
economy penalty. Given the task of meeting more strin-
gent standards on a wide variety of powertrains, it is
possible that some of the technologies and calibrations
may not be fully optimized in the first year or two of
implementation. While this possible initial fuel economy
loss cannot be precisely quantified, the agency has
considered it and allowed some margin for its existence
in setting the light truck CAFE standards for MY
1994.
NHTSA believes there are serious questions
whether a standard set at a level above Ford's capa-
bility for MY 1993, or GM's capability for MY 1994
would be consistent with the requirement that stan-
dards be set taking industrywide considerations into
account, given those companies' market shares.
Notwithstanding the projected product plans that
the manufacturers have provided the agency and that
are discussed above, there is the potential for some
change in each manufacturer's CAFE. The above anal-
ysis has not covered the potential of mix shifts because
of the possible adverse financial consequences to
manufacturers and national employment of any large
change in CAFE that is created by forced mix shifts.
Nevertheless, the market may dictate changes in the
light truck mix in response to fuel prices and availabil-
ity. Low fuel prices and plentiful supply may result in
an increased demand for power and performance, while
a substantial increase in fuel prices could increase
demand for more fuel-efficient models. The immediate
marketplace reaction to the Iraqi invasion of Kuwait
was for the sales proportion of light trucks to increase
by about 4 percentage points in August and Septem-
ber 1990 over the July share.
The precise effects on petroleum conservation of
a higher standard are uncertain. The maximum theo-
retical additional energy savings associated with a
standard set at a higher level can be determined by
comparing hypothetical situations where GM, Chrysler,
and Ford would have combined average fuel economy
levels of 21.0 mpg. Since most other manufacturers in
the industry project MY 1993 CAFE above that of
these manufacturers' capabilities, a standard set at
21.0 mpg would not be expected to affect the petro-
leum consumption of trucks manufactured by that part
of the industry. The maximum difference in total gaso-
line consumption between these two hypothetical
situations over the lifetime of the MY 1993 fleet would
be 395 million gallons. The maximum yearly impact on
U.S. gasoline consumption would be 46 million gallons,
or roughly 300 's of 1 percent of total transportation
gasoline consumption.
The agency believes, however, that any gasoline
savings associated with a higher standard would actu-
ally be less than indicated by this projection. While such
a standard would provide added incentive for GM to
achieve its maximum fuel economy capability, it is not
clear in light of earning possible carryforward/carry-
back credits that they might not achieve this increase
anyway. Ford and GM could not likely improve their
CAFE levels other than by restricting sales of larger
light trucks and engines. "To the extent that would-be
purchasers of such vehicles and engines transferred
their purchases to Chrysler without that company
otherwise changing its product plans, there could be
little or no effect on overall petroleum consumption.
Higher standards than 20.4 mpg for MY 1993 and
20.5 mpg for MY 1994 could result in serious econom-
ic difficulties for Ford in MY 1993 or GM in MY 1994.
Given leadtime constraints, NHTSA believes that the
primary potential fuel-efficiency enhancing actions that
Ford or any other manufacturer would consider in
response to a higher standard would consist of
marketing actions. For the reasons discussed earlier
in this notice, however, the agency does not believe that
marketing actions can be relied upon to significantly
improve fuel economy. If such marketing actions were
unsuccessful in whole or in part, the least capable
manufacturer would likely have to engage in product
restrictions, including limiting the sales of larger
engines and/or vehicles to improve its fuel economy.
PART 533-PRE 165
Such product restrictions could result in adverse eco-
nomic consequences for that manufacturer, its
employees and the economy as a whole and limit
consumer choice, especially with regard to the load
carrying needs of light truck purchasers.
Given Ford's 26 percent share and GM's 34 per-
cent share of the light truck market in MY 1989, the
capabilities of these manufacturers have a significant
effect on the level of the industry's capability and,
therefore, on the level of the standards. The agency
believes that the 20.4 mpg standard for MY 1993 and
the 20.5 mpg standard for MY 1994 balance the poten-
tially serious adverse economic consequences assoc-
iated with market and technological risks against
potential fuel economy improvements. The agency
concludes, in view of the statutory requirement to
consider specified factors, that the relatively small and
imcertain energy savings associated with setting a
standard above Ford's capability for MY 1993 or above
GM's capability for MY 1994 would not justify the
potential economic harm to those companies and the
economy as a whole.
As explained in the final rule for MY 1992, in
addition to the comments discussed above, the agency
received comments from Nissan, the Natural Resources
Defense Council (NRDC), the Energy Conservation
Coalition (ECC), the Western Interstate Energy Board
(WINB), and the National Automobile Dealers Associ-
ation (NADA).
The ECC, in comments endorsed by NRDC, argued
that in setting the CAFE standards, NHTSA should
double the 3 percent annual rate of increase provided
by the high end of the proposed ranges. This would
result in an MY 1992 CAFE of 22.2 mpg, and an MY
1994 CAFE of 25 mpg. The ECC also stated it is
essential to set standards now for model years after
1994 to provide manufacturers with adequate leadtime
to achieve higher fuel economy levels. The comments
claimed these increases would be cost-effective, and
listed a number of potential technological improve-
ments available to manufactiu"ers. Finally, ECC pro-
vided statistics on the potential fuel savings achievable
through higher CAFE standards for light trucks, and
emphasized the U.S. transportation sector's role as a
source of greenhouse gas emissions.
ECC does not explain the basis for its suggested
levels. The commenter did not demonstrate why these
levels would be feasible. As explained above, the
agency has determined that the maximimi feasible
levels for MY 1993-94 are 20.4 mpg and 20.5 mpg,
respectively. NHTSA also notes that much of the tech-
nology listed in ECC's comments has already been
extensively incorporated in the light truck fleet.
The agency has included an analysis of carbon dioxide
emissions associated with this CAFE standard in the
Environmental Assessment prepared by the agency for
this rulemaking and available from the Docket Section.
Finally, the agency notes that the fuel economy levels
and time frames for their implementation advocated
by ECC exceed the scope of the NPRM.
NRDC, while endorsing the ECC comments, also
expressed concern that the NPRM did not discuss
NHTSA's decision to undertake a programmatic En-
vironmental Impact Statement (EIS) to examine
effects of the CAFE program. NRDC believes the
agency's handling of fuel economy issues violates the
National Environmental Policy Act, and that the
agency has not adequately analyzed the relationship
between fuel efficiency and carbon dioxide emissions.
In response, NHTSA notes that it has provided an
analysis of fuel economy and carbon dioxide emissions
in its Environmental Assessment for this rulemaking,
and is continuing its work toward the publication of a
programmatic EIS for the CAFE program. To that
end, the agency issued a notice of intent to prepare a
programmatic EIS (54 FR 37702, September 12, 1989),
and conducted a public scoping meeting on December
13, 1990.
WINB supports higher fuel economy standards
than those proposed, although it does not provide
specific levels. The comments note that the growing
role of light duty trucks is a primary cause of the
stagnation in the fleetwide CAFE of all light duty
vehicles. WINB argues that the agency has not consid-
ered the economic implications of failing to increase
light truck CAFE, and that domestic jobs will be lost
as rising fuel prices shift demand toward more effi-
cient, imported light trucks.
NHTSA believes that it has taken into account the
economic implications of not setting higher standards.
This issue is discussed in detail in the FRIA available
from the Docket. The agency disagrees with WINB's
assumption that significantly higher fuel prices are
likely during the period affected by this rulemaking,
and therefore disagrees that there will be a signifi-
cantly increased demand for more fuel-efficient vehi-
cles. See the FRIA for a more detailed discussion of
future fuel prices. Despite the recent trend toward
higher oil prices, the agency does not believe it can
reliably assiune that this trend will continue into the
time frame addressed by this rulemaking. K the agency
is wrong about energy prices and prices do increase,
manufacturers will have a consumer-driven incentive
to produce more fuel efficient light trucks. Such action
would not introduce the economic risk inherent with
manufacturer's attempts to shift the market through ^^
product restrictions or market incentives. This out- ^^p
PART 533-PRE 166
come would benefit the nation in terms of energy con-
servation and reduce the manufacturers' risks in meet-
ing the standards.
The agency also disagrees that domestic jobs will
be lost as a result of its decision. In response to appar-
ent consumer demands, import manufacturers are now
introducing larger, more powerful, and less efficient
light trucks. This trend gives no indication of revers-
ing in the near future. Finally, the agency notes that
promulgation of standards beyond the range proposed
in the NPRM exceeds the scope of this rulemaking.
NADA recommended that the agency establish
CAFE standards no higher than 20.2 mpg. This is the
maximum feasible level in NADA's opinion, because
of new regulatory constraints and the need to accom-
modate a wide range of consumer needs for utility and
durability. NADA stated that NHTSA appears to have
underestimated the potential impact of safety and
emissions standards for MY 1992-94, although no
specific data were provided.
NHTSA notes that emissions impacts stemming
from the Clean Air Act amendments are discussed
above, and were considered in setting the MY 1994
standards. The agency also believes that its analysis
has adequately accounted for the CAFE impacts of
safety requirements affecting the MY 1993-94 fleet.
In its comments, Nissan projected that it would be
in compliance with the upper end of the ranges pro-
posed in the NPRM, and was thus not opposed to their
adoption.
In its March 1989 response to NHTSA's request for
comments, Volkswagen suggested as an alternative to
establishing a combined standard within its capability
that the agency consider alternate special considera-
tion for limited product line truck manufacturers. In
establishing the MY 1980-81 light truck CAFE stand-
ards, the agency did establish a separate standard in
light of International Harvester's (IH) limited product
line. (See 43 FR 11995, March 23, 1978.) The agency
noted that IH had imique problems given its limited
sales volume, restricted product line, the fact that its
engines were derivatives of medium duty truck (above
10,000 pounds GVWR) engines, and the fact that it did
not have experience with state-of-the-art emission
control technology which the other manufacturers had
obtained in the passenger automobile market. The
agency emphasized, however, that the separate class
was being established for only two model years' dura-
tion, concluding that IH should be able to achieve levels
of fuel efficiency in line with other manufacturers
within that time period either through purchasing
engines from outside sources or by making improve-
ments to current engines.
The agency does not believe that Volkswagen's sit-
uation is similar to that of IH. While IH's difficulties
were related to being newly subject to the fuel econo-
my program, Volkswagen's potential CAFE difficul-
ties are not. Under the Cost Savings Act,
manufacturers are required to meet average fuel econ-
omy standards which are set based on industrywide
considerations. For MY 1990, Volkswagen is project-
ed to be well above the CAFE standard. Thus, NHTSA
believes it is not appropriate to set a separate standard
to accommodate Volkswagen's limited product line
status.
533-[AMENDEDl
In consideration of the foregoing, 49 CFR Part 533
is amended as follows:
1. The authority citation for Part 533 continues to
read as follows:
Authority: 49 U.S.C. 1657, 15 U.S.C. 2002; dele-
gation of authority at 49 CFR 1.50.
2. Table III in § 533.5(a) is revised to read as
follows:
§ 533.5 Requirements.
(a) * * *
TABLE HI
Combined Standard
Model Year Captive Imports Others
1992
1993
199Jf
Issued on March 29, 1991.
20.2
20.2
20.A
20.h
20.5
20.5
Jerry Ralph Curry
Administrator
56 F.R 13733
April 4, 1991
PART 533-PRE 167-168
PART 533— LIGHT TRUCK FUEL ECONOMY STANDARDS
(Docket No. FE 77-05; Notice 5)
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 estab-
lishing 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," "aver-
age fuel economy standard," "fuel economy," "im-
port," "manufacture," "manufacturer," 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.
(3) The term "domestically manufactured" is
used as defined in section 503(b) (2) (E) of the Act.
(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 manufactured
but which is imported in the 1980 model year or
thereafter by a manufacturer whose principal
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 passenger automobiles.
"Basic engine" means a unique combination of
manufacturer, engine displacement, number of
cylinders, fuel system (as distinguished by number
of carburetor barrels or use of fuel injection), and
catalyst usage.
S533.5 Requirements
(a) Each manufacturer of light trucks shall com-
ply with the following average fuel economy stand-
ards, expressed in miles per gallon, in the model
year specified as applicable:
(b) (1) For model year 1979, each manufacturer
may:
(i) Combine its 2- and 4-wheel drive light
trucks and comply with the average fuel
economy standard in paragraph (a) for 2-wheel
drive light trucks; or
(ii) Comply separately with the two stand-
ards specified in paragraph (a).
(2) For model year 1979, the standard
specified in paragraph (a) for 4-wheel drive light
trucks applies only to 4-wheel drive general utility
vehicles. All other 4-wheel drive light trucks in
that model year shall be included in the 2-wheel
drive category for compliance purposes.
PART 533-1
Table 1
Model year
2-wheel drive
light trucks
i-wheel drive
light trucks
Limited
Captive
imports
Other
Captive
imports
Other
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
—
Table 2
Model year
Conbined Standard
2-wheel drive
light trucks
i-wheel drive light trucks
Captive
imports
Others
Captive
imports
Others
Captive
imports
Others
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
1987
20.5
20.5
21.0
21.0
19.5
19.5
1988
20.5
20.5
21.0
21.0
19.5
19.5
1989 _ __ _
20.5
20.5
21.5
21.5
19.0
19.0
1990 — === =
20.0
20.0
20.5
20.5
19.0
19.0
1991
20.2
20.2
20.7
20.7
19.1
19.1
Table 3
Combined Standard
1992 20.2 20.2
[1993 20.4 20.4
1994 20.5 20.51
(56 F.R. 13773— April 4, 1991. Effective: May 6, 1991))
(c) For model years 1980 and 1981, manufac-
turers of limited product line light trucks may:
(1) Comply with the separate standard for
limited product line light trucks, or
(2) Comply with the other standards specified
in § 533.5(a), as applicable.
(d) For model years 1982-91, each manufacturer
may:
(1) Combine its 2- and 4-wheel drive light
trucks (segregating captive import and other light
trucks) and comply with the combined average fuel
economy standard specified in paragraph (a) of this
section; or
(2) Comply separately with the 2-wheel drive
standards and the 4-wheel drive standards
(segregating captive import and other light trucks)
specified in paragraph (a) of this section.
(e) For model year 1992, each manufacturer shall
comply with the average fuel economy standard
specified in paragraph (a) of this section
(segregating captive import and other light trucks).
S533.6 Measurement and calculation procedures.
(a) Any reference to a class of light trucks
manufactured by a manufacturer shall be deemed:
(1) To include all light trucks in that class
manufactured by persons who control, are controlled
by, or are under common control with, such manufac-
turer; and
(2) To exclude all light trucks in that class man-
ufactured (within the meaning of paragraph (a) (1) of
this section) during a model year by such manufac-
turer which are exported prior to the expiration of 30
days following the end of such model year.
(b) The average fuel economy of all light trucks
that are manufactured by a manufacturer and are
subject to S533.5(b) or to S533.5(c) shall be deter-
mined in accordance with procedures established
by the Administrator of the Environmental Protec-
tion Agency under section 503(a) (2) of the Act.
42 F.R. 13807
March 14, 1977
(Rev. 4/4/91)
PART 533-2
PREAMBLE TO PART 535— THREE-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 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 NHTS A 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
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.
Tiiis 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 with 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 S-yearcanyforward 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 shaU 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 mOe 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 mUe 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 avaUable 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
EfFecflva: D*cemb*r 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 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 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 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 information.
The National Highway Traffic Safety Admin-
istration (NHTSA) is establishing the format
and content requirements for the semiannual
automoti\c fuel economy reports to be submitted
by all manufacturers of automobiles beginning
with the 1978 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 Secretai-y 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 ("XPRM") 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 comments 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
SumTiiary of major differences betiveen the
proposed and fnal I'ules.
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) The 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
with 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 I'eport 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
(3) The Secretary shall prescribe rules
setting forth the form and content of the
repoits required under paragraphs (1) and
(2).
Section 505(c)(1) of the Act requires everj'
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 under 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 502(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 infonnation
and projected production levels describe only tlie
result the manufacturer hopes to achieve. Section
505(a) (1) (B) specifically requires that the report
also include a description of tlie steps that the
manufacturer has taken or will take to achieve
that result. The "steps" that can be taken to
improve average fuel economy and achieve com-
pliance generally fall into two categories: (1)
technology improvements and (2) shifts in the
mix of models and options olfered 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-vohune 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-
facturers 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 manufacturers 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, XHTSA
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 XPRM 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
nuiltistage 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 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
reports 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-
nmin 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
with the Clean Air Act and redetermine the fuel
economy of the automobiles. These manufactur-
ers would also be required to determine whether
exceeding the wcifrht maximum affected the auto-
mobiles' comi)liance with the Federal Motor
Vehicle Safety Standards. This testing; would
be a relatively expensive process, particularly
considerin<f that these manufacturers would not
have their own testinj;; facilities available.
The apency is also mindful that the burden
that would be imposed on the intermediate and
final-stafj;e manufacturers if they were required
to prepare these reports would be greater relative
to that imposed on larger manufacturers. As
staterl above, these manufacturers have a minimal
engineering staff, if any.
After a reconsideration of all these factors, the
NHTSA has determined under section .501(9) of
the Act and Part 529 that the incomplete auto-
mobile manufacturer 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-examination of the implemen-
tation of this rule by 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 docs not always know what the model type
of the multistage automobile will be wlien com-
pleted. Accordingly, the incomplete automobile
manufacturer is required 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 provided 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 be submitted. The first report,
called the "pre-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, 41 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 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 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 anntial 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-m.odel 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
automoljiles 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 pi'oduced 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 whicli 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,
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
av-erages 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
age submitted in the pre-model year report will
be the same as the preliminarj' average submitted
to the EPA, except as modified to reflect i-unning
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
believes 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 clianges 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, 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 XHTSA, due not later than De-
cember 31. This agency would thus be faced
witii 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 report by § 537.7(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 by which the manufacturer is re-
quired to submit tile preliminary determination
of average fuel economy to the EPA under 40
CFR 600.506. Any manufacturer taking ad-
vantage of tills opportunity is required to submit
a supplementary report to tiiis agency not later
than tiie fifth day after the date by which that
manufacturer must submit the preliminary de-
termination. This supplementary report must
contain all the information the manufacturer
omitted from its semiannual report, pursuant to
the above provision, and any revisions of the
information previously submitted in the semi-
Effective: December 12, 1977
annual report as are necessary to reflect this new
information.
Semianmial 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 XPRM 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 wei'e 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 manufacturer submitting esti-
mates or alternatives would be required to state
the basis for each estimate or alternative, tlie
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 I'equest for
PART 537— PRE 7
EffccHv*: December 12, 1977
comments on this proposed method, only one
manufacturer addressed this issue. Volvo stated
that permitting estimates would give the XHTSA
more representative data, and make the manu-
facturer's task less burdensome.
To place the smallest burden on the industry
consistent with the XHTSA's need for informa-
tion, this rule permits manufacturers to submit
estimates in response to requirements for data on
mai'keting. 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 tlie 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 that informa-
tion must 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 505(a)(1)(A) of the
Act.
Ford challenged the inclusion of a requirement
that manufacturere state whether their 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 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 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 representative calculated average fuel
economies and discussed the issue at length in it^s
notice establisliing the fuel economy testing and
calculation procedures (41 FR 38674, at 38676,
September 10, 1976). The disclosure requirement
in tliis rule will supplement the EPA's efforts in
40 CFR 600.509-78 to ensure the representative-
ness of the calculated averages.
PART 537— PRE 8
EfFecllve: Dacembtr 12, 1977
Requiring manufacturers to disclose deficien-
cies wliich they believe exist in the projected
average and to disclose their plans for freneratin<r
additional fuel economy data would enable the
government to avoid duplicating the manufac-
turers' efforts to generate that data and the waste
of public resources resulting from such duplica-
tion. It woidd also infoim the government about
the extent to which the manufacturers were not
going to generate the additional data. The gov-
ernment could then decide whether to undertake
any of the testing and analysis itself. Timing
would be critical to tlie al)ility of tlie 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, tlie demand on tlie govern-
ment's test facilities for emissions and fuel econ-
omy testing purposes requii'es that the government
have some flexibility in scheduling any additional
testing.
By requiring that apparent deficiencies in the
projected average fuel economy be di.sclosed, the
reporting regulation would aid in ensuring the
steady and orderly implementation of the fuel
economy program by resolving problems before
the end of the model year when corrective actions
might still be taken. The entire fuel economy
program, which constitutes the primary element
of tlie national effort to conserve gasoline, might
be 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 should also
aid in promoting public 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 requirement 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 the other hand,
information available to tiie manufacturer leads
it to believe that there are deficiencies, it simply
reports the nature and cau.se 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 botli a necessary and a reason-
able means for ensuring the smootli 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 require-
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 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 provide the agency with the basis for a
manufacturer's projected average fuel economy,
the rule requires the manufacturer to provide fuel
economy values for each model type of its auto-
mobiles and describe the fuel economy related
technical information and specifications of each
vehicle configuration on whicli the model type
fuel economv values were based.
PART 537— PRE 9
Effecirve: December 12, 1977
Ford commented that it was unlikely that the
NHTSA 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 off-highway operation, were included in
the NPRM to permit the XHTSA 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-
tui'ers 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 tj-pe 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 determined, 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 0 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 concuri'ed 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 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
manufacturer should liave been able to determine
for itself or learn from the suppliers the differ-
ences in specifications between their engines for
the current model yp<ir ^^(^ 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
changing the sales mix. However, the combined
fuel economy of Toyota's subcompacts for the
1977 model year ranges 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 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
comment 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 XPRM. Both the pre- and
mid-model year reports are required to include a
description of the manufacturer's dealer incentive
pi'ograms 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
lielow the standard. xVs a quantification of the
manufacturer's advertising efforts, the final rule
requires that each report state the amount to be
spent to advertise eacii carline, witii additional
information to be provided regarding model
types, if available. Additionally, the mid-model
year rejjorts 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 efforts made
during the second half of the model year is re-
quired by this rule. Accordingly, this agency is
considering furtiier 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 information 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 on 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 tiiis 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
Effective: December 12, 1977
CositH and Gross income and market share.
Data on these subjects were proposed to be re-
quired in the reports so that the XHTSA could
compare tlie 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 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-
ers, it can use special orders.
Future model year data. The NPRM proposed
that 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
unique 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-
ough consideration of these questions. Ford
requested that the XHTSA 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
505 (a) does not require future model year report-
ing. Ford believes that XHTSA has no statutory
deadline for promulgation of the future model
year reporting requirement. AMC expressed
substantially the same views.
Otlier manufacturers made the same point, al-
tliough they expressed it in terms of tlie scope of
the proposal and the purposes to be served by the
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 pi'oposed 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
Alotors 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 XPRM. 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 XHTSA
has decided not to include any requirements for
future model year information in the final I'ule.
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 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 jear information, in-
cluding issuing a new proposal or special orders.
PART 537— PRE 13
Effective: December 12, 1977
Supplementar'y reports. Section 505(a) (2) re-
quires that if a manufacturer indicated in its
recent semiannuall 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
av^erage 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 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 sliould 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
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-
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 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
turer determinecl that its previous statements
under § 537.7(b) (3) re<iarding the representative-
ness of an average do not accurately reflect its
cuT'rent views. This requirement is narrower
than Ford understood it to be. A manufacturer's
views about the representativeness will presum-
ably channfe only after some analysis of these
l)rocedures 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 preceding analysis. Since Ford did
not explain why different results were likely, the
NHTSA assumes that Ford's statement about
daily reporting was based on some misinterpre-
tation of this section.
In response to Ford's comment 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 eqpnomy 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
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-
facturers by section r)02(a)(2). The agency
continues to believe that supplementary reporting
regarding the representativeness 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 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 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, tliis rule specifies that the manu-
facturer no longer projecting compliance shall
PART 537— PRE 15
EfFecHve: 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 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, 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 "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 505(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
express terms of section 505(d)(1), and the
mandatory nature of its directive, the agency
must reject Chrysler's argimient.
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
that the continued use of case-by-case determina-
PART 537— PRE 16
Effective: December 12, 1977
tions of confidentiality for the interim period
should not be unduly burdensome on the manu-
facturers or the ao;ency.
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] ) showinp;
of need to review this information.'' Althouo:h
Chrysler 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 proceedinji under Title V of the
Act. The agency has interpreted section 505(d)
(1) as <rivinji it the power to release confidential
business information in a proceeding when it is
in the public interest to do so. The determina-
tion of whether the release of confidential busi-
ness information is in the public interest will
usually entail a balancinji of benefits and harms,
both public and private, 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 balancinp, as would other factors,
such as the effect on competition resultin*;: 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, the 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 withdraw
that information. The agency agrees that sub-
mitters of confidential information, or informa-
tion claimed to be confidential, should have notice
of, and opportunity to object to, the proposed
release of that information. The XPRM and the
final rule provide for such notice, as will the
rule governing the treatment of confidential in-
formation. The submitter will have 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 inadvei'tently 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 report to the Congress.
The agency's report to Congress will be a public
document. Therefore, the agency would have to
decide to disclose any confidential information
PART 537— PRE 17
Effective: 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,
^nd 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 Fiiel 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
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 Fu£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(aMl) 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(aM4) 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 driveabUity 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
♦
#
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 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
I
(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
(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 §537.8(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) (xivh
(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 mOes 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
I
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 mianufacturer'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
S 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
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.
§ 537.11 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 obtJiin 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)]
(R«v. 1/8/81)
PART 537-7-8
PREAMBLE TO PART 538
Minimum Driving Range for Duai Energy and
Naturai Gas Duai Energy Passenger Cars
(Docket No. 89-09; Notice 3)
RIN 2127-AD02
ACTION: Final rule.
SUMMARY: This rule establishes minimum driving
range standards for the operation of dual energy and
natural gas dual energy passenger automobiles on
non-petroleum fuel. Promulgation of minimum driv-
ing range standards for these vehicles is required by
the 1988 amendments to the Motor Vehicle Informa-
tion and Cost Savings Act. Dual energy passenger
automobiles are those capable of operating on alco-
hol and either gasoline or diesel fuel, and natural
gas dual energy passenger automobiles are those
capable of operating on natural gas and either
gasoline or diesel fuel. The minimum range for dual
energy passenger automobiles is 200 miles, and the
minimum range for natural gas dual energy passen-
ger automobiles is 100 miles. A new passenger
automobile which meets the applicable range and
other criteria established by the 1988 amendments
qualifies to have its fuel economy calculated accord-
ing to a special procedure. Under that procedure, a
relatively high fuel economy figure is assigned the
vehicle thus encouraging its production as a way of
facilitating a manufactvirer's compliance with the
Corporate Average Fuel Economy Standards.
This notice also establishes procedures for manu-
facturers to follow in petitioning the agency to
establish a lower driving range for a particular
model or models of natural gas dual energy passen-
ger automobiles and for the agency to follow in
establishing such lower ranges. It also enables the
agency to set lower ranges for specific models of
natural gas dual energy automobiles on its own
initiative.
This rulemaking was initiated on June 15, 1989
(54 FR 25539), with the publication of a request for
comments on the minimum driving range criteria. A
notice of proposed rulemaking was published on
February 16, 1990 (55 FR 5633).
DATES: These requirements are effective May 29,
1990.
SUPPLEMENTARY INFORMATION: This final rule
establishes minimum driving range requirements
for dual energy and natural gas dual energy passen-
ger automobiles. Dual energy passenger automo-
biles are those which are capable of operation on
alcohol and gasoline or diesel fuel. Natural gas (NG)
dual energy passenger automobiles are those which
are capable of operation on natural gas and either
gasoline or diesel fuel. This preamble will use these
terms to distinguish between these two types of
vehicles. The term "dual fuel" vehicles will be used
to refer collectively to both types of vehicles.
1. Statutory Background
Section 6 of the Alternative Motor Fuels Act of
1988 (Pub. L. 100-494, October 14, 1988) amended
the fuel economy provisions of the Motor Vehicle
Information and Cost Savings Act (Cost Savings Act)
by adding a new section 513, containing incentives
for the manufacture of vehicles designed to operate
on alternative motor fuels, including dual fuel vehi-
cles. Section 513 provides, inter alia, that the Secre-
tary of Transportation must establish, by April 16,
1990, two minimum driving ranges, one for dual
energy automobiles when operating on alcohol, and
the other for natural gas dual energy automobiles
when operating on natural gas. In establishing the
driving ranges, the Secretary is required to consider
the purposes of the Alternative Motor Fuels Act,
consumer acceptability, economic practicability,
technology, environmental impacts, safety, drive-
ability, performance, and any other factors the Sec-
retary deems relevant.
The Act and its legislative history make clear that
the driving ranges are to be low enough to encourage
the production of dual fuel passenger automobiles,
yet not so low that motorists would be discouraged
by a low driving range from actually fueling their
vehicles with the alternate fuels. Section 513(hX2XC)
provides that the range for dual energy automobiles
may not be less than 200 miles. Section 513(hX2XB)
allows passenger automobile manufacturers to peti-
tion the agency to set a lower range for a particular
model or models than the general range established
by the agency for all models. However, the range may
not be reduced to less than 200 miles for any model
of dual energy automobile.
Neither minimum driving range is a mandatory
PART 538; PRE 1
requirement, but one of several statutory criteria
which a new passenger automobile must satisfy in
order to fall within the definition in section 513(h)
for dual energy or natural gas dual energy automo-
biles. The other criteria which a passenger automo-
bile must meet in order to be considered a dual
energy automobile are that it be an automobile:
"(i) which is capable of operating on alcohol and
on gasoline or diesel fuel;
(ii) which provides equal or superior energy
efficiency, as calculated for the applicable model
year during fuel economy testing for the Federal
Government, while operating on alcohol as it
does while operating on gasoline or diesel fuel;
(and)
(iii) which, for model years 1993 through 1995,
and, if the Administrator of the Environmental
Protection Agency determines that an extension
of this clause is warranted, for an additional
period ending not later than the end of the last
model year for which section 513(b) and (d)
applies, provides equal or superior energy effi-
ciency, as calculated during fuel economy test-
ing for the Federal Government, while operat-
ing on a mixture of alcohol and gasoline or
diesel fuel containing exactly 50 percent gaso-
line or diesel fuel as it does while operating on
gasoline or diesel fuel[.]"
The other criteria which a passenger automobile
must meet in order to be considered a natural gas
dual energy automobile are that it be an automobile:
"(i) which is capable of operating on natural gas
and on gasoline or diesel fuel; (and)
(ii) which provides equal or superior energy effi-
ciency, as calculated for the applicable model year
during fuel economy testing for the Federal Gov-
ernment, while operating on natural gas as it does
while operating on gasoline or diesel fuel[.]"
By meeting these criteria, dual fuel automobiles
qualify for special treatment in the calculation of
their fuel economy for purposes of their manufactur-
ers' compliance with the Corporate Average Fuel
Economy Standards starting in MY 1993. The fuel
economy of a dual energy passenger automobile
would be the average of two values, the automobile's
fuel economy when operating on gasoline or diesel
fuel, and its fuel economy when operating on alco-
hol. Section 513(a) provides that, for the purposes of
calculating that latter value, a gallon of alcohol is
considered to contain 0.15 gallons of gasoline or
diesel fuel. Thus, an automobile that runs 20 miles
on a gallon of alcohol would be considered to have a
fuel economy of 133 miles per gallon ((1/.15) x (20))
when operating on alcohol.
Similarly, the fuel economy of a natural gas dual
energy passenger automobile would be the average
of two values, the automobile's fuel economy when
operating on gasoline or diesel fuel, and its fuel
economy when operating on natural gas. Section
513(c) provides that, for the purposes of calculating ^
the fuel economy of an automobile while operating A
on natural gas, 100 cubic feet of natiu-al gas is ^
considered to contain 0.823 gallons equivalent of
natural gas and a gallon equivalent of natural gas is
considered to contain 0.15 gallons of gasoline or
diesel fuel.
Manufacturers can take advantage of these spe-
cial calculation procediu-es in model years 1993
through 2004. The agency is authorized to extend
this period up to an additional four years if it issues
a rule for that purpose before January 1, 2002.
Section 513(g) limits the CAFE benefit that a
manufacturer can receive in any single model year
from producing automobiles that meet the above
requirements. The total increase permitted in a
manufacturer's Corporate Average Fuel Economy
(CAFE) is 1.2 miles per gallon in any of model years
1993 through 2004 in which the manufacturer pro-
duced those automobiles and 0.9 miles per gallon in
any of model years 2005 through 2008, if the Secre-
tary determines that an extension of the provision
beyond model year 2004 is warranted.
The agency notes that the statute does not require
that all or even some minimum number or percentage
of a manufacturer's passenger automobiles be capable ^k
of achieving the minimum driving ranges in order for ^V
any of its automobiles to qualify for the incentives.
However, automobiles that do not meet the applicable
minimum driving range do not qualify.
NHTSA concludes that the fuel economy value for
each model type as determined using EPA test
procedures is the appropriate measure for purposes
of section 513. Sections 513(b) and (d) specify that
the measurements are to be made under section
503(d). The latter provides that, except for the pur-
poses of labeling under section 506, the procedures
used shall be those "utilized by the EPA Adminis-
trator for model year 1975 ... or procedures
which yield comparable results."
2. Regulatory Background
As a first step in establishing minimum driving
range criteria for dual fuel vehicles, NHTSA published
a Request for Comments on June 15, 1989 (54 FR
25539). The notice asked several questions regarding
dual energy passenger automobiles and natural gas
dual energy passenger automobiles relative to the
following criteria: consumer acceptability; economic
practicability; technology; environmental impacts;
safety; driveability; and performance.
Comments were received from several manufac-
turers and natural gas associations. Based largely ^^
on information obtained from these comments, ^^
PART 538; PRE 2
NHTSA published a notice of proposed rulemaking
(NPRM) on February 16, 1990 (55 FR 5633). This
notice proposed a minimum driving range require-
ment for dual energy passenger automobiles of 200
miles on one tank of alcohol fuel in order to be
treated as a dual energy automobile, and a mini-
mum range of 100 miles between refueling stops for
a passenger automobile operating on natural gas to
be treated as a NG dual energy automobile and thus
qualify for the incentive provided in section 513. The
NPRM also proposed procedures to enable manufac-
turers to petition the agency to set a lower minimum
standard for specific models of NG dual energy
vehicles unable to comply with the generally appli-
cable standard. These procedures would not be avail-
able for dual energy vehicles since the proposed
generally applicable standard was set at the statu-
tory minimum of 200 miles.
As stated in the NPRM, the agency tentatively
concluded these levels satisfy the twin goals of being
low enough to encourage the production of dual fuel
passenger automobiles, yet high enough to ensure
that motorists not be discouraged from actually
fueling and driving those automobiles on the alter-
native fuels.
3. Dual Energy Driving Range Requirements
NHTSA received comments on the NPRM from
General Motors (GM), Ford, Chrysler, Nissan, Volvo,
the Center for Auto Safety (CFAS), the National
Automobile Dealers Association (NADA) and one
individual commenter GM, Ford, Chrysler, Nissan,
Volvo, and CFAS supported the proposed 200 mile
minimum range. NADA recommended a 250 mile
minimum, while the individual commenter recom-
mended a 275 mile minimum driving range.
In support of the 200 mile minimum, the manu-
facturers indicated that a minimum range above this
level could result in the need for extensive modifica-
tions and redesign of vehicles. Volvo simply indi-
cated that vehicle redesign would be necessary to
accommodate the larger fuel tanks that would be
required. GM stated that its current vehicles do not
have unused space around the fuel tank, and that as
a result, larger fuel tanks would require substantial
redesign, consuming considerable engineering, tool-
ing and testing resources. GM also indicated the
redesign process would be costly, and could delay the
introduction of dual energy vehicles. The company
also noted that the increased cost and resulting price
increase could discourage potential customers from
purchasing the vehicles.
Chrysler stated that while minor increases in fuel
tank capacity (1.5-2.0 gallons) could be accom-
plished for an estimated cost of $20-$25 per vehicle,
more substantial increases would necessitate major
design changes. Chrysler believes that a 5-10 per-
cent increase beyond that stated above could add
$75-$ 100 to the price of these cars. While not provid-
ing specific figures. Ford shared Chrysler's position
that a slight increase in the tank capacity of some
models may be possible at relatively low costs, but
that significant redesign would be necessary to sub-
stantially increase capacity, and that the cost of
doing so would impair the marketability of dual
energy vehicles.
Ford also suggested that NHTSA revise §538.5 of
the proposed rule to refer to "nominal usable fuel
tank capacity" instead of "full tank capacity." The
former has a common industry understanding, and
is used in the manufacturers' applications to EPA for
certification. It also takes into account the fact that
certain areas within each tank design cannot be
filled with fuel (e.g., areas above the filler inlet
opening). NHTSA agrees that this term more accu-
rately reflects usable capacity, and has revised the
final rule accordingly.
Although CFAS supported the 200 mile range, its
support is based on its general opposition to in-
creased use of methanol as a motor fuel, and because
of its opposition to the granting of CAFE credits to
manufacturers of dual fuel vehicles. However, these
issues are beyond the scope of this rulemaking.
NHTSA notes, moreover, that the CAFE credits for
manufacturers of dual fuel vehicles complying with
the other requirements set out above are mandated
by statute.
NADA supported a 250 mile range due to concerns
about consumer acceptability. The Association be-
lieves that vehicles capable of only a 200 mile range
will be unacceptable to consumers. In addition,
NADA stated that the vast majority of MY 1989
passenger automobiles could achieve a 250 mile range,
and that those vehicles which are likely candidates for
conversion to dual energy vehicles, but cannot cur-
rently meet that criterion could be modified at a
reasonable cost by MY 1993. NADA disagrees with
NHTSA's assumption in the NPRM that the reduced
range of dual energy vehicles would be offset by
improved performance characteristics, because NADA
believes this assumption is only valid if the alternative
fuels are reasonably available.
The individual commenter recommended a 275
mile minimum range based upon marketing and
geographical concerns. The commenter believes that
a 200 mile range is not practical, and therefore is not
marketable, and that minivans and other vehicles
that blur the "conventional distinction between cars
and trucks" will be the primary candidates for
conversion to dual energy operation. The commenter
maintains that these vehicles have greater fuel
storage capacity. However, no data was supplied to
support this contention. In addition, no information
was provided to support the commenter's claim that
275 miles was an achievable range for the passenger
PART 538; PRE 3
automobiles that are the subject of this rulemaking.
NHTSA notes that under the Cost Savings Act,
minivans and other "hybrid vehicles" are not con-
sidered "passenger automobiles," and are therefore
not subject to the minimum driving range require-
ment or the CAFE incentives.
The commenter had other suggestions for improving
the marketability of dual energy vehicles, including
relaxing safety requirements. Those suggested actions
are beyond the scope of this rulemaking.
The substantial majority of commenters supported
NHTSA's proposed 200 mile minimum range for dual
energy passenger automobiles. As noted above, the
purpose behind the minimum range requirement is
to encourage the manufacture and sale of dual
energy vehicles. The agency believes that the range
should be set at a level that would not impose
unreasonable increased costs for fuel tank and struc-
tural changes in order to achieve that range. As
pointed out by several commenters, these costs
would be passed on in the form of higher vehicle
prices to consumers, thereby affecting the competi-
tiveness of these vehicles in the marketplace.
NHTSA believes further that the range should be set
at a level which gives the manufacturers broad
flexibility in selecting the models to be offered with
dual energy capability.
At the same time, NHTSA recognizes the impor-
tance of ensuring that the vehicles produced have a
large enough range so as to be considered practical
choices for consumers. It is likely that some consum-
ers would reject a vehicle capable of only a 200 mile
range.
However, since the range will be a minimum, not
a maximum, and since consumer acceptability will
be an important consideration of manufacturers in
selecting which vehicles to offer with dual energy
capability, the agency anticipates that the vast ma-
jority of dual energy vehicles offered for sale would
likely be capable of driving ranges considerably
higher than this minimum. As Ford noted in its
response to the agency's Request for Comments,
nearly 80 percent of its MY 1989 passenger fleet
would be capable of achieving at least a 250 mile
range if converted to dual energy operation. Like-
wise, GM noted that nearly 70 percent of its MY
1989 fleet would be above that figure. NHTSA be-
lieves that, instead of choosing to make all existing
models available as dual energy models, manufac-
turers are likely to select those models capable of
higher ranges as candidates for dual energy use.
Consumers concerned about the range could choose
those models. Moreover, since these vehicles have
the potential to operate on alcohol, conventional
fuels, or a combination of the two, consumers will
always have the option of using conventional fuel in
those instances where the reduced range is likely to
create unusual problems (e.g., long distance travel
through areas where alcohol fuels may not be easily
available). A
Based on its consideration of the available infor- ▼
mation, including the comments received and the
factors set out in the Alternative Fuels Act, the
agency concludes that 200 miles is an appropriate
minimum driving range for dual energy passenger
automobiles. The 200-mile range can be achieved
without any increase in the size of existing fuel
tanks, which would be used for both types of fuel.
Thus, the agency believes the range is consistent
with available technology.
Based on the comments received, NHTSA believes
that setting a minimum driving range substantially
higher than 200 miles would, in some instances,
require fuel tanks that would be significantly larger
than current tanks. In order to install a tank of that
size, a manufacturer would have to redesign its
automobiles. As noted in the manufacturer com-
ments discussed above, the costs of doing so could be
significant. In their comments, the manufacturers
expressed a reluctance to redesign their automobiles
and install larger tanks in order to achieve an
alcohol driving range equivalent to that of a petro-
leum fuel passenger automobile. They stated that
such a redesign could be extremely expensive and
could make it necessary to recertify compliance with
applicable Federal safety standards (e.g., FMVSS
301, Fuel System Integrity).
The 200 mile standard means that automobile
manufacturers will not have to make compensatory
design changes to ensure that the weight of a larger
tank loaded to capacity with fuel would not ad-
versely affect the braking, handling or performance
of existing automobiles. A larger tank would exac-
erbate the variation in a vehicle's weight between
the times that it has a full tank and the times that
it has a nearly empty one. Manufacturers must
design vehicles to take into account the effects which
such variations in vehicle weight have on vehicle
handling and braking. In addition, manufacturers
would have to recertify that the vehicle, when loaded
to its maximum weight, still meets all applicable
safety standards.
Driving range for natural gas dual energy
automobiles
The Alternative Fuels Act also requires that a
minimum driving range be established for natural
gas (NG) dual energy automobiles, although it does
not specify that the range must equal or exceed some
minimum value. The NPRM proposed a minimum
range of 100 miles for NG dual energy automobiles.
#
•
PART 538; PRE 4
GM, Ford, Chrysler, CFAS, NADA, the American
Gas Association (AGA) and one individual com-
menter provided comments on the proposed range
for NG dual energy vehicles.
GM suggested that the agency does not need to set
a minimum range for NG dual energy automobiles
at this time, but did not take issue with the 100 mile
range coupled with the petition procedure which
would enable manufacturers to petition for a lower
minimum range for specific models of NG dual
energy vehicles. The company pointed out that in-
creasing the range of NG dual energy vehicles would
be accomplished by using more or larger high pres-
sure cylinders. This would result in increased costs
and less storage space, as the cylinders are typically
located in the trunk. GM is also concerned about the
impact on driveability and potential loss of fuel
economy from additional gas cylinders.
NHTSA notes that it has no discretion as to
whether to set a minimum range for NG dual energy
vehicles. Such a range is explicitly required by
section 513(hX2XA) of the Cost Savings Act. The
agency agrees that increasing the driving range of
NG dual energy vehicles by increasing fuel storage
space can have negative impacts on driveability and
fuel economy.
Ford and Chrysler both supported the proposed
range for NG dual energy vehicles, but both noted
that they did not have a great deal of informa-
tion on these vehicles. Ford emphasized that the
costs of conversion to NG dual energy vehicles are
very preliminary, and are likely to exceed by sever-
al times the incremental costs mentioned in the
NPRM.
The AGA supported the proposed minimum range,
and stated that the natural gas industry has con-
cluded that the most cost effective current target for
natural gas use is the fleet vehicle that returns to a
central refueling station after each shift. AGA em-
phasized that it views NG dual energy propulsion as
a technology "bridge" between current technology
and improved future technology.
In its comments, the Association stated that since
the targeted vehicles are those with access to a
centralized refueling facility, they need not exceed
the driving ranges that are now attained with nat-
ural gas conversion equipment now in use. The
comments did not specify what this range is. An-
other consideration raised by the AGA concerned the
use of NG dual energy propulsion in utility vehicle
fleets. The AGA stated that these vehicles are fre-
quently used to provide power for equipment, light-
ing and communications at service locations, and
that this prolonged idling will reduce the effective
driving range of these vehicles. However, NHTSA
notes that the vehicles used in these applications are
not typically passenger automobiles; rather, they are
light trucks or MPVs which are not subject to this
rulemaking.
NADA concurred that NG dual energy vehicles
are likely to be used primarily in fleet service, with
centralized refueling facilities, but did not express
an opinion on the proposed minimum range.
CFAS recommended that the minimum range be
set at 200 miles or slightly lower, because it believes
a 100 mile range is impractical even for fleet appli-
cations, as vehicles would be unable to travel more
than 50 miles away from refueling facilities. While
CFAS says that direct use of natural gas is consider-
ably more efficient than the use of natural gas to
produce methanol, and that natural gas has environ-
mental benefits, it opposes encouraging the use of
natural gas through the granting of CAFE credit.
CFAS believes it is inappropriate for manufacturers
to receive this credit for manufacturing a car that is
likely to see little use with natural gas.
CFAS provided no information to support its rec-
ommendation of a 200 mile range as a practical
range. Based on the information available to it,
NHTSA believes that a minimum range at that level
would be viewed as impractical by manufacturers
and would serve to discourage the production of NG
dual energy vehicles. While CFAS's objections to the
incentives chosen by Congress to encourage the use
of alternative fuels are beyond the scope of this
rulemaking, NHTSA notes that it is unlikely that
consumers would be willing to pay the considerable
increased costs for a NG dual energy automobile
unless they actually intended to operate it on natu-
ral gas. NHTSA thus disagrees with the group's
position that manufacturers will, in effect be receiv-
ing a CAFE "bonus" for producing vehicles that are
unlikely to be operated on natural gas.
The individual commenter recommended that the
minimum range for NG dual energy vehicles be set
at 200 miles for the same reasons that he recom-
mended a higher range for dual energy vehicles.
These are discussed above. Like CFAS, he provided
no information to support his contention that such a
range is achievable. NHTSA disagrees with this
recommendation for the reasons stated above.
NHTSA believes that a 100-mile range will not
lead to the production of vehicles with so low a
natural gas operating range that it would impede
the development and sale of natural gas dual energy
vehicles. The agency notes that a natural gas dual
energy vehicle still has the gasoline fuel tank as a
range extender. In addition, the 100-mile criterion
represents a minimum range that would likely be
exceeded by vehicle manufacturers. Market forces
will assure that vehicles will not be produced unless
purchasers are satisfied with their capabilities.
Based on its consideration of the information
available, including the comments discussed above,
PART 538; PRE 5
and the factors set forth in the Alternative Motor
Fuels Act, the agency concludes that NG dual en-
ergy passenger automobiles can achieve a minimum
driving range of 100 miles while operating on natu-
ral gas.
On average, the cost of natural gas fuel tanks
needed to achieve a 100 mile range would be from
$386-$579, depending on design and construction
material.
In order to achieve a higher range, vehicles would
have to be equipped with additional storage tanks.
Doing this would pose significant problems since
weight and available space are limiting factors. As
noted above, for the 100-mile range, the additional
tanks would cost $386 to $579 and add $46 to
lifetime fuel costs due to the added weight. In
addition, these tanks would reduce available trunk
space by about 3.4 cubic feet. The added weight
would have a negative impact on vehicle perfor-
mance and driveability.
The agency believes that the 100 mile range is
sufficient to meet the needs of the likely purchasers
of natural gas dual energy automobiles. The agency
agrees with the commenters that suggest the most
likely passenger automobiles that would be con-
verted to burn natural gas are fleet passenger auto-
mobiles and taxis because of their high annual fuel
consumption and access to central company-owned
refueling facilities. Access to such facilities would
enable these companies to accommodate the range
established by this rule. This range might be less
adequate for private owners of natural gas passen-
ger automobiles since they may have limited access
to natural gas refueling facilities. Therefore, for the
private owner, driving range is likely to be a major
factor in the selection of a natural gas dual energy
automobile until refueling facilities are more plen-
tiful. The agency believes that the 100 mile range
represents an achievable level, consistent with avail-
able technology which will not be unduly impracti-
cal or have negative impacts upon consumer accept-
ability, vehicle driveability or performance.
Presently, the agency is not aware of any signifi-
cant safety risks associated with alcohol or natiu-al
gas fuel for dual energy passenger automobiles
attributed specifically to the magnitude of vehicle
driving range or fuel tank size. All gasoline and
diesel-powered automobiles are required to comply
with FMVSS No. 301; Fuel System Integrity. Alcohol-
powered vehicles are likewise required to comply
with Standard 301. The natural gas fuel system of a
natural gas dual energy vehicle will not be required
to comply with Standard 301 because that standard
applies only to vehicles which use a fuel having a
boiling point above 32° F, while natural gas has a
boiling point below 32° F. NHTSA expects to publish
advance notices of proposed rulemaking later this
year as part of its effort to determine whether addi-
tional requirements are necessary to enhance the
safety of vehicles operating on alcohol or natural gas.
Procedures establishing lower driving ranges for
particular models of natural gas dual energy
automobiles
Section 513(hX2XBXi) requires that the rule estab-
lishing the driving ranges also allow the agency to
determine that a specific model or model type may
have a lower range than the generally established
range and establish procedures for manufacturers to
petition the agency to specify such a lower range. As
noted above, section 513(hX2XBXii) provides that
lower ranges may not be established for dual energy
automobiles if the agency selects the 200 mile stat-
utory minimum as the driving range for those auto-
mobiles. Since this notice establishes that minimum
value, the petitioning procedures apply only to nat-
ural gas dual energy automobiles. NHTSA received
no comments on the substance of the proposed pro-
cedure for petitions, and the final rule makes no
changes to these procedures.
The procedures specify that petitioning manufac-
turers must address each of the factors which the
agency is required by section 513(hX2XD) to take into
account in establishing lower driving ranges, i.e.,
the purposes of the Alternative Motor Fuels Act of
1988, consumer acceptability, economic practicabil-
ity, technology, environmental impact, safety, drive-
ability, performance, and any other factors the
agency deems relevant. This notice does not estab-
lish any additional factors.
Following its receipt of a petition, the agency will
publish a notice summarizing the petition and invit-
ing public comment. Then the agency will consider
the comments and other available information and
publish a final decision in accordance with section
513(hX2XD).
In consideration of the foregoing, 49 CFR is
amended by adding Part 538 to read as follows:
1. The authority citation for Part 538 reads as
follows:
Authority: Sec. 6, Pub. L. 100-494, 100 Stat. 2448
(15 U.S.C. 2013); delegation of authority at 49 CFR
1.50.
2. A new Part 538 is added to read as follows:
PART 538-DRIVING RANGES FOR DUAL EN-
ERGY AND NATURAL GAS DUAL EN-
ERGY PASSENGER AUTOMOBILES
Sees.
538.1 Scope.
538.2 Purpose.
538.3 Applicability.
538.4 Definitions.
538.5 Driving range.
#
•
#
PART 538; PRE 6
538.6 Measurement of driving range.
538.7 Petitions for reduction of minimum driving
range.
§538.1 Scope.
This part establishes minimum driving range
criteria to aid in identifying passenger automobiles
that are either dual energy automobiles or natural
gas dual energy automobiles. It also establishes
procedures by which manufacturers may petition for
a lower driving range for a specific model of natural
gas dual energy automobile and by which the agency
may grant or deny such petitions.
§538.2 Purpose.
The purpose of this part is to specify one of the
criteria in section 513(h) of the Act for identifying
dual energy and natural gas dual energy passenger
automobiles that are manufactured in model years
1993 through 2004. The fuel economy of these pas-
senger automobiles is calculated in a special manner
so as to facilitate the compliance of their manufac-
turers with the Corporate Average Fuel Economy
Standards set forth in Part 531 of this title and
thereby encourage the production of such vehicles.
§538.3 Applicability.
This part applies to manufacturers of passenger
automobiles that are either dual energy or natural
gas dual energy passenger automobiles manufac-
tured during model years 1993-2004.
§538.4 Definitions.
(a) Statutory terms. (1) The terms dual energy
automobile, natural gas dual energy automobile, and
alcohol are used as defined in section 513 of title V of
the Act.
(2) The terms automobile and passenger automo-
bile, are used as defined in section 501 of the Act and
in accordance with the determinations in part 523 of
this chapter.
(3) The term manufacturer is used as defined in
section 501 of the Act and in accordance with part
529 of this chapter.
(4) The term model year is used as defined in
section 501 of the Act.
(5) As used in this part, unless otherwise required
by the context: Act means the Motor Vehicle Infor-
mation and Cost Savings Act (Pub. L. 92-513), as
amended.
(b) Other terms. The terms average fuel economy,
fuel economy, and model type are used as defined in
subpart A of 40 CFR part 600.
§ 538.5 Minimum driving range.
(a) The minimum driving range which a passenger
automobile must have in order to be treated as a
dual energy automobile pursuant to section
513(1XC) of the Act is 200 miles when operating on
its nominal usable fuel tank capacity of alcohol fuel.
(b) Except as provided in § 538.7, the minimum
driving range which a passenger automobile must
have in order to be treated as a natural gas dual
energy automobile pursuant to section 513(1XD) of
the Act is 100 miles when operating on its nominal
fuel tank capacity of natural gas.
(c) The Administrator may determine that a spe-
cific model type or types of natural gas dual energy
automobiles may have a lower range than that
specified in paragraph (b) of this section and still
qualify as a natural gas dual energy automobile for
purposes of the section. In making such a determi-
nation, the Administrator takes into account the
factors specified in § 538.7(f).
§ 538.6 Measurement of driving range.
The driving range of a passenger automobile
model type is determined by multiplying the com-
bined EPA city/highway fuel economy when operat-
ing on the alcohol or natural gas fuel by the nominal
usable fuel tank capacity in gallons, of the fuel tank
containing the alcohol or natural gas. The combined
EPA city/highway fuel economy is the value deter-
mined by the procedm-es established by the Admin-
istrator of the Environmental Protection Agency
under section 503(d) of the Act and set forth in 40
CFR 600.
§ 538.7 Petitions for reduction of minimum driving
range.
(a) A manufacturer of a model type of passenger
automobile capable of operating on both natural gas
and either gasoline or diesel fuel may petition for a
reduced minimum driving range for that model type
in accordance with paragraphs (b) through (c) of this
section.
(b) Each petition shall—
(1) Be addressed to: Administrator, National High-
way Traffic Safety Administration, 400 Seventh
Street SW., Washington, DC 20590.
(2) Be submitted not later than the beginning of
the first model year in which the petitioner seeks to
have the model type treated as a natural gas dual
energy automobile.
(3) Be written in the English language.
(4) State the full name, address, and title of the
official responsible for preparing the petition, and
the name and address of the petitioner.
(5) Set forth in full data, views and arguments of
the petitioner, including the information and data
specified in § 538.7(b) and the calculations and anal-
yses used to develop that information and data. No
documents may be incorporated by reference in a
petition unless the documents are submitted with
the petition.
PART 538; PRE 7
(6) Specify and segregate any part of the informa-
tion and data submitted under this section that the
petitioner wishes to have withheld from public dis-
closure in accordance with Part 512 of this chapter.
(c) Each petitioner shall include the following
information in its petition.
(1) Identification of the model type or types for
which a lower driving range is sought under this
section.
(2) For each model type identified in accordance
with paragraph (cKD:
(i) The driving range sought for that model type.
(ii) The number of years for which that driving
range is sought.
(iii) A description of the model type, including car
line designation, engine displacement and type, nat-
lu-al gas fuel tank location and capacities, transmis-
sion type and average fuel economy when operating
on:
(A) Natural gas, and
(B) Gasoline or diesel fuel.
(iv) An explanation of why the petitioner cannot
modify the model type so as to meet the generally
applicable minimum range, including the steps
taken by the petitioner to improve the minimum
range of the vehicle, as well as additional steps that
are technologically feasible, but have not been
taken. The costs to the petitioner of taking these
additional steps shall be included.
(3) A discussion of why granting the petition would
be consistent with the following factors:
(i) The purposes of the Alternative Motor Fuels
Act, including encouraging the development and
widespread use of natural gas as a transportation
fuel by consumers, and the production of passenger
automobiles capable of being operated on both nat-
ural gas and gasoline/diesel fuel;
(ii) Consumer acceptability;
(iii) Economic practicability;
(iv) Ttechnology;
(v) Environmental impact;
(vi) Safety;
(vii) Driveability; and
(viii) Performance.
(d) If a petition is found not to contain the infor-
mation required by this section, the petitioner is
informed about the areas of insufficiency and ad-
vised that the petition will not receive further con-
sideration until the required information is received.
(e) The Administrator may request the petitioner
to provide information in addition to that required
by this section.
(f) The Administrator publishes in the Federal
Register a notice of receipt for each petition contain-
ing the information required by this section. Any
interested person may submit written comments
regarding the petition.
(g) In reaching a determination on a petition
submitted under this section, the Administrator
takes into account:
(1) The purposes of the Alternative Motor Fuels Act,
including encouraging the development and wide-
spread use of methanol, ethanol and natural gas as
transportation fuels by consumers, and the production
of alternative fuel powered motor vehicles;
(2) Consumer acceptability;
(3) Economic practicability;
(4) Tfechnology;
(5) Environmental impact;
(6) Safety;
(7) Driveability; and
(8) Performance.
(i) The purposes of the Alternative Motor Fuels Act,
including encouraging the development and wide-
spread use of methanol, ethanol and natural gas as
transportation fuels by consumers, and the production
of alternative fuel powered motor vehicles;
(ii) Consumer acceptability;
(iii) Economic practicability;
(iv) Tfechnology;
(v) Environmental impact;
(vi) Safety;
(vii) Driveability; and
(viii) Performance.
(h) If the Administrator grants the petition, the
petitioner is notified in writing, specifying the
model years for which it applies. He also publishes
in the Federal Register a notice of the grant and the
reasons for it.
(i) If the Administrator denies the petition, the
petitioner is notified in writing. He also publishes in
the Federal Register a notice of the denial and the
reasons for it.
Issued on April 18, 1990
0
Jeffrey R. Miller
Deputy Administrator
55 F.R. 17611
April 26, 1990
•
PART 538; PRE 8
PART 538— DRIVING RANGES FOR DUAL ENERGY AND NATURAL GAS
DUAL ENERGY PASSENGER AUTOMOBILES
5538.1 Scope.
This part establishes minimum driving range criter-
ia to aid in identifying passenger automobiles that are
either dual energy automobiles or natural gas dual
energy automobiles. It also establishes procedures by
which manufacturers may petition for a lower driving
range for a specific model of natural gas dual energy
automobile and by which the agency may grant or deny
such petitions.
5538.2 Purpose.
The purpose of this part is to specify one of the
criteria in section 513(h) of the Act for identifying dual
energy and natural gas dual energy passenger auto-
mobiles that are manufactured in model years 1993
through 2004. The fuel economy of these passenger
automobiles is calculated in a special manner so as to
facilitate the compliance of their manufacturers with
the Corporate Average Fuel Economy Standards set
forth in Part 531 of this title and thereby encourage
the production of such vehicles.
5538.3 Applicability.
This part applies to manufacturers of passenger
automobiles that are either dual energy or natural gas
dual energy passenger automobiles manufactured
during model years 1993-2004.
S538.4 Definitions.
(a) Statutory terms. (1) The terms "dual energy
automobile," "natural gas dual energy automobile,"
and "alcohol" are used as defined in section 513 of
Titie V of the Act.
(2) The terms "automobile" and "passenger auto-
mobile," are used as defined in section 501 of the Act
and in accordance with the determinations in Part 523
of this chapter.
(3) The term "manufacturer" is used as defined in
section 501 of the Act and in accordance with Part 529
of this chapter.
(4) The term "model year" is used as defined in
section 501 of the Act.
(5) As used in this part, unless otherwise required
by the context: "Act" means the Motor Vehicle Infor-
mation and Cost Savings Act (Pub. L. 92-513), as
amended.
(b) Other terms. The terms "average fuel economy,"
"fuel economy," and "model type" are used as defined
in Subpart A of 40 CFR Part 600.
5538.5 Minimum driving range.
(a) The minimum driving range which a passenger
automobile must have in order to be treated as a dual
energy automobile pursuant to section 513(1XC) of the
Act is 200 miles when operating on its nominal usable
fuel tank capacity of alcohol fuel.
(b) Except as provided in § 538.7, the minimum
driving range which a passenger automobile must have
in order to be treated as a natural gas dual energy
automobile pursuant to section 513(1XD) of the Act is
100 miles when operating on its nominal fuel tank
capacity of natural gas.
(c) The Administrator may determine that a spec-
ific model type or types of natural gas dual energy
automobiles may have a lower range than that speci-
fied in paragraph (b) and still qualify as a natural gas
dual energy automobile for purposes of the section. In
making such a determination, the Administrator takes
into account the factors specified in § 538.7(f).
5538.6 IVIeasurement of driving range.
The driving range of a passenger automobile model
type is determined by multiplying the combined EPA
city/highway fuel economy when operating on the
alcohol or natural gas fuel by the nominal usable fuel
tank capacify in gallons, of the fuel tank containing the
alcohol or natural gas. The combined EPA city /high-
way fuel economy is the value determined by the proce-
dures established by the Administrator of the
Environmental Protection Agency under section 503(d)
of the Act and set forth in 40 CFR 600.
5538.7 Petitions for reduction of minimum driving
range.
(a) A manufacturer of a model type of passenger
automobile capable of operating on both natural gas
PART 538-1
and either gasoline or diesel fuel may petition for a
reduced minimum driving range for that model type
in accordance with paragraphs (b)-(c).
(b) Each petition shall—
(1) Be addressed to: Administrator, National High-
way Traffic Safety Administration, 400 Seventh
Street, S.W., Washington, D.C. 20590.
(2) Be submitted not later than the beginning of the
first model year in which the petitioner seeks to have
the model type treated as a natural gas dual energy
automobile.
(4) State the full name, address, and title of the offi-
cial responsible for preparing the petition, and the
name and address of the petitioner.
(5) Set forth in full data, views and arguments of the
petitioner, including the information and data specified
in § 53B.7(b) and the calculations and analyses used to
develop that information and data. No documents may
be incorporated by reference in a petition unless the
documents are submitted with the petition.
(6) Specify and segregate any part of the informa-
tion and data submitted imder this section that the peti-
tioner wishes to have withheld from public disclosure
in accordance with Part 512 of this chapter.
(c) Each petitioner shall include the following infor-
mation in its petition.
(1) Identification of the model type or types for
which a lower driving range is sought under this
section.
(2) For each model type identified in accordance with
paragraph (cXl):
(i) The driving range sought for that model type.
(ii) The number of years for which that driving
range is sought.
(iii) A description of the model type, including car
line designation, engine displacement and type, natural
gas fuel tank location and capacities, transmission type
and average fuel economy when operating on (1) natur-
al gas, and (2) on gasoline or diesel fuel.
(iv) An explanation of why the petitioner cannot
modify the model type so as to meet the generally ap-
plicable minimum range, including the steps taken by
the petitioner to improve the minimum range of the
vehicle, as well as additional steps that are technologi-
cally feasible, but have not been taken. The costs to
the petitioner of taking these additional steps shall be
included.
(3) A discussion of why granting the petition would
be consistent with the following factors:
(i) The purposes of the Alternative Motor Fuels
Act, including encouraging the development and
widespread use of natural gas as a transportation fuel
by consumers, and the production of passenger automo- ^^
biles capable of being operated on both natural gas and ^B
gasoline/diesel fuel; ^
(ii) Consumer acceptability;
(iii) Economic practicability;
(iv) Technology;
(v) Environmental impact;
(vi) Safety;
(vii) Driveability; and
(viii) Performance.
(d) If a petition is found not to contain the infor-
mation required by this section, the petitioner is in-
formed about the areas of insufficiency and advised
that the petition will not receive further consideration
until the required information is received.
(e) The Administrator may request the petitioner to
provide information in addition to that required by this
section.
(f) The Administrator publishes in the Federal
Register a notice of receipt for each petition contain-
ing the information required by this section. Any in-
terested person may submit written comments
regarding the petition.
(g) In reaching a determination on a petition sub-
mitted under this section, the Administrator takes into
account:
(i) The purposes of the Alternative Motor Fuels
Act, including encouraging the development and
widespread use of methanol, ethanol and natural gas
as transportation fuels by consumers, and the produc-
tion of alternative fuel powered motor vehicles;
(ii) Consumer acceptability;
(iii) Economic practicability;
(iv) Technology;
(v) Environmental impact;
(vi) Safety;
(vii) Driveability; and
(viii) Performance.
(h) If the Administrator grants the petition, the peti-
tioner is notified in writing, specifying the model years
for which it applies. He also publishes in the Federal
Register a notice of the grant and the reasons for it.
(i) If the Administrator denies the petition, the
petitioner is notified in writing. He also publishes in
the Federal Register a notice of the denial and the
reasons for it.
•
55 F.R. 17611
April 26, 1990
f
PART 538-2
PREAMBLE TO PART 541
Vehicle Theft Prevention Standard and Selection of
Covered Major Parts — Motor Vehicle Theft Law Enforcement Act of 1984
[Docket No. T84-01 ; Notice 7]
ACTION: Final rule.
SUMMA
RY:
This rule establishes a vehicle theft
prevention standard, as required by the Motor
Vehicle Theft Law Enforcement Act of 1984. The
standard contains performance requirements for
inscribing or affixing identification numbers onto
original equipment major parts and the replace-
ment parts for those original equipment parts on
passenger motor vehicle lines selected as high
theft lines. The rule also specifies which parts are
the major parts that must be so identified. Finally,
it sets forth the manner and form for certifying
compliance with the standard.
EFFECTIVE DATE: April 24, 1986. This means
that the theft prevention standard applies to pas-
senger cars and major replacement parts begin-
ning with the 1987 model year.
SUPPLEMENTARY INFORMATION: The Motor
Vehicle Theft Law Enforcement Act of 1984 (Theft
Act; Pub. L. 98-547) added Title VI to the Motor
Vehicle Information and (Cost Savings Act). Title
VI requires NHTSA, by delegation from the Sec-
retary of Transportation, to promptly complete a
series of rulemaking actions designed to mount a
comprehensive attack on the problem of vehicle
theft. This rule contains the most significant of
those mandated rulemaking actions, the theft pre-
vention standard setting forth the performance
criteria for affixing or inscribing covered major
parts of passenger motor vehicles with identifying
numbers or sjonbols, as required by section 602
of the Cost Savings Act (15 U.S.C. 2022). Addi-
tionally, this rule carries out the following statu-
tory mandates:
1) it identifies the major parts that must be
marked, as specified in section 603(a)(2);
2) it establishes the cost limitation for marking
major replacement parts, as specified in section
604; and
3) it establishes the form and manner of certify-
ing compliance with the theft prevention standard,
as specified in section 606(c) of the Cost Savings
Act.
The Notice of Proposed Rulemaking
To carry out these statutory mandates, NHTSA
published a notice of proposed rulemaking
(NPRM) at 50 FR 19728, May 10, 1985. The agency
has received more than 240 comments on the
NPRM, representing the opinions of vehicle and
parts manufacturers, law enforcement groups, in-
surers, automobile dealers, members of Congress,
direct importers of vehicles, and individual con-
sumers. "Direct importers" are individuals and
commercial enterprises that obtain foreign cars
not originally manufactured for sale in the United
States, bring those cars into this country under
bond, and modify the cars so that they can be
certified as being in compliance with the U.S.
vehicle safety, emissions, and bumper standards.
Each of these comments has been considered and
the most significant points are addressed below.
The NPRM contained a detailed background dis-
cussion of the provisions of the Theft Act and
explained in detail the agency's rationale for pro-
posing each of the requirements. This preamble
follows the same organizational format used in
the NPRM, so that readers can easily compare the
two documents. A brief summary highlighting the
most important points of this final rule follows.
PART 541-PRE 1
Highlights of this Final Rule
1. Markings for Covered Original Equipment
Major Parts.
Original equipment covered major parts must
be marked with the full 17 character U.S. vehicle
identification number (VIN), except for engines
and transmissions used by certain manufacturers.
Manufacturers marking engines and transmis-
sions with a VIN derivative, consisting of at least
the last 8 characters of the VIN, as of the enact-
ment date of the Theft Act may continue to use
those derivatives. Section 604(b) of the Cost Sav-
ings Act provides that manufacturers engaged in
identifying their engines and transmissions in a
manner which "substantially complies" with the
requirements of this standard shall not be re-
quired to conform to any identification system
which imposes greater costs than those being in-
curred under the "substantially complying" iden-
tification system. NHTSA deems 8-character VIN
derivatives to be substantially in compliance with
this standard.
The performance requirements for both labels
and other markings have been adopted substan-
tially as proposed in the NPRM. The only note-
worthy difference is in the "footprint" requirement
for labels. In response to the comments, the pro-
posed requirement has been clarified in this final
rule. Removal of a label must leave some residual
part of the label or adhesive on the part, such
that an investigator could detect that a label was
originally present on the part.
2. Covered Major Parts.
This standard specifies 14 major parts as the
covered major parts as the covered major parts
which must be marked, if present, on all vehicles
in lines selected as high theft lines. Those 14 parts
consist of the 12 major parts proposed in all three
of the alternatives set forth in the NPRM, plus
the two rear doors for 4-door vehicles. Two-door
cars will be required to have only 12 parts marked.
3. Markings for Replacement Parts.
Replacement parts for covered original equip-
ment parts are required to be marked with the
letter "R" and the manufacturer's logo, for pur-
poses of this standard, and with the symbol "DOT",
as a certification of compliance with this standard,
as proposed in the NPRM. Such markings are sub-
ject to the same performance requirements as
the markings on original equipment parts. This
standard also establishes a cost limit of five dollars
(in 1984 dollars) for marking each replacement
part.
4. Target Areas for Parts Marking.
The agency had proposed that both original
equipment and replacement parts be marked in a
5 centimeter X 5 centimeter target area, and that
these target areas be separated by at least 15 centi-
meters. Many commenters suggested that this
small target area was too restrictive and unneces-
sary to achieve the intended purpose. NHTSA was
persuaded by these comments. Accordingly, this
theft prevention standard requires the original
vehicle manufacturers to designate target areas
for marking both original equipment and replace-
ment parts. The target area for the original equip-
ment parts cannot exceed 50 percent of the total
surface area of the part surface on which the mark-
ing will appear, and the target area for replace-
ment parts cannot exceed 25 percent of the total
surface area of the surface on which the marking
will appear. The boundaries of the different target
areas must be separated by at least 10 centimeters
at all points along those boundaries. The vehicle
manufacturers will be required to inform NHTSA
of the target areas they have designated on each
of the parts.
5. Who May Certify Compliance with this
Standard.
The NPRM proposed that only original vehicle
manufacturers be allowed to certify compliance
with this theft prevention standard. The proposal
would have had the effect of prohibiting direct
importers from importing any high theft vehicles
into the U.S. This proposal was based on the Theft
Act's prohibition against importing non-complying
vehicles into the U.S. , together with the Theft Act's
ambiguity as to whether persons besides the orig-
inal manufacturer should be allowed to certify
compliance. The proposal was also based on the
agency's tentative conclusion that limiting certifi-
cation authority would enhance the security of the
marking technologies and the enforcement of this
theft prevention standard.
Upon further consideration, NHTSA has decided
that this regulation should not prohibit direct
imports of vehicles. NHTSA also believes that the
PART 541-PRE 2
rulemaking record supports the law enforcement
concerns expressed in the NPRM. Accordingly,
this theft prevention standard sets forth special
requirements for direct imports of vehicles in high
theft lines. Such vehicles must:
(1) Be marked with the original Euro-VIN, and
not a "home-made" U.S. VIN;
(2) Be marked by inscribing the required mark-
ings, and may not have labels affixed to the parts
to satisfy this standard; and
(3) Be marked before the vehicle is imported
into the U.S. This final requirement is explicitly
set forth in section 607(a)(1) of the Cost Savings
Act. Accordingly, the agency has concluded that
it cannot adopt the suggestion in some of the com-
ments that it implement a bonding program for
direct imports, similar to that in effect for the
bumper and safety standards. To implement this
requirement, this rule specifies that direct
importers of high-theft vehicles must certify com-
pliance with this theft prevention standard, by
having a certification label permanently affixed
to each covered vehicle before it is imported into
the United States.
A detailed discussion of these issues and other
issues raised during the comment period follows.
The Theft Prevention Standard
A. Original Equipment Parts
As noted in the NPRM, Title VI of the Cost Sav-
ings Act requires NHTSA to promulgate a theft
prevention standard, which must be a minimum
performance standard for the identification of the
covered original equipment and replacement
major parts of new passenger motor vehicles. This
identification is to be achieved by inscribing or
affixing numbers or symbols to such parts. The
first question addressed in the NPRM concerned
the numbers or symbols that should be used to
identify original equipment major parts.
1. The full vehicle identification number (VIN)
must be inscribed or affixed to all covered major
original equipment parts, except the engine and
transmission.
The NPRM proposed that the full 17 character
VIN be required as the indentifying number to be
inscribed or affixed to the covered major original
equipment parts, for three reasons. First, the full
VIN represents a unique signature which cannot
be repeated on any two vehicles during a 30-year
period. Second, the full VIN is the basis for the
National Crime Information Center's (NCIC)
vehicle theft reprting system, which is used by
law enforcement officials around the nation to
detect and track stolen vehicles. Third, since the
full VIN is now in common use for all law enforce-
ment agencies, its continued use would cause
minimal disruption in the personnel training and
records kept by those agencies. However, the
agency also sought public comment on the use of
VIN derivatives as the identifying numbers.
Several of the commenters supported the
agency's proposed requirement to use the full VIN.
These commenters included all the law enforce-
ment organizations, groups organized to try to
reduce auto thefts, and Jaguar and Mercedes.
Mercedes specifically stated that the use of a VIN
derivative would require at least 8 characters to
be unique, so the cost advantages of allowing the
use of VIN derivatives would be minimal.
On the other hand, many of the vehicle manufac-
turers argued that they should be allowed to use
VIN derivatives. The suggestions ranged from
Honda's that manufacturers be required to use
only the last 6 characters of the VIN to Volks-
wagen's that the manufacturers be required to use
11 characters of the VIN. Both General Motors
(GM) and the United States Department of Justice
urged that manufacturers be required to use the
full 17 character VIN on labels, but be permitted
to use a VIN derivative if they used other methods
of identification, provided that the VIN derivative
was also unique.
NHTSA seriously considered allowing the use
of VIN derivatives if those derivatives contained
enough characters to ensure that they would also
be unique. However, NCIC has sent the agency a
letter explaining that it has designed its theft re-
porting system to reject any inquiries concerning
stolen vehicles manufactured in 1981 and all sub-
sequent model years which do not consist of the
full 17 character VIN. NCIC stated that it had
discussed allowing the use of VIN derivatives with
state and local law enforcement officials, and the
reaction from those officials was "very negative".
This reaction was based on the administrative
burden which would result from not having a uni-
form length for reporting the identifying numbers
for stolen and recovered vehicles and parts. This
would lead to uncertainty that the reporting police
department had properly entered the correct VIN
derivative of a stolen vehicle, because of the var-
PART 541-PRE 3
jing lengths of derivatives which could be entered
into the tracking system. Such uncertainty would
force the law enforcement agencies and officers to
expend significant time and effort in checking the
accuracy of the reports before arresting suspected
criminals in possession of the stolen vehicles. The
lost time could result in being unable to arrest the
suspect or seize the stolen vehicle.
If they did not expend this time and effort, the
law enforcement groups stated their concerns
about potential liability. The law enforcement
groups would be accused of an improper arrest or
vehicle seizure if they were to erroneously identify
a vehicle or part as stolen. Such erroneous identifi-
cations would inevitably result, according to the
law enforcement groups, if they are forced to try
to reconstruct quickly the full VIN from a VIN
derivative.
One of the primary purposes of the Theft Act is
to make it easier for law enforcement agencies to
establish that a vehicle or a major part is stolen.
See H.R. Rep. No. 1087, 98th Cong., 2d Sess. at
2-3 (1984) (hereinafter referred to as "H. Kept.").
If this purpose is to be promoted, this standard
must ensure that police officers learning of
suspicious, potentially stolen vehicle parts can
quickly verify whether those parts are stolen. If
this standard were to allow parts to be marked
with VIN derivatives, the time necessary to posi-
tively identify a part as being from a stolen vehicle
would be substantially longer than if the parts
were marked with the full VIN. Police officers can-
not be expected to wait to learn the true status of
parts while the VIN derivative is reconstructed
into a full VIN through contacts with the vehicle
manufacturer or a private agency.
Further, NCIC has informed the agency that a
review of its active record of stolen vehicles cur-
rently lists 12,382 cases where the last 8 charac-
ters of the VIN are identical in two or more cases.
Hence, a match of the last 8 characters of the VIN
would not by itself justify seizing the vehicle or
arresting the driver. If NHTSA were to permit the
use of VIN derivatives for marking parts, it would
have to require the use of a least 11 characters of
the VIN (the first three characters and the last
eight) to ensure the derivative was unique. The
cost differences for the vehicle manufacturer to
mark the full VIN instead of a shortened 11-
character VIN derivative are not significant, and
will not cause any manufacturer to exceed the
fifteen dollar cost limitation. Additionally, VIN
derivatives would require NCIC to restructure its
data base, a complex and costly task. Finally, the
full 17-character VIN includes the check digit, the
purpose of which is to provide a means for verify-
ing the accuracy of any VIN transcription. As such,
the check digit ensures that the VIN of a stolen
vehicle has been correctly entered. It also quickly
shows when a VIN has been altered in an effort
to disguise the fact that a vehicle is stolen. Accord-
ingly, the agency has determined that the full
17-character VIN should be marked on covered
original equipment major parts.
There is, however, one exception to this require-
ment. Section 604(b) of the Cost Savings Act [15
U.S.C. 2024(b)] specifies that "any manufacturer
engaged in identifying engines or transmissions
on the effective date of this title in a manner which
substantially complies with the requirements of the
theft prevention standard" shall not be required
to conform to any identification system which
imposes greater costs on the manufacturer than
those being incurred as of such effective date. This
statutory requirement means that the agency
must determine what sort of identification system
for engines and transmissions substantially com-
plies with the requirements of this standard.
To the agency's knowledge, all manufacturers
currently stamp an identifying number on their
engines and transmissions. The NPRM stated that
all manufacturers currently stamp their engines
and transmissions with a VIN derivative, but the
vast majority of manufacturers commented that
this statement was not true. GM marks its engines
and transmissions with a 9-character VIN deriva-
tive, and Ford and Chrysler mark those parts with
an 8-character VIN derivative. The agency has no
information indicating that any other manufac-
turers mark their engines and transmissions with
a VIN derivative.
Two issues are thus presented. First, NHTSA
must determine whether manufacturers that
mark their engines and transmissions with a
number other than a VIN derivative "substan-
tially comply" with the requirement that all
covered major parts be marked with the full VIN.
Second, NHTSA must determine whether manu-
facturers that mark their engines and transmis-
sions with 8- or 9-character VIN derivatives can
be said to substantially comply with that require-
ment.
PART 541-PRE 4
With respect to the markings not derived from
the VIN, NHTSA has concluded that such mark-
ings do not substantially comply with the require-
ment that a full 17-character VIN be marked on
covered original equipment major parts. Such
markings do not provide law enforcement officers
with a means for quickly checking whether the
component came from a stolen vehicle, because
the NCIC data system relies on the VIN. The non-
VIN markings consist of numbers generated and
assigned by each individual manufacturer. The
method for assigning the number is in the nature
of a sequential production number for the particu-
lar engine or transmission. Accordingly, the
number itself does not provide any means for
quickly ascertaining the vehicle in which the com-
ponent was installed, nor does the number identify
the model year of the vehicle in which the compo-
nent was installed. Thus, these markings neither
substantially meet the identification require-
ments of this standard (the full 17-character VIN),
nor achieve the purpose of these requirements
( allowing law enforcement officers to quickly check
whether covered major parts were originally in-
stalled on stolen vehicles).
BMW, Mercedes-Benz, Jaguar, Mazda, and the
Automobile Importers of America (AIA) all stated
that such markings should be found to substan-
tially comply with the requirement that a full VIN
be marked on covered original equipment parts.
Some of these commenters stated that law enforce-
ment officials from the countries in which the
vehicles are produced have asked the manufac-
turers not to mark their engines and trans-
missions with a VIN derivative, because other
numbering systems, according to those law en-
forcement officials, reduce the likelihood of thieves
successfully altering these numbers.
NHTSA does not believe that this point is rele-
vant in determining whether these non-VIN related
markings "substantially comply" with the identifi-
cation requirements for original equipment parts
contained in this theft prevention standard. How-
ever, as explained above, the NCIC strongly pre-
fers that the full VIN be marked as the identifier
on covered parts. NHTSA believes it is more
important that the preferences of the NCIC be
accommodated in this theft standard than the pre-
ferences of law enforcement officials in other coun-
tries, since the theft standard applies only to
vehicles sold in the United States. The preferences
of foreign law enforcement officials can be accom-
modated in the case of engines and transmissions
for vehicles not designed to be sold in the United
States.
AIA commented that a requirement forcing
manufacturers to change their existing marking
systems would require the stamping equipment
to be reprogrammed, or might even require new
stamping equipment. Further, the AIA stated that
such a requirement would impose the significant
administrative burden of separating U.S. engine
blocks and transmission housings from the blocks
and housings made for the rest of the world.
NHTSA recognizes that complying with a
requirement to mark the VIN on engines and
transmissions, or any other requirement, imposes
costs and administrative burdens on the manu-
facturers. NHTSA must determine whether the
requirement is necessary to carry out the purposes
of the Theft Act, while imposing costs which can
be met within the fifteen dollar per vehicle limit
established for this theft prevention standard. As
explained above, law enforcement officials have
explained that they need parts identified with the
VIN, if they are to effectively carry out the pur-
poses of the Theft Act. In NHTSA's judgment, the
requirement to mark the VIN on engines and
transmissions, as well as the other covered major
parts, will not cause any manufacturer to exceed
the fifteen dollar cost limit. Hence, any burdens
imposed by this requirement are consistent with
the intent and provisions of the Theft Act.
AIA noted the practive whereby manufacturers
purchase or supply engines and transmissions to
other manufacturers, and stated that most of
those parts are marked by the original manufac-
turer. AIA argued that requiring the vehicle man-
ufacturer to obliterate these numbers and replace
them with VINs would "not only be costly, but
could also be very confusing to law enforcement
officials." Additionally, AIA argued that requiring
obliteration and new markings would violate the
requirement of section 602(d)(lKA) of the Cost
Savings Act. That section provides that this theft
prevention standard may not require any original
equipment part to have more than a single identifi-
cation.
This theft prevention standard does not require
manufacturers to obliterate markings inscribed
by other manufacturers, nor does it require any
part to have more than a single identification. This
standard requires only that the engines and trans-
missions be marked with the VIN. Any other iden-
PART 541-PRE 5
tification markings on those parts are not required
by the standard, so their presence or absence is
irrelevant for the purposes of section 602(d)(1)(A).
In the case of manufacturers currently marking
their engines and transmissions with a VIN de-
rivative, the agency has considered whether those
manufacturers that use at least an 8-character
VIN derivative, consisting of the last 8 characters
of the VIN, can be said to substantially comply
with the requirement that covered major parts be
marked with the full 17-character VIN. As noted
above, an 8-character VIN derivative is not
unique. This is because it does not identify the
manufacturer of the vehicle or the vehicle attri-
butes, nor does it include the check digit. Accord-
ingly, the agency determined that it would be
inappropriate to allow an 8-character VIN deriva-
tive for the marking of all covered major parts.
However, an 8-character VIN derivative con-
sisting of the last 8 characters of the VIN does
identify the model year of the vehicle, the plant
at which it was assembled, and the sequential
production number of the vehicle. Trained inves-
tigators will be able to identify the manufacturer
of an engine or transmission, by noting the par-
ticular design characteristics of the component.
The manufacturer of the engine or transmission
is not necessarily the manufacturer of the vehicle,
as noted by AIA in its comments and discussed
above. Hence, there will be some instances where
the 8-character VIN derivative would not enable
investigators to confirm immediately that an
engine or transmission was installed in a stolen
vehicle.
Permitting the use of VIN derivatives on engines
and transmissions does not present as serious a
law enforcement problem as would be presented
if all covered major parts were permitted to be
marked with VIN derivatives. Engines and trans-
missions are bulkier, heavier, and not as easy to
transport as the other major parts of a car. Thus,
police officers are more likely to have the time
necessary to allow for a reconstruction of the full
VIN from the 8-character VIN derivatives marked
on these components. That reconstruction can be
made reasonably quickly in the majority of cases,
where the manufacturer of the engine or transmis-
sion and the manufacturer of the vehicle are the
same.
After considering these facts, NHTSA has con-
cluded that VIN derivatives consisting of at least
the last 8 characters of the full VIN can be said
to "substantially comply" with the requirement of
this standard that the 17-character VIN be
marked on all covered parts. To the agency's
knowledge, Chrysler, Ford, and GM are the man-
ufacturers currently using at least an 8-character
VIN derivative, consisting of the last 8 characters
of the VIN, to identify their engines and transmis-
sions. They and any other manufacturers using
these VIN derivative markings on their engines
and transmissions as of October 24, 1984, the date
of enactment of the Theft Act, may continue using
those VIN derivatives instead of the 17-character
VIN to mark the engines and transmissions. All
other vehicle manufacturers will be required to
identify their engines and transmissions with the
17-character VIN.
Toyota stated that only one engine part should
be required to be marked. Section 602(d) of the
Cost Savings Act specifies that a part cannot be
required to have more than a single identification,
and the NPRM did not propose more than one
marking for any part. For the purposes of this
part, the engine should be marked on the block
and the transmission should be marked on the
housing. No other markings are required.
Ford stated that the proposed language, allow-
ing engines and transmissions being marked with
a VIN derivative as of the day before the effective
date of this theft prevention standard to continue
using that derivative for identification required
by this theft prevention standard, appeared to be
inconsistent with the requirement in section
604(b), which prohibits the agency from requiring
manufacturers to conform to a more costly identifi-
cation system for its engines and transmissions if
the manufacturer was already engaged in identify-
ing the engines and transmissions in a manner
that substantially complies with this standard.
Under the proposed language. Ford believed that
new engine and transmission designs which were
not being marked with a VIN derivative as of the
day before the effective date of the theft prevention
standard, because they were not yet in production,
would be required to be marked with the full VIN.
This, it was asserted, would conflict with the
explicit requirement of section 604(b) that a Man-
ufacturer whose identification system substan-
tially complied with the requirements of the theft
prevention standard could not be required to
undertake an identification system which imposed
PART 541-PRE 6
greater costs. NHTSA agrees with Ford on this
point, and has modified the language to reflect
this change.
Ford also commented that the NPRM proposed
that manufacturers marking engines and trans-
missions with an acceptable VIN derivative as of
the effective date of the standard would be per-
mitted to continue such marking of those com-
ponents. Ford correctly noted that section 604(b)
refers to manufacturers using such markings as
of the effective date of the Theft Act being permitted
to continue using such markings. This final rule
has been modified to reflect the language of section
604( b ) of the Cost Savings Act.
2. The theft prevention standard must be a perfor-
mance standard, which is practicable and which
employs relevant, objective criteria.
The legislative history is very clear on the type
of standard which must be promulgated. Page 10
of the House Report reads as follows:
The DOT will establish the tests or general
criteria which the identification must meet,
but not how it is to be inscribed or affixed.
That is the choice of each manufacturer. For
example, we understand that a tamper-resis-
tant label exists. If it can meet the perfor-
mance tests or general criteria prescribed by
the standard, the manufacturer may choose
to use it to comply with the standard.
Because of this clearly expressed Congressional
intent, this final rule does not adopt the sugges-
tions in some of the comments that the agency
mandate the use of a particular marking system,
such as stamping, glass etching, or some patented
marking systems. Several commenters asserted
that the use of a particular marking system would
ensure the greatest effectiveness for the theft
prevention standard. However, NHTSA has no
authority to mandate the use of any particular
marking system. NHTSA has authority only to
establish performance criteria that will accomplish
the purposes of the Theft Act. The manufacturers
are free to select any marking system that satisfies
those criteria.
NHTSA believes that the performance criteria
specified for labels in this final rule are objective,
and will ensure that labels will serve effectively
the purposes of the Theft Act. The criteria speci-
fied for non-label forms of identification are less
rigorous, because methods such as etching or
stamping the identification into the metal or the
glass are inherently more permanent. Alterations
of such identifications would be detectable by
trained investigators. The criteria for the non-
label forms of identification are intended primar-
ily to ensure that the marking will be readily
accessible to investigators.
la) The inscription or affixation must meet size
and style requirements to ensure that it is clearly
legible to investigators.
The NPRM proposed that the inscription or
affixation of the VIN on covered major parts meet
the same size and style requirements as the VIN
is required to meet in sections 54.6, 54.7, and 54.8
of Standard No. 115 (49 CFR §571.115). Briefly
stated, this meant that the characters would have
a minimum height of 4 millimeters (mm), would
consist of the Arabic or Roman numerals and/or
letters set forth in Table 1 of 49 CFR §571.115, and
would consist of capital, sans-serif characters.
Many manufacturers commented that the pro-
posed 4mm size was larger than was necessary
for the characters. NHTSA proposed this
minimum size to ensure that the identification
would be clearly legible to investigators. However,
a number of commenters observed that the 4 mm
height is specified in Standard No. 115 to ensure
that the VIN can be easily read through the vehicle's
windshield. In the case of the theft prevention
standard, these commenters stated that the parts
will be examined by trained investigators carefully
examining the parts to find the VIN. Several
manufacturers and the National Automobile Theft
Bureau (NATB) suggested that the minimum
height for the characters be reduced to 3/32 inch
(approximately 2.5mm), which is the same size
as is currently specified for the information re-
quired to appear on vehicle certification labels by
49 CFR Part 567.
NHTSA has further considered this issue, and
determined that the certification labels required
by Part 567 are partly intended to provide infor-
mation to knowledgeable persons specifically look-
ing for that information. This is analogous to the
purpose that the parts marking requirements are
intended to fulfill. The 3/32 inch minimum height
requirement has been wholly satisfactory for the
purposes of Part 567. NHTSA has, therefore, de-
cided not to require larger characters for this theft
prevention standard. Accordingly, this final rule
adopts the minimum character height require-
ment currently specified in Part 567, i.e., 3/32 inch.
PART 541-PRE 7
Ford and GM both specifically commented that
the sans-serif requirement for the characters
should be deleted. Ford stated that their printers
are not technically sans-serif, but that no party
has experienced any difficulty in reading the
characters. Ford suggested that the agency specify
the use of block capital letters and numerals, as
is done for the vehicle certification labels in Part
567. GM showed the characters as printed in the
"positive identification" system. The positive iden-
tification system consists of block capital letters
and numerals, but gives unique characteristics to
each character so that it is more difficult to alter
a character to resemble a different character. GM
stated that those characters are readily legible,
but asked for the agency's opinion as to whether
those characters would satisfy the sans-serif
requirement.
Again, the purpose of the proposed sans-serif
requirement was to ensure that the markings
would be legible to the trained investigators
examining the parts. The presence of small serifs
would not affect that legibility. Therefore, the
agency is not adopting the proposed sans-serif
requirement. Instead the agency is adopting a
requirement that the identification consist of block
capital letters and numerals. This requirement is
identical to the style requirements of Part 567. It
is the agency's opinion that the GM "positive
identification" characters appear to satisfy this
requirement.
(b) The inscription or affixation must be as perma-
nent as possible.
The NPRM stated that the identification
(whether affixed or inscribed) should be made in
such a way that, under normal conditions of wear,
tear, and repair, the identification would continue
to meet the other performance requirements of
the theft prevention standard for the average life
of the car, which the NPRM stated to be 10 years.
However, the NPRM proposed only that the mark-
ings be "permanent", and did not establish any
number of years during which the markings would
have to satisfy the other performance require-
ments of this standard. The NPRM also sought
comments on requiring only that the marking
remain legible for the average length of time dur-
ing which cars are generally susceptible to high
theft rates.
The commenters agreed with the agency's tenta-
tive judgment that it would not serve the purposes
of the Theft Act to require the markings to remain
legible only for the average length of time during
which cars are generally susceptible to high theft
rates. The theft investigators noted that many
cars are stolen after the initial high theft period.
If the identification is permitted not to be visible
on those parts, it would tend to make such vehicles
more attractive to professional thieves. This
plainly would not serve the theft deterrent pur-
poses of the Theft Act. No commenters argued in
favor of adopting this alternative. For the reasons
set forth above, this alternative has not been
adopted in this final rule.
Many of the theft investigators urged the agency
to specify some minimum period of time during
which the markings would have to satisfy all the
other performance requirements of this standard.
The International Association of Auto Theft Inves-
tigators urged that there be a minimum 8 year
life for labels, while the Coalition to Halt Automo-
tive Theft (CHAT) urged that labels have a 10 year
minimum life.
On the other hand, Chrysler, Ford, and GM all
supported the idea of adopting the proposed per-
manence requirement without specifying a
minimum time period as a definition of that con-
cept. GM stated that Part 567 has used the word
"permanent" without specifying any time period,
and that the vehicle certification labels have been
affixed so that there have been no significant dis-
agreements between the manufacturers and the
agency as to the meaning of the word. Ford stated
its opinion that any greater specificity than "per-
manent" would require the agency to develop a
performance test to measure whether the mark-
ings were permanent.
This rule adopts the proposed requirements on
permanency, that is, it does not specify any
minimum number of years during which the mark-
ings must continue to satisfy the other performance
requirements of this standard. As noted by GM,
this term has served its intended purpose when
used in Part 567, and is a concept with which the
manufacturers and the agency have had experi-
ence. The purpose of Part 567 was explained
thusly in the preamble to the final rule establish-
ing that Part: "The intent of the regulation is that
the label should remain in place and legible for
PART 541-PRE 8
the life of the vehicle and not be easily transferable
to another vehicle." 34 FR 1147; January 24, 1969.
NHTSA believes that the purpose underlying the
permanency requirement in Part 567 and this
theft prevention standard are sufficiently similar
that it is appropriate to express those require-
ments in the same way. Should that belief be
shown to be incorrect, because the labels are not
remaining affixed and legible for the life of the
vehicle, the agency will initiate rulemaking to
specify some minimum length of time during
which the labels must satisfy the other require-
ments of this standard. However, such rulemaking
would be premature at this time.
VW asked what the term "permanent" means
in this standard. As noted above, it means exactly
what it means when used in Part 567. That is,
the label should remain in place and legible for
the life of the vehicle.
Toyota stated that there was no way of knowing
if labels will satisfy the permanence requirement,
so this requirement should be deleted. NHTSA
does not understand this comment, since Toyota's
vehicles presumably comply with the "perma-
nence" requirement in Part 567. NHTSA believes
that either Toyota or the label manufacturer can
obtain data, through tests or other means, show-
ing whether labels will remain affixed and legible
for the life of the car. Those data would form the
basis for certifying compliance with this require-
ment.
Moreover, as stated above, this is a performance
standard that sets forth general criteria which
must be satisfied by whatever means of marking
the manufacturer chooses. If Toyota is unable to
certify that its labels will satisfy the permanence
requirement, it will have to use stamping, etching,
or some other method of marking its parts. The
criterion of permanence is very important if this
standard is to carry out the intent of the Theft
Act. It seems obvious that markings that, after a
short period of time, are not present on the vehicle
or are not legible to investigators do not serve the
purposes of the Theft Act.
c) Locations selected for labels must provide pro-
tection from damage as a result of normal mainte-
nance and exposure conditions while still being
visible to investigators without further disassem-
bly once the parts are removed from the vehicle.
The NPRM proposed that labels be protected
from damage as a result of normal vehicle repair
and maintenance and exposure conditions. Inscrip-
tions would not be subject to this requirement,
because such marking methods are inherently
more durable than labels. Accordingly, the agency
does not believe it is necesary to specify protection
from damage requirements for inscribed mark-
ings. If experience shows that the manufacturers
are not locating those markings so as to protect
them from damage, NHTSA will consider initiating
rulemaking to amend this standard. All means of
identification would be subject to the requirement
of visibility to investigators without further dis-
assembly once the parts are removed from the
vehicle.
The National Automobile Dealers Association
(NADA) stated that the legislative history of the
Theft Act specifically instructs NHTSA to "con-
sider the location of the number so that it will not
be easily susceptible to damage in the normal
course of dealer preparation (for such procedures
as rustproofing and undercoating), or be easily
damaged in the course of repair, or regular au-
tomobile maintenance by repair shops or car own-
ers;" H. Kept, at 12 (Emphasis added). NADA
urged the agency to modify the proposal to
explicitly require that the label be protected from
damage during dealer preparation operations.
NHTSA believes that such a requirement is very
closely related to its proposal. Further, it is consis-
tent with the legislative history and needed to
ensure that the labels will not routinely be
obscured or damaged before the vehicle is sold to
the first purchaser. Therefore, this final rule adds
this requirement.
Ford commented that the locations chosen for
the labels cannot protect the labels against pos-
sible damage during a collision and subsequent
repairs, where the part might need bumping,
grinding and repainting to be repaired. Neither
the NPRM nor this final rule require the labels to
be protected from damage during every repair for
collision damage. Even inscriptions might well be
obliterated or rendered illegible during some col-
lision repairs. This rule does not require manufac-
turers to do the impossible; i.e., certify that labels
will never be damaged during any work which
might be performed on the part.
However, the legislative history states: "The
Committee believes, as already noted, that one of
the major factors that the Secretary and the manu-
facturers should consider in rulemaking is the
location of the identification number in relation
PART 541-PRE 9
of the future repairability of the major part. The
location selected should, to the greatest extent pos-
sible, not be a spot likely to be damaged in what
is an economically repairable accident, if possible. "
H. Rept. at 24-25 (Emphasis added). It is hard
to imagine a clearer expression of Congressional
desire that the identification on covered major
parts should be located so that it will not be
damaged during most collision repairs. Hence,
placing the labels on the fenders at the height of
other vehicles' bumpers would seem to be pre-
cluded, since that is the area most likely to need
the bumping and grinding to repair collision
damage, as noted in Ford's comments.
It is imperative that the identification numbers
not be destroyed or rendered illegible during repair
and maintenance operations, to the greatest
extent practicable, since destroyed or illegible
labels will serve the interests of no one but auto
thieves. To ensure the efficacy of the labels, this
rule simply requires that which Congress intended;
namely, that the vehicle manufacturers use their
engineering judgement when deciding where to
apply the labels, so that those labels will be:
(1) in a place where they won't be disturbed by
the use of any tools necessary in the installing,
adjusting, or removing of the part or adjoining
parts, or any portion thereof;
(2) on a portion of the part not likely to be dam-
aged in a collision; and
(3) protected from damage during normal dealer
preparation procedures.
To clarify what is required of vehicle manufac-
turers, this rule specifies that the label shall be
placed on an interior surface of the part as it is
installed in the vehicle, if this placement is prac-
ticable, and that the label shall be positioned to
satisfy the three criteria specified above.
GM commented that the requirement that
labels be protected from damage during mainte-
nance and repair of the vehicle should be deleted.
GM stated that it was not clear how the manufac-
turer could certify compliance with the require-
ment that the label was protected from damage
as the result of repair and maintenance. As noted
above, the manufacturers are required only to
ensure that the labels are protected from damage
during foreseeable repair and maintenance oper-
ations and during normal dealer preparation oper-
ations. The manufacturer specifies the procedures
its dealers are to follow during these operations,
and recommends the tools to be used during such
operations. Accordingly, the manufacturer al-
ready knows the procedures it has specified and
the portions of the part most likely to be damaged
in a collision. The manufacturer is simply required
to cerify that it has used this knowledge when
deciding where to position the labels on its covered
major parts.
VW commented that the agency should allow
the use of an integral paint mask, so that the
labels can be put on the parts before the vehicle
is painted or rustproofed. Such a procedure is per-
missible under this standard, provided that the
paint mask is removed from the label. If the mask
were not removed, the identification would not
satisfy the requirement that it be visible without
further disassembly once the vehicle part has been
removed from the vehicle. That requirement is
essential if this theft prevention standard is to
facilitate the quick and easy identification of parts
by trained investigators.
Mazda asked that vehicle hatchbacks be allowed
to be marked beneath the trim panels. Otherwise,
Mazda commented, the identification marking
would be visible to vehicle occupants. This rule
does not permit any covered major parts to have
identification marks hidden behind trim panels.
One of the major purposes of this theft prevention
standard is to enable law enforcement officers to
quickly determine if a motor vehicle part is stolen.
If those officers must disassemble the part to look
for the appropriate identification markings, their
task would be more difficult. NHTSA believes that
the purpose of the Theft Act was to make the task
of law enforcement officers as simple as possible,
without imposing significant costs on vehicle
manufacturers. No greater costs are imposed by
requiring the markings to be visible to inves-
tigators. Therefore, the requirement for visibility
is adopted as proposed.
Target Areas. To ensure that the identification
markings are readily located by investigators, the
NPRM proposed that those markings be placed in
the same 5 centimeter X 5 centimeter (cm) area
on each part of that type produced by the manufac-
turer. The manufacturers were free to select any
5 cm X 5 cm area as the target area, provided of
course that the target area met the requirements
of protecting the identification from damage
during normal repair, maintenance, and dealer
preparation operations and was visible to inves-
tigators without further disassembly. Comments
were requested on whether this target area should
PART 541-PRE 10
be required to remain unchanged for the entire
production run of the covered major parts or
whether the manufacturers should be allowed to
change this target area every model year.
Most of the manufacturers asked for some
modification to the proposed 5X5 cm target area.
Ford stated that a target area was unnecessary.
Chrysler stated that a target area was incom-
patible with mass production techniques. VW
stated that a 5 X 5 cm target area was both un-
reasonable and unnecessary. Nissan asked that
the target area be expanded to 5 X 6 cm. Mercedes
and Saab asked that the target area be expanded
to 10 cm X 10 cm. GM asked that the target area
be expanded to 15 cm X 15 cm. Mazda urged the
agency to require only that some part of the iden-
tification be within the 5 cm X 5 cm target area.
In response to these comments, NHTSA has
carefully examined the reasoning behind its pro-
posed target area requirement. There were two
primary reasons for proposing this requirement.
First, a standardized location would facilitate
quick identification checks by law enforcement
officers. If the investigator knew exactly where a
particular part on each line was required to be
marked, the investigator would know where to
look for the identifying number without having to
search the part for that number. The investigator
would also be alerted to possible suspicious activ-
ity if the identifying symbol were in some location
other than the required target area.
Second, the proposed target area for original
equipment and the companion proposal for a
target area for replacement parts were intended
to ensure that there would be a separation be-
tween the areas where the identification would be
marked on such parts. Criminals plainly will not
be able to routinely sell stolen parts which can be
identified as such, nor should there be a market
among honest repair shops for unmarked parts
which were required to be marked by this standard.
Accordingly, there will probably be an effort by
chop shops and other thieves to try to obliterate
the identifying numbers on original equipment
parts and affix counterfeit replacement part iden-
tifications. If that counterfeit replacement part
marking can be located directly over the obliter-
ated original equipment part marking, it would
be more difficult for the investigator to see the
evidence of the obliteration of the original equip-
ment part marking. With the target areas and the
requisite distance between that for original equip-
ment parts and replacement parts, the oblitera-
tion of the original equipment part marking would
leave that area with evidence of the obliteration
or with evidence of sanding and repainting. With
either sort of evidence, the investigator would be
alerted that the replacement identification should
be carefully examined for authenticity.
NHTSA believes that both of these objectives
are still reasonable and necessary if the theft pre-
vention standard is to achieve its intended objec-
tives. However, the agency also believes that the
manufacturers raised valid points in the com-
ments asserting that these objectives could be
achieved in a less restrictive manner. Therefore,
this final rule retains the target area requirement
for original equipment parts, so as to achieve
both the intended objectives, but makes the re-
quirement less restrictive. This theft prevention
standard requires the vehicle manufacturers to
designate a target area for each covered major
part. The covered major parts are set forth later
in this preamble.
There is only one limitation on the target area
which may be designated by the vehicle manufac-
turers, subject to the other performance require-
ments for labels set forth above. That is, the target
area for original equipment parts cannot exceed
50 percent of the surface area on the surface of
the part where the original equipment part will
have the identification affixed or inscribed. This
requirement is included in this final rule to ensure
that there will be adequate separation between
the target areas for original equipment parts and
those for replacement parts.
The vehicle manufacturers are required to in-
form the agency of the target areas selected for
each covered major part. This information will be
made available to the public in the docket section.
NHTSA anticipates that the information will be
primarily used by replacement part manufactur-
ers and by law enforcement organizations to learn
the location of the target areas on each manufac-
turer's original equipment parts. Further, the
agency anticipates that this will be a minimal bur-
den on the manufacturers, since Ford and GM
commented that they have voluntarily provided
such information to the National Automobile
Theft Bureau (NATB) in connection with their
voluntary parts marking programs over the past
several years.
PART 541-PRE 11
The agency has determined that this procedure
and the companion procedure requiring vehicle
manufacturers to designate target areas for mark-
ing replacement parts, discussed in detail below,
will serve both the objectives the proposed 5 cm
X 5 cm target area was designed to serve, by ensur-
ing that trained investigators know the location
of the target areas for both original equipment
and replacement parts and ensuring an adequate
separation of the target areas for marking original
equipment and repalcement parts. It will do so
while providing manufacturers with maximum
flexibility to avoid unnecessary production bur-
dens and/or costs.
Regarding the issue of whether the target area
should be maintained for the production run of
the major parts or whether that target area should
be allowed to be changed each model year, opinion
was very divided between vehicle manufacturers
and law enforcement groups. The vehicle manu-
facturers uniformly indicated that they should be
allowed to change the target area after each model
year. Their position generally was that unexpected
design changes sometimes occur between model
years, which could make it impracticable to con-
tinue using the previously specified target area.
On the other hand, the International Association
of Auto Theft Investigators and CHAT urged the
agency to standardize the location of the original
equipment marking over the entire production run
of the parts. CHAT stated that a fender from any
model year will not have any model year identifi-
cation other than the VIN. If the target area varies
from model year to model year, an investigator
might well have to check four or five different
places to see if the fender has the necessary mark-
ing.
NHTSA believes that the expansion of the per-
missible target area in this final rule has largely
obviated the manufacturers' concern about being
required to use the same target area over the
entire production run of the part. The expansion
of the target area has also increased the need
for theft investigators to have such target areas
standardized over the entire production run of the
parts. Accordingly, this final rule specifies that
the target area must remain constant over the
entire production run of the parts. It does, how-
ever, allow an exception for a situation where a
restyling of the part makes it impracticable to
mark the part in the original target area. In such
cases, the manufacturer would be required to in-
form the agency of the redesign and the new target
area. It will be an easy matter for a trained inves-
tigator to differentiate the restyled part from the
old part and look for the markings in the different
target area.
d) Removal of the identification number must
cause that identification to self destruct and alter
the appearance of the vehicle part.
The NPRM proposed these requirements for the
following reasons. It is critically important that
thieves not be able to remove an identification
marking label legitimately affixed to the part by
a manufacturer and transfer that label intact and
undamaged to a stolen part. CHAT commented
that this was one of the most significant proposed
requirements in the NPRM, and urged the agency
to adopt it as proposed. No other commenter spec-
ifically addressed this proposed requirement, and
it is adopted in this final rule to ensure that legiti-
mately affixed labels cannot be removed from
parts and reapplied to other parts.
As a further precaution, the NPRM proposed
that an alteration of a character on the label be
required to leave traces of the original character
or otherwise visibly alter the appearance of the
label. For other means of identification, the NPRM
proposed that an alteration of any part of the iden-
tification be required to visibly alter the appear-
ance of the vehicle part. Both Toyota and Ford
commented that the label should only be required
to leave evidence that an attempt was made to
alter or obliterate a character of the VIN. These
commenters noted that this would not necessarily
leave a trace of the original character.
The agency notes that the NPRM did not propose
to require that an attempt to alter or obliterate a
character on the label always leave a trace of the
original character. It proposed only that it do that
or otherwise visibly alter the appearance of the
label. Ideally the alteration would leave a trace of
the original character so that the legitimate owner
of the part could be informed of its recovery. How-
ever, the NPRM recognized that this would not
always be practicable with current labels. In those
cases where it is not practicable, the proposed re-
quirement would be satisfied if the appearance of
the label was visibly altered. This requirement is
identical to the understanding expressed by both
Ford and Toyota, and it is adopted as proposed.
PART 541-PRE 12
Ford also commented that the proposed require-
ment that alterations of the identification number
visibly alter the appearance of the vehicle part, if
the identification number is applied by some
means other than labels, should be modified. The
reasoning behind this comment was as follows:
first, according to Ford; it is the identification
number, and not that of the vehicle part, which
would be altered in appearance. Second, a skillful
alteration, such as over-stamping, might not visi-
bly alter the appearance of the number. The alter-
ation would be latent and would be detectable only
with further laboratory or further field investiga-
tion. Accordingly, Ford requested that the require-
ment be modified so that attempts to alter the
indentification number "be detectable".
NHSTA has carefully considered this comment.
The agency did not intend that the alteration of
the identification number on an engine, for in-
stance, must visibily alter the appearance of the
entire engine. The proposed requirement was in-
tended to refer to the appearance of the part sur-
face on which the identification number is marked,
and not to the appearance of the entire part. It is
appropriate to be more specific in this final rule,
and limit the requirement so that an attempted
alteration must visibily alter the appearance of
the part surface on which the identification
number is marked, rather than generally requir-
ing it to alter the appearance of the part.
However, this rule does not incorporate Ford's
suggested requirement that the attempted altera-
tion only "be detectable". That criterion would re-
quire that all investigators have laboratory equip-
ment and possess the highest skills, if they were
to be alerted to the attempted alteration. However,
this theft prevention standard is designed to facili-
tate the recognition of any alterations by reason-
ably skilled trained investigators working under
field conditions. To serve that function, it is neces-
sary that the attempted alteration at least give
some visual indication to the investigator that the
part should be more carefully examined. Such in-
dication would not be required under the require-
ment suggested by Ford, and so it is not adopted
in this rule. Attempted alterations must visibly
alter the appearance of the part surface on which
the identification number is marked, in the case
of means of identification other than labels.
A number of commenters addressed the prop-
osed "footprint" requirement for labels under this
section. That proposal would have required that
removal of the affixation must create or uncover
physical evidence that the affixation was origi-
nally present or required to be present. The 3M
Corporation, a leading manufacturer of these
labels, commented that a footprint would not re-
main if some extraordinary means of eradication
were used on the areas where the labels were af-
fixed. VW and Saab stated that the proposed re-
quirement that removal of the label must "dis-
cernibly alter the appearance of the vehicle part"
should be narrowed to require only that some re-
sidual parts of the label must remain. Saab stated
that if the agency intends a broader requirement,
it ought to include the compliance test procedures
it will follow in this standard. Chrysler stated that
the footprint requirement should be deleted be-
cause it would create engineering problems and
might "violate" their rustproofing procedures. GM
stated that the footprint requirement should be
deleted because of the many unresolved questions
surrounding this area. CHAT, on the other hand,
stated only that any compromise of the footprint
requirement would undermine the integrity and
effectiveness of the theft prevention standard.
In light of these comments, the agency
reexamined the proposed requirement in detail.
If there were no footprint requirement and the
label were removed from the stolen part, there
would be no evidence that a label had ever been
on the part. NHSTA agrees with CHAT's comment
that this would substantially reduce the effective-
ness of this theft prevention standard.
On the other hand, NHSTA agrees with the
manufacturer's comments stating that the foot-
print left by current labels would not really alter
the appearance of the vehicle part. The labels work
by leaving a residue of adhesive which cannot be
removed by most solvents, but the residue is not
visible under natural light conditions. Adopting
the proposed requiremnets would require the
manufacturers to certify that removal of the labels
would not discernibly alter the appearance of the
parts, and it is not clear that current labels would
do so, particularly if the parts were painted and
rustproofed before the labels were affixed.
The label manufacturers have indicated that the
developement of an adhesive that would alter the
appearance of the part when removed is feasible,
but has not yet been developed. While such a fea-
ture would significantly enhance the ability of law
enforcement personnel to detect tampering with
a label, the agency does not believe it is appro-
PART 541-PRE 13
priate in this case to impose a requirement beyond
the limits of current technology. NHSTA antici-
pates that, as this enhanced label technology is
developed and labels incorporating this feature
are offered for sale, the vehicle manufacturers will
voluntarily include specifications for such tech-
nology into their orders for labels used for marking
parts in accordance with this standard.
Accordingly, this standard requires only that
removal of the labels must leave residual parts of
the label, including the adhesive, on the part, and
that these residual parts must be discernible by
trained investigators. For purposes of this require-
ment, "discernible" does not mean that the residual
parts must be visible under natural light. This
modification of the proposed requirements is in-
tended to allay the concerns of those manufac-
turers who believed that the NPRM was asking
them to certify a performance for current labels
which is beyond their capabilities. It does not rep-
resent any change from what the agency intended
to propose in the NPRM.
e) The affixation must be resistant to counterfeit-
ing.
The NPRM proposed that this requirement be
applicable only to labels. Aside from steps taken
by the label and vehicle manufacturers to safe-
guard the labels and the marking system, the
NPRM would have required each label to bear a
distinctive logo or trademark identifier along with
the VIN. By requiring the marking to be incorpo-
rated in the material of the label itself instead of
simply being stamped on the label, the NPRM in-
tended to increase the difficulty of counterfeiting
the labels because standard templates could not
be readily located or purchased.
3M commented that all means of identification
should be required to be resistant to counterfeit-
ing, not just labels. The agency proposed that only
labels be subject to this requirement because
stamping, etching, and other means of identifica-
tion are readily available to the public. A stamped
or etched marking will resemble any other stamped
or etched markings.
3M also commented that it assumed that its
CONFIRM logo could serve as the logo for all man-
ufacturers. That assumption is incorrect. As
stated above, NHTSA proposed that each manu-
facturer's distinctive logo or trademark identifier
would be incorporated in the material of the label
itself, as a further protection against counter-
feiting of the labels. CHAT commented that the
requirement for each manufacturer's distinctive
logo or trademark identifier should minimize the
ability of non-legitimate users to use "off-the-
shelf technology to produce their own labels.
NHTSA agrees with CHAT, because the proposed
requirement would require counterfeiters to alter
the process by which the label is produced instead
of just altering the finished product. Morever, if
those non-legitimate users were to somehow ac-
quire the labels, such labels could only be applied
to one manufacturer's vehicles. Therefore, this
requirement is adopted as proposed.
Security Etch commented that the resistance to
counterfeiting requirement was not objective and,
therefore, was not permissible in this theft preven-
tion standard. NHTSA believes that the general
criteria set forth in this requirement are sufficient
to alert both manufacturers and vehicle manufac-
turers to what is required. The House Report
accompanying the Theft Act explicitly authorized
the agency to promulgate "general criteria which
the identification must meet." H. Rept. at 10. It is
the agency's belief that Congress authorized the
use of general criteria because of its desire that
the theft prevention standard be swiftly im-
plemented. See H. Rept. at 11.
To further specify what is intended by those
general criteria, NHTSA has included a specific
requirement in this final rule that each manufac-
turer's logo or trademark identifier be incorpo-
rated in labels, as was proposed. The agency be-
lieves that these requirements are more than suf-
ficient to satisfy the mandate of the Theft Act that
the theft prevention standard be objective, as that
term was explained in the relevant legislative his-
tory.
3. Parts to be covered by this standard.
Section 602 of the Cost Savings Act provides
that this theft prevention standard applies to only
the covered major parts of high theft lines, and
limits the number of covered major parts to 14 per
vehicle. Section 601(7) of the Cost Savings Act sets
forth a candidate list of 15 or 17 major parts (de-
pending on whether the car has two or four doors )
from which covered major parts can be selected.
To implement these statutory provisions, the
NPRM set forth three alternatives for selecting
the covered major parts. Alternative 1 listed the
following 12 major parts as those which would be
selected as covered major parts on all high theft
lines:
•
PART 541-PRE 14
1. Engine;
2. Transmission;
3. Right front fender;
4. Left front fender;
5. Hood;
6. Right front door;
7. Left front door;
8. Front bumper;
9. Rear bumper;
10. Right rear quarter panel;
11. Left rear quarter panel;
12. Decklid, tailgate, or hatchback (whichever is
present).
These 12 parts were selected from section
601( 7)'s list of major parts because they were found
to be those most frequently repaired or those most
costly to replace. This listing did not include the
rear doors on 4-door cars, the grille, the trunk
floor pan, or the frame, which are all specifically
listed in section 601(7).
The second alternative would have required the
marking of the same 12 parts as the first alterna-
tive, and an additional two parts. These two parts
would not have been specified in this standard.
Instead, this alternative would have allowed the
individual manufacturer to propose the additional
two parts to the agency. NHTSA stated in the
NPRM that it would agree to the manufacturer's
proposal if the two parts were listed in section
601(7), and would initiate rulemaking if the part
was comparable in design or function to any of
the listed parts. The reason for proposing this al-
ternative was that law enforcement groups have
consistently urged the agency to require the mark-
ing of the statutory maximum 14 parts on all veh-
icles.
The third alternative was also based on the
agency's inclination to require the marking of the
statutory maximum of 14 parts. It was similar to
the second alterantive, except that the two addi-
tional parts to be marked would be specified in
this final rule. The NPRM stated that the candi-
dates for the additional parts to be selected were
the five listed in section 601( 7 ) which had not been
included in the 12 parts listed in the first alterna-
tive.
The comments on these alternatives again re-
flected a split of opinion between vehicle manufac-
turers and organizations involved in reducing auto
thefts. Chrysler stated that it was not necessary
to mark more than 8 parts. BMW urged the agency
not to specify that 14 parts must always be
marked. VW and AMC urged the agency to require
the marking of as few parts as possible by the
manufacturers. Ford and Nissan supported the
first alternative listed in the NPRM. Ford stated
that the uniform marking of certain parts would
make it easier for investigators to know on what
parts he or she should look for the identification
numbers. GM proposed that 10 parts be marked
on all high theft cars, and that two additional
parts be marked on those cars. Those two addi-
tional parts would be selected by agreement be-
tween the agency and the individual manufacturer.
Saab supported the third alternative and sug-
gested that the rear doors, if present, be the two
additional parts selected for marking.
On the other hand, the groups involved in reduc-
ing auto theft unanimously supported the concept
of requiring 14 parts to be marked on high theft
cars. The Delmarva Investigators, the Interna-
tional Association of Auto Theft Investigators, and
the Maryland State Police all commented that the
frame should be added to the list of 12 parts set
forth in the first alternative of the NPRM, and
the 14th part to be marked should be selected by
agreement between the agency and the manufac-
turer. CHAT stated that the rear doors should be
added to the 12 parts listed in the NPRM, since
all four doors are taken from a vehicle when it is
stripped. CHAT urged that if any of the 14 required
parts were not present on a high theft vehicle, the
manufacturer should be required to propose alter-
nate parts to be identified, because 14 parts should
be marked on each high theft vehicle. The NATB
agreed with CHAT's comments, and suggested
three alternatives to require high theft cars to
have 14 parts marked, depending on how such
cars are configured.
There were a number of commenters addressing
the question of whether certain parts should or
should not be included in the list of covered major
parts. The frame or, in the case of a unitized body,
the supporting structure which serves as the
frame was recommended to be included in the
designation of covered major parts by both manu-
facturers and theft investigators. For instance, the
FBI stated that marking the frame is the only way
to identify a stripped or burned-out vehicle. The
Delmarva Investigators stated that the frame is
often used to identify illegally altered stolen
vehicles. GM stated that many manufacturers
have voluntarily marked the frame for many
years, and this identification has proven useful to
PART 541-PRE 15
law enforcement. A failure to select the frame as
a covered major part in this final rule would cause
GM to reevaluate whether it should continue vol-
untarily marking the frame. Ford, on the other
hand, stated that marking the frame should be
given a low priority. This was because passenger
car design is moving away from traditional frame
construction to unitized body construction, which
does not use a frame.
NHTSA has determined that the frame need
not be selected as one of the covered major parts
for the purposes of this standard. The frame itself
is almost never stolen or replaced on a vehicle.
The only reason for making such a selection would
be to ensure that the remains of a stripped vehicle
can be identified. As noted by Ford, there will be
few, if any, new passenger cars produced in the
future using frame construction. In the case of
cars using unitized body construction, the objec-
tive of ensuring that an identifiable part of the
vehicle remains after the vehicle has been stripped
can be achieved by requiring the marking of both
rear quarter panels. Those rear quarter panels
are an integral part of the supporting structure
which serves as the frame for unitized bodies, and
generally remain with the frame. Accordingly, the
agency does not believe there is any reason to
select the frame as one of the covered major parts.
A number of commenters also questioned the
agency's selection of rear quarter panels as co-
vered major parts. Mitsubishi, BMW, Nissan, and
Mazda stated that the rear quarter panels are not
really separate parts in the case of unitized bodies,
since they can't be removed as separate parts from
the unitized body. However, the Theft Act clearly
designates the rear quarter panels as separate
parts which can be selected as covered major parts.
NHTSA believes there is value in marking both
rear quarter panels, because they would be among
the costliest major parts to replace. They will also
serve as an effective surrogate for marking the
frame in unitized body vehicles, as discussed
above. For these reasons, NHTSA is not convinced
by GM's comment that, because there is no evi-
dence that rear quarter panels are by themselves
high theft parts, those panels should not be
selected as covered major parts. Given the high
cost of the rear quarter panels, such parts could
be especially profitable to chop shops. One of the
purposes of this theft prevention standard is to
increase the risks for those chop shops (H. Rept.
at 5 ), and the agency believes it is especially impor-
tant to increase the risks associated with the most
potentially profitable parts. Moreover, marking of
both rear quarter panels would serve the law en-
forcement objective noted above in the discussion
on why the frame was not selected as a covered
major part. Accordingly, the theft prevention stan-
dard requires the marking of both rear quarter
panels.
Mazda stated that the rear quarter panels on
their unitized body vehicles consist of an inner
structural side panel which is an integral part of
the unitized body shell to which is attached an
exterior body panel. Mazda asked which of those
two panels should be marked, or if both should be
marked. In these instances, both the inner side
panel and the exterior body panel comprise the
rear quarter panel of the car. Marking either panel
would comply with the requirement that the rear
quarter panel be marked.
The commenters generally questioned the
agency's selection of the front and rear bumpers
as covered major parts. Chrysler stated that most
cars in the future will not have traditional chrome-
plated bumpers with a face bar. Instead, those
vehicles will use soft front and rear fascia mater-
ials which are integrated with the front and rear
of the body. Chrysler stated that it knows of no
feasible way to permanently attach a label to that
soft fascia material.
Earlier in this preamble, NHTSA explained that it
is required to promulgate a performance standard.
The fact that manufacturers may have to use some
means of identification other than labeling is not
by itself a valid reason for not selecting a part as
a covered major part. If a manufacturer is unable
to certify that labels can satisfy the performance
standard when attached to a covered major part,
the manufacturer will have to use some other
means of marking the part, such as stamping or
etching.
Additionally, Chrysler argued that these
bumper designs are not really separate parts, but
are an integral part of either the front or rear
end. Accordingly, Chrysler argued that the new
bumpers will not be high theft items. The Depart-
ment of Justice commented that, as far as they
know, bumpers are not involved in much chop shop
activity. The Justice Department accordingly
recommended that the rear doors on four door cars
should be required to be marked in lieu of the
bumpers.
•
PART 541-PRE 16
According to the information currently available
to NHTSA, the front and rear bumpers are the
most often replaced major parts on vehicles. This,
of course, results from the function of these com-
ponents, which is to protect the front and rear end
of the vehicle. Hence, these parts would seem to
be natural targets for chop shops, since they are
such high demand items by repair shops.
Moreover, the fact that current information in-
dicates that bumpers have not been prime targets
for chop shops is not dispositive. None of the front
end components are marked on most high theft
cars today. In this situation, it stands to reason
that the most expensive components of the front
end, the hood and the fenders, would be most desir-
able to chop shops, because of the potential profits.
However, if this standard were to require the
marking of the hood and fenders, but not the
bumpers, chop shops could with relative safety
"clip" the bumpers of stolen vehicles and fence
those parts. The legislative history of the Theft
Act noted that marked components are often
junked by criminals, while the unmarked com-
ponents are fenced to salvage and repair shops.
H. Rept. at 4. It would be inconsistent with the
purposes of the Theft Act to leave open the possi-
bility that chop shops could with relative safety
steal and fence the most often replaced major parts
of high theft lines, because NHTSA failed to select
the bumpers as covered major parts.
Accordingly, this final rule selects the front and
rear bumpers as covered major parts. The agency
concurs with the manufacturer's comments that
these bumpers frequently consist of many compo-
nents. For the purposes of this requirement, the
marking of the bumper will be satisfied by mark-
ing the face bar or the fascia, but would not be
satisfied by marking the rub strip, bumper guards,
or energy absorber.
After having determined that these specific com-
ponent parts should or should not be selected as
"covered major parts" under section 602(aKl) of
the Cost Savings Act, NHTSA had to determine
which of the three proposed alternatives should
be incorporated into the theft prevention standard.
The first proposed alternative offered the advan-
tage of uniformity of parts marking, so that inves-
tigators in the field would know which parts were
to be marked on all high theft line vehicles. Adopt-
ing the second alternative would mean that two
of the fourteen parts to be marked would vary
from manufacturer to manufacturer, and this
would create needless complexity for the inves-
tigators. However, the agency agrees with the
comments by the Justice Department, CHAT, and
Saab that all current evidence indicates that all
four doors are taken when a four door vehicle is
stripped by criminals. It would be inconsistent
with the purposes of the Theft Act to allow the
rear doors to be stolen and fenced with minimal
risk. For the reasons stated above, this final theft
prevention standard adopts the third proposed al-
ternative, adding the two rear doors to the list of
the 12 major parts given in the first alternative.
This means that two door vehicles in high theft
lines will have 12 covered major parts, and four
door vehicles will have 14 covered major parts.
Further, it includes the advantage of the first
proposed alternative of uniformity of parts mark-
ing between the different manufacturers.
4. Cost of Compliance with the Theft Prevention
Standard.
Section 604(a) of the Cost Savings Act provides
that the theft prevention standard "may not . . .
impose costs upon any manufacturer of motor
vehicles to comply with such standard in excess
of $15 per motor vehicle . . ." To amplify this limi-
tation, the House Report stated, "(t)his is a limi-
tation on DOT. If DOT, when promulgating the
standard, determines that this cost will be ex-
ceeded, the standard should not be issued until it
is adjusted to be within the limitation. In short,
there is no authority to issue a standard that ex-
ceeds the cost limitation." H. Rept. at 16.
NHTSA stated its interpretation of this lan-
guage in the NPRM. To repeat, NHTSA believes
that it has no authority to issue a standard which
cannot reasonably be met by all manufacturers
for $15 or less, but this language does not require
the standard to be capable of being met for $15 or
less by every manufacturer using every tech-
nology. In other words, this standard meets the
cost limitation of section 604(a) if there is at least
one reasonable means of compliance available to
each manufacturer that would cost not more than
$15 per vehicle, based on reasonable and generally
accepted management and accounting techniques.
The agency has broad discretion to make adjust-
ments to the standard if it exceeds the $15 limit.
These adjustments would then be generally
applicable to all manufacturers. NHTSA believes
PART 541-PRE 17
it is clear that Congress did not contemplate that
no standard would be issued merely because one
manufacturer claims unverified costs above that
limit. Moreover, as explained in the NPRM, Con-
gress did not give the agency authority to exempt
any manufacturers entirely from the standard,
nor does the agency have the authority to modify
the standard for a particular manufacturer to
bring that manufacturer's costs below the $15
limit. The same performance requirements must
pertain to all manufacturers even if adjustments
are needed to the standard so that it is within the
$15 hmit.
The agency concluded this section of the NPRM
by stating its anticipation that no manufacturer
would make a claim that it is unable to meet the
standard for $15 per vehicle, given the availability
of inexpensive labeling and engraving technologies.
However, Ferrari did make such a claim, and
stated that for a small manufacturer the marking
of 14 parts with the VIN "would create enormous
problems with the management of the system and
would raise costs well in excess of $15 for each
vehicle". The only substantiation for this claim
was that the marking requirements would force
the small manufacturer to determine the U.S. ver-
sions of its vehicles as early as the bodywork stage
of production.
NHTSA is not persuaded by this comment.
There are inexpensive labeling and engraving
technologies available for use by Ferrari. Foreign
manufacturers must determine whether the
vehicle is to be a U.S. or European version before
the vehicle has been built, so that it can be certified
as complying with the U.S. vehicle safety and
emissions standards. At that time, Ferrari can
assign a U.S. VIN and use the inexpensive mark-
ing technologies to mark the covered major parts
of its high theft lines, for those vehicles to be sold
in the United States. Accordingly, NHTSA be-
lieves Ferrari can comply with this standard at a
cost of no more than $15 per vehicle.
VW commented that it might not be able to com-
ply with this standard at a cost of $15 or less per
vehicle. As support for this position, VW stated
only that its cost of compliance would depend upon
which of its lines were selected for coverage under
this standard. No other manufacturer stated that
it could not comply at a per vehicle cost of $15 or
less. NHTSA's estimate of compliance costs is less
than $10 per vehicle if the parts are stamped or
engraved and $5 per vehicle if the parts are labeled
for the larger manufacturers. For low volume
manufacturers, NHTSA estimates that it will cost
between $7 and $9 per vehicle to sandblast the
markings into the parts. Based on this informa-
tion, NHTSA concludes that this standard satis-
fies the cost limitation of section 604(a) of the Cost
Savings Act.
Ferrari also asked that NHTSA exempt from
the requirements of this theft prevention standard
high theft car lines which have fewer than 20
thefts per model year. Section 603( a )(1 ) of the Cost
Savings Act treats "passenger motor vehicles of
any line" as part of a high theft line, if that line
meets certain conditions. Congress granted
exemption authority to the agency in section 605
of the Cost Savings Act for vehicles with original
equipment anti-theft devices which meet certain
conditions. There are no other exemptions pro-
vided in Title VI of the Cost Savings Act. An old
principle of legal interpretion is expressed in the
maxim "expressio unius est exclusio alterius"; liter-
ally, the expression of one thing is the exclusion
of another. See Earl of Southampton s Case, 1 Dyer
50a, 73 Eng. Rep. 109 (K.B. 1541); Marbury v.
Madison, 1 Cranch (5 U.S.) 137, at 174, 175 (1803).
When Congress drafted the Theft Act so as to pro-
vide one means of exempting vehicles from its
requirements, it is presumed that Congress in-
tended to exclude other means of exempting
vehicles from those requirements.
The presumption that Congress did not intend
low volume manufacturers to be excluded from
the theft prevention standard because of the rela-
tively few vehicles they produce is reinforced by
comparing Title V and Title VI of the Cost Savings
Act. Title V expressly provides NHTSA with the
authority to exempt small manufacturers from the
generally applicable requirements of the fuel
economy standards in section 502(c) of the Cost
Savings Act. The absence of any comparable
exemption authority in Title VI of the Cost Savings
Act shows a Congressional intent that vehicles
not be exempted from the requirements of the theft
prevention standard just because relatively few of
those vehicles are produced or stolen. Accordingly,
the Ferrari comment is not adopted in this final
rule.
B. Performance Standards for Replacement
Parts
Title VI of the Cost Savings Act provides that
PART 541-PRE 18
the theft prevention standard shall apply to re-
placement parts as well as to the original equip-
ment parts. Section 602(d)(2) specifies that the
standard may not require identification of any
replacement part which is not designed as a re-
placement for a covered major part required to be
identified under the standard. It further provides
that the standard can not require the inscribing
or affixing of any identification other than a sym-
bol identifying the manufacturer and a common
symbol identifying the part as a major replace-
ment part. The legislative history notes that the
marking for replacement parts "could be a manu-
facturer's logo with the initial "R" for replacement
part affixed or inscribed on the part." H. Rept. at
12. To implement these requirements, the NPRM
proposed the following requirements.
1. Number or Symbol to be Used and Location
of the Marking.
The agency proposed that the replacement parts
be marked with the manufacturer's logo and the
"R", precisely as Congress had suggested. These
markings were required to be at least one cm in
height, as compared with the 4 millimeter height
proposed for original equipment parts marking.
In response to the proposed requirements, both
Ford and GM asked why the minimum size for
the replacement part identification was larger
than that proposed for original equipment part
identification. The larger markings were proposed
for replacement parts than original equipment
parts because of the different information being
marked on the parts. Original equipment parts
will be identified with the VIN. Experience has
shown that markings which are 3/32 of an inch
have been readily legible for investigators. Re-
placement parts will only be identified with the
letter R and the manufacturer's logo. NHTSA
proposed the one cm minimum height for these
markings so that the logo would be more clearly
identifiable and more difficult to counterfeit.
These replacement part markings would have to
meet the same performance requirements as orig-
inal equipment parts.
NHTSA believes the replacement parts marking
is especially important. Numerous commenters at
the public hearing on December 6 and 7, 1984,
noted that the theft prevention standard is only
as good as the replacement parts marking standard,
because chop shops and other motor vehicle
thieves will try to obliterate the VIN markings
from original equipment parts and to replace those
VIN's with counterfeit logos and "R" designations.
It seems far easier to counterfeit a single letter
and logo than to counterfeit a new VIN marking
for each stolen part. Therefore, this rule adopts
the proposed one cm minimum height requirement
for replacement part markings.
Both the Auto Internacional Association and the
Specialty Equipment Market Association com-
mented that the manufacturer of the replacement
part should not be required to mark its logo on
the replacement part. Instead, these commenters
asserted that the manufacturer's initials should
be required, since those would also identify the
manufacturer and would be required to be perma-
nent, tamper-resistant, etc.
NHTSA is not persuaded by these comments.
The manufacturer's logo is more distinctive and
more difficult to counterfeit than simple initials
would be. If thieves can successfully obliterate the
original VIN markings on stolen parts, it would
be a very simple task to affix or inscribe initials
on the stolen part. Moreover, it would be difficult
for investigators in the field to judge if the initials
represented legitimate markings or were counter-
feit, if the counterfeiting were done with even min-
imal skill. Logos, on the other hand, are unique
indentifiers of each manufacturer and will be
quickly identified by the investigator. Further, a
counterfeited logo should be easier for inves-
tigators to identify than some counterfeited ini-
tials. Accordingly, this final standard retains the
requirement that covered major replacement
parts be marked with the manufacturer's logo and
the letter "R".
CHAT commented that the agency should re-
quire the manufacturers of replacement parts to
register their names, addresses, and logos with
the agency. This, according to CHAT, would help
both NHTSA and law enforcement officers to iden-
tify the replacement part manufacturer from its
logo and to verify that the logo was valid. Regard-
less of the merits of this suggestion, it is outside
the scope of this rulemaking. However, should ex-
perience with this standard indicate that trained
theft investigators are unable to identify or verify
logos without a central registry, the agency would
consider whether it ought to initiate rulemaking
to require this sort of registration.
The NPRM proposed that the logo marked on
PART 541-PRE 19
the replacement part be that of the part's manufac-
turer. VW asked that this be modified to specify
that the logo be either that of the part's fabricator
or that of the vehicle manufacturer for which the
part is made, at the vehicle manufacturer's option.
This comment relates to the common practice of
vehicle manufacturers of leasing out the molds
used to make the major parts of their vehicles to
another party. That other party then produces the
parts using the manufacturer's mold. The parts
are then marketed as replacement parts made by
the vehicle manufacturer.
NHTSA did not intend to disturb this practice,
nor did it intend to require that parts made for a
manufacturer by an agreement with a third party
be identified as parts not actually made by the
vehicle manufacturer. Accordingly, for the pur-
poses of this theft prevention standard, the manu-
facturer of a replacement part will be considered
to be either the actual fabricator of that part or
the party that provides the fabricator with the
mold used to make that part and markets the
replacement part as its own. The question of which
of these two parties is the manufacturer for the
purposes of this standard is left to those parties
to decide, through contract or other agreement.
Whichever party agrees to be the manufacturer
of the replacement part will be responsible for en-
suring that the markings on the part comply with
this performance standard, and must certify that
compliance. If neither party elects to be the manu-
facturer of the replacement part, the party that
markets the replacement part as its product will
be responsible for certifying that the part complies
with this standard.
GM commented that the NPRM should be modi-
fied to permit the use of labels for replacement
part marking. Both the NPRM and this final rule
allow manufacturers to label the markings on
replacement parts, provided that the labels satisfy
the performance criteria. Honda and Jaguar both
stated that they will have to inscribe the markings
on their replacement parts, to allow for painting
and rustproofing. This may well be true, but the
standard does not require it. If these manufac-
turers can devise a way to protect the labels during
painting and rustproofing, and satisfy the other
performance requirements, they are free to use
labels. However, they may inscribe the parts, if
they determine that to be the easiest means of
complying with the standard.
Mazda stated that its replacement parts are
shipped just primed, and the part must be painted
and rustproofed by the dealer before it is installed
on a vehicle. Mazda noted that the markings may
not be clearly visible after these operations have
been performed on the replacement part. There-
fore, Mazda suggested that the proposed require-
ment that replacement part markings be protected
from damage during maintenance and repair be
modified to require such protection "to the
maximum extent possible".
NHTSA has not adopted this comment in this
final rule. As noted above, many commenters at
the public hearing stated that this theft preven-
tion standard will only be as effective as the re-
placement parts marking requirement. NHTSA
concurs in that judgment. If the theft standard
were to allow replacement part markings not to
be clearly visible to invesigators, those inves-
tigators would have no way of determining if the
marking had been obliterated during normal
maintenance and repair or if it had been obliterated
by thieves. This would offer a loophole in the
standard for the unscrupulous. Since NHTSA
strongly believes no such loophole should exist, it
did not adopt the Mazda comment.
VW commented likewise that replacement parts
are shipped either unpainted or just primed, and
must be painted and rustproofed by the entity that
installs the part. VW stated that in some cases
"the agency must recognize that it may not be
possible to maintain the label." VW must recognize
that it cannot certify compliance with this theft
prevention standard for its replacement parts, un-
less it can certify that the marking of those parts
will remain permanently attached to the part and
will be clearly visible after normal dealer prepara-
tion of the replacement part, which includes paint-
ing and rustproofing. If VW cannot devise a
method that will enable it to certify such com-
pliance using labels, it will have to use some other
means of marking those replacement parts, such
as stamping or etching.
Both Saab and Mazda asked the agency to con-
firm that it was acceptable under the provisions
of this theft standard for a manufacturer to mark
all of its covered major parts with the replacement
part markings. Those parts then used as original
equipment parts would also be marked with the
VIN for the vehicle on which they were used. It
was asserted that these "dual markings" would
PART 541-PRE 20
greatly simplify the manufacturer's task and re-
duce its costs for complying with this standard.
NHTSA agrees that such dual markings would
be simpler for vehicle manufacturers, but the
agency cannot allow such dual markings under
the theft prevention standard. Dual markings
would give thieves the opportunity to present
stolen original equipment parts as properly
marked replacement parts. Once the original
equipment part identification (the VIN) had been
obliterated from those stolen parts, a legitimate
replacement part marking would remain. Assum-
ing that the obliteration of the VIN were per-
formed reasonably proficiently, repair shops and
investigators would have little reason to suspect
that this part was anything other than a properly
identified replacement part. This would not serve
the purpose of the Theft Act of "decreasing the
ease with which certain stolen vehicles and their
major parts can be fenced". H. Rept. at 2. To make
this absolutely clear, this final rule incorporates
a provision prohibiting manufacturers from mark-
ing a part both as an original equipment part and
as a replacement part.
Saab also commented that replacement parts
should only have to be marked while the high theft
line the parts are designed to fit is in production.
This suggestion has not been adopted. The re-
placement parts will be designed to fit vehicles
which have been selected as high theft lines. All
available evidence suggests that cars which are
subject to high theft rates remain so for a signifi-
cant period of time. If markings are not required
on replacement parts after the manufacturer has
ceased production of the corresponding high theft
line, thieves could steal those cars and chop the
cars into parts. The chop shops could devote their
cunning and energy to obliterating the original
equipment marking on those parts, and then sell
the parts as replacement parts. Since replacement
parts for these cars would no longer have to be
marked by the manufacturer, the chop shops
would not have to bother counterfeiting the re-
placement part marking. The absence of this
marking would give less notice to both repair
shops and investigators that the parts were, in
fact, stolen. Allowing this would be inconsistent
with the purposes of the Theft Act. Accordingly,
it is not permitted under this final theft prevention
standard. Once a line is selected as a high theft
line, each covered major replacement part designed
for use on that line must be identified as a replace-
ment part. That requirement remains in effect as
long as those replacement parts are produced.
With respect to the location of the replacement
part markings, the NPRM proposed that those
markings be placed in the same size target area
as was proposed for original equipment parts (5
cm X 5 cm) and that this target area be 15 cm
away from the target area for original equipment
parts. The reasons for proposing the target area
were the same two explained above for original
equipment parts. Briefly repeated, a target area
would alert an investigator as to precisely where
he or she should examine the part for the marking
and it would ensure that a thief could not obliter-
ate a legitimate marking and place a counterfeit
marking on top of the obliterated area, in an effort
to hide the obliterated legitimate marking.
The comments on the proposed 5 cm X 5 cm X
5 cm target area for replacement parts were very
similar to those for the same target area for orig-
inal equipment parts, i.e., the area was too small.
NHTSA is adopting a less restrictive target area
which will achieve the same goals as the proposed
target area, but do so in a less burdensome man-
ner. As explained above, the vehicle manufac-
turers will now be required to designate a target
area not to exceed 50 percent of the surface area
on the surface for the original equipment parts to
be marked with the VIN. Each of those vehicle
manufacturers are also the major producers of re-
placement parts for their vehicles. Accordingly, in
conjunction with the target area designations for
original equipment parts, those manufacturers
will also designate a target area for replacement
parts.
There are two limitations on the designation of
the target area for replacement parts, to ensure
that there will be an adequate separation between
the original equipment part markings and the re-
placement part markings. First, the target area
for replacement parts may not exceed 25 percent
of surface area on the surface of the part where
the replacement marking will appear. If both the
original equipment marking target area and the
replacement part marking target area were 50
percent of the surface area of the part, and the
target areas were on the same surface of the part,
the boundaries of the two target areas would touch
each other. This would not result in any significant
separation of the target areas. Accordingly, one of
PART 541-PRE 21
the target areas must be less than 50 percent of
the surface area of the part. NHTSA beHeves it is
more appropriate to Hmit the size of the target
area for replacement part marking. This is be-
cause replacement part marking will not be done
on an assembled vehicle, but will be done on the
individual part. This makes it easier to position
the marking more precisely.
Second, the target area for replacement parts
must be at least 10 cm at all points from the target
area for original equipment parts. NHTSA be-
lieves it is vitally important that investigators be
able to see the area in which a thief may have
attempted to obliterate an identification marking.
This would not be feasible if those thieves could
remove an original equipment part label and then
apply a replacement part label over the same area.
Therefore, the agency has concluded that there
must be an adequate separation of the areas in
which original equipment and replacement parts
will be marked.
A 15 cm separation was proposed to ensure that,
even if a manufacturer slightly missed the 5 cm
X 5 cm target area, the investigators in the field
would have a chance to examine the target area
in which a marking may have been obliterated.
In response to that proposed requirement,
Chrysler commented that a 15 cm separation
might eliminate locations for replacement parts
marking which would be optimal for visibility or
protection of the marking. Jaguar stated that the
proposed 15 cm separation could prove unduly re-
strictive to manufacturers, without furthering the
agency's purpose. Jaguar suggested that a 5 cm
separation would serve the same purpose in a less
restrictive manner.
NHTSA believes that the greatly enlarged
target areas in this final rule respond to both these
commenters' concerns. Moreover, the required
separation has also been lessened to 10 cm in re-
sponse to these concerns. A further reduction to
Jaguar's suggested 5 cm would make it more dif-
ficult for investigators to quickly determine that
a part was not marked within a designated target
area, and would increase the chances for a thief
to successfully hide the removal of a proper iden-
tification and the application of a counterfeit one.
In NHTSA's judgment, the 10 cm separation re-
flects the best balance between its need to ensure
adequate separation of the markings and its desire
to give the manufacturers as much flexibility as
possible in complying with this standard.
The Specialty Equipment Market Association
and the Auto Internacional Association com-
mented that this final rule ought to include a pro-
vision to allow replacement parts manufacturers
to object to the target areas designated by the
original vehicle manufacturer. No such provision
is included in this rule, because NHTSA has con-
cluded that such a provision is unnecessary. The
covered major parts specified in this theft preven-
tion standard do not include parts such as oil fil-
ters and air filters which are made by many manu-
facturers for a particular vehicle. The original veh-
icle manufacturers produce the majority of the
covered major replacement parts, and most of
those which are not produced by the original
vehicle manufacturers are made by parties that
have leased the original manufacturer's molds for
those parts. Thus, the original vehicle manufac-
turers have no reason to select target areas for
replacement parts marking that will make it dif-
ficult for them or their lessors to properly mark
the part. In fact, those manufacturers have every
incentive to ensure that the target area will meet
the performance criteria of this standard and
allow easy access to the party applying the mark-
ing.
2. Cost Limitations of the Replacement Part
Standard.
Section 604(a)(2) of the Cost Savings Act limits
the costs which may be imposed on replacement
parts manufacturers by the marking require-
ments of this standard, in that those requirements
"may not impose costs upon any manufacturer of
major replacement parts to comply with such
standard in excess of such reasonable lesser
amount per major replacement part as the Secre-
tary specifies in such standard." The NPRM noted
the diflerence between this per part cost limitation
and the specific $15 per vehicle cost limitation for
marking the original equipment parts. The agency
believes these differing statutory requirements re-
flect the difference in economies of scale for orig-
inal equipment parts manufacturers and replace-
ment parts manufacturers. The amount specified
in this standard for replacement parts would be
adjusted for inflation in the same manner as the
$15 per car cost limitation.
The NPRM solicited comment on what "reason-
able lesser amount" should be specified, and spe-
cifically asked for comments on levels of $1 and
PART 541-PRE 22
$5 per part. The Specialty Equipment Market
Association and the Auto Internacional Associa-
tion suggested a complex formula for determining
the reasonable lesser amount. They urged the
agency to determine the relationship between $15
and the price of the vehicle for which the parts
are made. That percentage of $15 should be
adopted as the limit for all 14 replacement parts,
and one-fourteenth of that number would be the
maximum cost that could be added by the marking
requirements for an individual part. For example,
if a new vehicle sold for $15,000, the $15 cost limit
would represent 0.1 percent of the cost of the
vehicle. Under this suggested formula, the total
cost for marking all 14 replacement parts would
be limited to 1.5 cents. Each part could cost no
more 0.1 cent to mark.
The agency has not adopted this formula in this
final rule. It would result in no replacement parts
being marked, and would directly contradict the
explicit requirements of, and intent underlying,
the Theft Act. If this suggested formula were not
adopted in the theft prevention standard, these
commenters asked the agency not to specify any
cost limit for marking replacement parts. This
course of action is not possible because section
604(a)(2) of the Cost Savings Act explicitly re-
quires the agency to specify a cost limit for the
marking of replacement parts in the theft preven-
tion standard.
CHAT commented that the suggested $5 limit
for marking replacement parts seemed to be an
excessive cost to impose on manufacturers. At the
same time, CHAT said that the suggested $1 level
might be too restrictive for marking purposes,
since these manufacturers would not have the
economies of scale the vehicle manufacturers
would have. CHAT stated that NHTSA should
specify a cost limit of $2 or $3 for marking a re-
placement part. Ford stated its belief that a $1
limit for marking a replacement part was reason-
able. GM commented that manufacturers should
not be required to incur costs of more than $1 to
mark a replacement part, and that the suggested
$5 limit per part was excessive.
The agency has reexamined this question in
light of these comments. NHTSA has concluded
that setting a cost limit of $1 to mark replacement
parts would be unreasonably restrictive. The
statutory limit of $15 to mark 14 covered parts on
a vehicle in effect allows an average cost of $1.07
per part. Setting a $1 limit for the costs of marking
replacement parts would require that it cost less
to mark those parts than Congress allowed for
original equipment parts. In fact, the cost of mark-
ing replacement parts will be greater than the
costs of marking original equipment parts, be-
cause of the lesser economies of scale the replace-
ment parts manufacturers experience. Further,
some parts may cost more than others to mark
because of individual characteristics, such as the
geometry of the part and its ability to withstand
stamping loads. A cost limit of $1 per replacement
part would force the agency to revise the standard
to allow the manufacturers to mark these more
costly parts for less than the cost limit. Accord-
ingly, this limit has been rejected as unreasonably
low.
As noted above, the agency believes that re-
placement parts marking is crucial if this standard
is to be effective. The replacement parts markings
required in this standard are exactly those sug-
gested in the legislative history. NHTSA has con-
cluded that a lessening of these markings would
undermine the purpose of those markings, by
making it simpler for thieves to falsely mark stolen
parts as legitimate replacement parts. Because
this standard is directed at very sophisticated
criminal enterprises, it must give investigators
every opportunity to detect counterfeit markings.
Fewer markings make it easier for a criminal to
apply counterfeit markings which appear to be
legitimate, and give investigators less of an oppor-
tunity to detect the counterfeit nature of those
markings. Therefore, NHTSA believes it would be
inconsistent with the intent of the Theft Act to
specify a cost limit for these markings that could
not be met by each replacement parts manufacturer.
As with the $15 cost limit to mark the parts on
a new vehicle, NHTSA has no authority to exempt
a manufacturer or particular parts from the re-
placement parts marking requirement because of
an inability to comply with these requirements by
some reasonable means at a cost of this specified
limit or less. If a replacement parts manufacturer
can show that it is unable to reasonably comply
with these markings requirements within such
limit for any covered part, the marking require-
ments of the standard will have to be amended to
permit each replacement parts manufacturer to
mark each covered major replacement part for the
specified limit.
The information currently available to the
agency indicates that it could cost a low volume
PART 541-PRE 23
manufacturer or importer of replacement parts as
much as $3.96 to mark certain replacement parts.
Accordingly, if the cost limit for marking replace-
ment parts were set below this level, the require-
ments for such markings would have to be made
less stringent, and NHTSA believes this would be
inconsistent with the purposes of the Theft Act.
To allow for possible error in this agency estimate,
this final rule establishes a cost limit of $5 (in
1984 dollars) for marking replacement parts.
NHTSA believes this amount is a "reasonable
lesser amount" than $15. The cost to vehicle manu-
facturers to mark these parts will be well under
$1 for each replacement part, and these manufac-
turers are the source of the vast majority of re-
placement parts. All available information to the
agency indicates that the vehicle manufacturers
will not approach this cost limit. As stated above,
the limit is directed at the reasonable costs which
will be incurred by the smallest manufacturers
and importers. These replacement parts are gen-
erally chosen by vehicle owoiers because they cost
significantly less than those same parts produced
by the vehicle manufacturers and the large re-
placement parts manufacturers. A $5 price in-
crease for the replacement parts produced by the
smallest manufacturers and importers will not sig-
nificantly reduce the demand for their products,
because the major replacement parts covered by
this standard are very expensive parts and usually
have large retail price mark-ups. Further, the
specialty cars for which most of the smaller entities
produce major replacement parts generally cannot
get parts from junk yards or other salvage opera-
tions. This leaves the parts manufacturers with a
virtual monopoly on the replacement parts market.
Appendices Setting Forth Lines Selected as
High Theft Lines and the Criteria Considered in
Selecting High Theft Lines.
The NPRM explained how the agency would
select lines as high theft lines. Since then, NHTSA
has published a final rule setting forth the pro-
cedures for selecting high theft lines from those
lines introduced after January 1, 1983 ( 50 FR 3483;
August 28, 1985) and theft data for lines intro-
duced before January 1, 1983 (50 FR 18708; May
2, 1985, 50 FR 32871; August 15, 1985). The issues
associated with those selections have been dis-
cussed at length in those notices and need not be
repeated herein.
Appendix A in the NPRM was proposed simply
to create a place for listing the lines which would
be selected as high theft lines. No commenters
suggested any reasons for not including such an
appendix to this theft prevention standard.
Accordingly, it is included in this final standard.
Proposed Appendix B listed the criteria the
agency would consider in limiting to 14 the number
of lines introduced by an individual manufacturer
before the effective date of the theft prevention
standard that may be selected as high theft lines
because of actual or likely high theft rates. This
limitation is set forth in section 603(a)(3) of the
Cost Savings Act. As announced in the August 28,
1985 notice establishing the final rule for the selec-
tion of high theft lines, one of the proposed criteria
for that appendix has not been adopted in this
theft prevention standard. It was proposed that a
manufacturer's plans for installation of an original
equipment anti-theft device in a line would be con-
sidered as a factor militating against choosing that
line as one of the 14 to be subject to this theft
prevention standard. As explained at 50 FR 34834-
34835, NHTSA has concluded that it would be
inappropriate to consider such plans to lessen the
possibility of a line being chosen as one of the 14
subject to the standard. All the other parts of Ap-
pendix B have been adopted as proposed in the
NPRM.
Proposed Appendix C contained criteria for
selecting likely high theft lines from those lines
introduced after January 1, 1983. Since no com-
menters objected to these criteria, they are
adopted as proposed.
Certification of Compliance with the Theft Pre-
vention Standard.
Section 606(c)(1) of the Cost Savings Act [15
U.S.C. 2026(c)(1)] provides that "[ejvery manufac-
turer of a motor vehicle subject to the standard ...
and every manu facturer of any major replacement
part subject to such standard, shall furnish at the
time of delivery of such vehicle or part a certifica-
tion that such vehicle or replacement part con-
forms to the applicable motor vehicle theft preven-
tion standard." It further provides that NHTSA
may issue rules prescribing the manner and form
of such certification.
Section 607(a) of the Cost Savings Act prohibits
any person from importing into the United States
any motor vehicle or part covered by this standard,
unless it is in conformity with the standard. The
House Committee Report states that "[a]ny motor
PART 541-PRE 24
vehicle not in compliance will be refused admis-
sion into the United States." H. Rept. at 18. On
that same page of the report, NHTSA is directed
to take "into consideration its present certification
practices in the case of safety" in determining the
method and form of certification for the theft pre-
vention standard.
A. Who May Certify
As noted above, Title VI of the Cost Savings Act
requires every "manufacturer" to certify that its
motor vehicles and/or covered major parts comply
with the requirements of this standard. The term
manufacturer is defined in section 2(7) of the Cost
Savings Act [15 U.S.C. 1901(7)] as "any person en-
gaged in the manufacturing or assembling of pass-
enger motor vehicles or passenger motor vehicle
equipment including any person importing motor
vehicles or motor vehicle equipment for resale."
Because of concerns about maintaining the sec-
urity of marking technologies and about enforce-
ment of this standard, the question which arises
is whether each and every "manufacturer", as that
term is defined in section 2( 7), should be permitted
to certify that a motor vehicle or part complies
with the requirements of this theft prevention
standard.
This question arises primarily in connection
with "direct importers". These direct importers are
individuals and commercial enterprises which ob-
tain foreign cars not originally manufactured for
sale in the United States, bring them into this
country, and modify them so that they can be cer-
tified as being in compliance with the U.S. vehicle
safety, emissions, and bumper standards. Under
the Federal statutes mandating the vehicle safety,
emissions, and bumper standards (15 U.S.C.
1397(b)(3), 42 U.S.C. 7522(b)(2), and 15 U.S.C.
1916(b)(3)) and the implementing regulations (19
CFR 12.73 and 12.80), vehicles not in compliance
with those standards may be brought into this
country under bond. The bond is released when a
statement is submitted showing that the neces-
sary modifications to achieve compliance with
those standards have been made. However, Title
VI of the Cost Savings Act does not specifically
provide for the importation of noncomplying veh-
icles under bond. Therefore, all vehicles must be
certified as complying with requirements of this
theft prevention standard before they are "im-
ported".
The NPRM proposed to limit those persons who
would be authorized to certify compliance with
the theft prevention standard to a narrower subset
of the universe of "manufacturers". Instead of al-
lowing all persons who are "manufacturers"
within the meaning of section 2(7) (both direct
importers and original manufacturers of the veh-
icles and parts) to certify compliance with the re-
quirements of the theft prevention standard, the
NPRM proposed to limit access to marking techol-
ogy by providing that only original manufacturers
of the vehicles and parts would be allowed to cer-
tify such compliance.
The language of Title VI and its legislative his-
tory neither expressly endorses nor repudiates the
definition of "manufacturer" in section 2(7). On
the one hand, certain portions of Title VI seem to
indicate that Congress did not contemplate that
direct importers would be involved in complying
with the theft prevention standard. Section
602( a )( 1 ) provides that the standard applies to "the
covered major parts which are installed by man-
ufacturers into passenger motor vehicles," and
602(d)(1) refers to "major parts installed by the
motor vehicle manufacturer." (Emphasis added to
both). Direct importers may alter, but do not in-
stall major parts. Hence, Congress did not seem
to be specifically referring to direct importers as
manufacturers for purposes of the Theft Act.
Moreover, Senator Percy, the original sponsor of
the Senate version of the anti-theft bill, stated
during the fioor debate that,"[u]nder the bill,
motor vehicle manufacturers would be required
to apply these numbers before each vehicle leaves
the factory." 130 Cong. Rec. S13585, Oct. 4, 1984.
This statement could be viewed as support for the
concept of limiting certification to original manu-
facturers, since direct importers could not apply
numbers before the vehicle leaves the factory.
Additionally, Congress did not explicitly provide
for importing noncompl3ang vehicles under bond,
as it had done for the safety, emissions, and
bumper statutes. Earlier versions of the legisla-
tion which became the Theft Act contained bond-
ing provisions which were dropped before the law's
enactment. The absence of express authority to
"import" noncompl3ang vehicles, particularly
when compared with the presence of such author-
ity under the other statutes requiring Federal
vehicle standards, might be said to suggest that
Congress intended to absolutely prohibit the im-
PART 541-PRE 25
portation of noncomplying vehicles.
On the other hand, Congress amended the gen-
eral definitions in section 2 of the Cost Savings
Act(15 U.S.C. 1901) so that those definitions apply
for the purpose of the Cost Savings Act "(except
title V and except as provided in section 601 of this
Act)". (Emphasis added). In section 601, Congress
set forth the definitions which applied solely for
the purposes of the Theft Act (Title VI of the Cost
Savings Act). However, it did not amend the def-
inition of "manufacturer" set forth in section 2 of
the Cost Savings Act. Had Congress intended to
change the definition of manufacturer to exclude
direct importers, it would presumably have done
so explicitly. This seems particularly true when
Congress did, in section 601, change the definition
of "passenger motor vehicle" set forth in section 2
for the purposes of Title VI of the Cost Savings Act.
Further, the legislative history explicitly stated
that the requirements of the Theft Act were de-
signed to curb motor vehicle thefts "while trying
to minimize regulation of the domestic and foreign
motor vehicle manufacturing industry, including
the aftermarket motor vehicle industry." H. Rept.
at 2. It would appear to be inconsistent with this
stated goal for the Theft Act requirements to force
a small, but recognized, portion of the industry
out of that business.
Since the statutory requirements and legislative
history appear to give conflicting signals as to the
underlying Congressional position on whether
direct importers should be allowed to certify com-
pliance with the requirements of this theft preven-
tion standard, the agency had to determine whether
the policy goals underlying Congressional passage
of the Theft Act would be better served by allowing
or prohibiting certification of compliance by direct
importers. In the NPRM, the agency tentatively
concluded that such certification would be incon-
sistent with the law enforcement goals of the Theft
Act, and proposed to limit certification of com-
pliance with the requirements of this theft preven-
tion standard to original vehicle manufacturers
and major replacement part manufacturers.
This proposal was explained at length at 50 FR
19738-19740, and need not be repeated herein.
However, NHTSA was sensitive to the economic
consequences for direct importers if the theft
prevention standard were to prevent their impor-
tation of high theft lines, by barring them from
certifying the compliance of those vehicles. Accord-
ingly, the NPRM asked for comments on whether
there was some scheme consistent with the Theft
Act that would permit direct importers to certify
compliance with this theft prevention standard,
without impeding the enforcement of this standard.
In response to this proposal and request for com-
ments, NHTSA received numerous and voluminous
comments on this proposed limitation. Many form
letters were submitted by direct importers, oppos-
ing the proposed limitation, and by law enforce-
ment groups supporting the proposed limitation.
Original vehicle manufacturers unanimously
supported the proposed limitation, and the
strongest supporters of that proposal were the
foreign manufacturers. These comments ampli-
fied the practical enforcement difficulties and sub-
stantially reduced effectiveness of the marking
requirements which they believed would ensue
if direct importers were allowed to mark vehicles.
CHAT commented that the security problems
associated with the marking technologies would
expand considerably if each direct importer had
access to those technologies, and supported the
proposed limitation. The National Automobile
Dealers Association agreed with the proposed
limitation, and emphasized the "serious problems
for franchised dealers" which have arisen in con-
nection with vehicles imported by the direct impor-
ters.
An association of direct importers, the Auto-
mobile Importers Compliance Association,
strongly opposed the proposed limitation, arguing
that if Congress had intended to limit certification
authority to original manufacturers, it would have
done so explicitly. That group suggested what it
felt were a number of ways in which direct impor-
ters could be allowed to certify compliance with
the theft prevention standard without sacrificing
the law enforcement objectives of that standard.
These included controlled labeling, in which only
one party would obtain the labels to be affixed to
direct imports and would distribute these labels
to the direct importers once the direct importer
had shown proper credentials for the labels. Alter-
natively, that group suggested that all direct im-
port vehicles be exempted from the marking re-
quirements of this standard, on condition that the
vehicles all be equipped with original equipment
anti-theft devices. This suggestion arose from the
agency's authority to exempt lines from the mark-
ing requirements, under section 605(a)(1) of the
Cost Savings Act, if the agency determines that
the original equipment anti-theft devices on those
PART 541-PRE 26
lines are likely to be as effective as parts marking
in reducing and deterring vehicle thefts. Finally,
this group indicated its belief that "NHTSA has
inherent authority to establish limited exemptions
from (the theft prevention standard's) require-
ments to assure reasonableness and practicabil-
ity." The group urged NHTSA to use this inherent
authority to exempt direct importer's vehicles
from the requirements of the theft prevention
standard.
The Justice Department (DOJ) also objected to
the proposal to allow only original manufacturers
to certify compliance with the theft prevention
standard. DOJ stated its belief that the benefits
associated with prohibiting direct importers from
marking vehicles would be significantly out-
weighed by the consumer costs resulting from such
a prohibition. Absent a clear Congressional direc-
tive to eliminate certification by direct importers,
and in consideration of the "significant negative
economic impact" which would be associated with
NHTSAs proposed limitation of certification au-
thority, DOJ suggested that NHTSA should not
adopt its proposed limitation.
DOJ agreed with NHTSA that access to marking
technologies should be carefully controlled, in
order to serve the law enforcement objectives of
the Theft Act. DOJ observed that it may be better
from a law enforcement standpoint if the markings
by direct importers were done in the U.S., since
such marking operations could be better moni-
tored. Accordingly, DOJ stated that NHTSA
should use its administrative discretion to admit
non- complying vehicles under bond, and allow
the theft prevention standard's markings to be
done at the same time as the modification of the
vehicle so that it satisfies the requirements of the
vehicle safety and emissions standards. To ensure
the effectiveness of the theft prevention standard,
DOJ suggested that four additional limitations be
placed on direct importers for purposes of the theft
prevention standard. These were:
(!) All direct importers would be required to re-
gister with NHTSA;
(2) Direct importers must use a numbering sys-
tem for parts that will uniquely identify both the
vehicle parts and the importer. They suggested
the use of the Euro-VIN with a prefix code and
logo to identify the direct importer;
(3) Direct importers should not be allowed to
use labels, since that might present special sec-
urity problems; and
(4) Direct importers would be required to main-
tain the records required of all manufacturers
under section 606(a) of the Cost Savings Act.
With these additional requirements, DOJ be-
lieved that the theft prevention standard would
be effective for law enforcement purposes while
not banning direct imports of high theft lines.
In response to these comments, NHTSA has
thoroughly reexamined this subject. The agency
has concluded that this regulation should not pro-
hibit direct imports of vehicles. Accordingly, this
final rule allows all entities which are "manufac-
turers" within the meaning of the Cost Savings
Act to certify compliance with the requirements
of this standard. This is consistent with existing
practice under the Safety Act, the Clean Air Act,
and Title I of the Cost Savings Act.
However, NHTSA also believes that the
rulemaking record supports its policy concerns
about the security of the marking technologies and
the enforcement of this standard. The lengthy dis-
cussion in the NPRM shows why the issue of direct
imports poses special problems for achieving the
law enforcement purposes of the Theft Act. Accord-
ingly, this theft prevention standard sets forth the
following special provisions for the purposes of
certification of compliance by direct importers.
1. Direct imports must be marked with the Euro-
VIN.
As noted above, the NCIC computer system for
recording and tracking stolen vehicles is set up so
that it requires the entry of a full 17-character
U.S. VIN. Thus, at first glance, it would seem to
be most useful for law enforcement purposes if
these vehicles were assigned a U.S. VIN. However,
the NPRM sought comments on the use of Euro-
VINs for marking direct imports subject to the
requirements of this theft prevention standard,
because of the problems which might be associated
with direct importers assigning U.S. VINs to these
vehicles.
The NATB stated that there are reported in-
stances under the current VIN regulations where
a direct importer has assigned and affixed new
17-character U.S. type VINs to vehicles with Euro-
VINs. "Homemade" VINs give all appearances of
having been actually assigned by the vehicle man-
ufacturer, but were actually assigned by the direct
importer, without identifying the direct importer.
Such "homemade" VINs assign the proper charac-
ters to accurately identify the actual manufacturer
PART 541-PRE 27
of the vehicle. Most even include an accurate
check-digit, so it is not apparent that they are
"homemade". However, according to NATB, such
"homemade" VINs present law enforcement offic-
ers with the situation where a vehicle cannot be
traced ( or its production verified ) either to the orig-
inal manufacturer or to the direct importer. This
substantially negates one of the main purposes of
the VIN. NATB concluded its comment on this
point by repeating its preference for a full 17-
character VIN, but stated that vehicles with accu-
rate Euro- VINs could be traced to the actual man-
ufacturer and have the production verified, albeit
with additional effort and time delays. Since this
could not be done with "homemade" U.S. VINs,
NATB urged this agency to require the use of
Euro-VINs by direct importers.
NHTSA is persuaded by this comment. While
the NCIC tracking system could more readily
handle full 17-character VINs, the usefulness of
those VINs would be substantially diminished if
they do not allow law enforcement personnel to
trace the vehicle to its manufacturer. The Euro-
VINs are more difficult for the NCIC to enter, but
will serve to trace the vehicle to its manufacturer.
Further, if the agency were to permit or require
assigning U.S. VINs by direct importers, such
"homemade" VINs would not be recorded by the
manufacturer as assigned. This could result in a
situation where a VIN was assigned to two differ-
ent vehicles (once by the vehicle manufacturer and
once by the direct importer). Duplicative VINs
would completely fail to serve the purpose of pro-
viding a unique identifier for a vehicle for 30 years.
Therefore, NHTSA has determined that vehicles
imported by direct importers should be marked
with the original Euro- VIN assigned to the vehicle
by the original manufacturer.
2. Direct imports must have the markings
inscribed on the parts.
The 3M Corporation's representatives have re-
peatedly expressed their concerns that producers
of security labeling technology, such as 3M, are
able to guarantee the usefulness of their product
only when the distribution of the product can be
tightly controlled. That corporation has stated
that the security labeling system's integrity and
uniqueness will be easily compromised if they are
required to make their security tape more widely
available in the marketplace.
Because of these concerns. DOJ commented that
direct importers should not be permitted to use
labels to mark the parts of their vehicles. Accord-
ing to those comments, "It is reasonable to impose
some additional costs on importers to prevent the
security risks perceived in a wide availability of
labeling technology."
The Automobile Importers Compliance Associa-
tion acknowledged in its comments that it was
necessary to reduce the number of parties in pos-
session of all or some part of the security marking
technologies, and suggested that a procedure be
set up whereby one party would secure and dis-
tribute labels to direct importers. That group
suggested that either it or the Department of
Transportation should be the party that secures
and distributes those labels.
NHTSA has not adopted the suggested pro-
cedure for having one party secure and distribute
labels to all direct importers. It would be inap-
propiate for the Department to perform this func-
tion, for the reasons stated in the NPRM. Briefly
repeated, such a procedure would differ radically
from practices under the Safety Act, and the legis-
lative history of the Theft Act directs NHTSA,
when establishing procedures for certification, to
"take into consideration its present certification
practices in the case of safety." H. Rept. at 18. No
resources are available for establishing such a pro-
cedure in the agency's budget, and the agency does
not believe it should seek an increase in its budget
to allow it to become involved in the certification
of vehicles.
The agency also believes it would be inappro-
priate to designate the Automobile Importers
Compliance Association, or any other group of
direct importers, as the sole source of labels for
direct importers' vehicles. By choosing a single
group as the source of labels for all direct impor-
ters, the agency would give it an unintended "gov-
ernment sanction" as the official representative
for all direct importers. Conversely, it would have
the effect of denigrating the standing of any other
direct importers' groups.
In view of these potential problems with desig-
nating some group outside of the Department of
Transportation as the sole source for labels for
direct importers' vehicles, NHTSA has not adopted
this suggested approach.
3M has specifically stated that the usefulness
of their labels can be guaranteed only when the
PART 541-PRE 28
distribution is tightly controlled. If a chop shop or
some other criminal enterprise were to make a
direct import of only one vehicle and were able to
obtain an excess supply of security labels, the in-
tegrity of the labels would be seriously com-
promised. Ifa number ofcriminal enterprises were
to do this, the value of the labels would be even
further diminished. The information currently av-
ailable to the agency suggests that nearly all orig-
inal manufacturers intend to comply with the
parts marking requirements of this theft preven-
tion standard by using those security labels. If
criminal enterprises were able to pose as legiti-
mate direct importers and readily obtain access
to these labels, the security and effectiveness of
these labels on all imported vehicles subject to
this theft prevention standard would be seriously
compromised, or perhaps rendered useless. This
theft prevention standard cannot permit such a
result.
Under general legal principles, the Theft Act
must be interpreted so as to give NHTSA implied
authority to set marking performance require-
ments that are essential to achieve the purposes
of the Theft Act. NHTSA is well aware of the direc-
tive in the legislative history that this is to be a
performance standard, and that the agency is to
establish the "tests or general criteria which the
identification must meet, but not how it is to be
inscribed or affixed". H. Rept. at 10. Clearly each
"manufacturer" was to be allowed to choose how
to comply with the requirements of this theft pre-
vention standard.
However, the agency believes that the require-
ment for a performance standard, read in the con-
text of the Theft Act, means that NHTSA must
draft its requirements as broadly as possible, but
may also be relatively specific if necessary to en-
sure that the Theft Act achieves it purposes. The
Vehicle Safety Act, on which much of this Act is
modeled, contains a similar requirement for per-
formance requirements. The agency has re-
peatedly interpreted the Safety Act in the manner
set forth above.
Moreover, there is a familiar principle of statu-
tory interpretation called "restrictive interpreta-
tion". That principle is explained thusly: "When
the natural or literal meaning of statutory lan-
guage embraces applications which would not
serve the policy or purpose for which the statute
was enacted or help to remedy the mischief at
which it was aimed, the courts may construe it
restrictively in order not to give it an effect beyond
its equity or spirit. ... A restricted interpretation
is usually applied when the effect of a literal inter-
pretation will make for injustice and absurdity .."
A. Sutherland, Statutes and Statutory Construc-
tion, ,^'54.06 (4th ed. CD. Sands 1973). NHTSA
has concluded that the principles of restrictive
interpretation must be applied to this performance
standard requirement as it applies to direct
importers.
According to the legislative history of the Theft
Act, it is:
a comprehensive package of proposals designed
to curb the theft of motor vehicles by preventing
thefts and decreasing the ease with which cer-
tain stolen vehicles and their major parts can
be fenced, while trying to minimize regulation
of the domestic and foreign motor vehicle manu-
facturing industry, including the aftermarket
motor vehicle industry. It also gives law enforce-
ment officials at all levels of government the
much-needed prosecutory tools to crack criminal
theft rings and related racketeering activities.
H. Rept. at 2.
These are truly the essential purposes of the
Theft Act. If criminal elements can readily com-
promise the security and effectiveness of labels,
the essential purposes will not be achieved. There
is no reasonable basis for supposing that Congress
intended the agency to require the original auto-
mobile manufacturers to undertake the perma-
nent identification of the covered major parts on
all their high theft lines, but also to permit the
security and effectiveness of such markings to be
readily compromised.
After considering this analysis, NHTSA believes
that it has authority to require direct importers
to mark their vehicles subject to this theft preven-
tion standard by inscribing the markings on the
covered major parts, and not allowing direct im-
porters to affix the markings on the covered major
parts by means of labels. There are no security
concerns related to the current stamping or etch-
ing technologies, because these are already widely
available. Hence, allowing direct importers to use
such technologies will not reduce the effectiveness
of such markings.
PART 541-PRE 29
This final rule does not adopt DOJ's suggestion
that direct importers be required to mark their
vehicles with a prefix code for the part and the
importer's logo, along with the Euro-VIN. Section
602(d)(1)(A) provides that the theft prevention
standard may not require original equipment
parts to have more than a single identification. In
the case of covered major parts on vehicles im-
ported by direct importers, NHTSA believes that
the most useful single identification will be the
Euro-VIN, as explained above, and that is what
is required in this standard.
The DOJ further suggested that direct importers
be required to stamp those covered major parts
with "positive identification" characters. The
agency has no basis for mandating the use of one
specific means of inscribing the markings made
by direct importers. NHTSA has no data which
show that stamping with "positive identification"
characters will produce markings which are more
difficult to alter or more readily legible for inves-
tigators than markings produced by laser etching,
sandblasting, stamping with different characters,
and so forth. If there were such evidence, it would
perhaps be more appropriate to amend the per-
formance requirements for the markings on all
replacement parts, so that all such parts' mark-
ings would offer these benefits. Accordingly, this
theft prevention standard allows direct importers
to use any means of inscribing markings into the
covered major parts, provided that those markings
comply with the applicable performance require-
ments.
3. The required markings must be inscribed be-
fore the vehicle or parts are "imported into the
United States".
Both DOJ and the Automobile Importers Com-
pliance Association asserted in their comments
that NHTSA has authority under the Theft Act
to allow non-complying vehicles to be imported
under bond and marked so as to comply with the
requirements of this theft prevention standard.
These comments were made in spite of the broad
prohibition of section 607(a)(1) that, "No person
shall ... import into the United States any motor
vehicle subject to the [theft prevention standard],
or any major replacement part subject to such
standard, which is manufactured on or after the
date the [theft prevention standard] takes effect
under this title for such vehicle or major replace-
ment part unless it is in conformity with such
standard." The only exception to this broad pro-
hibition expressed in the Theft Act is in section
607(b), which provides that section 607(a)(1) "shall
not apply to any person who establishes that he
did not have reason to know in the exercise of due
care that the vehicle or replacement part is not
in conformity with an applicable theft prevention
standard."
The agency concludes that it has no authority
to adopt a program to admit noncomplying vehicles
under bond, for essentially the same reasons as it
reached that tentative conclusion in the NPRM.
Congress expressly granted the agency such
authority in Title I of the Cost Savings Act (15
U.S.C. 1916 ) and in the National Traffic and IMotor
Vehicle Safety Act (15 U.S.C. 1397), but did not
grant such authority in Title VI of the Cost Savings
Act, relating to the theft prevention standard. The
legislative history of the Theft Act referred to the
agency's procedures for certification under the Na-
tional Traffic and IMotor Vehicle Safety Act, which
contains an express provision authorizing the
agency to admit non-complying vehicles under
bond. IMoreover, earlier versions of the bill which
ultimately became the Theft Act contained bond-
ing provisions, but those provisions were dropped
from the final bill. For these reasons, NHTSA
concludes that Congress did not intend bonding
procedures to be used in connection with this
standard.
NHTSA would like to emphasize that it is
unaware of any policy reason why a program to
admit noncomplying vehicles under bond, which
is appropriate in the case of the National Traffic
and Motor Vehicle Safety Act, the Clean Air Act,
and Title I of the Cost Savings Act, should not be
permitted under the Theft Act. The agency cannot
dispute DOJ's comment that: "If an unsafe or pol-
luting car can be admitted under bond, it is hard
to find a public policy justification for irrevocably
banning a car lacking $15 theft prevention mark-
ings." It would be simpler and more efficient for
the direct importers if they were allowed to have
the required theft prevention markings inscribed
in the U.S. at the same time as the vehicle was
being modified to comply with the Federal
bumper, safety, and emissions standards. Pro-
hibiting theft prevention markings from being in-
scribed in the U.S. could encourage more of the
required modifications work, with the associated
PART 541-PRE 30
jobs, to be shifted overseas. Even without consid-
ering the negative effects that this possible shift
could have on U.S. employment and balance of
trade, there would be a small positive impact on
U.S. employment and balance of trade if the neces-
sary markings were inscribed after the vehicle was
admitted into the U.S. under bond. Notwithstand-
ing these advantages, the agency is constrained
from implementing any bonding program by the
Theft Act, as explained above.
The Automobile Importers Compliance Associa-
tion also raised the issue of when a vehicle is im-
ported into the United States. That group asserted
that vehicles admitted under bond are not "im-
ported" until that bond has been released. To re-
solve this issue, NHTSA obtained a legal opinion
from the Chief Counsel of the United States Cus-
toms Service as to when a vehicle is considered
"imported" into the United States. A copy of this
letter is available in the docket.
The Customs Service stated that, as a general
rule, a vehicle is imported as soon as it enters the
customs territory of the United States with the
intent by the importer that it remain within the
customs territory. Hence, vehicles imported under
bond are imported before that bond is liquidated.
The Automobile Importers Compliance Associa-
tion further commented that vehicles entering
foreign-trade zones in the United States would
not be "imported" until the vehicles leave such a
zone to enter the customs territory of the United
States. Foreign-trade zones may be established in
or adjacent to ports of entry under the jurisdiction
of the United States, and are not deemed to be
within the customs territory of the United States.
See 19 U.S.C. 81a et seq. and 19 CFR Part 146.
Under this reasoning, the commenter stated its
belief that direct importers could, consistent with
the provisions of section 607 of the Cost Savings
Act (15 U.S.C. 2027), bring vehicles directly into
foreign-trade zones, make the necessary markings
while the vehicles were inside the zones, and then
formally bring the vehicles into the customs territ-
ory of the United States.
In a separate opinion from the Customs Service,
also available in the public docket, that agency
stated that "this suggestion on the part of the im-
porters is clearly incorrect. Foreign merchandise
brought into a foreign-trade zone in the United
States is indeed imported for Customs purposes."
Accordingly, the required markings must be in-
scribed onto directly imported vehicles before
those vehicles are brought into the customs territ-
ory of the United States or a foreign-trade zone.
The U.S. Customs Service will be the agency
enforcing the Theft Act's prohibition against im-
porting noncomplying vehicles and parts, just as
that agency enforces all other statutory prohibi-
tions against importing noncomplying vehicles
and items of motor vehicle equipment. Therefore,
any further questions about when a product is
"imported" into the United States should be ad-
dressed to the U.S. Customs Service. Their ad-
dress is: Office of the Chief Counsel, United States
Customs Service, 1301 Constitution Avenue, N.W.,
Washington, D.C. 20229.
NHTSA has not adopted the Automobile Impor-
ters Compliance Association suggestions that all
direct imports be excluded from the requirements
of this standard on condition that they install an
original equipment anti-theft device or that all
direct imports be excluded. The exemption from
the marking requirements of this standard for
vehicles equipped with original equipment anti-
theft devices is contained in section 605 of the
Cost Savings Act (15 U.S.C. 2025), and requires
the agency to make a determination that such
anti-theft device "is likely to be as effective in re-
ducing and deterring motor vehice theft as com-
pliance with the requirements of this standard."
NHTSA has no basis for making such a determi-
nation for all anti-theft devices on all direct im-
ports. Absent some basis for making the requisite
determination, NHTSA has no authority to
exempt those vehicles under section 605 of the
Cost Savings Act.
With respect to the suggestion that all direct
imports be excluded from the theft prevention
standard, NHTSA has no authority to exempt veh-
icles except under section 605 of the Cost Savings
Act. Although it was suggested that the agency
has "inherent authority to establish limited
exemptions from its requirements", no authority
was cited for the suggestion. NHTSA believes that
when Congress explicitly provides one basis for
exempting vehicles from the requirements of this
theft prevention standard, as it did in section 605
of the Cost Savings Act, the expression excludes
any other bases for exempting vehicles. The appli-
cation of the legal principle, "Expressio uniiis est
exclusio alterius" is as apt here as it was when
NHTSA considered Ferrari's request that low vol-
ume manufacturer's vehicles be exempted from
the requirements of this standard, as set forth
PART 541-PRE 31
above in this preamble.
B. Manner of Certification
1. Vehicles Subject to the Theft Prevention Stan-
dard.
The NPRM proposed a simple amendment to
the certification procedures applicable under the
Safety Act. At present, the Safety Act requires
manufacturers to affix a permanent plate or label
to each vehicle providing a number of items of
information, including the following statement:
"This vehicle conforms to all applicable Federal
motor vehicle safety standards in effect on the
date of manufacture shown above." For all passen-
ger cars manufactured on or after September 1,
1978, the phrase "and bumper" is required to ap-
pear in the above statement immediately following
the word "safety".
The NPRM proposed that, in the case of passen-
ger cars manufactured on or after the effective
date of the theft prevention standard and subject
to the requirements of this standard, the expres-
sion "bumper, and theft prevention" be substituted
in the statement immediately following the word
"safety". Ford commented that the proposal should
be revised, because it would require separate cer-
tification labels for cars subject to the theft preven-
tion standard and cars not subject to this stan-
dard. Ford stated that separate certifications
would "cause disruption of the assembly plant pro-
cess", particularly in a plant which produced some
lines subject to the standard and others which
were not. Ford concluded this comment by noting
that the statement that the vehicle conforms to
all "applicable" theft prevention standards would
ensure that it was accurate in the case of vehicles
not subject to this standard.
NHTSA did not intend to require separate cer-
tifications for passenger cars, and has adopted
Ford's comment for the reasons stated in that com-
ment.
As a related matter, VW, Mazda, and Saab noted
that a few of their vehicles are damaged so badly
in shipment that a major part may be among those
that need to be replaced before the vehicles are
offered for sale to the public. The commenters
asked if the manufacturer was required to replace
the damaged part with a part marked with the
VIN, as is required for original equipment parts,
or if the dealer could replace the part with a re-
placement part. The commenters noted the certifi-
cation difficulties they would have if a VIN mark-
ing were required on the replacement part. Mazda
further commented that if those VIN markings
were required, it would have to provide each of
its dealers with the labeling technology.
Section 606(c)(1) of the Cost Savings Act re-
quires that "every manufacturer of a motor vehicle
subject to the [theft prevention standard]. ..shall
furnish at the time of delivery of such vehicle ...
a certification that such vehicle conforms to the
applicable motor vehicle theft prevention stan-
dard. Such certification shall accompany such
vehicle... until delivery to the first purchaser."
This latter sentence is consistent with the posi-
tion NHTSA has taken for purposes of the Safety
Act; i.e., it is not sufficient for a vehicle to satisfy
the applicable safety standards at the time it
leaves the assembly line. Instead, the manufac-
turer must certify that the vehicle satisfies all
applicable safety standards at the time it is
delivered to the first purchaser.
However, NHTSA does not understand these
commenters to be suggesting that this theft pre-
vention standard should permit new vehicles to
be delivered which do not comply with this stan-
dard; i.e., with unmarked covered major parts. It
is implicit in these comments that all vehicles
must comply with this theft prevention standard.
The question, however, is whether all parts of new
vehicles must comply with the vehicle standard
(marked with the VIN) at the time of delivery to
the first purchaser, or whether some parts of the
new vehicle may comply with the replacement part
standard (marked with the letter "R" and the
manufacturer's logo) at the time of delivery to the
first purchaser.
Section 606(c)(1) specifies that the vehicle man-
ufacturer must certify that the vehicle complies
with the vehicle standard (all covered major parts
marked with the VIN ) "at the time of delivery of
such vehicle". This requirement leaves two ques-
tion concerning the manufacturer's certification
to be resolved:
(1) what is the "time of delivery"?; and
(2) the "delivery" to whom?
Neither the language of section 606 nor its legis-
lative history makes clear the answers to these
questions. However, the legislative history does
specify that: "The method and form of certification
PART 541-PRE 32
shall be prescribed by the DOT by rule, taking
into consideration its present certification prac-
tices in the case of safety." H. Rept. at 18. Section
114 of the National Traffic and Motor Vehicle
Safety Act (15 U.S.C. 1403) states that: "Every
manufacturer or distributor of a motor vehicle or
motor vehicle equipment shall furnish to the dis-
tributor or dealer at the time of delivery of such
vehicle or equipment by such manufacturer or dis-
tributor the certification that each such vehicle or
item of motor vehicle equipment conforms to all
applicable Federal motor vehicle safety stan-
dards." This certification practice with respect to
the Safety Act suggests that Congress was refer-
ring to a delivery to the dealer or distributor as
the point when a certification must be made by
the vehicle manufacturer.
That conclusion is reinforced by section
606(c)(l)'s reference to "delivery to the first purch-
aser" in the next sentence. Had Congress intended
to refer to delivery to the first purchaser in both
instances, it would presumably have used the
same phrase. Since it did not refer to "delivery to
the first purchaser" as the point when the vehicle
manufacturer must certify that the vehicle com-
plies with this theft prevention standard, Con-
gress must have intended that the "delivery" in
question be that to a dealer or distributor. This is
because there are no other parties to whom the
manufacturer could be said to deliver a vehicle.
Accordingly, NHTSA has determined that the de-
livery referred to in the first sentence of section
606(c)(1) is a delivery by a vehicle or replacement
parts manufacturer to a dealer or distributor.
This determination means that the vehicle
manufacturer satisfies its certification respon-
sibilities under the Theft Act when it delivers to
a dealer or distributor a vehicle with all covered
major parts marked with the VIN and conforming
to the performance requirements set forth for
those markings. Thus, a manufacturer will not be
subject to civil penalties under section 607(a)(4)(B),
which prohibits the issuance of false or misleading
certifications of compliance, if it delivers such a
vehicle to a distributor or dealer. However, as
noted above, section 606(c)(1) of the Cost Savings
Act makes the vehicle manufacturer responsible
for delivering to the first purchaser a vehicle that
complies with the applicable requirements of this
theft prevention standard. Therefore, a manufac-
turer that delivers a complying vehicle to a dealer
or distributor may be subject to civil penalties
under section 607( a )( 1 ), which prohibits the manu-
facture or sale of a noncomplying vehicle, if the
vehicle does not comply with the theft standard
when it is delivered to the first purchaser. In such
an instance, the manufacturer could assert the
defense set forth in section 607(b) that it did not
have reason to know in the exercise of due care
that the vehicle was not in conformity with this
standard. If some person actually altered or
obliterated the markings, such person would have
violated section 201 of the Theft Act ( 18 U.S.C. 511 ).
This leaves open the question of what the time
of delivery of a vehicle is, for the purposes of the
Theft Act. NHTSA has not specifically addressed
the "time of delivery" of a vehicle for the purposes
of the Safety Act, so there is no general practice
for the agency to consider. Absent clear legislative
guidance or any clearly established practice under
the Safety Act, the agency must examine other
sources and consider the purposes of the Theft Act
to determine what the "time of delivery" means
under the Theft Act.
Delivery is a concept used for commercial trans-
actions, and has been defined in the Uniform Com-
mercial Code (U.C.C). The U.C.C. has been
adopted in whole or in part by all 50 states and
the District of Columbia. NHTSA believes that
the generally accepted definition of "delivery", as
set forth in the U.C.C, is a useful indicator of
what Congress intended when it used that term
in section 606 of the Theft Act.
The rule under the Uniform Commercial Code
is that when a seller ships goods by carrier, the
delivery occurs when the goods are delivered by
the seller to the carrier, unless the contract requires
the seller to deliver the goods to the purchaser at
a particular destination. U.C.C. §2-504 and §2-509
(1977). If this rule were applied in the case of a
vehicle, the delivery to the dealer or distributor
would occur when the manufacturer shipped the
vehicle, unless the contract specifies delivery
occurs when the vehicle is tendered to the dealer.
In the interests of ease of administration, NHTSA
believes it is appropriate to define "delivery" so
that it occurs at the same point in any given trans-
action. It would be unwise policy and an onerous
burden on the agency and the regulated parties
if the agency were forced to examine the contrac-
tual terms between every manufacturer and each
of its dealers and distributors to determine when
PART 541-PRE 33
"delivery" occurs in each case. Therefore, NHTSA
has concluded that, for the purposes of this theft
prevention standard, delivery occurs when the
vehicle manufacturer delivers the vehicle to a
shipper to be transported to a dealer or distributor.
As noted above, this is the general rule under the
U.C.C.
In practical terms, this means that, if a vehicle
is so badly damaged that a covered major part
needs to be replaced before the manufacturer has
delivered the vehicle to the shipper, the vehicle
manufacturer will have to mark a part with the
VIN of that vehicle and install that part before
delivering the vehicle to a dealer or distributor.
If, on the other hand, a vehicle is so badly damaged
after the manufacturer has delivered a properly
marked and certified vehicle to the shipper that
a covered major part needs to be replaced before
the first sale of the vehicle for purposes other than
resale, the dealer or distributor may install a
replacement part on the vehicle. The replacement
part must comply with the applicable require-
ments for replacement parts, and need not have
the VIN marked on it, as would be necessary if
it were subject to the original equipment part
requirements.
The certification which the first purchaser of
the vehicle must receive, pursuant to section
606(c)(1), will indicate that the vehicle conforms
to all applicable Federal theft prevention stan-
dards. This statement will not be misleading, be-
cause the undamaged original equipment parts
must comply with the requirements applicable to
original equipment parts, while the substituted
replacement parts must comply with the require-
ments applicable to replacement parts.
NHTSA believes that this definition of "delivery"
is the only one consistent with the purposes of the
Theft Act to require markings of vehicle parts
while imposing nominal burdens on the motor
vehicle manufacturing industry. The agency
recognizes that replacement parts installed on
vehicles will be particularly attractive to thieves,
since they can remove that part from the vehicle
and sell it as a legitimate replacement part. How-
ever, vehicles are very infrequently damaged so
badly before sale to the public that a major part
would need to be replaced. If a major part were
replaced with a replacement part, thieves will not
be alerted to the fact that the vehicle has only 13
parts marked with the VIN and one marked with
an "R" and the manufacturer's logo. Even if a thief
were to learn this fact, the 13 marked parts would
still show that a vehicle had been stolen by that
person.
On the other hand, had the agency concluded
that delivery to a dealer or distributor occurs when
the dealer or distributor takes physical possession
of the vehicle, enormous burdens would result for
the dealers and distributors. Section 607(a)(1) of
the Cost Savings Act specifies that no person shall
sell or offer for sale a vehicle subject to this theft
prevention standard that does not conform to this
standard. Accordingly, dealers and distributors
would have to hold the vehicle until the vehicle
manufacturer had marked a part with the vehicle's
VIN and shipped the part to the dealer or dis-
tributor. This would create a financial burden for
the dealer or distributor holding the vehicle, since
it would be paying interest on the vehicle from
the date it received the vehicle, but could not offer
to sell the vehicle until it had received and in-
stalled a properly marked part from the manufac-
turer. It would also create a burden on the manu-
facturer to produce one part not marked as a
replacement part, label that part with the proper
VIN, and ship the part to the dealer or distributor.
NHTSA would like to note that Mazda's com-
ment that it would have to provide its dealers with
labels and marking technology is incorrect. The
Theft Act places the burden of marking the parts
exclusively on the manufacturer, not the dealer.
Therefore, any necessary marking of parts under
this theft prevention standard is the responsibility
of the vehicle's manufacturer.
NHTSA also wishes to emphasize that this
determination of when delivery occurs is solely
applicable for the purposes of determining com-
pliance with the requirements of the theft preven-
tion standard. It does not affect any contractual
provisions concerning which party bears the risk
of loss for vehicle damaged in shipment, nor is it
applicable to the provisions of the Safety Act or
any other statutes administered by the agency.
Those statutes may have differing underlying
policy considerations from those of the Theft Act,
and those considerations might mandate a con-
trary determination of when delivery occurs.
This final rule must also establish rules for cer-
tification of direct imports subject to the require-
ments of this standard. The NPRM noted that
PART 541-PRE 34
requiring alterations in the certification plate
should prove feasible for all affected parties,
since that notice proposed to limit certification
authority to original manufacturers only.
However, this procedure would not be feasible
for direct importers. The safety certification label
can not be affixed to the vehicle until the vehicle
is certified as complying with the applicable safety
standards. In the case of direct imports, that cer-
tification is not made until after the vehicle has
been imported under bond and the necessary mod-
ifications have been made. As noted above, the
Theft Act does not permit any vehicles to be
imported which do not conform to the require-
ments of this standard. Therefore, a separate cer-
tification label will have to be affixed to these
vehicles before they are "imported".
The agency believes that the direct importers'
certification should be simple for the benefit of
both Customs officials and the direct importers.
Accordingly, the theft prevention standard re-
quires that direct imported vehicles have a label
permanently attached to each vehicle subject to
this theft prevention standard, in the same posi-
tions on the vehicle and with the same lettering
size and contrast requirements as is required for
the safety certification labels by Part 567, with
the statement: "This vehicle conforms to the
applicable federal theft prevention standard in ef-
fect on the date of manufacture." Additionally, the
label must identify the model year and line of the
vehicle. Finally, the label must display the corpo-
rate or individual name of the direct importer that
is certifying the vehicle's compliance with the theft
prevention standard's requirements, preceded by
the words "Imported by". This will be sufficient to
inform Customs officials that the vehicle has been
properly marked and identify the party which is
certifying the conformity of the markings.
NHTSA wishes to emphasize that this separate
certification is necessary only for those directly
imported vehicles subject to this theft prevention
standard. Those vehicles not subject to this stan-
dard need not be so certified. The other informa-
tion required to appear on the Part 567 certifica-
tion label will be affixed to the vehicle when that
certification label is affixed, i.e., after the direct
importer certifies that the vehicle complies with
the applicable safety and bumper standards.
2. Replacement Parts.
Again relying on the legislative instructions
that the agency take into account current certifi-
cation practices under the Safety Act, NHTSA
proposed in the NPRM that certification of com-
pliance with the replacement parts standard be
accomplished by marking each replacement part
with the symbol "DOT", and that the "DOT" sym-
bol appear immediately adjacent to the "R" and
manufacturer's logo required to appear on replace-
ment parts.
Ford supported the proposed certification, noting
that the DOT symbol has been effectively used as
a certification of compliance with many standards
applicable to motor vehicle equipment. Ford listed
lighting equipment, brake hoses, brake fiuids,
automotive glazing, new and retreaded pneumatic
tires, and motorcycle helmets as examples of
motor vehicle equipment which must display the
DOT symbol as the manufacturer's certification
of compliance with the applicable safety standard.
GM objected to the requirement to mark the DOT
symbol on replacement parts as a certification of
compliance. GM explained its objection by stating
that the addition of the DOT symbol would not
"add to the effectiveness of the marking, but it
would increase its cost". GM concluded by recom-
mending that should NHTSA decide to require the
DOT marking to appear on replacement parts, it
should delete the requirement to mark either the
logo or the "R" on the parts. No other commenters
addressed this proposed certification requirement.
The agency has decided to adopt the certification
requirement proposed for replacement parts. Sec-
tion 606(c)(1) of the Cost Savings Act requires
manufacturers of covered major replacement
parts to furnish a certification that the part con-
forms to this standard at the time of delivery. For
purposes of the Safety Act, the agency has used
the DOT symbol as the certification of compliance
for most of its motor vehicle equipment standards.
Accordingly, it is appropriate to require this sim-
ple but effective certification for purposes of the
Theft Act.
GM's comments are not persuasive. The agency
intends that this standard impose the lowest costs
necessary to comply with the requirements of the
Theft Act. However, NHTSA has concluded that
the costs of marking the letters "DOT" in addition
PART 541-PRE 35
to the letter "R" and the manufacturer's logo will
be minimal, whether the markings are inscribed
or affixed. The agency is unaware of, and GM did
not explain, how the addition of these three letters
would present any difficulties in either designing
the replacement part markings or in ensuring that
the markings are within the designated target
area.
Further, GM's suggestion that either the letter
"R" or the manufacturer's logo could serve as the
certification of compliance was unsupported by
any reasoning or precedent in the safety stan-
dards. The letter "R" and the manufacturer's logo
were suggested by Congress and are adopted in
this standard as the means of complying with the
replacement parts marking requirement. It is still
necessary to certify that those means of com-
pliance have been used, under the requirements
of section 606. If the means of compliance were
also interpreted as a certification, the agency
would be ignoring the Congressional admonition
to take into account its certification practices
under the Safety Act when establishing the cer-
tification practices under this theft prevention
standard. Most of the agency's equipment stan-
dards require the manufacturer either to affix the
letters "DOT" as a certification or to furnish a full
statement that the equipment complies with the
applicable standard, in the case of child restraint
systems or slide-in campers. There are no exam-
ples under the Safety Act where the required
markings also serve as a certification of com-
pliance. For these reasons, the GM suggestion has
not been adopted.
No special provisions have been made for direct
imports of covered major parts. Such direct im-
ports must be properly marked and so certified
before they are imported into the United States,
per section 607(a)(1) of the Cost Savings Act. This
means that the markings and the "DOT" symbol
must be inscribed on the part outside the customs
territory of the United States. The NPRM pro-
posed that the "DOT" symbol be the certification
of compliance with this standard. This require-
ment, adopted in this final rule, poses no special
problems for direct importers of covered major re-
placement parts similar to those which would have
been posed for direct importers of vehicles under
the proposed vehicle certification requirements.
Effective Date of this Theft Prevention Standard
Section 602(cK4) of the Cost Savings Act
specifies that this theft prevention standard shall
take effect not earlier than 6 months after the
date this final rule is published, except that an
earlier effective date may be specified if the agency
finds good cause for an earlier effective date, and
publishes the reasons for that finding. In the legis-
lative history, it was emphasized that "the Com-
mittee expects the Secretary to promulgate the
[theft prevention] standard as expeditiously as
possible so that major parts may begin to be num-
bered by the earliest possible model year." H. Rept.
at 11. In consideration of these facts, the NPRM
proposed that this standard would become effec-
tive 6 months after this final rule was issued, and
that it would apply to new passenger cars and
their covered major replacement parts beginning
in the 1987 model year.
In response to this proposal, Mazda asked that
the standard's effective date be set at September
1, 1986. They asserted that an effective date in the
spring of 1986 would have severe consequences
for manufacturers planning to introduce new 1987
models in the spring of 1986. The available lead
time would, according to Mazda, force postpone-
ment of the model introduction for no reason other
than the requirements of the theft prevention
standard and the manufacturer's need for more
lead time. Additionally, Mazda hypothesized that
the manufacturer could advance the introduction
of that new model to the fall of 1985 and designate
it as a 1986 model year vehicle. This would result
in the vehicle not being subject to the standard
until its 1987 model year. Mazda asserted that
this earlier introduction would not satisfy the in-
tent of the theft prevention standard, because the
manufacturer would not be able to offer the same
level of theft deterrence on the vehicle.
NHTSA is not persuaded by this comment. In
the legislative history. Congress expressly stated:
"The standard cannot apply to a car in the middle
of the model year." H. Rept. at 11. It is generally
known that the various manufacturers have dif-
ferent model years and that the various lines pro-
duced by the same manufacturer have different
introduction dates, and, therefore, different model
years. Given that this standard cannot apply to a
car in the middle of a model year, setting an effec-
tive date of September 1, 1986 would allow manu-
PART 541-PRE 36
facturers to avoid being subject to the standard
in the 1987 model year, simply by introducing their
high theft lines before September 1, 1986. Such a
result would delay the marking of high theft lines
until the 1988 model year. This is plainly incon-
sistent with the Congressional intent that this
standard be effective as soon as possible. H. Rept.
at 11. Accordingly, this suggestion has not been
adopted.
Parenthetically, it is worth noting that Congress
provided that manufacturers do not have to begin
to comply with the theft prevention standard for
a line which is selected for coverage under this
standard less than 6 months before the start of
the model year; section 603(aK5) of the Cost
Savings Act [15 U.S.C. 2023(a)(5)]. If Mazda is
asserting that it needs more than 6 months lead
time, its assertion is directed at the language of
the Theft Act itself, and not this theft prevention
standard.
VW commented that no effective date should be
set for this theft prevention standard until the
agency had responded to the petitions for reconsid-
eration of this rule, which petitions were "highly
likely" in VW's view. NHTSA understands VW's
concerns, but does not believe it would be appro-
priate to adopt this comment. Based on the com-
ments and other information available to NHTSA
at this time, the effective date for this standard
is reasonable. With this rule, as with any other
published by the agency, NHTSA sets an effective
date for the requirements and allows the public
to file petitions for reconsideration of those
requirements. If, in response to such petitions,
NHTSA concludes that the requirements should
be significantly amended or the effective date no
longer appears reasonable, the agency has authority
to amend the effective date. 49 CFR §553.35(d).
This procedure has worked well for all of NHTSA's
rules, and NHTSA sees no reason to alter it for
this theft prevention standard.
Honda fommented that the effective date for this
standard should be set so that dealers can use up
their inventory of unmarked replacement parts with-
out violating this standard. The effective date for this
stan<iaril means that the covered major parts of high
theft lines will have to be marked in the 1987 model
year and thereafter, while covered major replace-
ment parts irhicli are manufactured after the effec-
tire (late of this standard and for use on 1987 or
s'(bse<iue)it itiodel year high theft line vehicles will
have to be marked. All major replacement parts in
dealers' .stock as of the effective date of this standard
will have been nianut'actured before that effective
date, and are not subject to the requirements of this
standard. Dealers are free to use such parts without
violating any of the requirements of this standard.
Regulatory Imparts
A. Costs and Benefits to Manufacturers and Con-
sumers.
NHTSA has analyzed this rule and determined that
it is not "major" within the meaning of Executive
Order 12291. It is, however, "significant" within the
meaning of the Department of Transportation reg-
ulatory policies and procedures, because of the high
level of public and Congressional interest. A regulat-
ory evaluation, analyzing in detail the impacts of the
theft prevention standard has been placed in Docket
No. T84-01, Notice 7. A copy of this evaluation may
be obtained by any interested person by writing to:
NHTSA Docket Section, Room 5109, 400 Seventh
Street, S.W., Washington, D.C. 20590, or by calling
the Docket Section at (202) 426-2768.
To summarize that evaluation, the agency esti-
mates that about 48 percent of all cars produced will
be selected as high theft lines. Assuming 10 million
passenger cars are manufactured in a model year,
4.8 million cars will be covered by this standard each
model year. Some of these cars may eventually be
equipped with original equipment anti-theft devices,
instead of being marked. For the large manufactur-
ers, NHTSA estimates that the costs of marking parts
as required by this standard will be $9.80 per vehicle,
if the parts are stamped, and $5.00 per vehicle, if the
parts are labeled. The total annual fleet costs are
thus estimated at $47 million for stamped identifiers
and $24 million for labeled identifiers. Low volume
manufacturers will probably use other technologies,
such as hand stamping, hand engraving, or sand blast-
ing. Their total costs will still be well under $15 per
vehicle.
The benefits associated with this theft prevention
standard depend upon the effectiveness of the mark-
ing requirements in reducing thefts. Assuming that
these marking requirements will reduce thefts of high
theft lines by 10 percent, NHTSA estimates that
25,000 vehicle thefts per year will be averted by this
standard. Since the average value of a stolen vehicle
is $3,900, the annual value of a 10 percent reduction
in thefts of high theft lines is $98 million. However,
this estimate should be considered preliminary, be-
PART 541-PRE 37
cause no data exist to show the effectiveness of a
full-scale marking system as mandated by this rule.
Honda commented that the effective date for
this standard should be set so that dealers can
use up their inventory of unmarked replacement
parts without violating this standard. The effec-
tive date for this standard means that the covered
major parts of high theft lines will have to be
marked in the 1987 mode! year and thereafter,
while covered major replacement parts which are
manufactured after the effective date of this stan-
dard and for use on 1987 or subsequent model year
high theft line vehicles will have to be marked. All
major replacement parts in dealers' stock as of the
effective date of this standard will have been
manufactured before that effective date, and are
not subject to the requirements of this standard.
Dealers are free to use such parts without violat-
ing any of the requirements of this standard.
Regulatory Impacts
A. Costs and Benefits to Manufacturers and
Consumers.
NHTSA has analyzed this rule and determined
that it is not "major" within the meaning of Execu-
tive Order 12291. It is, however, "significant"
within the meaning of the Department of Trans-
portation regulatory policies and procedures, be-
cause of the high level of public and Congressional
interest. A regulatory evaluation, analyzing in de-
tail the impacts of the theft prevention standard
has been placed in Docket No. T84-01, Notice 7.
A copy of this evaluation may be obtained by any
interested person by writing to: NHTSA Docket
Section, Room 5109. 400 Seventh Street, S.W.,
Washington, D.C. 20590, or by calling the Docket
Section at (202) 426-2768.
To summarize that evaluation, the agency esti-
mates that about 48 percent of all cars produced
will be selected as high theft lines. Assuming 10
million passenger cars are manufactured in a
model year, 4.8 million cars will be covered by this
standard each model year. Some of these cars may
eventually be equipped with original equipment
anti-theft devices, instead of being marked. For
the large manufacturers, NHTSA estimates that
the costs of marking parts as required by this stan-
dard will be $9.80 per vehicle, if the parts are
stamped, and $5.00 per vehicle, if the parts are
labeled. The total annual fieet costs are thus esti-
mated at $47 million for stamped identifiers and
$24 million for labeled identifiers. Low volume
manufacturers will probably use other technologies,
such as hand stamping, hand engraving, or sand
blasting. Their total costs will still be well under
$15 per vehicle.
The benefits associated with this theft preven-
tion standard depend upon the effectiveness of the
marking requirements in reducing thefts. Assum-
ing that these marking requirements will reduce
thefts of high theft lines by 10 percent, NHTSA
estimates that 25,000 vehicle thefts per year will
be averted by this standard. Since the average
value of a stolen vehicle is $3,900, the annual value
of a 10 percent reduction in thefts of high theft
lines is $98 million. However, this estimate should
be considered preliminary, because no data exist
to show the effectiveness of a full-scale marking
system as mandated by this rule.
B. Small Business Impacts
The agency has also considered the impacts of
this rulemaking action as required by the Regu-
latory Flexibility Act. I hereby certify that this
rule will not have a significant economic impact
on a substantial number of small entities. Few of
the passenger car or replacement part manufac-
turers subject to this standard are small entities.
This theft prevention standard will not signifi-
cantly increase the production or certification
costs for those manufacturers which do quality as
small entities. Small organizations and gov-
ernmental jurisdictions will be affected as pur-
chasers of new passenger cars. However, the cost
impacts of this standard will be minimal. Accord-
ingly, a regulatory fiexibility analysis has not been
prepared.
C. Environmental Impacts
NHTSA has considered the environmental im-
plications of this rule, in accordance with the Na-
tional Environmental Policy Act, and determined
that it will not significantly affect the human en-
vironment. Accordingly, an environmental impact
statement has not been prepared.
D. Paperwork Reduction Act
The Office of Management and Budget (0MB)
has already approved the NHTSA requirement
that VINs appear on all new vehicles ( 0MB #2127-
0051). However, this rule expands the scope and
uses for the VIN. It also requires vehicle manufac-
turers to designate target areas for marking orig-
inal equipment and replacement parts. Both these
PART 541-PRE 38
requirements are considered to be information col-
lection requirements, as that term is defined by
0MB in 5 CFR Part 1320. Accordingly, these re-
quirements will be submitted to 0MB for its ap-
proval, pursuant to the requirements of the Paper-
work Reduction Act (44 U.S.C. 3501 et seq.t. A
notice will be published in the Federal Register
when 0MB makes its decision on this request.
List of Subjects
49 CFR Part 541
Administrative practice and procedure, Label-
ing, Motor vehicles. Reporting and recordkeeping
requirements.
49 CFR Part 567
Labeling, motor vehicle safety, reporting, and
recordkeeping requirements.
In consideration of the foregoing, Chapter V of
Title 49 of the Code of Federal Regulations is
amended as follows: A new Part 541 is added. . . .
Issued on: October 17, 1985.
Diane K. Steed
Administrator
50 FR 43166
October 24, 1985
i)
D
PART 541-PRE 39-40
•
PREAMBLE TO AN AMENDMENT TO PART 541
Listing of High Theft Lines;
[yiotor Vehicle Theft Prevention Standard
(Docket No. T84-01; Notice 9)
ACTION: Technical amendment.
SUMMARY: This agency has completed its selection
of the carlines that will be subject to the requirements
of the motor vehicle theft prevention standard begin-
ning with 1987 model year vehicles. These selections
were based on actual theft data, in the case of lines in-
itially introduced into commerce before January 1,
1983, and according to the specified selection pro-
cedures, in the case of lines introduced into commerce
on or after January 1, 1983. This listing is intended to
». inform the public, particularly law enforcement
'j groups, of the vehicles that are subject to the marking
requirements of the motor vehicle theft prevention
standard.
EFFECTIVE DATE: This listing becomes effective May
8, 1986. This means that each of the listed lines and
their major replacement parts will be subject to the
requirements of the motor vehicle prevention
standard beginning in the 1987 model year.
SUPPLEMENTARY INFOMRATION: On October 24,
1985, NHTSA published a new Part 541, Federal
Motor Vehicle Theft Prevention Standard: 50 FR
43166. Part 541 sets forth performance requirements
for inscribing or affixing identification numbers onto
original equipment major parts and the replacement
parts for those original equipment parts, on all
vehicles in lines selected as high theft lines. Section
603(a)(1) of the Motor Vehicle Information and Cost
Savings Act (the Cost Savings Act; 15 U.S.C.
2023(a)(1) specifies that three types of carlines are
high theft lines for the purposes of the motor vehicle
theft prevention standard. These three types of lines
are:
P(l) existing lines that had a theft rate exceeding
j the median theft rate in 1983 and 1984;
(2) new lines that are likely to have a theft rate
exceeding that median theft rate; and
(3) existing or new lines that have a theft rate
below the median theft rate, but which have a majority
of major parts interchangeabel with lines whose theft
rate exceeded or is likely to exceed the 1983 and 1984
median theft rate.
NHTSA followed different procedures to determine
which lines met any of these three statutory criteria.
Section 603(b) of the Cost Savings Act sets forth the
procedures NHTSA followed to determine whether
existing lines, that is, lines initially introduced into
commerce before January 1, 1983, had a theft rate
that exceeded the median theft rate. That section
specifies that the agency "shall obtain from the most
reliable source or sources accurate and timely theft
and recovery data and publish such data for review
and comment." In response to this directive, NHTSA
published theft data notices on May 2, 1985 and
August 15, 1985; 50 FR 18708 and 50 FR 32871,
respectively. After considering the comments re-
ceived in response to these notices, the agency
published its final theft data and calculated the
median theft rate based on those data; 50 FR 46666,
November 12, 1985. Those lines that exceeded the
median theft rate were selected as high theft lines,
subject to the limitation in section 603(a)(3) of the
Cost Savings Act. That section specifies that not
more than a total of 14 of a manufacturer's lines
introduced before the effective date of the theft
prevention standard can be selected for coverage
under the standard, based on data establishing the
line was a high theft line. The only manufacturer that
would have had more than 14 lines selected was
General Motors.
With respect to lines introduced into commerce on
or after January 1, 1983, section 603(a)(2) of the Cost
PART 541; PRE 41
Savings Act specifies that the new lines which are to
be subject to the standard "may be selected by agree-
ment between that manufacturer and [NHTSA]." To
implement this provision, NHTSA published a new
Part 542, Procedures for Selecting Lines to be Covered
by the Theft Prevention Standard; 50 FR 34831,
August 28, 1985. These procedures were followed by
the agency in selecting those new lines that are likely
to have theft rates exceeding the median theft rate,
those lines that have a majority of major parts inter-
changeable with the major parts of an actual or likely
high theft line, and in deciding which of General
Motors' lines should be among the 14 selected for
coverage by the theft prevention standard.
After following these procedures, the agency has
selected the high theft lines that will be subject to the
requirements of the theft prevention standard, unless
the lines are exempted pursuant to section 605 of the
Cost Savings Act. The individual vehicle manufac-
turers have already been notified which of their own
lines have been selected for coverage under the motor
vehicle theft prevention standard. This listing of the
covered lines for all affected manufacturers is simply
a compendium of the selections which have already
been sent to the individual manufacturers. It is
published so that the public, especially law enforce-
ment groups wOl know which vehicles will be subject
to the requirements of the theft prevention standard.
The agency has been told that the 1987 versions of
some of these car lines will be introduced into com-
merce before April 24, 1986, the effective date for
Part 541. For the purposes of Title VI of the Cost
Savings Act, NHTSA beHeves that a line's model year
begins on the day on which a vehicle in that line is in-
troduced into commerce in the United States. The
legislature history of Title VI states, "The [theft
prevention] standard cannot apply to a car in the
middle of the model year." H.R. Rep. No. 1087, 98th
Cong, 2d Sess., at 11 (1984). Accordingly, NHTSA
concludes that a 1987 model year version of a car line
introduced into commerce before the effective date of
Part 541 is not subject to the requirements of Part
541 during the 1987 model year. Such lines will, of
course, be subject to those requirements for the 1988
model year. NHTSA will inform the National Crime
Information Center (NCIC) of those lines listed in
Appendix A whose 1987 model year versions were
introduced into commerce before April 24, 1986, and
are not subject to the requirments of Part 541 in the
1987 model year.
NHTSA would like to note that this listing is not a
final listing of the lines that will be required to be
marked in the 1987 model year. As noted above, some
manufacturers plan to introduce 1987 lines on this list
into commerce before April 24, 1986. If they do so,
the lines would not be subject to the marking
requirements for the 1987 model year. Further, the
agency has received a number of petitions for exemp-
tion from the marking requirements of Part 541,
because some of the lines in this listing will be
equipped with standard equipment anti-theft devices
in the 1987 model year. After the agency verifies
whether the 1987 lines were actually introduced into
commerce before April 24 1986 and reaches decisions
on the petitions from exemption, it will promptly
publish an update to this listing. That update will
show all the lines that must be marked in accordance
with Part 541 for the 1987 model year.
NHTSA finds for good cause that notice and oppor-
tunity for comment on this listing are unnecessary.
As explained above, the agency is statutorily required
to make the determination of which existing lines are
high theft lines based on actual theft data. In the case
of newer lines, the agency is statutorily required to
determine which lines are likely high theft lines by
agreement with the manufacturer if possible. All
selections of newer lines as high theft lines were
made pursuant to Part 542. Additionally, the agency
has made the statutorily-required determinations of
which lines with theft rates below the median theft
rate have a majority of major parts interchangeable
with those a high theft line. Thus, all of the lines listed
herein have already been selected as high theft lines
in accordance with the criteria set forth in Title VI of
the Cost Savings Act. Public comment on the selec-
tions is not contemplated by Title VI, and is
unnecessary after the selections have been made in
accordance with the statutory criteria.
Regulatory Impacts.
NHTSA has determined that this rule listing the
high theft carlines subject to the requirements of the
vehicle theft prevention standard is neither "major"
within the meaning of Executive Order 12291 nor
"significant" within the meaning of the Department
of Transportation regulatory policies and procedures.
As noted above, these selections have all been made
in accordance with the provisions of section 603 of the
Cost Savings Act. This listing does not actually select
the lines to be covered by the theft prevention stand
ard; it only informs the general public of those lines
PART 541; PRE 42
that have been selected as high theft Unes. NHTSA
does not beheve that the selections affect the impacts
described in the regulatory evaluation prepared for
the vehicle theft prevention standard. Accordingly, a
separate regulatory evaluation has not been prepared
for this listing. Interested persons may wish to
examine the regulatory evaluation prepared for the
theft prevention standard in connection with this
listing. Copies of the evaluation have been placed in
Docket No. T84-01, Notice 7, and may be obtained by
writing to: National Highway Traffic Safety Ad-
ministration, Docket Section, Room 5109, 400
Seventh Street, S.W., Washington, D.C. 20590.
The agency has also considered the effects of this
listing under the Regulatory Flexibility Act. I hereby
certify that this rule will not have a significant
economic impact on a substantial number of small en-
tities. First this is merly a listing of selections that
have already been made. Second, the total costs for
marking any vehicle may not exceed $15, as specified
in section 604 of the Cost Savings Act. This
represents much less than one half of one percent of
the suggested retail price of the lowest priced new car
available in the United States. Third, few, if any, of
the vehicle manufacturers listed herein would qualify
as small entities for the purposes of the Regulatory
Flexibility Act. Small organizations and small
governmental jurisdictions will be minimally affected
as purchasers of new vehicles subject to the theft
prevention standard. Accordingly a regulatory flex-
ibility analysis has not been prepared. Those persons
interested in seeing the agency's analysis of the ef-
fects of the vehicle theft prevention standard on small
businesses are referred to the regualtory evaluation
available in Docket No. T84-01, Notice 7.
Finally, the agency has considered the environmen-
tal impacts of this rule, in accordance with the
National Environmental Policy Act, and determined
that it will not have any significant impact on the
quality of the human environment.
In consideration of the foregoing, 49 CFR Part 541
is amended as follows:
1. The authority citation for Part 541 continues to
read as follows:
Authority: 15 U.S.C. 2021-2024, and 2026;
delegation of authority at 49 CFR 1.50.
2. A new Appendix A is added to Part 541, reading
as follows:
Appendix A
Lines Subject to the Requirements of this Standard
Manufacturer
Subject Lines
Alfa Romeo
MUano 161
Austin Rover
Sterling
BMW
3-Carline
5— Carline
6-Carline
7-Carline
Chrysler
Ferrari
Ford
General Motors
Chrysler Executive Sedan/Limousine
Chrysler Fifth Avenue/Newport
Chrysler Laser
Chrysler LeBaron/Town & Country
Chrysler LeBaron GTS
Dodge Aries
Dodge Conquest
Dodge Daytona
Dodge Diplomat
Dodge Lancer
Dodge 600
Plymoth Cciravelle
Plymouth Conquest
Plymouth Gran Fury
Plymouth Reliant
"Q" Car
Mondial 8
308
328
Ford Mustang
Ford Thunderbird
Mercury Capri
Mercury Cougar
Lincoln Continental
Lincoln Mark
Lincoln Town Car
Merkur Scorpio
Merkur XR4Ti
Buick Electra
Buick LeSabre
Buick Riviera
Cadillac Allante
Cadillac DeVille
Cadillac Eldorado
CadUlac Seville
Chevrolet Cameiro
Chevrolet Corvette
Chevrolet Nova
Oldsmobile Delta 88
Oldsmobile 98
Oldsmobile Toronado
Pontiac Bonneville
Pontiac Fiero Pontiac Firebird
Honda
Acura Legend
Isuzu
Impulse
PART 541; PRE 43
Manufacturer
Subject Lines
Manufcucturer
Subject Lines
Jaguar
XJ
XJ-6
XJ-40
Reliant
Saab
SSI
900
9000
Maserati
Biturbo
Quattroporte
Subaru
Toyota
XT
Camry
Mazda
GLC
RX-7
626
Celica
Celica Supra
Corolla/Corolla Sport
Mercedes-Benz
190 D/E
300 D/E
300 SDL
380 SEC/500 SEC
380 SEL/500 SEL
380 SL
420 SEL
560 SEL
560 SEC
560 SL
MR2
Starlet
Volkswagen
Audi 5000S
Audi Quattro
Volkswagen Cabriolet
Volkswagen Rabbit
Volkswagen Scirocco
1986.
Diane K. Steed
Administrator
Mitsubishi
Cordia
Galant
Starion
Tredia
issued on Apni c,
Nissan
Maxima
300 ZX
Porsche
911
924S
928
51 F.R. 11919
April 8, 1986
PART 541; PRE 44
PREAMBLE TO AN AMENDMENT TO PART 541
Final Listing of High Theft Lines for 1987 Model Year;
Motor Vehicle Theft Prevention Standard
(Docket No. T84-01; Notice 11)
ACTION: Final rule; technical amendment.
SUMMARY: This agency has completed all its actions
for determining which carlines will be subject to the
marking requirements of the motor vehicle theft
prevention standard for the 1987 model year.
NHTSA has previously published a listing of those
carlines which were selected as high theft carlines
beginning with the 1987 model year. However, some
of the curlines selected as high theft lines are never-
theless not subject to the theft prevention standard
for the ^987 model year. Three 1987 lines selected as
high theft lines are not subject to the theft prevention
standard because they were introduced into com-
merce before the effective date of the theft preven-
tion standard (April 24, 1986). Twelve carlines have
received exemptions from complying with the re-
quirements of the theft prevention standard because
they have standard equipment anti-theft devices. This
final listing is intended to inform the public, par-
ticularly law enforcement groups, of the carlines that
are subject to marking requirements of the theft
prevention standard for the 1987 model year.
EFFECTIVE DATE: This listing becomes effective
November 25, 1986.
SUPPLEMENTARY INFORMATION: On October 24,
1985, NHTSA published a new Part 541, Federal
Motor Vehicle Theft Prevention Standard; 50 FR
43166. Part 541 sets forth performance requirements
for inscribing or affixing identification numbers into
or onto covered original equipment major parts, and
the replacement parts for those original equipment
parts, on all vehicles in lines selected as high theft
lines.
Section 603(a)(2) of the Motor Vehicle Information
and Cost Savings Act (15 U.S.C. 2023(a)(2)
hereinafter "the Cost Savings Act") specifies that
NHTSA shall select the high theft lines with the agree-
ment of the manufacturer, if possible. Accordingly, on
April 8, 1986, this agency published a listing of those
selected as high theft lines beginning with the 1987
model year; 51 FR 11919. However, that notice stated
that there were two possible circumstances in which a
carline listed in the notice would not be required to be
marked in accordance with the theft prevention stan-
dard for the 1987 model year.
First, three of the high theft lines had 1987 models
introduced into commerce before April 24, 1986, the
effective date for Part 541. For the purposes of Title
VI of the Cost Savings Act, a line's model year begins
on the day on which a vehicle in that line is introduced
into commerce in the United States. The legislative
history of Title VI states, "The [theft prevention]
standard cannot apply to a car in the middle of the
model year." H.R. Rep. No. 1087, 98th Cong., 2d
Sess., at 11 (1984). Accordingly, this agency has con-
cluded that if a 1987 model year version of a carline
selected as a high theft line was introduced into com-
merce before the effective date of Part 541, it is not
subject to the requirements of Part 541 during the
1987 model year. Such lines will, however, be subject
to Part 541 beginning in the 1988 model year.
Second, section 605 of the Cost Savings Act (15
U.S.C. 2025) provides that a manufacturer may peti-
tion to have a high theft line exempted from the re-
quirements of Part 541, if the line is equipped as
standard equipment anti-theft device. The exemption
is granted if NHTSA determines that the standard
equipment anti-theft device is likely to be as effective
as compliance with Part 541 in reducing and deter-
ring motor vehicle thefts. NHTSA has exempted
twelve high theft lines under this statutory provision.
This revised listing is intended to inform the public,
particularly law enforcement groups, of which
carlines are subject to the marking requirements of
PART 541; PRE 45
the theft prevention standard for the 1987 model
year. This hsting does not add any more Unes to the
group hsted in the April 8, 1986 notice as subject to
Part 541. It does, however, delete some lines from
that listing. Since such deletions do not impose any
additional obligations on any party, but instead
relieve some manufacturers from compliance with
Part 541, NHTSA finds for good cause that this
notice should be effective as soon as it is published in
the Federal Register.
NHTSA also finds for good cause that notice and op-
portunity for comment on this listing are unnecessary.
All of the lines listed herein have already been selected
as high theft lines in accordance with the criteria set
forth in Title VI of the Cost Savings Act. Further, all of
the lines exempted from Part 541 were exempted in ac-
cordance with Title VI. Public comment on the selec-
tions and exemptions is not contemplated by Title VI,
and is unnecessary after the selections have been made
in accordance with the statutory criteria.
Regulatory Impacts.
NHTSA has determined that this rule deleting
some previously listed lines from the listing of those
subject to the requirements of the vehicle theft
prevention standard is neither "major" within the
meaning of Executive Order 12291 nor "significant"
within the meaning of the Department of Transporta-
tion regulatory policies and procedures. As noted
above, the deletions have all been made in accordance
with the provisions of the Cost Savings Act, and the
manufacturers of the deleted lines have already been
informed that those lines are not subject to the re-
quirements of Part 541 for the 1987 model year. This
listing does not actually exempt lines from the re-
quirements of Part 541; it only informs the general
public of such exemptions. Since the only purpose of
this final listing is to inform the public of prior final
agency action for the 1987 model year, a full
regulatory evaluation has not been prepared.
In consideration of the foregoing, 49 CFR Part 541
is amended as follows:
1. The authority citation for Part 541 continues to
read as follows:
Authority: 15 U.S.C. 2021-2024, and 2026; delega-
tion of authority at 49 CFR 1.50.
2. Appendix A of Part 541 is revised to read as
follows:
Appendix A— Lines Subject to the Requirements of Part 541
Manufacturer
Subject Lines
Manufacturer
Subject Lines
BMW
3-Carline
Ford
Ford Mustang
5— Carline
Ford Thunderbird
6— Carline
Mercury Capri
7-Carline
Mercury Cougar
Tjinroln Onntinpntiil
Chrysler
Chrysler Executive Sedan/
l^UldJlil V^Lf 11 LLl ICI lL<li
Lincoln Mark
Lincoln Town Car
Limousine
Chrysler Fifth Avenue/
Newport
Chrysler Laser
Merkur Scorpio
Merk XR4Ti
General Motors
Buick Electra
Chrysler LeBaron/Town &
Buick LeSabre
Country
Chrysler LeBaron GTS
Buick Riviera
Cadillac DeVille
Cadillac Eldorado
Dodge Aries
Cadillac Seville
Dodge Daytona
Chevrolet Camaro
Dodge Diplomat
Chevrolet Nova
Dodge Lancer
Oldsmobile Delta 88
Dodge 600
Oldsmobile 98
Plymouth Caravelle
Oldsmobile Toronado
Plymouth Gran Fury
Pontiac Bonneville
Plymouth Reliant
Pontiac Fiero
"Q" Car
Pontiac Firebird
Honda
Acura Legend
Ferrari
Mondial 8
308
Jaguar
XJ
XJ-6
328
XJ-40
PART 541; PRE 46
Manufacturer
Subject Lines
Maserati
Biturbo
Quattroporte
Mazda
GLC
626
Mercedes-Benz
190 D/E
[260 E]
300 D/E
[300 TD]
300 SDL
380 SEC/500 SEC
380 SEL/500 SEL
380 SL
420 SEL
560 SEL
560 SEC
560 SL
Appendix A-U— Lines Exempted from the Requirements of this
Standard Pursuant to 1,9 CFR Part 51,3
Manufacturer Exempted Lines
Austin Rover
Sterling
Chrysler
Chrysler Conquest
General Motors
Cadillac Allante
Chevrolet Corvette
Isuzu
Impulse
Mitsubishi
Galant
Starion
Nissan
Maxima
300 ZX
Toyota
Celica Supra
Cressida
Volkswagen
Audi 5000S
Mitsubishi
Cordia
Tredia
Porsche
911
928
Reliant
SSI
Saab
900
9000
Subaru
XT
Issued on November 20, 1986.
Toyota
Camry
Celica
Corolla/Corolla Sport
MR2
Starlet
Volkswagen
Audi Quattro
Volkswagen Cabriolet
Volkswagen Rabbit
Volkswagen Scirocco
Diane K. Steed
Administrator
51 F.R. 42577
November 25, 1986
Appendix A-\—1987 Lines Introduced Into Commerce Before
April 2J,, 1986, Which Are Not Subject to the Requirements of This
Standard Until the 1988 Model Year
Manufacturer
Line
Alfa Romeo
Milano 161
Mazda
RX-7
Porsche
924S
PART 541; PRE 47-48
PREAMBLE TO AN AMENDMENT TO PART 541
Final Listing of High Theft Lines for 1 988 Model Year; Motor Vehicle Theft Prevention Standard
(Docket No. T84-01; Notice 13)
ACTION: Final rule; technical amendment.
SUMMARY: This agency has completed all of its
actions for determining which car lines will be
subject to the marking requirements of the motor
vehicle theft prevention standard for the 1988
model year. NHTSA has previously published a
listing of those car lines that were selected as high
theft car lines beginning with the 1987 model year.
This listing includes all of those car lines, as well as
the new lines introduced in the 1988 model year
that have been selected as likely high theft lines. In
addition, this listing shows the three lines that have
received exemptions from complying with the
requirements of the theft prevention standard
beginning with the 1988 model year, because they
have standard equipment anti-theft devices. This
final listing for the 1988 model year is intended to
inform the public, particularly law enforcement
groups, of the car lines that are subject to the
marking requirements of the theft prevention
standard for the 1988 model year.
EFFECTIVE DATE: This listing becomes effective
December 30, 1987.
SUPPLEMENTARY INFORMATION: On October
24, 1985, NHTSA published a new Part 541,
Federal Motor Vehicle Theft Prevention Standard;
50 FR 43166. Part 541 sets forth performance
requirements for inscribing or affixing identifica-
tion numbers into or onto covered original equip-
ment major parts, and the replacement parts for
those original equipment parts, on all vehicles in
lines selected as high theft lines.
Section 603(a)(2) of the Motor Vehicle Informa-
tion and Cost Savings Act (15 U.S.C. 2023(a)(2);
hereinafter "the Cost Savings Act") specifies that
NHTSA shall select the high theft lines with the
agreement of the manufacturer, if possible. NHTSA
has published the procedures that it follows in
selecting lines as high theft lines at 49 CFR Part
542. In accordance with those procedures, NHTSA
has selected five new 1988 car lines that are likely
to be high theft lines. The newly selected lines are
set forth in this listing, along with all those lines
that had been previously selected as high theft
lines. A listing of the previously selected lines was
published at 51 FR 42577; November 25, 1986.
Section 603(d) of the Cost Savings Act (15 U.S.C.
2023(d)) provides that the theft prevention standard
must continue to apply to all lines that have been
selected as high theft lines, unless those previously
selected lines receive an exemption under section
605 of the Cost Savings Act (15 U.S.C. 2025).
Section 605 provides that a manufacturer may
petition to have a high theft line exempted from the
requirements of Part 541, if the line is equipped as
standard equipment with an anti-theft device. The
exemption is granted if NHTSA determines that
the standard equipment anti-theft device is likely
to be as effective as compliance with Part 541 in
reducing and deterring motor vehicle thefts.
Pursuant to this statutory provision, NHTSA has
exempted one of the newly selected high theft lines
from the requirements of Part 541. Additionally,
two car lines that were formerly subject to Part 541
have been exempted for the 1988 model year.
This revised listing is intended to inform the
public, particularly law enforcement groups, of
which car lines are subject to the marking require-
ments of the theft prevention standard for the 1988
model year, and of which car lines are exempted
from the theft prevention standard for the 1988
model year because of standard equipment anti-
theft devices. The agency has already selected
those new lines that are likely to be high theft lines,
in accordance with Part 542 and section 603 of the
Cost Savings Act. NHTSA has already exempted
car lines with qualifying standard equipment anti-
theft devices, in accordance with Part 543 and
section 605 of the Cost Savings Act. Therefore,
since this revised listing only informs the public of
previous agency actions and agreements, and does
not impose any additional obligations on any party,
NHTSA finds for good cause that this notice should
be effective as soon as it is published in the Federal
Register.
NHTSA also finds for good cause that notice and
opportunity for comment on this listing are un-
necessary. All of the lines listed herein have already
been selected as high theft lines in accordance with
the criteria set forth in Title VI of the Cost Savings
Act. Further, all of the lines exempted from Part
PART 541-PRE 49
541 were exempted in accordance with Title VI.
Public comment on the selections and exemptions
is not contemplated by Title VI, and is unnecessary
after the selections and exemptions have been
made in accordance with the statutory criteria.
Regulatory Impacts: NHTSA has determined that
this rule listing the high theft car lines subject to
the requirements of the vehicle theft prevention
standard is neither "major" within the meaning of
Executive Order 12291 nor "significant" within
the meaning of the Department of Transportation
regulatory policies and procedures. As noted above,
the selections have all been made in accordance
with the provisions of the Cost Savings Act, and the
manufacturers of the selected lines have already
been informed that those lines are subject to the
requirements of Part 541 for the 1988 model year.
This listing does not actually exempt lines from the
requirements of Part 541; it only informs the
general public of all such exemptions. Since the
only purpose of this final listing is to inform the
public of prior final agency action for the 1988
model year, a full regulatory evaluation has not
been prepared.
The agency has also considered the effects of this
listing under the Regulatory Flexibility Act. I
hereby certify that this rule will not have a
significant economic impact on a substantial
number of small entities. As noted above, the effect
of this notice is simply to inform the public of those
lines that will be subject to the requirements of
Part 541 for the 1988 model year. The agency
believes this information will not have any economic
impact on small entities.
In consideration of the foregoing, 49 CFR Part
541 is amended as follows:
Appendix A of Part 541 is revised. Appendix A-I
is deleted, and Appendix A-II is redesignated as
Appendix A-I, to read as follows:
Appendix A — Lines Subject to the Requirements of this Standard
Manufacturer
Alfa Romeo
Subject Lines
Milano 161
BMW
3 - Car line
5 - Car line
6- Car line
Chrysler
Chrysler Executive Sedan/Limousine
Chrysler Fifth Avenue/Newport
Chrysler Laser
Chrysler LeBaron/Town & Country
Chrysler LeBaron GTS
Dodge Aries
Dodge Daytona
Dodge Diplomat
Dodge Lancer
Dodge 600
Plymouth Caravelle
Plymouth Gran Fury
Plymouth Reliant
"Q" Car
Ferrari
Mondial 8
308
328
Ford
Ford Mustang
Ford Thunderbird
Mercury Capri
Mercury Cougar
PART 541-PRE 50
i
Lincoln Continental
Lincoln Mark
Lincoln Town Car
Merkur Scorpio
Merkur XR4Ti
General Motors
i
Mercedes-Benz
»)
Buick Electra
Buick LeSabre
Buick Regal
Buick Riviera
Cadillac DeVille
Cadillac Eldorado
Cadillac Seville
Chevrolet Camaro
Chevrolet Nova
Oldsmobile Cutlass Supreme
Oldsmobile Delta 88
Oldsmobile 98
Oldsmobile Toronado
Pontiac Bonneville
Pontiac Fiero
Pontiac Firebird
Pontiac Grand Prix
Honda
Acura Legend
Jaguar
XJ
XJ-6
XJ-40
Maserati
Biturbo
Quattroporte
Mazda
GLC
626
MX-6
190 D/E
260 E
300 CE
300 D/E
300 SE
300 TD
300 TE
300 SDL
300 SEL
380 SEC/500 SEC
380 SEL/500 SEL
380 SL
420 SEL
560 SEL
560 SEC
560 SL
PART 541-PRE 51
Mitsubishi
Cordia
Tredia
Porsche
911
924S
928
Reliant
SSI
Saab
900
9000
Subaru
Toyota
XT
Camry
Celica
Corolla/Corolla Sport
MR2
Starlet
Volkswagen
Audi Quattro
Volkswagen Cabriolet
Volkswagen Rabbit
Volkswagen Scirocco
Appendix A-I — Lines Exempted from the Requirements of This Standard
Pursuant to 49 CFR Pa rt 5^3
Manufacturer
Austin Rover
Nissan
Exempted Lines
Sterling
BMW
7 Car line
Chrysler
Chrysler Conquest
General Motors
Cadillac Allante
Chevrolet Corvette
Isuzu
Impulse
Mazda
929
RX-7
Mitsubishi
Galant
Starion
Maxima
300 ZX
PART 541— PRE 52
»
Toyota Supra
Cressida
Volkswagen Audi 5000S
Issued on December 30, 1987
Diane K. Steed
Administrator
53 F.R. 133
December 30, 1987
I
i)
PART 541-PRE 53-54
PREAMBLE TO AN AMENDMENT TO PART 541
Final Listing of High-Theft Lines for 1988 IVIodel Year;
Motor Vehicle Theft Prevention Standard
(Docket No. T84-01; Notice 14)
ACTION: Technical Amendment.
SUMMARY: This technical amendment adds a new
car line to the January 5, 1988, final listing of high-
theft lines for Model Year (MY) 1988 published by the
agency in its Final Rule at 53 FR 133. The new MY
1988 car line was determined to be a likely high-theft
vehicle but was inadvertently omitted from the agen-
cy's MY 1988 listing. The list of high-theft car lines
is intended to inform the public, particularly law en-
forcement groups, of the car lines that are subject to
the marking requirements of the theft prevention
standard for MY 1988.
EFFECTIVE DATE: April 22, 1988
SUPPLEMENTARY INFORMATION: On October 24,
1985, NHTSA published a new Part 541, Federal
Motor Vehicle Theft Prevention Standard; 50 FR
43166. Part 541 sets forth performance requirements
for inscribing or affixing identification numbers into
or onto covered original equipment major parts, and
the replacement parts for those original equipment
parts, on all vehicles in lines selected as high-theft
lines.
Section 603(aX2) of the Motor Vehicle Information
Cost Savings Act (15 U.S.C. 2023(aX2) hereinafter
"the Cost Savings Act") specifies that NHTSA shall
select high-theft lines with the agreement of the
manufacturer, if possible. NHTSA has published the
procedures that it follows in selecting lines as high-
theft lines at 49 CFR Part 542. On January 5, 1988,
the agency published its listing of high-theft MY 1988
car lines at 53 FR 133 which included five newly
selected lines for MY 1988 and those car lines that
were previously selected as high-theft car lines begin-
ning with MY 1987. A sixth MY 1988 car line was
inadvertently omitted from the final listing. This
amendment corrects that error, by adding the General
Motors Buick Reatta car line to the list.
Section 603(d) of the Cost Savings Act (15 U.S.C.
2023 (d)) provides that the theft prevention standard
must continue to apply to all lines that have been
selected as high-theft lines, unless those previously
selected lines receive an exemption under Section 605
of the Cost Savings Act (15 U.S.C. 2025).
Section 605 provides that a manufacturer may peti-
tion to have a high-theft line exempted from the
requirements of Part 541, if the line is equipped as
standard equipment with an anti-theft device. The
exemption is granted if NHTSA determines that the
standard equipment anti-theft device is likely to be
as effective as compliance with Part 541 in reducing
and deterring motor vehicle thefts. The omitted car
line does not have an anti-theft device installed as
standard equipment.
The revised listing is intended to inform the public,
particularly law enforcement groups, concerning
which car lines are subject to the marking re-
quirements of the theft prevention standard for the
1988 model year, and which car lines are exempted
from the theft prevention standard for the 1988 model
year because of standard equipment anti-theft
devices.
To repeat, the agency and motor vehicle manufac-
turers have come to an agreement on these selected
car lines, including the omitted line, in accordance
with 49 CFR Part 542, and Section 603 of the Cost
Savings Act. Accordingly, this correction would not
impose any additional responsibilities on vehicle
manufacturers. It would only inform the public of
previous agency action and ensure that all deter-
mined likely high-theft car lines are listed. In con-
sideration of the foregoing. Appendix A of Part 541
is revised for General Motors car lines to read as
follows:
Appendix A— Lines Subject to the Requirements of
This Standard
% He :(e He :fc
* * *
General Motors
Buick Electra
Buick LeSabre
Buick Reatta
Buick Regal
Buick Riviera
Cadillac Deville
Cadillac Eldorado
Cadillac Seville
Chevrolet Camaro
Chevrolet Nova
PART 541-PRE 55
General Motors - Oldsmobile Cutlass * *
(Continued) Supreme Issued on April 18, 1988
Oldsmobile Delta 88
Oldsmobile 98
Oldsmobile Toronado
Pontiac Bonneville Diane K. Steed
Pontiac Fiero Administrator
Pontiac Firebird
Pontiac Grand Prix 53 F.R. 13274
April 22, 1988
PART 541-PRE 56
PREAMBLE TO AN AMENDMENT TO PART 541
Motor Vehicle Theft Prevention Standard
Final Listing of High Theft Lines for 1989 Model Year
(Docket No. T84-01; Notice 190)
ACTION: Final rule; technical amendment.
SUMMARY: The purpose of this notice is tod) report
the results of this agency's actions for determining
which car lines are subject to the marking require-
ments of the motor vehicle theft prevention standard
for the 1989 model year, and (2) publish a list of
those car lines. NHTSA has previously published a
list of the car lines that were selected as high theft
car lines for prior model years, beginning with the
1987 model year. The list in this notice includes all
of the car lines in the previous lists, as well as the
new lines that were introduced for the 1989 model
year and that have been selected as likely high theft
lines. In addition, this listing shows the three new
lines that have standard equipment anti-theft
devices and have been granted exemptions from
complying with the requirements of the theft
prevention standard beginning with the 1989 model
year. One additional line previously listed as having
been designated a high theft line has been granted
an exemption from the parts marking requirements
for Model Year 1989 because it has a standard
equipment anti-theft device. This final listing for
the 1989 model year is intended to inform the public,
particularly law enforcement groups, of the car lines
that are subject to the marking requirements of the
theft prevention standard for the 1989 model year.
EFFECTIVE DATE: This listing applies to the 1989
model year. The amendment made by this notice is
effective March 30, 1989.
SUPPLEMENTARY INFORMATION: Federal Motor
Vehicle Theft Prevention Standard, 49 CFR Part
541, sets forth performance requirements for in-
scribing or affixing identification numbers into or
onto covered original equipment major peirts, and
the replacement parts for those original equipment
parts, on all vehicles in lines selected as high theft
lines.
Section 603(aX2) of the Motor Vehicle Information
and Cost Savings Act (15 U.S.C. 2023(aX2); herein-
after "the Cost Savings Act") specifies that NHTSA
shall select the high theft lines, with the agreement
of the manufacturer, if possible. In accordance with
procedures published in 49 CFR Part 542, NHTSA
previously selected nine of the new 1989 car lines as
likely to be high theft lines. The newly selected lines
are set forth in this listing, along with all those lines
that had been selected as high theft lines and listed
for one or more prior model years. Lists of selected
lines were published at 51 FR 42577; November 25,
1986, for Model Year 1987, and at 53 FR 133;
January 5, 1988, for Model Year 1988. Section
603(d) of the Cost Savings Act (15 U.S.C. 2023(d))
provides that the theft prevention standard must
continue to apply to each line that has been selected
as high theft lines, unless that line is exempted
under section 605 of the Cost Savings Act (15 U.S.C.
2025).
Section 605 provides that a manufacturer may
petition to have a high theft line exempted from the
requirements of Part 541, if the line is equipped as
standard equipment with an anti-theft device. The
exemption is granted if NHTSA determines that the
standard equipment anti-theft device is likely to be
as effective as compliance with Part 541 in reducing
and deterring motor vehicle thefts. Pursuant to this
statutory provision, NHTSA has exempted from the
requirements of Part 541 three of the new lines that
have been selected as high theft. Also pursuant to
Section 605, the agency has exempted an existing
car line, the Saab 9000, that was formerly subject to
Part 541, beginning with the 1989 model year.
This revised listing is intended to inform the
public, particularly law enforcement groups, of
those car lines that are subject to the marking
requirements of the theft prevention standard for
the 1989 model year, and of those car lines that are
exempted from the theft prevention standard for the
1989 model year because of standard equipment
anti-theft devices. The car lines listed as being sub-
ject to the standard were previously selected as high
theft lines, in accordance with Part 542 and section
603 of the Cost Savings Act. Similarly, the car lines
listed as being exempt from the standard were pre-
viously exempted in accordance with Part 543 and
PART 541-PRE 57
section 605 of the Cost Savings Act. Therefore, since
this revised listing only informs the public of
previous agency actions and agreements, and does
not impose any additional obligations on any party,
NHTSA finds for good cause that the amendment
made by this notice should be effective as soon as it
is published in the Federal Register.
For the same reasons, NHTSA also finds for good
cause that notice and opportunity for comment on
this listing are imnecessary. Further, public com-
ment on the listing of selections and exemptions is
not contemplated by Title VI, and is unnecessary
after the selections and exemptions have been made
in accordance with the statutory criteria.
Regulatory Impacts.
NHTSA has determined that this rule listing the
car lines that are high theft and are subject to the re-
quirements of the vehicle theft prevention standeu-d
and the car lines that are exempt from the standard
is neither "major" within the meaning of Executive
Order 12291 nor "significant" within the meaning
of the Department of Transportation regulatory
policies and procedures. As noted above, the selections
have all been made in accordance with the provisions
of the Cost Savings Act, and the manufacturers of
the selected lines have already been informed that
those lines are subject to the requirements of Part
541 for the 1989 model year. Further, this listing
does not actually exempt lines from the requirements
of Part 541; it only informs the general public of all
such exemptions. Since the only purpose of this final
listing is to inform the public of prior final agency
action for the 1989 model year, a full regulatory
evaluation has not been prepared.
The agency has also considered the effects of this list-
ing imder the Regulatory Flexibility Act. I hereby cer-
tify that this rule will not have a significant economic
impact on a substantial number of small entities. As
noted above, the effect of this notice is simply to in-
form the public of those lines that are subject to the
requirements of Part 541 for the 1989 model year.
The agency believes that listing of this information
will not have any economic impact on small entities.
In accordance with the National Environmental
Policy Act of 1969, the agency has considered the en-
vironmental impacts of this rule, and determined
that it will not have any significant impact on the
quality of the human environment.
Finally, this action has been analyzed in accord-
ance with the principles and criteria contained in
Executive Order 12612, and it has been determined
that the proposed rulemaking does not have suffi-
cient federalism implications to warrant the
preparation of a Federalism Assessment.
In consideration of the foregoing, 49 CFR Part 54 1
is amended as follows:
Appendix A of Part 541 is revised, Appendix A-I
revised to read as follows:
Manufacturer
Alfa Romeo
Appendix A— Lines Subject to the Requirements of this Standard
Subject Lines
Milano 161
BMW
3 - Car line
5 - Car line
6 - Car line
Chrysler
Chrysler Executive Sedan/Limousine
Chrysler Fifth Avenue/Newport
Chrysler Laser
Chrysler LeBaron/Town & Country
Chrysler LeBaron GTS
Dodge Aries
Dodge Daytona
Dodge Diplomat
Dodge Lancer
Dodge 600
Plymouth Caravelle
Plymouth Gran Fury
Plymouth Reliant
Chrysler TC
PART 541-PRE 58
i
Manufacturer
Ferrari
Appendix A— Lines Subject to the Requirements of this Standard
Subject Lines
Mondial 8
308
328
Ford
Ford Mustand
Ford Thunderbird
Ford Probe**
Mercury Capri
Mercury Cougar
Lincoln Continental
Lincoln Mark
Lincoln Town Car
Merkur Scorpio
Merkur XR4Ti
General Motors
I
Buick Electra
Buick LeSabre
Buick Reatta
Buick Regal
Buick Riviera
Cadillac DeVille
Cadillac Eldorado
Cadillac Seville
Chevrolet Camaro
Chevrolet Nova
Oldsmobile Cutlass Supreme
Oldsmobile Delta 88
Oldsmobile 98
Oldsmobile Toronado
Pontiac Bonneville
Pontiac Fiero
Pontiac Firebird
Pontiac Grand Prix
Geo Prizm**
Honda
Acura Legend
Jaguar
XJ
XJ-6
XJ-40
Maserati
Biturbo
Quattroporte
228**
Mazda
GLC
626
MX-6
PART 541-PRE 59
Manufacturer
Mercedes-Benz
Appendix A— Lines Subject to the Requirements of this Standard
Subject Lines
190 D/E
260 E
300 CE
300 D/E
300 SE
300 TD
300 TE
300 SDL
300 SEL
380 SEC/500 SEC
380 SEL/500 SEL
380 SL
420 SEL
560 SEL
560 SEC
560 SL
Mitsubishi
Cordia
Tredia
Eclipse**
Peugeot
405^
Porsche
911
924S
928
Reliant
SSI
Saab
900
Subaru
XT
Toyota
Camry
Celica
Corolla/Corolla Sport
MR2
Starlet
Volkswagen
Audi Quattro
Volkswagen Cabriolet
Volkswagen Rabbit
Volkswagen Scirocco
Volkswagen Corrado**
**Nine car lines were added to the MY 1989 listings. Of these, three car lines received exemptions from the
requirements of Part 541. Also, one existing car line (Saab 9000) received an exemption from the requirements
of Part 541.
PART 541-PRE 60
Appendix A-I— High-Theft Lines with Antitheft Devices that are
Exempted from the Requirements of this Standard Pursuant to 49 CFR Part 543
Manufacturer
Austin Rover
Volkswagen
Exempted Lines
Sterling
BMW
7 Car line*
Chrysler
Chrysler Conquest
General Motors
Cadillac Allante
Chevrolet Corvette
Isuzu
Impulse
Mazda
929
RX7
Mitsubishi
Galant
Starion
Nissan
Maxima
300 ZX
Saab
9000**
Toyota
Supra
Cressida
Audi 5000S
Audi 100**
Audi 200**
Volvo
480ES**
*Although the BMW 7 car line received an exemption from parts marking, the exemption is not being used.
This means the BMW 7 car line must be marked as required under Part 541.
**Nine car lines were added to the MY 1989 listings. Of these, three car lines received exemptions from the re-
quirements of Part 541. Also, one existing car line (Saab 9000) received an exemption from the requirements of
Part 541.
Diane K. Steed
Administrator
54 FR 13067
March 30, 1989
PART 541-PRE 61-62
t
PREAMBLE TO AN AMENDMENT TO PART 541
Final Listing of High Theft Lines for 1990 Model Year
Motor Vehicle Theft Prevention Standard
(Docket NO.T84-01; Notice 20)
RIN:2127-AC96
ACTION: Final rule; technical amendment.
SUMMARY: The purpose of this notice is to (1) report
the results of this agency's actions for determining
which car lines are subject to the marking requirements
of the motor vehicle theft prevention standard for the
1990 model year, and (2) publish a list of those car lines.
NHTS A has previously published a list of the car lines
that were selected as high theft car lines for prior
model years, beginning with the 1987 model year. The
list in this notice includes all of the car lines in the
previous lists, as well as thirteen new lines that were
introduced for the 1990 model year and that have been
selected as likely high theft lines. In addition, this
listing shows the seven new lines that have standard
equipment anti-theft devices and have been granted
exemptions from complying with the requirements of
the theft prevention standard beginning with the 1990
model year. Two more car lines have been exempted in
part and are required to have only their engines and
transmissions marked. This final listing for the 1990
model year is intended to inform the public, particularly
law enforcement groups, of the car lines that are
subject to the marking requirements of the theft
prevention standard for the 1990 model year.
EFFECTIVE DATE: This listing applies to the 1990
model year. The amendment made by this notice is
effective September 20, 1989.
SUPPLEMENTARY INFORMATION: Federal Motor
Vehicle Theft Prevention Standard, 49 CFR Part 541,
sets forth requirements for inscribing or affixing
identification numbers onto covered original equipment
major parts, and the replacement parts for those
original equipment parts, on all vehicles in lines
selected as high theft lines.
Section 603(a)(2) of the Motor Vehicle Information
and Cost Savings Act (15 U.S.C. 2023(a)(2); hereinafter
"the Cost Savings Act") specifies that NHTSA shall
select the high theft lines, with the agreement of the
manufacturer, if possible. In accordance with pro-
cedures published in 49 CFR Part 542, NHTSA pre-
viously selected twenty-two of the new 1990 car lines
as likely to be high theft lines. The newly selected lines
are set forth in this listing, along with all those lines
that had been selected as high theft lines and listed in
prior model years.
Section 663(d) of the Cost Savings Act (15 U.S.C.
2023(d)) provides that the theft prevention standard
must continue to apply to each line that has been
selected as a high theft line, unless that line is
exempted under section 605 of the Cost Savings Act (15
U.S.C.2025). Section 605 provides that a manufacturer
may petition to have a high theft line exempted from
the requirements of Part 541, if the line is equipped as
standard equipment with an anti-theft device. The
exemption is granted if NHTSA determines that the
anti-theft device is likely to be as effective as compliance
with Part 541 in reducing and deterring motor vehicle
thefts. Pursuant to this statutory provision, NHTSA
has exempted nine of the twenty-two high theft car
lines from the parts marking requirements of Part 541.
Seven of these nine car lines are exempted in full from
Part 541 and two of the nine are exempted in part.
This notice is intended to inform the public, par-
ticularly law enforcement groups, of the high-theft car
lines for the 1990 model year, and of those car lines that
are exempted from the theft prevention standard for
the 1990 model year because of standard equipment
anti-theft devices.
The car lines listed as being subject to the standard
have been selected as high theft lines in accordance
with the procedures of 49 CFR Part 542 and section 603
of the Cost Savings Act. Under these procedures,
manufacturers evaluate new car lines to conclude
whether those new lines are likely to have high theft
rates. Manufacturers submit these evaluations and
conclusions to the agency, which makes an indej)endent
evaluation and, on a preliminary basis, determines
whether the new line should be subject to parts
marking. NHTSA informs the manufacturer in writing
of its evaluations and determinations, together with
the factual information considered by the agency in
making them. The manufacturer may request the
agency to reconsider these preliminary determinations.
PART 541— PRE 63
Within 60 days of the receipt of the request, NHTSA
makes its final determination. NHTSA informs the
manufacturer by letter of these determinations and its
response to the request for reconsideration. If there is
no request for reconsideration, the agency's determi-
nation becomes final 45 days after sending the letter
with the preliminary determination. Each of the new
car lines on the high theft list is the subject of a final
determination.
Similarly, the car lines listed as being exempt from
the standard have been exempted in accordance with
the procedures of 49 CFR Part 543 and section 605 of
the Cost Savings Act. Therefore, since this revised
listing only informs the public of previous agency
actions, and does not impose any additional obligations
on any party, NHTSA finds for good cause that the
amendment made by this notice should be effective as
soon as it is published in the Federal Register.
In consideration of the foregoing, 49 CFR Part 541 is
amended as follows:
Appendix A of Part 541 is revised. Appendix A-I is
revised to read as follows, and Appendix A-II is added
as follows:
Appendix A— Lines Subject to the Requirements of this
Standard
Ford
Manufacturer
Subject Lines
Alfa Romeo
Milano 161
Fiat 164*
BMW
3 — Car line
5 — Car line
6 — Car line
Chrysler
Chrysler Executive Sedan/Limousine
Chrysler Fifth Avenue/Newport
Chrysler Laser
Chrysler LeBaron/Town & Country
Chrysler LeBaron GTS
Chrysler TC
Chrysler Eagle Talon*
Chrysler New Yorker Fifth Avenue*
Dodge Aries
Dodge Daytona
Dodge Diplomat
Dodge Lancer
Dodge 600
Plymouth Caravelle
Plymouth Laser*
Plymouth Gran Fury
Plymouth Reliant
Ferrari
Mondial 8
308
328
General Motors
Mazda
Mercedes-Benz
Ford Mustang
Ford Thunderbird
Ford Probe
Mercury Capri
Mercury Couger
Lincoln Continental
Lincoln Mark
Lincoln Town Car
Merkur Scorpio
Merkur XR4Ti
#
Buick Electra
Buick LeSabre
Buick Reatta
Buick Regal
Buick Riviera
Cadillac DeVille
Cadillac Eldorado
Cadillac Seville
Chevrolet Nova
Chevrolet Lumina*
Oldsmobile Cutlass Supreme
Oldsmobile Delta 88
Oldsmobile 98
Oldsmobile Toronado
Pontiac Bonneville
Pontiac Fiero
Pontiac Grand Prix
Geo Prizm
Geo Storm*
Honda
Acura Legend
Acura NS-X*
Isuzu
90JZ*
Jaguar
XJ
XJ-6
XJ-40
Lotus
MlOO*
Maserate
Biturbo
Quattroporte
228
GLC
626
MX-6
MX-5 Miata*
190 D/E
250DT
260 E
300 CE
300 D/E
300 SE
300 SL*
300 TD
300 TE
300 SDL
300 SEL
380 SEC/500 SEC
380 SEL/500 SEL
380 SL
420 SEL
500 SL*
560 SEL
560 SEC
560 SL
PART 541— PRE 64
Mitsubishi;
Cordia
Tredia
Eclipse
Peugeot
405
Porsche
924S
Reliant
SSI
Saab
900
Subaru
XT
Nissan
Toyota
Camry
Celica
Corolla/Corolla Sport
MR2
Starlet
Volkswagen
Audi Quattro
Volkswagen Cabriolet
Volkswagen Rabbit
Volkswagen Scirocco
Volkswagen Corrado
♦Lines added in Model Year 1990
Appendix A-I — High-Theft Lines with Antitheft
Devices that are Exempted from the Requirements of this
Standard Pursuant to 49 CFR Part 543
Manufacturer
Mitsubishe
Exempted Lines
Austin Rover
Sterling
BMW
7 — Car line
Chrysler
Chrysler Conquest
Imperial**
General Motors
Cadillac Allante
Chevrolet Corvette
Isuzu
Impulse
Mazda
929
RX7
Galant
Starion
Maxima
300ZX
Infiniti M30*
InfinitiQ45**
Porsche
911**
928**
Saab
9000
Toyota
Supra
Cressida
Lexus LS400**
Lexus ES250**
Volkswagen
Audi 5000S
Audi 100
Audi 200
Volvo
480ES
**Lines exempted from the requirements of Part 541
pursuant to 49 CFR Part 543 in MY 1990.
Appendix A- 1 1 — High Theft Lines with Antitheft
Devices that are Exempted in Part from the Parts-
Marking Requirements of this Standard Pursuant to 49
CFR Part 543
Manufacturer Exempted Lines Parts Marked
General Motors Chevrolet Camaro Engine, Transmission
Pontiac Firebird Engine, Transmission
These two car lines received partial exemptions from
the requirements of Part 541 pursuant to 49 CFR Part
543 in MY 1990.
Jeffrey R. Miller
Acting Administrator
54 F.R.38684
September 20, 1989
PART 541-PRE 65-66
PREAMBLE TO AN AMENDMENT TO PART 541
Final Listing of High Theft lines for 1991 Model Year;
Motor Vehicle Theft Prevention Standard
(Docket 90-19; Notice 01)
RIN 2127-AD33
ACTION: Final rule; technical amendment.
SUMMARY: The purpose of this notice is to (1) report
the results of this agency's actions for determining
which car Hnes are subject to the marking requirements
of the motor vehicle theft prevention standard for the
1991 model year, and (2) publish a list of those car lines.
NHTSA has previously published lists of the car lines
that were selected as high theft car lines for prior
model years, beginning with the 1987 model year. The
list in this notice includes all of the car lines in the
previous lists, as well as five new lines that were
introduced for the 1991 model year and that have been
selected as likely high theft lines. In addition, this
listing shows the two additional lines that have
standard equipment anti-theft devices and have been
granted exemptions from the requirements of the theft
prevention standard beginning with the 1991 model
year. Two more car lines have been exempted in part
and are required to have only their engines and
transmissions marked.
This final listing for the 1991 model year is intended
to inform the public, particularly law enforcement
groups, of the car lines that are subject to the marking
requirements of the theft prevention standard for the
1991 model year.
EFFECTIVE DATE: This listing apphes to the 1991
model year. The amendment made by this notice is
effective September 11, 1990.
SUPPLEMENTARY INFORMATION: Federal Motor
Vehicle Theft Prevention Standard. 49 CFR Part 541,
sets forth requirements for inscribing or affixing
identification numbers onto covered original equipment
major parts, and the replacement parts for those
original equipment parts, on all vehicles in lines
selected as high theft lines.
Section 603(aX2) of the Motor Vehicle Information
and Cost Savings Act (15 U.S.C. 2023(aX2); hereinafter
"the Cost Savings Act") specifies that NHTSA shall
select the high theft lines, with the agreement of the
manufacturer, if possible. Section 603(d) of the Cost
Savings Act (15 U.S.C. 2023(d)) provides that once a
line has been designated as a high theft line, it remains
subject to the theft prevention standard imless that line
is exempted under section 605 of the Cost Savings Act
(15 U.S.C. 2025). Section 605 provides that a
manufacturer may petition to have a high theft line
exempted from the requirements of Part 541, if the line
is equipped as standard equipment with an anti-theft
device. The exemption is granted if NHTSA
determines that the anti-theft device is likely to be as
effective as compliance wath Part 541 in reducing and
deterring motor vehicle thefts.
The agency annually publishes a list of the lines so
selected for previous model years. This notice is
intended to inform the public, particularly law
enforcement groups, of the high-theft car lines for the
1991 model year, and of those car lines that are
exempted from the theft prevention standard for the
1991 model year because of standard equipment anti-
theft devices
The list includes the five new 1991 car lines selected
by the agency in accordance with procedures published
in 49 CFR Part 542 as likely to be high theft lines. The
list also includes all those lines that were selected as
high theft lines and listed for prior model years. For
model year 1990, the Alfa Romeo 164 car line was
incorrectly identified as the Fiat 164. The Alfa Romeo
164 is correctly identified for the 1991 model year.
This notice also includes four high theft lines
exempted by the agency, beginning in MY 1991, from
the parts marking requirements of Part 541. Two of
these car lines are exempted in full from Part 541 and
two are exempted in part.
Notice and comment; effective date. The car lines listed
as being subject to the standard have been selected as
high theft lines in accordance with the procedures of
49 CFR Part 542 and section 603 of the Cost Savings
Act. Under these procedures, manufacturers evaluate
new car lines to conclude whether those new lines are
likely to have high theft rates. Manufacturers submit
these evaluations and conclusions to the agency, which
makes an independent evaluation, and, on a
preliminary basis, determines whether the new line
should be subject to parts marking. NHTSA informs
PART 541-PRE 67
the manufacturer in writing of its evaluations and
determinations, together with the factual information
considered by the agency in making them. The
manufacturer may request the agency to reconsider
these preliminary determinations. Within 60 days of
the receipt of the request, NHTSA makes its final
determination. NHTSA informs the manufacturer by
letter of these determinations and its response to the
request for reconsideration. If there is no request for
reconsideration, the agency's determination becomes
final 45 days after sending the letter with the
preliminary determination. Each of the new car lines
on the high theft list is the subject of a final
determination.
Similarly, the car lines listed as being exempt from
the standard have been exempted in accordance with
the procedures of 49 CFR Part 543 and section 605 of
the Cost Savings Act.
Therefore, NHTSA finds for good cause that notice
and opportunity for comment on this listing are
unnecessary. Further, public comment on the listing
of selections and exemptions is not contemplated by
Title VI, and is unnecessary after the selections and
exemptions have been made in accordance with the
statutory criteria.
For the same reasons, since this revised listing only
informs the public of previous agency actions, and does
not impose any additional obligations on any party,
NHTSA finds for good cause that the amendment made
by this notice should be effective as soon as it is
published in the Federal Register.
In consideration of the foregoing, 49 CFR Part 541
is amended as follows:
Appendix A of Part 541 is revised, Appendix A-I
revised to read as follows, and Appendix A-II is revised
to read as follows:
PART 541— Appendix A
Lines subject to the requirements of Part 541
Manufacturer
Alfa Romeo
Subject Lines Manufacturer Subject Linss
Milano 161 ^°^'^ 1°"^^ T^^!'^. .
p- . ic/i Ford Thunderbird
Fiat 164 ^_, ^_^
BMW
3-Carline
5— Carline
6-Carline
Mercury Capri
Mercury Cougar
Lincoln Continental
Lincoln Mark
Lincoln Town Car
Merkur Scorpio
Merkur XR4Ti
Chrysler
Chrysler Executive Sedan/Limousine
Chrysler Fifth Avenue/Newport
Chrysler Laser
Chrysler LeBaron/Town & Country
Chrysler LeBaron GTS General Motors Buick Electra
Chrysler TC Buick LeSabre
Chrysler Eagle Talon Buick Reatta
Chrysler New Yorker Fifth Avenue Buick Regal
Dodge Aries Buick Riviera
Dodge Daytona Cadillac DeVille
Dodge Diplomat Cadillac Eldorado
Dodge Lancer Cadillac Seville
Dodge 600 Chevrolet Nova
IDodge Stealth'l Chevrolet Lumina
Plymouth Caravelle
Plymouth Laser
Plymouth Gran Fury
Plymouth Reliant
Oldsmobile Cutlass Supreme
Oldsmobile Delta 88
Oldsmobile 98
Oldsmobile Toronado
IConsulier
Ferrari
Consulier GTP'l
Mondial 8
308
328
Pontiac Bonneville
Pontiac Fiero
Pontiac Grand Prix
Geo Prizm
Geo Storm
PART 541 -PRE 68
I
PART 541— Appendix A— Continued
Lines subject to the requirements of Part 541
Manufacturer
Subject Lines
llsuzu
90JZ* Impulsel
I90JX* Implusel
Jaguar
XJ
XJ-6
XJ-40
Lotus
MlOO
ILotus Elan'l
Maserati
Biturbo
Quattroporte
228
Manufacturer
Subject Lines
Mazda
Mercedes-Benz
I
Mitsubishi
GLC
626
MX-6
MX-5 Miata
190 D/E
250D-T
260 E
300 CE
300 D/E
300 SE
300 SL
300 TD
300 TE
300 SDL
300 SEL
380 SEC/500 SEC
380 SEL/500 SEL
380 SL
Toyota
Volkswagen
420 SEL
500 SL
560 SEL
560 SEC
560 SL
Cordia
Tredia
Eclipse
I3000GT*!
Peugeot
405
Porsche
924S
Reliant
SSI
Saab
900
Subaru
XT
Camry
Celica
Corolla/Corolla Sport
MR2
Starlet
Audi Quattro
Volkswagen Cabriolet
Volkswagen Rabbit
Volkswagen Scirocco
Volkswagen Corrado
' Lines added in Model Year 1991.
PART 541-PRE 69
PART541— Appendix A-l
High-Theft Lines With Antitheft Devices That are Exempted from the Requirements of This Standard
Pursuant to 49 CFR Part 543
Manufacturer
Exempted Lines
Austin Rover
Sterling
BMW
7 Car line
Chrysler
Chrysler
Chrysler Conquest
Imperial
General Motors
Cadillac Allante
Chevrolet Corvette
IHonda
AcuraNS-X"
Acura Legend**!
Isuzu
Impulse
Mazda
929
RX7
Mitsubishi
Galant
Starion
Nissan
Porsche
Saab
Toyota
Volkswagen
Volvo
Maxima
300 ZX
Infiniti M30
Infmiti Q45
911
928
9000
Supra
Cressida
Lexus LS400
Lexus ES250
Audi 500S
Audi 100
Audi 200
480ES
• Lines exempted from the requirements of Part 541 pursuant to 49 CFR Part 543 in
MY 1991.
PART 541 -PRE 70
»
PART541— Appendix A-ll
High Theft Lines With Antltheft Devices That are Exempted In Part From the Parts-Marking Requirements
of This Standard Pursuant to 49 CFR Part 543
Manufacturer
Exempted Lines
Parts Marked
General Motors
Chevrolet Camaro
Engine, Transmission
Pontiac Firebird
Engine, Transmission
ICadillac Deville-
Engine, Transmission
Fleetwood***
Oldsmobile 98* ••
Engine,
Transmission!
• •• Received partial exemptions from the requirements of PART 541 pur-
suant to 49 CFR Part 543 in MY 1990.
Jeffrey R. Miller
Acting Administrator
I
55 F.R. 37326
September 11, 1990
I
PART 541-PRE 71-72
PREAMBLE TO AN AMENDMENT TO PART 541
Final Listing of l-iigh Theft Lines for 1992 IVIodel Year
IVIotor Vehicle Theft Prevention Standard
(Docket No. T84-01; Notice 260)
RIN: 2127-AD53
ACTION: Final rule, technical amendment.
SUMMARY: The purpose of this notice is to (1) report
the results of this agency's actions for determining
which car lines are subject to the marking requirements
of the motor vehicle theft prevention standard for the
1992 model year and, (2) publish a list of those car lines.
NHTSA has previously published lists of the car lines
that were selected as high theft car lines for prior
model years, beginning with the 1987 model year. The
list in this notice includes all of the car lines in the previ-
ous lists, as well as four new lines that were introduced
for the 1992 model year and that have been selected
as likely high theft lines. In addition, this listing shows
the five additional lines that have standard equipment
anti-theft devices and have been granted exemptions
from the requirements of the theft prevention standard
beginning with the 1992 model year. Two more car
lines have been exempted in part and are required to
have only their engines and transmissions marked.
This final listing for the 1992 model year is intended
to inform the public, particularly law enforcement
groups, of the car lines that are subject to the mark-
ing requirements of the theft prevention standard for
the 1992 model year.
EFFECTIVE DATE: This listing applies to the model
year. The amendment made by this notice is effective
September 4, 1991.
SUPPLEMENTARY INFORMATION:
The Federal Motor Vehicle Theft Prevention Stand-
ard, 49 CFR Part 541, sets forth requirements for
inscribing or affixing identification numbers onto
covered original equipment major parts, and the
replacement parts for those original equipment parts,
on all vehicles in lines selected as high theft lines.
Section 603(aX2) of the Motor Vehicle Information
and Cost Savings Act (15 U.S.C. 2023(aX2); hereinafter
"the Cost Savings Act") specifies that NHTSA shall
select the high theft lines, with the agreement of the
manufacturer, if possible. Section 603(d) of the Cost
Savings Act (15 U.S.C. 2023(d)) provides that once a
line has been designated as a high theft line, it remains
subject to the theft prevention standard unless that line
is exempted under Section 605 of the Cost Savings Act
(15 U.S.C. 2025). Section 605 provides that a manufac-
turer may petition to have a high theft line exempted
from the requirements of Part 541, if the line is
equipped as standard equipment with an antitheft
device. The exemption is granted if NHTSA deter-
mines that the antitheft device is likely to be as effec-
tive as compliance with Part 541 in reducing and
deterring motor vehicle thefts.
The agency annually publishes the names of the lines
which were listed as high theft lines for one or more
previous model years and of the lines which are being
listed for the first time and will be subject to the theft
prevention standard beginning with the next model
year. This notice is intended to inform the public, par-
ticularly law enforcement groups, of the high theft car
lines for the 1992 model year. It also identifies those
car lines that are exempted from the theft prevention
standard for the 1992 model year because of standard
equipment anti-theft devices.
The list includes the four new 1992 car lines se-
lected by the agency in accordance with procedures
published in 49 CFR Part 542 as likely to be high theft
lines. The list also includes all those lines that were
selected as high theft lines and listed for prior model
years.
The notice also includes seven high theft lines
exempted by the agency, beginning from MY 1992,
from the parts marking requirements of Part 541. Five
of these car lines are exempted in full from Part 541,
and two are exempted in part, with the manufacturer
required to mark only the engines and transmissions
of these vehicles.
Notice and comment; effective date. The car lines listed
as being subject to the standard have been selected as
high theft lines in accordance with the procedures of
49 CFR Part 542 and Section 603 of the Cost Savings
Act. Under these procedures, manufacturers evaluate
new car lines to conclude whether those new lines are
likely to have high theft rates. Manufacturers submit
PART 541-PRE 78
these evaluations and conclusions to the agency, which
makes an independent evaluation, and, on a prelimi-
nary basis, determines whether the new line should be
subject to parts marking. NHTSA informs the manu-
facturer in writing of its evaluations and determina-
tions, together with the factual information considered
by the agency in making them. The manufacturer may
request the agency to consider these preliminary
determinations. Within 60 days of the receipt of the
request, NHTSA makes its final determination.
NHTSA informs the manufacturer by letter of these
determinations and its response to the request for
reconsideration. If there is no request for reconsider-
ation, the agency's determination becomes final 45 days
after sending the letter with the preliminary determin-
ation. Each of the new car lines on the high theft list
is the subject of a final determination.
Similarly, the car lines listed as being exempt from
the standard have been exempted in accordance with
the procedures of 49 CFR Part 543 and Section 605
of the Cost Savings Act.
Therefore, NHTSA finds for good cause that notice
and opportunity for comment on this listing are un-
necessary. Further, public comment on the listing of
selections and exemptions is not contemplated by Title
VI, and is unnecessary after the selections and exemp-
tions have been made in accordance with the statutory
criteria.
For the same reasons, since this revised listing only
informs the public of previous agency actions, and does
not impose any additional obligations on any party,
NHTSA finds for good cause that the amendment made
by this notice should be effective as soon as it is pub-
lished in the Federal Register.
In consideration of the foregoing, 49 CFR Part 541
is amended as follows:
Appendix A of Part 541 is revised to read as follows.
Appendix A-I is revised to read as follows, and Appen-
dix A-II is revised to read as follows:
Appendix A—
Chrysler
Eagle Talon
General Motors
Saturn Sports Coupe
Mazda
MX-3*
Subru
SVX*
Appendix A-I—
BMW
8 Car line**
Honda
Acura Vigor**
Porsche
968**
Toyota
Lexus SC300**
Lexus SC400**
Volkswagen
Audi 200/S4
Appendix A-II—
General Motors
Buick Park Avenue***
Pontiac Bonneville***
Engine, Transmission
Engine, Transmission
• Car lines added in Model Year 1992.
'* Lines exempted in full from the requirements of
Part 541 pursuant to 49 CFR Part 543, beginning from
MY 1992.
•• Lines exempted in part from the requirements of
Part 541 pursuant to 49 CFR 543, beginning in
MY 1992.
Issued on August 28, 1991.
56 F.R. 43711
September 4, 1991
PART 541 -PRE 74
PART 541 — FEDERAL MOTOR VEHICLE THEFT PREVENTION STANDARD
(Docket No. T84-01; Notice 7)
§541.1. Scope.
This standard specifies performance re-
quirements for identifying numbers or symbols to
be placed on major parts of certain passenger
motor vehicles.
§541.2 Purpose.
The purpose of this standard is to reduce the in-
cidence of motor vehicle thefts by facilitating the
tracing and recovery of parts from stolen vehicles.
§541.3 Application.
This standard applies to those passenger car
parts identified in § 541.5 (a) that are present in
the car lines listed in Appendix A of this Part. It
also applies to the replacement parts for those
cars, if the part is identified in § 541.5 (a).
§541.4 Definitions.
(a) Statutory terms. All terms defined in sec-
tions 2 and 601 of the Motor Vehicle Information
and Cost Savings Act (15 U.S.C. 1901 and 2021)
are used in accordance with their statutory mean-
ings unless otherwise defined in paragraph (b)
below.
(b) Other definitions.
(1) "Interior surface" means, with respect to a
vehicle part, a surface that is not directly exposed
to sun and precipitation.
(2) "Line" or "car line" means a name which a
manufacturer applies to a group of motor vehicles
of the same make which have the same body or
chassis, or otherwise are similar in construction or
design. A "line" may, for example, include 2-door,
4-door, station wagon, and hatchback vehicles of
the same make.
(3) "Passenger car" is used as defined in
§ 571.3 of this chapter.
(4) "VIN" means the vehicle identification
number required by Part 565 and § 571.115 of this
chapter.
§ 541.5 Requirements for passenger cars.
(a) Each passenger car subject to this standard
must have an identifying number affixed or in-
scribed on each of the parts specified in paragraphs
(a) (1) through (a) (14) inclusive, if the part is pre-
sent on the passenger car. In the case of passenger
cars not originally manufactured to comply with
U.S. vehicle safety and bumper standards, each
such car subject to this standard must have an
identifying number inscribed in a manner which
conforms to paragraph (d) (2) of this section, on
each of the parts specified in paragraphs (a) (1)
through (a) (14) inclusive, if the part is present on
the passenger car.
(1) Engine.
(2) Transmission.
(3) Right front fender.
(4) Left front fender.
(5) Hood.
(6) Right front door.
(7) Left front door.
(8) Right rear door.
(9) Left rear door.
(10) Front bumper.
(11) Rear bumper.
(12) Right rear quarter panel.
(13) Left rear quarter panel.
(14) Decklid, tailgate, or hatchback (whichever
is present).
(b) (1) Except as provided in paragraphs (b) (2)
and (b) (3) of this section, the number required to
be inscribed or affixed by paragraph (a) shall be the
VIN of the passenger car.
PART 541-1
(2) In place of the VIN, manufacturers who
were marking engines and/or transmissions with a
VIN derivative consisting of at least the last eight
characters of the VIN on October 24, 1984, may
continue to mark engines and/or transmissions
with such VIN derivative.
(3) In the case of passenger cars not originally
manufactured to comply with U.S. vehicle safety
and bumper standards, the number required to be
inscribed by paragraph (a) shall be the original
vehicle identification number assigned to the car
by its original manufacturer in the country where
the car was originally produced or assembled.
(c) The characteristics of the number required to
be affixed or inscribed by paragraph (a) shall
satisfy the size and style requirements set forth for
vehicle certification labels in § 567.4 (g) of this
chapter.
(d) The number required by paragaph (a) of this
section must be affixed by means that comply with
paragraph (d) (1) of this section or inscribed by
means that comply with paragraph (d) (2) of this
section.
(1) Labels.
(i) The number must be printed indelibly on a
label, and the label must be permanently affixed
to the car's part.
(ii) The number must be placed on each part
specified in paragraph (a) of this section in a loca-
tion such that the number is, if practicable, on an
interior surface of the part as installed on the
vehicle and in a location where it:
(A) will not be damaged by the use of any tools
necessary to install, adjust, or remove the part
and any adjoining parts, or any portions thereof;
(B) is on a portion of the part not likely to be
damaged in a collision; and
(C) will not be damaged or obscured during
normal dealer preparation operations (including
rustproofing and undercoating).
(iii) The number must be placed on each part
specified in paragraph (a) of this section in a loca-
tion that is visible without further disassembly
once the part has been removed from the vehicle,
(iv) The number must be placed entirely within
the target area specified by the original
manufacturer for the part, pursuant to
paragraph (e) of this section, on each part
specified in paragraph (a) of this section.
(v) Removal of the label must—
(A) Cause the label to self-destruct by tearing or
rendering the number on the label illegible, and
(B) Discernibly alter the appearance of that
area of the part where the label was affixed by
leaving residual parts of the label or adhesive in
that area, so that investigators will have
evidence that a label was originally present,
(vi) Alteration of the number on the label must
leave traces of the original number or otherwise
visibly alter the appearance of the label material,
(vii) The label and the number shall be resistant
to counterfeiting.
(viii) The logo or some other unique identifier of
the vehicle manufacturer must be placed in the
material of the label in a manner such that
alteration or removal of the logo visibly alters
the appearance of the label.
(2) Other means of identification.
(i) Removal or alteration of any portion of the
number must visibly alter the appearance of the
section of the vehicle part on which the iden-
tification is marked.
(ii) The number must be placed on each part
specified in paragraph (a) of this section in a loca-
tion that is visible without further disassembly
once the part has been removed from the vehicle,
(iii) The number must be placed entirely within
the target area specified by the original
manufacturer for the part, pursuant to
paragraph (e) of this section, on each part
specified in paragraph (a) of this section.
(e) Target areas.
(1) Each manufacturer that is the original pro-
ducer who installs or assembles the covered major
parts on a line shall designate a target area for the
identifying numbers to be marked on each part
specified in paragraph (a) of this section for each of
its lines subject to this standard. The target area
shall not exceed 50 percent of the surface area on
the surface of the part on which the target area is
located.
(2) Each manufacturer subject to paragraph
(e) (1) of this section shall, not later than 30 days
before the line is introduced into commerce, inform
NHTSA in writing of the target areas designated
for each line listed in Appendix A. The information
should be submitted to: Administrator, National
Highway Traffic Safety Administration, 400
Seventh Street, S.W., Washington, D.C. 20590.
PART 541-2
(3) The target areas designated by the original
vehicle manufacturer for a part on a line shall be
maintained for the duration of the production of
such line, unless a restyling of the part makes it no
longer practicable to mark the part within the
original target area. If there is such a restlying, the
original vehicle manufacturer shall inform NHTSA
of that fact and the new target area, in accordance
with the requirements of paragraph (e) (2) of this
section.
§ 541.6 Requirements for replacement parts.
(a) Each replacement part for a part specified in
§ 541.5 (a) must have the registered trademark of
the manufacturer of the replacement part, or some
other unique identifier if the manufacturer does
not have a registered trademark, and the
letter"R" affixed or inscribed on such replacement
part by means that comply with § 541.5 (d), except
as provided in paragraph (d) of this section. In the
case of replacement parts subject to the marking
requirements of this section, which were not
originally manufactured for sale in the United
States, the importer of the part shall inscribe its
registered trademark, or some other unique iden-
tifier if the importer does not have a registered
trademark, and the letter "R" on the part by
means that comply with § 541.5 (d) (2), except as
provided in paragraph (d) of this section.
(b) A replacement part subject to paragraph (a)
of this section shall not be marked pursuant to
§ 541.5.
(c) The trademark and the letter "R" required
by paragraph (a) of this section must be at least one
centimeter high.
(d) The trademark and the letter "R" required
by paragraph (a) of this section must be placed
entirely vdthin the target area specified by the
vehicle manufacturer, pursuant to paragraph (e) of
this section.
(e) Target areas.
(1) Each manufacturer that is the original pro-
ducer or assembler of the vehicle for which the
replacement part is designed shall designate a
target area for the identifying symbols to be
marked on each replacement part subject to the
requirements of paragraph (a) of this section. Such
target areas shall not exceed 25 percent of the sur-
face area of the surface on which the replace-
ment part marking will appear.
(2) The boundaries of the target area
designated under paragraph (e) (1) of this section
shall be at least 10 centimeters at all points from
the nearest boundaries of the target area
designated for that part under § 541.5 (e) of this
part.
(3) Each manufacturer subject to paragraph
(e) (1) of this sec'jon shall inform NHTSA in
writing of the target areas designated for each
replacement part subject to paragraph (a) of this
section, at the same time as it informs the
agency of the target areas designated for the
original equipment parts of the line, pursuant to
§ 541.5 (e) (2) of this part. The information
should be submitted to: Administrator, National
Highway Traffic Safety Administration, 400
Seventh Street, S.W., Washington, D.C. 20590.
(4) The target areas designated by the original
vehicle manufacturer for the parts subject to the
requirements of paragraph (a) of this section
shall be maintained for the duration of the pro-
duction of such replacement part, unless a restyl-
ing of the part makes it no longer practicable to
mark the part within the original target area. If
there is such a restyling, the original vehicle
manufacturer shall inform NHTSA of that fact
and the new target area, in accordance with the
requirements of paragraph (e) (3) of this section.
(f) Each replacement part must bear the sym-
bol "DOT" in letters at least one centimeter high
within 5 centimeters of the trademark and of the
letter "R", and entirely within the target area
specified under paragraph (d) of this section. The
symbol "DOT" constitutes the manufacturer's
certification that the replacement part conforms
to the applicable theft prevention standard, and
shall be inscribed or affixed by means that
comply with paragraph (a) of this section. In the
case of replacement parts subject to the re-
quirements of paragraph (a) of this section,
which were not originally manufactured for sale
in the United States, the importer shall inscribe
the "DOT' symbol before the part is imported in-
to the United States.
PART 541-3
APPENDIX A
Lines subject to the requirements of this standard.
I Reserved]
APPENDIX B
Criteria for limiting the selection of prestandard lines
having or likely to have high theft rates to 14.
Scope.
These criteria specify the factors the
Administrator will take into account in determin-
ing which high theft lines initially introduced by a
manufacturer into commerce before April 24,
1986, will be selected for coverage under this theft
prevention standard.
Purpose.
The purpose of these criteria is to enable the
Administrator to select, with the agreement of the
manufacturer, if possible, those high theft lines for
which the greatest benefits in reducing motor vehi-
cle theft are likely to be achieved by requiring
those lines to be subject to this theft prevention
standard.
Application.
These criteria apply to those high theft lines pro-
duced by a manufacturer of passenger motor
vehicles having more than 14 actual or likely high
theft lines introduced into commerce before April
24, 1986.
Methodology.
For each manufacturer producing more than 14
high theft lines that were introduced into com-
merce before April 24, 1986 these criteria will be
applied to rank such lines in comparison to one
another. Each manufacturer's lines will be con-
sidered only in relationship to other hnes produced
by the same manufacturer. Once the manufac-
turer's lines have been ranked according to which
lines appear likely to show the greatest benefits in
reducing vehicle thefts if covered by this theft
prevention standard, the Administrator will select,
by agreement with the manufacturer, if possible,
and in accordance with the procedures set forth in
§ 542.2 of this chapter, 14 lines for coverage under
this theft prevention standard.
Criteria.
1. Proximity of the line's theft rate, calculated
in accordance with the statutory formula, to the
median theft rate. Higher theft rates wOl receive
higher priority.
2. Approximate number of vehicles within
such line scheduled to be produced in the upcom-
ming model year. Larger projected productions
receive higher priority. However, if the line is
scheduled to be discontinued in the near future,
it will be given lower priority than one which will
continue to be produced.
3. Likelihood of significant design changes in
the design of the line (such as downsizing or
restyling) that would reduce the number of inter-
changeable parts within such line as between the
new model year and previous model years. Lines
with significant style changes will receive higher
priority.
4. Whole vehicle recovery rate for such line in
the most recent calendar year for which such
data are available. Lines with higher recovery
rates will receive lower priority.
5. Number of lines, and actual number of
vehicles produced, having interchangeable parts
with such line. Lines with which numerous low
theft vehicles or lines have interchangeable parts
will receive lower priority.
APPENDIX C
Criteria for selecting lines likely to have high theft
rates.
Scope.
These criteria specify the factors the Ad-
ministrator will take into account in determining
whether a new line is likely to have a high theft
rate, and, therefore, whether such line will be
subject to the requirements of this theft preven-
tion standard.
Purpose.
The purpose of these criteria is to enable the
Administrator to select, by agreement with the
manufacturer, if possible, those new lines which
are likely to have high theft rates.
Application.
These criteria apply to lines of passenger
motor vehicles initially introduced into com-
merce on or after January 1, 1983.
PART 541-4
Methodology.
These criteria will be applied to each line in-
itially introduced into commerce on or after
January 1, 1983. The likely theft rate for such lines
will be determined in relation to the national me-
dian theft rate for 1983 and 1984. If the line is
determined to be likely to have a theft rate above
the national median, the Administrator will select
such line for coverage under this theft prevention
standard.
Criteria.
1. Retail price of the vehicle line.
2. Vehicle image or marketing strategy.
3. Vehicle lines with which the new line is in-
tended to compete, and the theft rates of such
lines.
4. Vehicle line(s), if any, which the new line is
intended to replace, and the theft rate(s) of such
line(s).
.5 Presence or absence of any new theft preven-
tion devices or systems.
6. Preliminary theft rate for the line, if it can be
determined on the basis of currently available date.
50 F.R. 43166
October 24, 1985
PART 541-5
•
#
I
PART 541— Appendix A
Lines subject to the requirements of Part 541
I
I
Manufacturer
Subject Lines
Manufacturer
Subject Lines
Alfa Romeo
Milano 161
Chevrolet Lumina
Fiat 164
Oldsmobile Cutlass Supreme
Oldsmobile Delta 881*1
BMW
3-CarlineI*l
Oldsmobile Toronado
5— Carline
Pontiac Fiero
6-CarIine
Pontiac Grand Prix
Chrysler
Chrysler Executive Sedan/Limousine
Geo Prizm
Geo Storm
Chrysler Fifth Avenue/Newport
Chrysler Laser
Chrysler LeBaron/Town & Country
V-lV'V^ i-^ \f\JL lit
[Saturn Sports Coupe]
Isuzu
Impulse
Chrysler LeBaron GTS
Stylus
Chrysler TC
Chrysler Eagle Talon
Jaguar
XJ
Chrysler New Yorker Fifth Avenue
XJ-6
Dodge Aries
Dodge Daytona
XJ-40
Lotus
Lotus Elan
Dodge Diplomat
Dodge Lancer
Maserati
Biturbo
Dodge 600
Quattroporte
Dodge Stealth
lEagle TalonJ
228
Plymouth Caravelle
Mazda
GLC
Plymouth Laser
626
Plymouth Gran Fury
MX-6
Plymouth Reliant
MX-5 Miata
IMX-3'1
Consulier
ConsuHer GTP
Mercedes-Benz
190 D/E
Ferrari
Mondial 8
250D-T
308
260 E
328
300 CE
Ford
Ford Mustang
Ford Thunderbird
300 D/E
300 SE
Ford Probe
300 SL
Mercury Capri
Mercury Cougar
300 TD
300 TE
300 SDL
Lincoln Continental
300 SEL
Lincoln Mark
380 SEC/500 SEC
Lincoln Town Car
380 SEL/500 SEL
MerkuT Scorpio
380 SL
Merkur XR4Ti
\JiJ\J KJLJ
420 SEL
General Motors
Buick Electra
500 SL
Buick LeSabre
560 SEL
Buick Reatta
560 SEC
Buick Regal
560 SL
Buick Riviera
Mitsubishi
Cordia
Cadillac DeVille
Tredia
Eclipse
3000GT
Cadillac Eldorado
CadUlac Seville
Chevrolet Nova
PART
(Rev. 9/4/91)
541-A-l
PART 541— Appendix A— Continued
Lines subject to the requirements of Part 541
Manufacturer
Svhject Lines
Peugeot
405
Porsche
924S
Reliant
SSI
Saab
900
Subaru
XT
ISVX*1
Toyota
Camry
Celica
Corolla/Corolla Sport
MR2
Starlet
Volksw^en
Audi Quattro
Volkswagen Cabriolet
Volkswagen Rabbit
Volkswagen Scirocco
Volkswagen Corrado
• Lines added in Model Year 1992.
(56 F.R. 43711— September 4, 1991. Effective: September 4, 1991)
9
(Rev. 9/ 11 f 90)
PART 541-A-2
PART541— Appendix A-l
High-Theft Lines With Antitheft Devices That are Exempted from the Requirements of This Standard
Pursuant to 49 CFR Part 543
Manufacturer
Exempted Lines
Austin Rover
Sterling
BMW
7 Car line
18 Car line"!
Chrysler
Chrysler
Chrysler Conquest
Imperial
General Motors
Cadillac Allante
Chevrolet Corvette
Honda
Acura NS-X
Acura Legend
jAcura Vigor* *|
Isuzu
Impulse
Mazda
929
RX7
Mitsubishi
Galant
Starion
Nissan
Porsche
Saab
Toyota
Volkswagen
Volvo
Maxima
300 ZX
Infiniti M30
Infiniti Q45
911
928
|968"1
9000
Supra
Cressida
Lexus LS400
Lexus ES250
ILexus SC300"!
ILexus SC400"!
Audi 500S
Audi 100
lAudi 200/S41
480ES
•■ Lines exempted from the requirements of Part 541 pursuant to 49 CFR Part 543 in MY 1992.
(56 F.R. 43711— September 4, 1991— Effective: September 4, 1991)
(Rev. 9/4/91)
PART 541-A-3-4
I
PART 541— Appendix All
High Theft Lines With Antitheft Devices That are Exempted in Part From the Parts-Marlcing Requirements
of This Standard Pursuant to 49 CFR Part 543
Manufacturer Exempted Lines
Parts Marked
General Motors
Chevrolet Camaro
Pontiac Firebird
Cadillac Deville-
Fleetwood
Oldsmobile 98
[Buick Parle
Avenue***
[Pontiac
Bonneville* ••
Engine, Transmission
Engine, Transmission
Engine, Transmission
Engine, Transmission
Engine, Transmission]
Engine, Transmission!
I
*" Received partial exemptions from the requirements of PART 541 pur-
suant to 49 CFR Part 543 in MY 1992.
(56 F.R. 43711— September 4, 1991— Effective: September 4, 1991)
I
(Rev. 9/11/90)
PART 541-A-5-6
PREAMBLE TO PART 542
Procedures for Selection of Covered Vehicles-
Motor Vehicle Theft Law Enforcement Act of 1984
[Docket No. T85-01; Notice 2]
ACTION: Final rule.
SUMMARY: This rule is issued under Title VI of
the Motor Vehicle Information and Cost Savings
Act. It sets forth the procedures to be followed
when determining which passenger motor vehicle
lines introduced on or after January 1, 1983, are to
be covered under the proposed vehicle theft pre-
vention standard. That standard would require the
marking of major component parts on all cars in
lines subject to its requirements. Under these pro-
cedures, the manufacturer will apply the relevant
criteria in preparing its views as to which of its
lines should be selected as high theft lines for pur-
poses of the theft prevention standard. The manu-
facturer would submit its views to the agency,
together with the facts it considered and the sup-
porting rationales for those views. NHTSA will
consider these submissions and inform the manu-
facturer of its agreement with the manufacturer's
views or of its preliminary determination that dif-
ferent lines should be selected. If the manufacturer
does not request reconsideration of the prelimi-
nary determination, it automatically becomes the
final determination. If the manufacturer does re-
quest reconsideration, it must provide the facts
and arguments underlying its objections. NHTSA
considers the request for reconsideration and
promptly issues its final determination.
EFFECTIVE DATE: November 1, 1985.
SUPPLEMENTARY INFORMATION:
The Motor Vehicle Theft
Law Enforcement Act of 1984
The Motor Vehicle Theft Law Enforcement Act
of 1984 (Theft Act) added Title VI to the Motor
Vehicle Information and Cost Savings Act (Cost
Savings Act). Title VI requires NHTSA, by delega-
tion from the Secretary of Transportation, to pro-
mulgate a vehicle theft prevention standard man-
dating a marking system for the major component
parts of high theft lines. To implement the man-
date of the Theft Act, NHTSA must divide each
manufacturer's fleet of passenger motor vehicles
into different "lines." A "line" is a group of
vehicles sold with the same nameplate, such as
Mustang, Camaro, or Aries. The agency must then
select those lines which are "high theft lines" and,
therefore, subject to the marking requirements of
the theft prevention standard.
Section 603(aXl) of the Cost Savings Act (15
U.S.C. 2023(aXl)) specifies three different groups of
lines that are designated as high theft lines for
purposes of the theft prevention standard. The
groupings are as follows:
(1) Existing lines that are determined on the
basis of actual theft data to have a theft rate ex-
ceeding the median theft rate for all new passen-
ger motor vehicles in 1983 and 1984 are high theft
lines under the provisions of section 603(aXlXA).
"Existing lines" are those lines introduced before
January 1, 1983. (This date is predicated on pro-
mulgation of the final rule establishing the theft
prevention standard in 1985.)
(2) Lines introduced on or after January 1, 1983,
that are likely to have a theft rate exceeding the
median theft rate are high theft lines under the
provisions of section 603(aXlXB).
(3) Lines whose theft rate is or is likely to be
below the median theft rate, but whose major com-
ponent parts are interchangeable with a majority
of the major component parts of a line that is sub-
ject to the theft prevention standard under section
603(aXlXA) or (B), are high theft lines under
PART 542; PRE 1
the provisions of section 603(aXlXC). However, car
lines whose theft rate is or is likely to be below the
median theft rate will not be treated as high theft
lines pursuant to this third grouping if such low
theft or likely low theft lines account for greater
than 90 percent of total production of all lines con-
taining such interchangeable parts, section 603
(aXlXCXi) and (ii).
Section 603(aX3) of the Cost Savings Act specifies
that not more than a total of 14 of a manufac-
turer's lines introduced before the effective date of
the standard can be selected under the first two
groups listed above. The 14 line total does not in-
clude any of those lines selected as high theft lines
under the third group listed above; i.e., car lines
which have interchangeable parts with high theft
lines.
Section 603(aX2) of the Cost Savings Act states
that the selection of lines as high theft lines sub-
ject to the requirements of the theft prevention
standard should be accomplished by agreement be-
tween the manufacturer and NHTSA, if possible.
However, that section also states that the agency
must unilaterally select the subject lines if no
agreement is reached. In the event that no agree-
ment is reached between the agency and the man-
ufacturer, this section requires NHTSA to make
the selections on a preliminary basis and give the
manvifacturer an opportunity to comment on those
selections.
The Notice of Proposed Rulemaking
To carry out these statutory mandates, NHTSA
published a notice of proposed rulemaking (NPRM)
at 50 FR 25603, June 20, 1985. That notice pro-
posed the procedures which the manufacturers and
this agency would follow in attempting to agree on
the lines to be selected for coverage by the theft
prevention standard for all lines introduced after
January 1, 1983. The NPRM stated that the selec-
tion of lines introduced before January 1, 1983,
that have a theft rate exceeding the median theft
rate for all new passenger motor vehicles in 1983
and 1984 was being handled in a separate action.
A notice setting forth data on passenger motor
vehicle thefts in 1983 and 1984 for review and
comment was published at 50 FR 18708, May 2,
1985. The agency will soon publish a notice setting
forth its final version of the 1983 and 1984 theft
data. That notice will provide the basis for select-
ing high theft lines from lines introduced before
Januar/ 1, 1983. However, the procedures set forth
in this rule will be followed by NHTSA and the man-
ufacturers in making all other selections of high
theft lines under the provisions of the Theft Act.
The NPRM also proposed the procedures that
would be followed in applying the 14 line limita-
tion set forth in section 603(aX3) of the Cost Sav-
ings Act. Finally, the NPRM set forth the rights
manufacturers would have if they disagreed with
the agency's preliminary determination that a
specific line should be selected as a high theft line.
It was emphasized that this rulemaking action
was simply a procedural adjunct to the theft
prevention standard. This rule does not set forth
any substantive requirements or restrictions, nor
does it actually select any car lines as high theft
lines. It merely sets forth the procedures to be
followed in determining which of a vehicle manu-
facturer's lines will be subject to the marking re-
quirements of the theft prevention standard.
The NPRM proposed two sets of procedures for
the selection of high theft lines. The first set, con-
tained in sections 542.1, 542.2, and 542.3, would be
used to select the high theft lines from existing
lines and new lines introduced on or after Janu-
ary 1, 1983, but before the effective date of the
theft prevention standard. The second set, contain-
ed in sections 542.4 and 542.5, would be used to
select the high theft lines from all new lines in-
troduced after the effective date of the standard.
Under each of the proposed procedures, the manu-
facturer would apply the relevant criteria to its cur-
rently produced or planned vehicle lines, and sub-
mit its views and supporting analysis to NHTSA
as to which of its lines should be selected as high
theft lines, together with the factual information
considered by the manufacturer in reaching its
conclusions. The agency would then promptly
review the manxifactvu-er's submissions, determine
whether it agreed or disagreed with the manufac-
turer's proposed classification of its lines, and
notify the manufacturer in writing of the agency's
preliminary determination as to which of its vehi-
cle lines should be selected as high theft lines. The
manufacturer would have the right to request
agency reconsideration of any preliminary deter-
mination to which the manufacturer objected. If
the manufacturer did not request reconsideration
of a preliminary determination, it would auto-
matically become the agency's final determina-
tion. If the manufacturer did request a recon-
sideration of a preliminary determination, it
would have to include all the facts and and argu-
ments underlying its objection to the agency's pre-
^^
PART 542; PRE 2
liminary determination. NHTSA would promptly
consider the facts and arguments and notify the
manufacturer of its final determination. Should
the manufacturer disagree with the final agency
determination, regardless of whether the manu-
facturer has sought reconsideration, it has the
right to seek judicial review of the agency deter-
mination, as specified in section 610 of the Cost
Savings Act (15 U.S.C. 2030).
NHTSA believes that the proposed procedures
were simple, straightforward, and compatible with
both the timing allowed by the Theft Act for com-
pleting the selection of high theft lines and the
Theft Act's directive that this selection should be
accomplished by agreement between the manufac-
turer and NHTSA if possible. The NPRM was con-
sciously structured so that the manufacturers and
agency would have every opportunity to under-
stand the other's position and agree on the proper
selections.
The NPRM noted that section 603(c) of the Cost
Savings Act (15 U.S.C. 2023(c)) directs NHTSA to,
by rule, require each manufacturer to provide in-
formation necessary to select the high theft lines
and major parts to be covered by the theft preven-
tion standard. This rule does not require the manu-
facturers to provide any information; it merely sets
forth the procedures to be followed by those manu-
facturers which choose to provide the information
and to participate in the selection process. There
are no penalties imposed for the failure of a manu-
facturer to provide the information. This approach
was chosen because NHTSA then and now anticip-
ates that the manufacturers will be forthcoming
and cooperative in providing the agency with the
views and supporting analyses specified in this
rule. If, of course, the agency does not receive or
otherwise obtain the necessary information on
which to base its selections, the agency will pro-
pose changes to this rule to specifically require
such information.
The Com)iients Changes to the
Proposed Procedures
Five comments on the NPRM had been received
by the agency as of the comment closing date and
were considered in developing this final rule. The
commenters were all automobile manufacturers,
and were generally supportive of the proposed pro-
cedures. However, the comments did raise some
further issues and request some changes to the
proposed procedures. The most significant issues
raised in the comments are discussed below.
A. General Comments.
1. Timing. All of the commenters noted the tight
time frames in the proposed schedules for both the
manufacturers and the agency to complete neces-
sary steps in the selection process. The commen-
ters acknowledged, however, that the tight time
frames were imposed by the Theft Act and that
they would probably be able to comply with the
various dates, assuming that NHTSA is able to
meet the statutory deadline for publishing the
final rule establishing the theft prevention stan-
dard and that there are no serious disagreements
as to the lines selected for coverage under that
standard.
The agency agrees that the time frames are very
tight, but it cannot expand them. The agency in-
tends to meet all the statutory deadlines imposed
by the Theft Act and believes that the procedures
set forth in this rule will enable the agency, and
those manufacturers which submit the necessary
information, to agree in most cases on those lines
which should be selected for coverage under the
theft prevention standard.
Volkswagen (VW) stated that the vehicle manu-
facturers could not make their submissions under
these procedures until the final theft data notice
had been published. VW stated that the agency
had not yet indicated which source of theft data
was going to be used, and repeated its comment to
the theft data notice that there were errors in some
of the figures and that corrections of those errors
would result in a reshuffling of the order of the
vehicle theft rates. In conclusion, VW stated that
its views as to whether a line introduced after
January 1, 1983, should be selected as a high theft
line "would likely be influenced by the placement
of its predecessor in the earlier list."
NHTSA agrees that the classification of the pre-
decessor line as either a high or low theft line is an
important criterion in determining whether a new
line should be selected as a likely high theft line.
That is why this fact was one of the six criteria pro-
posed in Appendix C of Part 541 for determining
whether a new line should be selected as a high
theft line. However, it is only one of the six cri-
teria. VW can prepare its views applying the other
five criteria, and prepare alternative views on this
criterion. This will ensure that NHTSA has re-
ceived VW's views and that those views reflect
VW's belief as to whether the new line should be
selected as a likely high theft line, regardless of
PART 542; PRE 3
how the predecessor line is classified in the final
theft data notice.
VW further stated that it could not make its sub-
mission under this procedural rule until it could
obtain vehicle recovery information. The vehicle
recovery rate was only proposed as a criterion for
determining whether new lines should be selected
as high theft lines in § 542.2. That section will be
used to limit, to a total of 14, the number of lines
introduced by an individual manufacturer before
the effective date of the theft prevention standard
that will be selected for coverage by the theft pre-
vention standard. VW does not have more than 14
lines, so this section does not apply to it. All of the
other sections of this proposed rule will apply to
VW, but none of those sections proposed using ve-
hicle recovery rate as a criterion for the selection of
a new line as a high theft line. Accordingly, the
agency does not believe that VW needs vehicle re-
covery data to prepared its submission under this
procedural rule.
2. Definition of "Line." Several of the com-
menters disagreed with the agency's proposal to
use the same definition of line which was set forth
in the proposed vehicle theft standard. General
Motors (GM), Chrysler, and BMW all urged the
agency to define "line" identically to the way in
which that term is defined in 49 CFR Part 565, for
the purposes of the vehicle identification number
(VIN). The proposed definition of "line" set forth
for these procedures and the theft prevention stan-
dard incorporates the definition of that term in the
Theft Act, supplemented by interpretive examples
so that the application of the term "line" under the
Theft Act will be as close as possible to the applica-
tion of the term "line" set forth by the Environ-
mental Protection Agency (EPA) under Title V of
the Cost Savings Act. This approach was taken
because section 603{bXl) requires that the theft
rate for various lines be calculated using "the pro-
duction volume of all passenger motor vehicles of
that line fas reported to the EPA under Title V of
this Act) . . ." (emphasis added). In order to use the
EPA production data, NHTSA must apply the term
"line" in a manner as similar as is possible to that
used by the EPA under Title V. Hence, the agency
is constrained by Title VI of the Cost Savings Act
from simply applying the term "line" in precisely
the same way as it has for the purposes of the Na-
tional Traffic and Motor Vehicle Safety Act (the
Safety Act), under 49 CFR 565.
However, NHTSA would like to note that the
slightly differing language in the definitions of
"line" for purposes of the Theft Act and the Safety
Act has not resulted in any manufacturer's fleet of
vehicles being grouped into different sets of "lines"
for purposes of the diff'erent Acts. That is, the agen-
cy's grouping of a manufacturer's vehicles into
lines thus far for the purposes of the Theft Act has
been identical to what that grouping would have
been if it were made for purposes of the Safety Act.
None of the commenters that urged the agency to
adopt identical definitions explained any practical
difference which has resulted from the slightly dif-
fering wording in the two definitions. Further, the
agency does not believe that a situation will arise
where a manufacturer's vehicles would be grouped
into two different sets of lines for purposes of the
Theft Act and the Safety Act.
3. Definition of "Interchangeable Part." The
NPRM proposed that these procedures would use
the same definition for "interchangeable part" as
was proposed for the theft prevention standard. To
wit, an interchangeable part is "a passenger motor
vehicle major pairt that is sufficiently similar in
size and shape to a major part of another car line so
that it could be used to replace the major part on a
vehicle in that other car line, with no modification
to the vehicle other than to the interior or exterior
trim."
GM argued that the proposed definition was
overly inclusive, and stated that there is no evi-
dence to suggest that thieves would spend the time
and money to replace all of the interior trim on a
door, for instance, so that it could be used as a re-
placement part for a different car line. Based on
this assertion, GM suggested that the definition of
interchangeable part be modified to include only
those parts that could be used to replace a major
part in another car line with no modifications
other than to medallions, molding, or paint.
This final rule does not adopt GM's suggested
change. While conceding that there is no evidence
to establish conclusively that thieves will make
these modifications, the agency concludes that the
available evidence strongly suggests that chop
shops would make the modifications. The agency
must, of course, exercise its judgment based on the
available evidence. Police agency comments have
consistently referred to the growing sophistication
and skill of chop shop operators, which would cer-
tainly indicate that the ability exists to change the
interior trim of a major part. A chop shop which
spent the time and money to change the interior
trim of a Chevrolet door, for example, so that it
would appear to be an Oldsmobile door could still
PART 542; PRE 4
make a substantial profit on that stolen door, par-
ticularly considering the relative price of a new
door compared with the interior trim for that door.
This would give chop shop operators a motive for
changing the interior trim package.
Congress stated that the Theft Act was intended
to "decrease the ease with which certain stolen
vehicles and their major parts can be fenced," H.
Kept. 98-1087, 98th Cong., 2d Sess., at 2 (1984;
hereinafter "H. Rept.") and "to make theft more
risky" especially for chop shops, H. Rept. at 5.
NHTSA must determine which approach better ef-
fectuates that intent. The approach suggested by
GM simply assumes that thieves would not make
this effort, and does nothing to make it more risky
or decrease the ease with which that part could be
fenced. The proposed definition would require the
marking of parts which, with relatively simple and
inexpensive modifications, can be fitted onto
vehicles in high theft lines. Marking such parts
would decrease the ease with which they could be
fenced and make thefts of those parts more risky.
Given the proliferation of chop shop operations and
the large profits which can be made in such illegal
operations, both of which were noted in the legisla-
tive history of the Theft Act, the agency has deter-
mined that it would be inappropriate to adopt the
more restrictive definition of "interchangeable
part" suggested by GM.
4. Annually Updates of the Listing of Se-
lected Lines. The NPRM indicated that the list of
those lines which have been selected as high theft
lines would be updated annually. The listing of
those lines will appear in Appendix A of Part 541,
the vehicle theft prevention standard. Chrysler
supported the proposal, but Ford suggested that
the updating be done every six months, so that law
enforcement agencies would be up to date on those
vehicles which should be marked. Under the pro-
posed procedures for selecting high theft lines, the
final selection for new lines introduced in the 1988
and subsequent model years will be completed no
later than 13 months before the new lines are in-
troduced. Thus, no matter when a new line will be
introduced, there will be at least one annual up-
date published between the final selection of a new
line as a likely high theft line, and its introduction.
The only time when there could be a gap would be
in the 1987 model year, the first model year in
which vehicles in high theft lines would be re-
quired to be marked. If there is a time when a line
selected as a high theft line would not be listed as
such, the agency can, of course, publish a special
update to the list. Hence, it does not appear
necessary to make a regular updating of this list
more frequently than annually.
Both Ford and GM asked that new lines not be
listed in Appendix A immediately upon their selec-
tion as high theft lines. Ford asked that the listing
be postponed until the manufacturer has actually
started production of vehicles in that new line,
while GM asked that the listing be postponed until
the manufacturer has made the vehicle's name-
plate public. NHTSA agrees with the implicit
point made by GM that there is no reason for the
agency to announce a new line's nameplate before
the manufacturer does so. However, the Ford sug-
gestion would in almost every instance mean that
NHTSA would be withholding information long
after the manufacturer itself had made the infor-
mation public, and there would no longer be a
reason for withholding such information. There-
fore, the agency will not publicly disclose the name
of new lines before the manufacturer itself an-
nounces that name. If the manufacturer chooses to
delay that announcement until the actual start of
production, the agency will not disclose the name-
plate prior to that announcement. If that line is
selected as a likely high theft line and if vehicles in
that line will be introduced before the next regu-
larly scheduled annual update of the listing of new
lines selected as high theft lines will be published,
NHTSA will make a special update to the listing
after the manufacturer's announcement of the
nameplate for the line.
5. Adequacy of Confidentiality Procedures.
The NPRM specifically sought comments on the
sufficiency of NHTSA's current procedures for
handling confidential information (49 CFR Part
512) to protect the confidential information it may
receive from the manufacturers in connection with
the selection process. Chrysler specifically stated
that the procedures in Part 512 are adequate, and
GM did likewise, but with the caveat that no out-
side contractors employed by NHTSA should be
given access to information provided to the agency
by manufacturers during the selection process.
The agency will not use outside contractors for the
selection process, nor does it anticipate that it will
make available to outside contractors any informa-
tion obtained during the selection process. How-
ever, NHTSA cannot state that it will never make
any information obtained during the selection pro-
cess available to outside contractors. If such a
PART 542; PRE 5
disclosure must be made, NHTSA will follow ap-
propriate procedures to ensure that the contractor
does not disclose the information to other parties.
B. Comments on Specific Sections of the Pro-
posed Rule.
1. § 542.1: Procedures for selecting pre-
standard new lines that are likely to have high
theft rates.
The NPRM proposed that the manufacturers
would apply the criteria set forth in Appendix C of
Part 541 (the proposed vehicle theft prevention
standard) to each line introduced between Jan-
uary 1, 1983, and the effective date. Briefly, the
criteria of Appendix C are:
a) price;
b) vehicle image;
c) lines with which the line in question is in-
tended to be competitive;
d) line or lines that the new line replaces;
e) presence or absence of any new theft
prevention devices;
f) any available theft data for lines already
introduced.
GM commented that the agency should adopt
some weighting of each of these criteria, so that
the process of selecting a line as a high theft line
would be more objectively defined. GM did not sug-
gest how this might be done with the currently
available data. NHTSA agrees that ideally there
would be sufficient data available so that each of
these criteria could be assigned a certain number
of points and specify that any line which earned x
or more points would be selected as a high theft
line. Unfortunately, such a system is simply not
possible with the current data.
As noted in the NPRM, these judgments of likely
high theft lines are partially subjective judgments.
NHTSA concurs with GM's statement that neither
price nor vehicle image alone can be strictly corre-
lated to vehicle theft rates. However, NHTSA be-
lieves that the six criteria set forth in Appendix C
considered together do form a subjective basis for
predicting if a new line is likely to be a high theft
line. K manufacturers in their submissions explain
their positions in detail and provide data for each
of these criteria, NHTSA anticipates that the ques-
tion of whether a vehicle should or should not be
selected as a high theft line will be fairly simple to
answer in most cases. The agency intends to give a
full explanation of the bases for its conclusions to
the manufacturer in the preliminary and final de-
terminations. If a manufacturer believes that the
agency has acted arbitrarily or purely subjectively,
the manufacturer has a right to seek judicial
review of the selection.
2. § 542.2: Procedures for limiting the selection
of pre-standard lines having or likely to have
high theft rates to 14 lines.
Section 603(aX3) of the Cost Savings Act estab-
lishes a limit of 14 on the combined total of lines
introduced before the effective date of the theft
prevention standard that may be selected for co-
verage under that standard because of actual or
likely high theft rates. This proposed section pro-
vided procedures for implementing that limit.
Under the proposed procedures, each manufac-
turer producing a total of more than 14 lines that
either exceed the median theft rate or are likely to
be high theft lines would evaluate and rank those
lines in accordance with the extent to which they
satisfy the criteria set forth in Appendix B of Part
541, the proposed vehicle theft prevention stan-
dard. Those criteria are:
(a) The closeness of the line's theft rate to the
median theft rate;
(b) The approximate production volume of
vehicles in the line during the next model year;
(c) The likelihood of significant design changes
to the line;
(d) The rate at which stolen vehicles in the line
are recovered with all parts intact;
(e) The plans for installation of an original
equipment anti-theft device in the line, which
satisfies the requirements of section 605 of the
Cost Savings Act; and
(f) The number of other lines having parts inter-
changeable with those of that line and the produc-
tion volumes of those lines.
The manufacturer would then submit its rank-
ing and evaluations to NHTSA, together with the
factual information it considered in reaching its
rankings.
Again in commenting on this proposed pro-
cedure, GM stated that the criteria should be
weighted, and again did not suggest how this
might be done. The agency's response is the same
as that made when GM raised this point in com-
menting on § 542.1.
PART 542; PRE 6
GM went on to object strongly to the agency's
proposed inclusion of a manufacturer's plans for
installing a satisfactory original equipment anti-
theft device as one of the criteria for determining
which of its lines should be marked.
GM stated that this objection would particularly
apply if such plans would reduce the chances that
that line would be among those selected as one of
the 14 to be marked. To explain this objection, GM
stated that it believed that "the statutory option of
using an approved theft deterrent system was in-
tended to exempt lines which were otherwise iden-
tified as having to meet the standard."
The agency proposed this criterion in Appendix
B of Part 541 because of its belief that Congress in-
tended lines with actual or likely high theft rates
to either be marked, in accordance with the re-
quirements of the theft prevention standard, or to
be equipped with anti-theft devices. However, fur-
ther examination of this issue has convinced the
agency that its proposed course of action should
not be adopted in a final rule.
Under the proposed criterion, a manufacturer's
plans to install an original equipment anti-theft
device in a line could have resulted in that line be-
ing excluded from the list of 14 lines to be marked.
Thus, the manufacturer would have lost the oppor-
tunity under the exemption provision to be permit-
ted to install such devices instead of marking the
parts of that line. Congress clearly indicated that
it was willing to give these devices the opportunity
to be proven as effective as parts marking in deter-
ring vehicle thefts (H. Rept. at 17). The agency has
re-examined the proposed criterion and determin-
ed that it would have the inadvertent effect of de-
nying manufacturers the opportunity Congress in-
tended. We believe that GM's reading of the stat-
ute better effectuates congressional intent and is
therefore adopted. Thus, in order to provide this
opportunity, NHTSA must permit manufacturers
to install such devices on vehicles in lines which
would otherwise be required to have their major
parts marked.
Accordingly, NHTSA will not consider plans to
install an original equipment anti-theft device as a
factor militating against the inclusion of that line
in the 14 lines chosen for coverage by the theft
prevention standard. Further, the final rule set-
ting forth the theft prevention standard will not
list this criterion in Appendix B.
3. § 542.3: Procedures for selection of pre-
standard low theft lines with a majority of ma-
jor parts interchangeable with those of a high
theft line.
The NPRM proposed that manufacturers would
submit their views on whether their lines with
theft rates likely to be below the median theft
rate had a majority of major parts interchangeable
with those of any of the manufacturer's high theft
lines, together with the supporting rationales for
those views. NHTSA stated in the NPRM that it
anticipated that the statement of views and sup-
porting rationales would take the following form.
The manufacturers would submit a listing of the
number and identity of the major parts which are
incorporated in each line believed by the manufac-
turer to have an actual or likely low theft rate, and
which are interchangeable with the major parts of
those of its lines believed by the manufacturer to
have an actual or likely high theft rate. The manu-
facturer would then calculate whether low theft
lines with a majority of major parts interchange-
able with those of a high theft line accounted for
more than 90 percent of the total production of the
lines with interchangeable parts.
Ford commented that manufacturers should not
be expected to list each of its car lines with actual
or likely low theft rates and show how many and
which of its major parts are interchangeable with
those on its likely or actual high theft lines. In-
stead Ford suggested that the manufacturers
should simply be expected to list each of the low
theft lines with fewer than eight interchangeable
major parts, identify those low theft lines with
eight or more interchangeable major parts, and
state whether those latter low theft lines consti-
tuted more or less than 90 percent of the total pro-
duction of all lines containing such interchange-
able parts.
NHTSA gave serious thought to proposing a pro-
cedure similar to that suggested by Ford in its
comments. However, the agency ultimately decided
to propose the more detailed procedures set forth in
the NPRM. The reasoning was as follows: the
manufacturers would have to make the detailed
analysis set forth in the proposed procedures to be
able to make the simple statements suggested by
Ford. Hence, the only additional task associated
with the more detailed procedures would be that of
transcribing the analysis onto paper. This is a
minimal task compared with generating the
analysis. Further, the detailed listing proposed in
PART 542; PRE 7
the NPRM would help to facilitate agreements be-
tween the agency and individual manufacturer.
Both parties would have a clearer understanding
of the identify of the major parts which the other
party believed should or should not be treated as
interchangeable. The manufacturer would provide
its version of this listing in its submission and
the agency would provide its version in its prelim-
inary determination. Any disagreement would
therefore be clearly and quickly focused on particu-
lar parts, thereby facilitating reaching agreement
as to whether the parts really were interchange-
able. Since these more detailed explanations would
facilitate an expeditious reaching of agreements
while imposing only a very minor burden on the
manufacturer, the agency decided that the more
detailed explanations should be specified in these
procedures.
Ford went on to comment that, if the agency de-
cided to adopt the proposed procedures, it should
limit the issue of interchangeability to "covered
major parts," which term is defined in section
601(6) of the Cost Savings Act as "any major part
selected ... for coverage by the vehicle theft
prevention standard issued under section 602."
Ford noted that the term "major part" as defined
in section 601(7) of the Cost Savings Act includes
both covered major parts (those which are required
to be marked on high theft lines by the theft pre-
vention standard) and other major parts, which
will not be required to be marked by the theft
prevention standard.
NHTSA agrees with Ford's comment, and did
not intend to suggest that manufacturers should
provide interchangeability information on major
parts which are not covered major parts. To clarify
this intent, this final rule has been changed from
the proposed language to refer to covered major
parts in both this section and section 542.5.
VW stated that it was not clear if only the inter-
changeable parts on low theft lines had to be
marked or all covered parts, including those which
were not interchangeable with any on the high
theft line, had to be marked. VW further asked if,
assuming that all covered parts had to be marked
on certain low theft lines, the replacement parts
for the non-interchangeable parts had to be
marked.
To answer VW's questions, both the original
equipment and replacement covered major parts
must be marked on those low theft lines that have
a majority of covered major parts interchangeable
with those of a high theft line, without regard to
whether the particular covered major part is itself
interchangeable. Congress determined that, al-
though certain vehicles are not themselves from a
high theft line, the high degree of interchange-
ability of their parts with those of a high theft line
would make these otherwise low theft vehicles
likely targets for car thieves. As likely targets for
car thieves. Congress determined that all covered
major parts on these vehicles should be marked,
not just those which were interchangeable with
the covered major parts of the high theft line. This
will serve as an additional deterrent to the theft of
these vehicles. To express these determinations,
Congress specified that vehicles in low theft rate
lines with a majority of covered major parts inter-
changeable with those of an actual or likely high
theft line are considered high theft lines; section
603(aXlXC) of the Cost Savings Act. Section 602(a)
specifies that the theft prevention standard shall
require m£U"king of covered major parts that are in-
stalled by manufacturers in high theft lines and
marking of the major replacement parts for the
covered major parts. These provisions make clear
that all covered major parts on lines selected as
high theft lines under section 603 must be marked.
Similarly, all major replacement parts for the
covered major parts of high theft lines selected
under section 603 must be marked.
VW also commented on the agency's example
showing that a manufacturer's "b" line, a low
theft line, had a majority of covered major parts in-
terchangeable with both the "x" and "y" lines,
which are both high theft lines. NHTSA stated in
the NPRM preamble that the manufacturer would
have to determine if total production of the b line
accounted for more that 90 percent of the b, x, and
y lines combined. VW stated its understanding
that the manufacturer would have to make two de-
terminations. First, the manufacturer would deter-
mine if b line production accounted for more than
90 percent of the total production of the b and x
lines, and then it would determine if b line produc-
tion accounted for more than 90 percent of the total
production of the b and y lines. VW's understand-
ing is correct. The use of the singular "line" in sec-
tion 603(aXlKCXii), when referring to high theft
lines with covered major parts interchangeable
with low theft lines, is in contrast to the use of the
plural "lines" when referring to low theft lines with
those interchangeable parts throughout the rest of
PART 542; PRE 8
section 603(aXlXC). This shows an intent to make
the determinations in the manner stated by VW.
Chrysler responded to the agency's proposed
means of determining if engines and transmissions
should be considered interchangeable between
lines. The NPRM proposed that, if an engine or
transmission is offered as standard or optional
equipment on two or more lines, the engine or
transmission should be considered interchangeable
among those lines. Chrysler argued that this posi-
tion was "an arbitrary declaration of complete in-
terchangeability [which] overlooks the above des-
cribed relatively complex modifications and/or re-
lated component installations that would be re-
quired to make these assemblies operable."
NHTSA agrees that modifications to such parts as
fuel lines, wiring harnesses, throttle linkages,
electronic engine controls, and emissions controls
might well be necessary to substitute a different
engine or transmission, and that these modifica-
tions are relatively complex. However, all avail-
able evidence (specifically the transcript of the
public meeting on December 6 and 7, 1984, and
agency meetings with police and insurance organi-
zations) indicates that chop shops are relatively
sophisticated operations capable of making these
modifications. In this case, a few hundred dollars
worth of work would allow these shops to install a
stolen component worth several thousand dollars.
Given this potentially large profit after performing
this work and the expressed intent of the Theft Act
to impede the operations of chop shops, NHTSA is
adopting its proposed interchangeability criteria
for engines and transmissions as best effectuating
the purposes of the Theft Act.
GM questioned the agency's stated intent to con-
sult current auto parts data publications as an aid
in determining interchangeability of parts. Ex-
amples of such publications are "The Hollander,"
Auto-Truck Interchange Edition, Hollander Pub-
lishing Co., Inc., Minnetonka, Minnesota, and
"Mitchell's Manual," Cordura Publications, San
Diego, California. GM stated that it knew of no
basis on which to conclude that these publications
would be an effective reference for use in determin-
ing interchangeability for purposes of the theft
prevention standard. Further, GM stated that,
since neither the government nor manufacturers
control the content of these publication, GM was
concerned that they might not be appropriate for
use in connection with the theft prevention
standard.
NHTSA did not state that these publications
would be used as the final arbiter of whether or not
parts are interchangeable; it stated only that it
would consult these publications. These publica-
tions are used daily by repair shops to decide which
parts can be used to replace damaged parts. The
credibility of these publications depends on their
designations of interchangeability being accurate.
NHTSA believes that consulting these publications
as the best available independent source of inter-
changeability is proper for the purposes of the theft
prevention standard, and hereby announces its in-
tention to do so.
4. § 542.4: Procedures for the selection of
new lines introduced on or after the effective
date of the standard that are likely to have
high theft rates.
The NPRM proposed that these procedures
would be very similar to those proposed under sec-
tion 542.1, except that the agency would have 90
days to issue its preliminary determination after
the manufacturer submitted its views and that the
manufacturer would have the right to request a
meeting with the agency to further amplify its
views during this 90 day period. A special schedule
was set out for new lines to be introduced in the
1987 model year because of the time constraints.
That special schedule would ensure that final de-
terminations for all new lines to be introduced in
the 1987 model year would be made by March 1,
1986.
Both VW and GM stated in their comments that
this section would not give them enough lead time
although it would satisfy the statutorily mandated
six months of lead time. VW stated that the agency
should allow itself only 30 days to consider the
manufacturer's submission before issuing its pre-
liminary determination. VW's argument was that
if a 30 day period was sufficient for the piu-poses of
sections 542.1, 542.2, and 542.3, it should also be
sufficient for this section and 542.5. GM stated
that it was going to make its submission for its
new lines to be introduced in the 1987 model year
concurrently with its submissions under section
542.1, 542.2, and 542.3 by July 24. GM expressed
its hope that this would allow the agency to issue
its preliminary determinations under this section
concurrently with those under the previous sec-
tions, that is, by August 24, 1985.
The agency has carefully considered these com-
ments in the context of both this section and sec-
PART542;PRE9
tion 542.5. The NPRM explained the agency's be-
lief that the 90 day period between its receipt of
the manufacturer's submission and its issuance of
a preliminary determination would facilitate
agreements on the appropriate selections. The in-
creased opportunity for meetings and detailed ana-
lysis of the manufacturer's submission by the
agency should ensure that both parties fully un-
derstand the other's position. That understanding
should, in turn, lead to more agreements during
the selection process.
However, for the 1987 model year, the agency be-
lieves that the need to ensure adequate lead time
to the manufacturers outweighs the interest in fa-
cilitating agreements. Therefore, NHTSA is
amending the proposed procedures to specify that
the agency will issue its preliminary determina-
tion to the manufacturer no later than 30 days
after receiving the manufacturer's submission
under this section and section 542.5. This change
will ensure that manufacturers will have the same
lead time for their new 1987 lines as they will have
for their pre-1987 lines. NHTSA would like to note
that it is not changing the date by which it will
provide those manufacturers who do not make sub-
missions under this section with the agency's uni-
lateral preliminary determinations. The proposed
December 31, 1985, date is adopted in this final
rule for such manufacturers.
In the case of the 1988 and subsequent model
years, NHTSA is adopting the proposed 90 day per-
iod for considering manufacturer's submissions be-
fore issuing its preliminary determinations, for the
reasons set forth in the NPRM. There will be no
lead, time concern in these model years because,
even allowing the 90 day period, a final determina-
tion for each new line must be made 13 months
before the new line is introduced. No manufacturer
or any other commenter to Theft Act rulemakings
has suggested that a 13 month lead time is inade-
quate.
5. § 542.5: Procedures for selecting post-
standard low theft new lines with a majority
of major parts interchangeable with those of a
high theft line.
These proposed procedures were very similar to
those set forth in section 542.3, but with a 90 day
period for the agency to consider the manufac-
turer's submission before issuing a preliminary de-
termination and with the manufacturers having
the right to request a meeting during this 90 day
period. The proposed 90 day period has been short-
ened to 30 days for the 1987 model year in this
final rule for the reasons set forth above in the dis-
cussion of § 542.4, and appropriate references to
"covered major parts" have been added, per the ex-
planation in the discussion of § 542.3 above. In all
other respects, this rule is adopted as proposed.
GM commented that this section should be de-
leted from the procedures, because this section is
"inappropriate at this time." GM argued that such
provisions should only be added if and when a rela-
tionship is established between thefts or theft
rates and interchangeability. This comment ig-
nores the express language of the Theft Act. Sec-
tion 603(aXlXC) explicitly designates as high theft
lines subject to the theft prevention standard those
lines introduced after the effective date of the theft
prevention standard with likely low theft rates,
but which have a majority of covered major parts
interchangeable with those of a line with actual or
likely high theft rates. Section 603(aX2) specifies
that the specific lines which are to be subject to the
standard may be selected by agreement between
the manufacturer and the agency. These provi-
sions expressly require this agency to have section
542.5 in these procedures.
C. Effective Date for These Procedures.
The Administrative Procedure Act (5 U.S.C. 553
(d)) specifies that a substantive rule shall be pub-
lished not less than 30 days before its effective
date, with a few exceptions. This rule is effective as
of its publication in the Federal Register. NHTSA
does not believe that the 30 day requirement is ap-
plicable to this rule, because it is not a substantive
rule. These procedures impose no substantive re-
quirements or restrictions. They do not require
manufacturers to submit any information to
NHTSA; they merely set forth the information
which should be submitted by those manufac-
turers that choose to participate in the selection
process. Because of this, NHTSA has concluded
that this rule is procedural, not substantive.
If the 30 day requirement were applicable to this
action, NHTSA would have found good cause for
specifying an earlier effective date. The Theft Act
requires the selection process to be completed by
October 24, 1985, for all lines introduced before the
effective date of the theft prevention standard. To
allow time for each of the steps involved in the
selection process, manufacturers must submit
their views and data to NHTSA no later than [in-
sert date five days after publication in the
PART 542; PRE 10
•
FEDERAL REGISTER]. The manufacturers which In consideration of the foregoing, Title 49 of the
commented on the proposed procedures indicated Code of Federal Regulations is amended by adding
that they would prepare their submissions on the a new Part 542— Procedures for Selecting Lines to
basis of the NPRM. This rule only clarifies a few Be Covered by the Theft Prevention Standard.
aspects of that proposal and gives the agency less
time to consider submissions for new lines to be in- Issued on August 21, 1985
troduced in the 1987 model year. The statutory
deadline and the similarity of the final procedures
to those which were proposed would have consti- Diane K. Steed
tuted good cause for making these procedures ef- Administrator
fective upon publication.
50 FR 34831
August 28, 1985
»
i
PART 542; PRE 11-12
PART 542— PROCEDURES FOR SELECTING LINES TO BE COVERED BY THE
THEFT PREVENTION STANDARD
(Docket No. T85-01; Notice 2)
Sec.
542.1
542.2
542.3
542.4
542.5
Procedures for selecting pre-standard new
lines that are liltely to have high theft rates.
Procedures for limiting the selection of pre-
standard lines having or likely to have high
theft rates to 14 lines.
Procedures for selecting pre-standard low
theft lines with a majority of major parts
interchangeable with those of a high theft
line.
Procedures for selecting post-standard new
lines that are likely to have high theft rates.
Procedures for selecting post-standard low
theft new lines with a majority of major
parts interchangeable with those of a high
theft line.
AUTHORITY: 15 U.S.C. 2021, 2022, and 2023;
delegation of authority at 49 CFR 1.50.
Note: This Part refers to the appendices to and effec-
tive date of Part 541, which is the proposed vehicle theft
prevention standard. Part 5U1 has not yet been issued as a
final rule. Until siwh time as th^. final rule establishing
Part 541 is issued, this Pari references the proposed ap-
pendices and effective date for Part 541 published at 50
FR 19728, May 10, 1985. Upon such issuance, the
references in this Part will be updated.
§ 542.1 Procedures for selecting pre-standard
new lines that are likely to have high theft rates.
(a) Scope. This section sets forth the pro-
cedures for motor vehicle manufacturers and
NHTSA to follow in the determination of whether
any pre-standard new lines are lines likely to have
high theft rates.
(b) Application. These procedures apply to
each manufacturer that has introduced or will in-
troduce a new line into commerce in the United
States after January 1, 1983, and before
November 1, 1985, and to each of those lines.
(c) Procedures.
(1) Each manufacturer uses the criteria in Ap-
pendix C of Part 541 of this chapter to evaluate
each new line and to identify those lines the
manufacturer believes are likely to have a theft
rate exceeding the median theft rate.
(2) The manufacturer submits its evaluations
and identifications made under paragraph (c)(1) of
this section, together with the factual information
underlying those evaluations and identifications,
to NHTSA by September 2, 1985.
(3) Within 30 days after its receipt of the manu-
facturer's submission under paragraph (cX2) of this
section, or by August 24, 1985, whichever is sooner,
the agency considers that submission, if any, in-
dependently evaluates each new line using the
criteria in Appendix C of Part 541 of this chapter,
and, on a preliminary basis, determines whether
those new lines should or should not be subject to
§ 541.5 of this chapter. NHTSA informs the
manufacturer by letter of the agency's evaluations
and determinations, together with the factual infor-
mation considered by the agency in making them.
(4) The manufacturer may request the agency
to reconsider any of its preliminary determination
made under (cX3) of this section. The manufacturer
must submit its request to the agency within 30
days of its receipt of the letter under paragraph
(c)(3) of this section informing it of the agency's
evaluations and preliminary determinations. The
request must include the facts and arguments
underlying the manufacturer's objections to the
agency's preliminary determinations. During this
30 day period, the manufacturer may also request
a meeting with the agency to discuss those
objections.
(5) Each of the agency's preliminary deter-
minations under paragraph (c)(3) of this section
becomes final on October 15, 1985, unless a request
PART 542-1
for reconsideration of it has been received in
accordance with paragraph (cX4) of this section. If
such a request has been received, the agency
makes its final determinations by October 24,
1985, and informs the manufacturer by letter of
those determinations and its response to the re-
quest for reconsideration.
§ 542.2 Procedures for limiting the selection of
pre-standard lines fiaving or likely to fiave
high theft rates to 14 lines.
(a) Scope. This section sets forth the pro-
cedures for motor vehicle manufacturers and the
NHTSA to follow in implementing the 14 line limit
applicable to certain groups of high theft lines in
the initial year of the theft prevention standard.
(b) Application. These procedures apply to
each manufacturer that produces more than 14
lines that have been or will be introduced into com-
merce in the United States before November 1,
1985 and that have been listed in Appendix A of
Part 541 of this chapter or have been identified by
the manufacturer or preliminarily determined by
the agency to be high theft lines under § 542.1, and
to each of those lines.
(c) Procedures.
(1) Each manufacturer evaluates each of its
lines in accordance with the criteria in Appendix B
of Part 541 of this chapter and ranks the lines
based on the extent to which they satisfy those
criteria.
(2) Each manufacturer submits its evaluations
and rankings made under paragraph (cXl) of this
section, together with the factual information
vmderlying those evaluations and rankings, to
NHTSA by September 2, 1985.
(3) Within 30 days after its receipt of the
manufacturer's submission imder paragraph (cX2)
of this section, or by August 24, 1985, whichever is
sooner, the agency considers that submission, if
any, independently evaluates each of the manufac-
turer's lines using the criteria in Appendix B of
Part 541 and, on a preliminary basis, determines
which 14 lines should be subject to § 541.5 of this
chapter. NHTSA informs the manufacturer by let-
ter of the agency's evaluations and rankings,
together with the factual information considered
by the agency in making them.
(4) The manufacturer may request the agency
to reconsider its preliminary ranking under
paragraph (cX3) of this section of any of the highest
14 ranked lines. The manufacturer must submit its
request to the agency within 30 days of its receipt
of the letter under paragraph (cX3) of this section
informing it of the agency's evaluations and
preliminary rankings. The request must include
the facts and arguments underlying the manufac-
turer's objections to the agency's preliminary
rankings. During this 30 day period, the manufac-
turer may also request a meeting with the agency
to discuss those objections.
(5) Each of the agency's preliminary rankings
of the 14 highest ranked lines under paragraph (cX3)
becomes final on October 15, 1985, unless a request
for reconsideration of it has been received in accord-
ance with paragraph (cX4) of this section. If such a
request has been received, the agency makes its
final rankings by October 24, 1985, and informs the
manufacturer by letter of those rankings and its
response to the request for reconsideration.
§ 542.3 Procedures for selecting pre-standard
low theft lines with a majority of major parts that are
Interchangeable with those of a high theft line.
(a) Scope. This section sets forth the pro-
cedures for motor vehicle manufacturers and the
NHTSA to follow in the determination of whether
any pre-standard lines with low theft rates have
major parts interchangeable with a majority of the
covered major parts of a line with an actual or
likely high theft rate.
(b) Application. These procedures apply to:
(1) Each manufacturer that produces—
(i) At least one passenger motor vehicle line
that has been or will be introduced into com-
merce in the United States before November
1, 1985, and that has been listed in Appendix A
of Part 541 of this chapter or identified by the
manufacturer or preliminarily determined by
the agency to be a high theft line under
§ 542.1, and
(ii) At least one line that has been or will be
introduced into commerce in the United States
before that date and that is below the median
theft rate; and
(2) Each of those sub-median rate lines.
PART 542-2
(c) Procedures.
(1) For each of its lines with a theft rate below
the median rate, each manufacturer identifies how
many and which of the major parts of that line are
interchangeable with the covered major parts of
any other of its lines that has been listed in Appen-
dix A of Part 541 of this chapter or identified by
the manufacturer or preliminarily determined by
the agency to be a high theft line under § 542.1.
(2) If the manufacturer concludes that one or
more lines with a sub-median theft rate has major
parts that are interchangeable with a majority of
the covered major parts of a high theft line, the
manufacturer decides whether all the vehicles of
those lines with sub-median theft rates and inter-
changeable parts account for more than 90 percent
of the total annual production of all of the manufac-
turer's lines with those interchangeable parts.
(3) The manufacturer submits its identifica-
tions and conclusions made under paragraphs (c)(1)
and (2) of this section, together with the facts and
data underlying those identifications and conclu-
sions, to NHTSA by September 2, 1985.
(4) Within 30 days after its receipt of the
manufacturer's submission under paragraph (c)(3)
of this section, or by August 24, 1985, whichever is
sooner, the agency considers that submission, if
any, and independently makes, on a preliminary
basis, the determinations of those lines with sub-
median theft rates which should or should not be
subject to § 541.5 of this chapter. NHTSA informs
the manufacturer by letter of those determina-
tions, together with the bases for the determina-
tions, including the factual information considered
by the agency.
(5) The manufacturer may request the agency
to reconsider any of its preliminary determinations
made under paragraph (cX4) of this section. The
manufacturer must submit its request to the agency
within 30 days of its receipt of the letter under
paragraph (cX4) informing it of the agency's
preliminary determinations. The request must in-
clude the facts and arguments underlying the
manufacturer's objections to the agency's
preliminary determinations. During this 30 day
period, the manufacturer may also request a
meeting with the agency to discuss those objections.
(6) Each of the agency's preliminary deter-
minations under paragraph (c)(4) becomes final on
October 15, 1985, unless a request for reconsidera-
tion of it has been received in accordance with
paragraph (cX5) of this section. If such a request
has been received, the agency makes its final
determinations by October 24, 1985, and informs
the manufacturer by letter of those determinations
and its response to the request for reconsideration.
§ 542.4 Procedures for selecting post-standard
new lines that are lilcely to have high theft rates.
(a) Scope. This section sets forth the pro-
cedures for motor vehicle manufacturers and
NHTSA to follow in the determination of whether
any post-standard line is likely to have a theft rate
above the median rate.
(b) Application. These procedures apply to
each manufacturer which plans to introduce a new
line into commerce in the United States on or after
November 1, 1985, and to each of those lines.
(c) Procedures.
(1) Each manufacturer uses the criteria in Ap-
pendix C of Part 541 of this chapter to evaluate
each new line and to conclude whether the manu-
facturer believes that new line is likely to have a
theft rate exceeding the median theft rate.
(2) The manufacturer submits its evaluations
and conclusions made under paragraph (cXl) of
this section, together with the factual information
underlying those evaluations and conclusions, to
the NHTSA not more than 24 months before the
introduction of each new line and not less than 18
months before that date for new lines to be in-
troduced in the 1988 or subsequent model years.
For new lines to be introduced in the 1987 model
year, the manufacturer makes this submission not
later than October 1, 1985. The manufacturer may
request a meeting with the agency during this
period to further explain the bases for its evalua-
tions and conclusions.
(3) Within 30 days after its receipt of the
manufacturer's submission under paragraph (cX2)
of this section, or not later than December 31,
1985, in the case of new lines introduced in the
1987 model year, and within 90 days after its
receipt of the manufacturer's submission under
paragraph (a)(2) of this section, or not later than 15
PART 542-3
months before the introduction of each new line, in
the case of new lines to be introduced in the 1988 or
subsequent model years, whichever is sooner, the
agency considers that submission, if any, in-
dependently evaluates each new line using the
criteria in Appendix C of Part 541 of this chapter
and, on a preliminary basis, determines whether the
new line should or should not be subject to § 541.5 of
this chapter. NHTSA informs the manufacturer by
letter of the agency's evaluations and determina-
tions, together with the factual information con-
sidered by the agency in making them.
(4) The manufacturer may request the agency
to reconsider any of its preliminary determinations
made under paragraph (cX3) of this section. The
manufacturer must submit its request to the agency
within 30 days of its receipt of the letter under
paragraph (cX3) informing it of the agency's evalua-
tions and preliminary determinations. The request
must include the facts and arguments underlying
the manufacturer's objections to the agency's
preliminary determinations. During this 30 day
period, the manufacturer may also request a
meeting with the agency to discuss those objections.
(5) Each of the agency's preliminary deter-
minations under paragraph (cX3) becomes final 45
days after the agency sends the letter specified in
paragraph (cX3) unless a request for reconsidera-
tion of it has been received in accordance with
paragraph (cX4) of this section. If such a request
has been received, the agency makes its final
determinations within 30 days of its receipt of the
request for the 1987 model year and within 60 days
of its receipt of the request for the 1988 and subse-
quent model years. NHTSA informs the manufac-
turer by letter of those determinations and its
response to the request for reconsideration.
§ 542.5 Procedures for selecting post-standard,
low theft, new lines with a majority of major parts in-
terchangeable with those of a high theft line.
(a) Scope. This section sets forth the pro-
cedures for motor vehicle manufacturers and the
NHTSA to follow in the determinations of whether
any post-standard lines that will be likely to have a
low theft rate have major parts interchangeable
with a majority of the covered major parts of a line
having or likely to have a high theft rate.
(b) Application. These procedures apply to:
(1) Each manufacturer that produces—
(i) At least one passenger motor vehicle line
that has been or will be introduced into com-
merce in the United States and that has been
listed in Appendix A of Part 541 of this
chapter or has been identified by the manufac-
turer or preliminarily or finally determined by
NHTSA to be a high theft line under § 542.1 or
§ 542.4, and
(ii) At least one line that will be introduced
into commerce in the United States on or after
November 1, 1985, and that the manufacturer
identifies as likely to have a theft rate below
the median theft rate; and
(2) Each of those likely sub-median rate lines.
(c) Procedures.
(1) For each new line that a manufacturer
identifies under Appendix G as likely to have a
theft rate below the median rate, the manufacturer
identifies how many and which of the major parts
of that line will be interchangeable with the
covered major parts of any other of its lines that
has been listed in Appendix A of Part 541 of this
chapter or identified by the manufacturer or
preliminarily or finally determined by the agency
to be a high theft line under § 542.1 or § 542.4,
(2) If the manufacturer concludes that a new
line with a likely sub-median theft rate will have
major parts that are interchangeable with a ma-
jority of the covered major parts of a high theft
line, the manufacturer determines whether all the
vehicles of those lines with likely sub-median theft
rates and interchangeable parts will account for
more than 90% of the total annual production of all
of the manufacturer's lines with those inter-
changeable parts.
(3) The manufacturer submits its evaluations
and identifications made under paragraphs (cXl)
and (2) of this section, together with the factual in-
formation underlying those evaluations and iden-
tifications, to NHTSA not more than 24 months
before introduction of the new line and not less
than 18 months before that date for new lines to be
introduced in the 1988 or subsequent model years.
For new lines to be introduced in the 1987 model
year, the manufacturer makes this submission not
later than October 1, 1985. During this period, the
manufacturer may request a meeting with the
PART 542-4
agency to further explain the bases for its evalua-
tions and conclusions.
(4) Within 30 days after its receipt of the
manufacturer's submission under paragraph (c)(3)
of this section, or not later than December 31,
1985, in the case of new lines to be introduced in
the 1987 model year, and within 90 days after its
receipt of the manufacturer's submission under
paragraph (c)(2) of this section, or not later than 15
months before the introduction of each new line, in
the case of new lines to be introduced in the 1988
or subsequent model years, whichever is sooner,
the agency considers that submission, if any, and
independently makes, on a preliminary basis, the
determinations of those lines with likely sub-
median theft rates which should or should not be
subject to § 541.5 of this chapter. NHTSA informs
the manufacturer by letter of the agency's pre-
liminary determinations, together with the factual
information considered by the agency in making
them.
(5) The manufacturer may request the agency
to reconsider any of its preliminary determinations
made under paragraph (c)(4) of this section. The
manufacturer must submit its request to the
agency within 30 days of its receipt of the letter
under paragraph (c)(4) informing it of the agency's
preliminary determinations. The request must
include the facts and arguments underlying the
manufacturer's objections to the agency's
preliminary determinations. During this 30 day
period the manufacturer may also request a meet-
ing with the agency to discuss those objections.
(6) Each of the agency's preliminary deter-
minations made under paragraph (c)(4) becomes
final 45 days after the agency sends the letter
specified in that paragraph unless a request for
reconsideration of it has been received in accord-
ance with paragraph (c)(5) of this section. If such a
request has been received, the agency makes its
final determinations within 30 days of its receipt of
the request for the 1987 model year and within 60
days of its receipt of the request for the 1988 and
subsequent model years. NHTSA informs the
manufacturer by letter of those determinations
and its response to the request for reconsideration.
50 FR 34831
August 28, 1985
PART 542-5
#
#
PREAMBLE TO AN AMENDMENT TO PART 543
Petitions for Exemption from the Vehicle Theft Prevention Standard
(Docket No. T85-02; Notice 21)
ACTION: Final rule
SUMMARY: This final rule is issued under Title VI
of the Motor Vehicle Information and Cost Savings
Act. Title VI provides that passenger motor vehi-
cle manufacturers may petition the Agency for an
exemption from the parts-marking requirements of
the vehicle theft prevention standard for passenger
motor vehicle lines whose standard equipment in-
cludes an antitheft device. In order for this Agency
to exempt a line, it must determine that the line's
antitheft device is likely to be as effective as parts-
marking in reducing and deterring motor vehicle
theft.
Part 543 currently sets out procedures for
manufacturers to follovi^ in preparing and submitting
petitions for exemption for model year 1987 carlines
from the parts-marking requirements. It also sets
forth procedures which the Agency will follow in
processing those petitions and determining whether
they should be granted. This final rule extends the
Part to subsequent model years, while making minor
changes to its provisions.
EFFECTIVE DATE: This final rule is effective on Oc-
tober 8, 1987.
SUPPLEMENTARY INFORMATION:
Statutory Background
The Motor Vehicle Theft Law Enforcement Act
of 1984, Pub. L. 98-547 (Theft Act), added Title VI
to the Motor Vehicle Information and Cost Savings
Act (Cost Savings Act). Under Title VI, by delega-
tion from the Secretary of Transportation, NHTSA
promulgated a vehicle theft prevention standard for
high-theft lines of passenger motor vehicles. On
October 24, 1985, the Agency published a final rule
(49 CFR Part 541) that, among other things, set out
performance requirements for marking certain
major original equipment and replacement parts on
high-theft passenger vehicles with permanent iden-
tification numbers, 50 F.R. 43166.
Section 605 of Title VI permits a manufacturer of
a high-theft line to petition NHTSA to exempt it
from the parts-marking requirements. NHTSA may
grant such a petition if the petitioner installs an
antitheft device (also called a "device" or "antitheft
system") as standard equipment on the entire line
for which it seeks an exemption, and if NHTSA
determines that the antitheft device is likely to be
as effective in reducing and deterring motor vehi-
cle theft as complying with the parts-marking
requirements.
Section 605 allows the Agency to grant an exemp-
tion for not more than two lines of any manufacturer
for the initial model year to which the vehicle theft
prevention standard applies. (Under the October
1985 final rule, the standard first applies to model
year 1987.) For each subsequent model year, the
agency may exempt not more than two additional
lines of any manufacturer. Thus, it is possible for
a manufacturer to receive two exemptions for model
year 1987, two more for model year 1988 for a total
of four, and so forth.
Section 605 contains these further provisions.
First, a manufacturer must file an exemption peti-
tion with NHTSA not later than eight months before
beginning production of the line for the first model
year covered by the petition. Second, NHTSA may
grant a petition in whole or in part. Third, the
Agency must grant or deny a petition within 120
days after the date the petition is filed. If the Agency
fails to make a determination within the specified
time, section 605 states that the petition shall be con-
sidered approved, and the manufacturer shall be ex-
empt from the standard's requirements for the
subsequent model year. Fourth, section 605 allows
the Agency to terminate a manufacturer's exemp-
tion if NHTSA determines that the manufacturer's
antitheft device has not been as effective in reduc-
ing and deterring motor vehicle theft as compliance
with the parts-marking standard.
On January 7, 1986 (51 F.R. 706), NHTSA pub-
lished an interim final rule setting forth the
PART 543-PRE 1
procedures for obtaining an exemption from the
theft prevention standard for model year 1987.
NHTSA also published a notice of proposed rulemak-
ing (NPRM) on January 7, 1986 (51 F.R. 715) that
principally did two things. First, the Notice set out
procedures for manufacturers to follow in prepar-
ing and submitting antitheft exemption petitions for
model years after 1987. Second, it set out pro-
cedures the Agency would follow in processing those
petitions and determining whether to grant an ex-
emption request. These procedures essentially were
the same as those NHTSA established for the 1987
model year.
The procedures proposed in the January 1986
NPRM specified the basic information and data
which manufacturers must set out in their petitions.
The required information included the identity of the
line or lines for which exemption is sought, a detailed
description of the standard equipment antitheft
device, the means and processes by which the device
is activated and functions, the reasons for the
manufacturer's belief that the antitheft device would
reduce and deter motor vehicle theft, and the
manufacturer's reasons for believing that the
Agency should determine that the device would be
as effective as compliance with Part 541 in reduc-
ing and deterring motor vehicle theft. The Notice
also proposed the Agency's procedures for process-
ing exemption petitions, and for modifying or ter-
minating an existing exemption.
Nine vehicle manufacturers, one law enforcement
group, an automobile dealers association, and an
aftermarket antitheft device manufacturers' associa-
tion commented on these notices.
Continued Use of Model Year 1987 Procedures
In the 1986 NPRM, the Agency requested public
comment on using the model year 1987 procedures
for subsequent model years. AMC/Renault objected
primarily because the company was concerned that
NHTSA's decisions on specific exemptions for model
year 1987 would prejudice decisions foi' future years.
AMC/Renault believed that the decision to grant or
deny a petition would be based on the relative merits
of the antitheft device described in one petition, com-
pared with devices described in other petitions.
Carrying over the 1987 procedures to subsequent
years will not prejudice any petitions made in those
later years. Under section 605, the Agency's deci-
sion whether to grant an exemption petition rests
on NHTSA's determining that an antitheft device
is likely to be as effective in reducing and deterring
motor vehicle theft as complying with the parts-
marking requirements. To determine whether an an-
titheft device meets the statutory test, the Agency
believes that the principal considerations are the
petitioner's description of its device, any other data
submitted in support of the petition, and the Agen-
cy's engineering assessment of the device and sup-
porting data. However, in making an exemption
decision, the Agency believes that it may also be
helpful to consider the relative merits of various
devices.
If one manufacturer petitions for an exemption
asserting that its device is the same as a device for
which the Agency already has granted an exemp-
tion, it is evident that NHTSA must assess the in-
formation in the new petition in conjunction with in-
formation respecting the device to which the peti-
tioner claims sameness. The Agency already has
granted an exemption for one manufacturer based
on just such an assertion.
In other instances, a petitioner may note the
similarity between its system and one for which the
Agency already has granted an exemption request.
Such a circumstance not only invites comparison
among systems, but necessitates it. At least one
manufacturer has made such a comparison in giv-
ing its reasons why NHTSA should grant its exemp-
tion request.
Finally, if the Agency is to apply the exemption
provisions consistently, it must be conscious of what
design and performance features previously led it
to conclude that any given device would likely be as
effective in reducing and deterring theft as the
parts-marking requirements. NHTSA hopes to allay
fears that a decision respecting the efficacy of one
system will rest entirely on the merits of that system
relative to another. On the other hand, the Agency
believes that factors such as those just described
may make it necessary to compare devices, or may
recommend that practice. In either event, the
Agency has the engineering expertise to use com-
parison appropriately, always giving primary con-
sideration to the merits of the device under its
scrutiny.
Public Comment on Petitions
In the 1986 NPRM, the Agency sought comment
on the desirability of changing the exemption pro-
cess after model year 1987 to include publishing
notice of receipt of petitions and providing a brief
period for public comment on them. NHTSA con-
templated the possibility of providing a similar
opportunity for petitions to modify or terminate ex-
emptions. At the same time, the Agency noted its
PART 543-PRE 2
concern that making a petition's details publicly
available in turn might make it easier for vehicle
thieves to get information that would aid in disarm-
ing an antitheft system.
The Agency received comments on this issue from
AMC/Renault, Chrysler, the National Automobile
Dealers Association (NADA), Ford, General Motors
(GM), and Volkswagen of America (VWoA). The
commenters expressed a belief that if seeking public
comment resulted in even limited data disclosure,
the disclosure could harm owners and manufacturers
of high-theft cars because even carefully edited data
might inadvertently contain clues for disarming and
defeating an antitheft device. Such a result would
undermine the basic purpose of the Theft Act: to
reduce and deter motor vehicle theft. Further, they
noted that Congress did not require that NHTSA
publish a notice and request public comment on each
exemption petition it receives.
VWoA stated that if the Agency granted manufac-
turer requests for confidential treatment of antitheft
data, there would be little information on which the
public could comment because the information
NHTSA could make public would be severely
limited. One company said that releasing detailed in-
formation would shorten the life of any device,
because the manufacturer would be obliged to alter
the device after release, in order to ensure effec-
tiveness in reducing and deterring motor vehicle
theft.
The Agency finds merit in these comments and
notes that it never intended to release detailed in-
formation concerning antitheft systems. Indeed, in
Federal Register notices granting model year 1987
exemption petitions, the Agency endeavored to
disclose as little as possible about the design
specifications for a given antitheft device so that a
potential thief would learn nothing of value about
the device. The Agency has decided against inviting
public comment on exemption petitions because
soliciting comments based on the general type of in-
formation released in the past would yield little of
value, and soliciting comments based on more de-
tailed information potentially could jeopardize the
statutory purpose of reducing and deterring vehi-
cle theft.
Exemption Statics Statement on Certification Labels
Another issue on which NHTSA asked for com-
ment in the NPRM was the value of requiring
manufacturers to include on the vehicle certification
label a statement of the vehicle's status relative to
the parts-marking requirements. If the Agency
adopted such a requirement, a manufacturer would
be required to print up different certifications for
its various car lines to reflect the vehicle's status as
subject to the antitheft standard, exempt from the
standard, or not subject to the standard.
The Agency received eight comments on certifica-
tion label statements reflecting the exempt status
of high-theft vehicles. The respondents were AMC/
Renault, Austin Rover, Chrysler, Ford, GM, VWoA,
NADA, and the National Automobile Theft Bureau
(NATB). Seven commenters opposed requiring such
a statement, making three principal arguments. The
first argument was that including this information
on the certification label would be of little value to
the primary audience for certification labels, i.e., the
ultimate consumer. The second was that these labels
might encourage schemes in which an unscrupulous
person would remove a label indicating compliance,
and replace it with a label indicating exemption. The
commenters noted that this practice would hamper
law enforcement authorities in policing vehicle and
equipment theft.
The third argument against requiring an exemp-
tion statement on the vehicle certification label was
the one that these commenters generally found most
compelling. That was that requiring a manufacturer
to produce different labels for its product lines adds
a cost to the manufacture of a vehicle by creating
an obligation for which there is no apparent need.
These commenters argued that the principal reason
for the entire antitheft plan is to assist law enforce-
ment organizations in vehicle theft investigations.
They concluded, therefore, that NHTSA's Appen-
dix A (to 49 CFR Part 541), published annually in
the Federal Register, will supply law enforcement
officials with a current list of high-theft lines. NATB
added further that they, along with the International
Association of Automobile Theft Investigators
(lAATI), also circulate information to help vehicle
theft investigators identify antitheft lines.
Of the eight commenters, only NADA endorsed
requiring "a label noticing that a vehicle is exempt
from the parts-marking standard." NADA asserted
that the Agency's Appendix A may be inaccurate,
less timely, and more burdensome to use than "prop-
erly marked certification labels." The Association
further stated that an "exempt status certification
label" would help people who repair cars to deter-
mine quickly whether the vehicle has an antitheft
device installed.
After having considered these comments, NHTSA
concludes that it is unnecessary to require a state-
ment on the certification label respecting the
PART 543-PRE 3
exemption status of high-theft vehicles. First, the
Agency recognizes that there are a number of
sources from which law enforcement groups can
obtain data to update lists of exempt high-theft lines.
The commenters mention two such sources: NATB
and lAATI. The Agency believes that, taken
together with those other sources of information,
Appendix A serves the purpose of disseminating in-
formation to aid theft investigations with reasonable
efficiency. Second, with respect to NADA's com-
ment concerning facilitating repair, the Agency
assumes that exempt vehicle manufacturers will
notify their dealers which lines are exempt; the
dealer then will know that an antitheft system is
among the car's standard features.
Direct Importers
In its interim final rule, NHTSA determined that
a direct importer cannot apply for an exemption
from the parts-marking requirements, and gave its
reasons in support of this position. However, the
Agency made a further determination that there are
some circumstances where a direct importer may
have some parts-marking responsibilities. The
Agency considered the following scenario.
A manufacturer has an exemption for a given line
of cars classified as high-theft vehicles, and makes
some of these cars for sale in the United States, and
some for sale outside this country. A direct importer
wants to import a number of the cars that were
manufactured for sale outside the United States, and
that consequently do not have an antitheft device.
The Agency stated that the direct importer would
have to mark these vehicles according to antitheft
parts-marking standard. NHTSA noted that there
would exist a line of cars available for sale in the
United States, some of which were marked under
parts-marking standard, and some of which were
equipped with antitheft devices. NHTSA sought
comments on the effects of this practice.
In response to the Agency's discussion, BMW of
North America and NADA stated that NHTSA
should include language in the theft exemption rule
explicitly stating that direct importers cannot apply
for an antitheft exemption. These commenters
asserted that without this language. Part 543 might
permit a direct importer to petition for an exemption.
NHTSA restates its position that in order for a
manufacturer to be exempted under Part 543, the
manufacturer must be capable of installing an an-
titheft system as standard equipment on an entire
vehicle line. {See 51 F.R. 706, 707.) A direct importer
cannot install an item as standard equipment on a
line because he does not control an entire line.
Therefore, NHTSA concludes that it is unnecessary
to amend Part 543 to state a prohibition against
direct importers applying for an exemption.
However, the Agency has included language in sec-
•tions 543.6 and 543.7 that should alleviate the con-
cerns of these commenters.
NADA made additional comments respecting
direct importers. First, it stated that NHTSA should
prohibit direct importers from installing " 'standard
equipment antitheft devices' on exempt line
automobiles which are not originally intended for
sale in America." The Agency believes that it lacks
the authority to prohibit the installation of antitheft
devices on such vehicles, including devices identical
to those installed as standard equipment on other
vehicles. There is nothing in Title VI that restricts
a direct importer, or any other retail business, from
retrofitting cars with antitheft systems. However,
as implied above, a direct importer's installation of
an antitheft device on a car not originally intended
for sale in this country will not relieve that importer
of the obligation of marking the parts of that car.
NADA also believed that if direct importers could
install "standard equipment antitheft devices in ex-
empted lines," this fact somehow would make design
data more avaOable to potential car thieves. NHTSA
does not understand this comment. The Agency
discusses confidentiality at length in another part
of this document. Suffice it to say here that if a
manufacturer submits design data in support of a
request for exemption, he may request confidential
treatment for the data under 49 CFR Part 512. If
the Agency determines to grant such a request, the
Agency wall treat the manufacturer's data consis-
tent with the determination, and vdll restrict data
access and dissemination. In any event, prohibiting
or circumscribing a direct importer's ability to in-
stall an antitheft system is a matter outside the
scope of Agency authority.
Finally, with respect to direct importers, BMW
stated that it should be impermissible for these im-
porters to market more than two lines of exempt
vehicles. The company stated that if NHTSA viewed
a direct importer as a manufacturer, the Agency
should apply the same restrictions to a direct im-
porter as it applied to an original manufacturer.
BMW alluded to section 605 of Title VI in support
of its position.
The Agency disagrees. First, NHTSA recognizes
in the preamble to the interim final rule and in this
document that an exemption may only be sought by
a manufacturer capable of installing an antitheft
device on all cars in the exempted line. Direct
PART 543-PRE 4
importers cannot install standard equipment and are
not likely to be able to persuade an original manufac-
turer to install such equipment on vehicles which the
direct importer seeks to sell in this country. Second,
section 605 does not prohibit any seller, including
any direct importer, from marketing vehicles from
more than two exempt lines at a time. The restric-
tion is that not more than two model lines per
manufacturer may be exempted for a given model
year.
Confidential Information
NHTSA requested comment on whether, under 49
CFR Part 512, the Agency properly may afford con-
fidential treatment to all data a manufacturer might
submit in connection with an exemption petition.
More specifically, NHTSA asked whether there may
be a class of "drawings and other information" that
a manufacturer would have to submit in support of
its antitheft petition, and that may be sensitive
information without being protectable under Appen-
dix B. Comments were received from five manufac-
turers, i.e., Austin Rover, Chrysler, Ford, GM, and
Toyota. Three of these, i.e., Austin Rover, Chrysler,
and Toyota, suggested that until the manufacturer
introduces the exempt car line to the public, NHTSA
should treat as confidential all data submitted in sup-
port of an antitheft exemption request.
Ford suggested that if the Agency is concerned
whether it might be compelled to disclose some ex-
emption data to potential vehicle thieves, NHTSA
could expand section 512.5, Substantive Standards
for Affording Confidential Treatment, "to embrace
the broader definition of confidentiality set forth in
recent judicial opinions." Specifically, the company
suggested amending section 512.5 by stating that
NHTSA would withhold information as confidential
if disclosing the information might harm a specific
governmental or private interest Congress sought
to protect under the Freedom of Information Act
(FOIA), 5 U.S.C. 552(b)(4), and if the information
met other criteria set out in section 512.4.
GM expressed concern that neither NHTSA's con-
fidentiality rules, nor the FOIA provision cited
above, would justify the Agency's withholding the
kind of information most valuable to an auto thief.
The Agency has considered these comments with
substantial care because theft deterrence and reduc-
tion is at the heart of the antitheft standard, and
because NHTSA wishes to avoid any practice that
will encourage or assist a potential thief. With
respect to Ford's suggested amendment to section
512.5, the Agency notes that Part 512 is primarily
a procedural mechanism for protecting information
under 552(b)(4) of the FOIA. The Agency is aware
of the breadth of judicial opinions articulating what
kinds of material a Federal Agency may withhold
under Exemption (b)(4). In particular, the Agency
is aware of the case law stating that Federal agen-
cies may withhold information under Exemption
(b)(4) in order to protect a governmental interest.
NHTSA plans to examine section 512.5 and consider
the need to make appropriate changes in a separate
rulemaking.
Regarding GM's concern, the Agency observes
that many manufacturers who submitted informa-
tion in connection with model year 1987 petitions
for exemption requested confidential treatment for
that information. The Agency is withholding much
of this information, having determined that disclos-
ing it would result in commercial harm to the
manufacturer. Further, before product introduction,
the Agency may withhold all exemption data from
disclosure as "future model specific product plans"
under 49 CFR 512, Appendix B.
When a manufacturer introduces a product sub-
ject to an antitheft exemption, NHTSA anticipates
that the manufacturer itself will eventually disclose
general information about the system in brochures
and in the owner's manual. Other information con-
cerning the device may become available through
reverse engineering or studying a standard equip-
ment antitheft device. The Agency believes that it
cannot withhold any information that becomes
publicly available by any legitimate method when the
manufacturer introduces its product.
If NHTSA has more detailed information such as
wiring diagrams or blueprints, the Agency can
withhold these data under Appendix B, provided
that the manufacturer properly asserts a claim for
confidential treatment. On the other hand, even data
like a detailed diagram cannot be withheld once the
diagram becomes publicly available because the
manufacturer includes it in a service manual, or
because the diagram otherwise is legitimately
disclosed.
In letters to the Agency concerning their petitions
for exemption for model year 1988, several manufac-
turers raised concerns about the Agency's timing in
releasing the nameplate of a car line to be introduced
in that model year. The manufacturers urged that
NHTSA release the nameplates when the manufac-
turer introduced the exempt model rather than at
the time the Agency granted an exemption petition.
The Agency believes that these concerns have merit,
but believes further that they must be balanced
PART 543-PRE 5
against the need of law enforcement agencies to
know which car lines will be required to be marked
under the theft prevention standard. If a manufac-
turer can show that it has not released a new model's
nameplate either to dealers or to any other portion
of the public, NHTSA will treat the nameplate as
confidential until the June 1 immediately preceding
the model year in which the model will be intro-
duced. Then, NHTSA will release the nameplate to
inform law enforcement agencies of those models
that must be marked under the theft prevention
standard.
Standardized Tests
In the preamble to the interim final rule, NHTSA
discussed a proposal to require that a manufacturer
give his reasons for believing in the theft reduction
and deterrence capabilities of his system. The
manufacturer must support his petition by discuss-
ing any information which underlies his belief that
the antitheft device will be effective in reducing and
deterring vehicle theft. That information may in-
clude theft data, demonstrations, and test results.
After stating that test information would be useful
in helping the Agency to make an exemption deci-
sion, the Agency asked for comment on the feasibil-
ity of developing a standardized test or test subject
to evaluate the efficacy of antitheft systems, and
whether information based on nonstandardized tests
would be of value in exemption deliberations.
The five manufacturers who responded, i.e.,
AMC/Renault, Chrysler, Ford, Toyota, and VWoA,
all essentially argued that developing and applying
a standardized test for the efficacy of antitheft
devices is not feasible. Each of these manufacturers
argued that there are a number of variables involved
in car theft, e.g., the theft's skill and the sophistica-
tion of tools. Consequently, a test evaluating a given
device probably will be reliable only for the device
tested, and under the specific test circumstances.
Chrysler commented further that standardizing
tests might inhibit a manufacturer's developing in-
dependent antitheft systems and tests to evaluate
those systems. That kind of a result, Chrysler stated,
is inconsistent with NHTSA's assertion in the
preamble to the interim final rule that the Agency
does not intend to specify a particular design.
With respect to the question of whether nonstand-
ardized test data would be valuable in helping the
Agency reach an exemption decision, none of the
commenters specifically addressed the point. Ford
stated that the Agency might find evaluating com-
ponents more useful than a standardized test in
determining the reduction and deterrence properties
of an antitheft device. VWoA believed that compar-
ing data for exempt devices with data for devices
subject to a new petition "should be sufficient to
determine effectiveness." VWoA also suggested
that "the requirement to submit data from a test
subject should be made optional and not mandatory
as the preamble suggests."
On the matter of developing a standardized test
or test subject for evaluating antitheft devices,
NHTSA concludes that developing a test or test sub-
ject is not now feasible because, as the commenters
assert, it may not be possible now to develop a test
protocol that will produce valid and reliable results.
However, this conclusion does not relieve the peti-
tioner of its responsibihty to demonstrate the rele-
vant properties of his system under Parts 541 and
543.
NHTSA notes that it did not intend to require a
petitioner to submit raw test data on the efficacy
of a device in connection with an exemption petition.
Rather, what NHTSA contemplated was that a
manufacturer would submit a discussion showing
how that test data objectively supported his belief
in the deterrence and reduction properties of his
system.
Diagrams
Ford and GM questioned NHTSA's use of the term
"diagram" in section 543.6(aXl) of the interim final
rule. Ford inquired about the level of detail that
would be required in a diagram. GM expressed par-
ticular concern about "the level of detail" that a
manufacturer must submit when it seeks an exemp-
tion "for a new theft deterrent system(s)." The com-
pany stated that service manuals and other general
information may not be available for a new system
when a manufacturer petitions for an exemption.
What GM fears apparently is the following situation:
In lieu of such general information, a manufacturer
submits sensitive information on its system, a thief
requests that information under FOIA, and because
of the limitations seen by GM in 49 CFR Part 512,
NHTSA releases the sensitive information. (As
discussed in the section of this preamble on "Con-
fidentiality," the Agency's opinion is that under
Appendix B, it can withhold data submitted in con-
nection with an exemption petition.)
NHTSA's experience with exemption petitions for
model year 1987 leads the Agency to conclude that
it does not need detailed component design specifica-
tions to make a finding on the capabilities of an
antitheft system. On the other hand, the Agency
PART 543-PRE 6
needs a diagram showing where the system com-
ponents are, as well as information on what the
manufacturer expects these components to do. The
Agency underscores its intent in proposed section
543.6 to require a petitioner to submit material nam-
ing each system component, and diagraming the
location of those components within the vehicle.
Therefore, to clarify its intent, the Agency has
revised section 543.6 to require petitioners to name
each antitheft system component, and submit a
diagram showing the location of those components
within the vehicle. The Agency retains the require-
ment that a petitioner submit a narrative describ-
ing its antitheft system relative to types of functions
mentioned in section 543.6.
Antitheft Device Attributes
GM and the National Automobile Theft Bureau
(NATB) commented on NHTSA's discussion of cer-
tain antitheft device attributes that Agency experi-
ence shows notably contribute to an antitheft sys-
tem's effectiveness. These attributes are automatic
activation of the antitheft device; an audible or visual
signal that is tied to the hood, door, and trunk and
draws attention to vehicle tampering; and a disabl-
ing mechanism designed to prevent a thief from
moving a vehicle under its own power without a key.
GM stated that two attributes, i.e., automatic
system activation and disabling mechanisms, "are
truly important attributes." On the other hand, the
manufacturer believed that NHTSA placed "undue
emphasis on . . . the need for an alarm system and
control of underhood access." GM stated that it was
unaware of evidence demonstrating whether an
alarm and hood access control made an antitheft
system more effective.
In the preamble to the interim final rule, NHTSA
discussed design features mentioned in GM's com-
ment, and explained that most manufacturers incor-
porate such features in an antitheft device.
However, section 543.6(a) does not require a specific
design for any antitheft device. Instead, the section
lists five functions that most system designs address,
and requires petitioners to discuss any design
feature that would facilitate those functions. A peti-
tioner should discuss any feature of its system that
forms the basis for his belief in the theft reduction
and deterrent properties of the system.
NATB noted that among the attributes the
Agency should consider in evaluating how well a
system will perform its function is whether the
system inhibits moving the vehicle by towing or
pushing. The Bureau asserted that these methods
are among those commonly used to steal
automobiles, and suggested that NHTSA add
language to proposed section 543.6(aX2) ([a][3] in the
final rule) specifically requiring a petitioner to
describe system attributes that would deter these
methods of vehicle theft.
The Agency's consideration of an antitheft system
is not limited to those elements expressly set out in
paragraph (a)(3), and NHTSA does not believe the
industry perceives the language so narrowly.
Evidence of this is provided by the fact that the
Agency already has granted a BMW exemption peti-
tion for an antitheft system that included a descrip-
tion of motion sensors to inhibit theft by towing or
pushing (51 F.R. 36333). The Agency declines to in-
corporate NATB's suggestion because the language
in 543.6(a)(3) does not restrict NHTSA in its con-
sideration of antitheft system design elements, and
already requires the manufacturer to describe all of
the means and processes by which a theft device is
activated and functions. If new information and
technology indicate that it is appropriate to expand
this list to expressly require discussion of specific
design elements, the Agency will consider revising
this list as NATB suggests.
Device Effectiveness
Section 605 of Title VI requires that apetition in-
clude "the reasons for the manufacturer's conclu-
sion that such device will be effective in reducing
and deterring theft of motor vehicles." In the first
clause of proposed section 543.6(c), the Agency pro-
posed that a petition include the "reasons for the
manufacturer's belief that the antitheft device will
reduce and deter theft of passenger motor vehicles."
Ford commented that NHTSA should make the
language in the regulation conform to that in the
statute. The company believed that the statutory
language "suggests an element of cooperation be-
tween the antitheft device and other vehicle systems
to reduce and deter theft," while parallel language
in the regulation does not. Ford did not say
specifically how its language showed a greater "ele-
ment of cooperation" than the language NHTSA
proposed.
NATB also suggested that the Agency rephrase
language in the first clause of proposed section
543.6(b) to avoid "confus(ing) the criterion with the
class of motor vehicles which may be exempted
(from the antitheft standard)." Therefore, the
Bureau suggested, the Agency should change the
words "theft of passenger motor vehicles" to
"motor vehicle theft." (For this same reason, the
PART 543-PRE 7
Bureau also suggested we add the words "motor
vehicle theft" to the second sentence in proposed
section 543.7(b), and to change the term "passenger,
motor vehicle theft" to "motor vehicle theft" in pro-
posed section 543.9(f)(1) and (2).
NHTSA never intended section 543.6(b) or any
Part 543 provision to impose any requirement incon-
sistent with the Cost Savings Act, nor does the
Agency believe that the language in the interim final
rule had that effect. However, the Agency has no
objection to bridging the language in the regulation
closer to that in the statute, and has amended sec-
tion 543.6(b), and the other provisions referenced
above, to conform more nearly to the statutory
language.
Ford also suggested that the Agency modify the
second clause of proposed section 543.6(b). In the
interim final rule, that clause read: "including any
data, including theft data and results of demonstra-
tions and tests, which show that the antitheft device
will be effective in reducing and deterring motor
vehicle theft." Ford suggested that it is confusing
to use the word "including" twice in such close prox-
imity, and asked that the Agency delete the second
"including," and substitute "such as." The company
further suggested that the Agency insert "which are
reasonably available to the manufacturer and," after
"demonstrations and tests." This change would
eliminate any suggestion that NHTSA arbitrarily
would "require manufacturers to produce data
which are not reasonably available to them." Fin-
ally, Ford suggested NHTSA insert the words "tend
to" between "which show," because adding those
words would show that a manufacturer may produce
evidence beyond that described in proposed section
543.6(b) in demonstrating the deterrence and reduc-
tion properties of an antitheft system.
The Agency has a number of responses. First,
NHTSA substantially redrafted proposed section
543.6(b) to state simply what data the Agency ex-
pects a petitioner to discuss in supporting the reduc-
tion and deterrence properties of its system. In the
redraft, the second clause reads "including any theft
data and other data that are available to the peti-
tioner and form a basis for that belief." This
redrafted clause reflects each of Ford's concerns.
The word "including" appears once.
On the matter of requiring a manufacturer to sub-
mit only "reasonably available" data, the Agency
repeats its statement in the preamble to the interim
final rule of NHTSA's awareness that there may be
no "empirical data bearing directly on the effec-
tiveness of the antitheft devices" that are the sub-
jects of these early petitions. On the other hand, to
the extent that such data are available, the Agency
wants to encourage full use of this material to sup-
port a manufacturer's assertion that his device
deters and reduces theft. However, the Agency
would not require a manufacturer to produce
unavailable data, or to assume an undue burden in
getting data. For that reason, the Agency includes
the word "available" in its redraft of proposed sec-
tion 543.6(b).
In the redrafted section 543.6(b), NHTSA permits
a petitioner to include a discussion of any data that
form the basis of petitioner's belief in the deterrence
and reduction properties of an antitheft system.
While NHTSA chose against using the words "tend
to" as Ford suggested, the Agency finds the new
language responsive to Ford's concern that a peti-
tioner have the freedom to include data beyond that
set out in proposed section 543.6(b) to support peti-
tioner's belief in the properties of its system.
Toyota commented that NHTSA should not re-
quire the submission of statistical data because
motor vehicle manufacturers do not have access to
such data on their own. The company asserts that
manufacturers must get theft data either from the
insurance industry, from groups like the Highway
Loss Data Institute, and from the Federal Bureau
of Investigation (FBI). Toyota . concludes that
NHTSA will obtain statistical information from the
FBI when the Agency reviews an exemption peti-
tion, and therefore that requiring a manufacturer
to submit this data is redundant.
The Agency has used the FBI's National Crime
Information Center (NCIC) data base to make some
high-theft designations, and probably will continue
to use that data in assessing whether the entire an-
titheft program reduces and deters motor vehicle
theft. However, NHTSA is uncertain why the
manufacturer believes the Agency will consult the
FBI in the regular course of reviewing an exemp-
tion petition. In any event, the Agency emphasizes
that it is the manufacturer's burden to persuade
NHTSA of the efficacy of an antitheft device relative
to the criteria set out in the Cost Savings Act. This
is a burden a petitioning manufacturer voluntarily
assumes. NHTSA questions how a manufacturer can
make any creditable showing of the deterrent prop-
erties of its device if the manufacturer fails to col-
lect any available data comparing the theft rate for
its line with the same or similar lines not equipped
with an antitheft system.
Again, NHTSA appreciates that initially, there
will not be a great deal of data given the newness
PART 543-PRE 8
of both the parts-marking and exemption programs.
However, the Agency finds it a reasonable require-
ment that a petitioner for an exemption discuss any
such available data as a manufacturer may acquire.
With respect to proposed section 543.6(c), Ford
suggested that the Agency change language in the
first clause from "will be as effective" to "is likely
to be as effective." The Agency agrees that this
change will reflect the determination the statute re-
quires NHTSA to make in comparing the efficacy
of parts-marking and antitheft devices, and so
changes the language in the final rule. At Ford's sug-
gestion, and for the same reason, the Agency also
amends the phrase "which are not equipped with the
device" to read "which have parts marked in com-
pliance with (49 CFR) Part 541." Because section
605 requires only that vehicles equipped with an
antitheft device be likely to be as effective as vehicles
marked in compliance with Part 541, the Agency is
revising section 543.6(c) to provide for the submis-
sion of data showing the device-equipped vehicles to
have a theft rate less than or equal to that of marked
vehicles.
Filing and Processing Petitions
Section 605 of Title VI has two statutory
deadlines. The first requires a manufacturer to file
an exemption petition not later than eight months
before commencing production for the first model
year covered by the petition. The second statutory
deadline gives NHTSA 120 days after the date on
which the petition is filed to determine whether to
grant it. As the Agency explained in the interim final
rule for model year 1987 (51 F.R. at 709), NHTSA's
administrative practice is to consider the date on
which it receives a manufacturer's complete petition
as the filing date. Section 543.7(a) of the interim final
rule reflects this position.
Ford commented that the Agency should amend
proposed section 543.7 to state that irrespective of
whether it is complete, a petition is filed on the date
NHTSA receives it, and therefore that the 120-day
statutory limit for deciding the petition starts on the
date of receipt. The company argued that to follow
the practice NHTSA set out in proposed section
543.7(a) is to deny the manufacturer's submission
"the status of a 'petition'." This result, Ford
asserted, would be "unduly harsh," because if the
Agency were to declare a submission incomplete
within the eight months before a car line's sched-
uled production, the manufacturer would lose the
possibility of exemption for an entire model year.
The company argued further that filing a petition
for exemption is analogous to a situation the
United States Court of Appeals for the Third Cir-
cuit faced in Dunn v. United States, 775 F.2d 99
(1985). In Dunn, the Third Circuit reversed a
District Court ruling dismissing a petition for award
of counsel fees in a class action for lack of subject
matter jurisdiction. The statute under which the
class petitioned for attorney's fees required, among
other things, that the party apply for fees "within
thirty days of final judgment in an action," and sub-
mit its attorney's itemized fee statement. The par-
ties filed the petition before the 30-day deadline, but
supplied the itemized fee statement after that
deadline.
The court of appeals first stated that it must read
the time bar in context with other language in the
provision to determine what Congress intended to
accomplish. The court found that requiring a party
to file within a certain time serves to inform par-
ties whether they can rely on the finality of an
action. Once a claim is timely filed, the pleading
requirements serve to "(flesh) out the details." As
the adverse party, the government experiences no
prejudice if these details come after the claim is filed,
and the court has no interest in promptly receiving
details because it will refrain from acting until the
government responds. On the other hand, there is
a strong interest in permitting "some degree of flex-
ibility" in pleading because preparing these docu-
ments requires great care, and because the issue of
fee awards frequently is hotly contested. The court
concluded that a failure to file a complete pleading
within 30 days could not be a jurisdictional bar.
NHTSA takes issue with Ford's assertion that the
facts in Dunn are analogous to the facts the Agen-
cy and a manufacturer face in an administrative pro-
ceeding to grant an exemption. An exemption peti-
tion is more than a document that serves to give the
Agency notice of a manufacturer's resolve to request
an exemption. The petition is itself supposed to con-
tain the detailed matter that should objectively sup-
port the manufacturer's technical conclusions about
the theft reduction and deterrence capabilities of its
device. Much of the information that may provide
substantial evidence for granting a petition is uni-
quely within the manufacturer's competence to
supply, and vnthout that information, the Agency
cannot exercise its responsibility. Further, unlike an
adjudicatory proceeding resolving claims among
competing parties, the time within which the Agency
must act is not open-ended.
If the Agency were to accept Ford's argument,
conceivably a manufacturer could give the barest
notice that it was requesting an exemption, and
PART 543-PRE 9
then late in the 120-day period give NHTSA the
necessary technical documentation to support the ef-
ficacy of the device. The Agency then would have
insufficient time to act. The Agency does not inter-_
pret section 605 of the Cost Savings Act as con-
templating this result.
On the other hand, the Agency believes that hav-
ing two statutory deadlines impacts upon process-
ing exemption petitions in ways that neither the
Agency nor most of the commenters gave particular
attention in the January 1986 rulemaking pro-
ceedings. Having a clearer standard of whether an
incomplete submission is a "petition," or whether
an incomplete petition is a "filed" petition would
facilitate processing exemption requests. Therefore,
the Agency will propose amendments to Part 543
that will focus specifically on what it means to "file"
a "petition." In the meantime, the procedures set
out in the final rule published today are in effect.
On the subject of the 120-day period for NHTSA
to make its determination, VWoA commented that
the Agency should respond within 60 days of the fil-
ing date. The company remarked that while its peti-
tion is pending, a manufacturer will not know
whether he can install an exempt device, or must
comply with the parts-marking standard. If the
manufacturer had to do the latter, he would need
at least three months before production to process
and set up assembly line stations.
NHTSA notes that after full consideration of the
subject matter. Congress selected 120 days as the
period for Agency response. Although the Agency
does not expect to use the full amount of time
allowed to process each petition, it has been
necessary to use most of it in the early phase of
implementing the exemption provisions. The Agency
anticipates that the processing time will decrease as
the experience of the manufacturers and the Agency
increases. Further, manufacturers can ensure that
final action is taken on their petitions three or more
months in advance of a model year by submitting
the petitions early enough so that the 120-day period
is completed by that time.
One commenter objected to a manufacturer's hav-
ing to file a petition eight months before beginning
production. Because the 8-month requirement is
statutory, the Agency cannot consider changing it.
Finally, Ford commented that the Agency should
amend proposed section 543.7(d) (paragraph 543.7(e)
in the final rule) to state that an exemption becomes
effective on the date of issuance instead of the date
on which the Agency publishes notice of the exemp-
tion in the Federal Register. Ford argued that occa-
sionally, there may be a substantial delay between
issuing and publishing a document, and that the date
of issuance would be the better reference date. The
company stated that keying the reference date to is-
suance (which is earlier than publication) helps a
manufacturer with product planning, and does not
prejudice the Agency or the public because NHTSA's
deliberations are complete when it issues an exemp-
tion, and because the statute requires exemption deci-
sions to be made not later than four months before
the production run of an exempt car line.
The Agency notes that the usual delay between is-
suing a document and publishing it in the Federal
Register is three working days. However, having con-
sidered Ford's comment and the language set out in
the proposed rule keying the effective date of an ex-
emption to Federal Register publication, the Agency
agrees that publication is not the appropriate
reference for an exemption's effective date. The
Agency has addressed this concern by amending the
final rule to key the effective date either to issuance
or to the date stated in the notice of exemption.
Terminating or Modifying an Exemption
Once NHTSA grants an exemption for a vehicle
line, that exemption remains in effect unless the
Agency either grants a petition to modify or ter-
minates the exemption, or until the manufacturer
stops manufacturing the exempted vehicle line.
Under section 543.9, NHTSA may initiate a pro-
ceeding to terminate or modify an exemption
granted under Part 543 either on the Agency's
motion, or in response to the petition of an in-
terested person. The rules provide a manufacturer
with an opportunity to present his views once a pro-
ceeding concerning him has been commenced. Ford
commented that the Agency should expand a
manufacturer's procedural rights under proposed
section 543.9. The company suggested that NHTSA
provide a manufacturer with a copy of any petition
to terminate or modify his exemption, a written
statement of the Agency's reasons for initiating a
proceeding, and an opportunity to present orally its
position during a meeting with the Agency.
With respect to Ford's first two suggestions, the
Agency notes that its intention was to provide these
procedural opportunities, even though it did not ex-
plicitly state them. The Agency has addressed these
matters expressly in the final rule. On the other
hand, a decision whether to terminate or modify an
exemption will depend on data showing the theft
rate for the vehicle line in question before and after
PART 543-PRE 10
installing an antitheft device, and on other technical
data regarding effectiveness. The Agency thinks
that data will be persuasive in these proceedings,
and that, because of its technical nature, the data
will be most effectively discussed in written submis-
sions. Therefore, NHTSA declines to provide in sec-
tion 543.9 for an opportunity to make an oral
submission to the Agency.
Proposed section 543.9(f) states that NHTSA will
publish a notice in the Federal Register if the Agency
terminates or modifies an exemption. If NHTSA ter-
minates an exemption, section 605 of the Cost Sav-
ings Act states that the termination is not effective
until six months after the manufacturer receives a
written termination notice. Ford suggests the
Agency include an express statement that it will
notify a manufacturer in writing of any decision
either to modify or terminate an exemption. The
Agency believes that this suggestion has merit.
Therefore, the introductory language of section
543.9(f) has been amended to incorporate it. Sim-
ilarly, NHTSA amends section 543.9(gXlXii) to state
expressly that a decision to terminate an exemption
is effective no earlier than six months after the
manufacturer receives written notice. This is a
statutory condition, but the Agency has no objection
to incorporating it into the regulations.
AMC/Renault objected to the provision under
which NHTSA could terminate an exemption. The
Agency declines to change this provision. Section
605 provides for termination, reflecting a legislative
determination not to continue sanction of an anti-
theft device that proves to be less effective than
parts-marking in reducing and deterring vehicle
theft for a high-theft line.
The company further commented that when
NHTSA wholly grants an exemption and later ter-
minates it, there will exist a supply of unmarked
replacement parts that but for the exemption, would
have been subject to the parts-marking standard.
These unmarked parts will remain in commerce, and
later manufactured replacement parts will be
marked. AMC/Renault asserts that such a cir-
cumstance will compromise "the enforceability of
the system." The company asks the Agency to limit
termination to instances where an exemption rests
on incorrect or misrepresented data. NADA also ex-
pressed a concern about parts-marking in the wake
of terminating an exemption, and suggested that
NHTSA require parts-marking for all high-theft
vehicle replacement parts.
The Agency is sympathetic to the commenters'
concerns that if NHTSA were to terminate an
exemption, there would be a residual supply of un-
marked parts. That supply could enable a suspected
thief to argue that the part in question came either
from a pre-termination vehicle or replacement parts
inventory.
Nevertheless, NHTSA cannot accommodate these
concerns. First, section 602(d)(2XA) of Title VI
states that the vehicle theft prevention standard can-
not require "identification of any part which is not
designed as a replacement for a major part required
to be identified under such standard." (Emphasis
added.) As long as a manufacturer is producing a
car line under an exemption granted in whole, there
is no requirement to identify major parts otherwise
subject to the theft standard; therefore, NHTSA
cannot require marking replacement parts.
Second, the Agency does not believe it would be
appropriate to decide never to use its authority to
terminate an exemption upon a negative finding on
the theft deterrence and reduction properties of the
system.
Granting Exemptions in Part
NATB noted that under section 605, the Agency
may grant an exemption petition "in whole or in
part," and that no antitheft device will be "100%
effective." The Bureau proposed that when NHTSA
determines to grant an antitheft exemption, the
Agency should grant all such exemptions in part,
and continue to require parts-marking for engines
and transmissions. NATB reasoned that because
parts for these systems are interchangeable among
car lines, "the prospect of non-identifiable engines
and transmissions in exempt lines would actually
serve as an incentive for the theft of these vehicles."
While NHTSA appreciates the commenter's con-
cern, the Agency is aware of its authority to grant
a partial exemption, and will do so where the
evidence in support of an exemption petition so in-
dicates. Further, neither the Cost Savings Act nor
the regulations issued under it contemplate that any
theft deterrent practice will be 100 percent effec-
tive. The criterion that must be satisfied is not the
absolute efficacy of a device, but rather a likelihood
that the petitioner's device will be as effective as
parts-marking in reducing and deterring theft.
NATB also commented that some vehicles exempt
from the parts-marking standard may have parts in-
terchangeable with high-theft lines that are subject
to parts-marking. The organization asserts that
granting a partial exemption is a way to address this
circumstance. NATB suggests that when a peti-
tioner seeks an exemption under Part 543 for a line
PART 543-PRE 11
that has two (or more, presumably) parts inter-
changeable with a line subject to the parts-marking
standard, NHTSA should require the petitioner to
mark the interchangeable parts. The Agency
restates its position that it will grant partial exemp-
tions where appropriate under the standards of the
Cost Savings Act.
One commenter suggested that NHTSA require
statements of intention from manufacturers regard-
ing their plans to continue any voluntary parts iden-
tification techniques. The Agency has no authority
to require such statements.
Maintaining, Modifying, and Replacing
Antitheft Devices
In connection with a comment on whether direct
importers can petition for antitheft exemptions
(discussed earlier in this preamble), NADA urged the
Agency to focus on proper installation, maintenance,
and repair of antitheft devices. The Association
stated that an improperly installed, maintained, or
repaired device will be ineffective. It concluded that
"each NHTSA petition review will be inadequate to
the extent that someone other than the petitioner
is allowed to attempt jerry-rigged retrofits of these
devices."
The Agency observes that exemptions are granted
under section 605 only for installing antitheft
devices as original standard equipment, and not for
retrofitting such devices. Further, the continued ap-
plication of exemptions would be premised upon the
antitheft devices being so installed on the exemp-
ted cars. However, the Agency has no authority to
prohibit the retrofitting of a vehicle with an antitheft
device. As to maintaining and repairing original
standard equipment or retrofitted antitheft devices,
such actions are outside the scope of this rulemak-
ing, and beyond the Agency's authority.
The Vehicle Security Association (VSA) com-
mented that if an aftermarket antitheft system per-
forms as well as or better than an original
manufacturer-installed antitheft device, a retailer of
a high-theft vehicle line should be able to install or
modify the original equipment system. Installing an
antitheft device on an unexempted vehicle would
contribute to the purposes of Title VI. However,
with respect to an exempted car line, substituting
a different or modified device for the standard equip-
ment antitheft device on that line would eviscerate
the legislative requirement that the entire line have
the standard equipment device. The continued ap-
plication of exemptions rests on the premise that an-
titheft devices will be standard on the exempted
cars. Further, the substituted or modified device
might or might not perform as well as the standard
equipment device. Therefore, NHTSA cannot en-
dorse such a practice.
Reliance on an Exemption for a Portion of
a Model Year
In connection with several exemption petitions, an
issue has arisen concerning the permissibility of a
manufacturer marking an exempted line for a por-
tion of a model year, and then ceasing marking and
instead installing an antitheft device on the line for
the balance of the year. Such practice is not permissi-
ble since if an antitheft device is to be installed in
lieu of marking for any given model year, the device
must be installed as standard equipment for the en-
tire model year.
Other Comments
One manufacturer suggested that the Agency
amend proposed section 543.5(a) to state that a
manufacturer could petition NHTSA for exemptions
from parts-marking requirements for not more than
two additional lines after model year 1987. The
Agency declines to make this change because the re-
quest assumes that any manufacturer seeking an ex-
emption for a car line for model year 1988 and
thereafter will first have sought an exemption for
another car line for model year 1987. However, some
manufacturers may first submit an exemption peti-
tion for a later model year.
Fiat suggested that "Part 543 be re-examined to
exempt from counting, those lines presenting a theft
rate under 10 or 20 cars per annum." This manufac-
turer produces some specialty car lines with low pro-
duction levels where a small absolute number of
thefts may determine whether the line becomes high-
theft. Fiat reasoned that with so small a number of
thefts, any vehicle theft data would be statistically
unreliable. The Agency understands this comment as
suggesting that where the theft rate for a car line
is 10 or 20 cars per year, NHTSA grant the car line
exempt status without the manufacturer's having to
petition imder Part 543. The Agency notes that it
may grant exemptions only under the exemption pro-
cess in section 605. The Agency cannot excuse a
manufacturer from this process if he seeks an exemp-
tion from parts-marking requirements.
In consideration of the preceding, Part 543 is
added to Title 49 of the Code of Federal Regulations.
Issued on: September 1, 1987
Diane K. Steed
Administrator
52 F.R. 33821
September 8, 1987
PART 543-PRE 12
PART 543— EXPEMPTION FROM VEHICLE THEFT PREVENTION STANDARD
Sec.
543.1 Scope.
543.2 Purpose.
543.3 Application.
543.4 Definitions.
543.5 Petition: general requirements.
543.6 Petition: specific content requirements.
543.7 Processing a petition.
543.8 Duration of exemption.
543.9 Terminating or modifying an exemption.
Authority: 15 U.S.C. 2025, delegation of author-
ity at 49 CFR 1.50.
§ 543.1 Scope.
This part establishes procedures under section
605 of the Motor Vehicle Information and Cost Sav-
ings Act (15 U.S.C. 2025) for filing and processing
petitions to exempt lines of passenger motor
vehicles from Part 541 of this chapter, and pro-
cedures for terminating or modifying an exemption.
§ 543.2 Purpose.
The purpose of this Part is to specify the con-
tent and format of petitions which may be filed by
manufacturers of passenger motor vehicles to
obtain an exemption from the parts-marking re-
quirements of the vehicle theft prevention standard
for passenger motor vehicle lines which include, as
standard equipment, an antitheft device if the
agency concludes that the device is likely to be as
effective in reducing and deterring motor vehicle
theft as compliance with the parts-marking re-
quirements. This Part also provides the procedures
that the Agency will follow in processing those peti-
tions and in terminating or modifying exemptions.
§ 543.3 Application.
This Part applies to manufacturers of high-theft
passenger motor vehicles; and to any interested per-
son who seeks to have NHTSA terminate an
exemption.
§ 543.4 Definitions.
(a) Statutory terms. All terms defined in sec-
tions 2, 601, and 605 of the Motor Vehicle Informa-
tion and Cost Savings Act are used in accordance
with their statutory meaning unless otherwise
defined in paragraph (b) below.
(b) Other definitions.
"Line" or "car line" means a name which a
manufacturer applies to a group of motor vehicles
of the same make v/hich have the same body or
chassis, or otherwise are similar in construction or
design. A "line" may, for example, include 2-door,
4-door, station wagon, and hatchback vehicles of
the same make.
"NHTSA" means the National Highway Traffic
Safety Administration.
§ 543.5 Petition: general requirements.
(a) For each model year, a manufacturer may
petition NHTSA to grant exemptions for up to two
lines of its passenger motor vehicles from the re-
quirements of Part 541.
(b) Each petition filed under this Part for an ex-
emption must—
(1) Be written in the English language;
(2) Be submitted in three copies to: Ad-
ministrator, National Highway Traffic Safety
Administration, 400 Seventh Street, S.W.,
Washington, D.C. 20590;
(3) State the full name and address of the peti-
tioner, the nature of its orgnization (individual,
partnership, corporation, etc.), and the name of
the State or country under the laws of which it is
organized;
(4) Be submitted at least 8 months before the
commencement of production of the lines
specified under paragraph (5) of section 543.5(b)
for the first model year in which the petitioner
wishes those lines to be exempted, and identify
that model year;
(5) Identify the passenger motor vehicle line
or lines for which exemption is sought;
PART 543-1
(6) Set forth in full the data, views, and
arguments of the petitioner supporting the ex-
emption, including the information specified in
section 543.6; and
(7) Specify and segregate any part of the
information and data submitted which the peti-
tioner requests be withheld from public
disclosure in accordance with Part 512, Con-
fidential Business Information, of this chapter.
§ 543.6 Petition: specific content requirements.
(a) Each petition for exemption filed under this
Part must include:
(1) A statement that an antitheft device will be
installed as standard equipment on all cars in the
line for which an exemption is sought;
(2) A list naming each component in the anti-
theft system, and a diagram showing the location
of each of those components within the vehicle;
(3) A discussion that explains the means and
process by which the device is activated and
functions, including any aspect of the device
designed to—
(i) Facilitate or encourage its activation by
motorists,
(ii) Attract attention to the efforts of an
unauthorized person to enter or move a vehicle
by means other than a key,
(iii) Prevent defeating or circumventing the
device by an unauthorized person attempting
to enter a vehicle by means other than a key,
(iv) Prevent the operation of a vehicle which
an unauthorized person has entered using
means other than a key, and
(4) The reasons for the petitioner's belief that
the antitheft device will be effective in reducing
the deterring motor vehicle theft, including any
theft data and other data that are available to the
petitioner and form a basis for that belief;
(5) The reasons for the petitioner's belief that
the agency should determine that the antitheft
device is likely to be as effective as compliance
with the parts-marking requirements of Part 541
in reducing and deterring motor vehicle theft, in-
cluding any statistical data that are available to
the petitioner and form a basis for petitioner's
belief that a line of passenger motor vehicles
equipped with the antitheft device is likely to
have a theft rate equal to or less than that of
passenger motor vehicles of the same, or a
similar, line which have parts marked in com-
pliance with Part 541.
(b) Any petitioner submitting data under sub-
paragraph (4) or (5) of this section shall submit an
explanation of its belief that the data are suffici-
ently representative and reliable to warrant
NHTSA's reliance upon them.
§ 543.7 Processing an exemption petition.
(a) NHTSA processes any complete petition. If a
manufacturer submits a petition that does not con-
tain all the information required by this part,
NHTSA informs the manufacturer of the areas of
insufficiency and advises the manufacturer that
the Agency does not process the petition until it
receives the required information.
(b) The Agency grants a petition for an exemp-
tion from the parts-marking requirements of Part
541 either in whole or in part, if it determines that,
based upon substantial evidence, the standard
equipment antitheft device is likely to be as effec-
tive in reducing and deterring motor vehicle theft
as compliance with the parts-marking require-
ments of Part 541.
(c) The agency issues its decision either to grant
or deny an exemption not later than 120 days after
the date on which a complete petition is filed.
(d) Any exemption granted under this Part ap-
plies only to the vehicle line or lines that are the
subject of the grant, and are equipped with the
antitheft device on which the line's exemption was
based.
(e) An exemption granted under this Part is
effective for the model year beginning after the
model year in which NHTSA issues the notice of
exemption, unless the notice of exemption specifies
a later model year.
(f) NHTSA publishes a notice of its decision to
grant or deny an exemption petition in the Federal
Register, and notifies the petitioner in writing of
the agency's decision.
§ 543.8 Duration of exemption.
Each exemption under this Part continues in
effect unless its is modified or terminated imder
section 543.9, or the manufacturer ceases produc-
tion of the exempted line.
PART 543-2
§ 543.9 Terminating or modifying an exemption.
(a) On its own initiative or in response to a peti-
tion, NHTSA may commence a proceeding to ter-
minate or modify any exemption granted under
this Part.
(b) Any interested person may petition the
Agency to commence a proceeding to terminate or
modify an exemption.
(c)(1) In a petition to terminate an exemption,
the petitioner must:
(1) Identify the vehicle line or lines that are
the subject of the exemption;
(ii) State the reasons for petitioner's belief
that the standard equipment antitheft device
installed under the exemption is not as effec-
tive as compliance with the parts-marking
requirements of Part 541 in reducing and
deterring motor vehicle theft;
(iii) Comply with section 543.5, paragraphs
(b)(l)-(3) and (7).
(2) In a petition to modify an exemption, the
petitioner must:
(i) Identify the vehicle line or lines that are
the subject of the exemption;
(ii) Request permission to use an antitheft
device similar to, but different from, the stand-
ard equipment antitheft device which is in-
stalled under the exemption;
(iii) Comply with section 543.5, paragraphs
(b)(l)-(3) and (7); and
(iv) Provide the same information for the
modified device that is required under section
543.6 for a new device, except that the infor-
mation specified by section 543.6(a)(3) need be
provided only to the extent that the modified
device differs from the standard equipment
antitheft device installed under the exemption.
(d) NHTSA processes any complete petition. If a
person submits a petition under this section that
does not contain all the information required by it,
NHTSA informs the manufacturer of the areas of
insufficiency and advises the manufacturer that
the Agency does not process the petition until it
receives the required information.
(e) If NHTSA denies a petition requesting a pro-
ceeding to terminate or modify an exemption, the
Agency notifies the petitioner by letter.
(f) If NHTSA commences a termination pro-
ceeding on its own initiative or in response to a
petition, the Agency provides the manufacturer of
the exempted line with a copy of the petition, if
any, a written statement of NHTSA' s reasons for
commencing the proceeding, and an opportunity to
present its written views.
(g)(1) The Agency terminates an exemption if it
determines that the antitheft device installed
under the exemption has not been as effective as
parts-marking in reducing and deterring motor
vehicle theft.
(2) Except as provided in paragraph (g)(3) of
this section, a decision to terminate an exemp-
tion under this section takes effect on the later of
the following dates:
(i) The last day of the model year in which
NHTSA issues the termination decision, or
(ii) Six months after the manufacturer
receives written notice of the termination.
(3) If a manufacturer shows good cause why
terminating its exemption effective on a date
later than the one specified in paragraph (g)(2) of
this section is consistent with the public interest
and the purposes of the Act, the agency may set
such later date.
(h)(1) The agency modifies an exemption if it
determines, based on substantial evidence, that the
modified antitheft device described in the petition
is likely to be as effective in reducing and deterring
motor vehicle theft as compliance with the parts-
marking requirements of Part 541.
(2)(i) Except as provided in paragraph (h)(2)(ii)
of this section, a decision to modify an exemption
under this section takes effect on the first day of
the model year following the model year in which
NHTSA issued the modification decision.
(ii) If a manufacturer shows good cause why
modifying its exemption effective on a date
earlier than the one specified in paragraph
(h)(2)(i) of this section is consistent with the
public interest an the purposes of the Act, the
Agency may set such earlier date.
(i) (Reserved.)
(j) NHTSA publishes notice in the Federal
Register of any agency decision terminating or
modifying an exemption, and notifies are affected
manufacturer in writing.
52 F.R. 33821
Septembers, 1987
PART 543-3-4
#
PREAMBLE TO PART 544-MOTOR VEHICLE THIEF PREVENTION:
INSURER REPORTING REQUIREMENTS
(Docket No. T86-01; Notice 2)
ACTION: Final rule.
SUMMARY: This rule is issued pursuant to section 612
of the Motor Vehicle Information and Cost Savings
Act, which requires each subject insurer to furnish an
annual report, regarding comprehensive insurance for
motor vehicles and thefts and recoveries of motor
vehicles, to NHTSA beginning October 25, 1986. The
reports are intended to aid the agency in implement-
ing the motor vehicle antitheft provisions of the Cost
Savings Act, including the requirement in section 612
that the agency periodically compile and publish the in-
surance information in a form that will be helpful to
the public, the law enforcement community, and Con-
gress. The information will also aid the agency in im-
plementing section 614, which requires the agency to
submit one report to Congress not later than October
1987 and another not later than October 1990. The Oc-
tober 1990 report is required to include an evaluation
of the effectiveness of the Federal Motor Vehicle Theft
Prevention Standard (49 CFR Part 541) and both the
1987 and 1990 reports are required to include an as-
sessment of whether that standard should be extended
to other classes of motor vehicles, such as trucks, vans,
and motorcycles.
This rule requires certain insurers to report annually
on the thefts and recoveries of motor vehicles that they
insure, their rating rules and plans, and supporting
data for establishing the premiums they charge for
comprehensive insurance coverage and for the
premium penalties for vehicles considered more likely
to be stolen, their actions to reduce the premiums they
charge for comprehensi /e insurance coverage because
of a reduction in motor vehicle thefts, and their actions
to assist in deterring and reducing motor vehicle thefts.
Information in each of these areas is expressly required
to be included in the insurer reports by section 612.
Additionally, this rule requires insurers to report in-
formation about vehicles equipped with antitheft
devices, to aid the agency in carrying out its respon-
sibilities under the Cost Savings Act.
NHTSA has minimized the number of insurance com-
panies subject to this reporting requirement, by
exempting every insurer that qualified for an exemp-
tion under section 612. As a result, only the 31 in-
surance companies listed in this rule are subject to this
reporting requirement. The agency tried to obtain the
information needed to allow it to create a similar ex-
emption for small rental and leasing companies.
However, those companies did not provide the agency
with that information. Accordingly, all companies with
fleets of 20 or more vehicles that are used primarily
for rental or lease (other than a governmental entity)
and which are not covered by theft insurance issued
by insurers of passenger motor vehicles remain sub-
ject to a statutory duty to file annual reports.
NHTSA remains concerned that a requirement that
annual reports be filed by the smaller rental and leas-
ing companies will impose an unnecessary burden on
those companies. The agency believes that the infor-
mation in the reports of the larger rental and leasing
companies would be sufficient to provide a represen-
tative sample of the theft experience of all rental and
leasing companies, just as the information from the
larger insurance companies will give NHTSA a
representative sample of the experience of insurance
companies. Therefore, NHTSA believes that reports
from the smaller rental and leasing companies are not
necessary to allow the agency to fulfill its statutory
duties and would impose an unnecessary burden on
these smaller companies. Notwithstanding this belief,
section 612 requires all rental and leasing companies
to file these reports unless NHTSA can make two
determinations. The rental and leasing companies have
not provided NHTSA with the information it needs to
determine whether exemptions for smaller rental and
leasing companies can be justified under section 612.
Accordingly, all rental and leasing companies will be
subject to these reporting requirements, unless
NHTSA obtains information before January 31, 1987,
that would allow the agency to determine whether ex-
emptions for smaller rental and leasing companies can
be justified.
DATES: This rule is effective on January 2, 1987.
PART 544-PRE 1
SUPPLEMENTARY INFORMATION:
The Motor Vehicle Theft Law Enforcement Act
of 1984
The Motor Vehicle Theft Law Enforcement Act of
1984 (the Theft Act) added Title VI to the Motor Vehi-
cle Information and Cost Savings Act (the Cost Sav-
ings Act). Pursuant to Title VI, NHTSA promulgated
a vehicle theft prevention standard mandating the
marking of the major parts of frequently stolen vehicles
(50 FR 43166; October 24, 1985).
Section 612 of the Cost Savings Act requires the sub-
mission of annual reports by insurers to this agency,
beginning in 1986, and specifies minimum content re-
quirements for those reports. Section 612(b) requires
NHTSA to periodically compile and publish the infor-
mation set forth in the insurer reports, in a form that
will be helpful to the public, including Federal, State,
and local police and the Congress. These insurer
reports are also intended to aid the agency in im-
plementing Title VI, including the requirements in sec-
tion 614 that the agency submit a report to Congress
not later than October 1987 and another report not
later than October 1990. Section 614 specifies that the
October 1990 report must include a detailed evaluation
of the effectiveness of the Federal Motor Vehicle Theft
Prevention Standard (49 CFR Part 541) and an assess-
ment of whether that standard should be extended to
other classes of motor vehicles, such as trucks, vans,
and motorcycles.
The required contents of the insurer reports are set
forth in section 612(aX2) of the Cost Savings Act. That
section provides that insurer reports must include the
following information:
1. the thefts and recoveries (in whole or in part) of
motor vehicles;
2. the number of vehicles which have been recovered
intact;
3. the rating rules and plans, such as loss data and
rating characteristics, used by such insurers to estab-
lish premiums for comprehensive insurance coverage
for motor vehicles, including the basis for such
premiums, and premium penalties for motor vehicles
considered by such insurers as more likely to be stolen;
4. the actions taken by insurers to reduce such
premiums, including changes in rate levels for auto-
mobile comprehensive coverages, due to a reduction
in thefts of motor vehicles;
5. the actions taken by insurers to assist in deter-
ring or reducing thefts of motor vehicles; and
6. such other information as the [NHTSA] may re-
quire to administer Title VI and to make the reports
and findings required by Title VI.
The Notice of Proposed Rulemaking
In response to this statutory mandate, NHTSA ^^
published a notice of proposed rulemaking (NPRM) at (^
51 FR 23095; June 25, 1986. The NPRM proposed to
exempt all but 31 insurance companies from the report-
ing requirements, because NHTSA tentatively conclud-
ed that all other insurance companies met the statutory
requirements for being exempted as small insurers.
This determination did not apply to rental and leasing
companies, because there are different statutory re-
quirements for exempting such companies from these
reporting requirements. However, the NPRM sought
information that would allow the agency to include a
general exemption for small rental and leasing com-
panies in this final rule.
The NPRM proposed to require insurers to subdivide
their insured motor vehicle population into passenger
cars, light and heavy trucks, multipurpose passenger
vehicles, and motorcycles, and provide separate infor-
mation for each of these types of vehicles. It also pro-
posed that insurers report information separately for
each State in which they do business, so that the agency
would be able to perform a State-by-State analysis of
the information in these reports. Both these elements
are required by section 612 of the Cost Savings Act
(15 U.S.C. 2032). The insurers would provide the
following information: ^^
1. Total thefts and recoveries of insured vehicles dur- ^^
ing the reporting period, broken down into make,
model, and line for each vehicle type and the use made
by the insurer of this information;
2. The rating rules and plans used by the insurer to
establish comprehensive insurance premiums and
premium penalties for motor vehicles considered by the
insurer as more likely to be stolen, broken down into
the risk groupings the insurer uses for its own
purposes;
3. The actions taken by the insurer to reduce com-
prehensive insurance premiums because of a reduction
in vehicle thefts;
4. Information about any discounts the insurer of-
fers for vehicles equipped with antitheft devices, in-
cluding the number of such discounts and thefts and
recoveries of vehicles that received such discounts; and
5. The insurer's actions to assist in deterring and
reducing vehicle thefts.
The NPRM explained that this information was the
minimum that could be required in the insurer reports,
consistent with the provisions of the Cost Savings Act.
Items 1, 2, 3, and 5 listed above are expressly required
to be included in the insurer reports by section 612(a).
Only item 4 listed above was not expressly required by
section 612(a). It was proposed to assist the agency in
PART 544-PRE 2
satisfying its statutory mandate under section 605 to
make determinations of wliether antitheft devices are
as effective as parts marking in deterring and reduc-
ing vehicle thefts. The information in the insurer
reports would be both more current and more rehable
than the information currently available to the agency
for making such determinations. This requirement was
proposed to be included in the insurer reports under
the authority of section 612(a)(2XF), which grants
NHTSA authority to require insurers to report "such
other information as the [NHTSA] may require to ad-
minister this title and to make the reports and findings
required by this title."
The agency received 25 comments on the NPRM,
representing the opinions of insurance companies and
trade associations of insurance companies, car rental
companies, motor vehicle manufacturers, car dealers,
and the National Automobile Theft Bureau. Each of
these comments has been considered and the most
significant points are addressed below.
The NPRM contained a detailed background discus-
sion of the provisions of section 6i2 and explained in
detail the agency's rationale for proposing each of the
requirements. This preamble follows the same
organizational format used in the NPRM, so that
readers can easily compare the two documents.
The Legislative Intent Underlying Section 612
The agency proposed to consciously tailor the insurer
reporting requirements so that they:
1. require insurers to report only information that
is essential to the purposes of Title VI and do not re-
quire information that is not related to the agency's
tasks under the title;
2. impose the smallest burdens both in terms of time
and money on the reporting insurers that is consistent
with the agency's informational needs under Title VI;
and
3. require insurers to report only data already
gathered for their own purposes to the maximum ex-
tent possible, and only require generation of new data
when these new data must be reported to satisfy the
explicit requirements of section 612.
This approach was proposed after carefully consider-
ing the language of section 612 and the following
passage from the House Report:
The Committee anticipates that much of the infor-
mation required by this provision is already provided
by the insurance industry to States and that genera-
tion of new data in new formats will not be necessary
where this is the case. Of course, DOT will have to
examine the matter to ensure that these require-
ments are fully met. The Committee urges the
[NHTSA] to devise a reporting system for insurance
information with an eye toward imposing re-
quirements which will be low cost and of minimal
burden to the industry, but which provide all of the
data required by this section (emphasis added). H.R.
Rep. No. 1087, 98th Cong., 2d Sess., at 21 (1984).
NHTSA observed that the corollary to the first
quoted sentence is the possibility that some of the infor-
mation required by section 612 is not already provided
by insurers to the States. In those cases. Congress an-
ticipated that generation of new data or providing ex-
isting data in new formats would be necessary to satisfy
the requirements of section 612. The last quoted
sentence makes clear that NHTSA has no discretion
regarding the collection of all of the information
specified in section 612.
In response to these statements in the NPRM, the
Alliance of American Insurers (the Alliance), the
American Insurance Association (AIA), and the Na-
tional Association of Independent Insurers (NAII) all
questioned NHTSA's authority to require any altera-
tion in existing statistical practices. These comments
were based on the following statement by Senator Dan-
forth during the final Senate consideration of the Theft
Act: "Specifically, no alteration in existing statistical
or data collection practices is being sought by this
reporting provision." 130 Cong. Rec. S13585 (daily ed.
Oct. 4, 1984). These commenters stated that the infor-
mation proposed to be required by the NPRM would
require alterations in both existing statistical and data
collection practices, and was, therefore, inconsistent
with the provisions of the Theft Act.
NHTSA considered this statement when drafting the
NPRM. It was a basis for the agency's decision to avoid
requiring insurers to alter existing statistical and data
collection practices except when necessary to satisfy
an expHcit requirement of section 612 of the Cost Sav-
ings Act. However, to the extent that this statement
conflicts with the express requirements of section 612,
the agency does not believe that floor statements can
be given effect to override the clear and unambiguous
requirements set forth in the statute. Railroad Com-
mission of Wisconsin v. Chicago B & 0 Railroad Co.,
257 U.S. 563, 589 (1922); American Smelting & Refin-
ing Co. V. Occupational Safety & Health Review Com-
mission, 501 F.2d 504 (8th Cir. 1974). Further, to the
extent that this statement conflicts with the statements
in the House Commerce Committee Report quoted
above, NHTSA notes that statements in committee
reports have been held to carry greater weight than
statements of legislators in the course of debates.
Crown Central Petroleum Corp. v. Federal Energy Ad-
ministration, 542 F.2d 69 (Temporary Emergency
Court of Appeals 1976). Accordingly, NHTSA con-
cludes that it is statutorily compelled to require altera-
PART 544-PRE 3
tions in existing practices when such alterations are
necessary to satisfy the express provisions of Title VI
of the Cost Savings Act.
Who Must Report; Who May be Exempted
Section 612 defines the term "insurer" very broadly,
and requires all insurers to file annual reports with the
agency unless NHTSA exempts them from the report-
ing requirements. There are two broad groups of en-
tities that fall within the meaning of an insurer for the
purposes of section 612. First, every person engaged
in the business of issuing passenger motor vehicle in-
surance policies is an insurer under section 2(12) of the
Cost Savings Act (15 U.S.C. 1901(12)), regardless of
the size of the business. Second, section 612(aX3)
specifies that for the purposes of section 612, the term
"insurer" includes any person, other than a govern-
mental entity, who has a fleet of 20 or more motor
vehicles used primarily for rental or lease and not
covered by theft insurance policies issued by an insurer.
a. Issuers of Motor Vehicle Insurance Policies
Small companies in the first group of insurers, i.e.,
issuers of motor vehicle insurance policies, must be ex-
empted from section 612 of the Cost Savings Act, if
the agency finds that such exemption will not
significantly affect the validity or usefulness of the in-
formation collected in the insurer reports. Section
612(aX5) defines a "small insurer" as one whose
premiums account for less than one percent of the total
premiums for all forms of motor vehicle insurance
issued by insurers within the United States.
The agency can exempt small insurers only if it "finds
that such exemption will not significantly affect the
validity or usefulness of the information collected and
compiled under [section 612], nationally or State-by-
State." Further, some insurers that satisfy the defini-
tion of a small insurer are nevertheless ineligible for
any exemption under section 612(aX5) and others are
eligible for only a partial exemption. Section
612(aX5XB) provides that NHTSA cannot exempt as
a small insurer any person considered an insurer solely
because it has a fleet of 20 or more vehicles used
primarily for rental or lease and not covered by theft
insurance. In other words, rental and leasing com-
panies do not qualify for a small insurer exemption
regardless of their size— the small insurer exemption
is available only for insurance companies. Additionally,
section 612 provides that if an insurance company
satisfies the section's definition of small insurer, but
accounts for 10 percent or more of the total premiums
for all forms of motor vehicle insurance issued by in-
surers within a particular State, such insurer must
report the required information about its operations
in that State.
To implement these statutory criteria for exempting
small insurers, NHTSA proposed to use data volun-
tarily supplied by insurance companies to A.M. Best
to determine insurers' market shares nationally and in
each State. The commenters supported this proposal.
The agency has concluded that the A.M. Best data are
both accurate and timely, and that the use of A.M. Best
data does not impose any burdens on any party. Ac-
cordingly, this final rule adopts the proposed approach.
Using the A.M. Best data, NHTSA identified 20 in-
surance groups that did not qualify as small insurers
because their premiums accounted for one percent or
more of the total motor vehicle insurance premiums
paid nationally. Again using the A.M. Best data,
NHTSA identified 11 other insurance groups whose
premiums accounted for 10 percent or more of the total
motor vehicle insurance premiums within any one
State. These 31 insurance groups received more than
57 percent of the total premiums paid for all forms of
motor vehicle insurance issued by insurers within the
United States in 1984, the most recent year for which
the A.M. Best data are available. Additionally, these
31 companies received at least 30 percent of the total
premiums paid for motor vehicle insurance in each of
the 50 States, ranging from a low of 30 percent in
North Dakota to a high of 73 percent in Hawaii.
Because these reports would represent such a signifi-
cant percentage of the national and individual State
premiums paid for motor vehicle insurance, the NPRM
tentatively concluded that the filing of reports by these
31 insurance companies would provide the agency with
representative data, both nationally and on a State-by-
State basis, and that these data would be sufficient for
the agency to carry out its activities and responsibilities
under Title VI. Accordingly, the NPRM concluded that
exemptions for all insurance companies that qualify as
small insurers would not affect the validity or
usefulness of the information collected in these reports
either nationally or on a State-by-State basis, and pro-
posed to exempt all insurance companies that qualify
as small insurers from these reporting requirements.
The commenters all supported the proposed exemp-
tions, although the Hartford commented that NHTSA
may be missing productive sources of information by
not getting reports from small specialty carriers that
deal in high-risk cars and the assigned risk carriers in
the individual States. NHTSA agrees that it is not get-
ting information from all insurance companies. How-
ever, the agency concludes that exempting all insur-
ance companies except the 31 insurers that do not
qualify as small insurers will not significantly affect the
vaHdity or usefulness of the information collected and
compiled under section 612, either nationally or State-
by-State. For this reason, and since the agency is at-
tempting to impose the smallest burden on insurers
PART 544-PRE 4
consistent with the language of section 612, this com-
ment was not adopted. This final rule exempts all in-
surance companies that qualify as small insurers under
section 612(aX5XC) from the reporting requirements.
To implement this determination, Part 544 includes
Appendices A and B listing all insurance companies
subject to these requirements. Appendix A lists those
companies whose premiums for motor vehicle insur-
ance accoimted for one percent or more of all premiums
paid for motor vehicle insurance issued by insurers
within the United States. The companies listed in Ap-
pendix A are subject to the reporting requirements for
each State in which they do business. Appendix B lists
those companies whose premiums accounted for 10 per-
cent or more of the premiums paid for all forms of
motor vehicle insurance issued by insurers in any one
of the 50 States. The companies listed in Appendix B
are subject to the reporting requirements only for the
State or States listed in parentheses after the com-
pany's name.
Proposed Appendix B listed a Southern F & B Group
as subject to the reporting requirements in Arkansas.
Southern Farm Bureau commented that it believed the
reference was to it, since it was unaware of any group
named Southern F & B. Southern Farm Bureau was
correct and its proper name appears in final Appendix
B. Additionally, the National Automobile Theft Bureau
(NATB) commented that the 1984 A.M. Best data on
which the agency was relying showed Southern Farm
Bureau with 10 percent or more of the premiums in
both Arkansas and Mississippi. NATB is correct, and
Appendix B is corrected to show that Southern Farm
Bureau is subject to the reporting requirements in both
these States.
The agency will update these appendices annually,
shortly after A.M. Best publishes its revised listings,
to reflect changes in premium shares for the insurance
companies. An insurer not formerly subject to these
reporting requirements whose name is added to one
of these appendices will have to file a report in the year
following the year in which its name is added to the
appendices. For example, if an insurer's name is added
to the appendices in November 1986, it would be re-
quired to file a report under this part in October 1987.
AIA commented that NHTSA should notify by mail
those insurers that become subject to these reporting
requirements, because smaller insurers may not be
aware of notices published in the Federal Register. No
such provision is incorporated in this final rule. The
government traditionally communicates its regulatory
decisions by publishing those decisions in the Federal
Register. Further, publication in the Federal Register
is sufficient legal notice to all affected parties, pursuant
to the Federal Register Act (44 U.S.C. 1507). NHTSA
encourages AIA and other insurance trade associations
to help publicize these requirements, so that subject in-
surers will know of their legal obligations.
b. Rental and Leasing Companies
Small companies in the second group of insurers, i.e.,
rental and leasing companies, may be exempted from
these reporting requirements under section 612(aX4)
of the Cost Savings Act. That section provides that
NHTSA shall exempt from these reporting require-
ments any insurer, if the agency determines that:
(1) the cost of preparing and furnishing such reports
is excessive in relation to the size of the business of
the insurer, and
(2) the insurer's report will not significantly con-
tribute to carrying out the purposes of Title VI.
Although exemptions under this section are statu-
torily available to all insurers, NHTSA stated that it
was unlikely that it could use this authority to exempt
an insurance company listed in Appendix A or B. This
is because the agency's determination to exempt all
small insurers from this rule was predicated on the con-
clusion that reports by all of the insurers listed in Ap-
pendix A or B would provide the agency with data that
are representative both nationally and State-by-State.
Accordingly, NHTSA believes that exemptions under
section 612(aX4) will be granted primarily to rental and
leasing companies.
The NPRM sought information that would allow the
agency to make both of the statutory determinations
it must make if it is to structure a blanket exemption
for small rental and leasing companies, similar to the
blanket exemption provided for small insurance
companies.
In response to this request, Chrysler commented that
it had fewer than 50 vehicles out of 15,000 in its leased
fleet stolen over the past year. Further, it stated that
its fleet is atypical and information on the fleet could
bias the agency study. Therefore, Chrysler recom-
mended that it should not be subject to the insurer
reports.
General Motors (GM) stated that the sample of the
31 large insurers is representative in itself, and there
is no need to get reports from any rental and leasing
companies. If rental and leasing companies are to be
subject to the reporting requirements, GM commented
that the agency should structure exemptions according
to the 1 percent national or 10 percent of any State
criteria used for small insurers, and that the 1 percent
or 10 percent should be with reference to the total
number of registered vehicles. GM also stated that if
they were subject to these reporting requirements for
their 5,000 vehicle leased fleet, they would have to im-
plement a new recordkeeping system.
PART 544-PRE 5
The National Automobile Dealers Association
(NADA) stated that most dealers engage in rental or
leasing operations and that 44 percent have 20 or more
vehicles in their rental or leasing fleets. NADA further
stated that it was not aware of any fleet of 20 or more
vehicles that is not covered by theft insurance. If there
are some fleets of 20 or more vehicles not covered by
theft insurance, they would not differ significantly from
those fleets covered by theft insurance. Accordingly,
NADA lu-ged NHTSA to conclude that all car dealers
should be exempted from these reporting re-
quirements, because the information in their reports
would not significantly contribute to carrying out the
purposes of the Theft Act. NADA acknowledged that
this argument might not respond to the first statutory
criteria (costs of reporting excessive in relation to the
size of the business), but stated that if NHTSA needed
cost information, it should conduct its own survey.
The American Car Rental Association (ACRA) com-
mented that rental cars are "prime targets" for
thieves. They suggested that NHTSA require reports
imder Part 544 only from rental car companies that
operate a fleet in excess of 20,000 vehicles. If adopted,
this suggestion would require reports by the 12 largest
car rental companies. ACRA stated that this approach
would:
a. give a statistically valid sample;
b. ensure that fleets covered by theft insurance were
excluded from the requirements, since most fleets with
fewer than 20,000 vehicles are franchise operations;
and
c. avoid the practical problems of collecting data
from several thousand car rental operations.
None of these commenters responded to the NPRM's
request for information on the probable costs of prepar-
ing reports under Part 544. Without this information,
the agency is unable to structure a blanket exemption
for small rental and leasing companies. This is because
NHTSA has no basis for making the first required
determination under section 612(aX4); i.e., that the cost
of preparing and furnishing these reports is excessive
in relation to the size of the insurer's business. Accord-
ingly, all rental and leasing companies with fleets of
20 or more vehicles that are not covered by theft in-
surance policies issued by insurers of motor vehicles
are required to file reports under Part 544.
However, NHTSA has no desire to impose an un-
necessary biu-den on the smaller rental and leasing
companies. Just as the agency believes that it will ob-
tain a representative sample of insurance companies
by requiring reports only from large insiu-ance com-
panies, the agency believes that it would obtain a
representative sample of rental and leasing companies
by requiring reports only from the large rental and leas-
ing companies. The agency has tried to obtain the
necessary information to allow it to exempt these com-
panies twice, before publishing the NPRM and in the
NPRM itself. In neither instance has the agency been
successful.
Absent this information, this final rule must apply
to all rental and leasing companies with 20 or more
vehicles in their fleet. However, the agency will again
try to obtain from the rental and leasing companies and
their trade associations the information needed to ex-
empt the smaller rental and leasing companies from
this regulation before January 31, 1987. If NHTSA is
successful in this effort and the information allows
NHTSA to make the determinations required under
section 612 to exempt rental and leasing companies,
the agency will publish a rule exempting the small ren-
tal and leasing companies from this reporting require-
ment before January 31, 1987. Otherwise, all rental and
leasing companies with fleets of 20 or more vehicles
will be required to fUe their reports by January 31,
1987.
Even if NHTSA does not get the information needed
to allow it to structure a blanket exemption from these
reporting requirements for the smaller rental and leas-
ing companies, NHTSA will entertain individual re-
quests for exemption from those companies as long as
the requests include all necessary information. To
qualify for an exemption from the reporting require-
ments, rental or leasing companies that self -insure their
fleets must provide the following information, as
specified in the NPRM:
1. Estimates of the probable cost of preparing and
filing the reports required by this rule, and the
methodology used for estimating those probable costs;
2. Information about the size of the company's
business. For the purposes of these insurer reports,
NHTSA concludes that the most important and most
easily provided information in response to this stat-
utory requirement is the size of the rental or leasing
fleet. This is because larger fleets would be expected
to have more thefts and recoveries of vehicles; and
3. The reasons that the rental or leasing company
believes its report will not significantly contribute to
carrying out the purposes of Title VI.
NHTSA would then evaluate the information submit-
ted by the rental or leasing company to see whether
the information was sufficient to allow the agency to
make the determinations required by section
612(aX2X4). If NHTSA makes those determinations, it
would initiate rulemaking to exempt the rental or leas-
ing company.
Any rental or leasing company that believes it ^^
satisfies the criteria for an exemption from these ^^
reporting requirements should send a letter to the
PART 544-PRE 6
NHTSA Administrator at the address shown in
S544.5(8) for submitting insurer reports. This letter
should include the information on the three points
outlined above. NHTSA wishes to emphasize that it can
exercise its authority to grant such exemptions only
if it makes both determinations required by section
612(aX4). Thus far, neither the comments on the NPRM
nor letters requesting exemptions submitted by Califor-
nia taxicab fleets have provided information that would
allow NHTSA to make the first required determina-
tion, i.e., that the cost of preparing and submitting the
reports is excessive in relation to the size of the rental
or leasing company's business. Absent information on
this point, NHTSA cannot exempt any rental or leas-
ing companies from these reporting requirements. The
agency would also like to emphasize that rental or leas-
ing companies submitting letters requesting exemp-
tions remain subject to these reporting requirements
until such time as the NHTSA Administrator sends a
letter authorizing such exemption. In other words,
simply submitting a letter asking for an exemption does
not relieve a rental or leasing company of its statutory
obligation to file these reports.
The agency noted in the NPRM that rental and leas-
ing fleets that have a contractual requirement for the
renter or lessee to obtain comprehensive insurance
coverage for some or all of the vehicles in the fleet need
not count those vehicles in determining how many
vehicles in their fleet are not covered by theft insur-
ance. There were two reasons supporting this position.
First, requiring both the rental or leasing company and
the insurance company to report the theft and any
recovery of the vehicle would result in double counting.
Second, the intent of section 612(aX3) was to get in-
formation on self -insured vehicles, not vehicles covered
by theft insurance.
The NATB commented that the double counting
problem noted by the agency in the preamble would
arise only if the insurer providing theft insurance for
the vehicle in the rental or leasing fleet was one of the
31 companies listed in the appendices. If any other in-
surance company provided theft insurance for the vehi-
cle, it would only be counted once.
The commenter is correct, but NHTSA concludes
that it would still be inconsistent with the intent
underlying section 612 to gather information on such
vehicles. Section 612 is structured to ensure that
NHTSA will get information on a representative sampl-
ing of the fleet population covered by insurance policies
written by an insurance company. However, a sizeable
number of large rental and leasing fleets self-insure
their vehicles. No information on these vehicles would
be included in the reports filed by insurance companies.
Moreover, as noted in ACRA's comment, rental car
fleets may experience much higher theft rates than the
general fleet population. To ensure that the agency
would receive information about these self-insured
fleets, section 612 includes in the definition of the term
"insurer" those self-insured rental and leasing fleets
of 20 or more vehicles. In keeping with this purpose,
the section does not require rental and leasing com-
panies to report separately their theft experience if
their fleets are covered by theft insurance policies writ-
ten by an insurance company. Even though the rental
or leasing companies covered by theft insurance may
experience a higher than average theft rate, a
representative sampling of that experience will be in-
cluded in the reports filed by the large insurance com-
panies. To adhere to this statutory scheme, NHTSA
will not count rental or lease vehicles subject to a con-
tractual requirement for the renter or lessee to obtain
comprehensive insurance coverage for the subject vehi-
cle when determining whether a rental or leasing com-
pany has a fleet of 20 or more vehicles not covered by
theft insurance policies.
Time Period to be Covered in Annual Reports
The NPRM proposed that the reports due annually
in October provide the information for the preceding
calendar year. For example, the reports due in October
1987 would include the information for calendar year
1986. This time period was proposed for two reasons.
First, it would allow insurers 10 months to gather the
needed data, arrange it into the appropriate format,
and report it to the agency. This is the longest period
that could be allowed under the statute and would be
consistent with the legislative intent that these reports
impose the least possible burden on the insurers con-
sistent with the statutory requirements. Second, Title
VI of the Cost Savings Act requires theft data to be
computed on a calendar year basis and calculations of
median theft rates to be based on the calendar year
data. If the insurer reports were based on an annual
period other than the calendar year, the agency could
not make comparative evaluations of the information
in the insurer reports with the calendar year theft data
provided to the agency by the National Crime Infor-
mation Center (NCIC).
In response to this proposal, State Farm commented
that the calendar year was acceptable for itself, but
might present a problem for other insurers. State Farm
suggested that Part 544 should allow the use of an "ac-
cident year" (data on all thefts that occurred during
the calendar year), "policy year" (data on all thefts that
occurred on policies issued or renewed during the calen-
dar year), "report year" (data on all thefts reported
to the insurer during the calendar year), or "fiscal
year" (which could be any of the above 3 "years," but
for a 12-month period other than the calendar year).
PART 544-PRE 7
If this comment were adopted, NHTSA could not
make comparative evaluations and aggregations of the
reported data, which would significantly lessen the
value of the data. State Farm conceded this point in
its comment, but stated that imposing a uniform calen-
dar year requirement would force "many reporting
companies to undertake costly and time-consuming
system and program changes." Although State Farm
identified this potential burden in its comments, those
comments also stated that a calendar year basis would
be acceptable for State Farm. AIA supported the calen-
dar year proposal stating that they "agree with
NHTSA's assessment that this type of tmiformity
would assist the agency in making evaluations of the
data while at the same time imposing little burden upon
insurers" (emphasis added). Since no commenter, in-
cluding State Farm, asserted that it would be burdened
by the calendar year requirement, the agency sees no
reason to sacrifice uniformity of the data. Accordingly,
the calendar year basis for reporting is adopted in this
final rule.
The NATB commented that thefts and recoveries
should be reported on a fiscal year basis, using July 1
to June 30. NATB explained that this would give the
agency more recent theft and recovery information,
and would give the agency additional information for
its October 1987 report to Congress. NHTSA agrees
that this would result in the agency having more in-
formation for the 1987 report to Congress, but has not
adopted this comment. The agency has thus far been
reluctant to use partial year theft and recovery data
for any purposes under the Theft Act, because partial
year data are not always indicative of full-year trends.
NHTSA does not want to now offer partial year data
for the first time in a report to Congress.
Additionally, it would be unnecessarily complex and
potentially burdensome to require that theft and re-
covery data be reported on a fiscal year basis, while
all other information required under Part 544 be
reported on a calendar year basis. NHTSA notes that
not all the insurance companies listed in Appendices
A or B are members of the NATB, and none of the ren-
tal or leasing companies are members. A requirement
for fiscal year reporting of thefts and recoveries might
well impose a significant burden on those insurers that
are not members of the NATB, because of the rela-
tively short time period for submitting the data and the
different format. Finally, NHTSA does not believe
there will be instances other than the 1987 report
where the 10-month delay in reporting will present
potential timing problems for the agency. Therefore,
this rule does not adopt the NATB suggestion. How-
ever, NHTSA would certainly consider such data if it
were voluntarily submitted by NATB on behalf of those
reporting insurers that are members of that
organization.
Southern Farm Bureau asked in its comments how
the calendar year reporting should be implemented.
Specifically, that insurer asked how they should report
a vehicle stolen in 1985 and recovered with the claim
settled in 1986. Under calendar year reporting, all
events that occur in the calendar year should be
reported. In Southern Farm Bureau's example, a theft
would be reported in 1985 and a recovery would be
reported in 1986.
General Requirements for Reports
The NPRM proposed basic format requirements for
each report filed under Part 544. The NATB com-
mented that these requirements should specify the ex-
act statutory deadline of October 25 for filing these
reports, instead of the proposed requirement that the
reports be filed in October of each year. The proposed
requirement was intended to offer the insurers slightly
more flexibility in satisfying their statutory respon-
sibilities. However, NHTSA has no objection to speci-
fying that the reports are due not later than October
25 of each year, and the final rule has been changed
to reflect this.
State Farm commented that the proposed general
requirements should be changed to include specific
language authorizing the use of a designated agent for
these reports, as permitted by section 612(aXl) of the
Cost Savings Act. Many other commenting insurers
stated that NATB was their designated agent for
reporting thefts and recoveries. The agency agrees
with State Farm's comment, and has added language
to the final rule to make clear that insurers may use
designated agents in connection with filing these
reports. In all other respects, the proposed general re-
quirements for these reports have been incorporated
in this final rule.
Contents of Reports
A . Types of Vehicles on Which Information Must Be
Reported
Section 614 of the Cost Savings Act requires
NHTSA's 1987 and 1990 reports to Congress to include
the agency's recommendation as to whether the re-
quirements of the theft prevention standard should be
extended to trucks, multipurpose passenger vehicles,
and motorcycles. To ensure that the insurer reports pro-
vide information that aids the agency in making that
assessment, section 612(f) specifies that, for purposes
of the insurer reports, the term "motor vehicle" includes
trucks, multipurpose passenger vehicles, and motor-
cycles. The NPRM proposed that insurers provide the
required information separately for the following vehi-
cle types: passenger cars, light trucks, heavy trucks,
multipurpose passenger vehicles, and motorcycles.
PART 544-PRE 8
Thus, the broad category of "trucks" would be sub-
divided into light trucks and heavy trucks. As explained
in the NPRM, the reason for proposing this subdivision
was the agency's belief, based on informal statements
by law enforcement groups, that there are significant
differences in the characteristics of light and heavy
trucks, which differences result in light trucks being
stolen more frequently. If this should prove to be true,
the agency would like to have separate data, instead
of making a recommendation on the entire category
of "trucks."
In response to this proposal, American Automobile
Association (AAA) Michigan questioned the need to
divide trucks into light and heavy trucks. This com-
menter stated that the subdivision would not present
a burden for them, but would result in more work for
the agency. NHTSA believes the preamble to the
NPRM explained why it was proposing this subdivision,
and the agency is willing to undertake any additional
work that results from receiving information broken
down into light and heavy trucks.
AIA, the Alliance, and NAII all objected to the
separate reporting provisions for light and heavy
trucks. According to these comments, a truck is more
likely to be stolen for the cargo it carries, instead of
for the vehicle itself. These commenters stated that the
purpose of the reporting requirements is to "assist the
agency in evaluating the impact of the component
marking requirement on motor vehicle thefts." Since
trucks are not subject to the marking requirements,
these commenters urged the agency not to require in-
formation to be reported on any type of truck.
These comments reflect a fundamental misreading
of sections 612 and 614 of the Cost Savings Act. As
noted above, NHTSA is specifically required by sec-
tion 614(aX2)(E) to include in its 1987 report to Con-
gress an assessment of whether requiring marking of
parts on trucks, multipurpose passenger vehicles, and
motorcycles would be likely to reduce thefts of those
types of vehicles. Section 614(bX2XI) requires NHTSA
to include the same assessment in its 1990 report to
Congress. To ensure that the insurer reports provide
information to assist the agency in making these
assessments, section 612(f) specifies that the term
"motor vehicle" includes trucks, multipurpose
passenger vehicles, and motorcycles. Thus, it is
statutorily required that the agency be provided with
information on trucks in these insurer reports. Since
none of these commenters indicated that it would be
more burdensome for insurers to separate information
on light and heavy trucks in their reports, the proposed
subdivision of trucks into light trucks and heavy trucks
is adopted in this final rule.
B. Format for Reports
1. Subdivisions of Vehicle Types.
The NPRM proposed to require theft and recovery
data in these insurer reports to be broken down by
model, make, and line. This proposal was based on the
explicit language of sections 614(a)(2XA) and
614(bX2XB), which both require NHTSA to provide
Congress with data on the number of motor vehicles
stolen and recovered annually subdivided according to
the "model, make, and line" of the vehicle.
In response to this proposal. Southern Farm Bureau
asked exactly what the agency meant by "model, make,
and line." As noted above, these are the terms used
in Title VI of the Cost Savings Act. "Make" refers to
the general name used by the vehicle manufacturer.
For example. Dodge, Ford, and Pontiac are makes of
vehicles. "Line" refers to the nameplate assigned by
the manufacturer to a group of vehicle models of the
same make. For example. Dodge Charger, Ford
Thunderbird, and Pontiac 6000 are lines of vehicles.
"Model" refers to a specific grouping of similar vehicles
within a line. For example, the Dodge Charger 2.2
2-door, Ford Thunderbird Turbo Coupe, and Pontiac
6000 LE 4-door are models.
AIA, the Alliance, NAII, and the Insurance Services
Office (ISO) all commented that, if the reports were
to require information on trucks, that information
should not be broken down into model, make, and line.
Instead, these commenters urged that truck theft and
recovery data be broken down by truck size, use, and
the radius of the truck's operation. According to these
commenters, such a requirement would conform to the
data collection breakouts currently used by insurers.
The ISO also commented that passenger cars used com-
mercially are not currently broken down into make,
model, and line by the insurers. The Hartford agreed
with ISO's comment. NHTSA believes it would be
simpler for insurers if they could just provide the thefts
and recoveries according to the breakdown they cur-
rently use for their own purposes. However, section
614 of the Cost Savings Act explicitly requires NHTSA
to provide Congress with theft and recovery data
broken down into model, make, and line. If the agency
is to provide the data to Congress in this format, it
must be provided in this format in these insurer
reports. Additionally, the use of a consistent format
by all reporting insurers makes the data more readily
comparable and more useful to this agency. Accord-
ingly, this final rule adopts the proposed requirement
for insurers to report thefts and recoveries of vehicles
broken down into model, make, and line for each of the
five vehicle types on which information is to be
reported.
PART 544-PRE 9
The agency proposed to also require the theft and
recovery data to be broken down according to the
model year of the stolen or recovered vehicle. This
breakdown was proposed so that the agency could eval-
uate the effectiveness of the theft prevention stand-
ard for passenger cars and assess the desirability of
extending that standard to trucks, multipurpose
passenger vehicles, and motorcycles. The example
given in the NPRM was a situation where passenger
car thefts remain constant in 1988, but thefts of new
cars marked in accordance with the theft prevention
standard decrease. Such data would be very significant,
but the agency would not learn of it unless these in-
surer reports break out the model year of stolen and
recovered vehicles. Similarly, if most thefts of other
types of vehicles are of newer models, this would be
very significant data for the agency's assessment of
whether to extend the theft prevention standard to
those vehicle types. The NPRM stated NHTSA's belief
that this proposed requirement would not impose a
significant burden, because the data gathered by NATB
already show the model year of a stolen or recovered
vehicle.
Hence, Southern Farm Bureau's question of whether
they should "lump together" all thefts and recoveries
was addressed at some length in this portion of the
preamble. The answer is no; the proposed rule required
thefts and recoveries to be broken out according to the
vehicle's model year, as explained above.
Nationwide suggested limiting the model year
breakout to the model year that coincided with the
calendar year covered in the report and the four model
years preceding that model year. However, Nationwide
offered no explanation of why the model year breakout
should be so limited or why the agency would receive
enough information with this limitation to conduct the
statutorily required evaluations.
GM commented that the base line for determining
the median theft rate for passenger cars was the 1983
and 1984 model years' combined theft data. GM also
stated that the agency will be trying to determine the
effectiveness of the theft prevention standard by com-
paring the theft rates of immarked passenger cars with
those of passenger cars marked according to the theft
prevention standard. Accordingly, GM recommended
that insurers be required to report only on 1983 and
subsequent model year thefts and recoveries.
NATB asked that theft and recovery data be limited
to 1981 and subsequent model year vehicles. NATB
stated that before the 1981 model year, the vehicle
identification numbers (VIN's) were not standardized
for foreign-made passenger cars or for any trucks,
multipurpose passenger vehicles, or motorcycles. The
theft and recovery data collected by NATB is com-
puterized, but the computer cannot accurately identify
these non-standardized VIN's. Accordingly, the only
way for the NATB to accurately identify the model
year of the vehicle woiJd be to have people manually
compare the recorded VIN's of stolen vehicles against
listings of the assigned VIN's for each model year. Ac-
cording to NATB, this would be very burdensome for
it, while giving NHTSA data with a significant number
of errors in identifying the stolen or recovered vehicles.
The NATB statements about non-standardized VIN's
before the 1981 model year are correct. Similarly, GM's
comment that Congress itself chose to limit the baseline
for measuring passenger car thefts to 1983 and subse-
quent model years is correct. Since Congress chose the
1983 model year as the baseline for measuring the theft
experience of passenger cars, the agency does not
believe that it needs vehicles older than those manufac-
tured in the 1983 model years to evaluate the theft ex-
perience of motor vehicles other than passenger cars.
Although sections 612 and 614 do not expressly limit
the model years of vehicles on which theft and recovery
information is to be reported, neither do they expressly
require information on all model years thefts and
recoveries to be included in these reports, regardless
of the burden imposed. Given the statement in the
House Committee Report that NHTSA should "devise
a reporting system for insurance information with an
eye toward imposing requirements which will be of low
cost and of minimal burden to the industry, but which
will provide all of the data required by this section,"
the agency concludes that the question of whether the
model years on which thefts and recoveries must be
reported should be limited depends on two points.
First, will limiting the data to 1983 and subsequent
model years still provide all of the data required by sec-
tion 612 and needed by the agency to carry out its
responsibilities under Title VI of the Cost Savings Act?
NHTSA concludes that the answer to this question is
yes. Theft and recovery data for older vehicles might
be useful for a long-term evaluation of trends in vehi-
cle theft. However, such data may not be essential for
the agency to evaluate the effectiveness of parts mark-
ing for passenger cars, for the reasons set forth in GM's
comment. Similarly, such data are not essential for
assessing whether the theft prevention standard should
be extended to other vehicle types. NHTSA believes
that the theft and recovery experience of 1983 and later
model year vehicles will give the agency a comprehen-
sive basis for making all statutorily required reports
and assessments.
Second, will limiting the data to 1983 and subsequent
model years avoid imposing a substantial burden on
reporting insurers? NHTSA believes the answer to this
PART 544-PRE 10
question is also yes. Since insurers would not be able
to rely on their computer files to break out thefts and
recoveries of pre-1981 model year vehicles, they would
have to hand sort this information and compare it to
VIN lists assigned by each manufacturer. This process
would have to be repeated for every year an insurer
reported a theft or recovery of a pre-1981 model year
vehicle. Information on thefts and recoveries of 1981
and 1982 model year vehicles could be retrieved by
computer, but it would require an expenditure of time
and money to provide this information.
Since NHTSA believes that limiting the theft and re-
covery data to 1983 and subsequent model year vehicles
will avoid imposing a substantial burden on insurers
while still offering NHTSA all the information it needs
to carry out its responsibilities under Title VI of the
Cost Savings Act, the agency concludes that this limita-
tion is consistent with the language and intent of sec-
tion 612. Therefore, this final rule requires a listing of
all thefts and recoveries of 1983 and subsequent model
year vehicles, broken down into model, make, and line.
Thefts and recoveries of vehicles manufactured in
model years before the 1983 model year are not re-
quired to be included in these insurer reports.
NHTSA emphasized in the NPRM that section 612
does not require the data in the insurer reports other
than theft and recovery data to be broken down accord-
ing to model, make, and line. Similarly, NHTSA does
not need the other data broken down by model year
in order to perform a meaningful evaluation of the data.
Thus, the NPRM noted that all required data other
than theft and recovery data can be subdivided into
whatever risk categories the reporting insurer uses for
its own purposes. Judging by some of the comments,
this provision was not clearly understood. For exam-
ple. State Farm said that this rule should require the
loss data only to be separated into the five vehicle
types, because of different capabilities and data
availability among the different insurers. However, the
proposed rule acknowledged the different data
availability and capabilities of the insurers by simply
proposing that insurers provide the agency with the
information, subdivided into the categories the insurer
uses for its own purposes. This approach imposes the
least burden on the insurers, because they do not have
to arrange their data into a new format. Similarly, the
Hartford commented that passenger cars used com-
mercially are not subdivided into make and model for
rating purposes. Again, Part 544 does not require a
breakdown by make and model for the rating informa-
tion. If an insurer uses a blanket category for all
passenger cars used commercially, it should report in-
formation for that broad category in responding to the
required rating information. This proposed approach
is adopted in this final rule.
2. Geographic Subdivisions.
The NPRM proposed that insurers report the infor-
mation divided by States. An insurer listed in Appen-
dix A or a rental or leasing company that did business
in all 50 States would be required to provide informa-
tion separately for each State in which it did business.
This proposed requirement was based on the statutory
language in section 612(aX5XA). That section specifies
that the agency shall exempt small insurers from these
reporting requirements if it finds that "such exemp-
tion will not significantly affect the validity or
usefulness of the information collected and compiled
under this section, nationally or State-by-State" (em-
phasis added). NHTSA concluded that this language
was an indication that Congress expects the agency to
compile and analyze the data set forth in the insurer
reports on both a national and a State-by-State basis.
This conclusion is reinforced by the requirement in sec-
tion 612(aX5XCXii) that an insurer that otherwise
qualifies as a small insurer must nevertheless report
information for any State in which its total premiums
are 10 percent or more of the total premiums paid for
motor vehicle insurance within the State. There would
be no reason for Congress to require that such insurers
report on their activities within States in which their
market share is 10 percent or more, if the agency were
not going to compile and evaluate information on a
State-by-State basis. Finally, the requirement in sec-
tion 612(b) that NHTSA periodically compile and
pubHsh the information in the insurer reports in a form
that will be helpful to the public virtually requires the
information to be reported on a State-by-State basis.
The information in these reports, especially the theft
and recovery information, would not be in a form that
is helpful to the public if it were not broken down on
a State-by-State basis.
Further, the law enforcement practices and pro-
secutorial efforts directed towards professional vehi-
cle thieves differ in the different States. The vehicle
theft problem itself is concentrated more in some
States than others. One would anticipate that the costs
of vehicle theft and the benefits associated with any
reduction in such thefts would be concentrated in those
States. NHTSA is required to include a detailed evalua-
tion of these benefits in its 1990 report to Congress
by section 614(bX2XE) of the Cost Savings Act. Hav-
ing the information in these reports broken down on
a State-by-State basis will enable NHTSA to comply
with this statutory mandate and give Congress a com-
plete assessment of the impacts of the theft preven-
tion standard.
Moreover, NHTSA's understanding is that State in-
surance regulations already require insurers to keep
separate records for each State. These records are
PART 544-PRE 11
examined in connection with proposed rate increases
and like actions. Accordingly, the proposed require-
ment for State-by-State reporting would not appear to
impose any additional burden on the insurers.
AAA Michigan commented that it did not believe
State-by-State reporting should be required if an in-
surer had aggregate data. However, this commenter
did not explain why it believed this. Nationwide com-
mented that a breakdown by States would be
"somewhat burdensome," without explaining why they
believed this was so. AIA commented that it had no
objection to the proposed State-by-State reporting, but
believed it should be limited to only those States with
higher-than-average theft rates. AIA did not assert
that it would be difficult to provide the information for
all States. Moreover, if the agency adopted AIA's com-
ment, it could not perform a State-by-State analysis.
Finally, some insurers are required by section
612(aX5XCXii) to provide information on States where
the insurer has a 10 percent or greater market share,
even in low theft States. There was no reason for Con-
gress to include such a requirement if the agency would
not have any other data for that State.
NATB suggested that NHTSA require State-by-
State reporting for all information except thefts and
recoveries, and permit thefts and recoveries to be
reported nationally. The theft and recovery informa-
tion is some of the most significant data to be included
in these reports, and is required to be included in both
the 1987 and 1990 reports to Congress. All indications
in sections 612 or 614 and the relevant legislative
history are that Congress intended for the agency to
compile and evaluate all of the information in these in-
surer reports both nationally and State-by-State.
NATB did not claim that this requirement would im-
pose a serious burden on it. Accordingly, the final rule
requires State-by-State reporting of all information in
these insurer reports.
The NATB asked how the agency wanted the follow-
ing information reported under the State-by-State
reporting requirement: a vehicle is stolen in State A,
recovered in State B, and the claim is filed in State C.
This should be reported as a theft in State A and a
recovery in State B.
Finally, the NATB asked if NHTSA wanted theft and
recovery information for the District of Columbia.
Similarly, ISO asked if information from the District
of Columbia and Puerto Rico should be included in the
insurer reports. Section 2 of the Cost Savings Act (15
U.S.C. 1901) sets forth definitions that apply to all titles
of the Cost Savings Act, including Title VI, unless
otherwise provided. Section 2(16) reads as follows:
"The term 'State' includes each of the several States,
the District of Columbia, the Commonwealth of Puerto
Rico, Guam, the Virgin Islands, and American Samoa."
Based on this statutory definition of "State,?? the in-
surers are required to provide information on both the
District of Columbia and Puerto Rico in their reports.
3. Identical Responses.
The NPRM proposed that insurers could avoid
repetitive answers by simply indicating that an answer
applied to several or all divisions of vehicle types, for
several or all vehicle types, and to several or all States
in which the insurer did business. No comments were
received on this proposal and it is adopted in this final
rule.
The NPRM also proposed that insurers be allowed
to incorporate by reference responses given in
documents previously filed with the agency or any
State agency within the last 4 calendar years, provid-
ed that the insurer clearly indicates on the first page
of the document in response to which regulatory re-
quirement the document is being submitted. Several
insurers asked that this language be amended to allow
them to incorporate by reference previous and futiu-e
documents filed with the agency or any State agency.
Incorporation by reference as a concept generally
refers to a complete report referencing previously filed
materials for a portion of the report. In the case of
documents to be filed after the report, the report would
not be complete until those documents were filed.
NHTSA believes that these commenters were refer-
ring to documents to be filed by a designated agent to
complete the report. As explained above, such filings
are permitted under this rule, but they would not be
incorporated by reference. Accordingly, the proposed
provisions for incorporating previously filed documents
by reference are adopted in this rule.
C. Theft and Recovery Data
Section 612(aX2XA) requires these insurer reports to
include the number of vehicle thefts. In response to this
statutory requirement, the agency proposed to define
a vehicle theft as an actual physical removal of a motor
vehicle without the permission of its owner, but would
not include the removal of component parts, ac-
cessories, or personal belongings from a vehicle which
is not moved.
ISO stated that this proposed definition of theft was
not the same as that used in insurance contracts. Ac-
cording to this commenter, theft for the purposes of
insurance contracts includes the removal of bumpers,
radios, wheels, and so forth from a stationary vehicle.
ISO suggested that the proposed definition of a vehi-
cle theft be expanded to include the removal of major
parts from a stationary vehicle. This comment has not
been adopted in this final rule. The proposed definition
of a vehicle theft is the definition that has been used
t
PART 544-PRE 12
by the FBI for many years, and has been used by this
agency in all of its previous rulemaking actions under
Title VI of the Cost Savings Act. Furthermore, this
definition of a vehicle theft has been endorsed by the
joint insurance industry-auto industry task force.
NHTSA does not believe it would be consistent with
the purposes of Title VI to adopt a different definition
of a vehicle theft just for these insurer reports.
ACRA commented that conversion is a form of vehi-
cle theft unique to rental car companies. A conversion
occurs when a person renting a car does not return the
car to the rental car company on the date specified in
the rental contract. ACRA stated that rental car com-
panies would count these as thefts in their reports filed
imder Part 544. NHTSA considers a conversion to be
a physical removal of a vehicle without the permission
of its owner. However, the agency does not believe that
Congress intended that each and every late return of
a rental car be reported as a vehicle theft for the pur-
poses of these reports. For instance, a family using a
rental car for their vacation that returns the car one
day later than specified in the contract has not stolen
that car. Indeed, counting these late returns as thefts
could significantly overstate the number of thefts in
any year.
To address this problem, State police have im-
plemented a waiting period after the contract due date
before the police will accept a stolen vehicle report from
a rental car company. This waiting period is generally
either 48 or 72 hours after the due date specified in
the rental contract. Such a waiting period enables the
State police to differentiate between late returns of
rental vehicles and actual thefts of those vehicles. This
final rule incorporates the waiting period specified by
the State police in which the vehicle was to be returned
for rental car companies reporting vehicle thefts. That
is, any rental vehicle that was or could have been
reported as stolen to the State police in the State where
the vehicle was to have been returned should be
counted as a theft and reported under these require-
ments. Any late return of a rental vehicle that could
not have been reported to the State police as a vehicle
theft is not a theft for the purposes of these reports,
and should not be included therein. NHTSA believes
that this limitation ensures that it will get accurate
theft and recovery information from rental car com-
panies in these reports without imposing any additional
burden on the reporting rental car companies.
After proposing to require the listing of the total
number of vehicle thefts experienced by the insurer
during the reporting period, the NPRM proposed that
the insurer list the total number of recoveries.
Recoveries are expressly required to be included in
these reports by section 612(aX2XA). The proposed
definition of a recovery was regaining physical posses-
sion of a motor vehicle or a major portion of the super-
structure of a motor vehicle with one or more major
parts still attached to the superstructure, after that
vehicle has been reported to the insurer as stolen (em-
phasis added).
Allstate, NATB, and Aetna all commented that this
last condition would result in many actual recoveries
not being reported to NHTSA. These recoveries are
generally called "simultaneous recoveries," and occur
when a vehicle is recovered by the police after it has
been stolen, but before the theft has been reported to
the insurer. Such recoveries would not be covered by
the proposed definition of recovery, since they would
not occur after the theft has been reported to the in-
surer. NATB stated that, "There does not appear to
be any practical reason to specify the reporting of all
thefts without, at the same time, specifying the report-
ing of all recoveries" (emphasis in original). NHTSA
is persuaded by these comments, because information
on all recoveries is as important as information on all
thefts. Accordingly, the definition of recovery in this
final rule has been changed to refer to regaining
physical possession after a vehicle has been stolen.
Sections 612(aX2XA) and (B) of the Cost Savings Act
require the total number of recoveries to be subdivided
into recoveries intact, recoveries-in-whole, and
recoveries-in-part. No comments were received con-
cerning the proposed definitions for these subdivisions
of "recovery" and they are adopted as proposed. Each
of these subdivisions of recovery, and the definition of
recovery itself, depend on the listing of major parts,
to allow the reporting insurers to determine whether
a vehicle really is "recovered" and, if so, what type of
recovery it is. The theft prevention standard at
S541.5(a) already defines the major parts for passenger
automobiles. However, the theft prevention standard
does not define the major parts of motor vehicles other
than passenger cars. Therefore, proposed S544.4(bX5)
set forth a listing of the major parts for such vehicles.
In response to this proposed listing, NATB com-
mented that the following parts should be added as
major parts: the transfer case, for light trucks, the
cargo bed, for heavy trucks and multipurpose
passenger vehicles, and the crankcase, for motorcycles.
NHTSA contacted the FBI to learn their opinion of
these suggested additions to the list of major parts for
these vehicles. The FBI stated that they concurred with
NATB's comment. The agency believes it is appro-
priate to recognize the expertise of the FBI and NATB
in dealing with vehicle thefts, and has amended the
final rule to include these parts as major parts for the
other types of motor vehicles.
This section of the NPRM further proposed that in-
surers be required to explain how the theft and re-
PART 544-PRE 13
covery data were obtained by the insurer, the steps
taken by the insurer to ensure that these data are ac-
curate and timely, and the use the insurer made of the
theft and recovery information, including the extent
to which such information is reported to national,
public, and private entities. Such information is ex-
pressly required to be included in the insurer reports
by section 612(aX2). No comments were received on
these proposed requirements, and they are adopted as
proposed.
D. Rating Rules and Plaris Used By Insurers to
Establish Comprehensive Insurance Premiums and
Premium Penalties for Motor Vehicles Considered by
the Insurer as More Likely to be Stolen
Section 612(aX2XC) of the Cost Savings Act expressly
requires that insiu-er reports include "the rating rules
and plans, such as loss data and rating characteristics,
used by such insurers to establish comprehensive in-
surance premiums for comprehensive insurance
coverage for motor vehicles, including the basis for
such premiums, and premium penalties for motor
vehicles considered by such insurers as more likely to
be stolen." This statutory language means that these
reports must include complete information about the
following subjects:
1. The loss data used by the insurer to establish its
comprehensive insurance premiums and premium
penalties for motor vehicles it considers more likely to
be stolen;
2. The rating characteristics used by the insurer to
establish its comprehensive insurance premiums and
premium penalties for motor vehicles it considers more
likely to be stolen;
3. Any other rating rules and plans used by the in-
surer to establish its comprehensive insurance
premiums and premium penalties for motor vehicles
it considers more likely to be stolen; and
4. The basis for the insurer's comprehensive in-
surance premiums and premium penalties for motor
vehicles it considers more likely to be stolen.
AIA and State Farm commented that section 612 of
the Cost Savings Act requires the reports to include
information used by insurers in establishing their
comprehensive insurance rates. To the extent that the
proposed requirements obligated insurers to provide
information not used by insurers in establishing their
rates, these commenters contended that the NPRM
was inconsistent with section 612. As explained above,
the NPRM proposed only that insurers satisfy the ex-
plicit requirements of section 612(aX2XC) and provide
the information required by that section.
The agency believes that the point these commenters
were making is that an insurer's vehicle theft loss data
is not currently broken out from other types of com-
prehensive loss data when establishing the comprehen- ^
sive insurance premiums. The commenters were not A
claiming that theft loss data are not used by insurers
in conjunction with other loss data when establishing
comprehensive insurance premiums, because such a
statement would be palpably incorrect. Rather, the
point was that the theft loss data are not used sepa-
rately from other types of loss data. Accordingly, these
commenters were contending that since these loss data
are not separated for purposes of establishing com-
prehensive insurance premiums, they need not be
separated for purposes of the insurer reports.
NHTSA does not believe that the requirements im-
posed on the agency for its reports to Congress will
permit the agency to find these comments persuasive.
Section 614(bX2XG) requires the agency to include in
its report information on the extent to which insurers
have foregone premium increases or reduced premiums
as a result of Title VI, as well as providing informa-
tion on increased premiums for vehicles that the insurer
considers more likely to be stolen. This provision
reflects the Congressional expectation that Title VI
would have a benficial impact on auto insurance
premiums. See. e.g., S. Rep. No. 478, 98th Cong., 2d
Sess., at 4 (1984) ("Experts project that a program
which effectively reduces auto theft will result in ^
substantial consumer savings. For example, the Na- ■
tional Association of Independent Insurers estimated
in 1980 a $200 million premium savings to the
American consumer resulting from parts numbering,
assuming a 10-percent drop in auto theft. The
American Insurance Association estimated in 1983 that
insurance premium reductions eventually would more
than compensate for the amount the parts marking
would add to the cost of a car.") This expectation was
based on testimony offered by representatives of the
insurance industry during Congressional hearings on
the bill which ultimately became Title VI of the Cost
Savings Act. See, e.g., Motor Vehicle Theft Law En-
forcement Act of 1983: Hearing on S. 1400 Before the
Subcomm. on Surface Transportation of the Senate
Comm. on Commerce, Science, and Transportation,
98th Cong., 1st Sess., at 84-96 (1983) (statements of
Thomas G. Bowman, Insurance Director, Automobile
Club of Michigan; Penelope Farthing, Senior Counsel,
American Insurance Association; and Donald D.
Messmer, on behalf of the National Association of In-
dependent Insurers). The only potential source for this
information will be these insurer reports.
Additionally, section 614(bX2)(E) requires the agency
to identify the benefits of the theft prevention standard,
and quantify the monetary value of those benefits. Ob- ^
viously, potential reductions in theft losses paid by in- ▼
surers and potential insurance savings for consumers
PART 544-PRE 14
would be noteworthy benefits of the theft prevention
standard. The only way for NHTSA to get the neces-
sary information to evaluate these subjects is in these
insurer reports. To make both these determinations,
NHTSA must know what percentage of overall com-
prehensive insurance losses are theft related. Only
those theft related losses are relevant when address-
ing the above topics in the reports to Congress. Accord-
ingly, NHTSA concludes that Title VI directs the
agency to require insurers to break out theft losses
from other losses in the insurer reports, and concludes
that such a break out is compelled by the statute.
Allstate commented that Congress intended NHTSA
to get insurers' rating rules as needed to administer
Title VI and to make the necessary reports to Con-
gress. The agency agrees with this assertion. Allstate
then asserted that the proposed requirements went far
beyond these purposes, without explaining how or why
it believed this was true. As explained above, NHTSA
has carefully tailored these requirements so that in-
surers must only report the minimum necessary to
satisfy the requirements of Title VI.
NAII and the Alliance stated that section 612(aX2XC)
of the Cost Savings Act requires insiu-ers to report in-
formation including the rating rules and plans, such as
loss data and rating characteristics, used to establish
comprehensive insurance premiums. The commenters
then said, "If insurers did fully comply with this re-
quirement, NHTSA would be receiving a tremendous
volume of information, such as relativity factors, codes,
tables, etc." The commenters stated their belief that
NHTSA did not wish to obtain and analyze this massive
amount of information.
The agency has no discretion regarding this require-
ment. Insurers rrnist fully comply with the requirement
and NHTSA mtist obtain and analyze this massive
amount of information, because Federal law requires
such actions. Congress has weighed the burdens and
benefits of requiring insurers to provide the agency
with this large amoimt of information, and determined
that the benefits outweigh the burden. This statutory
determination forecloses the agency from reexamin-
ing the question and reaching a contrary conclusion.
However, this agency is not interested in imposing
requirements for insurers to report information that
the agency cannot use or does not need. Therefore,
NHTSA will carefully examine to what extent and how
it uses all of the information furnished in these insurer
reports. If the commenters are correct and the agency
cannot use all of the information in these reports,
because of limited resources or for some other reasons,
NHTSA will consider whether legislative changes to
Title VI should be suggested, so that insurers are not
required to report information that is not used by the
agency in its evaluations and reports. At this time,
however, this final rule represents the least burden that
can be imposed consistent with the requirements of
Title VI.
NHTSA would also consider amending the rule to
reduce the amount of information required to be in-
cluded in these reports if some defined subset of the
broad term "rating rules and plans" would be sufficient
to satisfy the Congressional intent underlying section
612. However, none of the commenters suggested such
a subset. NHTSA itself is unable to define such a subset
at this time.
NAII and the Alliance, together with many other in-
surers, commented that NHTSA should simply adopt
the form proposed to the agency by NAII. This form
was not adopted because it fails to satisfy the statutory
requirements. The NAII form consisted of six ques-
tions, one of which was the insurer's name and address.
It sought information only from the insurer's State of
domicile. Thus, it would not allow NHTSA to perform
a State-by-State evaluation of these reports, as re-
quired by section 612. The insurers would be asked to
"describe the nature" of rating plans used by insurers
to vary the physical damage premiums by make or
model of the vehicle based on the loss characteristics.
Then the insurers would indicate the basis for premium
adjustments. The examples given in the proposed form
for indicating the basis for premium adjustments were
"own experience, HLDI data, ISO data, etc." The in-
surers were then asked "Are adjustments made for the
theft experience separately from that for the other
physical damage perils?" Based on the comments
received on the NPRM, the response to this question
would be "No." The insurers would then indicate the
maximum premium adjustments made (in percentages)
under this plan, and to give the average nationwide
comprehensive rate increase during the past year.
NHTSA agrees that such a requirement would be
simpler for the reporting insurers, but it would not
comply with the requirements of section 612(aX2XC)
of the Cost Savings Act. It would not provide the loss
data used by the insurers to establish comprehensive
insurance premiums, as expressly required by that sec-
tion. It would not provide any information on premium
penalties charged for motor vehicles considered more
likely to be stolen, as expressly required by that sec-
tion. It provides rating information for "physical
damage premiums" which, according to many com-
menters, would include both comprehensive and colli-
sion premiums. To the extent that this information
would be intermingled, the proposed NAII form would
not satisfy the express statutory requirement that in-
surers provide the rating characteristics used to
establish comprehensive insurance premiums. NHTSA
neither needs nor sought information on collision
PART 544-PRE 15
insurance premiums either individually or combined
with comprehensive insurance premiums. Moreover,
tht statutory requirement that insurers provide the
basis for comprehensive insurance premiums and
premium penalties charged for vehicles considered
more likely to be stolen would not be satisfied by two
word responses, such as "ISO data" or "own ex-
perience." For all these reasons, the proposed NAII
form cannot be adopted in this rule, because it would
fail to satisfy the explicit requirements of section
612(aX2XC).
The Hartford and AAA Michigan both stated that
comprehensive insurance includes many hazards in ad-
dition to theft, and that it is difficult to isolate the ef-
fects of theft alone. The Alliance, ISO, and NAII all
commented that, because of the many factors that go
into determining comprehensive insurance premiums,
it would be "very difficult" to determine the impact
a decrease in vehicle thefts would have on comprehen-
sive insurance premiums. Difficult though the task may
be, that is exactly the information section 614(bX2XG)
requires NHTSA to include in its 1990 report to Con-
gress and exactly why such information is required to
be included in these insurer reports.
To turn to the specific requirements of the proposal,
the NPRM set forth what the agency believes is the
least burdensome way for insurers to meet their
statutory obligations to provide information on the four
areas required to be addressed in these reports.
1. The rating characteristics used by the insurer to
establish its comprehensive insurance premiums and
premium penalties for motor vehicles it considers more
likely to be stolen.
The NPRM proposed that insurers could provide the
rating characteristics used to establish the premiums
for comprehensive insurance coverage and the
premium penalties for motor vehicles considered more
likely to be stolen simply by furnishing pertinent sec-
tions of the insurer's rate manual(s). NHTSA believed
that this requirement would offer by far the least
burdensome means of satisfying this statutory require-
ment. No commenter addressed this proposea require-
ment, and it is adopted as proposed.
2. The loss data used by the insurer to establish its
comprehensive insurance premiums and premium
penalties for motor vehicles it considers more likely to
be stolen.
To satisfy this statutory requirement, NHTSA pro-
posed that insurers submit the following:
a. The total number of comprehensive claims paid
by the insurer during the reporting period;
b. The total number of those comprehensive claims
paid during the reporting period because of vehicle
theft;
c. The total amount (in dollars) paid out by the in-
surer during the reporting period in response to all
comprehensive claims filed by its policyholders;
d. The total amount (in dollars) paid out by the in-
surer in comprehensive claims during the reporting
period because of vehicle theft;
e. The total amount (in dollars) of salvage value
realized from the sale of recovered vehicles and
recovered major parts not attached to a vehicle, after
payment has been made to the insured for a vehicle
theft claim;
f . An identification of the motor vehicles for which
the insurer charges comprehensive insurance premium
penalties, because it considers those vehicles as more
likely to be stolen;
g. The relevant loss data for each vehicle risk
grouping identified under paragraph f; and
h. The maximum premium adjustments (as a per-
centage of the basic premium) made for comprehen-
sive insiu"ance premiums for each vehicle risk group-
ing identified in pargraph f, as a result of the insurer's
belief that vehicles in this nsk grouping are more likely
to be stolen.
AIA commented that the information specified in
paragraphs a and c would be readily available, but that
the information specified in paragraphs b and d would
not be. The reason that the info**mation required by
paragraphs b and d would not be available was, accord-
ing to the AIA, that claims data do not generally
distinguish between vehicle theft and component theft,
such as stolen radios, tires, bumpers, etc. The NATB
also commented that comprehensive claims data would
lump together claims involving vehicle thefts and thefts
of parts from vehicles that were not stolen.
NHTSA has reconsidered its proposed requirement
in response to these comments. As noted at the outset
of this preamble, NHTSA intended to structure this
rule to require insurers to report only data that they
already gather for their own purposes to the maximum
extent that such pre-existing data can be used to satisfy
the explicit requirements of Title VI. According to
AIA's comment, NHTSA could require insiu-ers to
report only pre-existing data in these reports if the pro-
posed requirements were changed to require insurers
to report their comprehensive insurance losses from
theft, consisting of both vehicle and component theft.
The agency would prefer this result, so the only ques-
tion is whether the reporting of such data is consistent
with Title VI.
The purpose of requiring loss data specifically for
vehicle thefts was to allow the agency to accurately cal-
culate the benefits that are associated with a reduction
in vehicle thefts. However, the agency has concluded
that it can prepare a reasonably accurate calculation
PART 544-PRE 16
of those benefits without requiring insurers to generate
• new data for the purposes of these reports. This final
rule requires subject insurers to report their theft
losses, consisting of both vehicle theft and component
theft, paid out under comprehensive insurance. The in-
surers would then be required to provide their best
estimate of the percentage of total theft losses at-
tributable to vehicle theft, and explain the basis for that
estimate. These estimates might be based on past ex-
perience, samples of some theft claims, etc. Such a pro-
cedure would give the agency the same information
available to the insurers, without requiring the insurers
to generate new data for these reports. Accordingly,
this final rule requires insurers to report theft losses
paid under comprehensive insurance, which theft losses
include both vehicle thefts, and component thefts from
vehicles that are not stolen.
Several commenters addressed the proposed require-
ment to provide the amount recovered from salvage
sales. NHTSA proposed to require this information so
that the agency could accurately calculate the societal
costs of vehicle theft and measure changes in these
costs as the theft prevention standard becomes effec-
tive. Without information on the salvage value of
recovered vehicles and parts, the loss data provided in
response to paragraphs a-d would be incomplete and
^k potentially misleading.
^^ Farmers Insurance stated that amounts recovered
in salvage sales do not separate recoveries on vehicle
thefts from recoveries on component thefts. Because
of this. Farmers Insurance urged the agency to delete
the proposed requirement for salvage information from
this final rule. NHTSA believes the information on
salvage sales is very important, as explained above.
However, the agency also believes that it would satisfy
the requirements of Title VI if insurers report the total
amount recovered in salvage sales for paid theft claims,
for the reasons explained above in the discussion of
total theft losses. Again in this action, the rule requires
the insurers to provide their best estimate of the
percentage of those salvage recoveries attributable to
paid vehicle theft claims, and provide the basis for that
estimate. This change should alleviate the concern ex-
pressed by Farmers Insurance in its comment.
NATB commented that salvage sales could be
handled on a regional basis for several States or salvage
sales could always be conducted in the State where the
vehicle or part was recovered. In these instances,
NATB stated that amounts recovered in salvage might
not be related to coverage issued in a single State or
to thefts occurring in that State. Any insurer that
^^ follows the policies described by NATB should simply
^B note that in its report. The agency will take account
^^ of these policies when using the salvage data in its
reports and evaluations.
Allstate commented that it could provide the net, but
not the gross amount recovered in salvage sales. Ac-
cording to Allstate, it does not maintain its systems
reports and files to isolate salvage and subrogation
dollars apart from paid comprehensive insurance
claims. It concluded by stating that its salvage data are
buried deep in its claim detail files, and any effort to
systematically compile the information in a reportable
way would not be cost efficient. As explained above,
section 612(aX2XC) requires insurers to report their loss
data for comprehensive insurance and NHTSA has con-
cluded that loss data alone without salvage recovery
information would be very misleading. Accordingly,
this salvage recovery information must be reported on
a gross, not net, basis to satisfy the applicable statutory
requirements. NHTSA has made every effort to mini-
mize the burden imposed on insurers by the statute,
but it cannot alter or ignore those requirements. Thus,
Allstate will have to devise the most efficient method
it can to allow it to report the required salvage
information.
The information proposed in paragraphs f through
h were included in the NPRM to satisfy the statutory
requirement that insurers provide "the rating rules and
plans, such as loss data and rating characteristics, used
by such insurers to establish . . . premium penalties for
motor vehicles considered by such insurers as more
likely to be stolen." Additionally, NHTSA is required
to provide information on these premium penalties to
Congress in both its 1987 report [section 614(a)(2)(D)]
and its 1990 report [section 614(bX2)(G)].
To satisfy these statutory requirements, the agency
proposed certain basic requirements. First, the insurers
would be required to identify the motor vehicles for
which it charges comprehensive insurance premium
penalties, because the insurer considers such vehicles
as more likely to be stolen, broken down into the risk
groupings the insurer uses for its own purposes. Thus,
if the insurer charges a comprehensive premium pen-
alty for all Pontiacs, the insurer would not have to
break that information down further for the purposes
of these reports. On the other hand, if the insurer
calculates its premium penalties broken down by make,
model, and line, it should provide that information in
these insurer reports. Second, the proposal would re-
quire insurers to provide the relevant loss data for each
risk grouping identified above. This was limited to the
number of comprehensive claims filed for this risk
grouping and the dollars paid out in response to these
comprehensive claims. Third, the proposal required in-
surers to state the maximum premium adjustments (as
a percentage of the basic premium) made for compre-
hensive insurance premiums for vehicles in this risk
grouping as a result of the insurer's belief that vehicles
in this risk grouping are more likely to be stolen. This
PART 544-PRE 17
third proposed requirement was derived from a ques-
tion in NAIFs proposed form. NHTSA concluded that
this was the absolute minimum amoimt of information
that could be included in the insurer reports in com-
pliance with Title VI.
In response to this proposal, Allstate commented that
it does not set its comprehensive rates based on the
likelihood of a vehicle's theft potential. Instead, its com-
prehensive premiums are based on a review of the ac-
tual loss experience for the vehicle. Accordingly,
Allstate suggested that some of section 612(aX2XC)
does not apply to it, because it does not charge
premium penalties for motor vehicles it considers more
likely to be stolen. NHTSA believes this comment tries
to read too much into the statutory language. Allstate
and every other insurance company review past losses
for groups of vehicles, use these past losses as a predic-
tor of future losses, and set their rates accordingly. If
Allstate meant to assert that it charges premium
penalties only for vehicles it knows are more likely to
be stolen, NHTSA disagrees with its assertion. No mat-
ter how much data one has about past losses, one can
only use that data as an indication of likely future
losses. The most one could say is that the vehicles it
considers as more likely to be stolen are strongly sup-
ported by data. However strongly supported, section
612(a)(2XC) explicitly requires the insurers to report
information about those premium penalties.
The agency notes that it would appear not very
burdensome for Allstate to comply with the reporting
requirements. Allstate can simply list the vehicle risk
groupings for which it charges premium penalties
because it has identified such vehicles as more likely
to be stolen, submit the loss experience that it states
are analyzed for these risk groupings, and indicate the
maximum premium adjustment it made for vehicles in
the risk grouping.
State Farm commented that it does not develop
comprehensive insurance premiums by make and model.
The NPRM did not propose to require the submission
of this information broken down by make and model.
Instead, it proposed to require insurers to provide the
information broken down by whatever risk groupings
they use for their own purposes. State Farm explained
that new vehicles are assigned to a physical damage
"symbol group" based on the manufacturer's suggested
retail price for the vehicle. Loss experience is then com-
pOed for each symbol group and analyzed to determine
the relationships between the symbol groups and age
groupings. With respect to passenger cars and light
trucks. State Farm reviews the combined comprehen-
sive and collision loss experience by make and model.
Adjustments are made in the originally assigned sym-
bol group, depending on whether the aggregate loss
data are better or worse than average for the group.
NHTSA does not believe that State Farm will face
a burdensome task in responding to this section of the
reporting rule. It can identify those make/models whose
premiums are adjusted up, provide the loss data that
formed the basis for the adjustment, and indicate what
difference this adjustment made in the comprehensive
premiums charged (as a percentage of what the
comprehensive premium would have been absent such
adjustment). It wiU have to separate the combined com-
prehensive and collision loss data, and provide the loss
data for comprehensive insurance separately. This will
impose more of a burden than State Farm would face
absent these reporting requirements. However, report-
ing of the comprehensive insurance loss data that forms
the basis for the comprehensive insurance premium
penalties is expressly required by section 612(aX2XC),
so State Farm must assume this burden.
The Hartford commented that many factors besides
theft are considered in assessing premiimi penalties for
comprehensive insurance. According to this com-
menter, it would not be possible to break out theft-
related data without totally revamping its internal pro-
cessing and rating of comprehensive insurance. The
agency does not believe that the Hartford meant that
it cannot identify the vehicles for which it charges
premium penalties or the amount of premium penalty
charged because it considers a vehicle as more likely
to be stolen. Thus, NHTSA assumes this comment was
directed toward the proposed requirement for insurers
to provide the relevant loss data for each vehicle risk
grouping for which comprehensive insurance premium
penalties are charged. However, this proposed require-
ment did not specify that the insurer had to provide
just theft-related data for these vehicles. Rather, it pro-
posed that insurers state the total number of com-
prehensive insurance claims paid for vehicles in this
risk grouping and the total amount in dollars repre-
sented by those claims. NHTSA must then evaluate
these loss data and provide the information to Congress
in both the 1987 and 1990 reports. Since the NPRM
did not seek to have reporting insurers provide only
theft-related data for these vehicles, NHTSA concludes
that the problem alleged by the Hartford in its com-
ment was based on a misreading of the proposal.
The AIA commented that the proposed information
to be reported on vehicles that are charged comprehen-
sive insurance premium penalties is not currently
recorded in insurers' files. This seems to conflict with
the comments filed by State Farm, whose comments
reflected that all the proposed data was already used
in assessing premium penalties, unless AIA was also
referring to the mixed comprehensive and collision loss
data. If that is what AIA meant, NHTSA' s response
is the same as was made for State Farm. Even if State
Farm's records are atypical of those for most insurers.
PART 544-PRE 18
NHTSA cannot alter the statutory requirement that
this information be provided. Because the agency
• believes the information about comprehensive premium
penalties is the least that could be adopted in response
to section 612(aX2XC) and because the agency believes
these requirements do not impose an excessive burden
on the reporting insurers, such reporting requirements
are adopted as proposed.
3. Any other rating rules and plans used by the in-
surer to establish its comprehensive insurance
premiums and premium penalties for vehicles it con-
siders more likely to be stolen.
The proposed requirements were to list any other
rating rules and plans used by the insurer, and explain
how such rating rules and plans are used to establish
the premiums and premium penalties. This informa-
tion, to the extent it has not already been provided,
is statutorily required. No comments addressed this
proposed requirement, and it is adopted as proposed.
4. The basis for the insurer's comprehensive in-
surance premiums and premium penalties it charges
for vehicles it considers as more likely to be stolen.
The NPRM proposed that insurers satisfy this
statutory requirement by providing the pertinent sec-
tions of materials filed with State insurance regulatory
officials and clearly indicating which information in
^k those materials is submitted in response to this require-
^P ment. NHTSA tentatively concluded that these mate-
rials would adequately explain the basis for these
premiums and the premium penalties.
ISO commented that it is a rating service, which
prepares model year/vehicle series ratings for com-
prehensive and collision insurance in 45 jurisdictions.
It further stated that it furnishes an antitheft device
rating for providing discounts to comprehensive in-
surance premiums in 48 jurisdictions. ISO stated that
it would like to file these ratings as a reference docu-
ment for its members, and asked if the proposed S544.7
would allow all insurers that are members of ISO to
incorporate by reference these ratings. Such informa-
tion can most certainly be filed and incorporated by
reference, and is, in fact, the precise sort of informa-
tion NHTSA is required to obtain.
ISO went on to state that a literal interpretation of
the proposal would require insurers to submit to
NHTSA the same information that is filed with State
insurance departments in the form of rate filings or
loss cost information to support changes in the rates,
rules, and policy forms for comprehensive insurance
premiums. Since such rate filings are made separately
in each State, this filing of loss cost information would
1^ have to be provided to NHTSA annually, according to
^B ISO. Further, those member insurers that deviate from
^^ ISO ratings would have to submit their deviations, and
those insurers that are not members of ISO would have
to submit their complete filings.
NHTSA acknowledges that this will be a large
volume of information for it to analyze and evaluate.
However, the proposed language for this section was
extracted verbatim from section 612(aX2XC). Thus, the
law requires NHTSA to gather and analyze this vol-
uminous information. The agency emphasizes that sec-
tion 612 does not require the agency to receive any in-
formation on collision insurance premiums. If ISO culls
out those sections of its ratings that pertain to com-
prehensive insurance rates and files those sections,
such filing may then be incorporated by reference by
the member insurers that used that rating. Assuming
this procedure is followed, NHTSA will not receive any
extraneous materials.
ISO concluded by stating its opinion that its rating
information and any deviations by member companies
will not aid the agency in evaluating the effectiveness
of the theft prevention standard. This commenter ex-
plained that its filings do not contain specific detail
related to auto theft, but deal with comprehensive
premiums in aggregate. However, the basis for the in-
surers' comprehensive premiums, together with other
information about comprehensive premiums, must be
included in those reports pursuant to sections
614(aX2XD) and 614(bX2XG). Thus, such information
is mandated by Congress to be included in these
reports, even if it cannot be used directly to measure
the effectiveness of the theft prevention standard ap-
plicable to certain passenger cars.
E. Actions Taken by Insurers to Reduce Comprehen-
sive Insurance Premiums Because of a Reduction in
Motor Vehicle Thefts.
Section 612(aX2XD) explicitly requires these insurer
reports to include a listing of the actions insurers have
taken to reduce comprehensive insurance premiums
because of a reduction in motor vehicle thefts. The
NPRM proposed that insurers simply list the reductions
they have made in comprehensive premiums because
of a reduction in vehicle thefts. For each listed reduc-
tion, the insurer would:
1. State the conditions, if any, that must be met to
receive the reduction;
2. State the number of policyholders that received
the reduction; and
3. State the difference in average comprehensive
insurance premiums for those policyholders that re-
ceived this reduction versus those policyholders that
did not receive the reduction.
NHTSA stated that it believed this was the least
burdensome way for insurers to satisfy this statutory
requirement. If there had been no reduction in motor
PART 544-PRE 19
vehicle thefts or if the insurer had not made any reduc-
tions in its comprehensive premiums in response to
such a decrease in theft, the insurer could simply note
these facts in its report. Only Liberty Mutual com-
mented on this proposed requirement, stating that it
does not have this information in its claims files.
All insurers are statutorily required to provide this
information in each of their reports filed under section
612. If insurers do not currently track this information
in their data files, they will have to institute some
method for tracking this information. The agency pro-
posed what it believes is the least burdensome way for
insurers to comply with this requirement. Since no com-
menter suggested a less burdensome way for insurers
to comply, NHTSA has adopted this requirement as
proposed.
F. Discounts for Antitheft Devices.
As noted in the preamble to the NPRM, this was the
only information proposed to be required in these in-
surer reports not expressly required by section 612.
However, NHTSA believes these data are implicitly
required by section 605. That section requires the
agency to consider the effectiveness of antitheft
devices when evaluating petitions by automobile
manufacturers for exemption from the parts-marking
requirements of Part 541. Section 602(e) explicitly
hmits the agency's authority to impose reporting or
recordkeeping requirements to four specific sections
of Title VI. Thus, if the information on antitheft devices
is not included in these insurer reports, NHTSA will
not be able to get industry-wide information on the ef-
fectiveness of these devices.
NHTSA proposed that insurers provide this informa-
tion only if the insurer offers a reduction in comprehen-
sive insurance premiums for vehicles equipped with
these devices. The insurer would be required to list the
specific criteria it used to determine whether a vehi-
cle is eligible for a reduction in comprehensive
premiums because of an antitheft device, and list the
total number of vehicle thefts and recoveries for
vehicles that received reductions imder each criteria.
As explained in detail in the NPRM, this information
in the insurer reports would provide the only industry-
wide data available to the agency when considering the
effectiveness of standard equipment antitheft devices
in connection with petitions filed under section 605 of
the Cost Savings Act (15 U.S.C. 2025).
In its comments, the Hartford asked the agency to
define the term "antitheft device." The Hartford noted
that there are a wide variety of these devices available
in the marketplace with wide-ranging degrees of effec-
tiveness. NHTSA is seeking information about any
antitheft device for which the insurer offers a reduc-
tion in comprehensive premiums. Thus, the reporting
insurer itself defines the term for the purposes of these
reports. If the insurer offers a reduction in comprehen-
sive insurance premiums for vehicles equipped with any
particular device, such device is an antitheft device for
the purposes of these reports. Conversely, if the insurer
does not offer a reduction in comprehensive insurance
premiums for vehicles equipped with a particular
device, no information about vehicles equipped with the
device is required to be included in these reports.
Therefore, no further definition would be useful or
necessary.
State Farm commented that the proposed regulation
was unclear if it was intended to apply only to insurers
that voluntarily offer discounts for vehicles equipped
with antitheft devices. State Farm stated that it does
not voluntarily offer discounts for vehicles equipped
with antitheft devices, but does so in the three States
that currently mandate reductions in comprehensive
premituns for vehicles equipped with certain devices.
Allstate indicated that it does not offer discoimts ex-
cept in the five States that mandate a discount. This
rule requires the information if the insurer offered dis-
counts to comprehensive premiums, regardless of
whether the insurer chose to offer this discount or did
so in response to a legal requirement. The information
about vehicles that received reductions because of an
antitheft device is extremely significant for the agency
in meeting its responsibilities under Title VI of the
Theft Act, regardless of the insurer's desire to offer
such reductions.
A number of commenters objected to the proposal
to give the total number of thefts and recoveries for
vehicles that received a comprehensive premium reduc-
tion because of specific antitheft devices. State Farm
and NAII commented that the loss data collected by
insurers are tailored to meeting obligations to the
States that mandate reductions. Accordingly, these
commenters stated that insurers do not currently col-
lect recovery information for such vehicles. Allstate
commented that "it is neither feasible, nor practical,
nor of any substantial value to maintain detailed
statistics on thefts and recoveries for vehicles equip-
ped with antitheft devices." Liberty Mutual stated that
this information is not currently collected in its claims
files. Farmers Insurance stated that thefts and
recoveries of these vehicles are not currently captured
in its loss records and that to do so would impose
significant costs. Therefore, it urged that this informa-
tion not be required. NATB commented that instead
of mandating "universal reporting" of data that is dif-
ficult and sometimes impossible to develop, NHTSA
should require a sample approach. Under this proposal,
NATB would require insurers to submit a represen-
tative sample of the VIN's of vehicles equipped with
antitheft devices. NATB stated that this would allow
PART 544-PRE 20
NHTSA to check those VIN's against the theft and
^ recovery statistics it has.
^^ NHTSA repeats t" ut it is not mandating "universal
^^ reporting" of these data. It is only requiring the infor-
mation for States where the insurer offers a reduction
in comprehensive premiums for vehicles equipped with
antitheft devices. Contrarv to these comments,
NHTSA does not beheve thac the information sought
in the proposal would be over.y burdensome for the in-
surers to provide. It is a relatively simple task for in-
surers to compile the VIN's of the vehicles given a
reduction in comprehensive premiums because of an
antitheft device. The insurers are required to report
theft and recovery data for all vehicles they insure
under S544.6(c) of this rule. The reporting insurer can
then use a computer to compare the VIN's of vehicles
receiving antitheft device comprehensive premium
reductions with the VIN's of stolen and recovered
vehicles, and report the matches under this section.
This may involve some additional burden beyond what
is done at present, but it does not appear to be a signifi-
cant or undue burden. To ensure that reporting
insurers' can perform this task on a computer, the pro-
posed requirement has been changed to specify that
the thefts and recoveries are only required for 1983
and later model year vehicles. This change parallels the
^ change made for thefts and recoveries in response to
^^ the AIA and NATB comments in the section of this
^^ preamble addressing theft and recovery data, and is
made for the same reasons explained therein for all
theft and recovery data.
Under section 605 of the Cost Savings Act (15 U.S.C.
2025), NHTSA is required to determine whether stand-
ard equipment antitheft devices are likely to be as ef-
fective in reducing and deterring motor vehicle thefts
as compliance with the theft prevention standard (49
CFR Part 541). Thus far, the agency has had to rely
on relatively old or limited data for determining the
effectiveness of antitheft devices. The data available
to NHTSA for making these determinations will be
significantly enhanced by the data in these insurer
reports. The insurer's data will, for the first time, show
NHTSA how effective the various antitheft devices
have been while actually used by the public.
The language of tf;.'> rule has been slightly changed
to make clear NHT-.A's intention that reporting in-
surers separately list each category of antitheft device
for which the insurer offers a discount to the com-
prehensive premium, and then separately list the total
thefts and recoveries for vehicles in each category. For
example, the State of New York requires insurers to
1^ offer discounts for three categories of antitheft devices.
^P These are an alarm that can be heard from 300 feet
^ for 3 or more minutes, an active disabling device
requiring a separate manual step to arm the device
when the driver leaves the car, and a passive disabling
device requiring no additional action by the driver. If
a vehicle antitheft device falls into more than one of
these categories, only the single highest discount is re-
quired to be given by the insurer. In response to this
rule, reporting insurers would identify these three
categories for the State of New York and then list the
total theft and recoveries for vehicles in each of these
three categories.
This clarification has been made because it would not
serve any useful purpose for the theft and recovery
data for all antitheft devices to be reported as a whole.
NHTSA believes that some antitheft devices will be
much more effective than others in reducing thefts. If
the information about these antitheft devices were
lumped together with information on the less effective
devices, the agency would only get an indication of the
effectiveness of all antitheft devices for which the in-
surer offers a reduction in comprehensive insurance
premiums. This composite information would have lit-
tle value for the agency in making the required deter-
mination under section 605.
If, on the other hand, insurers provide theft and
recovery information for each type of antitheft device
for which they offer comprehensive premium reduc-
tions, NHTSA will have accurate effectiveness infor-
mation for several types of antitheft devices. When an
automobile manufacturer submits a petition under sec-
tion 605 of the Cost Savings Act, the agency can deter-
mine what type of antitheft device listed in the insurer
reports the antitheft device in the manufacturer's peti-
tion most closely resembles. The measured effec-
tiveness of that sort of antitheft device will significantly
enhance the agency's basis for determining if a device
that is the subject of a petition under section 605 is
likely to be as effective as parts marking in deterring
and reducing vehicle theft. This rule requires the in-
formation to be broken out in this manner to ensure
that it will be useful to the agency.
NATB's suggestion to require representative
samples of VIN's is not adopted for several reasons.
First, with the newly added provision in this rule that
limits the theft and recovery information to 1983 and
later model year vehicles, NHTSA does not believe that
this information will be "difficult or impossible" to
develop, as explained above. Second, the agency does
not know how it could define what constituted a
"representative sample" for the purposes of these
reports. Third, information on all vehicles that received
a reduction because of an antitheft device will be more
comprehensive and more useful for the agency than
would information on a representative sample.
PART 544-PRE 21
G. Insurers ' Actions to Assist in Deterring and Reduc-
ing Vehicle Thefts.
Information about these actions are expressly re-
quired to be included in these insurer reports by sec-
tion 612(aX2XE) of the Cost Savings Act. The NPRM
proposed that insurers identify each action they took
to assist in deterring and reducing vehicle thefts. For
each action so identified, the insurer would describe it
and explain why the insurer believed it would be ef-
fective in deterring and reducing vehicle thefts. Addi-
tionally, since the demand for used parts is a part of
the reason why illegal chop shop operations have been
so profitable, the NPRM would require the insurer to
state its policy regarding the use of used parts to ef-
fect repairs on vehicles it insures, and indicate the
precautions taken by or on behalf of the insurer to iden-
tify the origin of those used parts.
In response to this proposal, Allstate described its
policy regarding used parts in its comments. This is the
sort of information NHTSA proposed to require in the
insurer reports. Since Allstate has already described
its policy in its comments, NHTSA assumes this pro-
posal presents no burden to Allstate. No other insiu*er
commented on any burden it believed would be asso-
ciated with this proposed section of the reports. Ac-
cordingly, this section is adopted as proposed.
Southern Farm Bureau asked whether insurers
would be "penalized" by this agency if they reported
that they had not reduced comprehensive premiums
because of a reduction in vehicle thefts or that they
required used parts to be used in repairs of their in-
sured vehicles without taking any precautions to iden-
tify the origin of those used parts. Title VI of the Cost
Savings Act does not give NHTSA any authority to
penalize an insurance company for failing to provide
certain discounts or failing to take precautions to deter-
mine the origin of used parts. Hence, an insurer that
files its required report has fully satisfied its statutory
obligations under Title VI of the Cost Savings Act. The
information set forth in the reports will be analyzed
and evaluated by the agency, and will be used as a
primary source in preparing the reports to Congress.
Special Provisions for Reports To Be Filed in 1986
The NPRM sought comments on the availability of
recovery data, divided into the three statutorily
specified subcategories of recovery, for the 1986
insurer reports 51 FR 23099. Although section 612 re-
quires recoveries to be grouped into these three sub-
categories, the agency noted that insurers had no
means of knowing exactly what definitions would be
proposed for these subcategories before the NPRM was
issued on June 20, 1986. The insurers could not collect
such data for the 1985 calendar year, which is the time
period about which information is to be provided in the
1986 reports. All commenters stated that these data
would not be available for the 1986 reports.
NHTSA concurs with the commenters that, absent
definitions for the three subcategories of recovery, it
was impossible for them to collect recovery data divided
into the three subcategories during the 1985 calendar
year. There is also no means by which the insurer could
now after-the-fact accurately divide recoveries into
those subcategories. In accordance with this conclusion,
this final rule specifies that insurer reports are required
to divide recoveries into the three subcategories begin-
ning with the report due by October 25, 1987. The
reports due in 1986 are only required to list the total
number of recoveries, without subdividing the
recoveries. This change has been made in the section
requiring insurers to report recovery data for all
vehicles and in the section requiring insurers to report
recovery information for vehicles equipped with an
antitheft device that received a reduction in com-
prehensive insurance premiums.
Many commenters stated that it would be very
burdensome or difficult to provide much of the other
data required in the insurer reports in their 1986
reports. The agency appreciates that some of these
reporting requirements impose a burden on the report-
ing insurers. However, Congress has determined that
these reporting requirements should be implemented,
and evidently considered the difficulty or burden of
compliance with these requirements. To repeat, the
agency has consciously structured this reporting re-
quirement to satisfy all statutory obligations while im-
posing the least burden on reporting insurers. This final
rule has also been changed from what was proposed
to permit insurers to use their existing computer data
base to provide all theft and recovery data. With one
exception, the remaining burdens imposed on insurers
are those that are explicitly required by section 612 of
the Cost Savings Act.
Farmers Insurance commented that it could provide
the rating rules and plans information specified in
S544.6(dX2), but could not do so by October 25. This
commenter asked the agency to allow it an additional
6 months to provide this information. NHTSA is ex-
pressly required to include information on rating rules
and plans for motor vehicles other than passenger cars
in its October 1987 report to Congress by section
614(aX2XD) of the Cost Savings Act. Thus, NHTSA
needs this information from the reporting insurers
early enough to allow the agency to analyze and
evaluate such information. Nevertheless, NHTSA
recognizes that these reporting requirements are im-
posing a burden on insurers to which they were not
previously subject. The agency also believes the com-
menters' assertions that it will be getting significant
amounts of information on this subject. In its assess-
PART 544-PRE 22
ment of the cost impacts of this rule, NHTSA has con-
cluded that the first reports will be the most burden-
some for the insurers, because they will have to imple-
ment some new formats and procedures for data they
currently collect.
After considering these burdens, the short time re-
maining before the first insurer reports are due, and
a good faith effort by Farmers Insurance to gather and
report the statutorily required data, NHTSA hereby
announces that it will not take any enforcement actions
against insurers that provide the reports required by
section 612 of the Cost Savings Act after October 25,
1986, but not later than January 31, 1987. Because of
the express statutory requirement, NHTSA cannnot
grant the 6-month extension of time requested by the
commenter. NHTSA recognizes that this 3-month ex-
tension may force insurers to make intensive efforts
if they are to gather and report the necessary data by
January 31, 1987. However, allowing even this 3-month
extension will force the agency to make intensive
efforts of its own to analyze and evaluate this infor-
mation quickly, so that the conclusions will be available
in time for the 1987 report to Congress.
NHTSA would like to make clear that this extension
of time applies only for the reports due in 1986.
NHTSA would also like to make clear that it will not
consider any further requests for extensions of the
period in which to file the insurer reports for the 1986
or any later reports. This decision to allow the reports
to be filed after the statutory due date is a recognition
of the particular circumstances associated with these
first reports. NHTSA cannot foresee any other cir-
cumstances in which it would allow insurers to file all
or parts of these reports after October 25.
Both ACRA and Southern Farm Bureau asked in
their comments if the agency was going to provide
forms for these reports. NHTSA has no plans to do so,
because it concludes there is no need for any forms.
Part 544 clearly explains what information must be in-
cluded in these reports and the format and order in
which the information should be reported. The insurers
should simply present the information in that format
and order.
Sections of Report Not Applicable to Rental and
Leasing Companies
ACRA noted in its comments that section 612 re-
quires all insurers to provide information in their
reports concerning rating rules and plans for com-
prehensive insurance premiums, information on
premium reductions, and the like. Section 612 also
specifies that rental and leasing companies are insurers
for the purposes of these reports. However, rental and
leasing companies do not have comprehensive insur-
ance premiums for the vehicles in their fleets, because
they insure those vehicles themselves. Accordingly,
ACRA stated that its members did not plan to respond
to those sections relating to premiums.
NHTSA is persuaded by this observation. No purpose
is served by requiring rental and leasing companies to
indicate "not applicable" to much of the information
required to be included in these reports. Therefore,
NHTSA has drafted this final rule to provide that per-
sons who are insurers by virtue of having a fleet of 20
or more self-insured vehicles used primarily for rental
or lease need only provide the following information
in their reports:
1. The total thefts and recoveries of vehicles in their
fleet, and how the theft and recovery data were
obtained, the steps taken to ensure these data are ac-
curate and timely, and the use made of such theft and
recovery information [S544.6(c)];
2. The net total amount (in dollars) of losses to the
rental or leasing company as a result of vehicle theft
[S544.6(d)(2)(iv)]; and
3. The actions taken by the rental or leasing com-
pany to assist in deterring or reducing thefts of motor
vehicles [S544.6(g)].
EFFECTIVE DATE:
NHTSA finds for good cause that this rule should be
effective immediately upon publication in the Federal
Register, instead of 30 days thereafter. As noted
throughout this preamble, section 612 of the Cost Sav-
ings Act (15 U.S.C. 2032) imposes a statutory duty on
insurers to provide specified information in annual
reports to NHTSA, and requires the first report to be
submitted not later than October 25, 1986. This
statutory deadline makes it imperative that this regula-
tion, specifying the information that must be included
in these reports, become effective as far as possible in
advance of that deadline. The early effective date will
ensure that all reporting insurers know precisely what
information must be included in these reports.
Issued on December 29, 1986.
Diane K. Steed
Administrator
52 F.R. 59
January 2, 1987
PART 544-PRE 23-24
%
PREAMBLE TO AN AMENDMENT TO PART 544
Insurer Reporting Requirements: List of
Insurers Required to File Reports in October 1987
[Docket No. T86-01; Notice 4]
ACTION: Final rule.
Summary: Title VI of the Motor Vehicle Informa-
tion and Cost Savings Act requires each pas-
senger motor vehicle insurer to file annual reports
with this agency, unless the insurer is exempted
by this agency from filing such reports. This law
specifies that NHTSA can exempt those insur-
ance companies whose market share is below
certain percentages for the nation as a whole and
in each individual State. To carry out these statu-
tory provisions, NHTSA has exempted all those
insurance companies that are statutorily eligible
to be exempted and published a listing of the
unexempted companies, i.e., those insurance
companies that are required to file annual reports.
The list of unexempted companies is subject to
slight changes from time to time since a com-
pany's eligibility for exemption from the report-
ing requirements may vary annually, as its
national and State-by-State market shares change.
To address this situation, NHTSA publishes
annual updates of the list of insurance companies
that are required to file annual reports. The list-
ings in these updates are based on the most cur-
rent market share information available to the
agency. Any insurance company omitted from
this list is not required to file a report for the 1986
calendar year. Those insurance companies in-
cluded on the list at the end of this rule were
statutorily required to file reports for the 1986
calendar year not later than October 25, 1987.
However, NHTSA recognizes that the statutory
date for filing those reports has passed. Because
this final listing is published after the statutory
date has passed, the agency will accept as timely
insurer reports for the 1986 calendar year that are
filed within 30 days after this listing is published.
EFFECTIVE DATE: This rule is effective January
21, 1988.
SUPPLEMENTARY INFORMATION:
Backgroutid: Section 612 of the Motor Vehicle
Information and Cost Savings Act (the Act; 15
U.S.C. 2032) requires each insurer to file an
annual report with NHTSA unless the agency
exempts the insurer from filing such reports. The
term "insurer" is defined very broadly for the
purposes of section 612, consisting of two broad
groups of entities. One of these broad groups is
included in thedefinitionof "insurer" by virtue of
section 612(a)(3). That section specifies that for
the purposes of section 612, the term "insurer"
includes any person, other than a governmental
entity, who has a fleet of 20 or more motor vehicles
used primarily for rental or lease and not covered
by theft insurance policies issued by insurers of
passenger motor vehicles. The requirements for
this group of insurers are not addressed in or
affected by this rule.
The other broad group is included within the
term "insurer" by virtue of section 2(12) of the Act
(15 U.S.C. 1901(12)). That section provides that
every person engaged in the business of issuing
passenger motor vehicle insurance policies is an
insurer, regardless of the size of the business.
Section 612(a)(5) provides that the agency shall
exempt small insurers included in this second
broad group from the reporting requirements if
NHTSA finds that such exemptions will not
significantly affect the validity or usefulness of
the information collected and compiled in the
reports, either nationally or on a State-by-State
basis. The term "small insurer" is defined in
section 612(a)(5)(C) as an insurer whose premiums
account for less than 1 percent of the total
premiums for all forms of motor vehicle insurance
issued by insurers within the United States.
However, that section also provides that if an
insurance company satisfies this definition of a
"small insurer," but accounts for 10 percent or
more of the total premiums for all forms of motor
vehicle insurance issued by insurers within a
particular State, such insurer must report the
required information about its operations in that
State.
To implement these statutory criteria for ex-
empting small insurers, NHTSA has used the
data voluntarily supplied by insurance companies
to A.M. Best to determine the insurers' market
shares nationally and in each State. The A.M. Best
data were chosen because they are both accurate
and timely, and because its use imposes no addi-
tional burdens on any party.
PART 544-PRE 25
After examing the A.M. Best data, NHTSA
determined that it should exempt all those in-
surance companies that were statutorily eligible
for exemption from these reporting requirements.
This determination was based on two separate
considerations. First, NHTSA determined that
the reports from only those insurance companies
that were statutorily required to file reports
would provide the agency with representative
data, both nationally and on a State-by-State
basis. Second, NHTSA determined that the data
in the insurer reports provided by the insurance
companies that were ineligible for an exemption
would be sufficient for NHTSA to carry out its
activities and responsibilities under Title VI of
the Act.
Accordingly, the agency included an Appendix
A and Appendix B in the final rule for insurer
reports published January 2, 1987 (52 FR 59). The
20 insurance companies listed in Appendix A had
premiums that accounted for 1 percent or more of
all motor vehicle insurance premiums paid
nationally. Hence, those companies were required
to report on their operations for every State in
which they did business. The 11 insurance com-
panies listed in Appendix B had premiums that
accounted for 10 percent or more of the total motor
vehicle insurance premiums within a particular
State or States. Such companies were required to
report on their operations only for those States in
which their premiums accounted for 10 percent or
more of the total premiums.
The Proposal: The market shares for each of the
insurance companies listed inthe January 2, 1987,
final rule were derived from the A.M. Best data
for 1984, the most recent year for which the A.M.
Best data were available as of the date the final
rule was published. However, the A.M. Best data
for 1985 became available after January 2. In the
January final rule, NHTSA stated, "The agency
will update these appendices annually, shortly
after A.M. Best publishes its revised listings, to
reflect changes in premium shares for the in-
surance companies." 52 FR 62.
In accordance with that pledge, the agency pub-
lished a proposed updated listing of subject in-
surance companies on May 28, 1987 (52 FR 19898).
This proposal used the more current A.M. Best
data to determine which insurance companies are
statutorily required to file reports by October 25,
1987. This notice proposed that all insurance
companies that were statutorily eligible for an
exemption from these reporting requirements
should be exempted.
The Comment and the Agency's Decision: Only
one comment was filed in response to the proposed
rule. The Sentry Insurance Group (Sentry) was
listed in proposed Appendix A as an insurance
company that was required to file an annual
report this year for each State in which it did
business. This proposal was based on A.M. Best
data showing that Sentry had a 1.0 percent market
share nationally, and was therefore statutorily
ineligible for an exemption. Sentry commented
that its review of the A.M. Best data showed that
Sentry had only 0.984 percent of the national
market. Sentry stated that if this number were to
be rounded, it should be rounded to 0.98 percent.
If it were so rounded. Sentry asserted that it
would not be required to file a report in October
1987, because it would have a national market
share of less than 1 percent.
A.M. Best reported to NHTSA that Sentry had
a 1.0 percent market share nationally. In response
to Sentry's allegations, NHTSA contacted A.M.
Best officials and asked them whether Sentry's
comment was accurate. After further examining
their raw data, those officials stated that Sen-
try's assertion that its market share was actually
0.984 percent was mathematically correct, but
statistically invalid. Those officials stated that
A.M. Best has always rounded market share per-
centages to the nearest one tenth of a percentage
point. According to those officials, A.M. Best has
always followed this practice in order to account
for the uncertainties and previous rounding of
numbers used in these statistical calculations. In
accordance with this longstanding practice, which
A.M. Best applies to all insurance companies.
Sentry's market share of 0.984 percent was
rounded to 1.0 percent by A.M. Best and reported
as such to the agency.
The A.M. Best practice is consistent with the
general principle of statistics that an impression
of numerical accuracy should be avoided, if such
accuracy does not actually exist. This subject is
discussed in John Griffin's Statistics, Methods and
Applications. Holt, Rinehart and Winston, Ap-
pendix B(1962). Such spurious accuracy would be
illustrated by an attempt to express the estimated
population of a city in 1987 to a precise number in
the final digit. It is not possible for such an
estimate to be that accurate. Accordingly, persons
making estimates must round off the estimate to
the degree of accuracy of the least precise figure
used in computing the estimate.
To illustrate this, let us suppose that a business
were attempting to estimate its sales in four dif-
PART 544-PRE 26
ferent States, and then determine what per-
centage of that four State area was represented by
the sales in State B. Assume that the sales figures
for the States were:
State A 25,000
State B 1.400.000
State C 12,000
State D 3,450,000
The total for these numbers is 4,887.000. How-
ever, this total is an improper expression of accu-
racy. Since the least precise sales figure is ex-
pressed to the nearest hundred thousand in State
B, the four State estimated total would also be
expressed to the nearest hundred thousand, as 4.9
million.
If one then divides the sales figure in State B
(1,400,000) by estimated total sales in the four
States (4.900.000). the result is 28.57142857142
percent. This expression of the result is a very
clear illustration of spurious accuracy. Applying
proper statistical principles, the percentage cal-
culated here cannot have more significant digits
that are found in any one of the numbers that are
divided. In this example, both the divisor and the
dividend have only two significant digits. There-
fore, the quotient could not have more than two
significant digits and the result should be shown
as 29 percent.
A.M. Best follows similar rounding procedures
when it calculates the market shares for insur-
ance companies. To avoid spurious accuracy in its
reported percentages, A.M. Best has determined
that its market share percentages should be
expressed only to the nearest one tenth of a
percentage point. This determination by A.M.
Best appears consistent with sound statistical
practices.
Therefore, the agency is not persuaded that
there is a need for it to recalculate the market
share information reported to it by A.M. Best, by
asking A.M. Best to furnish its raw data for all
insurance companies with a 1.0 percent share of
the national market. When NHTSA announced its
intention to base its market share determinations
on the A.M. Best data, the A.M. Best practice of
rounding off market shares to the nearest one
tenth of a percentage point was known by all
insurance companies. The agency will recalculate
the A.M. Best estimates .fbonly.fa if there is some
reason to believe that the estimates are based on a
mathematical error, unreasonable statistical
practices or assumptions, or are arbitrarily ap-
plied to only some insurance companies. In this
case, none of these factors is present. Therefore,
NHTSA does not believe it is necessary or approp-
riate for it to recalculate A.M. Best's reported
market share information. Accordingly, Sentry
Insurance Group appears in this final version of
Appendix A, based on the A.M. Best report.
No other comments were received on the pro-
posed listings. For the reasons set forth above and
in the preamble to the proposed listing, this final
rule adopts the proposed listings for both Appen-
dix A and Appendix B.
NHTSA finds for good cause that this rule
should be effective immediately upon publication
in the Federal Register, instead of 30 days there-
after. As noted earlier in this preamble, section
612 of the Cost Savings Act (15 U.S.C. 2032)
imposes a statutory duty on insurers that were not
exempted from these reporting requirements to
file a report for the 1986 calendar year no later
than October 25, 1987. This statutory obligation
makes it imperative that this listing of the
insurance companies that are not exempted from
filing those reports become effective as soon as
possible. As also noted above, NHTSA will consider
reports by the listed insurance companies to be
timely filed, if such reports are received by the
agency not later than 30 days after the publication
of this rule.
In consideration of the foregoing, 49 CFR Part
544 is amended as follows:
Appendix A to Part 544 is revised to read as
follows:
Appendix A — Issuers of Motor Vehicle Insur-
ance Policies Subject to the Reporting Require-
ments in Each State in Wliich They Do Business
State Farm Group
Allstate Insurance Group
Farmers Insurance Group
Nationwide Group
Aetna Life & Casualty Group
Liberty Mutual Group
Travelers Insurance Group
USAA Group
Hartford Insurance Group
CIGNA Group
Geico Corporation Group
Continental Group
United States F & G Group
Fireman's Fund Group
California State Auto Association
Interinsurance Exchange Auto Club of
Southern California
Sentry Insurance Group
Lincoln National Group
PART 544-PRE 27
Appendix B to Part 544 is revised to read as Issued on January 15, 1988
follows:
Appendix B — Issuers of Motor Vehicle Insur-
ance Policies Subject to the Reporting Require-
ments Only in Designated States
Alabama Farm Bureau Group (Alabama)
Island Insurance Group (Hawaii)
Kentucky Farm Bureau Group (Kentucky)
American General Group (Maine)
Commercial Union Assurance Group (Maine)
American Family Group (North Dakota, South
Dakota, and Wisconsin)
Auto Club of Michigan Group (Michigan)
Southern Farm Bureau Group (Mississippi)
Amica Mutual Insurance Company (Rhode Diane K. steed
Island) Administrator
American International Group (Vermont) 53 F.R. 1635
January 21, 1988
PART 544-PRE 28
PREAMBLE TO AN AMENDMENT TO PART 544— INSURERS
REPORTING REQUIREMENTS
List of Insurers Required to File Reports in October 1988
(Docket No. T86-01 ; Notice 6)
ACTION: Final Rule.
SUMMARY: Title VI of the Motor Vehicle Informa-
tion and Cost Savings Act requires each passenger
motor vehicle insurer to file annual reports with this
agency, unless the insurer is exempted by this agen-
cy from filing such reports. This law stipulates that
NHTSA can exempt those insurance companies
whose market share is below certain percentages in
each individual State and for the Nation as a whole.
To carry out these statutory provisions, the agency
has exempted those insurance companies that are
lawfully eligible to be exempted and has also pub-
lished a listing of those insurance companies subject
to the reporting requirements of Title VI of the Motor
Vehicle Information and Cost Savings Act.
The list of insurance companies required to file
reports may differ annually since a company's
eligibility for exemption from the reporting re-
quirements may change, as its national and State-by-
State market shares change. To properly address this
situation, NHTSA publishes annual updates listing
the insurance companies that are required to file
these reports each year. The updated list is based on
the most current market share information available
to the agency. Those insurance companies included
on the list at the end of this rule are required to file
reports for the 1987 calendar year not later than
October 25, 1988. Any insurance company omitted
from this list is not required to file a report for the
1987 calendar year.
EFFECTIVE DATE: October 11, 1988.
SUPPLEMENTARY INFORMATION:
Background: Section 612 of the Motor Vehicle In-
formation and Cost Savings Act (the Act; 15 U.S.C.
2032) requires each insurer to file an annual report
with NHTSA unless the agency exempts the insurer
from filing such reports. The term "insurer" is defined
very broadly for the purposes of Section 612, which
consists of two broad groups of entities. One of these
groups is included in the definition of "insurer" by
virtue of Section 612(aX3). That section specifies that,
for the purposes of Section 612, the term "insurer"
includes any person, other than a governmental en-
tity, who has a fleet of 20 or more motor vehicles used
primarily for rental or lease and not covered by theft
insurance policies issued by insurers of passenger
motor vehicles. The requirements for this group of in-
surers are not addressed in or affected by this rule.
The other broad group is included within the term
"insurer" by virtue of Section 2(12) of the Act (15
U.S.C. 1901(12)). That section provides that every per-
son engaged in the business of issuing passenger
motor vehicle insurance policies is an insurer,
regardless of the size of the business. Section 612(aX5)
provides that the agency shall exempt small insurers
included in this second broad group from the report-
ing requirements if NHTSA finds that such exemp-
tions will not significantly affect the validity or
usefulness of the information collected and compiled
in the reports, either nationally or on a State-by-State
basis. The term "small insurer" is defined in Section
612(aX5XC) as an insurer whose premiums account
for less than 1 percent of the total premiums for all
forms of motor vehicle insurance issued by insurers
within the United States. However, that section also
stipulates that if an insurance company satisfies this
definition of a "small insurer," but accounts for 10
percent or more of the total premiums for all forms
of motor vehicle insurance issued by insurers within
a particular State, such an insurer must report the
required information about its operations in that
State.
To implement these statutory criteria for exempting
small insurers, NHTSA has used the data voluntar-
ily supplied by insurance companies to A.M. Best to
determine the insurer's market shares nationally and
in each State. The A.M. Best data base was chosen
because it is both accurate and timely, and because
its use imposes no additional burdens on any party.
PART 544-PRE 29
After examining the A.M. Best data, NHTSA deter-
mined that it should exempt all those insxirance com-
panies that were statutorily eligible for exemption
from these reporting requirements. This determina-
tion was based on two separate considerations. First,
NHTSA determined that the reports from only those
insurance companies that were statutorily required
to file reports would provide the agency with
representative data, both nationally and on a State-
by-State basis. Second, NHTSA determined that the
report data to be provided by insurance companies
who were ineligible for an exemption would be suffi-
cient for NHTSA to carry out its activities and respon-
sibilities under Title VI of the Act.
Accordingly, the agency included an Appendix A
and an Appendix B in the final rule for insurer reports
published January 2, 1987, (52 FR 59) and updated
these appendices annually. The 20 insurance com-
panies listed in the January 2, 1987, Appendix A had
premiums that accounted for 1 percent or more of all
motor vehicle insurance premiums paid nationally.
Therefore, those companies were required to report
on their operations for every State in which they did
business. The eleven insurance companies listed in
the January 2, 1987, Appendix B had premiums that
accounted for 10 percent or more of the total motor
vehicle insurance premiums within a particular State
or States. Such companies were required to report on
their operations only for those States in which their
premiums accounted for 10 percent or more of the
total premiums.
The market shares for each of the insurance com-
panies listed in the January 2, 1987, final rule were
derived from the A.M. Best data for 1984, the most
recent year for which the A.M. Best data were
available as of the date the final rule was published.
Since that time, A.M. Best data for more recent calen-
dar years have become available. In its January 2,
1987, final rule, NHTSA stated that "The agency will
update these appendices annually, shortly after A.M.
Best publishes its revised listings, to reflect changes
in premium shares for the insurance companies" (52
FR 62).
Accordingly, the agency published a Notice of Pro-
posed Rulemaking (NPRM) on January 21, 1988, (53
FR 1641), proposing an updated listing of subject in-
surance companies that must provide annual insurer
reports to the agency for the 1987 calendar year. That
NPRM used the most current A.M. Best data to deter-
mine which insvirance companies are statutorily re-
quired to file reports by October 25, 1988. That notice
proposed that all insurance companies that were
statutorily eligible for an exemption from these re-
porting requirements should be exempted.
No comments were received on the proposed rule.
For the reasons set forth above and in the NPRM, this
final rule adopts the proposed listings for both Appen-
dix A and Appendix B.
This rule is effective 30 days after publication in
the Federal Register. As noted earlier in this pre-
amble. Section 612 of the Cost Savings Act (15 U.S.C.
2032) imposes a statutory duty on insurers that were
not exempted from these reporting requirements to
file a report for the 1987 calendar year no later than
October 25, 1988.
In consideration of the foregoing, 49 CFR Part 544
is amended as follows:
APPENDIX A — Issuers of Motor Vehicle Insurance
Policies Subject to the Reporting Requirements in
Each State in Which They Do Business
State Farm Group
Allstate Insurance Group
Farmers Insurance Group
Nationwide Group
Aetna Life & Casualty Group
Liberty Mutual Group
Travelers Insurance Group
Hartford Insurance Group
USAA Group
United States F & G Group
Geico Corporation Group
American International Group
CIGNA Group
Continental Group
Fireman's Fund Group
CNA Insurance Group
California State Auto Association
American Family Group
Progressive Group
Crum & Forster Companies
PART 544-PRE 30
APPENDIX B — Issuers of Motor Vehicle Insurance
Policies Subject to the Reporting Requirements
Only in Designated States
Alabama Farm Bureau Group (Alabama)
Island Insurance Group (Hawaii)
Kentucky Farm Bureau Group (Kentucky)
Commercial Union Assurance Group (Maine)
Auto Club of Michigan Group (Michigan)
Southern Farm Bureau Group (Mississippi)
Amica Mutual Insurance Company (Rhode Island)
Issued on Sept. 6, 1988
Diane K. Steed
Administrator
53 F.R. 35073
September 9, 1988
PART 544-PRE 31-32
«
•
t
PREAMBLE TO AN AMENDMENT TO PART 544
Insurer Reporting Requirements; List of
Insurers Required to File Reports in 1989
(Docket No. T86-01; Notice 9)
RIN:2127-AC32
ACTION: Final rule.
SUMMARY: Title VI of the Motor Vehicle Information
and Cost Savings Act requires each passenger motor
vehicle insurer to file annual reports with NHTSA,
unless the agency exempts the insurer from filing such
reports. The law stipulates that NHTSA can exempt
those insurance companies whose market share is
below certain percentages in each individual State and
for the nation as a whole. To carry out these statutory
provisions, the agency has exempted those insurance
companies that are lawfully eligible to be exempted
and is hereby publishing an updated listing of those
insurance companies subject to the reporting require-
ments. Those insurance companies included on the list
are required to file reports for the 1988 calendar year
not later than October 25, 1989. Any insurance company
omitted from this list is not required to file a report for
the 1988 calendar year.
EFFECTIVE DATE: The final rule on this subject will
be effective December 4, 1989.
SUPPLEMENTARY INFORMATION: Section 612 of
the Motor Vehicle Information and Cost Savings Act
(the Act )(15 U.S.C.2032) requires each insurer to file
an annual report with NHTSA unless the agency
exempts the insurer from filing such reports. The
reports include information about thefts and recoveries
or motor vehicles , the rating rules used by the insurers
to establish premiums for comprehensive coverage,
the actions taken by insurers to reduce such premiums,
and the actions taken by insurers to reduce or deter
theft.
Section 612(a)(5) provides that the agency shall
exempt small insurers from the reporting requirements
if NHTSA find that such exemptions will not signifi-
cantly affect the validity or usefulness of the infor-
mation collected and compiled in the reports, either
nationally or on a State-by-State basis. The term
"small insurer" is defined in Section 612(a)(5)(C) as an
insurer whose premiums account for less than 1
percent of the total premiums for all forms of motor
vehicle insurance issued by insurers within the United
States. However, that section also stipulates that if an
insurance company satisfies this definition of a "small
insurer," but accounts for 10 percent or more of the
total premiums for all forms of motor vehicle insurance
issued by insurers within a particular State, such as
insurer must report the required information about its
operations in that State.
To implement these statutory criteria for exempting
small insurers, NHTSA has used the data voluntarily
supplied by insurance companies to A.M.Best to
determine the insurer's market shares nationally and
in each State. The A.M.Best data base was chosen
because it is both accurate and timely, and because its
use imposes no additional burdens on any party.
After examining the A.M.Best data, NHTSA has
determined, first, that the report data to be provided by
the large insurance companies will be sufficient for
NHTSA to carry out its activities and responsibilities
under Title VI of the Act, and second, that exempting
all those insurance companies that qualify as small
insurers will not affect the validity and usefulness of
the information collected and compiled under this
section, either nationally or on a State-by-State basis.
In the final rule for insurer reports published
January 2, 1987, (52 FR 59), the agency listed, as
Appendix A, the 20 insurance companies that had
premiums that accounted for 1 percent or more of all
motor vehicle insurance premiums paid nationally.
Those companies were required to report on their
operations for every State in which they did business.
In Appendix B, the agency listed the eleven insurance
companies with premiums that accounted for 10
percent or more of the total motor vehicle insurance
premiums within a particular State or States. Such
companies were required to report on their operations
only for those States in which their premiums
accounted for 10 percent or more of the total premiums.
The market shares for each of the insurance
companies listed in the January 2, 1987, final rule were
derived from the A.M.Best data for 1984, the most
recent year for which the A.M.Best were available as of
the date the final rule was published. In issuing the
PART 544-PRE 33
rule, NHTSA stated that it would update the ap-
pendices as revised listings become available. Since
that time, A.M. Best data for more recent calendar
years have become available.
Accordingly, the agency published a Notice of
Proposed Rulemaking (NPRM) on May 30, 1989 (54 FR
22921), proposing an updated listing of insurance
companies that must provide annual insurer reports to
the agency for the 1988 calendar year. That NPRM
used the A.M.Best data for 1987 to determine which
insurance companies are statutorily required to file
reports by October 25, 1989. The notice proposed that
all insurance companies that were statutorily eligible
for an exemption from these reporting requirements
should be exempted.
No comments were received on the proposed rule.
For the reasons set forth above and in the NPRM, this
final rule adopts the proposed listings for both Appendix
A and Appendix B.
This rule is effective 30 days after publication in the
Federal Register. As noted earlier in this preamble.
Section 612 of the Cost Savings Act (15 U.S.C. 2032)
imposes a statutory duty on insurers that were not
exempted from these reporting requirements to file a
report for the 1988 calendar year no later than October
25, 1989.
Appendix A to Part 544 is revised to read as follows:
Appendix A — Issuers of Motor Vehicle Insurance
Policies Subject to the Reporting Requirements in
Each State in Which They Do Business
Appendix B to Part 544 is revised to read as follows:
Appendix B - Issuers of Motor Vehicle Insurance
Policies Subject to the Reporting Requirements OnlY^k
in Designated States
Alfa Insurance Group (Alabama)
Island Insurance Group (Hawaii)
Kentucky Farm Bureau Group (Kentucky)
Commercial Union Assurance Group (Maine)
Auto Club of Michigan Group (Michigan)
Southern Farm Bureau Group (Mississippi)
Amica Mutual Insurance Company (Rhode Island)
Concord Group Insurance Company (Vermont)
Issue Date: October 27, 1989
Jeffrey R. Miller
Acting Administrator
54 F.R. 46252
November 2, 1989
State Farm Group
Allstate Insurance Group
Farmers Insurance Group
Nationwide Group
Aetna Life & Casualty Group
Liberty Mutual Group
Travelers Insurance Group
Hartford Insurance Group
USAA Group
United States F&G Group
Geico Corporation Group
American International Group
CIGNA Group
Continental Group
Fireman's Fund Group
CNA Insurance Companies
California State Auto Association
American Family Group
Progressive Group
Crum & Forster Companies
PART 544— PRE 34
PREAMBLE TO AN AMENDMENT TO PART 544
Motor Vehicle Theft Prevention; Reporting Requirements
(Docket No. T86-01; Notice 10)
RIN 2127-AC32
ACTION: Final rule.
SUMMARY: This final rule marks the culmination of
a four-year effort by this agency to obtain the infor-
mation necessary to implement authority for ex-
empting a substantial number of self-insured motor
vehicle rental and leasing companies from a statu-
tory requirement to file annual theft data reports, lb
date, all self-insvu-ed rental and leasing companies
with fleets of 20 or more motor vehicles have been
required to file reports. Henceforth, theft reports
wfill be required from only those rental and leasing
companies (including franchisees and licensees)
which have combined fleets of 50,000 or more vehi-
cles. This change reduces the number of covered
companies to fewer than two dozen.
The agency has taken this action after making two
statutorily-specified determinations. First, NHTSA
has determined that for those companies with com-
bined fleets of fewer than 50,000 vehicles, the cost of
preparing and furnishing such reports is excessive in
relation to the size of the business of the insurer.
Second, NHTSA has determined that reports from
the largest rental and leasing companies would pro-
vide the agency with a representative sampling of the
theft experience of rental and leasing companies.
DATE: Effective Date: This final rule is effective on
July 23, 1990.
SUPPLEMENTARY INFORMATION:
Background: The Motor Vehicle Theft Law En-
forcement Act of 1984 (Pub.L. 98-547; Theft Act)
added Title VI to the Motor Vehicle Information and
Cost Savings Act (15 U.S.C. 2021 et seq.; Cost Sav-
ings Act). Section 612 of the Cost Savings Act re-
quires insurers to submit annual reports to NHTSA
regarding a number of theft-related matters. As set
forth in section 612(aX2) of the Cost Savings Act, the
reports are to include theft and recovery data, the
rating rules and plans used by insurers to establish
premiums for comprehensive insurance coverage for
motor vehicles, and actions taken to reduce premi-
ums, among other information.
In addition to including companies that issue
insurance policies, the term "insurers" is defined in
section 612 to include certain self-insurers, i.e., any
person who has a fleet of 20 or more motor vehicles
(other than any governmental entity) which are used
primarily for rental or lease and which are not
covered by theft insurance policies issued by insurers
of passenger motor vehicles. (Section 612(aX3)). The
agency estimates that about 4,000 rental and leas-
ing companies are "insurers" under this definition
and are therefore required to file annual reports.
Section 612(aX4) authorizes the agency to exempt
certain insurers from submitting the reports, if the
agency determines that:
(1) The cost of preparing and furnishing such
reports is excessive in relation to the size of the
business of the insurer, and
(2) The insurer's report will not significantly con-
tribute to carrying out the purposes of Title VI.
The purpose of this notice is in effect to grant a
class exemption to all companies that rent or lease
fewer than 50,000 vehicles. This notice concludes a
rulemaking proceeding begun with the issuance of a
notice of proposed rulemaking on February 3, 1989
(54 FR 5519). NHTSA believes that reports from a
representative sample of rental and leasing compa-
nies will provide the agency with the necessary
information to allow it to fulfill all its obligations
under Title VI of the Cost Savings Act. NHTSA
concludes that reports by the many smaller rental
and leasing companies do not significantly contrib-
ute to carrying out Title VI, and that exempting
such companies will relieve an unnecessary burden
on the vast majority of the companies presently
subject to the reporting requirements.
When it issued the initial regulations under Title
VI, NHTSA did not have sufficient information to
allow it to make the first determination in section
612(aX4), i.e., a determination that the cost of pre-
paring and furnishing such reports is excessive in
relation to the size of the business of the insurer.
Absent such information, NHTSA was unable to
exempt rental and leasing companies from the re-
porting requirements. Therefore, in a final rule
published on January 2, 1987 (52 FR 59), NHTSA
required each rental and leasing company which fell
PART 544; PRE 35
within the definition of "insurer" to file an annual
report with the agency. In the preamble to the final
rule, the agency stated that it would consider indi-
vidual requests for exemption from smaller rental
and leasing companies, as long as they provided
information that would enable the agency to make a
determination under section 612(aX4) that the cost
of preparing and furnishing the reports is excessive
in relation to the size of the insurer's business.
The agency received approximately 150 petitions
for exemption for the October 25, 1987 reporting
period. Many of the petitioners requested that their
petitions be made applicable to subsequent years.
Those petitions from smaller, independent rental
and leasing companies were granted, but petitions
from large, nationwide rental and leasing compa-
nies and their franchisees or licensees were denied.
Subsequent to the issuance of the January 1987
rule, the agency obtained information on the size of
the fleets of rental and leasing companies and the
market share for these companies. This information
was obtained from the Automotive Fleet Magazine
(for both rental and leasing companies) and Travel
Trade Business Travel News (for rental companies
only). These publications publish annual tabula-
tions of the data which the motor vehicle rental and
leasing companies voluntarily supply to them.
Within the rental and leasing community, both
publications are regarded as the most accurate data
sources available for those businesses. NHTSA ten-
tatively concluded that these sources are sufficiently
accurate to determine which rental and leasing
companies should be exempted from the theft report-
ing requirements.
Notice of Proposed Rulemaking
Using these data from the trade publications, the
agency published a notice of proposed rulemaking
(NPRM) (54 FR 5519, February 3, 1989) that ex-
plained how the agency proposed to make the stat-
utory determinations that would exempt most self-
insured rental and leasing companies from
reporting. In the NPRM, the public was invited to
comment on the several tentative conclusions
reached by the agency in formulating the proposed
rule. First, the agency had tentatively concluded
that Automotive Fleet and Travel Trade Business
Travel News were sufficiently accurate to be used in
determining which rental and leasing companies
should be exempted from the theft reporting require-
ments. Second, the agency tentatively concluded
that franchisors and their franchisees or licensors
and their licensees should be treated as single enti-
ties for purposes of reporting, with franchisors and
licensors responsible for gathering the required
data. The agency's rationale for this tentative deci-
sion was that since franchisees generally submit
periodic reports to the franchisor in any case, it
would be relatively simple to include information
about theft experience. Further, NHTSA has no data
on the size of all franchisees and licensees. Without
this information, the agency had no basis to propose
exemptions for rental and leasing companies if it
were to treat each franchisee or licensee separately.
Commenters who disagreed with this approach were
asked to discuss how NHTSA could obtain franchisee
number and fleet size information and to discuss
whether the agency could structure an exemption
from the reporting requirements for small rental
and leasing companies while requiring reports from
all franchisees of large franchisors. NHTSA also
sought additional information on the structure and
procedures used by franchise operations in the car
rental business.
Third, using the trade publication information,
the agency tentatively determined that a represen-
tative sample of the theft experience of vehicles
other than passenger cars would be obtained if it
received reports only from rental and leasing com-
panies (including franchisees and licensees) with
fleets of 50,000 or more vehicles.
Fourth, the agency tentatively determined that
the costs of requiring rental and leasing companies
with fewer than 50,000 vehicles in their fleet to
prepare and furnish reports were excessive in rela-
tion to the size of the company's business and would
not in any way contribute to the agency's carrying
out its responsibilities under Title VI of the Cost
Savings Act. NHTSA asked commenters who dis-
agreed with this determination to explain why they
believed that the purposes of Title VI would be
furthered by reports from smaller companies.
Public Comments
The agency received a total of seven comments. All
commenters supported the 50,000 vehicle threshold,
and the general intent to exempt as many companies
as possible from reporting requirements. One com-
menter argued that the costs of franchisors' provid-
ing theft data for franchisees is excessive in relation
to the size of the business of the insurer, regardless of
the company's size.
Chrysler Motors Corporation (Chrysler) and Volks-
wagen of America, Inc. (Volkswagen), two motor
vehicle manufacturers not subject to the reporting
requirements, wrote in support of the proposal, es-
pecially the 50,000 vehicle threshold. Chrysler of-
fered a comment about the proposed change to
wording in Section 544.3, the "Application" section
that describes companies subject to the reporting
requirements of Part 544. The NPRM had proposed
that self-insured motor vehicle rental and leasing
PART 544; PRE 36
companies subject to reporting requirements be de-
scribed as:
. . . persons (including licensees and franchi-
sees) who have a fleet of 20 or more motor
vehicles used primarily for rental or lease and
not covered by theft insurance policies issued by
an insurer of motor vehicles listed in Appendix
C.
Chrysler stated that it believed that the agency had
erred in developing the wording for the exemption in
Section 544.3 since it did not correspond with the
agency's intent to exclude from reporting require-
ments those self-insured rental and leasing compa-
nies with fleets of fewer than 50,000 vehicles. The
agency notes that the description proposed is the
statutory definition of "insurer" in Section 612(aX3)
of the Theft Act. However, the agency agrees that
there may be less confusion if the description of the
self-insured rental and leasing companies were more
simply worded. Therefore, the regulatory text
adopted in this notice simply describes these compa-
nies as "the motor vehicle rental and leasing com-
panies listed in Appendix C."
Chrysler also stated the agency's proposal to up-
date Appendix C annually in November to identify
the companies which must report the following
October did not provide sufficient lead time in pre-
paring the required report for a calendar year. It
suggested that the requirements be amended to give
a company listed in Appendix C a full year to collect
theft and recovery data for reporting to the agency
the following year Under the procedure recom-
mended by Chrysler, a company added to Appendix
C in November 1990, would begin collecting data for
calendar year 1991 on January 1, 1991, and would
file its first report in October 1992.
The agency is not adopting this recommendation,
for the following reasons. Although there may be
merit in this comment, NHTSA could not adopt the
recommended change in this rulemaking because it
is not within the scope of the notice. This agency will
consider the comment further after the completion
of this rulemaking. In doing so, the agency will
examine the following factors which are relevant to
making a decision about the appropriate interval
between the agency's final determination regarding
which companies must report and the time that the
reports must be submitted. First, the time period
proposed in the NPRM would allow a company about
10 months after final notification to gather the
needed data for the preceding calendar year, arrange
it into the appropriate format, and report it to the
agency. Second, the insurers listed in Appendices A
and B are required to report under an identical
schedule. In order to avoid confusion, the reporting
timeframe should be consistent for all reporting
companies. The agency's experience with insurers
subject to Appendices A and B has been that the
time between the finalization of the list of insurers
required to report and the due date of the annual
theft report has not been a problem.
The National Automobile Dealers Association
supported the agency's proposal to exempt all self-
insured rental and leasing companies with under
50,000 motor vehicles. The association resubmitted
data, originally provided with a petition for recon-
sideration of the final rule issued by the agency on
January 2, 1987 (52 FR 59), on the fleet size of
members of the dealers' association. The agency was
asked to consider the data to be representative of all
franchised car and truck dealer leasing and rental
fleets.
U-Haul International, another motor vehicle
rental and leasing company, supported the proposed
rule, but requested that the company be removed
from Appendix C, stating that because of the unique
nature of its business, any data it provided could not
be extrapolated to the whole industry. The agency is
unable to accommodate this request. U-Haul pro-
vided no contradictory data regarding the agency's
determinations that, for those companies with com-
bined fleets of more than 50,000 vehicles, the cost of
preparing and furnishing such reports is not exces-
sive in relation to the size of the business of the
insurer, and that a report from U-Haul would not
provide the agency with a representative sampling
of the theft experience of rental and leasing compa-
nies. Since U-Haul is one of the largest rental and
leasing companies of trucks, any information U-
Haul provides to the agency is necessary to fulfill the
requirements of the Theft Act. The agency further
notes that despite this comment, U-Haul submitted
timely comments on its theft experience for calendar
years 1987 and 1988.
The American Automotive Leasing Association, a
trade association representing members that lease
motor vehicles on a long-term basis to commercial
businesses, supported the thrust of the proposed
amendments.
The law firm of Collier, Shannon, Rill & Scott,
commenting on behalf of the American Car Rental
Association, asserted that: "The cost of car rental
franchisors providing theft data on franchisees is
excessive in relation to the size of the insurer's
business because that information will not signifi-
cantly contribute to providing the agency with bet-
ter insight into car theft problems." It was further
stated that obtaining this information from franchi-
sees would impose "significant" costs on franchisors.
The commenter also disagreed with NHTSA's state-
ment that it would be simple to expand existing
franchisee reporting information to franchisors, to
include theft information, asserting that:
Franchisors have no contractual right under the
PART 544; PRE 37
franchise agreement to such information be-
cause it is not material to the operation and
fulfillment of the agreement. Franchisors do not
report information about the franchisee's vehi-
cles because franchisees own their own vehicles.
In view of these concerns, the commenter suggested
that the reporting obligations of franchisors be lim-
ited to reporting the theft experience of company-
operated facilities.
The agency is unable to assess this commenter's
cost arguments since it did not submit any support-
ing cost data. Further, even though the commenter
suggested that the costs would be significant, there
was no suggestion that they would be excessive. As
to the suggestion of difficulty under current contrac-
tual arrangements in obtaining theft information,
the commenter did not argue that the task would be
an impossible one. Further, no other commenter
indicated any problem in obtaining such informa-
tion from franchisees.
Accordingly, after taking into consideration the
public comments, the agency adopts as final the
tentative conclusions formulated in the NPRM, and
makes final the language for Part 544 set forth in
the NPRM, including Appendix C, which lists the
motor vehicle rental and leasing companies (in-
cluding licensees and franchisees) which are not
exempted with respect to calendar year 1988. In the
next several months, the agency will issue a proposal
setting forth its tentative determination regarding
exemptions and listing the companies that would be
required to file a report in October 1990 for the 1989
calendar year.
In consideration of the foregoing, 49 CFR Part 544
is amended as follows:
Section 544.3 is revised to read as follows:
§ 544.3 Application.
This part applies to the motor vehicle insurance
policy issuers listed in Appendices A or B, and to the
motor vehicle rental and leasing companies listed in
Appendix C.
Section 544.6 is amended by revising subparagraph
(a)(2):
§ 544.6 Contents of insurer reports
(aXD * * *
(2) In the case of a motor vehicle rental or
leasing company listed in Appendix C, provide the
information specified in paragraphs (c), (dX2Xiv), and
(g) of this section for each vehicle type listed in
paragraph (b) of this section, for each State in which
the company, including any licensee, franchisee, or
subsidiary, did business during the reporting period.
The information for each listed company shall in-
clude all relevant information from any licensee,
franchisee, or subsidiary. i^^
A new Appendix C is added to Part 544, to read as
follows:
Appendix C— Motor Vehicle Rental and Leasing
Companies Subject to the Reporting Requirements of
Part 544
Alamo Rent-A-Car, Inc.
Automotive Rentals, Inc.
Avis Car Leasing-USA
(Subsidiary of Avis, Inc.)
Avis Rent a Car System, Inc.
(Subsidiary of Avis, Inc.)
Budget Rent A Car Corporation
Dollar Rent-A-Car
(Subsidiary of Systems Inc.)
Enterprise Fleets, Inc.
(Subsidiary of Enterprise Leasing Company)
GE Capital Fleet Services
Hertz Penske Truck Leasing, Inc.
(Subsidiary of Hertz Corporation)
Hertz Rent-A-Car
(Subsidiary of Hertz Corporation)
Lease Plan, USA
Lend Lease
McCullagh Leasing, Inc.
National Car Rental System, Inc.
Peterson, Howell & Heather, Inc.
Rent A Car Company
(Subsidiary of Enterprise Leasing Company)
Rent A Car Corporation
(Subsidiary of American International)
Ryder Truck Rental
(Both rental and leasing operations)
Security Pacific Credit Corporation
U-Haul International, Inc.
(Subsidiary of AMERCO)
United States Fleet Leasing Inc.
(Subsidiary of Hertz Corporation, Leasing)
Wheels, Inc.
Issued on: June 18, 1990
Jeffrey R. Miller
Deputy Administrator
55 F.R. 25606
June 22, 1990
t
•
PART 544; PRE 38
PREAMBLE TO AN AMENDMENT TO PART 544
Insurer Reporting Requirements; List of Insurers
Required to File Reports
(Docket No. 91-53; Notice 2)
RIN: 2127-AE23
ACTION: Final rule.
SUMMARY: Title VI of the Motor Vehicle
Information and Cost Savings Act require certain
passenger motor vehicle insurers to file reports
with NHTSA, unless the agency exempts the
insurer from filing such reports. The law stipulates
that NHTSA can only exempt those insurance
companies whose market share is below certain
percentages for the nation as a whole and in each
individual State, or for which NHTSA determines
that: (1) the cost of preparing and furnishing such
reports is excessive in relation to the size of the
business of the insurer; and (2) the insurers report
will not significantly contribute to carrying out the
purposes of Title VI.
To carry out these statutory provisions, the
agency has exempted those companies that are
lawfully eligible to be exempted and is hereby
publishing an updated listing of those companies
subject to the reporting requirements. Using a
new procedure, this notice updates the list of
companies subject to the reporting requirements,
to reflect changing market conditions. This final
rule was preceded by a notice of proposed rule-
making published on October 16, 1991 (56 FR
51871) that requested public comment on the pro-
posal.
EFFECTIVE DATE: The final rule on this subject
is effective July 6, 1992. Companies listed on the
appendices are required to submit reports begin-
ning with the one due October 25, 1992.
SUPPLEMENTARY INFORMATION:
Background
Section 612 of the Motor Vehicle Information
and Cost Savings Act (the Act) (15 U.S.C. 2032)
requires certain passenger motor vehicle insurers
to file an annual report with NHTSA unless the
agency exempts the insurer from filing such
reports. The reports include information about
thefts and recoveries of motor vehicles, the rating
rules used by the insurers to establish premiums
for comprehensive coverage, the actions taken by
insurers to reduce such premiums, and the actions
taken by insurers to reduce or deter theft. Under
the Act, the following insurers are subject to the
reporting requirements: (1) those issuers of motor
vehicle insurance policies whose total premiums
account for one percent or more of the total pre-
miums of motor vehicle insurance issued within
the United States; (2) those issuers of motor
vehicle insurance policies whose premiums
account for 10 percent or more of total premiums
written within any one State; (3) rental or leasing
companies with a fleet of 20 or more vehicles not
covered by theft insurance policies issued by
insurers of motor vehicles, other than any govern-
mental entity. As discussed in the following sec-
tions, the agency may, by regulation, exempt cer-
tain insurers from the reporting requirements.
A. Insurers of Passenger Motor Vehicles
Although issuers of motor vehicle insurance
policies are subject to reporting requirements, sec-
tion 612(a)(5) provides that the agency shall
exempt small insurers from the reporting require-
ments if NHTSA finds that such exemptions will
not significantly affect the validity or usefulness
of the information collected and compiled in the
reports, either nationally or on a State-by-State
basis. The term "small insurer" is defined in sec-
tion 612(a)(5)(C) as an insurer whose premiums
account for less than 1 percent of the total pre-
miums for all forms of motor vehicle insurance
issued by insurers within the United States. How-
ever, that section also stipulates that if an insur-
ance company satisfies this definition of a "small
insurer,"" but accounts for 10 percent or more of
the total premiums for all forms of motor vehicle
insurance issued by insurers within a particular
PART 544: PRE-39
State, such an insurer must report the required
information about its operations in that State.
As described in the final rule establishing the
requirement for insurer reports (52 FR 59, Janu-
ary 2, 1987), Appendix A lists companies which
must report based on the fact that each insurer
had at least one percent of the national market for
motor vehicle insurance premiums, and Appendix
B lists those insurers that are required to report
for particular states because each insurer had a 10
percent or greater market share of motor vehicle
premiums in those States. In the January 2, 1987
notice, the agency stated that these appendices
will be updated annually. It has been NHTSA's
practice to update the appendices based on data
voluntarily provided by insurance companies to
A.M. Best, and made available to the agency each
spring. The agency uses the data to determine the
insurers' market shares nationally and in each
state.
B. Self-Insured Rental and Leasing Companies
In addition to companies that issue insurance
policies, the term "'insurers" is defined in section
612 of the Act to include certain self-insurers,
i.e., any person who has a fleet of 20 or more
motor vehicles (other than any governmental
entity) which are used primarily for rental or
lease and which are not covered by theft insur-
ance policies issued by insurers of passenger
motor vehicles. (Section 612(a)(3)). Section
612(a)(4) of the Act authorizes the agency to
exempt an insurer from submitting the reports, if
the agency determines that:
(1) The cost of preparing and furnishing such
reports is excessive in relation to the size of the
business of the insurer, and
(2) The insurer's report will not significantly
contribute to carrying out the purposes of title IV.
In a final rule dated June 22, 1990 (55 FR
25606), the agency in effect granted a class
exemption to all companies that rent or lease
fewer than 50,000 vehicles. The agency issued
this exemption because it believed that reports
from the largest rental and leasing companies
would provide the agency with a representative
sampling of the theft experience of rental and
leasing companies. NHTSA concluded that reports
by the many smaller rental and leasing companies
do not significantly contribute to carrying out title
VI, and that exempting such companies will
relieve an unnecessary burden on the vast major-
ity of the companies presently subject to the
reporting requirements. As a result of the June
1990 final rule, a new Appendix C, which con-
sists of an annually updated listing of the rental
and leasing companies that are subject to the
reporting requirements in part 544, was added. It
has been NHTSA's practice to update Appendix
C based primarily on information contained in the
publications Automotive Fleet Magazine and
Travel Business Travel News.
October 1991 Notice of Proposed Rulemaking
On October 16, 1991, NHTSA published a
notice of proposed rulemaking (NPRM) to update
the list of insurers required to file reports, based
on the most recent information. (See 56 FR
51871.) In that notice, the agency also proposed
a new procedure that the agency believed would
let insurers know well in advance of the annual
October 25 filing date whether they need to file
a report for the previous calendar year.
In the past, it was the agency's practice to
attempt to update Appendices A, B and C each
year prior to the October 25 filing date, using
A.M. Best and other data obtained in the spring
of that same calendar year. However, the agency
was generally unable to complete the updating
before the October 25 filing date, resulting in
confusion concerning which companies needed to
file reports.
In the October 1991 NPRM, NHTSA stated
that it believed that this problem would be
resolved by increasing the interval between the
receipt of data and the reporting date. Under the
new approach, the updating of the appendices
would focus on the report due the year after
receipt of the A.M. Best and other data, both for
companies which are added to the lists and
companies which are removed from the lists. The
agency stated that, under this approach, all
companies added to the lists as of the last update
(March 1991 final rule) should file the required
report by October 25, 1991, and all companies
added to the lists by the final rule based on the
October 1991 NPRM would be provided ample
notice concerning whether they need to file a
report by October 25, 1992.
The agency further noted that Part 544 would
not need to be changed to implement this
approach. Part 544 generally does not limit its
requirements to particular years. Under that part,
any company not listed has an indefinite exemp-
PART 544: PRE^O
tion from the reporting requirements, and as long
as any company is listed, it must file reports each
October 25. Thus, any company listed in the
appendices as of the date of the notice of pro-
posed rulemaking (October 16, 1991) must file a
report on October 25, 1991, and each succeeding
October 25, absent a further amendment.
NHTSA requested comments on this approach,
and in particular, on whether there are any other
ways to eliminate the problem discussed above.
NHTSA also proposed that, based on 1989 cal-
endar year A.M. Best data, two companies,
CIGNA Group and Crum and Forster Companies,
included in Appendix A, be removed, and one
company. Prudential of America Group, be added.
Also based on the 1989 Best data, the agency
proposed that one company. Island Insurance
Group (reporting on its activities in Hawaii) be
removed from Appendix B and that one company,
Tennessee Farmers (reporting on its activities in
Tennessee) be added. The agency further pro-
posed that Southern Farm Bureau Casualty Group,
already included in Appendix B and required to
report on its activities in Mississippi, also be
required to report on its activities in Arkansas.
Based on information in Automotive Fleet
Magazine and Travel Trade Business Travel News
for 1989, NHTSA proposed that the following six
rental and leasing companies be removed from
Appendix C; Automotive Rentals, Inc. (subsidiary
of ARI, Inc.), Enterprise Rent-A-Car, GE Capital
Auto Lease, Inc., Lend Lease Cars, Security
Pacific Auto Finance, and United States Fleet
Leasing, Inc. Based on additional information
provided by each respective company that it self-
insures fewer than 50,000 vehicles per year, the
agency proposed to remove from Appendix C two
additional companies. Automotive Rentals, Inc.
and United States Fleet Leasing, Inc. The agency
also proposed that one company. Associates Leas-
ing, Inc. be added to Appendix C.
Public Comment and Final Determination
In response to the NPRM, the agency received
one public comment, from Lease Plan U.S.A.,
Inc. Lease Plan stated that it should be removed
from Appendix C because it has on lease in the
United States 12,000 vehicles and does not self-
insure any of the vehicles. Because Lease Plan
U.S.A. has fewer than 50,000 vehicles in its fleet
and does not self-insure any of its vehicles, it
does not meet the criteria the agency uses to
determine that an insurer is included in Appendix
C. Therefore, the agency agrees that Lease Plan
U.S.A. should be removed from Appendix C.
Since the agency received no comment on the
proposed change in the procedure updating
Appendices A, B and C, the agency adopts as
final the procedure proposed in the NPRM.
Henceforth, any company listed in the appendices
must file a report in the forthcoming October 25
and each succeeding October 25, absent a further
amendment. Therefore, each company listed in
Appendix A, B, or C of this notice must file a
report no later than October 25, 1992, and, on
each succeeding October 25, absent a further
amendment.
This final rule does not have any retroactive
effect, and it does not preempt any State law.
Section 610 of the Motor Vehicle Information and
Cost Savings Act, 15 U.S.C. 2030, provides that
judicial review of this role may be obtained
pursuant to Section 504 of the Cost Savings Act,
15 U.S.C. 2004. The Cost Savings Act does not
require submission of a petition for reconsider-
ation or other administrative proceedings before
parties may file suit in court.
In consideration of the foregoing, 49 CFR part
544 is amended as follows:
PART 544— [AMENDED]
1. The authority citation for part 544 continues
to read as follows:
Authority: 15 U.S.C. 2032; delegation of
authority at 49 CFR 1.50.
2. Appendix A to part 544 is revised to read
as follows:
Appendix A — Insurers of Motor Vehicle Insurance
Policies Subject to the Reporting Requirements in
Each State in Which They Do Business
Aetna Life & Casualty Group
Allstate Insurance Group
American Family Group
American International Group
California State Auto Association
CNA Insurance Companies
Farmers Insurance Group
GEICO Corporation Group
[Hanover Insurance Companies]
Hartford Insurance Group
Liberty Mutual Group
Nationwide Group
Progressive Group
PART 544; PRE--^1
[Prudential of America Group]
State Farm Group
Travelers Insurance Group
United States F&G Group
USAA Group
3. Appendix B to part 544 is revised to read as
follows:
Appendix B — Issuers of Motor Vehicle Insurance
Policies Subject to the Reporting Requirements
Only in Designated States
Alfa Insurance Group (Alabama)
Arnica Mutual Insurance Company (Rhode Island)
Auto Club of Michigan Group (Michigan)
Commercial Union Insurance Companies (Maine)
Concord Group Insurance Companies (Vermont)
[Erie Insurance Group (Pennsylvania)]
[Indiana Farm Bureau Group (Indiana)]
Kentucky Farm Bureau Group (Kentucky)
Southern Farm Bureau Casualty Group (Arkansas,
Mississippi)
[Tennessee Farmers (Tennessee)]
4. Appendix C to part 544 is revised to read as
follows:
Appendix C — Motor Vehicle Rental and Leasing
Companies (Including Licensees and Franchisees)
Subject to the Reporting Requirements
of Part 544
Alamo Rent-A-Car, Inc.
[American International Rent-A-Car Corp./ANSA]
[Associates Leasing, Inc.]
[Avis, Inc.]
Budget Rent-A-Car Corporation
Dollar Rent-A-Car Systems, Inc.
GE Capital Fleet Services
Hertz Rent-A-Car Division (subsidiary of Hertz Cor-
poration)
McCullagh Leasing, Inc.
National Car Rental System, Inc.
[Penske Truck Leasing Company]
[PHH Fleet America]
[Rental Concepts, Inc.]
Ryder Truck Rental (both rental and leasing oper-
ations)
U-Haul International, Inc. (subsidiary of AMERCO)
Wheels, Inc.
Issued on: May 29, 1992.
Jerry Ralph Curry,
Administrator.
57 F.R. 23535
June 4, 1992.
PART 544; PRE-A2
PART 544— INSURER REPORTING REQUIREMENTS
(Docket No. T86-01 ; Notice 2)
5544.1 Scope. This part sets forth requirements
for insurers to report to the National Highway
Traffic Safety Administration information about
motor vehicle thefts and recoveries, the effects of
the Federal motor vehicle theft prevention stand-
ard on those thefts and recoveries, and related
insurance practices.
5544.2 Purpose. The purpose of these reporting
requirements is to aid in implementing and
evaluating the provisions of the Motor Vehicle
Theft Law Enforcement Act to prevent or discour-
age the theft of motor vehicles, to prevent or
discourage the sale or distribution in interstate
commerce of used parts removed from stolen
motor vehicles, and to help reduce the cost to
consumers of comprehensive insurance coverage
for motor vehicles.
5544.3 Application. [This part applies to the
motor vehicle insurance policy issuers listed in
Appendices A or B, and to the motor vehicle
rental and leasing companies listed in Appendix
C. (55 F.R. 25606— June 22, 1990. Effective:
July 23, 1990)]
5544.4 Definitions, (a) Statutory terms. All
terms defined in sections 2 and 601 of the Motor
Vehicle Information and Cost Savings Act (15
U.S.C. 1901 and 2021) ai;e used in accordance
with their statutory meanings unless otherwise
defined in paragraph (b) of this section.
(b) Other definitions. (1) Comprehensive insur-
ance coverage means the indemnification of
motor vehicle owners by an insurer against losses
due to fire, theft, robbery, pilferage, malicious
mischief and vandalism, and damage resulting
from floods, water, tornadoes, cyclones, or wind-
storms.
(2) Gross vehicle weight rating is used as
defined at S571.3 of this chapter.
(3) Heavy truck means a truck with a gross
vehicle weight rating of more than 10,000
pounds.
(4) Light truck means a truck with a gross
vehicle weight rating of 10,000 pounds or less.
(5) Major part means —
(i) in the case of passenger motor vehicles,
any part listed in §S541. 5(a)(1) through (14) of
this chapter;
(ii) in the case of light trucks, any part listed
in §S54 1.5(a)(1) through (14) of this chapter,
or the cargo bed or transfer case;
(iii) in the case of heavy trucks, any part
listed in § S541.5(a)(l) through (14) of this
chapter, or the cargo bed, drive axle assembly,
fifth wheel, sleeper, or the transfer case;
(iv) in the case of multipurpose passenger
vehicles, any part listed in §S541. 5(a)(1)
through (14) of this chapter, or the cargo bed
or transfer case; and
(v) in the case of motorcycles, the crankcase,
engine, frame, front fork, or transmission.
(6) Motorcycle is used as defined at S571.3
of this chapter.
(7) Motor vehicle means a passenger motor
vehicle, multipurpose passenger vehicle, truck, or
motorcycle.
(8) Multipurpose passenger vehicle is used
as defined at S571.3 of this chapter.
(9) Recovery means regaining physical
possession of a motor vehicle or a major portion
of the superstructure of a motor vehicle with one
or more major parts still attached to the super-
structure, after that vehicle has been stolen.
(10) Recovery-in-part means a recovery in
which one or more of the recovered vehicle's
major parts is missing at the time of recovery.
(11) Recovery intact means a recovery with
none of the recovered vehicle's major parts miss-
ing at the time of recovery, and with no apparent
damage to any part of the motor vehicle other
than those parts damaged in order to enter, start,
and operate the vehicle, but with additional mile-
age and ordinary wear and tear.
(12) Recoveiy-in-whole means a recovery
with none of the recovered vehicle's major parts
missing at the time of recovery, but with apparent
PART 544-1
(Rev. 6/22/90)
damage to some part or parts of the vehicle in
addition to those parts damaged in order to enter,
start, and operate the vehicle.
(13) Reporting period means the calendar
year covered by a report submitted under this
part.
(14) Truck is used as defined at S571.3 of
this chapter.
(15)(i) In the case of insurers that issue
motor vehicle insurance policies, "vehicle theft"
means an actual physical removal of a motor
vehicle without the permission of its owner, but
does not include the removal of component parts,
accessories, or personal belongings from a motor
vehicle which is not moved.
(ii) In the case of an insurer which has a
fleet of 20 or more vehicles (other than a
governmental entity) used primarily for rental
or lease and not covered by theft insurance
policies issued by insurers of motor vehicles,
"vehicle theft" means an actual physical
removal of a motor vehicle without the permis-
sion of its owner, or keeping possession of the
motor vehicle without the permission of its
owner for a sufficient period of time so that the
vehicle could have been reported as stolen to
the State police in the State in which the
vehicle was to have been returned. However,
vehicle theft does not include the removal of
component parts, accessories, or personal
belongings from a motor vehicle which is not
moved.
S544.5 General requirements for reports.
(a) Each insurer to which this part applies shall
submit a report annually not later than October
25, beginning on October 25, 1986. The report
shall contain the information required by S544.6
of this part for the calendar year preceding the
year in which the report is filed (e.g., the report
due by October 25, 1988, shall contain the
required infomiation for the 1987 calendar year).
(b) Each report required by this part must:
(1) Have a heading preceding its text that
includes the words "Insurer Report";
(2) Identify the insurer, including all subsidi-
ary companies, on whose behalf the report is
submitted, and the designated agent, if any,
submitting the report or that will submit further
documents to complete the report;
(3) Identify the State or States in which the
insurer did business during the reporting period;
(4) State the full name and title of the offi-
cial responsible for preparing the report, and the
address of the insurer;
(5) Identify the reporting period covered by
the report;
(6) Be written in the English language;
(7) Include a glossary defining all acronyms
and terms of art used in the report, unless those
acronyms and terms of art are defined imme-
diately after they first appear in the report;
(8) Be submitted in three copies to: Adminis-
trator, National Highway Traffic Safety Adminis-
tration, 400 Seventh Street, S.W., Washington,
D.C. 20590; and
(9) If the insurer wishes to submit certain
information under a claim of confidentiality, be
submitted in accordance with Part 512 of this
chapter.
S544.6 Contents of insurer reports.
(a)(1) In the case of insurers that issue motor
vehicle insurance policies, provide the information
specified in paragraphs (b) through (g) of this
section for each State in which the insurer,
including any subsidiary, did business during the
reporting period if the insurer is listed in Appen-
dix A, or for each State listed after the insurer's
name if the insurer is listed in Appendix B.
[(2) In the case of a motor vehicle rental or
leasing company listed in Appendix C, provide
the information specified in paragraphs (c),
(d)(2)(iv), and (g) of this section for each vehicle
type listed in paragraph (b) of this section, for
each State in which the company, including any
licensee, franchisee, or subsidiary, did business
during the reporting period. The information for
each listed company shall include all relevant
information from any licensee, franchisee, or
subsidiary. (55 F.R. 25606— June 22, 1990.
Effective: July 23, 1990)]
(b) For each of the following vehicle types,
provide the information specified in paragraphs
(c) through (g) of this section for all vehicles of
that type insured by the insurer during the report-
ing period —
(1) Passenger cars.
(2) Multipurpose passenger vehicles.
(3) Light trucks.
(4) Heavy trucks.
(5) Motorcycles.
(Rev. 6/22/90)
PART 544-2
(c)(1) List the total number of vehicle thefts for
vehicles manufactured in the 1983 or subsequent
model years, subdivided into model year, model,
make, and line, for this type of motor vehicle.
(2) List the total number of recoveries for
vehicles manufactured in the 1983 or subsequent
model years, subdivided into model year, model,
make, and line, for this type of motor vehicle.
Beginning with the report due not later than Octo-
ber 25, 1987, for each of these subdivided num-
ber of recoveries, indicate how many were:
(i) Recoveries intact;
(ii) Recoveries-in- whole; and
(iii) Recoveries-in-part.
(3) Explain how the theft and recovery data
set forth in response to paragraphs (c)(1) and (2)
of this section were obtained by the insurer, and
the steps taken by the insurer to ensure that these
data are accurate and timely.
(4) Explain the use made by the insurer of
the information set forth in response to para-
graphs (c)(1) and (2) of this section, including the
extent to which such information is reported to
national, public, and private entities (e.g., the Fed-
eral Bureau of Investigation and State and local
police). If such reports are made, state the fre-
quency and timing of the reporting.
(d)(1) Provide the rating characteristics used by
the insurer to establish the premiums it charges
for comprehensive insurance coverage for this
type of motor vehicle and the premium penalties
for vehicles of this type considered by the insurer
as more likely to be stolen. This requirement may
be satisfied by furnishing the pertinent sections of
the insurer's rate manual(s).
(2) Provide the loss data used by the insurer
to establish the premiums it charges for com-
prehensive insurance coverage for this type of
motor vehicle and the premium penalties it
charges for vehicles of this type it considers as
more likely to be stolen. This requirement may be
satisfied by providing the following:
(i) The total number of comprehensive insur-
ance claims paid by the insurer during the
reporting period;
(ii)(A) The total number of claims listed in
(d)(2)(i) of this section that arose from a theft;
(B) The insurer's best estimate of the
percentage of the number listed in paragraph
(d)(2)(ii)(A) of this section that arose from
vehicle thefts, and an explanation of the basis
for the estimate;
(iii) The total amount (in dollars) paid out by
the insurer during the reporting period in
response to all the comprehensive claims filed
by its policyholders;
(iv)(A) In the case of insurers listed in
Appendix A or B, provide —
(1) The total amount (in dollars) listed under
paragraph (d)(2)(iii) of this section paid out by
the insurer as a result of theft; and
(2) The insurer's best estimate of the
percentage of the dollar total listed in paragraph
(d)(2)(iv)(A)(l) of this section that arose from
vehicle thefts, and an explanation of the basis for
the estimate;
(B) In the case of other insurers subject to
this part, the net losses suffered by the insurer
(in dollars) as a result of vehicle theft;
(v)(A) The total amount (in dollars) recov-
ered by the insurer from the sale of recovered
vehicles, major parts recovered not attached to the
vehicle superstructure, or other recovered parts,
after the insurer had made a payment listed under
paragraph (d)(2)(iv) of this section;
(B) The insurer's best estimate of the
percentage of the dollar total listed in para-
graph (d)(2)(v)(A) of this section that arose
from vehicle thefts, and an explanation of the
basis for the estimate;
(vi) An identification of the vehicles for
which the insurer charges comprehensive insur-
ance premium penalties, because the insurer
considers such vehicles as more likely to be
stolen;
(vii) The total number of comprehensive
insurance claims paid by the insurer for each
vehicle risk grouping identified in paragraph
(d)(2)(vi) of this section during the reporting
period, and the total amount (in dollars) paid
out by the insurer in response to each of the
listed claims totals; and
(viii) The maximum premium adjustments
(as a percentage of the basic comprehensive
insurance premium) made for each vehicle risk
grouping identified in paragraph (d)(2)(vi) of
this section during the reporting period, as a
result of the insurer's determination that such
vehicles are more likely to be stolen.
(3) Identify any other rating rules and plans
used by the insurer to establish its comprehensive
insurance premiums and premium penalties for
PART 544-3
motor vehicles it considers as more likely to be
stolen, and explain how such rating rules and
plans are used to establish the premiums and pre-
mium penalties.
(4) Explain the basis for the insurer's com-
prehensive insurance premiums and the premium
penalties charged for motor vehicles it considers
as more likely to be stolen. This requirement may
be satisfied by providing the pertinent sections of
materials filed with State insurance regulatory
officials and clearly indicating which information
in those sections is being submitted in compliance
with this paragraph.
(e) List each action taken by the insurer to
reduce the premiums it charges for comprehensive
insurance coverage because of a reduction in
thefts of this type of motor vehicle. For each
action:
(1) State the conditions that must be satisfied
to receive such a reduction (e.g., installation of
antitheft device, marking of vehicle in accordance
with theft prevention standard, etc.);
(2) State the number of the insurer's policy-
holders and the total number of vehicles insured
by the insurer that received this reduction; and
(3) State the difference in average com-
prehensive insurance premiums for those policy-
holders that received this reduction versus those
policyholders that did not receive the reduction.
(f) In the case of an insurer that offered a
reduction in its comprehensive insurance pre-
miums for vehicles equipped with antitheft
devices, provide:
(1) The specific criteria used by the insurer
to determine whether a vehicle is eligible for the
reduction (original equipment antitheft device,
passive antitheft device, etc.);
(2) The total number of vehicle thefts for
vehicles manufactured in the 1983 or subsequent
model years that received a reduction under each
listed criterion; and
(3) The total number of recoveries of
vehicles manufactured in the 1983 or subsequent
model years that received a reduction under each
listed criterion. Beginning with the report due not
later than October 25. 1987, indicate how many
of the total number of recoveries were —
(i) Recoveries intact
(ii) Recoveries-in- whole, and
(iii) Recoveries-in-part.
(g)(1) List each action taken by the insurer to
assist in deterring or reducing thefts of motor
vehicles. For each action, describe the action and
explain why the insurer believed it would be
effective in deterring or reducing motor vehicle
thefts.
(2)(i) State the insurer's policy regarding the
use of used parts to effect repairs paid for by
the insurer on vehicles it insures. Indicate
whether the insurer required, promoted,
allowed, or forbade the use of used parts in
those repairs.
(ii) In the case of insurers requiring, promot-
ing, or allowing the use of used parts to make
repairs paid for by the insurer on vehicles it
insures indicate the precautions taken by or on
behalf of the insurer to identify the origin of
those used parts.
S544.7 Incorporation by reference.
(a) In any report required by this part, an
insurer may incorporate by reference any docu-
ment or portion thereof previously filed with any
Federal or State agency or department within the
past 4 years.
(b) An insurer that incorporates by reference a
document not previously submitted to the
National Highway Traffic Safety Administration
shall append that document or the pertinent sec-
tions of that document to its report, and clearly
indicate on the cover or first page of the docu-
ment or pertinent section the regulatory require-
ment in response to which the document is being
submitted.
(c) An insurer that incorporates by reference a
document shall clearly identify the document and
the specific portions thereof sought to be incor-
porated, and, in the case of a document pre-
viously submitted to the National Highway Traf-
fic Safety Administration, indicate the date on
which the document was submitted to the Agency
and the person whose signature appeared on the
document.
52 F.R. 59
January 2, 1987
PART 544-4
%
Appendix A
Issuers of Motor Vehicle Insurance Policies Subject to the Reporting
Requirements in Each State in Which They Do Business
Aetna Life & Casualty Group
Allstate Insurance Group
American Family Group
American International Group
California State Auto Association
CNA Insurance Companies
Farmers Insurance Group
GEICO Corporation Group
Hanover Insurance Companies
Hartford Insurance Group
Liberty Mutual Group
Nationwide Group
Progressive Group
Prudential of America Group
State Farm Group
Travelers Insurance Group
United States F&G Group
US A A Group (57 F.R. 23535— June 4, 1992. Effec-
tive: July 6, 1992)
i
PART 544— A-1
(Rev. 6/4/92)
•
#
^ Appendix B
Issuers of Motor Vehicle Insurance Policies Subject to the Reporting
Requirements [only in Designated States]
Alfa Insurance Group (Alabama) Indiana Farm Bureau Group (Indiana)
Amica Mutual Insurance Company (Rhode Island) Kentucky Farm Bureau Group (Kentucky)
Auto Club of Michigan Group (Michigan) Southern Farm Bureau Casualty Group (Arkansas,
Commercial Union Assurance Group (Maine) Mississippi)
Concord Group Insurance Companies (Vermont) Tennessee Farmers (Tennessee) (57 F.R. 23535 — June
Erie Insurance Group (Pennsylvania) 4, 1992. Effective: July 1, 1992)
i
PART 544— B-1 (Rev. 6/4/92)
t
•'
•
i
Appendix C
Motor Vehicle Rental and Leasing Companies (including Licensees and
Franchisees) Subject to the Reporting Requirements of Part 544
Alamo Rent-A-Car, Inc.
American International Rent-A-Car Corp./ANSA
Associates Leasing, Inc.
Avis, Inc.
Budget Rent-A-Car Corporation
Dollar Rent-A-Car Systems, Inc.
GE Capital Fleet Services
Hertz Rent-A-Car Division (subsidiary of Hertz Cor-
poration)
McCuUagh Leasing, Inc.
National Car Rental System, Inc.
Penske Truck Leasing Company
PHH Fleet America
Rental Concepts, Inc.
Ryder Truck Rental (both rental and leasing oper-
ations)
U-Haul International, Inc. (subsidiary of AMERCO)
Wheels, Inc. (57 F.R. 23535— June 4, 1992. Effec-
tive: July 6, 1992)
i
i
PART 544— C-1
(Rev. 6/4/92)
t
#
#
fllMtiv*: D«c«mb*r 20, 1966
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
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
•
•
Ellactiv*: 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
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— IRESERVEDl
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
Effacliv*: Scplemixr 4, 1975
PREAMBLE TO PART 552— PETITIONS FOR RULEMAKING, DEFECT, 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
tliat 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) tinder 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.
General 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
EfFecHve: September 4, 1975
petition. The NHTSA does not agree. It should
be remembered that the grant of a petition iinder
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 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
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.
PART 552-PETITIONS FOR RULEMAKING, DEFECT, AND
NONCOMPLIANCE ORDERS
§ 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
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-
cedtu'es 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.
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
#
t
PART 552-2
IfFKtlv*: November 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 (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
Sec.
353.1
353.3
353.5
353.7
SUBPART A— GENERAL
Applicability.
Definitions.
Regulatory dockets.
Records.
SUBPART B— PROCEDURES FOR ADOPTION OF
RULES UNDER SECTIONS 103 AND 109
OF THE ACT
353.1 1 General.
353.13 Initiation of rule making.
353.15 Contents of notices of proposed
making.
353.17 Participation of interested persons.
353.19 Petitions for extension of time to com
ment.
353.21 Contents of written comments.
353.23 Consideration of comments received.
rule
PART 553— PRE 1
Effacllvt: Nevtmbtr 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 {32F.R. 14277).
32 F.R. 15818
November 17, 1967
4
PART 55a— PRE 2
Efftcllv*: Dcombtr 19, 1970
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 upon, 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 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 563— PRE a-4
t
#
Ellactiv*: Hbniary 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 eflfective 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
PART 653— PRE 6-6
#
t
t
Effccllv*: March 1. 1972
PREAMBLE TO AMENDMENT TO PART 553— RULEMAKING PROCEDURES:
MOTOR VEHICLE SAFETY STANDARDS
Statement of Policy: Action on Petitions for Reconsideration
Tlie 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-
spond 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 iieriod 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. ^ATiere 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, ....
Effective 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
#
#
#
MNcNvai May >l, 1*79
PREAMBLE TO AMENDMENT TO PART 553— RULEMAKING PROCEDURES
Sections 553.31 and 553.35 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, §§ 553.31 and 553.35 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, Petitions for extension
of time to corrvment.
The requirement of § 553.31(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 658, 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 23, 1973.
(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 13, 1973.
James E. Wilson
Acting Administrator
38 F.R. 9824
April 20, 1973.
PART 668— PRE 9-10
t
#
t
Effactiv*: July 27. 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
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 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 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 rule.
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 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
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
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 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 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 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 55a— PRE 15-16
#
•
#
Effactlvt: Nevambcr 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, 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 found for good cause shown that an immediate
effective 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
•
Efhcllve: 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 pei-sons
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 Infonnation 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 tlie 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-
tacliments 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
•
•
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 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 aD 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.
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.
f(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,
so found and the delay beyond that period is 32 F.R. 15818
expected to be substantial, notice of that fact, and November 1 7, 1 967
(#
#
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
disclosiu"e 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 1 12 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 NHTTSA 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. 1 1 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.
§ 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).
§ 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).
§ 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
■iES 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 shown.
(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
(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 r io796
(d) A statement of the Administrator's final February 19, 1980
i
i
PART 554-3-4
I Jonuaiy 39, 1971
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
foi- 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
Elbctiv*: 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 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 ^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 imnecessary
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-exempt«d 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
MMtlvci Janugry 29, 1973
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 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
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-
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
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. 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-
sary since the agency would consider any in-
formation brought to its attention that is relevant
to its regulatory fimctions, a section to this effect
has been added for public information. It pro-
PART 555— PRE 3
Mm«v«: 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 tisked 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
ii2. 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 (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
EfhcMv*: March IS, 1974
PREAMBLE TO AMENDMENT TO PART 555— TEMPORARY EXEMPTION FROM
MOTOR VEHICLE SAFETY STANDARDS
(Docket No. 72-30; Notice 4)
This notice amends 49 CFR Part 55.5 to sijecify
that the NHTSA will notify i^etitioners directly
when their petitions are found not to contain
required information, and that income statements
must be included in support of liardship peti-
tions.
The NHTSA proposed these amendments on
October 29, 1973 (38 F.R. 29817). Interested
jjersons have been otiered an o])portunity to p-.u--
ticipate in the making of the amendments and
due consideration has been given to the two com-
ments that were received in response to the notice.
A comment by H. E. Waterman of Bowie,
Maryland, suggests that the agency adopt the
essence of Federal Aviation Regulation § 11.25
Petition for mlemaking or exemptions 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 opportunity to state
his financial condition, but that should not be
emphasized by establishment of such a require-
ment".
Mr. Waterman's comment is inapposite. 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 upon factors of
substantial economic hardship. The NHTSA hafe
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 connnent on public interest
factors however is in ix)int. In addition to find-
ing that one of the four appropriate statutory
bases for e.\emption is jiresent, the Administrator
must also make a finding that the exemption is
in the public interest and consistent with tiif
objectives of the National Traffic and Motor
Vehicle Safety Act. The regulation currently
does not specifically require the petitioner to sul)-
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 petition 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 restricti\e 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
Effective: March 15, 1974
loss of market) that the petitioner desires tlie 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 ti /-,
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
Effactiv*: Nevambtr 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 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
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
•
•
•
Effacllve; May 30, 197S
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, 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. . . .
Effective 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
•
•
•
Effcctiva: S«pt«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. . . .
Elective 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.
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
wdth 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
PREAMBLE TO AN AMENDMENT TO PART 555
Temporary Exemption From Federal Motor
Vehicle Safety Standards
[Docket No. 82-14; Notice 2]
ACTION: Final rule; correction.
SUMMARY: This notice amends the temporary ex-
emption regulations to correct an error appearing
in the Code of Federal Regulations which has left
incomplete the wording required for certification
labels on exempted vehicles. The error has ap-
peared in Section 555.9 of Title 49 CFR in volumes
revised as of October 1, 1982, 1983, and 1984. Since
this amendment simply corrects the CFR text, it is
effective upon publication without notice or oppor-
tunity to comment.
EFFECTIVE DATE: March 18, 1985.
SUPPLEMENTARY INFORMATION: On July 22,
1982, NHTSA issued an amendment to 49 CFR
Part 555 updating the certification requirements
for exempted vehicles to include certification to
Federal bumper requirements (47 FR 31694).
These requirements are found in Sections
555.9(cKl) and (c)(2). In amending the portion of
those sections containing the specified certifica-
tion label wording, NHTSA added the words "and
bumper" at the appropriate places, but did not con-
sider it necessary to recite at length in the Federal
Register notice the sentences in the regulation
which were unchanged after that point. In the
drafting style accepted for indicating no further
change' in text, NHTSA indicated the omission of
sequential and unchanged sentences by "* * *".
The purpose of this indication was apparently mis-
understood by the editors of the CFR and the 1982,
1983, and 1984 revisions of Title 49 of the Code of
Federal Regulations quoted verbatim the 1982
notice, ending the requirements with "* * *" and
omitting the remaining language. It is therefore
necessary to amend Sections 555.9(c)(1) and (c)(2) to
correct the error. Because of the technical nature
of this amendment, the agency finds for good cause
shown that prior notice and public comment on
this amendment is unnecessary, and that it may be
made effective upon publication.
PART 555 -TEMPORARY EXEMPTION FROM
MOTOR VEHICLE SAFETY STANDARDS
In consideration of the foregoing. Title 49 Code
of Federal Regulations Part 555, Temporary Ex-
emption From Motor Vehicle Safety Standards, is
amended as follows:
Section 555.9(c)(1) and (c)(2) are revised in perti-
nent part:
§ 555.9 Temporary exemption labels.
♦ ♦ * * *
(c) * * *
(1) Instead of the statement required by
§ 567.4(g)(5) of this Chapter, the following state-
ment shall appear: "THIS VEHICLE CONFORMS
TO ALL APPLICABLE FEDERAL MOTOR
VEHICLE SAFETY (AND BUMPER) STAN-
DARDS IN EFFECT ON THE DATE OF
MANUFACTURE SHOWN ABOVE EXCEPT
FOR STANDARDS NOS. [listing the standards 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 ap-
pear: "THIS VEHICLE CONFORMS TO ALL AP-
PLICABLE FEDERAL MOTOR VEHICLE
SAFETY (AND BUMPER) STANDARDS IN EF-
FECT IN [Month, Year] EXCEPT FOR STAN-
DARD NOS. [listing the standards by number and
title for which an exemption has been granted]
PART 555 -PRE 15
EXEMPTED PURSUANT TO NHTSA EXEMP-
TION NO. "
Issued on March 12, 1985.
Barry Felrice
Associate Administrator
for Rulemaking
50 FR 10771
March 18, 1985
#
PART 555 -PRE 16
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
manufacturers of motor vehicles.
to
§ 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 detaO 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. 1/8/81)
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
/ith 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-morjth 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
§ 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 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 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
(50 F.R. 10771-March 18, 1985. Effective:
March 18, 1985)
(Rev. 3/18/85)
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).
[(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)]
38 F.R. 2693
January 29, 1973
(R«v. 1/8/81)
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 Eegnlations 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 tlie 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-
consequentiality 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— PEE 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 meaningful only when the XHTSA makes
an initial determination as opposed to a final
determination. Therefore, the agency has de-
cided to retain the language "has determined,"
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 comments 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 subm'^sion 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 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)
redimdant. 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 manufacturers 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 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
Effective: March 9, 1977
This aspect of parajiTaph (3) (i) was proposed
to allow the agency to publish the time and loca-
tion of a meeting: concurrently with the publica-
tion in the FEDERAL REGISTER of the
manufacturer's petition for an inconsequentiality
determination. Since issuance of the proposal,
the agency has had more experience with section
157 petitions. To date meetings have not been
required for disposition of these petitions. There-
fore, the final rule incorporates the lanfriiage
suggested by the MV]\L\ and GM to establish
that public meetings will be held "upon request
of the petitioner or interested persons."
Many commenters requested that paragraph
(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 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 found 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 agi-ee that the consolidation
of the two argvmients 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 adversarial proceedings and it
yields equally reliable factual information. Fur-
ther, Congress has authorized the agencj' 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 argimients.
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 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 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.
Jolm W. Snow
Administrator
42 F.R. 7145
February 7, 1977
PART 556— PRE 4
PREAMBLE TO AN AMENDMENT TO PART 556
Exemption for Inconsequential Defect or Noncompliance
(Docket No. 75-21; Notice 3)
RIN: 2127-AE30
ACTION: Final rule.
SUMMARY: A manufacturer which determines that its
motor vehicle or motor vehicle equipment fails to
comply with a Federal motor vehicle safety standard
or contains a safety-related defect may, under Part 556,
Exemption for Inconsequential Defect or Noncom-
pliance, petition to be exempted from the obligation
under the National Traffic and Motor Vehicle Safety
Act to notify owners and remedy the noncompliance
or defect, upon a showing that the noncompliance or
defect is inconsequential as it relates to motor vehicle
safety. Under Part 573, Defect and Noncompliance
Reports, a manufacturer making a noncomplance or
defect determination must, within 5 working days of
that determination, file a report with NHTSA. The
final rule adopted by this notice requires a manufac-
turer petitioning under Part 556 to attach a copy of
its Part 573 report with its petition.
EFFECTIVE DATE: January 22, 1992.
SUPPLEMENTARY INFORMATION:
Under 49 CFR 573.5(a), "Each manufacturer shall
furnish a report to the NHTSA" for each noncompli-
ance with a Federal motor vehicle safety standard or
each safety related defect in the vehicles or motor
vehicle equipment that he manufactures "that he or the
Administrator determines to exist." Section 573.5(b)
requires that the manufacturer submit the report "not
more than 5 working days after" a noncompliance or
safety related defect "has been determined to exist."
A manufacturer making such a determination is
required by the National Traffic and Motor Vehicle
Safety Act to notify its purchasers and to remedy the
noncompliance or the safety related defect. However,
under 49 CFR 556.4(a), the manufacturer may file a
petition with the Administrator for a determination
that the noncompliance or safety related defect is
inconsequential as it relates to motor vehicle safety.
Such petition must be filed within 30 days after the
determination. If the petition is granted, the manu-
facturer is excused from the obligation to notify and
remedy.
It is clear that if a noncompliance or safety related
defect does not exist, the obligation to notify and
remedy does not arise. Thus, section 556.4(a) extends
the right to petition only to "A manufacturer who has
determined the existence, in a motor vehicle or item
of replacement equipment that he produces, of a defect
related to motor vehicle safety or a noncompliance with
an applicable Federal motor vehicle safety stan-
dard . ..." In other words, the right extends only to
a manufacturer which has the related obligation to file
a Part 573 report.
On occasion, the fact that a manufacturer must de-
termine the existance of a noncompliance before the
manufacturer can file a Part 556 petition does not
appear clear to manufacturers seeking an inconsequen-
tiality determination. When the agency receives a
petition, but no Part 573 report relating to the non-
compliance or defect forming the basis for the petition,
the agency must take time to obtain the manufacturer's
determination of noncompliance before it can consider
the petition. This delay is not in the interest of safety
in those instances in which the Administrator ulti-
mately denies the petition because it is important that
notification and remedy begin as soon as practicable
after the denial. Although the agency believes that the
relationship between Part 573 and Part 556 is presently
unambiguous, it wishes to make the relationship even
clearer by explicitly providing in Part 556 that a
petitioning manufacturer is required to submit a copy
of its Part 573 report as part of its petition. It is there-
fore adding that requirement as Section 556.4(bX6) (the
regulation already requires the manufacturer to sub-
mit its petition in three copies; thus, three copies of
the report will also be required).
In accordance with 5 U.S.C. 553(bX3XA) and (B),
because the amendment is procedural in nature and
does not alter the existing requirement to submit Part
573 reports containing defect or noncompliance deter-
minations, it is hereby found for good cause shown that
notice and public procedure thereon are unnecessary,
and the amendment is effective thirty days after its
publication in the Federal Register.
PART 556-PRE 5
In consideration of the foregoing, 49 CFR 5556 is safety related defect or noncompliance with an applica-
amended as follows: ble safety standard that is the subject of the petition. ' '
In Section 556.4(b), new subsection (6) is added to h Ifi 1991
read: "(6) Be accompanied by three copies of the report ^^^ " '
the manufacturer has submitted, or is submitting, to
NHTSA in accordance with Part 573 of this chapter, 56 F.R. 66374
relating to its determination of the existence of the December 23, 1991
PART 556-PRE 6
PART 556— EXEMPTION FOR INCONSEQUENTIAL DEFECT OR NONCOMPLIANCE
§ 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.
((6) Be accompanied by three copies of the re-
port the manufacturer has submitted, or is sub-
mitting, to NHTSA in accordance with Part 573 of
this chapter, relating to its determination of the
existence of the safety related defect or noncom-
pliance with an applicable safety standard that is
the subject of the petition." (56 F.R. 66374— Dec-
ember 23, 1991. Effective: January 22, 1992.))
(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-
turer of, nor will it be considered relevant to, the
(Rev. 12/23/91)
PART 556-1
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 relevant 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 5108, 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 3), 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 557, Petitions for Hearings on
Notif cation and Remedy of Defects, governing
petitions for hearings on whether or not a manu-
facturer has reasonably 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. The new part also specifies the pro-
cedures to be followed in holding such a hearing.
The NHTSA proposed the regulation (40 FR
56926, December 5, 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 which any interested person (including a
manufacturer) may make oral (as well as writ-
ten) presentations of data, views, and arguments
on the question of whether 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, dealers, 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 lemedy without charge such defects
or failures to comply. Section 156 also provides
that
[i]f the Secretary determines the manu-
facturei- 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 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 regidation.
The four commenters appeared to be unaware of
the provision for these hearings mandated by
section 156 of the Act, indei^endent 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 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
PAET 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 authority to carry out section 156
is vested in the Department of Transportation.
Firestone Tire and Rubber Company suo;'frested
that the hearing procedure could be consolidated
with the hearino: procedures set forth in Part 552
{Petitions for Rnlemaking, Defect, and Non-
compliance Orders) of XHTSA reo^ulations (49
CFR Part 552). Part 552 addresses the proce-
dures that arise from a request for the initiation
of a<iency 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 on^^oinof 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 confonn to the re-
quirements of Part 557 to be treated as a petition.
Wiile 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-confoi-ming 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 I'eason, the agency does not consider
necessaiT 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.
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 nonual letter fonnat,
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 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 XHTSA 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: January 31, 1977
Statinp the nature of tlie complaint is cleenied
necessary to allow XHTSA to ju(l<re whether the
issues of fact or opinion are of a type that could
he resolved by a hearinfr. In those cases where
facts or en<rineerin<r considerations are not at
issue and only a policy decision remains to be
made, the Administrator could make his findino;
without holdinir a hearing. A related factor
(listed as § 557.6(a) (4) ) is the NHTSA'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 gathered.
The agency therefore disagrees with the Center's
assessment of § 557.6(a)(1) and declines to
modify it or delete it.
The Center viewed the second factor listed in
§ 557.6 (the seriousness of the alle.fred breach of
obligation to remedy) as impermissibly vague
also. The Center's submission implies 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 obliTation" exists, all with differino- 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 originally
fitted. Another example would be a failure of
a notification letter to list the correct address of
the dealer that will undertake a particular re-
pair. The agency needs to exercise its discretion
in such cases to decide whether the gravity of the
objection merits a public hearing.
The Center also argued that §557.6(4) (the
ability of the NHTSA to resolve a problem with-
out holding a hearing) constitutes an impermis-
sible "escape hatch" from a<rency responsibilities.
This comment ignores the lan.qruage of the Act.
Section 156 states that the Secretai-y "may hold
a hearing," a statutory grant of discretion now
properly reflected in the implementing re<Tulation,
and intended to expedite the agency's decisions
in the public interest, not avoid them.
The Recreation Vehicle Industry Association
(RVIA) requested that the information pre-
sented to the NHTSA 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 tlie 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 factors other than
the information itself that would enter into the
decision whether or not a hearing is necessarj'.
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 gi-ant or deny the petition in time to notify
the petitioner within 60 days of receipt of the
petition. The Center argued for a SO-daj' limit,
arguing that a longer period would necessarily
liave serious safety consequencies in eveiT 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
woidd be necessary and desirable. The agency
laiows 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
sei'ves as a record function. Experience with a
similar publication schedule for denial of ride-
making petitions has been satisfactory.
PART 557— PRE 3
EfFcclive: January 31, 1977
The Centei- further sufffrested that all hearings
be conducted within 30 days of the decision to
j2:rant a hearing, and that a final decision on the
adequacy of notification or remedy be made with-
in 30 days of the liearinji. The agency intends
to schedule hearinfjs within a reasonable time
after the petition is granted, but is unable to
assure that a liearing can always he 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 than that
presented at the heai'ing and is not able to state
unequivocally that the hearing will produce the
information necessai^ to reach a decision within
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 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
KVIA, AMC. and International Harvester Com-
pany (IH) asked that tlie informal non-adver-
sarial hearings be revised to permit cross-exami-
nation of those who appear by tliose who disagree
with them. IH also asked that, upoji 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 NHTSA wishes to conform its re.iidation 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
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
private sectors, including possible loss of safety
benefits. In this case, the new regulation merely
establishes procedures to can-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 tlie hearing should have minimal costs of those,
including manufacturers, who participate. "VMiile
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 liigh-
way safety was contemplated by Congress in
providing for tlie hearings.
In consideration of the foregoing, a new Part
557, Petitions for Hearings on Notification 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. 93-492.
88 Stat. 1470 (15 U.S.C. 1416) ; delegation of
authority at 49 CFR 1.50)
Issued on December 22, 1976.
John W. 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.
§ 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 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 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 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
PREAMBLE TO AN AMENDMENT TO PART 565
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 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 imder
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
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 aU 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
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 AutomobOe 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 avaOable to State motor vehicle administra-
tions, law enforcement organizations, and other
PART 565-PRE 2
VIN users. The agency agrees that taking this step
would help assure that VIN users would have com-
plete and accurate information on the VIN's which
are actually assigned by the vehicle manufac-
turers. Accordingly, NHTSA will establish an in-
ternal procedure for routinely transmitting VIN
error information to NCIC and NATB.
Most commenters also suggested that the
agency define the term "trailer kit" and specify in
the regulation the agency's previously established
policy, i.e., that trailer kits are subject to the same
VIN requirements as trailers. The agency believes
that making these changes is appropriate, and is
adopting a definition of trailer kits based on
language in 49 CFR 567.4(g). "Trailer kits" are
defined as a trailer which is delivered in complete
but unassembled form, and which can be as-
sembled without special machinery or tools.
MVMA suggested that the "trailer kit" defini-
tion should be added to the definitions in the begin-
ning of Part 571. Taking that action would not
serve any present purpose, since the term is ap-
parently not used in any other FMVSS. MVMA
also suggested incorporating all the definitions in
Part 571 into FMVSS 115. The agency sees no
need for this change, and making the change could
have unintended effects, such as where a term's
definition in one standard is inappropriate for use
in FMVSS 115. Therefore, these recommendations
were not adopted.
The International Association of Chiefs of Police
and the NATB also suggested that the agency
define the term "glider kit" and specify that VIN
requirements are applicable to glider kits. Typi-
cally, a glider kit is a new truck cab, frame rails,
and front suspension without drive train (engine,
transmission, and rear axle). The treatment of
combinations of new and used components in a
single vehicle is currently specified in 49 CFR
571.7. Under that provision, the addition of a new
cab, frame rail, and front suspension is deemed to
create a new vehicle subject to all applicable safety
standards in effect as of the date of remanufac-
ture, unless the engine, transmission, and drive
axle (as a minimum) of the assembled vehicle are
not new and at least two of those listed com-
ponents were taken from the same vehicle. Thus,
in many situations, the use of a new glider kit
would not require that a new VIN be affixed to the
assembled vehicle. Further, it would be difficult for
the glider kit manufacturer to assign a VIN, as
suggested by the two commenters, since a truck
VIN must contain coded information regarding the
engine type, and the glider kit manufacturer would
not generally know what type of engine would be
used with a particular kit. Therefore, the agency is
not adopting the provisions suggested by these two
commenters, and will instead rely on the existing
regulations for dealing with glider kits.
The Iowa Department of Transportation ob-
jected to the practice of some motorcycle manufac-
turers of stamping a portion of the VIN on motor-
cycle frames. "The Iowa agency points out that this
practice could cause confusion as to which number
is the actual VIN. NHTSA has taken the position
that, so long as the vehicle manufacturer complies
with all requirements in FMVSS 115 with regard
to the specified 17 character number, these
manufacturers may affix other numbers to the
motorcycles for their own purposes. Currently,
NHTSA cannot justify altering this policy.
However, should we become aware of substantial
numbers of incidents where the use of this sup-
plementary number has undermined the Federal
VIN system, we may consider prohibiting these
supplementary numbers, requiring that sup-
plementary numbers must be the same 17
character number as the VIN, or some clarifying
labeling where other than the VIN is used. The
NCIC objected to the exemption of farm equip-
ment from VIN requirements. The VIN re-
quirements, like all of the FMVSS, apply only to
"motor vehicles", i.e., vehicles which are manufac-
tured primarily for use on the public roads, consist-
ent with the scope of the agency's regulatory
authority under the Act. See section 102(3) of the
Act. The agency lacks the authority to regulate
vehicles which are principally used off the public
roads, such as the vehicles cited by these two com-
menters. Should the States decide to apply VIN re-
quirements to such vehicles as a matter of State
law, NHTSA would have no objection.
Ford Motor Company and the MVMA pointed
out that the requirement that VIN's affixed to
vehicles must have a letter height of at least 4
millimeters should only apply to passenger cars
and trucks with a gross vehicle weight rating of
10,000 pounds or less as the requirement has ever
since it was established. In the NPRM, this re-
quirement was inadvertently applied to all motor
vehicles. The error is corrected in the final rule.
MVMA also requested that the new VIN regula-
tion maintain the requirement that, for manufac-
turers of under 500 vehicles per year, the third
PART 565-PRE 3
character of the VIN must be the number 9. The
agency deleted this provision, since prior to its
amendment today, FMVSS 115 gave the erroneous
impression that vehicle manufacturers selected the
world manufacturer identifier (WMI) portion of
their VIN's. In fact, the Society of Automotive
Engineers assigns those characters for U.S.
manufacturers. The deletion of the phrase specify-
ing the third character of the VIN for small
manufacturers in no way changes the intended
numbering system— SAE will continue to assign
WMI's as it has in the past.
The American Association of Motor Vehicle Ad-
ministrators has requested that NHTSA re-
emphasize that vehicle manufacturers must submit
and update deciphering information on their VIN
systems. This final rule continues to provide that
at least 60 days prior to affixing any VIN, or, when
information is unavailable at that time, within one
week after it becomes available, each manufac-
turer must submit information necessary to
decipher its VIN system. This requirement, which
has been in effect since January 1981, applies to
both the original submission of deciphering infor-
mation and to updates of that information as new
products are offered by the manufacturer. It is the
manufacturer's responsibility to assure that
deciphering information provided to NHTSA is
current.
Ford Motor Company argued that sections 108
and 152 of the Act, which the agency listed as part
of the legal authority for the new VIN regulation,
are not appropriate authority for this action. Sec-
tion 108 was cited as authority merely to point out
that, in conjunction with the reference to section
112 as authority for the action, failure to comply
with the VIN regulation would be enforceable as a
violation of section 108(a) (1) (E) of the Act. The
reference to section 152 is included to point out the
regulation is issued to facilitate carrying out the
recall provisions of section 152 of the Act. The
NPRM should also have included (and this final
rule includes) a reference to the safety research
authority of section 106 of the Act, a major use of
the VIN information.
This action is being made effective 30 days after
publication in the Federal Register. This relatively
expedited effective date is in the public interest
since it will quickly remove the potential problem
of unwarranted VIN-related recalls.
The principal impact of this action is to remove
this threat of an unduly burdensome recall require-
ment to correct VIN errors. The new Part 565
would not have any requirements not in FMVSS
115 prior to today. The agency anticipates that the
manufacturers will continue to assign VIN's in the
same manner regardless of whether VIN require-
ments take the form of a safety standard or a
regulation. Further, the agency anticipates that
the corrective action required in case of erroneous
VIN's would not essentially differ as a result of this
proposed change, since only in extreme cases can
the agency envision having to order a vehicle
recall.
This action should have a small positive impact
on foreign trade, since it removes the threat to
foreign manufacturers of a potentially burdensome
recall campaign to correct minor VIN errors. Also,
the exemption of vehicles imported under bond will
have a small positive impact on foreign trade.
The agency has concluded that the environmen-
tal 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 en-
vironment; that this proposal does not qualify as a
"major rule" within the meaning of Executive
Order 12291; and that due to its minimal cost im-
pacts, this rule is not "significant" within the
meaning of the Department's regulatory pro-
cedures. Therefore, preparation of neither a
regulatory analysis nor full regulatory evaluation
is necessary for this action. The agency notes this
rulemaking action should have a small, positive im-
pact on small firms— particularly small manufac-
turers and small importers. This regulation pro-
vides relief to small manufacturers from the
generally applicable 60-day VIN prenotification re-
quirements in the case of orders for unique vehicle
configurations. The agency is also exempting small
importers (principally individuals importing one
vehicle for their own use) from certain VIN format
and content requirements. Given the relatively
minor economic consequences of these changes, I
certify that this action will have no significant
economic impact on a substantial number of small
entities, including small organizations or govern-
mental units. These changes should have no impact
on vehicle prices. For this reason and because
VIN's will continue to be assigned to new vehicles
as before, the agency does not anticipate any im-
pacts on small organizations or governmental
PART 565-PRE 4
»
units. Accordingly, no Regulatory Flexibility Issued May 13, 1983.
Analysis has been prepared. Raymond A. Peck, Jr.,
For the reasons stated above, the agency is Administrator
amending Chapter V of Title 49 of the Code of 48 F.R. 22567
Federal Regulations by adding a new Part 565. May 19, 1983
»
PART 565-PRE 5-6
A
PREAMBLE TO AN AMENDMENT TO PART 565
Vehicle Identification Number — Content Requirements
[Docket No. 88-02; Notice 2]
ACTION: Final Rule.
SUMMARY: This notice amends 49 CFR Part 565,
Vehicle Identification Number— Content Require-
ments, by simplifying vehicle identification infor-
mation coding requirements for trailer manufac-
turers. Specifically, this rule amends Table I,
section 565.4, by deleting the requirement that
trailer manufacturers include in the VIN code a
"series" designation for trailers, and by changing
vehicle attributes for incomplete trailers. The
amendment will bring VIN requirements for
trailers in line with actual trailer manufacturing
practices, thereby facilitating VIN information
retrieval, and increasing the accuracy and effi-
ciency of vehicle defect recall campaigns.
EFFECTIVE DATE: February 16, 1988.
SUPPLEMENTARY INFORMATION: /wfrodwdioH.
Under Standard 115, Vehicle Identification
Number— Basic Requirements, a motor vehicle
manufacturer must assign a 17-character vehicle
identification number (VIN) to each vehicle it
makes. The purposes of the VIN system are to
simplify vehicle identification information re-
trieval, and increase the accuracy and efficiency
of vehicle defect recall campaigns. Title 49 CFR
Part 565, Vehicle Identification Number— Content
Requirements, sets forth format and content re-
quirements for VINs. Section 565.4, General
Requirements, tells what information a manufac-
turer must code into a VIN, and in what sequence.
Under section 565.4, the 17-character VIN is
divided into four sections. The first section uni-
quely identifies the vehicle manufacturer, make,
and type. The second encodes vehicle attributes
which vary according to vehicle type. The third
section consists of one character (the check digit),
and serves to verify the accuracy of a VIN trans-
cription. The final section encodes the vehicle
model year, the plant of manufacture, and the
number sequentially assigned by the manufac-
turer in the production process. This amendment
affects only the second VIN sequence consisting of
the five characters in positions four through eight
(4-8).
In this section, a VIN number must disclose
those unique motor vehicle attributes set out in
Table I of section 565.4. In encoding these attrib-
utes, a manufacturer may determine what char-
acters to use and the order in which to place them.
The manufacturer must supply NHTSA with
whatever information is necessary to decipher the
meaning of its characters relative to Table I.
Currently, for trailer or trailer kit, Table I
requires a manufacturer to identify (1) the type of
trailer; (2) series; (3) body type; (4) length; and (5)
axle configuration.
On May 19, 1986, in response to a petition for
rulemaking from the Truck Trailer Manufactur-
ers Association (TTMA), this agency published a
notice proposing to amend Table I. In support of
its petition, TTMA stated that a survey of its
membership revealed that trailer manufacturers
do not divide their product lines by series as auto-
mobile manufacturers do. TTMA asserted that
trailers are identified sufficiently by trailer type,
body type, length, and axle configuration. Further,
TTMA asserted that requiring a series designa-
tion in trailer VINs may not simplify vehicle iden-
tification information retrieval, or contribute to
the accurate identification of a particular trailer.
For these reasons, TTMA's first request was that
NHTSA remove the "series" designation as an
attribute that a trailer manufacturer must iden-
tify in a VIN.
TTMA's second request concerned incomplete
trailers. Currently, Table I states five attributes
which a manufacturer must encode in the VIN for
any type of incomplete vehicle, including trailers.
These attributes are model or line, series, cab
type, engine type, and brake system. TTMA asked
that NHTSA amend Table I to delete the "brake
system" designation for incomplete trailers. How-
ever, upon further examination of this issue, the
agency tentatively determined that most of the
"incomplete vehicle" attributes may be inapprop-
riate for trailers, and proposed that manufactur-
ers encode the same attributes for incomplete and
complete trailers. The VINs for all trailer catego-
ries would be required to include information
respecting trailer type, body type, length, and
axle configuration.
PART 565-PRE 7
Comments. NHTSA received two comments on
the proposed rule — one from the petitioner, and
one from Theurer, Inc., a truck trailer manufac-
turer. TTMA made a summary statement in
support of the proposal. Theurer agreed that the
term "series" did not apply to its product line, that
a trailer manufacturer should encode the same
attributes for incomplete and complete trailers,
and that the company believed the economic
consequences of the revision would be minimal.
Adopting the Proposed Changes. After reviewing
the comments, NHTSA has determined that the
proposed changes to Table I should be adopted.
The primary purpose of the VIN requirement is to
facilitate identifying a motor vehicle that may be
the subject of a vehicle recall campaign. If one can
identify trailers through trailer type, body type,
length, and axle configuration, there is no need to
require the use of any designation that fails to
serve Part 565's purpose, and that compels a
manufacturer to include a superfluous designation
or risk violating the regulation. Therefore, this
rule deletes the requirement that trailers be
identified by "series."
Therefore, NHTSA amends Table I of section
565.4 by doing the following: First, the agency is
deleting "series" from the list of those attributes a
trailer manufacturer must encode in the second
VIN sequence. Second, the agency removes
"incomplete trailers" from the "incomplete vehi-
cle" category, and places "incomplete trailers," in
the "trailer and trailer kits" category. This change
means that a trailer manufacturer must encode
the same attributes in that second VIN sequence
Irrespective of whether the trailer is complete or
incomplete. Finally, the agency makes a technical
correction by removing an erroneous reference to
"Footnote 1" after "axle configuration" in the list
of trailer attributes. These changes will affect the
manufacturers of certain vehicles as follows:
Complete Tra Hers and Tra Her Kits. With respect
to complete trailers and trailer kits, the agency
would like to emphasize two points. First, the
agency notes that this amendment of Table I does
not require a manufacturer to change the charac-
ters currently used in the second section. Instead,
Part 565 permits each trailer manufacturer to
decide whether to delete whatever character now
occupies the "series" space. If a trailer manufac-
turer decides to change the VIN by deleting the
"series" character or changing the code with
respect to these four attributes, then the manufac-
turer must submit new material to this agency
informing NHTSA how to read this sequence.
Second, as a result of this amendment, manu-
facturers of complete trailers and trailer kits now ^^^
have five characters with which to describe the ^^9
four Table I attributes. In this second VIN se-
quence, a manufacturer determines what charac-
ters to use and where to place them. A manufac-
turer may choose to use two characters to indicate
any one of these attributes.
Incomplete Trailers. With respect to incomplete
trailers, this amendment changes both the number
and nature of the attributes an incomplete trailer
manufacturer must encode in the second sequence.
Because of this amendment, every manufacturer
of incomplete trailers must change the attributes
used in this section. Also, these manufacturers
must submit material to the agency explaining
how to decipher the sequence relative to the four
new attributes these manufacturers now must
encode in a VIN.
The agency amends Part 565, Vehicle Identifi-
cation Number — Content Regxirements, in Title 49
of the Code of Federal Regulations, as follows:
Table I in Section 565.4 is revised to read as
follows:
TABLE I-TYPE OF VEHICLE AND
INFORMATION DECIPHERABLE
Passenger car: Line, series, body type, engine
type,^ and restraint system type.
Multi-purpose passenger vehicle: Line, series,
body type, engine type,^ gross vehicle weight
rating.
Truck: Model or line, series, chassis, cab type,
engine type,^ brake system and gross vehicle
weight rating.
Bus: Model or line, series, body type, engine
type,^ and brake system.
Trailer, including trailer kit and incomplete
trailer: Type of trailer, body type, length, and axle
configuration.
Motorcycle: Type of motorcycle, line, engine
type,' and net brake horsepower.'
Incomplete vehicle other than trailer: Model or
line, series, cab type, engine type.' and brake
system.
Issued January 11, 1988
Diane K. Steed
Administrator
53 F.R. 1032
January 15, 1988
PART 565-PRE 8
PREAMBLE TO AN AMENDMENT TO PART 565
Vehicle Identification Number— Content Requirements
(Docket No. Not issued)
ACTION: Final rule.
Summary: This notice amends the applicability section
of Part 565 to substitute a reference to Part 591 of this
title for a reference to 19 CFR 12.80. This amendment
conforms to Part 565 with the requirements of amend-
ments made to the National Traffic and Motor Vehicle
Safety Act by P. L. 100-562.
EFFECTIVE DATE: January 31, 1990
SUPPLEMENTARY INFORMATION: The National
Traffic and Motor Vehicle Safety Act was amended by
the Imported Vehicle Safety Compliance Act of 1988
(P.L. 100-562). Those amendments were enacted on
October 31, 1988, and will become effective January 31,
1990. The amendments revoke the joint authority
previously provided by 15 U.S.C. 1397(b)(3) under
which motor vehicles subject to the Federal motor
vehicle safety standards are admitted into the United
States pursuant to joint regulations issued by the
Departments of Treasury and Transportation. Instead,
the Vehicle Safety Act, as amended, vests the primary
importation regulatory authority in the Department of
Transportation.
The existing joint vehicle importation regulation is
19 CFR 12.80. The forthcoming importation regulation
of this agency is 49 CFR Part 591. Paragraph S2,
Applicability of 49 CFR Part 565, Vehicle Identification
Number — Content Requirements, exempts "Vehicles
imported into the United States under 19 CFR
12.80(b)(l)(iii), other than by a corporation which was
responsible for assembly of that vehicle or a subsidiary
of such a corporation . . . ." This relates to the
importation of vehicles not originally manufactured to
conform to the Federal motor vehicle safety standards.
The section of the new importation regulation that
corresponds to 12.80(b)(l)(iii) is 49 CFR 591.5(f). This
notice amends Part 565 to delete reference to the old
authority and to add reference to the new one.
Since the amendment substitutes one authority for
another and is procedural in nature, it is hereby found
that notice and public comment thereon is unnecessary.
In consideration of the foregoing. Part 565 is amended
to read as follows:
In paragraph 565.2, the citation "19 CFR 12.80(b)
(l)(iii)" is changed to read "paragraph 591.5(f) of this
chapter".
Issued on October 5, 1989.
Jeffrey R. Miller
Acting Administrator
54 F.R. 41843
October 12, 1989
PART 565-PRE 9-10
PART 565— VEHICLE IDENTIFICATION NUMBER-
CONTENT REQUIREMENTS
Sec.
565.1
565.2
565.3
565.4
565.5
Purpose and scope.
Applications.
Definitions.
General requirements.
Reporting requirements.
§ 565.1 Purpose and scope.
This regulation specifies the format and content
for a vehicle identification number (VIN) system to
simplify vehicle identification information retrieval
and increase the accuracy and efficiency of vehicle
defect recall campaigns.
§ 565.2 Applicability.
This regulation applies to passenger cars, multi-
purpose passenger vehicles, trucks, buses, trailers
(including trailer kits), incomplete vehicles and
motorcycles. Vehicles imported into the United
States under [paragraph 591.5(f) of this chapter),
other than by a corporation which was responsible
for the assembly of that vehicle or a subsidiary of
such a corporation, are exempt from the re-
quirements of this Part. (54 F.R. 41843. October 12,
1989. Effective: January 31, 1990)
§ 565.3 Definitions.
(a) Statutory Definitions: All terms used in this
part that are defined in section 102 of the National
Traffic and Motor Vehicle Safety Act of 1966 (15
U.S.C. 1391) are used as defined in the Act.
(b) Motor Vehicle Safety Standard Definitions:
Unless otherwise indicated, all terms used in this
part that are defined in 49 CFR 571.115 are used
as defined therein.
(c) "Body Type" means the general configura-
tion or shape of a vehicle distinguished by such
characteristics as the number of doors or windows,
cargo-carrying features and the roofline (e.g.,
sedan, fastback, hatchback).
(d) "Engine Type" means a power source with
defined characteristics such as fuel utilized,
number of cylinders, displacement, and net brake
horsepower. The specific manufacturer and make
shall be represented if the engine powers a pas-
senger car or a multipurpose passenger vehicle, or
truck with a gross vehicle weight rating of 10,000
pounds or less.
(e) "Line" means a name which a manufactiu*er
applies to a family of vehicles within a make which
have a degree of commonality in construction, such
as body, chassis or cab type.
(f) "Make" means a name which a manufacturer
applies to a group of vehicles or engines.
(g) "Model" means a name which a manufac-
turer applies to a family of vehicles of the same
type, make, Hne, series, and body type.
(h) "Model Year" means the year used to
designate a discrete vehicle model irrespective of
the calendar year in which the vehicle was actually
produced, so long as the actual period is less than
two calendar years.
(i) "Plant of manufacture" means the plant
where the manufacturer affixes the VIN.
(j) "Series" means a name which a manufac-
turer applies to a subdivision of a "line" denoting
price, size or weight identification, and which is
utilized by the manufacturer for marketing pur-
poses.
(k) "Type" means a class of vehicle distin-
guished by common traits, including design and
purpose. Passenger cars, multipurpose passenger
vehicles, trucks, buses, trailers, incomplete
vehicles, and motorcycles are separate types.
§ 565.4 General requirements.
The VIN shall consist of four sections of
characters which shall be grouped accordingly:
(a) The first section shall consist of three
characters which occupy positions one through
three (1-3) in the VIN. This section shall uniquely
identify the manufacturer, make and type of the
motor vehicle if its manufacturer produces 500 or
more motor vehicles of its type annually. If the
(Rev. 10/12/89)
PART 565-1
manufacturer produces less than 500 motor
vehicles of its type annually, those three characters
along with the third, fourth and fifth characters of
the fourth section shall uniquely identify the
manufacturer, make and type of the motor vehicle.
These characters are assigned in accordance with
section 565.5(c) of this Part.
(b) The second section shall consist of five
characters which occupy positions four through
eight (4-8) in the VIN. This section shall uniquely
identify the attributes of the vehicles as specified in
Table I. For passenger cars, and for multipurpose
passenger vehicles and trucks with a gross vehicle
weight rating of 10,000 pounds or less, the first
and second characters shall be alphabetic and the
third and fourth characters shall be numeric. The
fifth character may be either alphabetic or
numeric. The characters utilized and their place-
ment within the section may be determined by the
manufacturer, but the specified attributes must be
decipherable with information supplied by the
manufacturer in accordance with § 565.5(d) of this
Part. In submitting the required information to the
NHTSA relating to gross vehicle weight rating,
the designations in Table II shall be utilized. The
use of these designations within the VIN itself is
not required.
Table I.— Type of Vehicle and Information
Decipherable
Passenger car: Line, series, body type, engine
type,^ and restraint system type.
Multipurpose passenger vehicle: Line, series, body
type, engine type,^ gross vehicle weight rating.
Truck: Model or line, series, chassis, cab type,
engine type,^ brake system and gross vehicle
weight rating.
Bus: Model or line, series, body type, engine type,^
and brake system.
Trailer, including trailer kit land incomplete
trailer:) Type of trailer, series, body type,
length, and axle configuration. >
Motorcycle: Type of motorcycle, line, engine type,^
and net brake horsepower.^
Incomplete vehicle lother than trailer:) Model or
line, series, cab type, engine type,* and brake
system. (53 F.R. 1032— January 15, 1988. Effective:
February 16, 1988)
Table II.— Gross Vehicle Weight Rating Classes
Class A Not greater than 3,000 pounds.
Class B 3,001-4,000 pounds.
Class C 4,001-5,000 pounds.
Class D 5,001-6,000 pounds.
Class E 6,001-7,000 pounds.
Class F 7,001-8,000 pounds.
Class G 8,001-9,000 pounds.
Class H 9,001-10,000 pounds.
Class 3 10,001-14,000 pounds.
Class 4 14,001-16,000 pounds.
Class 5 16,001-19,500 pounds.
Class 6 19,501-26,000 pounds.
Class 7 26,001-33,000 pounds.
Class 8 33,001 pounds and over.
(c) The third section shall consist of one
character which occupies position nine (9) in type
VIN. This section shall be the check digit whose
purpose is to provide a means for verifying the ac-
curacy of any VIN transcription. After all other
characters in VIN have been determined by the
manufacturer, the check digit shall be calculated
by carrying out the mathematical computation
specified in paragraphs (c) (1) through (4) of this
section.
(1) Assign to each number in the VIN its ac-
tual mathematical value and assign to each letter
the value specified for it in Table III.
Table III.— Assigned Values
A = l
J = l
T = 3
B = 2
K = 2
U = 4
C = 3
L = 3
V=5
D = 4
M = 4
W = 6
E = 5
N = 5
X = 7
F = 6
P = 7
Y = 8
G = 7
R = 9
Z = 9
H = 8
S = 2
(2) Multiply the assigned value for each
character in the VIN by the position weight fac-
tor specified in Table IV.
' Engine net brake horsepower when encoded in the
VIN shall differ by no more than 10 percent from the
actual net brake horsepower, shall, in the case of
motorcycle with an actual net brake horsepower of 2 or
less, be not more than 2; and shall, in the case of a
motorcycle with an actual brake horsepower greater
than 2, be greater than 2.
(Rev. 1/15/88)
PART 565-2
Table IV.— VIN Position and Weight Factor
1st 8 10th .
2d ,
3d .
4th.
5th.
6th.
7th.
8th
7
6
5
4
3
2
10
9th (check digit) 0
nth.
12th.
13th.
14th.
15th.
16th.
17th.
(3) Add the resulting products and divide the
total by 11.
(4) The numerical remainder is the check digit.
If the remainder is 10 the letter "X" shall be
used to designate the check digit. The correct
numerical remainder zero through nine (0-9) or
the letter "X" shall appear in VIN position nine
(9).
(5) A sample check digit calculation is shown
in Table V.
Table V.— Calculations of a Check Digit
VIN Position
Sample VIN
Assigned Value
Multiply by weight factor .
2
G
7
7
4
A
1
5
5
H
H
10 0
10
11
12
13
14
15
16
17
5
-G
1
1
8
3
4
1
5
7
1
1
8
3
4
1
9
8
7
6
5
4
3
2
Add products 8 + 49 + 24 + 5 + 32 + 15 + 18 + 80 + 0 + 45 + 56 + 7 + 6 + 40 + 12 + 12 + 2 = 411
Divide sum of products by 11:411/11 = 37"/^^
Remainder is checi( digit H {insert in VIN position nine (9)
(d) The fourth section shall consist of eight
characters which occupy positions ten through
seventeen (10-17) of the VIN. The last five (5)
characters of this section shall be numeric for
passenger cars, and for multipurpose passenger
vehicles and trucks with a gross vehicle weight
rating of 10,000 pounds or less, and the last four (4)
characters shall be numeric for all other vehicles.
(1) The first character of the fourth section
shall represent the vehicle model year. The year
shall be designated as indicated in Table VI.
Table VI
Year
Code
Year
Code
1980 A 1997
1981 B 1998
1982 C 1999
1983 D 2000
1984 E 2001
1985 F 2002
1986 G 2003
1987 H 2004
1988 J 2005
1989 K 2006
1990 L 2007
1991 M 2008
1992 N 2009
1993 P 2010
1994 R 2011
1995 S 2012
1996 T 2013
V
W
X
Y
1
2
3
4
5
6
7
8
9
A
B
C
D
(2) The second character of the fourth section
shall represent the plant of manufacture.
(3) The third through the eighth characters of
the fourth section shall represent the number se-
quentially assigned by the manufacturer in the
production process if the manufacturer produces
500 or more vehicles of its type annually. If the
manufacturer produces less than 500 motor
vehicles of its type annually, the third, fourth,
and fifth characters of the fourth section, com-
bined with the three characters of the first sec-
tion, shall uniquely identify the manufacturer,
make and type of the motor vehicle and the sixth,
seventh, and eighth characters of the fourth sec-
tion shall represent the number sequentially
assigned by the manufacturer in the production
process.
§ 565.5 Reporting requirements.
(a) Information collection requirements con-
tained in this regulation have been approved by the
Office of Management and Budget under the provi-
sions of the Paperwork Reduction Act (Pub. L.
96-511) and have been assigned 0MB Control
Number 2127-0051.
(b) Manufacturers of motor vehicles subject to
this regulation shall submit, either directly or
through an agent, the unique identifier for each
make and type of vehicle it manufactures at least
PART 565-3
60 days before affixing the first VIN using the
identifier. Manufacturers whose unique identifier
appears in the fourth section of the VIN shall also
submit the three characters of the first section
which constitutes a part of their identifier.
(c) The NHTSA has contracted with the Society
of Automotive Engineers (SAE) to coordinate the
assignment of manufacturer identifiers. Manufac-
turer identifiers will be supplied by SAE at no
charge. All requests for assignments of manufac-
turer identifiers should be forwarded directly to:
Society of Automotive Engineers, 400 Com-
monwealth Avenue, Warrendale, Pennsylvania
15096, Attention: WMI Coordinator.
Any requests for identifiers submitted to
NHTSA will be forwarded to SAE. Manufacturers
may request a specific identifier or may request
only assignment of an identifier(s). SAE will
review requests for specific identifiers to deter-
mine that they do not conflict with an identifier
already assigned or block of identifiers already
reserved. SAE will confirm the assignments in
writing to the requester. Once confirmed by SAE,
the identifier need not be resubmitted to the
NHTSA.
(d) Manufacturers of motor vehicles subject to
the requirements of this regulation shall submit to
the NHTSA the information necessary to decipher
the characters contained in its VIN's. Amend-
ments to this information shall be submitted to the
agency for VIN's containing an amended coding.
The agency will not routinely provide written ap-
provals of these submissions, but will contact the
manufacturer should any corrections to these sub-
missions be necessary.
(e) The information required under paragraph
(d) of this section shall be submitted at least 60
days prior to offering for sale the first vehicle iden-
tified by a VIN containing that information, or if
information concerning vehicle characteristics suf-
ficient to specify the VIN Code is unavailable to the
manufacturer by that date, then within one week
after that information first becomes available. The
information shall be addressed to: Administrator,
National Highway Traffic Safety Administration,
400 Seventh Street, S.W., Washington, D.C.
20590, Attention: VIN Coordinator.
PART 565-4
Effccllv*: February 1, 1972
PREAMBLE TO PART 566— MANUFAaURER IDENTIFICATION
(Docket No. 71-11; Notice 2)
This notice adopts a new Part 566 in Title 49,
Code of Federal Regulations, to require manu-
facturers of motor vehicles, and manufacturers
of motor vehicle equipment to which a motor
vehicle safety standard applies, to submit iden-
tifying information and a description of the
items they produce. A notice of proposed rule-
making on this subject was published on April
28, 1971 (36 F.R. 7970). The comments re-
ceived in response to the notice have been con-
sidered in this issuance of a final rule. The final
rule exempts tire manufacturers from coverage,
deletes the required submittal of estimated an-
nual production, and requires the manufacturer
to submit revised information when necessary to
keep his entry current.
As noted in the proposal of April 28, 1971 (36
F.R. 7970) the establishment of a centrally or-
ganized system to collect information regarding
the manufacturer's corporate status, mailing ad-
dress, and items manufactured has been found
necessary lor efficient enforcement of the Act,
as well as for distribution of information to
manufacturers.
.jt^i^eral manufacturers stated that the informa-
tion required by the regulations is already sub-
mitted to the NHTSA under existing regula-
tions. This claim is true only with respect to
tire manufacturers, who are required under Part
574, Tire Identification and Recordkeeping, (36
F.R. 1196, at 1197-8) to submit to the NHTSA
data which would meet the requirements of the
proposed regulation in order to obtain their code
numbers. The tire manufacturers' request for
exemption has therefore been granted.
While it is true that the Defect Reports reg-
ulation (36 F.R. 3064) requires the submittal
of some information similar to the data collected
under the proposed regulation, the former re-
quirement does not provide the comprehensive
data required by the Administration.
The largest number of comments were di-
rected at the required submittal of estimated
annual production figures. Upon consideration
of the comments and review of the Administra-
tion's need for this data, it has been determined
that its collection would create difficulties for
the industry that outweigh its benefits, par-
ticularly since approximate information about
production is available to the NHTSA from
other sources. Therefore this requirement is
deleted.
A number of manufacturers were uncertain
about their coverage under the proposed regula-
tion. One packager of brake fluids stated that
he did not manufacture the fluid and wished to
know whether he is considered a manufacturer
under the regulation. The packager's operations
may significantly affect the quality of the brake
fluid. Moreover, under amended Federal Vehicle
Safety Standard No. 116, "Motor Vehicle Hy-
draulic Brake Fluids", the original manufacturer
in some cases will not be identified on the con-
tainer label. For these reasons it has been deter-
mined that for the purposes of this regulation,
a person who packages brake fluid from a bulk
state shall be considered a manufacturer of
motor vehicle equipment and therefore subject
to the regulation.
A manufacturer of mobile homes sought an
exemption from coverage on the grounds that
the general public does not usually engage in
transporting mobile structure trailers. The fact
that only "experts" transport the regulated ve-
hicle is not germane to the question of its inclu-
sion under the regulation, however, since the
identification requirement is based on the general
determination that the centralized data system
PART 566— PRE 1
ElhcHv*: Nbruary 1, 1972
will improve enforcement of the Act and com-
munication with manufacturers.
An incomplete vehicle manufacturer submitted
a comment regarding the requirement that manu-
facturers of multipurpose passenger vehicles,
trucks and trailers submit a description indi-
cating the intended final use of their product.
The final rule as issued does not specifically
include incomplete vehicJe manufacturers. A
notice of proposed rulemaking published in this
issue of the Federal Register would, however,
amend the regulation to provide coverage of
incomplete vehicles.
The time-of -submittal section has been clarified
in light of the comments. It is intended that a
manufacturer supply the required information
when he begins to manufacture the motor ve-
hicle or covered equipment. The regulation has
been amended to indicate that subsequent sub-
mittals will be necessary only when changes in
the manufacturer's business render the submitted
data inaccurate or incomplete.
A number of manufacturers offered recom-
mendations as to the classification system to be
adopted by the Administration utilizing the data
collected under this regulation. Such discussion
is beyond the scope of this regulation, but these
suggestions will be considered at the appropriate
time.
One manufacturer petitioned for a public
hearing to discuss the NHTSA's planned use of
the information collected under the regulation.
Since the required submittal of estimated annual
production figures has been deleted from the
final rule, the concern about the use of the in-
formation by the Administration would appear
to be dispelled, and a public hearing has been
found to be unnecessary. The petition is there-
fore denied.
Effective date: February 1, 1972.
In consideration of the above. Part 566, Manu-
facturer Identification, is added to Title 49, Code
of Federal Regulations. . . .
Issued on October 22, 1971.
Douglas W. Toms
Administrator
36 F.R. 20977
November 2, 1971
PART 566— PRE 2
MacHva: February 1, 1973
PREAMBLE TO AMENDMENT TO PART 566— MANUFAaURER IDENTIFICATION
(Docket No. 71-11; Notice 4)
This notice amends Part 566 in Title 49, Code
of Federal Regulations, to provide for the cov-
erage of "incomplete vehicles," as defined in Part
568, Vehicles Manufactured in Two or More
Stages. A notice of proposed rulemaking on this
subject was published on November 2, 1971 (36
F.R. 20987). No comments on the proposed
amendment were received, and the amendment
is adopted as proposed.
Part 566, published on November 2, 1971 (36
F.R. 20977), requires manufacturers of motor
vehicles and of motor vehicle equipment other
than tires to which a motor vehicle safety stand-
ard applies to submit identifying information
and a description of the items which they pro-
duce. In responding to a comment on the pro-
posed regulation from an incomplete vehicle
manufacturer, it was noted that while the regu-
lation clearly covers intermediate and final-stage
manufacturers (as defined in Part 568) it makes
no reference to incomplete vehicle manufactur-
ers. This amendment is intended to clarify this
ambiguity by specifically providing for coverage
of incomplete vehicles.
The incomplete vehicle manufacturer stated
that he was unaware of the final use of his light
truck vehicles and requested that he be. permitted
to submit a brief description of the incomplete
vehicle expressed in the terminology of the in-
dustry as an alternative to the description in
terms of final use. This method for incomplete
vehicle manufacturers has been found acceptable,
and the NHTSA accordingly grants this request.
In consideration of the foregoing, the NHTSA
adopts amendments to Part 566 of Title 49, Code
of Federal Regulations ....
Effective date: February 1, 1972.
This amendment is issued under the authority
of sections 103, 108, 112 and 119 of the National
Traffic and Motor Vehicle Safety Act of 1966,
15 U.S.C. 1392, 1397, 1401, 1407, and the delega-
tion of authority at 49 CFR 1.51.
Issued on January 24, 1972.
Douglas W. Toms
Administrator
37 F.R. 1364
January 28, 1972
PART 666— PRE 3-4
t
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(#
PREAMBLE TO AN AMENDMENT TO PART 566
Manufacturers Identification
(Docket No. 71.1; Notice 3)
ACTION: Final Rule (correction)
SUMMARY: This document corrects two citation ref-
erences in 49 CFR Part 566, Manufacturer Identifica-
tion. Part 566 requires motor vehicle and motor vehi-
cle equipment manufacturers to supply NHTSA with
information identifying themselves, and describing
their products.
DATES: This correction is effective June 2, 1988.
SUPPLEMENTARY INFORMATION: On November 2,
1971, NHTSA published a final rule adding Part 566,
Manufacturer Identification, to title 49 of the Code of
Federal Regulations (CFR). (36 FR 20977, November
2, 1971.) This Part requires a manufacturer of motor
vehicle or motor vehicle equipment to supply NHTSA
with information identifying the manufacturer, and
describing its products.
It has come to the agency's attention that section
566.6 incorrectly refers to section 566.4 in two in-
stances. In the first instance, there is a reference to
manufacturers required to submit information under
section 566.4. In the second instance, there is a refer-
ence to information specified under paragraphs (a)
through (c) of section 566.4. In both instances, the cor-
rect reference is section 566.5, not section 566.4.
Therefore, Section 566.6 is revised as fellows:
§566.6 Submittal of Information.
In §566.6, remove internal references to "§566.4"
and add in its place, "§566.5."
Issued on May 26, 1988.
Barry Felrice
Associate Administrator
for Rulemaking
53 F.R. 20119
June 2, 1988
PART 566-PRE 5-6
t
i
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PART 566— MANUFACTURER IDENTIFICATION
(Docket No. 71-11; Notice 2)
§ 566.1 Scope. This part requires manufac-
turers of motor vehicles, and of motor vehicle
equipment to which a motor vehicle safety
standard applies, to submit identifying information
and a description of the items they produce.
§ 566.2 Purpose. The purpose of this part is to
facilitate the regulation of manufacturers under
the National Traffic and Motor Vehicle Safety Act,
and to aid in establishing a code numbering system
for all regulated manufacturers.
§ 566.3 Application. This part applies to all
manufacturers of motor vehicles, and to manufac-
turers of motor vehicle equipment, other than
tires, to which a motor vehicle safety standard
applies (hereafter referred to as "covered equip-
ment").
§ 566.4 Definitions. All terms defined in the Act
and the rule and standards issued imder its authority
are used as defined therein. Specifically, "incomplete
vehicle," "intermediate manufacturer," and "final-
stage manufacturer" are used as defined in Part 568,
Vehicles Manufactured in Two or More Stages.
§ 566.5 Requirements. Each manufacturer of
motor vehicles, and each manufacturer of covered
equipment, shall furnish the information specified
in paragraphs (a) through (c) of this section to:
Administrator, National Highway Traffic Safety
Administration, 400 Seventh Street, S.W.,
Washington, D.C. 20590.
(a) Full individual, partnership, or corporate
name of the manufacturer.
(b) Residence address of the manufacturer and
State of incorporation if applicable.
(c) Description of each type of motor vehicle or
of covered equipment manufactured by the
manufacturer, including for motor vehicles, the
approximate ranges of gross vehicle weigh ratings
for each type.
(1) Except as noted below, the description
may be of general types, such as "passenger cars"
or "brake fluid."
(2) In the case of multipurpose passenger
vehicles, trucks, and trailers, the description shall
be specific enough also to indicate the types of use
for which the vehicles are intended, such as "tank
trailer," "motor home", or "cargo van."
(3) In thfe case of motor vehicles produced in
two or more stages, if the manufacturer is an in-
complete vehicle manufacturer, the description
shall so state and include a description indicating
the stage of completion of the vehicle and, where
known, the types of use for which the vehicle is in-
tended.
EXAIVIPLE: "Incomplete vehicle manufacturer
—Chassis-cab intended for completion as van-
type truck."
If the manufacturer is an intermediate manufac-
turer, or a final stage manufacturer, the descrip-
tion shall so state and include a brief description of
the work performed.
EXAIVIPLE: "Multipurpose passenger vehicles:
Motor homes with GVWR from 8,000 to
12,000 pounds. Final-stage manufacturer-
add body to bare chassis."
§ 566.6 Submittal of information. Each manufac-
turer required to submit information under [§ 566.5]
shall submit the information not later than February
1, 1972. After that date, each person who begins to
manufacture a type of motor vehicle or covered
equipment for which he has not submitted the
required information shall submit the information
specified in paragraphs (a) through (c) of I§ 566.5]
not later than 30 days after he begins manufacture.
Each manufacturer who has submitted required in-
formation shall keep his entry current, accurate and
complete by submitting re\ased information not later
than 30 days after the relevant changes in his
business occur.
36 F.R. 20977
November 2, 1981
(Rev. 6/2/88)
PART 566-1-2
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Effcctlv*: S«pt*inb«r 1, 1969
PREAMBLE TO PART 567— CERTIFICATION
Regulations for the certification labeling of
motor vehicles and motor vehicle equipment, and
the provision of identifying information on the
label, were issued under sections 112, 114, and
119 of the National Traffic and Motor Vehicle
Safety Act (15 U.S.C. 1401, 1403, 1407) by the
Federal Highway Administrator and published
in the Federal Register on January 24, 1969 (34
F.R. 1147). In a notice published on April 29,
1969, (34 F.R. 7031) it was proposed to make
certain amendments to those regulations. This
amendment to the regulations is based on that
proposal.
The notice proposed that sections 367.7 and
367.8, relating to manufacturers and distributors
of motor vehicle equipment, be revoked, pending
further study of the distribution patterns and
the needs of the motor vehicle equipment indus-
try. No adverse comments to that proposal were
received. Those two sections are accordingly
being revoked with a view to the future issuance
of regulations relating to the particular indus-
tries whose products are covered by equipment
standards. Manufacturers and distributors of
motor vehicle equipment must, however, continue
to meet the certification requirements of section
114 of the National Traffic and Motor Vehicle
Safety Act of 1966 (15 U.S.C. 1403) as ampli-
fied by notice in the Federal Register of Novem-
ber 4, 1967 (32 F.R. 15444).
Clarifying language was proposed by the notice
adding the phrase "(except chassis-cabs)" to sec-
tion 367.4(a), and substituting the phrase "door
edge that meets the door latch post" in section
367.4(c). A sentence was proposed for addition
to section 367.4(g)(1), requiring the name of a
person, other than the manufacturer, who affixes
a label on an imported vehicle to be shown on
the label. No adverse comments were received
on these proposals, and they are incorporated
into the rule as issued.
It was proposed to delete the reference to the
use of tools in section 367.4(b), so that the sub-
section would read: "The label shall be perma-
nently affixed in such a manner that it cannot be
removed without destroying it." Some comments
have indicated uncertainty as to the types of
label that are permitted by this section. It is
intended that the label be affixed so as not to be
removable without damage. The purpose is to
make sure that a label cannot be easily and un-
detectably transferred to another vehicle, and to
provide that, within this requirement, manufac-
turers would have discretion in choice of material
and adhesive method. In order to clarify the
requirement, the words "or defacing" are inserted
after "destroying". Several inquiries were di-
rected specifically to the adequacy of riveted
labels. This amendment permits riveting since
it has been determined to be a generally satis-
factory method of affixing the label.
One comment noted that, particularly in some
foreign countries, assembly of a vehicle may be
performed by a subsidiary corporation controlled
by a parent that is the generally known "name-
plate" company. It was suggested that the name
of the parent corporation should be allowable on
the label. The suggestion has been determined
to have merit, in that no important purpose is
served by requiring the name of a lesser-known
subsidiary corporation on the label, and language
permitting the use of a parent corporation's name
is added to section 367.4(g) (1).
In order to allow exporting and importing
manufacturers to indicate the country to which
the word "Federal" refers, a sentence is added
to section 367.4(g) (3) permitting the insertion
of "U.S." or "U.S.A." before the word "Federal"
in the conformity statement.
One petitioner suggested permitting the inser-
tion of the model year before the word "vehicle"
in the conformity statement, so that it would
read "This 1970 vehicle conforms . . .", in the
PART 567— PRE 1
EffMfiva: S«p»«mb«r 1, 1969
case of a vehicle manufactured in late 1969. The
requirement of stating the month and year of
manufacture on the label is intended to eliminate
confusion caused by model years that do not
match calendar years, and that may mislead con-
sumers as to the standards that are applicable.
The manufacturer or dealer is free to indicate
the model year of the vehicle by other labels, or
any means that do not involve the certification
label, and therefore it is not necessary to allow
insertion of this possibly confusing additional
date.
Objections were made to the requirement of
color contrast on the label, and to the require-
ment of stating the actual manufacturer's name
rather than that of a distributor under a "private
brand" label. Similar comments were made and
rejected at previous stages of rulemaking. Both
of these requirements are important aids to en-
forcement where rapid inspection of large num-
bers of vehicles must be made.
One comment suggested that it would be mis-
leading for a manufacturer to certify that the
vehicle "conforms" to applicable standards, since
the manufacturer has no control over the vehicle
after it leaves his hands, and proposed that the
certification be limited to the statement that the
vehicle conformed at the time it was delivered
to a distributor or dealer. The requirement for
certification is not, however, limited to manu-
facturers, but extends to all distributors and
importers as well. These parties satisfy this
requirement by allowing the certification label
to remain affixed to the vehicle. A distributor
who alters a vehicle so that it does not conform
to the manufacturer's certification must certify
that the vehicle as altered meets applicable
standards or he is subject to penalties under the
Act. A dealer who sells a vehicle after altering
it so that it does not conform would be subject
to penalties under the Act, and prior parties
would not be held responsible for the dealer's
alterations. Any alterations that came about
after a vehicle had been sold to a user would not
be relevant to the question of conformity to ap-
plicable standards, as provided by section 108(b)
(1) of the Act.
One comment raised the question of who should
certify a vehicle such as a boat trailer that is
shipped complete but in unassembled form by
its fabricator, such that it can be easily assembled
without special equipment. The fabricator ob-
viously has the technical knowledge on which
certification should be based, but the subsequent
assembler may be viewed as the "manufacturer"
of the vehicle within the meaning of the Act.
This question is part of the larger area of kits
for the assembly of new vehicles or the renova-
tion or alteration of existing ones. It is expected
that separate regulations will be issued concern-
ing standards applicable to such assemblers and
their certification. As an interim measure, it
has been determined that the purposes of the Act
would be served by allowing the fabricator the
option of treating itself as the certifying manu-
facturer under section 114 of the Act and affixing
the label in a manner such that it will conform
when the vehicle is assembled. Language to that
effect is added to section 367.4(g) (1).
In section 367.4(e), describing the label loca-
tion for motorcycles, the words "except the
steering system" are added to the final phrase,
"in a location such that it is easily readable
without moving any part of the vehicle", in order
to allow a location on the steering post that may
be obscured when the steering system is turned
to a certain position.
Eflective date. Since these amendments do not
impose substantial additional burdens relative to
the regulations as previously issued, this part as
amended shall continue to be effective for all
motor vehicles manufactured on or after Septem-
ber 1, 1969.
In consideration of the foregoing, 49 CFR
Part 367, Certification, is amended to read as set
forth below. This amendment is issued under
the authority of sections 112, 114, and 119 of the
National Traffic and Motor Vehicle Safety Act
(15 U.S.C. 1401, 1403, 1407) and the delegation
of authority from the Secretary of Transporta-
tion to the Federal Highway Administrator, 49
CFR § 1.4(c).
Issued on July 7, 1969.
F. C. Turner
Federal Highway Administrator
#
PART 567— PRE 2
Iffactiv*: Saplwnbar 1, 19*9
S«c. 367.5 R«quir*m«nt< for manufacturers of chatiU-
367.1 Purpose and scop*. cabs.
367.2 Application. 367.6 Roquiromonts for distributors of motor
367.3 Definitions. vehicles.
367.4 Requirements for manufacturers of motor 34 F.R. 11360
vehicles. July 9, 1969
i
PART 567— PRE 3-4
#
#
#
Effactiv*: Jun* 1, 1971
January 1, 1972
PREAMBLE TO PART 567— CERTIFICATION
(Dockets No. 70-6, 70-8, and 70-15)
(Revised and reissued April 8, 1971)
This notice adopts a new Part 568 in Title 49,
Code of Federal Regulations, to require the fur-
nishing of information relevant to a vehicle's
conformity to motor vehicle safety standards,
and makes complementary changes in the cer-
tification regulations in Part 567 of that title and
in Part 571. It also amends the certification
regulations with respect to the manufacturer
whose name must appear on the label for trailers
and with respect to the information that must
appear on the label for all vehicles. Notices
of proposed rulemaking on these subjects were
published on March 17, 1970 (35 F.R. 4639),
May 1, 1970 (35 F.R. 6969), and June 13, 1970
(35 F.R. 9293). The comments received in re-
sponse to these notices, and the statements made
at the public meeting on vehicles manufactured
in two or more stages (September 18, 1970; 35
F.R. 13139) have been considered in this issuance
of a final rule.
The amendments to the certification regula-
tions proposed on May 1, 1970 (35 F.R. 6969)
are adopted as proposed, except that GCWR in-
formation is not required.
The most frequently stated objection to the
amendments was that the providing of GVWR
and GAWR for passenger cars gives the pur-
chaser information that is already provided by
the label required by Standard No. 110. Al-
though the information is to rome extent duplica-
tive, in that if the consumer knew the vehicle's
unloaded weight, he could use the information
required by Standard No. 110 to estimate the
gross vehicle weight, the gross weight informa-
tion is more easily usable for regulatory pur-
poses. Requirements of certain standards may in
the future apply to a passenger car according to
its weight class.
Several comments stated that the inclusion of
weight information on the certification label
would make the labels awkw-.irdly large. Since
only two items would be added to the label, these
comments are considered to be without merit.
As amended, the regulation requires a certifica-
tion label on vehicles sold directly to users, as
well as on those sold to dealere and distributors.
The Administration regards this as useful to the
consumer and necessary to efficient, enforcement
of the standards. The authority for requiring
information labels is found in sections 112 and
119 of the Act, as well as in section 114.
The requirements for the certification label
for multi-stage vehicles, discussed above, include
the vehicle type. Under Part 567 as presently
in force, the type need only be shown for multi-
purpose passenger vehicles. This information
has been determined to be useful for enforce-
ment and other information purposes, and Part
567 is therefore hereby amended to require the
vehicle type to appear on all labels.
Issued on April 8, 1971.
Douglas W. Toms
Acting Administrator
36 F.R. 7054
April 14, 1971
PART 667— PRE 5-6
#
#
IffacHv*! January 1, 1972
PREAMBLE TO AMENDMENT TO PART 567— CERTIFICATION
and
(Denial of Petitions to Part 568 — Vehicles Manufactured in Two or More Stages)
(Docket No. 70-8)
Part 567 of Title 49, Code of Federal Regula-
tions, certification requirements for motor ve-
hicles, as amended, and Part 568, establishing
requirements for vehicles manufactured in two or
more stages, were published on April 14, 1971
(36 F.R. 7054 et seq.). Thereafter, pursuant to
49 CFR 553.35 (35 F.R. 5119), petitions for re-
consideration were filed by American Motors
Corporation, Chrysler Corporation, Ford Motor
Company, General Motors Corporation, and In-
ternational Harvester Company. On June 22,
1971, a notice proposing the addition of a vehicle
identification number to the certification label
required for vehicles manufactured in two or
more stages was published in the Federal Reg-
ister (Docket No. 71-14; Notice 1, 36 F.R. 11868).
This notice of Reconsideration and Amend-
ment represents the action taken by this agency
in response to the petitions and the notice of
June 22.
1. Effective date. Ford and International
Harvester petitioned that the effective date of
Part 568 be delayed at least until July 1, 1972,
to permit a more orderly development and im-
plementation of systems and procedures per-
taining to the documentation requirements of the
regulation. Neither petitioner has argued that it
is impossible or impracticable for it to comply
with Part 568 by January 1, 1972, nor has any
other petition been received on this subject.
Timely implementation of these regulations is
important, because of the need to have the re-
quired information in the hands of final-stage
manufacturers in advance of the effective date of
standards applicable to these types of vehicles.
The Administrator therefore has denied the peti-
tions for extension of the effective date.
1. GVWR; GAWR. International Harvester
stated that if an incomplete vehicle manufacturer
installs tires supplied by the customer or ships
the vehicle with temporary tires that will be re-
placed by the customer, the manufacturer should
bo permitted to base his GVAVR and GAWR
ratings on the capacity of the vehicle's structure
and to disregard the capacity of customer-in-
stalled tires. The company therefore requested
an interpretation, or revision, of the regulation
to exclude tire ratings in the computation of
GAWR and GVAVR, so long as the exclusion is
indicated on tlie certification lal)el or the docu-
ment furnished to the final-stage manufacturer.
The NHTSA cannot accept the position that
the weight ratings should not be related to the
tires on the vehicle. To the contrary, the newly
proposed motor vehicle safety standard on Tire
and Rim Selection and Rim Performance for
vehicles other than passenger cars (36 F.R. 14273,
August 3, 1971) would require each completed
vehicle to have tires whose load ratings reflect
the gross axle weight ratings of the vehicle. If
an incomplete vehicle manufacturer installs tires
that are intended to be used on the vehicle as
completed (whether or not they are "supplied by
the customer"), the weight ratings of the vehicle
siiould reflect the capacities of those tires. On
the other hand, it is entirely permissible for an
incomplete vehicle manufacturer to install "tem-
porary" tires for shipment purposes only, if he
provides full information on the subject in the
document required to be furnished with the
incomplete vehicle under Part 568.
Counsel for the Trailer Manufacturers Associa-
tion have pointed out that some trailer manufac-
turers provide different sizes of tires as a customer
PART 567— PRE 7
IffMHv*: January 1, 1972
option, and have requested permission to state dif-
ferent weight rating vahies on the label for each
tire size that is offered. This request may have
merit, since it may not be practicable in some
cases for a manufacturer to anticipate which
tires will be used on a particular vehicle, or to
rely on dealers to affix permanent labels that re-
flect the tires ultimately selected. A notice of
proposed rulemaking that would allow manu-
facturers to provide several values for GV^VR
and GAWR, along with tire sizes for each, is
published in this issue of the Federal Register.
American Motors petitioned for withdrawal of
GVAVR and GAWR from passenger car certifica-
tion labels on the grounds that the terms are am-
biguous and misleading. Ford also petitioned
for a change in the GAWR-GVIVR usage, stat-
ing that the present placard required on ]>assen-
ger cars by Standard No. 110 makes GAWR and
GVWR imnecessary for passenger cars and that
a similar reference to vehicle capacity weight
should be substituted for GAWR and GV^VR
in the documents and labels required on multi-
purpose passenger \ehicles, trucks, and buses.
American interprets GVIVR to be the equivalent
of maximum loaded vehicle weight, as well as the
equivalent of the sum of iniloaded Aehicle weight
and vehicle capacity weight.
The definitions of gross vehicle weight rating
and gross axle weight rating have been develoi>ed
in order to provide useful and reasonably flexible
metliods for manufacturers to rate the overall
capacities of their vehicles and axle systems re-
spectively, on the basis of which the vehicles
will be tested for conformity to various stand-
ards. The existing concept of "maximum loaded
vehicle weight" has been found deficient for some
purposes, because it relies on a complex definition
of "curb weight" (found in Standard No. 110,
49 CFR 571.21) that combines both arbitrary and
specific elements. It is this agency's intent to
allow manufacturers, in stating GVAVR and
GAWR, to select values that represent the overall
performance capabilities of their vehicles as de-
livered, without necessarily varying the values to
allow for minor weight variations in a particular
line of vehicles. To preclude the ix)ssibility of
understating a vehicle's GVAVR, however, the
certification regulation is herewith amended to
provide that the stated GVWR shall not be less
than the sum of. unloaded vehicle weight, rated
cargo load, and 150 pounds times the vehicle's
designated seating capacity.
3. Certification responsibility of the incom-
plete vehicle manufacturet: General Motors has
l)etitioned for a revision of Part 568 that would
"distinguish between final -stage manufacturers
who merely add a van or a work unit to the rear
of a chassis-cab, and those manufacturers who
[)erform material alterations to the incomplete
vehicle in the process of manufacturing a com-
pleted vehicle."' In the former case, under the
GM scheme, the incomplete vehicle manufacturer
would certify that the vehicles complied with all
Federal standards except those (such as No. 108)
where final compliance depends ui^on the work
I)erformed by the add-on type manufacturers.
The latter would then certify that he had made
no alterations to the incomplete vehicle other
than . (describing the work per-
formed), and that the vehicle complied with
(standards not certified by the
incomplete vehicle manufacturer). GM believes
that the incomplete vehicle manufacturer could
be required by regulation to provide specific
items of information about its product (e.g.,
maximum height of center of gravity, regarding
Standard No. 105) to enable the final-stage man-
ufacturer to add a van or work unit without
causing a nonconformity. In the second case,
under the GM scheme, the material-alteration
tyj>e manufacturer would certify the entire ve-
hicle, and could obtain from the incomplete ve-
hicle manufacturer all data needed for certifica-
tion.
There is considerable similarity between the
GM scheme and Part 568. The manufacturer of
a vehicle complete except for the addition of a
van or work unit, under Part 568, provides a
statement (568.4(a) (7) (i)) that the vehicle when
completed will conform to specified standards if
no alterations are made in identified components
of the incomplete vehicle. He also provides an
appropriate statement, according to 568.4(a)-
(7)(ii) or (iii), as to the remaining standards.
On the basis of such statements, and the work
he i>erforms, the final stage manufacturer certifies
tlie complete vehicle.
%
PART 567— PRE 8
Efhcttv*: January 1, 1973
The primary difficulty with the GM scheme is
that it is not adequate for such standards as
No. 121, Air Brake Systems, where end conform-
ance depends upon work performed by both the
incomplete vehicle and final -staj^e manufacturers.
GM would not, in that instance, certify con-
formance as to Standard No. 121, nor would it
provide information sufficient for the final-stage
manufacturer to produce a conforming vehicle.
The scheme with respect to material -alteration
type manufacturers as well would not appear to
provide as much assistance to final -stage manu-
facturers as that adopted imder Part 568. Tra-
ditionally, the final-stage manufacturer is an
entity whose resources are limited. The thrust
of Part 568 is to place some legal responsibility
on the incomplete vehicle manufacturer to supply
the final-stage manufacturer with data and con-
ditions under which the completed vehicle will
comply, and most importantly, to allocate a fair
share of the legal responsibility for conformity
to the incomplete vehicle manufacturer. GM's
petition is therefore denied.
Chrysler also wishes to split the certification
responsibility, and petitioned for an amendment
requiring the incomplete vehicle manufacturer to
"list . . . only those standards to which full com-
pliance has been achieved . . . ." Otherwise.
Chrysler feels it has no alternative other than
periodic use of the general statement allowed
by § 568.4(a) (7) (iii) that conformity with a
standard is not substantially determined by the
design of the incomplete vehicle, and that the
incomplete vehicle manufacturer makes no repre-
sentation as to conformity of the incomplete ve-
hicle with such standard.
Since alternative (iii), above, is partially a
factual representation, Chrysler may not provide
such a statement where conformance with a
standard is substantially determined by the de-
sign of the incomplete vehicle. It is up to the
incomplete vehicle manufacturer to decide which
tyi)e of statement accurately reflects the condi-
tion of compliance, and Chrysler may use the
general statement in those instances where it is
ai)propriate. Chryslers petition is therefore
denied.
4. Sequence of required data. Ford petitioned
that Part 567 be amended to make the sequence
of the data required on certification labels per-
manently affixed to completed \ehicles consistent
with that on the document to be supplied by
incomplete vehicle manufacturers (Part 568).
Ford's reason for this request is that it would
simplify computer print-out of material if the
same computer program could be used for both
requirements.
Although this request has some technical merit.
Ford is the only manufacturer who has com-
mented on variances in data sequence. This
agency understands that other manufacturers
have already ordered certification labels printed
in the sequence required by Part 567, and deems
it unfair to them to amend Part 567 at this time.
Ford's request is therefore denied.
5. Proposed VIN. There were no objections
to the proposal that a vehicle identification num-
ber be required for labels on vehicles manufac-
tured in two or more stages, and the proposal is
adoi>ted.
In consideration of the foregoing changes are
made in 49 CFR Part 567.
K-ffective date: January 1, 1972.
Issued on October 6, 1971.
Douglas W. Toms
Administrator
36 F.R. 19593
Octobers, 1971
PART 567— PRE 9-10
m
Eft«llv«; January 1, t973
PREAMBLE TO AMENDMENT TO PART 567— CERTIFICATION
(Docket No. 70-8; Notice 5)
This notice amends the Certification Regula-
tions to allow vehicle manufacturers to list on
the certification label more than one set of
values for gross vehicle and gross axle weight
ratings. It also allows school bus manufacturers
to compute the vehicle's GVWR using 120 pounds
to represent the weight of an occupant.
On April 14, 1971, (36 F.R. 7054), the certifi-
cation regulations (49 CFR Part 567) were
amended to provide for the furnishing of addi-
tional information on the certification label, and
a new Part 568, "Vehicles Manufactured in Two
or More Stages", was established. On October 8,
1971, (36 F.R. 9593) certain amendments to Part
567 and Part 568 were issued in response to peti-
tions for reconsideration received concerning the
amendment of April 14, 1971. Also on October
8, 1971, a notice was issued (36 F.R. 19617) pro-
posing to allow multiple GVWR and GAWR
listings to be used in certain circumstances. This
notice is issued in response to petitions for re-
consideration concerning the amendment of
October 8, 1971, and comments concerning the
notice of proposed rulemaking of that date.
The proposal of October 8, 1971, allowing
multiple GVWR and GAWR listings to be
placed on the certification label is adopted as
proposed. Comments received by the NHTSA
were generally in favor of this amendment. One
commentator stated that the proposal would not
be practical for large trucks. However, the re-
quirement is only permissive, and it will provide
a useful alternative to manufacturers of various
other types of vehicles. It is therefore adopted
as proposed.
The final rule published in the October 8 notice
amended sections 567.4(g)(3) and 567.5(a)(5)
to provide for GVWR computation using a
multiplier of 150 pounds times the vehicle's'
designated seating capacity. This agency has
received petitions for reconsideration of this
provision from the School Bus Manufacturers
Institute and Blue Bird Body Company. Both
suggested that the figure of 150 pounds is un-
realistically high, because the maximum seating
capacity of a school bus is based on three chil-
dren sitting on each standard 39-inch seat. These
petitions suggested that a 120-pound figure,
found in the 1970 Revised Edition of Minimum
Standards for School Buses, be used in comput-
ing the GVWR of school buses. The NHTSA
agrees with these petitions, and the regulation
is amended accordingly.
It has been brought to the attention of the
NHTSA that on some vehicles it will be difficult
to affix the required label in the designated loca-
tion, because of space limitations. It was re-
quested that the use of a multi-column label or a
label in two parts be considered permissible
under the regulation. One such request was
answered in a letter interpretation to counsel for
the Trailer Manufacturers Association, dated
November 3, 1971. The substance of the agency's
reply is repeated here for the benefit of all inter-
ested parties: The NHTSA adheres to the re-
quirement in the certification regulation that the
required information be listed "in the order
shown," a requirement that since its issuance in
September 1969 has been found to enhance the
readability and usefulness of the label. How-
ever, there is no requirement that the listing be
in one column, and as long as it appears in the
order specified, mulfi-column labels or adjacent
labels in two or more parts are permitted.
Some inquiries were received concerning the
significance of the requirement for a vehicle
identification number on the label of a vehicle
manufactured in two or more stages (36 F.R,
19593, October 8, 1971). This VIN requirement
is not new, as some i>ersons apparently believed,
but merely a continuation of the requirement
contained in the original certification regulations
PART 567— PRE 11
EffKNv*: January 1, 1972
effective September 1, 1969 (34 F.R. 11360, July
9, 1969). The VIN requirement is not intended
to change existing practices with respect to ve-
hicle numbering.
In consideration of the foregoing, Part 567 of
Title 49, Code of Federal Regulations, is hereby
amended ....
Eifective date: As these requirements impose
no additional burdens on any person, and as
implementation of these requirements as part of
the general regulatory scheme is essential, good
cause exists for an effective date less than 30
days from the day of publication. The amend-
ments are accordingly effective on January 1,
1972.
m
This notice is issued pursuant to Sections 103,
112, 114, and 119 of the National Traffic and
Motor Vehicle Safety Act (15 U.S.C. 1392, 1401,
1403, 1407), and the delegation of authority at
49 CFR 1.51.
Issued on December 8, 1971.
Charles H. Hartman
Actins: Administrator
36 F.R. 23571
December 10, 1971
#
PART 567— PRE 12
Eff«<tiv*: July 13, 1973
PREAMBLE TO AMENDMENT TO PART 567— CERTIFICATION
(Docket No. 70-8; Notice 7)
The purpose of this notice is to allow manu-
facturers to specify a tire size on their certifica-
tion label when they provide only one gross
vehicle weight rating, or one gross axle weight
rating for each axle, and do not list other op-
tional tire sizes. The provisions of the Certifi-
cation regulations dealing with gross vehicle
weight rating and gross axle weight rating were
published April 14, 1971 (36 F.R. 7054), and
were amended on October 8, 1971 (36 F.R.
19593) and December 10, 1971 (36 F.R. 23572).
In addition, the definition of gross axle weight
rating (49 CFR 571.3) was amended February
12,1972 (37 F.R. 3185).
As issued on April 14, 1971, the certification
regulations required each manufacturer (final-
stage manufacturers in the case of multi-stage
vehicles) to include on his certification label a
gross vehicle weight rating, and a gross axle
weight rating for each axle. The assigned rating
was to be made without reference to particular
tires or other components on which the value was
based. The amendment of December 10, 1971,
modified this result to some extent by allowing a
manufacturer, at his option, to list different
weight ratings for various tire sizes, with the
appropriate tire size listed for each rating.
In response to inquiries by interested persons,
the agency has decided not to limit this option
to cases of multiple tire sizes. By the amend-
ment issued herewith, manufacturers are allowed
to list the appropriate tire size for both gross
vehicle and axle weight ratings, even when only
one rating is provided. With this information,
subsequent manufacturers, distributors, dealers,
and users who install or replace tires will be put
on notice that the tires they mount on the vehicle
might affect the weight ratings provided by the
manufacturer.
This amendment also makes a minor correction
in a paragraph reference in the regulations.
In light of the above, 49 CFR Part 567, "Cer-
tification," is amended
Effective date : July 13, 1972.
As this amendment provides an optional
method of compliance and imposes no additional
burdens, it is found for good cause shown that
an effective date less than 30 days from the day
of issuance is in the public interest.
This notice is issued under the authority of
sections 103, 112, 114, and 119 of the National
Traffic and Motor Vehicle Safety Act, 15 U.S.C.
1392, 1401, 1403, 1407, and the delegation of
authority at 49 CFR 1.51.
Issued on July 6, 1972.
Douglas W. Toms
Administrator
37 F.R. 13696
July 13, 1972
PART 567-PRE 13-14
#
m
IffMtivat Nbniary ), 1974
PREAMBLE TO AMENDMENT TO PART 567— CERTIFICATION
(Docket No. 72-27; Notice 2)
This notice establishes certification and label-
ing responsibilities for persons who alter "com-
pleted vehicles" after their certification as
conforming to applicable motor vehicle safety
standards. The requirements are based on those
proposed in a notice of proposed rulemaking
published October 25, 1972 (37 F.R, 22800).
Under the new requirements, a person who
alters a completed vehicle, other than by the
attachment, substitution, or removal of "readily
attachable components", will be required to as-
certain conformity to all applicable standards as
of any date between the manufacture date of the
completed vehicle and the manufacture date of
the altered vehicle. That person will be required
to afl^ a label (leaving the certification label in
place) that identifies the alterer, the date of
alteration, the date as of which conformity is
determined, and any changes the alteration pro-
duces in either gross weight ratings or vehicle
classification. A person who does not alter the
vehicle, or who adds, substitutes, or removes only
readily attachable components will be required
to leave the certification label in place, but will
not be required, unless the alteration invalidates
the stated weight ratings, to provide an addi-
tional label. Distributors who do not alter the
vehicle, or who alter it using only readily attach-
able components and do not invalidate the stated
weight ratings will meet the certification require-
ments by leaving the certification label in place.
The requirements will place persons who alter
completed vehicles on the same basis as final-
stage manufacturers, by allowing the former to
choose as the date by which vehicle conformity
is determined any date between the date on which
the completed vehicle is manufactured and the
date on which the vehicle is altered. Under
previously existing statutory and regulatory pro-
visions, alterers of vehicles were required to use
only the date of completion of the altered vehicle
as the date by which conformity could be deter-
mined.
Gfeneral Motors, Truck Body and Equipment
Association, and Stutz Motor Car of America
supported the proposal without qualification.
Other comments generally approved the proposal
with some suggested changes.
Several comments argued that the limiting
concept of "readily attachable components", the
addition, removal, or substitution of which does
not create a requirement to affix a label, should
not include "mirrors or tire and rim assemblies",
as the language appears in §§ 567.6 and .7, and
§ 568.8. It was argued that these items directly
affect the vehicle's conformity to the standards'
or the weight ratings, and should therefore not
be alterable without, in effect, a recertification
by the alterer. It was variously suggested that
explicit inclusion of these items as examples of
readily attachable components might cause a
safety problem, a false certification, or a mis-
leading of persons such as dealers as to their
responsibilities under the Act and the standards.
The NHTSA does not accept these arguments.
The provisions for alteration of vehicles, like the
larger certification scheme of which they are a
part, are intended to reflect the realities of manu-
facture and distribution. It is a fact that the
substitution of tires by a dealer takes place in a
substantial fraction of all vehicle sales. More-
over, a large proportion of the components that
are in fact frequently altered at the dealer level
are directly affected by standards: mirrors, tires,
rims, lighting accessories, bumper guards and
attachments, windshield wipers and washers, hub
caps and wheel nuts, seat belts, and interior
components such as air conditioners or radios
that come within the head impact area, to name
PART 567— PRE 15
Effactiv*: February 1, 1974
a few. If these items were not included in the
concept of readily attachable components, for
which an alteration label is not required, it is
safe to say that virtually every dealer in the
country would be aflixing labels to many of the
vehicles he sold.
It was not the intent of this agency to create
such a manifold expansion of labeling require-
ments. The altered-vehicle label is designed
primarily to reach those cases where a completed
vehicle is significantly altered, in a manner, and
with components, not provided by the original
manufacturer. The substitution or addition of
parts such as tires, rims, and mirrors is a routine
aspect of typical vehicle distribution systems,
and the cost burden of affixing a permanent label
to the vehicle has not been found to be justified
in that situation. For these reasons the language
of the regulation has in these respects been re-
tained as proposed.
The requirement to keep a vehicle in conform-
ity to the standards and the weight ratings ap-
plies throughout the chain of distribution
regardless of any labeling requirements, and this
agency has no intent of downgrading the im-
portance of that requirement. The comments did
reveal a justifiable concern of manufacturers for
situations where the vehicle might be altered, as
by substitution of tires, in a way that its stated
weight ratings are no longer valid. Also, there
may well be cases where a customer wants a
vehicle to have lighter components for its in-
tended purpose, and would accept lowered weight
ratings. To deal with these cases, language has
been added to sections 567.6 and .7, and 568.8, to
require the affixing of an alteration label when-
ever any type of alteration is made that would
invalidate the stated weight ratings.
American Motors and Jeep argued that re-
quiring alterers to certify conformity discrimi-
nates against manufacturers' dealers. They
pointed out that dealers, who generally alter
vehicles before sale, are required to maintain
conformity, while aftermarket installers of equip-
ment, because the additions they make are to
"used" vehicles, need not. They suggested that
"special add-on accessories" be excepted from the
requirements, that a new category of "Special
Motorized Equipment" be created to which some
•
of the. standards would not apply, that equip-
ment standards be issued to cover aftermarket
installers, and that highway safety program
standards prohibit the alteration of vehicles such
that they would not conform to the standards.
These comments are not, in the view of this
agency, within the scope of the rulemaking.
Eequests of this nature should be submitted as
petitions for rulemaking, with supporting data,
in accordance with the procedures of 49 CFR
Part 553.
British Leyland suggested that an exemption
to the labeling requirements be made for persons
installing accessories which the original vehicle
manufacturer makes available, and whose in-
stallation he knows will not affect vehicle con-
formity. The NHTSA expects that most
accessories meeting this description will be read-
ily attachable within the sense of the regulation,
and no further labeling in these cases will be
required. It should be noted that the category
of "readily attachable components" cannot be
sharply defined, and in any marginal case the
NHTSA will accept the reasonable judgment of
the parties concerned, especially where the origi-
nal manufacturer and the alterer are in agree-
ment. In cases where components of this type
are not found to be readily attachable, the burden
on the alterer to determine that the alteration
does not destroy conformity is minimized, leaving
him with essentially no more than the attachment
of the alterer label.
Certain comments pointed out that while pro-
posed sections 567.7 and 568.8 are not limited in
their application to distributors, that limitation
had been retained in section 567.6. The com-
ments suggested that, as sections 567.7 and 568.8
applied to dealers, section 567.6 should likewise
so apply. The substance of the suggestion has
been adopted in the final rule, by modifying
§ 567.6 to apply to any person.
The Recreation Vehicle Institute (RVI) sug-
gested that manufacturers of completed vehicles
be required to supply a document when requested
by a vehicle alterer, similar to that provided
final-stage manufacturers, that advises alterers
how to achieve or retain conformity. This sug-
gestion has not been adopted. If a vehicle manu-
facturer wishes to provide information on the
•
PART 567— PRE 16
EffacHva: February 1, 1974
alteration of his vehicles, he of course may do so.
Once a completed, certified vehicle has been pro-
duced, however, the NHTSA does not believe it
reasonable to require manufacturers to provide
persons who might alter that vehicle with addi-
tional certification information. The requirement
to provide information concerning incomplete
vehicles (Part 568) is founded on the fact that
an incomplete vehicle manufacturer has marketed
his vehicles with the express intent of having
them completed by other persons. This is not
the case with completed vehicles.
RVI also suggested that the regulation spe-
cifically provide that alterers be allowed to base
their conclusions as to conformity on the original
certification. The NHTSA does not consider
such a provision to be meaningful. The extent
to which the alterer's conformity assurance may
be based on the original certification depends
entirely on what the alterer does to the vehicle,
which is a fact peculiarly within his knowledge.
Certain comments suggested that compliance
with the requirements be permitted before the
specified effective date. The NHTSA believes
this request to be meritorious. Alterers will be
able to conform to existing requirements or to
those issued by this notice at any time up to the
effective date.
In light of the above, amendments are made
to 49 CFR Parts 567 and 568 ... .
Elective date: February 1, 1974. However,
persons who alter vehicles may at any time be-
fore that date conform to the provisions issued
in this notice in lieu of existing provisions of
49 CFR Parts 567 and 568.
Sections 103, 112, 114, 119, Pub. L. 80-563,
80 Stat. 718; 15 U.S.C. 1392, 1401, 1403, 1407;
delegation of authority at 38 F.R. 12147.
Issued on June 13, 1973.
James E. Wilson
Associate Administrator
Traffic Safety Programs
38 F.R. 15961
June 19, 1973
PART 567— PRE 17-18
Effective: September 1, 1976
PREAMBLE TO AMENDMENT TO PART 567— CERTIFICATION
(Docket No. 71-19; Notice 3)
This notice establishes a new Federal Motor
Vehicle Safety Standard No. 120, Tire selection
and rims for motor vehicles other than passenger
cars, 49 CFR 571.120, and amends 49 CFR Part
567, Certification. The new standard specifies
tire and rim selection requirements for multi-
purpose passenger vehicles (MPV's), tnicks,
buses, trailers, and motorcycles, and marking re-
quirements for rims for use on these vehicles.
It also adds tire and rim matching information
to the items required to appear on such vehicles'
certification labels. The amendment to Part 567
makes that regulation consistent with the new
standard. The notice is based on proposals which
were published August 3, 1971 (36 FR 14273)
and June 3, 1974 (39 FR 19505).
The standard requires new vehicles (other than
passenger cars, which are the subject of Standard
No. 110) to be equipped with tires that comply
with either Standard No. 109, Neto Pneumatic
Tires — Passenger Cars, or Standard No. 119, New
Pneumatic Tires for Vehicles Other Than Pas-
senger Cars. The tires must be fitted to rims
which have been designated by the tire manu-
facturer, in accordance with S4.4 of Standard
No. 109 or S5.1 of Standard No. 119, as suitable
for use with those tii-es. The designations are
made by listing the tire-rim matching informa-
tion in one of seven industry-maintained publi-
cations or by furnishing this information to
dealers of the manufacturer's tires, to any person
upon request, and to the NHTSA.
Each axle must be equipped with tires the sum
of whose load ratings is not less than that axle
system's Gross Axle Weight Rating (GAWR).
In certain situations, discussed below, a vehicle
may be equipped with used tires of adequate load
rating that were originally manufactured to
comply with Standard No. 119. Adequacy is
determined as follows: the sum of the maximum
load ratings of the tires must be equal to or
greater than the GAWR which is specified on
the Part 567 certification label, with an exception
discussed below. If the certification label lists
more than one GAWR-tire combination for the
axle, the sum of the tires' maximum load ratings
must meet or exceed the GA"\VR that corresponds
to the tires' size designation. If more than one
combination is listed, but the size designation
of the actual tires on the vehicle is not among
those listed, then the sum of the load ratings must
simply meet or exceed the lowest GAWR which
does appear.
Rims must be marked with five items of in-
formation : the size designation (and, in the case
of multipiece rims, the type designation), an in-
dication of the source of the rim's nominal
dimensions, and the DOT symbol must appear
on the weather side, while identification of the
manufacturer and date of manufacture may
appear at any place on the rim's surface. The
standard does not explicitly require that a rim
conform to its published dimensions. If a rim's
deviation from these nominal dimensions is so
great that a safety hazard is jjresented, how-
ever, the defect notification and remedy provi-
sions of the National Traffic and Motor Vehicle
Safety Act of 1966, as amended, provide au-
thority to deal with the hazard.
To reduce the possibility of confusion and to
minimize the number of characters stamped on
the rim, the standard establishes a set of code
letters to indicate the source of the rim's nominal
dimensions. "T", "E", "J", "D", "M", "B", and
"S" indicate the industry publications listed in
Standards Nos. 109 and 119, while "N" indicates
an independent listing with tire dealers and the
NHTSA. The proposed requirement that the
marking indicate the date of the publication has
not been adopted because it does not appear neces-
PART 567— PRE 19
Effective: September 1, 1976
sary. The standard does not require manufac-
turers to be identified witli a code number
assigned by the NHTSA, because no action has
been taken on the proposal published in the Fed-
eral Register on June 7, 1973 (38 FR 14968).
The rim manufacturer is fi"ee to use his name,
trademark, or a symbol of his choice. Because
a rim's maximum load rating may be limited by
its disc, this standard does not require that the
maximum load rating be marked. Tlie rim's
maximum inflation pressure, wliile not affected
by the choice of disc, is potentially misleading
without additional marking of the disc. These
rim markings are being considered in conjunction
with further NHTSA rulemaking activity con-
cerning wheels.
Several commenters objected to the proposed
requirement of a tire-rim information label,
required by Part 567. Upon consideration of
these comments, the NHTSA agrees that a sepa-
rate placard is unnecessary. G"\^\Tl and GAWR
are already required to appear on the certification
label. If the vehicle manufacturer exercises his
option of listing more than one G"\'^VR-GA"\^rR
combination, he is already required to indicate
the proper tire size designations after each weight
rating. Standard No. 120 further requires, for
vehicles other than passenger cars, the following
information to appear after each weiglit rating
and tire size designation listed on the certifica-
tion label: rim size designation, cold inflation
pressure for the tires, and speed restriction (if
any) for the tires. This information is now
required to appear even when only one G^^^Tl-
GAWR combination is listed. The Part 567
label is thus expanded to include the informa-
tion that would have appeared on the separate
label described in S5.4 of the proposed standard
No. 120.
Many commenters pointed to the large number
of possible axle-tire-rini combinations and sug-
gested that the information label would be too
large and confusing. Some discussed the vehicle
manufacturer's difficulty in ensuring that the re-
quired information appear, given the common
practice of changing tires and rims after a new
vehicle has been shipped to a dealer. These
commenters appear to have misunderstood the
various proposed and existing requirements. Part
567 does not, in its prior form or as amended
today, require a listing for more than one
GVWR-GAWR-tire combination. Further,
while S5.1.2 of Standard No. 120 requires the
tires with which a new vehicle is equipped to be
of adequate loading rating for the GA"\^Tl, and
while S5.3 requires an indication of tires ade-
quate for the GAWR, there is no requirement
that the actual tires be listed on the certification
label. The tire information on that label is in-
tended as a guide which tells the user what re-
placement tires, as a minimum, are appropriate
for the listed GAWR and what rims are appro-
pi-iate for those tires.
Guerdon Industries, Inc., objected to the re-
quirement that vehicles be restricted to the load
limits molded on tire sidewalls. They pointed
to the mobile home industry's practice of load-
ing tires to 150 percent of their load ratings, and
argued that this practice should be permitted to
continue. Examination of data compiled bj^ the
Bureau of Motor Carrier Safetj', however, shows
that from 1969 to 1972 (the most recent years
for which figures are available), tires accoimted
for 18.0 percent of reported mobile home ac-
cidents. The NHTSA therefore rejects the pro-
position that such overloading does not present
a safety hazard. There is no exception to the
requirement that all vehicles be equipped with
tires of adequate load rating.
Some commenters requested that tire overload-
ing be permitted under restricted speed condi-
tions. These commenters appear to have mis-
understood the scoi>e of the standard. Vehicles-
in-use are regulated by the States and by the
Bureau of Motor Carrier Safety. Standard No.
120 does not prohibit the overloading of tires in
speed-restricted service, or otherwise regulate
the use of tires or vehicles. The GV~WR and
GAWR information on the certification level is
based on unrestricted sei"vice.
Tlie formula described above for tire selection
is subject to an exception for MPV's, trucks,
buses, and trailers which are equipped with pas-
senger car tires. The combined maximmn load
rating of the passenger car tires on an axle must
be equal to or greater than 110 percent of the
axle's GAWR. Some comments supported this
exception as it was proposed. Others suggested
PART 567— PRE 20
Effective: September 1, 1976
that passenger care tires be permitted on such
vehicles without the 110% factor, while the
RMA and others argued that passenger car tires
should not be permitted on trailers at all. The
NHTSA rejects the argument that the 110%
correction factor is unnecessary. Because non-
passenger-car service on the average puts greater
stresses on a tire (for example, trucks and trailers
are driven at or near their maximum rated loads
more often than passenger cars), a given load
rating for a Standard No. 109 tire does not
have the same meaning as the identical load rat-
ing for a Standard No. 119 tire. Conversely,
the NHTSA has found no evidence that pas-
senger car tires are inadequate for trailer service
when the load correction factor is applied. The
110 percent factor is therefore adopted as pro-
posed.
As proposed, the standard included an excep-
tion to the requirement that new vehicles be
equipped with new tires conforming to Standard
No. 109 or 119. Used tires were to be permitted
on a truck, bus, or trailer (other than a mobile
structure trailer) under the following conditions :
the tires were originally manufactured to comply
with Standard No. 119; they were of adequate
load rating; they were owned or leased by the
purchaser; and they were installed on the new
vehicle at its place of manufacture at the pur-
chaser's request. Comments on this exception
were generally favorable, although one mobile
home manufacturer objected to the exclusion of
mobile structure trailers. The exception was in-
tended to accommodate commercial delivery prac-
tices in the truck, bus, and trailer industry.
Wliile fleets which lease tires on a mileage- con-
tract basis or which install their own used tires
on new vehicles are in a good position to know
the condition of these tires, the mobile home pur-
chaser has no knowledge of the history of used
tires installed on his vehicle. The proposed ex-
ception to the new tire requirement is therefore
not extended to include all moliile structure
trailers. It is. however, extended to include those
delivered to the purchaser by a motor carrier,
because a motor carrier (who is subject to Bureau
of Motor Carrier Safety regulations) can be ex-
pected to be more familiar with tire safety needs
than a typical purchaser. To clarify the pro-
posed language "originally manufactured to
comply with Standard No. 119", the words "as
evidenced by the DOT symbol" have been added
to the text of the standard.
Several commenters pointed out that certain
vehicles are designed for non-uniform side to
side loading, and suggested that the proposed
method of determining the necessary tire load
rating from the GAWE (dividing GAAVE by the
number of wheel positions on the axle) is inade-
quate for such vehicles. These commented
argued that tire load rating should be based on
the maximum wheel load, rather than on the
GA'WTl. The standard issued today does not
specify the maximum load rating to be exceeded
by each tire on any given axle. Instead, it re-
quires the sum of those load ratings to meet or
exceed the GATATt. The manufacturer of an
asymmetrically designed vehicle can therefore
equip an axle with tires of differing load ratings.
The NHTSA agrees that each tire should be
capable of carrying its maximum expected wheel
load. At this time, however, the NHTSA con-
siders its defect authority, combined with the new
standard, adequate to ensure that vehicles are
equipped with such tires.
Definitions have been added to clarify the
meaning of "rim base", "rim size designation",
"rim type designation", "rim diameter", "rim
width", and "'weather side". Definitions sug-
gested for other terms have not been included in
the standard because the meaning have been found
to be widely understood or self evident.
Iklany comments pointed out problems with a
single eifective date. For example, for marked
rims to be available to vehicle manufacturers in
time, an interval is necessary between the effec-
tive dates for the rim marking requirement and
the requirement that vehicles be equipped with
rims that comply with the standard. Similarly,
to require all used tires, otherwise permitted by
S5.1.3 to have originally been manufactured to
comply with Standard No. 119 would, without
a delayed effective date, cause the waste of pre-
Standard No. 119 tires of adequate load-carrying
capacity. Accordingly, a staggered system of
effective dates is established as set out below.
In consideration of the foregoing. Chapter V
of Title 49, Code of Federal Regulations, is
amended. . . .
PART 567— PRE 21
Effective: September 1, 1976
Elective dates: For the amendment to Part 1421, 1422) ; delegation of authority at 49 CFR
567 : September 1, 1976. For Standard No. 120: 1.50.)
August 1, 1976, for the rim marking requirements Issued on January 19, 1976.
(S5.2), and September 1, 1976, for the remaining
requirements except as otherwise provided in the James a. (jregory
standard. Administrator
(Sees. 103, 112, 114, 119, 201, 202, Pub. L. 41 F.R. 3478
89-563, 80 Stat. 718 (15 U.S.C. 1392, 1401, 1407, January 23, 1976
•
#
•
PART 567— PRE 22
Effective: April 1, 1976
PREAMBLE TO AMENDMENT TO PART 567— CERTIFICATION
(Docket No. 76-1; Notice 2)
This notice, amends 49 CFR 567 and 575 to
allow manufacturers an alternative method of
referring purchasers to appropriate consumer
information tables.
On January 22, 1976, the National Highway
Traffic Safety Administration issued in the
Federal Register (40 FR 3315) a notice which
proposed amending 49 CFR 575, Consumer
Information and 49 CFR 567, Certification to
allow the consumer information document pro-
vided to the purchaser of a vehicle to refer the
reader to the vehicle's certification label to de-
termine which information applied to that ve-
liicle. This information, which relates to the
performance characteristics of the vehicle, is
required to be made available to purchasers by
49 CFR 575.6(a). Currently, if the document
containing this information also contains infor-
mation relating to other vehicles, the document
itself must clearly indicate which information
is applicable to the vehicle purchased. The
NHTSA proposal was made in response to a
petition from the General Motors Corporation
which suggested that the proposed alternative
procedure would for some companies be a more
efficient and less costly method of accomplishing
the purposes of the regulation.
Comments in support of the proposal were
received from General Motors Corporation,
American Motors Corporation, Chrysler Cor-
poration and Ford Motor Company. No com-
ments in opposition were received.
Based on the petition of General Motors and
the comments concerning the notice of proposed
rulemaking, the NHTSA concludes that allowing
an alternative method of designating the appro-
priate consumer information tables would reduce
the possibility of error and lessen the cost to the
manufacturer.
In consideration of the foregoing, Parts 567
and 575 of Title 49, Code of Federal Regulations,
are amended. . . .
Effective date: April 1, 1976. Because the
procedures established herein are optional and
impose no increased burden on any party, it is
found for good cause shown that an immediate
effective date is in the public interest.
(Sec. 103, 112, 114, 119, Pub. L. 80-563, 80
Stat. 718 (15 U.S.C. 1392, 1401, 1403, 1407);
delegation of authority at 49 CFR 1.50.)
Issued on : March 26, 1976.
James B. Gregory
Administrator
41 F.R. 13923
April 1, 1976
PART 567— PRE 23-24
Effective: May 6, 1976
PREAMBLE TO AMENDMENT TO PART 567— CERTIFICATION
(Docket No. 71-19; Notice 4)
Tliis notice delays the effective dates of certain
requirements of Standard No. 120, Tire Selec-
tion and Eims for Motor Vehicles Other Than
Passenger Cars, and of the conforming amend-
ment to 49 CFR Part 567, Certification, that was
issued along with the standard. Its purpose is
to permit manufacturers to avoid the burden of
preparation for compliance with requirements
that the NHTSA has determined should be
amended. There is no delay, however, in the
standard's basic tire and rim selection require-
ments, which become effective September 1, 1976.
Standard No. 120 (49 CFR §671.120) was
issued on January 19, 1976 (41 FR 3478; Jan-
uary 23. 1976; Notice 3). It specifies require-
ments for tire and rim selection, rim marking,
and the provision of tire and rim information
on vehicle certification labels. Part 567, the
certification regulation, was amended in the same
Federal Register notice, to accommodate the
additional labeling.
Manufacturers are expected to begin prepara-
tions for compliance with a standard at the time
a final rulemaking notice is issued. Lead times
are established in accordance with this expecta-
tion, despite the possibility of future amend-
ments. Fifteen petitions for reconsideration of
Standard No. 120 have been received. From the
petitions and other information available to this
agency, the NHTSA has determined that certain
provisions of the standard should be amended.
However, the agency finds it impracticable to
respond to the petitions by May 24, 1976, the
date by which a response would be expected
under its policy regarding such responses (49
CFR Part 553, Appendix). The agency plans
to respond to the petitions not later than July 1,
1976. Without a delay of certain effective dates,
manufacturers would be forced to make prepara-
tion for compliance with requirements that will,
in all likelihood, be changed.
Accordingly, this notice changes from Sep-
tember 1, 1976, to September 1, 1977, the effective
date of the requirement, found in S5.3, that cer-
tain information appear on a vehicle's certifica-
tion label. The effective date of the conforming
amendment to Part 567, Certif cation, is similarly
changed to September 1, 1977. The effective
date of S5.2, Rim Marking, is changed from
August 1, 1976, to August 1, 1977. The date by
which vehicles must be equipped with rims that
are marked in accordance with the standard,
which is presently specified in S5.1.1 as March
1, 1977, is changed to September 1, 1979. The
NHTSA is considering the possibility of elimi-
nating this requirement entirely, to simplify the
phase-in of properly marked rims as they become
available.
Manufacturers should note that, apart from
the changed effective date for the requirement
in S5.1.1 that vehicles be equipped with properly
marked rims, there is no delay in the September
1, 1976, effective date of the standard's basic re-
quirement, S5.1 {Tire a7\d Rim Selection).
The symbol "DOT" is required by S5.2(c) to
appear on every non-passenger-car rim manu-
factured on or after the effective date of the rim
marking requirements, as a certification by the
manufacturer of the rim that it complies with
all applicable Federal motor vehicle safety stand-
ards. Several manufacturers have requested
permission to begin stamping the symbol on rims
that otherwise comply with the standard, before
that effective date. In the past, the NHTSA
has in similar situations taken the position that
such use of the DOT symbol to indicate "antici-
patory compliance" would necessarily be a false
or misleading certification, because no standard
would in fact be in effect at the time of its use.
PART 567— PRE 25
Effective: May 6, 1976
The agency has determined that a limited
relaxation of this principle will not adversely
affect its enforcement authority, yet will both
foster early compliance with impending require-
ments and ease manufacturer's difficulties in
transition to new production procedures. Ac-
cordingly, the XHTSA will not consider the use
of the symbol "DOT" on an item of motor ve-
hicle equipment that is not subject to any appli-
cable and effective standard to be "false or
misleading" if the following conditions are met:
(i) there has, as of the date of manufacture of
the item of equipment, been issued as a final rule
a Federal motor vehicle safety standard to which
the item of equipment would, but for that date's
being earlier than the standard's effective date,
be subject; and (ii) the item of equipment meets
all requirements set out in the standard as most
recently published before the date of manufac-
ture of the equipment. The NHTSA will con-
tinue to consider other, unauthorized uses of the
symbol to be "false or misleading in a material
respect" within the meaning of Section 108(a)-
(1)(C) of the National Traffic and Motor Ve-
hicle Safety Act of 1966, as amended (15 U.S.C.
1398(a)(1)(C)).
This intei^^retation will permit the requested
stamping that is discussed above. It will not
permit the restamping, requested by several man-
ufacturers, of previously manufactured rims
that are in stock. These latter requests, how-
ever, are no longer of practical .significance
because of the other actions taken in this notice.
In consideration of the foregoing, the effective
date of the amendment to 49 CFR Part 567,
Certif cation^ that was published on January 23,
1976 (49 FR 3478) is changed from September
1, 1976, to September 1, 1977, and changes are
made to 49 CFR §571.120 (Standard No. 120,
Tvre Selection and Rims for Motor Vehicles
Other Than Passenger Cars) ....
Effective date: These changes in the text of
the Code of Federal Regulations should be made
immediately.
(Sec. 103. 112, 114, 119, 201, 202, Pub. L. 89-
563, 80 Stat. 718 (15 U.S.C. 1392, 1401, 1403,
1407. 1421, 1422) ; delegation of authority at 49
CFR 1.50.)
Issued on April 29, 1976.
Robert L. Carter
Acting Administrator
41 F.R. 18659
May 6, 1976
PART 567— PRE 26
Effeellve: March 9, 1977
PREAMBLE TO AMENDMENT TO PART 567— CERTIFICATION
(Docket No. 73-31; Notice 02)
The National Highway Traffic Safety Admin-
istration's Certification regulations for motor ve-
hicles are amended to allow gross axle weight
ratings to be combined on the certification label
in the case of consecutive axles that have identical
weight ratings. The amendment results from a
suggestion from the Trailmobile Company and
reflects the view that a separate listing for each
GAWR can cause unnecessarily long certification
labels that are more difficult to understand than
labels containing combined axle weight ratings.
Dates: Effective date June 20, 1977.
Addresses: Requests for reconsideration should
refer to the docket number and be submitted to:
Docket Section, Room 5108, National Highway
Traffic Safety Administration, 400 Seventh Street,
S.W., Washington, D.C. 20590.
For further information contact :
Mr. David Fay
Motor Vehicle Programs
National Highway Traffic Safety
Administration
Washington, D.C. 20590
(202) 426-2817
Supplementary information: Part 567 of
NHTSA regulations (49 CFR Part 567, Certif-
catUni) requires, among other things, a listing of
the gross axle weight rating (GAWR) for each
axle of the certified vehicle (§§ 567.4(g) (4),
567.5(a)(6)).
A manufacturer of trailers urged that a sepa-
rate listing for each GAWR can, on many-axled
vehicles, cause unnecessarily lengthy certification
labels that are more difficult to understand than
labels containing combined axle weight ratings.
The NHTSA agreed and subsequently proposed
an amendment of Part 567 to allow GAWR's to
be combined on the certification label for con-
secutive axles that have identical weight ratings
(38 FR 33775, December 7, 1973). Each of the
eight comments on the proposal supported the
concept of combined GAWR ratings, and the
NHTSA makes final the amendment essentially
in the form proposed.
In response to a Ford question, the option of
combining axle ratings as long as the tire desig-
nation is listed does not require that axle-by-axle
listings also be accompanied by the tire designa-
tion. For clarification, the illustration of com-
bined ratings is titled, "EXAMPLES OF
COMBINED RATINGS."
International Harvester pointed out that the
incomplete vehicle document provided to assist
final-stage manufacturers should also be amended
to permit the optional listing of combined
GAWR listings. The agency agrees that such
parallelism is logically justified and accordingly
adds the option to the requirements of § 568.4 of
Part 568.
International Harvester's understanding that
the new language would permit a set of tandem
axles to be listed together as the total value of
the two separate GAWR's is incorrect. The
agency only proposed a new method for state-
ment of the GAWR, which is a concept ap-
plicable only to separate axle systems, not
combinations of axle systems. It is noted that
neither example appended to the proposed lan-
guage would have suggested the incorrect under-
standing advanced by International Harvester.
The agency has also clarified that the new
means of stating values is optional, by adding
the phrase "at the option of tJie manufacturer"
to the second sentence following the word "may."
In consideration of the foregoing, amendments
are made in Chapter V of Title 49, Code of
Federal Regulations.
PART 567— PRE 27
Effective: June 20, 1977
m
Note — The economic and inflationary impacts
of this rulemaking have been evaluated in ac-
cordance with 0MB Circular A-107, and an
Economic Impact Statement is not required.
Because the amendment provides an option and
does not create additional obligations for any
person, the agency finds that the amendment may
become effective immediately.
The program official and lawyer principally
responsible for this amendment are David Fay
and Tad Herlihy, respectively.
(Sec. 103, 119, Pub. L. 89-563, 80 Stat. 718
(15 U.S.C. 1392, 1407) ; delegation of authority
at 49 CFR 1.50.)
Issued on June 13, 1977.
Joan Claybrook
Administrator
42 F.R. 31161
June 20, 1977
v5
PART 567— PRE 28
Effective; July 21, 1977
PREAMBLE TO AMENDMENT TO PART 567— CERTIFICATION
(Docket No. 73-31; Notice 03)
In an amendment of agency regulations on
June 20, 1977, an incorrect format was published
for the listing of tire information. This notice
corrects that error by the replacement of the
symbol "x" wherever it occurs, with the sym-
bol "-".
Effective date: July 21, 1977.
For further information contact :
Mr. David Fay
Motor Vehicle Programs
National Highway Traffic Safety
Administration
Washington, D.C. 20590
(202) 426-2817
Supplementary information : On June 20, 1977
(42 FR 31161), the NHTSA published an amend-
ment to Part 567, Certification, and Part 568,
Vehicles Manufactured in Two or More Stages,
permitting the use of the "all axles" designation
on the certification label where tire and rim in-
formation is identical for all axles. In that
amendment, the agency erroneously listed a tire
size example that used the symbol "x" to separate
tire width from diameter. Current agency regu-
lations use the symbol "-" instead of "x". The
agency by this notice corrects the June 20 notice
to reflect current agency practice.
Accordingly, Volume 49 of the Code of Federal
Regulations, Part 567.4(g)(4) and .567.5(a)(6)
and Part 568.4(a) (5) are corrected by substitut-
ing the symbol "-" for the symbol "x" wherever
it occurs in the examples listed thereunder.
The principal authors of this notice are David
Fay of the Office of Motor Vehicle Programs and
Roger Tilton of the Office of Chief Counsel.
(Sec. 103, 119, Pub. L. 89-563, 80 Stat. 718
(15 U.S.C. 1392, 1407) ; delegation of authority
at 49 CFR 1.50.)
Issued on July 15, 1977.
Robert L. Carter
Associate Administrator
Motor Vehicle Programs
42 F.R. 37371
July 21,1977
PART 567— PRE 29-30
m
EffccH"*: July 25, 1977
PREAMBLE TO AMENDMENT TO PART 567— CERTIFICATION
(Docket No. 75-28; Notice 03)
This notice amends the regulations that specify
how a truck manufacturer meets its statutory
responsibility to certify compliance of its pro-
ducts with Federal motor vehicle safety stand-
ards. Most trucks are constructed in at least
two separate stages and these regulations have
required the basic "chassis-cab" manufacturer to
provide necessary engineering calculations to the
subsequent manufacturer that permit him to
finish the vehicle and certify compliance. The
decision in Rex Chainbelt v. Brinegar, 511 F.2d
1215 (7th Cir. 1975) directed the NHTSA to
amend this regulation so that both manufacturers
certify compliance to the degree their work af-
fects the vehicle.
Date : Effective date July 25, 1977.
Addresses : Petitions for reconsideration should
refer to the docket number and be submitted to:
Docket Section, Room 5108, National Highway
Traffic Safety Administration, 400 Seventh Street,
S.W., Washington, D.C. 20590.
For further information contact:
David Fay
Motor Vehicle Programs
National Highway Traffic Safety
Administration
Washington, D.C. 20590
(202) 426-2817
Supplementary information : This notice
amends 49 CFR Part 567, Certif cation, by add-
ing a labeling requirement for chassis-cab manu-
facturers and modifying the labeling requirements
for final stage manufacturers, in accordance with
the decision in Rex Chainbelt, Inc. v. Brinegar,
511 F.2d 1215 (7th Cir. 1975). Conforming
amendments are made to 49 CFR Part 568,
Vehicles Manufactured in Two or More Stages.
Certification labeling requirements for inter-
mediate manufacturers are proposed in a com-
panion notice issued today (Notice 4, 42 FR
378).
The notice is based on a proposal that was
published as Notice 1 on October 3, 1975 (40 FR
45847). Seventeen comments were received in
response to the proposal. The amendments are
adopted essentially as proposed. The major
change is that the list of permissible locations
for the required certification labels has been ex-
tended to include the inward-facing surface of
the driver's door, in order to accommodate the
larger sizes of labels that can now be expected.
Any submitted suggestions for changes that are
not specifically mentioned herein are declined for
action or proposal at this time, on the basis of all
the information presently available to the agency.
The existing scheme for the certification of
multistage vehicles is found in Parts 567 and 568
of Title 49, Code of Federal Regulations. Briefly,
it requires a final-stage manufacturer to certify
tliat his completed vehicle complies with all ap-
plicable Federal motor vehicle safety standards,
on the basis of (i) the work he has performed
and (ii) the information concerning the incom-
plete vehicle's conformity status with respect to
each standard, found in a document (the "Part
568 docimient") supplied by those who have pre-
viously performed work on tlie incomplete ve-
hicle. This scheme is more fully described in the
notice of proposed rulemaking at 40 FR 45847.
Petitioners in the Rex Chainbelt case attacked
the validity of the scheme as it applied to a
company mounting cement mixers on chassis-
cabs. The U.S. Court of Appeals for the Seventh
Circuit, in its first opinion in this case, invali-
dated the scheme to the extent that it required a
final-stage manufacturer who builds on a chassis-
cab to make the "sole certification of compliance
of the entire vehicle." Rex Chainbelt, Inc. v.
Volpe, 486 F.2d 757, 761-762 (7th Cir. 1973).
PART 567— PRE 31
Effective: July 25, 1977
In its last opinion, the Court restated its holding
as meaning that "in instances where the customer
purchases a chassis-cab from its manufacturer
and thereafter the mixer from the mixer manu-
facturer, the 'entire vehicle' must be certified via
two certifications, with the chassis-cab manufac-
turer certifying its chassis-cab, and with the
mixer manufacturer certifying its mixer and the
effect of the mounting, if any, to thus obtain
effective certification of the 'entire vehicle.' "
Eex ChainbeZt, Inc. v. Brinegar, 511 F.2d 1215,
1216 (7th Cir. 1975).
Parts 567 and 568 are amended today to con-
form to this decision. The basic change in Part
567 is to require the manufacturer of a chassis-
cab to affix a certification label to his incomplete
vehicle, certifying: its conformity status with re-
spect to each standard that will be applicable to
the vehicle as completed. He will divide the
standards into three categories, according to the
degrees to which conformity with them is ap-
proached in his product, and certify essentially
the same facts about them as have merely, up to
now, been required to be indicate-d in the Part
568 document. The final stage manufacturer who
uses the chassis-cab will then make a three-part
certification statement (to the extent that the
three parts are applicable), corresponding to the
three statements made by the chassis-cab manu-
facturer.
More specifically, in the first category on its
label, the chassis-cab manufacturer will state,
"This chassis-cab conforms to Federal Motor
Vehicle Safety Standard Nos. "
listing the numbers of the standards for which
the statement is correct. In the corresponding
first category on its label, the final-stage manu-
facturer will state, "Conformity of the chassis-
cab to Federal Motor Vehicle Safety Standard
Nos. has not been affected by
final-stage manufacturer." This couplet con-
forms precisely to the mandate of the Court that
the chassis-cab manufacturer certify its chassis-
cab, and the final-stage manufacturer certify as
to the "effect" of its work. It is not necessary
for all the standards that were placed in the first
category by the chassis-cab manufacturer to be
similarly included by the final-stage manufac-
turer in his first category. The latter manufac-
turer is free to "affect" the manner in which the
completed vehicle conforms to any such stand-
ards, e.g., by removing and replacing mirrors or
lights, as long as he ultimately certifies in his
third (final) statement conformity to those af-
fected standards. In the extreme case, if the
final-stage manufacturer wishes to exclude all of
the standards from the first categoi-y, he may
omit this statement altogether.
The second category of standards, those that
are necessarily strongly affected by what both the
chassis-cab and final-stage manufacturers do, is
the main target of the regulatory scheme. In its
second statement the chassis-cab manufacturer
will certify, "This vehicle will conform to Stand-
ard Xos. if it is completed in
accordance with the instructions contained in the
incomplete vehicle document furnished pursuant
to 49 CFR Part 568." The final-stage manufac-
turer's corresponding statement will be, "With
respect to Standard Nos. , the
vehicle has been completed in accordance with
the chassis-cab manufacturer's instructions." This
statement also conforms to the Court's opinion,
although the treatment of this category cannot
be as simple. The final-stage manufacturer, in
considering a standard such as the one on air
brakes that its work must crucially "affect," will
thus have a choice. He may conform his com-
pletion work to the instructions of the chassis-cab
manufacturer, in which case he need only make
a statement to that effect, thereby throwing the
burden of conformity onto the chassis-cab manu-
facturer. Or, he may deviate from those instruc-
tions, in which case the second statement becomes
inapplicable as far as that standard is concerned,
and instead include the standard in the residual
third statement. Thus, the final-stage manufac-
turer will describe the "effect of [his] mounting,
if any" either by saying he had remained within
the Part 568 document's limits, thereby actuating
the chassis-cab manufacturer's certification, or by.
making an original certification of conformity.
Again, if the final-stage manufacturer chooses to
omit all standards from this second category, the
second statement may be omitted.
The third statement by the chassis-cab manu-
facturer will be, "Conformity to the other safety
standards applicable to this vehicle when com-
pleted is not substantially affected by the design
of the chassis-cab." The expression "substan-
PART 567— PRE 32
Effective: July 25, 1977
tially affected" replaces "substantially deter-
mined," which appeared in the notice of proposed
rulemaking, in order to clarify the meaning of
this third statement. This subject is discussed
further below. The third statement by the final-
stage manufacturer will be, "This vehicle con-
forms to all other applicable Federal Motor
Vehicle Safety Standards in effect in [month,
year]." Obviously, conformity to standards
concerning whicli the chassis-cab manufacturer
makes no representation whatever, or to those
where the final-stage manufacturer chooses not
to follow the chassis-cab manufacturer's instruc-
tions, must be assumed by the final-stage manu-
facturer. The regulation provides that where
the first two statements are omitted, the word
"other" be omitted from the third statement. In
this form it covers both the cases where the final-
stage manufacturer cliooses not to follow the
chassis-cab manufacturer's instructions concern-
ing any standards, and the cases involving in-
complete vehicles other than chassis-cabs, to
which the dual-certification scheme is inap-
plicable. Finally, it covers the cases where the
final-stage manufacturer considers the simple con-
formity statement to adequately represent his
rights and duties.
The Motor Vehicle Manufacturers Association
(MVMA) and several chassis manufacturers ob-
jected to the chassis-cab manufacturer's type
(1) certification, "[t]his chassis-cab conforms to
Federal Motor Vehicle Safety Standard Nos.
" on several groimds. The es-
sence of these objections was that such a certifi-
cation would be both misleading and beyond the
statutory authority of the XHTSA to require,
because there are no standards applicable to
chassis-cabs. These commenters have referred to
Section 114 of the Xational Traffic and Motor
Vehicle Safety Act of 1966, as amended (15
U.S.C. 1391 et seq.) (the Act), which requires
certification that each "[motor] vehicle or item
of motor vehicle equipment conforms to all ap-
plicable Federal motor vehicle safety standards."
They have correctly pointed out that a chassis-
cab, because it is an incomplete vehicle, is not a
"motor vehicle" as that term is defined in Section
102(3) of the Act. A chassis-cab is an item of
"motor vehicle equipment," as that term is de-
fined in Section 102(4). "While Federal motor
vehicle safety standards have been issued for
certain types of motor vehicle equipment, e.g.,
tires and motorcycle helmets, no such standards
have been issued for chassis-cabs or other incom-
plete vehicles. The NHTSA agrees that the
chassis-cab manufacturer's type (1) certification
specified in the rule adopted today is therefore
not the certification that is explicitly required by
Section 114 of the Act. Even so. the NHTSA
considers the former certification to be meaning-
ful and appropriate as part of a scheme for en-
suring the full certification of completed motor
vehicles by the proper manufacturing parties.
Conformity of a physical object (in this case, a
chassis-cab) to a safety standard is a concept
distinct from that standard's legal applicability
to the object. For example, a chassis-cab is not
statutorily required to conform to Standard No.
101, Control Location^ I dentif cation, and Illumi-
nation, because chassis-cabs are not listed in S3.
Appli-cation of that standard. Nevertheless, a
chassis-cab that does in fact meet the substantive
requirements of the standard is accurately de-
scribed as "conforming" to it.
The NHTSA does not consider the type (1)
certification to be misleading provided that it is
factually accurate. Any intimation to the reader
of such a statement that the safety standards
enumei'ated in it are applicable to the chassis-cab
is outweighed by the need for full certification
of completed motor vehicles. An untrue type (1)
statement, of course, would be considered a non-
compliance with 49 CFR Part 567.
Ford Motor Company has suggested that,
through the new certification scheme, the NHTSA
seeks to impose safety standards on chassis-cabs
indirectly — without a statutorily required con-
sideration of whether they are "reasonable, prac-
ticable, or approjjriate for the particular type of
motor vehicle or item of motor vehicle equipment
for which [they are] prescribed." This charac-
terization of the new scheme is incorrect. With
the three part certification statement, the chassis-
cab manufacturer is merely certifying his pro-
duct's sta.tuft of conformity with respect to each
of the safety standards that apply to the com-
pleted vehicle. The only standards to which a
chassis-cab must actually conform are those that
PART 567— PRE 33
Effective: July 25, 1977
he has placed in the first category, and he is free
to leave that cateorory empty by including all the
standards in the succeeding two.
Indeed, the NHTSA has specifically rejected
the concept, urged by Ford and others, of Federal
motor vehicle safety standards that apply to
chassis-cabs. It is the completed motor vehicle
with which the \HTSA is most concerned, be-
cause that is what is driven on the public high-
ways. The performance capabilities of a
chassis-cab affect motor vehicle safety only
through their effect on the performance of the
vehicle into which the chassis-cab is completed.
The consequent inappropriateness of standards
applicable to chassis-cabs was discussed fully in
the notice of proposed rulemaking.
The MVMA and several chassis manufacturers
also objected to the second type of chassis-cab
certification — that the chassis-cab will conform
to enumerated standards if it is completed in
accordance with the instructions found in the
incomplete vehicle document. These commenters
argued that such a certification statement would
require the chassis-cab manufacturer to anticipate
conduct over which he has no control. Because
conditions on subsequent manufacturing are con-
tained tvithin a chassis-cab manufacturer's type
(2) certification statement, however, the state-
ment's truth or falsehood is established at the
time of chassis-cab manufacture. The work that
is actually performed on a chassis-cab following
such a certification has no bearing on that truth
or falsehood. These objections are thus without
foundation. The chassis-cab manufacturer is
protected against the wide variety of po.ssible
methods of completion over which the NHTSA
readily agrees he has no control.
In a similar vein, the MVMA suggested that
the chassis-cab certification statements would be
susceptible to amendments made to the standards
between the time of manufacture of the chassis-
cab and the completion of the vehicle, and would
thus be unacceptably open-ended. The MVMA
is mistaken. The XHTSA interprets all the
statements on the chassis-cab manufacturer's
label as made with respect to the Federal motor
vehicle safety standards in effect at the time of
manufacture of the chassis-cab, as that time is
indicated on the label.
As noted in the notice of proposed rulemaking,
there is a factual limitation on the chassis-cab
manufacturer's use of the third type of certifica-
tion. \Miere the chassis design is an important
determinant of a vehicle's ability to conform to a
given standard, it is incorrect to state (whether
on a certification label or in a Part 568 docu-
ment) that conformity to that standard is "not
substantially determined by the design of the
chassis-cab." Ford and General Motors objected
to this position, arguing that where the work
of the final-stage manufacturer substantially de-
termines conformity, the design of the chassis-cab
must of necessity not substantially determine con-
formity. The NHTSA rejects these objections.
It is possible for a completed vehicle's conformity
to a standard to be substantially determined by
both the design of the chassis-cab and the man-
ner of completion by the final-stage manufacturer.
Indeed, this is often the case with the braking
standards and the fuel system integrity standard,
among others. To more precisely characterize
the agency's intention and to eliminate further
confusion on this subject, the expression "sub-
stantially determined" in the chassis-cab manu-
facturers' type (3) certification is replaced by
"substantially affected". In addition, an inter-
pretive amendment is made to the description in
Part 568 of the incomplete vehicle document, to
effect the same substitution.
Eexnord, Inc. (formerly Rex Chainbelt) ar-
gued that the proposed certification scheme would
not comply with the Eex Chainhelt holding be-
cause it would require "that the Final Mfr.
certify the Chassis Mfr.'s materials, workman-
ship and design in some situations." The situa-
tions referred to are those in which a final-stage
manufacturer affects the manner of conformity
to a standard to which the chassis-cab has been
certified in category' (1) or departs from the
completion instructions for a standard respecting
which the chassis-cab has been certified in cate-
gory (2). Rexnord objects to the requirement
that, in these situations, the final-stage manufac-
turer "unconditionally" certify the completed
vehicle in category (3), on the ground that he
should be able to "preserve so much of the prior
certification as he has a right to rely on" despite
his departure from the anticipated manner of
completion.
PART 567— PRE 34
Effective: July 25, 1977
The infinite number of modifications that can
be made by a final-stage manufacturer in depart-
ing from the incomplete-vehicle manufacturer's
disposition make "preservation" of the remnants
of a prior certification extremely difficult under
the general allocation provisions of Part 567.
For this reason, the final-stage manufacturer
must rely on the requirement that the chassis-cab
manufacturer's certification is permanently af-
fixed to the vehicle and thereby "preserves" that
portion of the prior certification that can continue
to be relied upon.
Rexnord also argued that the completion in-
structions supplied by chassis-cab manufacturers
are often unreasonably restrictive. It urged that
a new regulation be established to require those
manufacturers to test and certify various "ap-
proved modifications" of their chassis-cabs. The
NHTSA considers such an approach to be as
unwise as the establishment of chassis-cab stand-
ards. While there may be many instances in
which the chassis manufacturer is in a better
position than the final-stage manufacturer to take
responsibility for the safety of a modification to
the chassis, the variety of manufacturing situa-
tions militates against government interference
with the freedom of manufacturers to allocate
responsibility among themselves as they find it
most appropriate.
In response to Rexnord's suggestion, the rule
specifies that the name of the chassis-cab manu-
facturer be preceded on the label affixed by him
by the words "CHASSIS-CAB MANUFAC-
TURED BY" or "CHASSIS-CAB MFD BY".
Omission of these words from the proposed rule
was an oversight. The additional suggestion
that the final-stage manufacturer's name be pre-
ceded on his label by "FINAL STAGE MANU-
FACTURE BY" (or an abbreviation) rather
than "MANUFACTURED BY" (or an abbrevia-
tion), however, is not adopted. Even though the
latter designation may oversimplify the final-
stage manufacturer's status, such a characteriza-
tion is necessitated by the Act. In any event, the
intimation that he is responsible for the entire
vehicle is negated by the accompanying identifi-
cation of the chassis-cab manufactui-er.
The NHTSA declines the suggestion of Mack
Trucks that Gross Vehicle and Gross Axle Weight
Ratings be required, or at least permitted as an
option, to appear on the chassis-cab label. There
is great potential for user confusion if chassis-
cab and final-stage manufacturers' labels indicate
different weight ratings. The need to avoid this
confusion outweighs an interest in placarding
weight ratings other than those of the completed
vehicle. Therefore, Rexnord's request — that the
final stage manufacturer who does not depart
from a chassis-cab manufacturer's weight ratings
be permitted to refrain from "restating" those
ratings — cannot be granted.
The Recreation Vehicle Industry Association
(RVIA) suggested a change in the definition of
"chassis-cab" to include certain incomplete ve-
hicles that are completed as motor homes. These
"chopped vans" and "Type C" motor home
chassis, however, appear to lack the prerequisite
completed occupant compartments of the pro-
posed definition. Because completeness of the
occupant compartment is what sets chassis-cabs
apart from other incomplete vehicles, the RVIA
suggestion is declined. Accordingly, the defini-
tion is adopted as proposed. For convenience, it
is located in § 567.3 rather than the definitions
section of Part 571 of this title. Manufacturers
are reminded that Part 568 continues to require
the provision of a document with every incom-
plete vehicle, regardless of whether the incom-
plete vehicle, by virtue of being a chassis-cab, is
also required by the rule issued today to be
certified.
The new chassis-cab certification requirements
will take effect in one year. This is longer than
all the lead times requested by commenters. It
provides ample time for chassis-cab manufactur-
ers to prepare for compliance. It also enables
the NHTSA to evaluate the comments and take
final action on the accompanying proposal to add
certification reciuirements for intermediate manu-
facturers with sufficient lead time remaining for
those manufacturers.
In consideration of the foregoing, the amend-
ments are made in Chapter V of Title 49, Code
of Federal Regulations.
Effective dates: Part 567: All changes to the
text of the Code of Federal Regulations should
be made immediately, to minimize confusion re-
sulting from changes in the designation of para-
PART 567— PRE 35
Effective: July 25, 1977
graphs. The chassis-cab labeling requirements
are effective as indicated in § 567.5 (a) . Findings :
Because § 567.5(c) allows an alternative means
of compliance with requirements previously set
out in § 567.5(a) and creates no additional bur-
den, the National Highway Traffic Safety Ad-
ministration finds that an immediate effective
date is in the public interest. Paragraphs (d)
through (f ) of § 567.5 are simply the prior para-
graphs (b) through (d) transposed, with cor-
rected cross-references. Because the amendment
to § 567.4(c) also allows an alternative means of
compliance and creates no additional burden, the
NHTSA finds that an immediate effective date
for this amendment is also in the public interest.
Similarly, the addition of a definition to § 567.3
creates no additional burden.
Part 568 : These amendments are effective im-
mediately. The amendment to § 568.4(a) (7) is
interpretive in nature. Because the amendments
#
to §§ 568.6 and 568.7 relieve restrictions and cre-
ate no additional burdens, the NHTSA finds that
an immediate effective date for them is also in
the public interest.
The principal program official and lawyer re-
sponsible for preparation of this rulemaking
document are David Fay and Mark Schwimmer,
respectively.
(Sec. 103, 108, 112, 114, 119, Pub. L. 89-563,
80 Stat. 718 (15 U.S.C. 1392, 1397, 1401, 1403,
1407) ; delegation of authority at 49 CFR 1.50.)
Issued on July 8, 1977.
Joan Claybrook
Administrator
42 F.R. 37814
July 25, 1977
#
PART 567— PRE 36
PREAMBLE TO AMENDMENT TO PART 567— CERTIFICATION OF
MULTISTAGE VEHICLES
(Docket No. 75-28; Notice 51)
Agency: National Highway TraiRc Safety Ad-
ministration, DOT.
Action: Correction.
Summary: In an amendment of the agency's
certification regulations published July 25, 1977,
an incorrect format was established for the list-
ing of tire infonnation. This notice corrects that
error and another minor error in the wording of
the regulation.
Effective date : September 19, 1977.
For further information contact :
Mr. David Fay, Motor Vehicle Programs,
National Highway Traffic Safety Adminis-
tration, Washington, D.C. 20590 "
(202-426-2817)
Supplementary information: On July 25, 1977
(42 FK 37814), the NHTSA published an amend-
ment of Part 567, Certification, and Part 568,
Vehicles Manufactured in Two or More Stages,
which prescribed regulations for vehicle certifi-
cation. In that amendment, the agency erro-
neously listed a tire size example that used the
symbol "x" to separate the tire width from
diameter. Current agency regulations use the
symbol "-" instead of "x". Accordingly, Part
567.5(c)(6) of Title 49 of the Code of Federal
Regulations is corrected by the substitution of
the symbol "-" for the symbol "x" wherever it
occurs in the example listed thereunder.
The second sentence in Part 567.5(c) (7) (ii) is
corrected to read: "The statement shall be com-
pleted by inserting the numbers of all or less than
all of the standards, and only those standards, to
which the chassis-cab manufacturer has made the
conditional certification under paragraph (a) (2)
of this section."
The principal author of this document is Roger
Tilton of the Office of Chief Counsel.
(Sees. 103, 108, 112, 114, 119, Pub. L. 89-563,
80 Stat. 718 (15 U.S.C. 1392, 1397, 1401, 1403,
1407) ; delegations of authority at 49 CFR 1.50
and 501.8.)
Issued on September 14, 1977.
Robert L. Carter
Associate Administrator
Motor Vehicle Programs
42 F.R. 46927
September 19, 1977
PART 567— PRE 37-38
i
•
ii
PREAMBLE TO AMENDMENT TO PART 567— CERTIFICATION AND PART
MANUFACTURED IN TWO OR MORE STAGES
(Docket No. 75; Notice 5)
568— VEHICLES
Agency: National Highway Traffic Safety Ad-
ministration, DOT.
Action: Final Rule.
Summary: This amendment specifies the manner
in which intermediate stage manufacturers of
trucks must certify compliance with Federal
motor vehicle safety standards. Some vehicles
are constructed in three or more separate, stages.
Current regulations require only that the first
and final manufacturers ceitify compliance
to the degree that their work affects the vehicle.
This amendment include^s the "intermediate
stage" manufacturer in the certification scheme
and completes revisions of the regulations re-
quired by Rex Chainhelt v. Brinegar, 511 F.2d
1215 (7th Cir. 1975).
Effective date : July 2, 1978.
Far further information contact:
David Fay, Engineering Systems Staff,
National Highway Traffic Safety Adminis-
tration, Washington, D.C. 20590
(202-126-2817).
Supplementary information: This notice amends
49 CFR Part 567, Certifjcatian, to add a labeling
requirement for intermediate manufacturers who
perform work on chassis-cabs. Confonning
amendments to 49 CFR Part 568, Vehicles Manu-
factured in Two or More Stages, are also made.
On July 25, 1977, the NHTSA published in the
Federal Register (42 FR 37831) a notice
proposing to amend the agency's certification
regulations by adding certification responsibili-
ties for intermediate manufacturers. That action
was responsive to the decision in Rex Chainhelt.
Currently, intennediate manufacturers are the
only major manufacturers in the chain of multi-
stage manufacturing without certification respon-
sibilities. To complete the certification scheme,
the agency pi-oposed to require certification by
intermediate manufacturers which would indicate
that such manufacturer had complied with all of
the safety standards applicable to his manufac-
turing operation. A complete explanation of the
intermediate manufacturer's certification respon-
sibilities was printed in the notice proposing the
amendment and will not be reprinted here.
No comments were received in response to the
notice of proposed rulemaking. Accordingly, the
agency adopts, as final, the proposal as it was
issued. The agency has reviewed the costs of this
regulation and concludes that they are the mini-
mum necessary for compliance with the Rex
Chainhelt decision.
The principal authors of this notice are David
Fay of the Engineering Systems Staff and Roger
Tilton of the Office of Chief Counsel.
In consideration of the foregoing, Chapter V
of Title 49, Code of Federal Regulations, is
amended. . . .
(Sees. 103, 108, 112, 114, 119, Pub. L. 89-.563,
80 Stat. 718 (15 U.S.C. 1392, 1397, 1401, 1403,
1407) ; delegation of authority at 49 CFR 1.50.)
Issued on March 1, 1978.
Joan Claybrook
Administrator
43 F.R. 9604
March 9, 1978
PART 567— PRE 39-40
#
m
PREAMBLE TO PART 567— CERTIFICATION BUMPER STANDARD
(Docket No. 73-19; Notice 24)
Agency: National Highway Traffic Safety Ad-
ministration , ( XHTSA) .
Action: Final Kule.
Summa)^ : This notice amends the method by
which manufacturers are required to certify
compliance with applicable Federal safety stand-
ards to require, in the case of passenger cars,
simultaneous certification of compliance with
Federal bumper standards.
Effective date : May 22, 1978.
For fiuther infor-matian contact:
Jlr. David Fay, Engineering Systems Staff,
National Highway Traffic Safety Adminis-
tration, Washington, D.C. 20590
(202-426-2817).
Supplementary informatimi: On March 6, 1978,
the NHTSA published a notice (43 FR 9167)
proposing to amend 49 CFR Part 567, Certif ca-
tion^ to implement § 105(c) of the Motor Vehicle
Information and Cost Savings Act (the Act)
(15 U.S.C. §1901, et seq.), which requires cer-
tification of compliance with applicable bumper
standards. The agency proposed that the manu-
facturer or distributor of a passenger car furnish
to the distributor or dealer at the time of deliv-
ery, a single certification of compliance with all
applicable safety and bumper standards. The
proposal fulfilled the statutory labeling require-
ments and avoided the cost and inconvenience of
requiring a separate bumper certification label,
by simply supplementing the existing require-
ments of Part 567 for certification to applicable
safety standards.
No unfavorable comments were received on the
concept of allowing a single certification label for
both safety and bumper requirements. One com-
menter suggested that the agency also encompass
the fuel economy standards of Title V of the Act
within the certification requirement of Part 567.
However, Title V imposes average fuel economy
requirements on manufacturer's fleets as a whole
rather than on individual vehicles, making fuel
economy certification labels inappropriate.
General Motors suggested allowing the label
applicable to passenger cars to be used, at the
manufacturer's option, on non-passenger vehicles
as well, maintaining that use of two different
labels could lead to control problems and in-
creased costs. The same statement that the ve-
hicle meets "all applicable safety and bumper
standards" could technically be used on non-
passenger vehicles because no bumper standards
are "applicable" to this vehicle type. The agency
declines to adopt General Motors' proposal, how-
ever, because consumers may be misled by such a
statement into assuming that non-passenger ve-
hicles also meet a bumper performance standard.
Several manufacturei"s pointed out that the
proposed immediate effective date for the change
would not allow sufficient lead time for prepara-
tion and printing of certification labels. To
avoid difficulty in phasing in the new certification
labels, the amendment has been modified to allow
conversion to the new label at any time prior to
September 1, 1978. This change is consistent
with the pi'ovision of § 571.215 which permits the
manufacture of Part 581 bumpers prior to Sep-
tember 1, 1978, and will not be misleading since
all vehicles bearing the new label will in fact
comply with either the Standard 215 or Part 581
bumper requirements.
PART 567— PRE 41
The principal author of this notice is Richard Issued on May 15. 1978. U^^
Hipolit, Office of Chief Counsel ^W
(Sees. 103, 119, Pub. L. 89-563, 80 Stat. 718 Jo^"^ Claybrook
(15 U.S.C. 1392, 1407) ; sees. 102, 105, Pub. L. Administrator
92-513, 86 Stat. 947 (15 U.S.C. 1912, 1915) ; dele- 43 F.R. 21890
gation of authority at 49 CFR 1.50.) May 22, 1978
#
PART 567— PRE 42
PREAMBLE TO AN AMENDMENT TO PART 567
Certification
Docket No. 83-15; Notice 1
ACTION: Final rule; correction.
in
SUMIVIARY: This notice amends a reference
NHTSA's motor vehicle certification regulations to
a paragraph in the joint motor vehicle importation
regulation of the Departments of Treasury and
Transportation. The joint regulation was
renumbered without a corresponding change having
been made to the reference in NHTSA's certifica-
tion regulations.
EFFECTIVE DATE: October 17, 1983.
SUPPLEIVIENTARY INFORMATION: 49 CFR Part
567, Certification, implements the statutory require-
ment of 15 U.S.C. 1403 for certification of compUance
with applicable Federal motor vehicle safety stan-
dards. Under 49 CFR 567.2(b), as currently written:
"(b) In the case of imported motor vehicles, the re-
quirement of affixing a label or tag applies to im-
porters of vehicles admitted to the United States
under Sec. 12.80(bX2) of the joint regulations for im-
portation of motor vehicles and equipment (19 CFR
12.80(bXl)) to which the required label or tag is not
affixed."
The joint regulations referred to are those of the
Department of Transportation and Department of
the Treasury on importation of vehicles and equip-
ment subject the Federal motor vehicle safety stan-
dards. At the time the joint certification regulation
was promulgated (36 FR 7056, April 14, 1971), these
regulations provided for unconditional entry of
vehicles certified as meeting Federal requirements
(19 CFR 12.80(bXl)) and conditional entry for non-
certified vehicles (19 CFR 12.80(bX2)). On December
14, 1978, the joint importation regulations were
amended (43 FR 56655) and certain paragraphs were
revised and renumbered. The principal change was
to make all entries conditional (the minimum condi-
tion, however, for manufacturer-certified vehicles
being a simple declaration of conformance). The
distinctions between the former 12.80(bXl) and (bX2)
disappeared and 12.80(bX2) became (bXl) in the revi-
sion. However, no corresponding correction of
reference has been made in Part 567 until now. The
current section 12.80(bX2) in the joint regulations
refers to the conditions for on-road use of vehicles
imported for experimental purposes, a category of
temporary use for which certification is not required.
This amendment is not a major action within the
meaning of Executive Order 12291 and is not a
significant action under the Department's regulatory
policies and procedures, since it makes no substan-
tive change in existing certification requirements.
For that same reason, I hereby certify that this
amendment will not have a significant economic im-
pact on a substantial number of small entities.
In consideration of the foregoing, subsection (b) to
Section 567.2 of Title 49 Code of Federal Regulations
is hereby amended to read:
"(b) In the case of imported motor vehicles, the
requirement of affixing a label or tag applies to im-
porters of vehicles admitted to the United States
under 19 CFR 12.80(bXl) to which the required label
or tag is not affixed."
Issued on October 7, 1983.
Diane K. Steed
Deputy Administator
48 FR 46994
October 17, 1983
PART 567-PRE 43-44
PREAMBLE TO AN AMENDMENT TO PART 567
Certification Requirements
(Docket No. 83-02; Notice 2)
ACTION: Final rule.
SUMMARY: This notice amends NHTSA's safety
certification regulations to permit the use of a
simplified certification label by final-stage manufac-
turers of trucks manufactured in two or more stages.
This action is being taken in response to a petition
by the National Truck Equipment Association
(NTEA), and is intended to reduce the administrative
burdens imposed on final-stage manufacturers by the
certification requirements.
DATES: This amendment is effective on November
8, 1983.
SUPPLEMENTARY INFORMATION: Section 114
of the National Traffic and Motor Vehicle Safety Act
(15 U.S.C. 1403) requires each motor vehicle
manufacturer to affix to each vehicle it produces a
label certifying that the vehicle complies with all
applicable Federal motor vehicle safety standards.
NHTSA has promulgated regulations specifying the
content and location of the required label. See 49
CFR Part 567.
In the case of motor vehicles that are manufactured
in two or more stages, chassis-cab manufacturers and
intermediate manufacturers who work with chassis
cabs are also required to attach labels to their
vehicles indicating the extent to which each has
assisted in assuring the compliance of the vehicles
with the safety standards. The requirements for
labeling for the chassis-cab and intermediate
manufacturers arose from the court decision in Rex
Chainbelt v. Brinegar, 511 F. 2d 1215 (7th Cir. 1975),
in which the court indicated that all manufacturers
involved in the manufacturing process should certify
compliance to the degree their work affects the
vehicle. Prior to that decision, only the final-stage
manufacturer certified the compliance of a multi-
stage vehicle.
Part 567 requires chassis-cab, intermediate, and
final-stage manufacturers to list those standards for
which compliance is being certified on each vehicle's
certification label. Final-stage manufacturers can
avoid this time-consuming listing of standards by
electing to use an abbreviated certification statement
that simply indicates that their vehicles comply with
all applicable motor vehicle safety standards.
However, few final-stage manufacturers make this
statement, because they fear potential product lia-
bility from making such a broad representation on
the certification label. They fear that the statement
could be construed as an assumption of responsibility
for manufacturing steps conducted entirely by other
companies.
On August 17, 1982, NTEA petitioned the agency
to amend the labeling requirements for final-stage
manufacturers to further simplify the label. NTEA
pointed out that in most cases the final-stage
manufacturer does not affect compliance with the
standards that have been previously certified by the
chassis-cab or intermediate vehicle manufacturer.
Also, in most cases, they complete the vehicle in
accordance with the instructions in the incomplete
vehicle document supplied by the previous manufac-
turer. In these cases, the NTEA argued, the label
could be generalized in such a manner that reference
to specific standards could be completely deleted,
with the final-stage manufacturer only certifying
compliance with standards other than those certified
by prior manufacturers. This would permit the
development of a form label that would not require
the time-consuming addition of significant amounts
of specialized information by the final-stage manufac-
turer. This could reduce the burden of certifying for
these manufacturers.
The NTEA recommended also that use of the ex-
isting, more complex label be retained as an option
that can be used by any final-stage manufacturer.
Under NTEA recommendations, the detailed label
PART 567-PRE 45
would be used by those final-stage manufacturers
who do not follow the instructions in the incomplete
vehicle documents or who affect the compliance of
standards that were previously certified by the
chassis-cab or intermediate vehicle manufacturers.
On February 13, 1983, NHTSA published a notice
granting the NTEA petition and proposing to amend
the certification regulations in accordance with
NTEA's request. See 48 FR 6565. Based on a review
of the comments received concerning that notice and
the agency's further consideration of the NTEA peti-
tion, the agency is adopting the proposed amend-
ments without change.
Only two commenters recommended changes in the
agency's proposal, one opposing the amendment and
the other supporting it but suggesting that it be ex-
panded. The National LP-Gas Association opposed
the amendment on the basis that requiring final-stage
manufacturers to list the standards for which they
are certifying compliance assures that those manufac-
turers have at least some familiarity with those stan-
dards. They argue that for manufacturers who are
familiar with the standards, the more detailed cer-
tification statement imposes no significant burden.
The NLPGA feels that the proposed amendment will
therefore only aid those final-stage manufacturers
who are not concerned about compliance with safety
standards.
The agency recognizes that the NLPGA argument
has some merit. However, even without this amend-
ment, final-stage manufacturers could certify com-
pliance with all standards without listing the stan-
dards by number, by using the abbreviated label.
This amendment only clarifies the existing provision
by allowing a statement that the final-stage manufac-
turer is only certifying compliance with standards
other than those certified by the chassis-cab manufac-
turer or the intermediate manufacturer. The agency
believes that this clarification is implicit in the
existing abbreviated certification option, in any case.
Further, the hsting of standards by number does not
by itself assure any significant degree of familiarity
with the standards.
Motor Truck Distributors, Inc., recommended a
further simplification of the certification re-
quirements by permitting final-stage manufacturers
to eliminate gross vehicle weight rating and gross
axle weight rating information from their certifica-
tion labels if the work they perform does not alter
the existing ratings of the chassis manufacturer.
However, the current regulations do not require
chassis-cab manufacturers to list this weight rating
information on their certification labels. Thus, adop-
ting the MTD recommendation could result in situa-
tions in which those ratings would not appear
anywhere on the vehicle. If the agency were to
amend its requirements for chassis-cab manufac-
turers to specify that those manufacturers must list
the weight rating information on their certification
labels, conflicting rating values would appear on
vehicles whose ratings were modified by either inter-
mediate or final-stage manufacturers. These differ-
ing weight ratings could cause confusion for truck
operators. Therefore, the agency is not adopting this
recommendation.
The agency has determined there is good cause to
make this amendment effective upon publication
since it "relieves a restriction" within the meaning
of 5 U.S.C. 553 (d). Manufacturers may continue to
use their existing labels or choose to change to the
new system. Accordingly, no adverse economic con-
sequences will result from an immediate effective
date.
Executive Order 12291
The agency has evaluated the economic and other
effects of this amendment and has determined that
it is not major as defined by Executive Order 12291
nor significant as defined by the Department of
Transportation's regulatory pohcies and procedures.
The amendment simply allows a shortened certifica-
tion technique for fmal-stage manufacturers, but per-
mits them to continue to certify in the same manner
that they certify at present if they choose. The only
economic result of this amendment might be a slight
reduction in the cost of certification for those entities
that choose the new certification format. Because the
economic and other impacts of this rule are so
minimal, a full regulatory evaluation is not being
prepared.
Regulatory Flexibility Act
In accordance with the Regulatory Flexibility Act,
the agency has evaluated the effects of this action
on small entities. Based upon this evaluation, I cer-
tify that the amendment will not have a significant
economic impact on a substantial number of small en-
PART 567-PRE 46
tities. Accordingly, no regulatory flexibility analysis
has been prepared.
While many of the final-stage manufacturers that
will be affected by this amendment are considered
small entities as defined by the Regulatory Flexi-
bility Act, the effect on them, if any, would be negli-
gible. The amendment would not impose any addi-
tional costs and might in fact slightly reduce costs
for them. Most important, the amendment will poten-
tially reduce confusion and complexity in the cer-
tification of their vehicles. Since the cost effects on
manufacturers are minimal, the effects on vehicle
prices, and thus on small organizations and govern-
mental units that might purchase new multistage
vehicles, are also negligible.
National Environmental Policy Act
The agency has also analyzed this amendment for
the purposes of the National Environmental Policy
Act. The agency has determined that the amend-
ments to Part 567 will not have any significant effect
on the quality of the human environment.
List of Subjects in U9 CFR 567:
Labeling, motor vehicle safety, motor vehicles, rub-
ber and rubber products, reporting requirements.
In accordance with the foregoing, 49 CFR
567.5(c)(7) is revised to read as follows:
§ 567.5(cX7).
(7) One of the following statements as appropriate.
Statements (i), (ii), and (iii) are alternative certifica-
tion statements. Statement (i) may be used by
manufacturers meeting the requirements described
in the instruction portion of that paragraph.
Statements (ii) and (iii) may be used by any final-stage
manufacturer.
(i) "Conformity of the chassis-cab to Federal Motor
Vehicle Safety Standards, which have been previ-
ously fully certified by the incomplete vehicle
manufacturer or intermediate vehicle manufacturer,
has not been affected by final-stage manufacture. The
vehicle has been completed in accordance with the
prior manufacturer's instructions, where applicable.
This vehicle conforms to all other applicable Federal
Motor Vehicle Safety Standards in effect in (month,
year)."
The preceding statement shall be used only in cases
in which the final-stage manufacturer has: (A) not
affected conformity to standards compliance which
has been fully certified by a chassis-cab manufac-
turer pursuant to paragraph (a)(1) of this sec-
tion or by an intermediate manufacturer pursuant
to paragraphs (bXlXi) or (bXlXii) of this section, and
(B) has completed the vehicle in accordance with the
prior manufacturer's instructions in regard to stand-
ards listed, as appropriate, in a chassis-cab manufac-
turer's conditional statement under paragraph (aX2)
of this section or in an intermediate manufacturer's
conditional statement under paragraph (bX2) of this
section. The date shovm in the third sentence of the
statement shall be not earlier than the manufactur-
ing date of the incomplete vehicle, and not later than
the date of completion of final-stage manufacture.
(ii) "Conformity of the chassis-cab to Federal
Motor Vehicle Safety Standards Nos has
not been affected by final stage manufacture. With
respect to Standards Nos , the vehicle has
been completed in accordance with the prior
manufacturer's instructions. This vehicle conforms
to all other applicable Federal Motor Vehicle Safety
Standards in effect in (month, year)."
The first sentence of the preceding statement shall
be completed by inserting the numbers of all or less
than all the standards, and only those standards,
respecting which the latest prior certification state-
ment was made by a chassis-cab manufacturer pur-
suant to paragraph (aXl) of this section or by an in-
termediate manufacturer pursuant to paragraphs
(bXlXi) or (bXlXii) of this section. The second sentence
of the statement shall be completed by inserting the
numbers of all or less than all of the standards, and
only those standards, respecting which the latest
prior certification statement was a chassis-cab
manufacturer's conditional statement under
paragraph (aX2) of this section or an intermediate
manufacturer's conditional statement under
paragraph (bX2) of this section. The date shown in
the third sentence of the statement shall be not
earlier than the manufacturing date of the incomplete
vehicle, and not later than the date of completion of
final-stage manfacture.
(iii) "This vehicle conforms to all applicable
Federal Motor Vehicle Safety Standards in effect in
(month, year)."
PART 567-PRE 47
The date shown shall be not earlier than the Issued on November 2, 1983.
manufacturing date of the incomplete vehicle and not
later than the date of completion of final-stage
manufacture.
Diane K. Steed
Deputy Administrator
48 FR 51308
November 8, 1983
PART 567-PRE 48
PREAMBLE TO AN AMENDMENT
TO PART 567 — CERTIFICATE
[Docket No. T84-01 ; Notice 7]
ACTION: Final rule.
SUMMARY: This rule establishes a vehicle theft
prevention standard, as required by the Motor
Vehicle Theft Law Enforcement Act of 1984. The
standard contains performance requirements for
inscribing or affixing identification numbers onto
original equipment major parts and the replace-
ment parts for those original equipment parts on
passenger motor vehicle lines selected as high
theft lines. The rule also specifies which parts are
the major parts that must be so identified. Finally,
it sets forth the manner and form for certifying
compliance with the standard.
EFFECTIVE DATE: April 24, 1986. This means
that the theft prevention standard applies to pas-
senger cars and major replacement parts begin-
ning with the 1987 model year.
SUPPLEMENTARY INFORMATION: The Motor
Vehicle Theft Law Enforcement Act of 1984 (Theft
Act; Pub. L. 98-547) added Title VI to the Motor
Vehicle Information and (Cost Savings Act). Title
VI requires NHTSA, by delegation from the Sec-
retary of Transportation, to promptly complete a
series of rulemaking actions designed to mount a
comprehensive attack on the problem of vehicle
theft. This rule contains the most significant of
those mandated rulemaking actions, the theft pre-
vention standard setting forth the performance
criteria for affixing or inscribing covered major
parts of passenger motor vehicles with identifying
numbers or symbols, as required by section 602
of the Cost Savings Act (15 U.S.C. 2022). Addi-
tionally, this rule carries out the following statu-
tory mandates:
1) it identifies the major parts that must be
marked, as specified in section 603(a)(2);
2) it establishes the cost limitation for marking
major replacement parts, as specified in section
604; and
3) it establishes the form and manner of certify-
ing compliance with the theft prevention standard,
as specified in section 606(c) of the Cost Savings
Act.
The Notice of Proposed Rulemaking
To carry out these statutory mandates, NHTSA
published a notice of proposed rulemaking
(NPRM ) at 50 FR 19728, May 10, 1985. The agency
has received more than 240 comments on the
NPRM, representing the opinions of vehicle and
parts manufacturers, law enforcement groups, in-
surers, automobile dealers, members of Congress,
direct importers of vehicles, and individual con-
sumers. "Direct importers" are individuals and
commercial enterprises that obtain foreign cars
not originally manufactured for sale in the United
States, bring those cars into this country under
bond, and modify the cars so that they can be
certified as being in compliance with the U.S.
vehicle safety, emissions, and bumper standards.
Each of these comments has been considered and
the most significant points are addressed below.
The NPRM contained a detailed background dis-
cussion of the provisions of the Theft Act and
explained in detail the agency's rationale for pro-
posing each of the requirements. This preamble
follows the same organizational format used in
the NPRM, so that readers can easily compare the
two documents. A brief summary highlighting the
most important points of this final rule follows.
Highlights of this Final Rule
1. Markings for Covered Original Equipment
Major Parts.
Original equipment covered major parts must
be marked with the full 17 character U.S. vehicle
identification number (VIN), except for engines
and transmissions used by certain manufacturers.
Manufacturers marking engines and transmis-
sions with a VIN derivative, consisting of at least
the last 8 characters of the VIN, as of the enact-
ment date of the Theft Act may continue to use
those derivatives. Section 604(b) of the Cost Sav-
ings Act provides that manufacturers engaged in
identifying their engines and transmissions in a
manner which "substantially complies" with the
requirements of this standard shall not be re-
quired to conform to any identification system
which imposes greater costs than those being in-
curred under the "substantially complying" iden-
tification system. NHTSA deems 8-character VIN
derivatives to be substantially in compliance with
this standard.
The performance requirements for both labels
and other markings have been adopted substan-
tially as proposed in the NPRM. The only note-
worthy difference is in the "footprint" requirement
for labels. In response to the comments, the pro-
posed requirement has been clarified in this final
rule. Removal of a label must leave some residual
part of the label or adhesive on the part, such
that an investigator could detect that a label was
originally present on the part.
2. Covered Major Parts.
This standard specifies 14 major parts as the
covered major parts as the covered major parts
which must be marked, if present, on all vehicles
in lines selected as high theft lines. Those 14 parts
consist of the 12 major parts proposed in all three
of the alternatives set forth in the NPRM, plus
the two rear doors for 4-door vehicles. Two-door
cars will be required to have only 12 parts marked.
3. Markings for Replacement Parts.
Replacement parts for covered original equip-
ment parts are required to be marked with the
letter "R" and the manufacturer's logo, for pur-
poses of this standard, and with the symbol "DOT",
as a certification of compliance with this standard,
as proposed in the NPRM. Such markings are sub-
ject to the same performance requirements as
the markings on original equipment parts. This
standard also establishes a cost limit of five dollars
(in 1984 dollars) for marking each replacement
part.
4. Target Areas for Parts Marking.
The agency had proposed that both original
equipment and replacement parts be marked in a
5 centimeter X 5 centimeter target area, and that
these target areas be separated by at least 15 centi-
meters. Many commenters suggested that this
small target area was too restrictive and unneces-
sary to achieve the intended purpose. NHTSA was
persuaded by these comments. Accordingly, this
theft prevention standard requires the original
vehicle manufacturers to designate target areas
for marking both original equipment and replace-
ment parts. The target area for the original equip-
ment parts cannot exceed 50 percent of the total
surface area of the part surface on which the mark-
ing will appear, and the target area for replace-
ment parts cannot exceed 25 percent of the total
surface area of the surface on which the marking
will appear. The boundaries of the different target
areas must be separated by at least 10 centimeters
at all points along those boundaries. The vehicle
manufacturers will be required to inform NHTSA
of the target areas they have designated on each
of the parts.
5. Who May Certify Compliance with this
Standard.
The NPRM proposed that only original vehicle
manufacturers be allowed to certify compliance
with this theft prevention standard. The proposal
would have had the effect of prohibiting direct
importers from importing any high theft vehicles
into the U.S. This proposal was based on the Theft
Act's prohibition against importing non-complying
vehicles into the U.S., together with the Theft Act's
ambiguity as to whether persons besides the orig-
inal manufacturer should be allowed to certify
compliance. The proposal was also based on the
agency's tentative conclusion that limiting certifi-
cation authority would enhance the security of the
marking technologies and the enforcement of this
theft prevention standard.
Upon further consideration, NHTSA has decided
that this regulation should not prohibit direct
imports of vehicles. NHTSA also believes that the
PART 567-PRE 50
rulemaking record supports the law enforcement
concerns expressed in the NPRM. Accordinj^ly,
this theft prevention standard sets forth special
requirements for direct imports of vehicles in high
theft lines. Such vehicles must:
(1) Be marked with the original Euro-VIN, and
not a "home-made" U.S. VIN;
(2) Be marked by inscribing the required mark-
ings, and may not have labels affixed to the parts
to satisfy this standard; and
(3) Be marked before the vehicle is imported
into the U.S. This final requirement is explicitly
set forth in section 607(a)(1) of the Cost Savings
Act. Accordingly, the agency has concluded that
it cannot adopt the suggestion in some of th<.' com-
ments that it implement a bonding program for
direct imports, similar to that in effect tor the
bumper and safety standards. To implement this
requirement, this rule specifies that direct
importers of high-theft vehicles must certify com-
pliance with this theft prevention standard, by
having a certification label permanently affixed
to each covered vehicle before it is imported into
the United States.
A detailed discussion of these issues and other
issues raised during the comment period follows.
The Theft Prevention Standard
A. Original Equipment Parts
As noted in the NPRM, Title VI of the Cost Sav-
ings Act requires NHTSA to promulgate a theft
prevention standard, which must be a minimum
performance standard for the identification of the
covered original equipment and replacement
major parts of new passenger motor vehicles. This
identification is to be achieved by inscribing or
affixing numbers or symbols to such parts. The
first question addressed in the NPRM concerned
the numbers or symbols that should be used to
identify original equipment major parts.
1. The full vehicle identification number (VIN)
must be inscribed or affixed to all covered major
original equipment parts, except the engine and
transmission.
The NPRM proposed that the full 17 character
VIN be required as the indentifying number to be
inscribed or affixed to the covered major original
equipment parts, for three reasons. First, the full
VIN represents a unique signature which cannot
be repeated on any two vehicles during a 30-year
period. Second, the full VIN is the basis for the
National Crime Information Center's (NCIC)
vehicle theft reprting system, which is used by
law enforcement officials around the nation to
detect and track stolen vehicles. Third, since the
full VIN is now in common use for all law enforce-
ment agencies, its continued use would cause
minimal disruption in the personnel training and
records kept by those agencies. However, the
agency also sought public comment on the use of
VIN derivatives as the identifying numbers.
Several of the commenters supported the
agency's proposed requirement to use the full VIN.
These commenters included all the law enforce-
ment organizations, groups organized to try to
reduce auto thefts, and Jaguar and Mercedes.
Mercedes specifically stated that the use of a VIN
derivative would require at least 8 characters to
be unique, so the cost advantages of allowing the
use of VIN derivatives would be minimal.
On the other hand, many of the vehicle manufac-
turers argued that they should be allowed to use
VIN derivatives. The suggestions ranged from
Honda's that manufacturers be required to use
only the last 6 characters of the VIN to Volks-
wagen's that the manufacturers be required to use
11 characters of the VIN. Both General Motors
( GM ) and the United States Department of Justice
urged that manufacturers be required to use the
full 17 character VIN on labels, but be permitted
to use a VIN derivative if they used other methods
of identification, provided that the VIN derivative
was also unique.
NHTSA seriously considered allowing the use
of VIN derivatives if those derivatives contained
enough characters to ensure that they would also
be unique. However, NCIC has sent the agency a
letter explaining that it has designed its theft re-
porting system to reject any inquiries concerning
stolen vehicles manufactured in 1981 and all sub-
sequent model years which do not consist of the
full 17 character VIN. NCIC stated that it had
discussed allowing the use of VIN derivatives with
state and local law enforcement officials, and the
reaction from those officials was "very negative".
This reaction was based on the administrative
burden which would result from not having a uni-
form length for reporting the identifying numbers
for stolen and recovered vehicles and parts. This
would lead to uncertainty that the reporting police
department had properly entered the correct VIN
derivative of a stolen vehicle, because of the var-
PART 567-PRE 51
ying lengths of derivatives which could be entered
into the tracking system. Such uncertainty would
force the law enforcement agencies and officers to
expend significant time and effort in checking the
accuracy of the reports before arresting suspected
criminals in possession of the stolen vehicles. The
lost time could result in being unable to arrest the
suspect or seize the stolen vehicle.
If they did not expend this time and effort, the
law enforcement groups stated their concerns
about potential liability. The law enforcement
groups would be accused of an improper arrest or
vehicle seizure if they were to erroneously identify
a vehicle or part as stolen. Such erroneous identifi-
cations would inevitably result, according to the
law enforcement groups, if they are forced to try
to reconstruct quickly the full VIN from a VIN
derivative.
One of the primary purposes of the Theft Act is
to make it easier for law enforcement agencies to
establish that a vehicle or a major part is stolen.
See H.R. Rep. No. 1087, 98th Cong., 2d Sess. at
2-3 (1984) (hereinafter referred to as "H. Kept.").
If this purpose is to be promoted, this standard
must ensure that police officers learning of
suspicious, potentially stolen vehicle parts can
quickly verify whether those parts are stolen. If
this standard were to allow parts to be marked
with VIN derivatives, the time necessary to posi-
tively identify a part as being from a stolen vehicle
would be substantially longer than if the parts
were marked with the full VIN. Police officers can-
not be expected to wait to learn the true status of
parts while the VIN derivative is reconstructed
into a full VIN through contacts with the vehicle
manufacturer or a private agency.
Further, NCIC has informed the agency that a
review of its active record of stolen vehicles cur-
rently lists 12,382 cases where the last 8 charac-
ters of the VIN are identical in two or more cases.
Hence, a match of the last 8 characters of the VIN
would not by itself justify seizing the vehicle or
arresting the driver. If NHTSA were to permit the
use of VIN derivatives for marking parts, it would
have to require the use of a least 11 characters of
the VIN (the first three characters and the last
eight) to ensure the derivative was unique. The
cost differences for the vehicle manufacturer to
mark the full VIN instead of a shortened 11-
character VIN derivative are not significant, and
will not cause any manufacturer to exceed the
fifteen dollar cost limitation. Additionally, VIN
derivatives would require NCIC to restructure its
data base, a complex and costly task. Finally, the
full 17-character VIN includes the check digit, the
purpose of which is to provide a means for verify-
ing the accuracy of any VIN transcription. As such,
the check digit ensures that the VIN of a stolen
vehicle has been correctly entered. It also quickly
shows when a VIN has been altered in an effort
to disguise the fact that a vehicle is stolen. Accord-
ingly, the agency has determined that the full
17-character VIN should be marked on covered
original equipment major parts.
There is, however, one exception to this require-
ment. Section 604(b) of the Cost Savings Act [15
U.S.C. 2024(b)] specifies that "any manufacturer
engaged in identifying engines or transmissions
on the effective date of this title in a manner which
substantially complies with the requirements of the
theft prevention standard" shall not be required
to conform to any identification system which
imposes greater costs on the manufacturer than
those being incurred as of such effective date. This
statutory requirement means that the agency
must determine what sort of identification system
for engines and transmissions substantially com-
plies with the requirements of this standard.
To the agency's knowledge, all manufacturers
currently stamp an identifjdng number on their
engines and transmissions. The NPRM stated that
all manufacturers currently stamp their engines
and transmissions with a VIN derivative, but the
vast majority of manufacturers commented that
this statement was not true. GM marks its engines
and transmissions with a 9-character VIN deriva-
tive, and Ford and Chrysler mark those parts with
an 8-character VIN derivative. The agency has no
information indicating that any other manufac-
turers mark their engines and transmissions with
a VIN derivative.
Two issues are thus presented. First, NHTSA
must determine whether manufacturers that
mark their engines and transmissions with a
number other than a VIN derivative "substan-
tially comply" with the requirement that all
covered major parts be marked with the full VIN.
Second, NHTSA must determine whether manu-
facturers that mark their engines and transmis-
sions with 8- or 9-character VIN derivatives can
be said to substantially comply with that require-
ment.
PART 567-PRE 52
With respect to the markings not derived from
the VIN, NHTSA has concluded that such mark-
ings do not substantially comply with the require-
ment that a full 17-character VIN be marked on
covered original equipment major parts. Such
markings do not provide law enforcement officers
with a means for quickly checking whether the
component came from a stolen vehicle, because
the NCIC data system relies on the VIN. The non-
VIN markings consist of numbers generated and
assigned by each individual manufacturer. The
method for assigning the number is in the nature
of a sequential production number for the particu-
lar engine or transmission. Accordingly, the
number itself does not provide any means for
quickly ascertaining the vehicle in which the com-
ponent was installed, nor does the number identify
the model year of the vehicle in which the compo-
nent was installed. Thus, these markings neither
substantially meet the identification require-
ments of this standard (the full 17-character VIN),
nor achieve the purpose of these requirements
( allowing law enforcement officers to quickly check
whether covered major parts were originally in-
stalled on stolen vehicles).
BMW, Mercedes-Benz, Jaguar, Mazda, and the
Automobile Importers of America (AIA) all stated
that such markings should be found to substan-
tially comply with the requirement that a full VIN
be marked on covered original equipment parts.
Some of these commenters stated that law enforce-
ment officials from the countries in which the
vehicles are produced have asked the manufac-
turers not to mark their engines and trans-
missions with a VIN derivative, because other
numbering systems, according to those law en-
forcement officials, reduce the likelihood of thieves
successfully altering these numbers.
NHTSA does not believe that this point is rele-
vant in determining whether these non-VIN related
markings "substantially comply" with the identifi-
cation requirements for original equipment parts
contained in this theft prevention standard. How-
ever, as explained above, the NCIC strongly pre-
fers that the full VIN be marked as the identifier
on covered parts. NHTSA believes it is more
important that the preferences of the NCIC be
accommodated in this theft standard than the pre-
ferences of law enforcement officials in other coun-
tries, since the theft standard applies only to
vehicles sold in the United States. The preferences
of foreign law enforcement officials can be accom-
modated in the case of engines and transmissions
for vehicles not designed to be sold in the United
States.
AIA commented that a requirement forcing
manufacturers to change their existing marking
systems would require the stamping equipment
to be reprogrammed, or might even require new
stamping equipment. Further, the AIA stated that
such a requirement would impose the significant
administrative burden of separating U.S. engine
blocks and transmission housings from the blocks
and housings made for the rest of the world.
NHTSA recognizes that complying with a
requirement to mark the VIN on engines and
transmissions, or any other requirement, imposes
costs and administrative burdens on the manu-
facturers. NHTSA must determine whether the
requirement is necessary to carry out the purposes
of the Theft Act, while imposing costs which can
be met within the fifteen dollar per vehicle limit
established for this theft prevention standard. As
explained above, law enforcement officials have
explained that they need parts identified with the
VIN, if they are to effectively carry out the pur-
poses of the Theft Act. In NHTSA's judgment, the
requirement to mark the VIN on engines and
transmissions, as well as the other covered major
parts, will not cause any manufacturer to exceed
the fifteen dollar cost limit. Hence, any burdens
imposed by this requirement are consistent with
the intent and provisions of the Theft Act.
AIA noted the practive whereby manufacturers
purchase or supply engines and transmissions to
other manufacturers, and stated that most of
those parts are marked by the original manufac-
turer. AIA argued that requiring the vehicle man-
ufacturer to obliterate these numbers and replace
them with VINs would "not only be costly, but
could also be very confusing to law enforcement
officials." Additionally, AIA argued that requiring
obliteration and new markings would violate the
requirement of section 602(d)(1)(A) of the Cost
Savings Act. That section provides that this theft
prevention standard may not require any original
equipment part to have more than a single identifi-
cation.
This theft prevention standard does not require
manufacturers to obliterate markings inscribed
by other manufacturers, nor does it require any
part to have more than a single identification. This
standard requires only that the engines and trans-
missions be marked with the VIN. Any other iden-
PART 567-PRE 53
tification markings on those parts are not required
by the standard, so their presence or absence is
irrelevant for the purposes of section 602( d )(1 )( A ).
In the case of manufacturers currently marking
their engines and transmissions with a VIN de-
rivative, the agency has considered whether those
manufacturers that use at least an 8-character
VIN derivative, consisting of the last 8 characters
of the VIN, can be said to substantially comply
with the requirement that covered major parts be
marked with the full 17-character VIN. As noted
above, an 8-character VIN derivative is not
unique. This is because it does not identify the
manufacturer of the vehicle or the vehicle attri-
butes, nor does it include the check digit. Accord-
ingly, the agency determined that it would be
inappropriate to allow an 8-character VIN deriva-
tive for the marking of all covered major parts.
However, an 8-character VIN derivative con-
sisting of the last 8 characters of the VIN does
identify the model year of the vehicle, the plant
at which it was assembled, and the sequential
production number of the vehicle. Trained inves-
tigators will be able to identify the manufacturer
of an engine or transmission, by noting the par-
ticular design characteristics of the component.
The manufacturer of the engine or transmission
is not necessarily the manufacturer of the vehicle,
as noted by AIA in its comments and discussed
above. Hence, there will be some instances where
the 8-character VIN derivative would not enable
investigators to confirm immediately that an
engine or transmission was installed in a stolen
vehicle.
Permitting the use of VIN derivatives on engines
and transmissions does not present as serious a
law enforcement problem as would be presented
if all covered major parts were permitted to be
marked with VIN derivatives. Engines and trans-
missions are bulkier, heavier, and not as easy to
transport as the other major parts of a car. Thus,
police officers are more likely to have the time
necessary to allow for a reconstruction of the full
VIN from the 8-character VIN derivatives marked
on these components. That reconstruction can be
made reasonably quickly in the majority of cases,
where the manufacturer of the engine or transmis-
sion and the manufacturer of the vehicle are the
same.
After considering these facts, NHTSA has con-
cluded that VIN derivatives consisting of at least
the last 8 characters of the full VIN can be said
to "substantially comply" with the requirement of
this standard that the 17-character VIN be
marked on all covered parts. To the agency's
knowledge, Chrysler, Ford, and GM are the man-
ufacturers currently using at least an 8-character
VIN derivative, consisting of the last 8 characters
of the VIN, to identify their engines and transmis-
sions They and any other manufacturers using
these VIN derivative markings on their engines
and transmissions as of October 24, 1984, the date
of enactment of the Theft Act, may continue using
those VIN derivatives instead of the 17-character
VIN to mark the engines and transmissions. All
other vehicle manufacturers will be required to
identify their engines and transmissions with the
17-character VIN.
Toyota stated that only one engine part should
be required to be marked. Section 602(d) of the
Cost Savings Act specifies that a part cannot be
required to have more than a single identification,
and the NPRM did not propose more than one
marking for any part. For the purposes of this
part, the engine should be marked on the block
and the transmission should be marked on the
housing. No other markings are required.
Ford stated that the proposed language, allow-
ing engines and transmissions being marked with
a VIN derivative as of the day before the effective
date of this theft prevention standard to continue
using that derivative for identification required
by this theft prevention standard, appeared to be
inconsistent with the requirement in section
604(b), which prohibits the agency from requiring
manufacturers to conform to a more costly identifi-
cation system for its engines and transmissions if
the manufacturer was already engaged in identify-
ing the engines and transmissions in a manner
that substantially complies with this standard.
Under the proposed language. Ford believed that
new engine and transmission designs which were
not being marked with a VIN derivative as of the
day before the effective date of the theft prevention
standard, because they were not yet in production,
would be required to be marked with the full VIN.
This, it was asserted, would conflict with the
explicit requirement of section 604(b) that a Man-
ufacturer whose identification system substan-
tially complied with the requirements of the theft
prevention standard could not be required to
undertake an identification system which imposed
PART 567-PRE 54
greater costs. NHTSA agrees with Ford on this
point, and has modified the language to reflect
this change.
Ford also commented that the NPRM proposed
that manufacturers marking engines and trans-
missions with an acceptable VIN derivative as of
the effective date of the standard would be per-
mitted to continue such marking of those com-
ponents. Ford correctly noted that section 604(bl
refers to manufacturers using such markings as
of the effective date of the Theft Act being permitted
to continue using such markings. This final rule
has been modified to reflect the language of section
604(b) of the Cost Savings Act.
2. The theft prevention standard must be a perfor-
mance standard, which is practicable and which
employs relevant, objective criteria.
The legislative history is very clear on the type
of standard which must be promulgated. Page 10
of the House Report reads as follows:
The DOT will establish the tests or general
criteria which the identification must meet,
but not how it is to be inscribed or affixed.
That is the choice of each manufacturer. For
example, we understand that a tamper-resis-
tant label exists. If it can meet the perfor-
mance tests or general criteria prescribed by
the standard, the manufacturer may choose
to use it to comply with the standard.
Because of this clearly expressed Congressional
intent, this final rule does not adopt the sugges-
tions in some of the comments that the agency
mandate the use of a particular marking system,
such as stamping, glass etching, or some patented
marking systems. Several commenters asserted
that the use of a particular marking system would
ensure the greatest effectiveness for the theft
prevention standard. However, NHTSA has no
authority to mandate the use of any particular
marking system. NHTSA has authority only to
establish performance criteria that will accomplish
the purposes of the Theft Act. The manufacturers
are free to select any marking system that satisfies
those criteria.
NHTSA believes that the performance criteria
specified for labels in this final rule are objective,
and will ensure that labels will serve effectively
the purposes of the Theft Act. The criteria speci-
fied for non-label forms of identification are less
rigorous, because methods such as etching or
stamping the identification into the metal or the
glass are inherently more permanent. Alterations
of such identifications would be detectable by
trained investigators. The criteria for the non-
label forms of identification are intended primar-
ily to ensure that the marking will be readily
accessible to investigators.
(a) The inscription or affixation must meet size
and style requirements to ensure that it is clearly
legible to investigators.
The NPRM proposed that the inscription or
affixation of the VIN on covered major parts meet
the same size and style requirements as the VIN
is required to meet in sections 54.6, 54.7, and 54.8
of Standard No. 115 (49 CFR §571.115). Briefly
stated, this meant that the characters would have
a minimum height of 4 millimeters (mm), would
consist of the Arabic or Roman numerals and/or
letters set forth in Table 1 of 49 CFR §571.115, and
would consist of capital, sans-serif characters.
Many manufacturers commented that the pro-
posed 4mm size was larger than was necessary
for the characters. NHTSA proposed this
minimum size to ensure that the identification
would be clearly legible to investigators. However,
a number of commenters observed that the 4 mm
height is specified in Standard No. 115 to ensure
that the VIN can be easily read through the vehicle's
windshield. In the case of the theft prevention
standard, these commenters stated that the parts
will be examined by trained investigators carefully
examining the parts to find the VIN. Several
manufacturers and the National Automobile Theft
Bureau (NATB) suggested that the minimum
height for the characters be reduced to 3/32 inch
(approximately 2.5mm), which is the same size
as is currently specified for the information re-
quired to appear on vehicle certification labels by
49 CFR Part 567.
NHTSA has further considered this issue, and
determined that the certification labels required
by Part 567 are partly intended to provide infor-
mation to knowledgeable persons specifically look-
ing for that information. This is analogous to the
purpose that the parts marking requirements are
intended to fulfill. The 3/32 inch minimum height
requirement has been wholly satisfactory for the
purposes of Part 567. NHTSA has, therefore, de-
cided not to require larger characters for this theft
prevention standard. Accordingly, this final rule
adopts the minimum character height require-
ment currently specified in Part 567, i.e., 3/32 inch.
PART 567-PRE 55
Ford and GM both specifically commented that
the sans-serif requirement for the characters
should be deleted. Ford stated that their printers
are not technically sans-serif, but that no party
has experienced any difficulty in reading the
characters. Ford suggested that the agency specify
the use of block capital letters and numerals, as
is done for the vehicle certification labels in Part
567. GM showed the characters as printed in the
"positive identification" system. The positive iden-
tification system consists of block capital letters
and numerals, but gives unique characteristics to
each character so that it is more difficult to alter
a character to resemble a different character. GM
stated that those characters are readily legible,
but asked for the agency's opinion as to whether
those characters would satisfy the sans-serif
requirement.
Again, the purpose of the proposed sans-serif
requirement was to ensure that the markings
would be legible to the trained investigators
examining the parts. The presence of small serifs
would not affect that legibility. Therefore, the
agency is not adopting the proposed sans-serif
requirement. Instead the agency is adopting a
requirement that the identification consist of block
capital letters and numerals. This requirement is
identical to the style requirements of Part 567. It
is the agency's opinion that the GM "positive
identification" characters appear to satisfy this
requirement.
(b) The inscription or affixation must be as perma-
nent as possible.
The NPRM stated that the identification
(whether affixed or inscribed) should be made in
such a way that, under normal conditions of wear,
tear, and repair, the identification would continue
to meet the other performance requirements of
the theft prevention standard for the average life
of the car, which the NPRM stated to be 10 years.
However, the NPRM proposed only that the mark-
ings be "permanent", and did not establish any
number of years during which the markings would
have to satisfy the other performance require-
ments of this standard. The NPRM also sought
comments on requiring only that the marking
remain legible for the average length of time dur-
ing which cars are generally susceptible to high
theft rates.
The commenters agreed with the agency's tenta-
tive judgment that it would not serve the purposes
of the Theft Act to require the markings to remain
legible only for the average length of time during
which cars are generally susceptible to high theft
rates. The theft investigators noted that many
cars are stolen after the initial high theft period.
If the identification is permitted not to be visible
on those parts, it would tend to make such vehicles
more attractive to professional thieves. This
plainly would not serve the theft deterrent pur-
poses of the Theft Act. No commenters argued in
favor of adopting this alternative. For the reasons
set forth above, this alternative has not been
adopted in this final rule.
Many of the theft investigators urged the agency
to specify some minimum period of time during
which the markings would have to satisfy all the
other performance requirements of this standard.
The International Association of Auto Theft Inves-
tigators urged that there be a minimum 8 year
life for labels, while the Coalition to Halt Automo-
tive Theft (CHAT) urged that labels have a 10 year
minimum life.
On the other hand, Chrysler, Ford, and GM all
supported the idea of adopting the proposed per-
manence requirement without specifying a
minimum time period as a definition of that con-
cept. GM stated that Part 567 has used the word
"permanent" without specifying any time period,
and that the vehicle certification labels have been
affixed so that there have been no significant dis-
agreements between the manufacturers and the
agency as to the meaning of the word. Ford stated
its opinion that any greater specificity than "per-
manent" would require the agency to develop a
performance test to measure whether the mark-
ings were permanent.
This rule adopts the proposed requirements on
permanency, that is, it does not specify any
minimum number of years during which the mark-
ings must continue to satisfy the other performance
requirements of this standard. As noted by GM,
this term has served its intended purpose when
used in Part 567, and is a concept with which the
manufacturers and the agency have had experi-
ence. The purpose of Part 567 was explained
thusly in the preamble to the final rule establish-
ing that Part: "The intent of the regulation is that
the label should remain in place and legible for
PART 567-PRE 56
the life of the vehicle and not be easily transferable
to another vehicle." 34 FR 1147; January 24, 1969.
NHTSA believes that the purpose underlying the
permanency requirement in Part 567 and this
theft prevention standard are sufTiciently similar
that it is appropriate to express those require-
ments in the same way. Should that belief be
shown to be incorrect, because the labels are not
remaining affixed and legible for the life of the
vehicle, the agency will initiate rulemaking to
specify some minimum length of time during
which the labels must satisfy the other require-
ments of this standard. However, such rulemaking
would be premature at this time.
VW asked what the term "permanent" means
in this standard. As noted above, it means exactly
what it means when used in Part 567. That is,
the label should remain in place and legible for
the life of the vehicle.
Toyota stated that there was no way of knowing
if labels will satisfy the permanence requirement,
so this requirement should be deleted. NHTSA
does not understand this comment, since Toyota's
vehicles presumably comply with the "perma-
nence" requirement in Part 567. NHTSA believes
that either Toyota or the label manufacturer can
obtain data, through tests or other means, show-
ing whether labels will remain affixed and legible
for the life of the car. Those data would form the
basis for certifying compliance with this require-
ment.
Moreover, as stated above, this is a performance
standard that sets forth general criteria which
must be satisfied by whatever means of marking
the manufacturer chooses. If Toyota is unable to
certify that its labels will satisfy the permanence
requirement, it will have to use stamping, etching,
or some other method of marking its parts. The
criterion of permanence is very important if this
standard is to carry out the intent of the Theft
Act. It seems obvious that markings that, after a
short period of time, are not present on the vehicle
or are not legible to investigators do not serve the
purposes of the Theft Act.
c) Locations selected for labels must provide pro-
tection from damage as a result of normal mainte-
nance and exposure conditions while still being
visible to investigators without further disassem-
bly once the parts are removed from the vehicle.
The NPRM proposed that labels be protected
from damage as a result of normal vehicle repair
and maintenance and exposure conditions. Inscrip-
tions would not be subject to this requirement,
because such marking methods are inherently
more durable than labels. Accordingly, the agency
does not believe it is necesary to specify protection
from damage requirements for inscribed mark-
ings. If experience shows that the manufacturers
are not locating those markings so as to protect
them from damage, NHTSA will consider initiating
rulemaking to amend this standard. All means of
identification would be subject to the requirement
of visibility to investigators without further dis-
assembly once the parts are removed from the
vehicle.
The National Automobile Dealers Association
(NADA) stated that the legislative history of the
Theft Act specifically instructs NHTSA to "con-
sider the location of the number so that it will not
be easily susceptible to damage in the normal
course of dealer preparation (for such procedures
as rustproofing and undercoating) , or be easily
damaged in the course of repair, or regular au-
tomobile maintenance by repair shops or car own-
ers;' H. Kept, at 12 (Emphasis added). NADA
urged the agency to modify the proposal to
explicitly require that the label be protected from
damage during dealer preparation operations.
NHTSA believes that such a requirement is very
closely related to its proposal. Further, it is consis-
tent with the legislative history and needed to
ensure that the labels will not routinely be
obscured or damaged before the vehicle is sold to
the first purchaser. Therefore, this final rule adds
this requirement.
Ford commented that the locations chosen for
the labels cannot protect the labels against pos-
sible damage during a collision and subsequent
repairs, where the part might need bumping,
grinding and repainting to be repaired. Neither
the NPRM nor this final rule require the labels to
be protected from damage during every repair for
collision damage. Even inscriptions might well be
obliterated or rendered illegible during some col-
lision repairs. This rule does not require manufac-
turers to do the impossible; i.e., certify that labels
will never be damaged during any work which
might be performed on the part.
However, the legislative history states: "The
Committee believes, as already noted, that one of
the major factors that the Secretary and the manu-
facturers should consider in rulemaking is the
location of the identification number in relation
PART 567-PRE 57
of the future repairability of the major part. The
location selected should, to the greatest extent pos-
sible, not be a spot likely to be damaged in what
is an economically repairable accident, if possible. "
H. Rept. at 24-25 (Emphasis added). It is hard
to imagine a clearer expression of Congressional
desire that the identification on covered major
parts should be located so that it will not be
damaged during most collision repairs. Hence,
placing the labels on the fenders at the height of
other vehicles' bumpers would seem to be pre-
cluded, since that is the area most likely to need
the bumping and grinding to repair collision
damage, as noted in Ford's comments.
It is imperative that the identification numbers
not be destroyed or rendered illegible during repair
and maintenance operations, to the greatest
extent practicable, since destroyed or illegible
labels will serve the interests of no one but auto
thieves. To ensure the efficacy of the labels, this
rule simply requires that which Congress intended;
namely, that the vehicle manufacturers use their
engineering judgement when deciding where to
apply the labels, so that those labels will be:
(1) in a place where they won't be disturbed by
the use of any tools necessary in the installing,
adjusting, or removing of the part or adjoining
parts, or any portion thereof;
(2) on a portion of the part not likely to be dam-
aged in a collision; and
(3) protected from damage during normal dealer
preparation procedures.
To clarify what is required of vehicle manufac-
turers, this rule specifies that the label shall be
placed on an interior surface of the part as it is
installed in the vehicle, if this placement is prac-
ticable, and that the label shall be positioned to
satisfy the three criteria specified above.
GM commented that the requirement that
labels be protected from damage during mainte-
nance and repair of the vehicle should be deleted.
GM stated that it was not clear how the manufac-
turer could certify compliance with the require-
ment that the label was protected from damage
as the result of repair and maintenance. As noted
above, the manufacturers are required only to
ensure that the labels are protected from damage
during foreseeable repair and maintenance oper-
ations and during normal dealer preparation oper-
ations. The manufacturer specifies the procedures
its dealers are to follow during these operations,
and recommends the tools to be used during such
operations. Accordingly, the manufacturer al-
ready knows the procedures it has specified and
the portions of the part most likely to be damaged
in a collision. The manufacturer is simply required
to cerify that it has used this knowledge when
deciding where to position the labels on its covered
major parts.
VW commented that the agency should allow
the use of an integral paint mask, so that the
labels can be put on the parts before the vehicle
is painted or rustproofed. Such a procedure is per-
missible under this standard, provided that the
paint mask is removed from the label. If the mask
were not removed, the identification would not
satisfy the requirement that it be visible without
further disassembly once the vehicle part has been
removed from the vehicle. That requirement is
essential if this theft prevention standard is to
facilitate the quick and easy identification of parts
by trained investigators.
Mazda asked that vehicle hatchbacks be allowed
to be marked beneath the trim panels. Otherwise,
Mazda commented, the identification marking
would be visible to vehicle occupants. This rule
does not permit any covered major parts to have
identification marks hidden behind trim panels.
One of the major purposes of this theft prevention
standard is to enable law enforcement officers to
quickly determine if a motor vehicle part is stolen.
If those officers must disassemble the part to look
for the appropriate identification markings, their
task would be more difficult. NHTSA believes that
the purpose of the Theft Act was to make the task
of law enforcement officers as simple as possible,
without imposing significant costs on vehicle
manufacturers. No greater costs are imposed by
requiring the markings to be visible to inves-
tigators. Therefore, the requirement for visibility
is adopted as proposed.
Target Areas. To ensure that the identification
markings are readily located by investigators, the
NPRM proposed that those markings be placed in
the same 5 centimeter X 5 centimeter (cm) area
on each part of that type produced by the manufac-
turer. The manufacturers were free to select any
5 cm X 5 cm area as the target area, provided of
course that the target area met the requirements
of protecting the identification from damage
during normal repair, maintenance, and dealer
preparation operations and was visible to inves-
tigators without further disassembly. Comments
were requested on whether this target area should
PART 567-PRE 58
be required to remain unchanged for the entire
production run of the covered major parts or
whether the manufacturers should be allowed to
change this target area every model year.
Most of the manufacturers asked for some
modification to the proposed 5X5 cm target area.
Ford stated that a target area was unnecessary.
Chrysler stated that a target area was incom-
patible with mass production techniques. VW
stated that a 5 X 5 cm target area was both un-
reasonable and unnecessary. Nissan asked that
the target area be expanded to 5 X 6 cm. Mercedes
and Saab asked that the target area be expanded
to 10 cm X 10 cm. GM asked that the target area
be expanded to 15 cm X 15 cm. Mazda urged the
agency to require only that some part of the iden-
tification be within the 5 cm X 5 cm target area.
In response to these comments, NHTSA has
carefully examined the reasoning behind its pro-
posed target area requirement. There were two
primary reasons for proposing this requirement.
First, a standardized location would facilitate
quick identification checks by law enforcement
officers. If the investigator knew exactly where a
particular part on each line was required to be
marked, the investigator would know where to
look for the identifying number without having to
search the part for that number. The investigator
would also be alerted to possible suspicious activ-
ity if the identifying symbol were in some location
other than the required target area.
Second, the proposed target area for original
equipment and the companion proposal for a
target area for replacement parts were intended
to ensure that there would be a separation be-
tween the areas where the identification would be
marked on such parts. Criminals plainly will not
be able to routinely sell stolen parts which can be
identified as such, nor should there be a market
among honest repair shops for unmarked parts
which were required to be marked by this standard.
Accordingly, there will probably be an effort by
chop shops and other thieves to try to obliterate
the identifying numbers on original equipment
parts and affix counterfeit replacement part iden-
tifications. If that counterfeit replacement part
marking can be located directly over the obliter-
ated original equipment part marking, it would
be more difficult for the investigator to see the
evidence of the obliteration of the original equip-
ment part marking. With the target areas and the
requisite distance between that for original equip-
ment parts and replacement parts, the oblitera-
tion of the original equipment part marking would
leave that area with evidence of the obliteration
or with evidence of sanding and repainting. With
either sort of evidence, the investigator would be
alerted that the replacement identification should
be carefully examined for authenticity.
NHTSA believes that both of these objectives
are still reasonable and necessary if the theft pre-
vention standard is to achieve its intended objec-
tives. However, the agency also believes that the
manufacturers raised valid points in the com-
ments asserting that these objectives could be
achieved in a less restrictive manner. Therefore,
this final rule retains the target area requirement
for original equipment parts, so as to achieve
both the intended objectives, but makes the re-
quirement less restrictive. This theft prevention
standard requires the vehicle manufacturers to
designate a target area for each covered major
part. The covered major parts are set forth later
in this preamble.
There is only one limitation on the target area
which may be designated by the vehicle manufac-
turers, subject to the other performance require-
ments for labels set forth above. That is, the target
area for original equipment parts cannot exceed
50 percent of the surface area on the surface of
the part where the original equipment part will
have the identification affixed or inscribed. This
requirement is included in this final rule to ensure
that there will be adequate separation between
the target areas for original equipment parts and
those for replacement parts.
The vehicle manufacturers are required to in-
form the agency of the target areas selected for
each covered major part. This information will be
made available to the public in the docket section.
NHTSA anticipates that the information will be
primarily used by replacement part manufactur-
ers and by law enforcement organizations to learn
the location of the target areas on each manufac-
turer's original equipment parts. Further, the
agency anticipates that this will be a minimal bur-
den on the manufacturers, since Ford and GM
commented that they have voluntarily provided
such information to the National Automobile
Theft Bureau (NATB) in connection with their
voluntary parts marking programs over the past
several years.
PART 567-PRE 59
The agency has determined that this procedure
and the companion procedure requiring vehicle
manufacturers to designate target areas for mark-
ing replacement parts, discussed in detail below,
will serve both the objectives the proposed 5 cm
X 5 cm target area was designed to serve, by ensur-
ing that trained investigators know the location
of the target areas for both original equipment
and replacement parts and ensuring an adequate
separation of the target areas for marking original
equipment and repalcement parts. It will do so
while providing manufacturers with maximum
flexibility to avoid unnecessary production bur-
dens and/or costs.
Regarding the issue of whether the target area
should be maintained for the production run of
the major parts or whether that target area should
be allowed to be changed each model year, opinion
was very divided between vehicle manufacturers
and law enforcement groups. The vehicle manu-
facturers uniformly indicated that they should be
allowed to change the target area after each model
year. Their position generally was that unexpected
design changes sometimes occur between model
years, which could make it impracticable to con-
tinue using the previously specified target area.
On the other hand, the International Association
of Auto Theft Investigators and CHAT urged the
agency to standardize the location of the original
equipment marking over the entire production run
of the parts. CHAT stated that a fender from any
model year will not have any model year identifi-
cation other than the VIN. If the target area varies
from model year to model year, an investigator
might well have to check four or five difi'erent
places to see if the fender has the necessary mark-
ing.
NHTSA believes that the expansion of the per-
missible target area in this final rule has largely
obviated the manufacturers' concern about being
required to use the same target area over the
entire production run of the part. The expansion
of the target area has also increased the need
for theft investigators to have such target areas
standardized over the entire production run of the
parts. Accordingly, this final rule specifies that
the target area must remain constant over the
entire production run of the parts. It does, how-
ever, allow an exception for a situation where a
restyling of the part makes it impracticable to
mark the part in the original target area. In such
cases, the manufacturer would be required to in-
form the agency of the redesign and the new target
area. It will be an easy matter for a trained inves-
tigator to differentiate the restyled part from the
old part and look for the markings in the different
target area.
d) Removal of the identification, number must
cause that identification to selfdestruct and alter
the appearance of the vehicle part.
The NPRM proposed these requirements for the
following reasons. It is critically important that
thieves not be able to remove an identification
marking label legitimately affixed to the part by
a manufacturer and transfer that label intact and
undamaged to a stolen part. CHAT commented
that this was one of the most significant proposed
requirements in the NPRM, and urged the agency
to adopt it as proposed. No other commenter spec-
ifically addressed this proposed requirement, and
it is adopted in this final rule to ensure that legiti-
mately affixed labels cannot be removed from
parts and reapplied to other parts.
As a further precaution, the NPRM proposed
that an alteration of a character on the label be
required to leave traces of the original character
or otherwise visibly alter the appearance of the
label. For other means of identification, the NPRM
proposed that an alteration of any part of the iden-
tification be required to visibly alter the appear-
ance of the vehicle part. Both Toyota and Ford
commented that the label should only be required
to leave evidence that an attempt was made to
alter or obliterate a character of the VIN. These
commenters noted that this would not necessarily
leave a trace of the original character.
The agency notes that the NPRM did not propose
to require that an attempt to alter or obliterate a
character on the label always leave a trace of the
original character. It proposed only that it do that
or otherwise visibly alter the appearance of the
label. Ideally the alteration would leave a trace of
the original character so that the legitimate owner
of the part could be informed of its recovery. How-
ever, the NPRM recognized that this would not
always be practicable with current labels. In those
cases where it is not practicable, the proposed re-
quirement would be satisfied if the appearance of
the label was visibly altered. This requirement is
identical to the understanding expressed by both
Ford and Toyota, and it is adopted as proposed.
PART 567-PRE 60
Ford also commented that the proposed require-
ment that alterations of the identification number
visibly alter the appearance of the vehicle part, if
the identification number is applied by some
means other than labels, should be modified. The
reasoning behind this comment was as follows:
first, according to Ford, it is the identification
number, and not that of the vehicle part, which
would be altered in appearance. Second, a skillful
alteration, such as over-stamping, might not visi-
bly alter the appearance of the number. The alter-
ation would be latent and would be detectable only
with further laboratory or further field investiga-
tion. Accordingly, Ford requested that the require-
ment be modified so that attempts to alter the
indentification number "be detectable".
NHSTA has carefully considered this comment.
The agency did not intend that the alteration of
the identification number on an engine, for in-
stance, must visibily alter the appearance of the
entire engine. The proposed requirement was in-
tended to refer to the appearance of the part sur-
face on which the identification number is marked,
and not to the appearance of the entire part. It is
appropriate to be more specific in this final rule,
and limit the requirement so that an attempted
alteration must visibily alter the appearance of
the part surface on which the identification
number is marked, rather than generally requir-
ing it to alter the appearance of the part.
However, this rule does not incorporate Ford's
suggested requirement that the attempted altera-
tion only "be detectable". That criterion would re-
quire that all investigators have laboratory equip-
ment and possess the highest skills, if they were
to be alerted to the attempted alteration. However,
this theft prevention standard is designed to facili-
tate the recognition of any alterations by reason-
ably skilled trained investigators working under
field conditions. To serve that function, it is neces-
sary that the attempted alteration at least give
some visual indication to the investigator that the
part should be more carefully examined. Such in-
dication would not be required under the require-
ment suggested by Ford, and so it is not adopted
in this rule. Attempted alterations must visibly
alter the appearance of the part surface on which
the identification number is marked, in the case
of means of identification other than labels.
A number of commenters addressed the prop-
osed "footprint" requirement for labels under this
section. That proposal would have required that
removal of the affixation must create or uncover
physical evidence that the affixation was origi-
nally present or required to be present. The 3M
Corporation, a leading manufacturer of these
labels, commented that a footprint would not re-
main if some extraordinary means of eradication
were used on the areas where the labels were af-
fixed. VW and Saab stated that the proposed re-
quirement that removal of the label must "dis-
cernibly alter the appearance of the vehicle part"
should be narrowed to require only that some re-
sidual parts of the label must remain. Saab stated
that if the agency intends a broader requirement,
it ought to include the compliance test procedures
it will follow in this standard. Chrysler stated that
the footprint requirement should be deleted be-
cause it would create engineering problems and
might "violate" their rustproofing procedures. GM
stated that the footprint requirement should be
deleted because of the many unresolved questions
surrounding this area. CHAT, on the other hand,
stated only that any compromise of the footprint
requirement would undermine the integrity and
effectiveness of the theft prevention standard.
In light of these comments, the agency
reexamined the proposed requirement in detail.
If there were no footprint requirement and the
label were removed from the stolen part, there
would be no evidence that a label had ever been
on the part. NHSTA agrees with CHAT's comment
that this would substantially reduce the effective-
ness of this theft prevention standard.
On the other hand, NHSTA agrees with the
manufacturer's comments stating that the foot-
print left by current labels would not really alter
the appearance of the vehicle part. The labels work
by leaving a residue of adhesive which cannot be
removed by most solvents, but the residue is not
visible under natural light conditions. Adopting
the proposed requiremnets would require the
manufacturers to certify that removal of the labels
would not discernibly alter the appearance of the
parts, and it is not clear that current labels would
do so, particularly if the parts were painted and
rustproofed before the labels were affixed.
The label manufacturers have indicated that the
developement of an adhesive that would alter the
appearance of the part when removed is feasible,
but has not yet been developed. While such a fea-
ture would significantly enhance the ability of law
enforcement personnel to detect tampering with
a label, the agency does not believe it is appro-
PART 567-PRE 61
priate in this case to impose a requirement beyond
the limits of current technology. NHSTA antici-
pates that, as this enhanced label technology is
developed and labels incorporating this feature
are offered for sale, the vehicle manufacturers will
voluntarily include specifications for such tech-
nology into their orders for labels used for marking
parts in accordance with this standard.
Accordingly, this standard requires only that
removal of the labels must leave residual parts of
the label, including the adhesive, on the part, and
that these residual parts must be discernible by
trained investigators. For purposes of this require-
ment, "discernible" does not mean that the residual
parts must be visible under natural light. This
modification of the proposed requirements is in-
tended to allay the concerns of those manufac-
turers who believed that the NPRM was asking
them to certify a performance for current labels
which is beyond their capabilities. It does not rep-
resent any change from what the agency intended
to propose in the NPRM.
e) The affixation must be resistant to counterfeit-
ing.
The NPRM proposed that this requirement be
applicable only to labels. Aside from steps taken
by the label and vehicle manufacturers to safe-
guard the labels and the marking system, the
NPRM would have required each label to bear a
distinctive logo or trademark identifier along with
the VIN. By requiring the marking to be incorpo-
rated in the material of the label itself instead of
simply being stamped on the label, the NPRM in-
tended to increase the difficulty of counterfeiting
the labels because standard templates could not
be readily located or purchased.
3M commented that all means of identification
should be required to be resistant to counterfeit-
ing, not just labels. The agency proposed that only
labels be subject to this requirement because
stamping, etching, and other means of identifica-
tion are readily available to the public. A stamped
or etched marking will resemble any other stamped
or etched markings.
3M also commented that it assumed that its
CONFIRM logo could serve as the logo for all man-
ufacturers. That assumption is incorrect. As
stated above, NHTSA proposed that each manu-
facturer's distinctive logo or trademark identifier
would be incorporated in the material of the label
itself, as a further protection against counter-
feiting of the labels. CHAT commented that the
requirement for each manufacturer's distinctive
logo or trademark identifier should minimize the
ability of non-legitimate users to use "off-the-
shelf technology to produce their own labels.
NHTSA agrees with CHAT, because the proposed
requirement would require counterfeiters to alter
the process by which the label is produced instead
of just altering the finished product. Morever, if
those non-legitimate users were to somehow ac-
quire the labels, such labels could only be applied
to one manufacturer's vehicles. Therefore, this
requirement is adopted as proposed.
Security Etch commented that the resistance to
counterfeiting requirement was not objective and,
therefore, was not permissible in this theft preven-
tion standard. NHTSA believes that the general
criteria set forth in this requirement are sufficient
to alert both manufacturers and vehicle manufac-
turers to what is required. The House Report
accompanying the Theft Act explicitly authorized
the agency to promulgate "general criteria which
the identification must meet." H. Rept. at 10. It is
the agency's belief that Congress authorized the
use of general criteria because of its desire that
the theft prevention standard be swiftly im-
plemented. See H. Rept. at 11.
To further specify what is intended by those
general criteria, NHTSA has included a specific
requirement in this final rule that each manufac-
turer's logo or trademark identifier be incorpo-
rated in labels, as was proposed. The agency be-
lieves that these requirements are more than suf-
ficient to satisfy the mandate of the Theft Act that
the theft prevention standard be objective, as that
term was explained in the relevant legislative his-
tory.
3. Parts to be covered by this standard.
Section 602 of the Cost Savings Act provides
that this theft prevention standard applies to only
the covered major parts of high theft lines, and
limits the number of covered major parts to 14 per
vehicle. Section 601( 7 ) of the Cost Savings Act sets
forth a candidate list of 15 or 17 major parts (de-
pending on whether the car has two or four doors)
from which covered major parts can be selected.
To implement these statutory provisions, the
NPRM set forth three alternatives for selecting
the covered major parts. Alternative 1 listed the
following 12 major parts as those which would be
selected as covered major parts on all high theft
lines:
PART 567-PRE 62
1. Engine;
2. Transmission;
3. Right front fender;
4. Left front fender;
5. Hood;
6. Right front door;
7. Left front door;
8. Front bumper;
9. Rear bumper;
10. Right rear quarter panel;
11. Left rear quarter panel;
12. Decklid, tailgate, or hatchback (whichever is
present).
These 12 parts were selected from section
601(7)'s list of major parts because they were found
to be those most frequently repaired or those most
costly to replace. This listing did not include the
rear doors on 4-door cars, the grille, the trunk
floor pan, or the frame, which are all specifically
listed in section 601(7).
The second alternative would have required the
marking of the same 12 parts as the first alterna-
tive, and an additional two parts. These two parts
would not have been specified in this standard.
Instead, this alternative would have allowed the
individual manufacturer to propose the additional
two parts to the agency. NHTSA stated in the
NPRM that it would agree to the manufacturer's
proposal if the two parts were listed in section
601(7), and would initiate rulemaking if the part
was comparable in design or function to any of
the listed parts. The reason for proposing this al-
ternative was that law enforcement groups have
consistently urged the agency to require the mark-
ing of the statutory maximum 14 parts on all veh-
icles.
The third alternative was also based on the
agency's inclination to require the marking of the
statutory maximum of 14 parts. It was similar to
the second alterantive, except that the two addi-
tional parts to be marked would be specified in
this final rule. The NPRM stated that the candi-
dates for the additional parts to be selected were
the five listed in section 601(7) which had not been
included in the 12 parts listed in the first alterna-
tive.
The comments on these alternatives again re-
flected a split of opinion between vehicle manufac-
turers and organizations involved in reducing auto
thefts. Chrysler stated that it was not necessary
to mark more than 8 parts. BMW urged the agency
not to specify that 14 parts must always be
marked. VW and AMC urged the agency to require
the marking of as few parts as possible by the
manufacturers. Ford and Nissan supported the
first alternative listed in the NPRM. Ford stated
that the uniform marking of certain parts would
make it easier for investigators to know on what
parts he or she should look for the identification
numbers. GM proposed that 10 parts be marked
on all high theft cars, and that two additional
parts be marked on those cars. Those two addi-
tional parts would be selected by agreement be-
tween the agency and the individual manufacturer.
Saab supported the third alternative and sug-
gested that the rear doors, if present, be the two
additional parts selected for marking.
On the other hand, the groups involved in reduc-
ing auto theft unanimously supported the concept
of requiring 14 parts to be marked on high theft
cars. The Delmarva Investigators, the Interna-
tional Association of Auto Theft Investigators, and
the Maryland State Police all commented that the
frame should be added to the list of 12 parts set
forth in the first alternative of the NPRM, and
the 14th part to be marked should be selected by
agreement between the agency and the manufac-
turer. CHAT stated that the rear doors should be
added to the 12 parts listed in the NPRM, since
all four doors are taken from a vehicle when it is
stripped. CHAT urged that if any of the 14 required
parts were not present on a high theft vehicle, the
manufacturer should be required to propose alter-
nate parts to be identified, because 14 parts should
be marked on each high theft vehicle. The NATB
agreed with CHAT's comments, and suggested
three alternatives to require high theft cars to
have 14 parts marked, depending on how such
cars are configured.
There were a number of commenters addressing
the question of whether certain parts should or
should not be mcluded in the list of covered major
parts. The frame or, in the case of a unitized body,
the supporting structure which serves as the
frame was recommended to be included in the
designation of covered major parts by both manu-
facturers and theft investigators. For instance, the
FBI stated that marking the frame is the only way
to identify a stripped or burned-out vehicle. The
Delmarva Investigators stated that the frame is
often used to identify illegally altered stolen
vehicles. GM stated that many manufacturers
have voluntarily marked the frame for many
years, and this identification has proven useful to
PART 567-PRE 63
law enforcement. A failure to select the frame as
a covered major part in this final rule would cause
GM to reevaluate whether it should continue vol-
untarily marking the frame. Ford, on the other
hand, stated that marking the frame should be
given a low priority. This was because passenger
car design is moving away from traditional frame
construction to unitized body construction, which
does not use a frame.
NHTSA has determined that the frame need
not be selected as one of the covered major parts
for the purposes of this standard. The frame itself
is almost never stolen or replaced on a vehicle.
The only reason for making such a selection would
be to ensure that the remains of a stripped vehicle
can be identified. As noted by Ford, there will be
few, if any, new passenger cars produced in the
future using frame construction. In the case of
cars using unitized body construction, the objec-
tive of ensuring that an identifiable part of the
vehicle remains after the vehicle has been stripped
can be achieved by requiring the marking of both
rear quarter panels. Those rear quarter panels
are an integral part of the supporting structure
which serves as the frame for unitized bodies, and
generally remain with the frame. Accordingly, the
agency does not believe there is any reason to
select the frame as one of the covered major parts.
A number of commenters also questioned the
agency's selection of rear quarter panels as co-
vered major parts. Mitsubishi, BMW, Nissan, and
Mazda stated that the rear quarter panels are not
really separate parts in the case of unitized bodies,
since they can't be removed as separate parts from
the unitized body. However, the Theft Act clearly
designates the rear quarter panels as separate
parts which can be selected as covered major parts.
NHTSA believes there is value in marking both
rear quarter panels, because they would be among
the costliest major parts to replace. They will also
serve as an effective surrogate for marking the
frame in unitized body vehicles, as discussed
above. For these reasons, NHTSA is not convinced
by GM's comment that, because there is no evi-
dence that rear quarter panels are by themselves
high theft parts, those panels should not be
selected as covered major parts. Given the high
cost of the rear quarter panels, such parts could
be especially profitable to chop shops. One of the
purposes of this theft prevention standard is to
increase the risks for those chop shops (H. Rept.
at 5), and the agency believes it is especially impor-
tant to increase the risks associated with the most
potentially profitable parts. Moreover, marking of
both rear quarter panels would serve the law en-
forcement objective noted above in the discussion
on why the frame was not selected as a covered
major part. Accordingly, the theft prevention stan-
dard requires the marking of both rear quarter
panels.
Mazda stated that the rear quarter panels on
their unitized body vehicles consist of an inner
structural side panel which is an integral part of
the unitized body shell to which is attached an
exterior body panel. Mazda asked which of those
two panels should be marked, or if both should be
marked. In these instances, both the inner side
panel and the exterior body panel comprise the
rear quarter panel of the car. Marking either panel
would comply with the requirement that the rear
quarter panel be marked.
The commenters generally questioned the
agency's selection of the front and rear bumpers
as covered major parts. Chrysler stated that most
cars in the future will not have traditional chrome-
plated bumpers with a face bar. Instead, those
vehicles will use soft front and rear fascia mater-
ials which are integrated with the front and rear
of the body. Chrysler stated that it knows of no
feasible way to permanently attach a label to that
soft fascia material.
Earlier in this preamble, NHTSA explained that it
is required to promulgate a performance standard.
The fact that manufacturers may have to use some
means of identification other than labeling is not
by itself a valid reason for not selecting a part as
a covered major part. If a manufacturer is unable
to certify that labels can satisfy the performance
standard when attached to a covered major part,
the manufacturer will have to use some other
means of marking the part, such as stamping or
etching.
Additionally, Chrysler argued that these
bumper designs are not really separate parts, but
are an integral part of either the front or rear
end. Accordingly, Chrysler argued that the new
bumpers will not be high theft items. The Depart-
ment of Justice commented that, as far as they
know, bumpers are not involved in much chop shop
activity. The Justice Department accordingly
recommended that the rear doors on four door cars
should be required to be marked in lieu of the
bumpers.
#
PART 567-PRE 64
According to the information currently available
to NHTSA, the front and rear bumpers are the
most often replaced major parts on vehicles. This,
of course, results from the function of these com-
ponents, which is to protect the front and rear end
of the vehicle. Hence, these parts would seem to
be natural targets for chop shops, since they are
such high demand items by repair shops.
Moreover, the fact that current information in-
dicates that bumpers have not been prime targets
for chop shops is not dispositive. None of the front
end components are marked on most high theft
cars today. In this situation, it stands to reason
that the most expensive components of the front
end, the hood and the fenders, would be most desir-
able to chop shops, because of the potential profits.
However, if this standard were to require the
marking of the hood and fenders, but not the
bumpers, chop shops could with relative safety
"clip" the bumpers of stolen vehicles and fence
those parts. The legislative history of the Theft
Act noted that marked components are often
junked by criminals, while the unmarked com-
ponents are fenced to salvage and repair shops.
H. Rept. at 4. It would be inconsistent with the
purposes of the Theft Act to leave open the possi-
bility that chop shops could with relative safety
steal and fence the most often replaced major parts
of high theft lines, because NHTSA failed to select
the bumpers as covered major parts.
Accordingly, this final rule selects the front and
rear bumpers as covered major parts. The agency
concurs with the manufacturer's comments that
these bumpers frequently consist of many compo-
nents. For the purposes of this requirement, the
marking of the bumper will be satisfied by mark-
ing the face bar or the fascia, but would not be
satisfied by marking the rub strip, bumper guards,
or energy absorber.
After having determined that these specific com-
ponent parts should or should not be selected as
"covered major parts" under section 602(aKl) of
the Cost Savings Act, NHTSA had to determine
which of the three proposed alternatives should
be incorporated into the theft prevention standard.
The first proposed alternative offered the advan-
tage of uniformity of parts marking, so that inves-
tigators in the field would know which parts were
to be marked on all high theft line vehicles. Adopt-
ing the second alternative would mean that two
of the fourteen parts to be marked would vary
from manufacturer to manufacturer, and this
would create needless complexity for the inves-
tigators. However, the agency agrees with the
comments by the Justice Department, CHAT, and
Saab that all current evidence indicates that all
four doors are taken when a four door vehicle is
stripped by criminals. It would be inconsistent
with the purposes of the Theft Act to allow the
rear doors to be stolen and fenced with minimal
risk. For the reasons stated above, this final theft
prevention standard adopts the third proposed al-
ternative, adding the two rear doors to the list of
the 12 major parts given in the first alternative.
This means that two door vehicles in high theft
lines will have 12 covered major parts, and four
door vehicles will have 14 covered major parts.
Further, it includes the advantage of the first
proposed alternative of uniformity of parts mark-
ing between the different manufacturers.
4. Cost of Compliance with the Theft Prevention
Standard.
Section 604( a ) of the Cost Savings Act provides
that the theft prevention standard "may not . . .
impose costs upon any manufacturer of motor
vehicles to comply with such standard in excess
of $15 per motor vehicle . . ." To amplify this limi-
tation, the House Report stated, "(t)his is a limi-
tation on DOT. If DOT, when promulgating the
standard, determines that this cost will be ex-
ceeded, the standard should not be issued until it
is adjusted to be within the limitation. In short,
there is no authority to issue a standard that ex-
ceeds the cost limitation." H. Rept. at 16.
NHTSA stated its interpretation of this lan-
guage in the NPRM. To repeat, NHTSA believes
that it has no authority to issue a standard which
cannot reasonably be met by all manufacturers
for $15 or less, but this language does not require
the standard to be capable of being met for $15 or
less by every manufacturer using every tech-
nology. In other words, this standard meets the
cost limitation of section 604(a) if there is at least
one reasonable means of compliance available to
each manufacturer that would cost not more than
$15 per vehicle, based on reasonable and generally
accepted management and accounting techniques.
The agency has broad discretion to make adjust-
ments to the standard if it exceeds the $15 limit.
These adjustments would then be generally
applicable to all manufacturers. NHTSA believes
PART 567-PRE 65
it is clear that Congress did not contemplate that
no standard would be issued merely because one
manufacturer claims unverified costs above that
limit. Moreover, as explained in the NPRM, Con-
gress did not give the agency authority to exempt
any manufacturers entirely from the standard,
nor does the agency have the authority to modify
the standard for a particular manufacturer to
bring that manufacturer's costs below the $15
limit. The same performance requirements must
pertain to all manufacturers even if adjustments
are needed to the standard so that it is within the
$15 limit.
The agency concluded this section of the NPRM
by stating its anticipation that no manufacturer
would make a claim that it is unable to meet the
standard for $15 per vehicle, given the availability
of inexpensive labeling and engraving technologies.
However, Ferrari did make such a claim, and
stated that for a small manufacturer the marking
of 14 parts with the VIN "would create enormous
problems with the management of the system and
would raise costs well in excess of $15 for each
vehicle". The only substantiation for this claim
was that the marking requirements would force
the small manufacturer to determine the U.S. ver-
sions of its vehicles as early as the bodj^work stage
of production.
NHTSA is not persuaded by this comment.
There are inexpensive labeling and engraving
technologies available for use by Ferrari. Foreign
manufacturers must determine whether the
vehicle is to be a U.S. or European version before
the vehicle has been built, so that it can be certified
as complying with the U.S. vehicle safety and
emissions standards. At that time, Ferrari can
assign a U.S. VIN and use the inexpensive mark-
ing technologies to mark the covered major parts
of its high theft lines, for those vehicles to be sold
in the United States. Accordingly, NHTSA be-
lieves Ferrari can comply with this standard at a
cost of no more than $15 per vehicle.
VW commented that it might not be able to com-
ply with this standard at a cost of $15 or less per
vehicle. As support for this position, VW stated
only that its cost of compliance would depend upon
which of its lines were selected for coverage under
this standard. No other manufacturer stated that
it could not comply at a per vehicle cost of $15 or
less. NHTSA's estimate of compliance costs is less
than $10 per vehicle if the parts are stamped or
engraved and $5 per vehicle if the parts are labeled
for the larger manufacturers. For low volume
manufacturers, NHTSA estimates that it will cost
between $7 and $9 per vehicle to sandblast the
markings into the parts. Based on this informa-
tion, NHTSA concludes that this standard satis-
fies the cost limitation of section 604(a) of the Cost
Savings Act.
Ferrari also asked that NHTSA exempt from
the requirements of this theft prevention standard
high theft car lines which have fewer than 20
thefts per model year. Section 603( a )( 1 ) of the Cost
Savings Act treats "passenger motor vehicles of
any line" as part of a high theft line, if that line
meets certain conditions. Congress granted
exemption authority to the agency in section 605
of the Cost Savings Act for vehicles with original
equipment anti-theft devices which meet certain
conditions. There are no other exemptions pro-
vided in Title VI of the Cost Savings Act. An old
principle of legal interpretion is expressed in the
maxim "expressio unius est exclusio alterius"; liter-
ally, the expression of one thing is the exclusion
of another. See Earl of Southampton 's Case, 1 Dyer
50a, 73 Eng. Rep. 109 (K.B. 1541); Marbury v.
Madison, 1 Cranch (5 U.S.) 137, at 174, 175 (1803).
When Congress drafted the Theft Act so as to pro-
vide one means of exempting vehicles from its
requirements, it is presumed that Congress in-
tended to exclude other means of exempting
vehicles from those requirements.
The presumption that Congress did not intend
low volume manufacturers to be excluded from
the theft prevention standard because of the rela-
tively few vehicles they produce is reinforced by
comparing Title V and Title VI of the Cost Savings
Act. Title V expressly provides NHTSA with the
authority to exempt small manufacturers from the
generally applicable requirements of the fuel
economy standards in section 502(c) of the Cost
Savings Act. The absence of any comparable
exemption authority in Title VI of the Cost Savings
Act shows a Congressional intent that vehicles
not be exempted from the requirements of the theft
prevention standard just because relatively few of
those vehicles are produced or stolen. Accordingly,
the Ferrari comment is not adopted in this final
rule.
B. Performance Standards for Replacement
Parts
Title VI of the Cost Savings Act provides that
A
PART 567-PRE 66
the theft prevention standard shall apply to re-
placement parts as well as to the original equip-
ment parts. Section 602(d)(2) specifies that the
standard may not require identification of any
replacement part which is not designed as a re-
placement for a covered major part required to be
identified under the standard. It further provides
that the standard can not require the inscribing
or affixing of any identification other than a sym-
bol identifying the manufacturer and a common
symbol identifying the part as a major replace-
ment part. The legislative history notes that the
marking for replacement parts "could be a manu-
facturer's logo with the initial "R" for replacement
part affixed or inscribed on the part." H. Rept. at
12. To implement these requirements, the NPRM
proposed the following requirements.
1. Number or Symbol to be Used and Location
of the Marking.
The agency proposed that the replacement parts
be marked with the manufacturer's logo and the
"R", precisely as Congress had suggested. These
markings were required to be at least one cm in
height, as compared with the 4 millimeter height
proposed for original equipment parts marking.
In response to the proposed requirements, both
Ford and GM asked why the minimum size for
the replacement part identification was larger
than that proposed for original equipment part
identification. The larger markings were proposed
for replacement parts than original equipment
parts because of the different information being
marked on the parts. Original equipment parts
will be identified with the VIN. Experience has
shown that markings which are 3/32 of an inch
have been readily legible for investigators. Re-
placement parts will only be identified with the
letter R and the manufacturer's logo. NHTSA
proposed the one cm minimum height for these
markings so that the logo would be more clearly
identifiable and more difficult to counterfeit.
These replacement part markings would have to
meet the same performance requirements as orig-
inal equipment parts.
NHTSA believes the replacement parts marking
is especially important. Numerous commenters at
the public hearing on December 6 and 7, 1984,
noted that the theft prevention standard is only
as good as the replacement parts marking standard,
because chop shops and other motor vehicle
thieves will try to obliterate the VIN markings
from original equipment parts and to replace those
VIN's with counterfeit logos and "R" designations.
It seems far easier to counterfeit a single letter
and logo than to counterfeit a new VIN marking
for each stolen part. Therefore, this rule adopts
the proposed one cm minimum height requirement
for replacement part markings.
Both the Auto Internacional Association and the
Specialty Equipment Market Association com-
mented that the manufacturer of the replacement
part should not be required to mark its logo on
the replacement part. Instead, these commenters
as.serted that the manufacturer's initials should
be required, since those would also identify the
manufacturer and would be required to be perma-
nent, tamper-resistant, etc.
NHTSA is not persuaded by these comments.
The manufacturer's logo is more distinctive and
more difficult to counterfeit than simple initials
would be. If thieves can successfully obliterate the
original VIN markings on stolen parts, it would
be a very simple task to affix or inscribe initials
on the stolen part. Moreover, it would be difficult
for investigators in the field to judge if the initials
represented legitimate markings or were counter-
feit, if the counterfeiting were done with even min-
imal skill. Logos, on the other hand, are unique
indentifiers of each manufacturer and will be
quickly identified by the investigator. Further, a
counterfeited logo should be easier for inves-
tigators to identify than some counterfeited ini-
tials. Accordingly, this final standard retains the
requirement that covered major replacement
parts be marked with the manufacturer's logo and
the letter "R".
CHAT commented that the agency should re-
quire the manufacturers of replacement parts to
register their names, addresses, and logos with
the agency. This, according to CHAT, would help
both NHTSA and law enforcement officers to iden-
tify the replacement part manufacturer from its
logo and to verify that the logo was valid. Regard-
less of the merits of this suggestion, it is outside
the scope of this rulemaking. However, should ex-
perience with this standard indicate that trained
theft investigators are unable to identify or verify
logos without a central registry, the agency would
consider whether it ought to initiate rulemaking
to require this sort of registration.
The NPRM proposed that the logo marked on
PART 567-PRE 67
the replacement part be that of the part's manufac-
turer. VW asked that this be modified to specify
that the logo be either that of the part's fabricator
or that of the vehicle manufacturer for which the
part is made, at the vehicle manufacturer's option.
This comment relates to the common practice of
vehicle manufacturers of leasing out the molds
used to make the major parts of their vehicles to
another party. That other party then produces the
parts using the manufacturer's mold. The parts
are then marketed as replacement parts made by
the vehicle manufacturer.
NHTSA did not intend to disturb this practice,
nor did it intend to require that parts made for a
manufacturer by an agreement with a third party
be identified as parts not actually made by the
vehicle manufacturer. Accordingly, for the pur-
poses of this theft prevention standard, the manu-
facturer of a replacement part will be considered
to be either the actual fabricator of that part or
the party that provides the fabricator with the
mold used to make that part and markets the
replacement part as its own. The question of which
of these two parties is the manufacturer for the
purposes of this standard is left to those parties
to decide, through contract or other agreement.
Whichever party agrees to be the manufacturer
of the replacement part will be responsible for en-
suring that the markings on the part comply with
this performance standard, and must certify that
compliance. If neither party elects to be the manu-
facturer of the replacement part, the party that
markets the replacement part as its product will
be responsible for certifying that the part complies
with this standard.
GM commented that the NPRM should be modi-
fied to permit the use of labels for replacement
part marking. Both the NPRM and this final rule
allow manufacturers to label the markings on
replacement parts, provided that the labels satisfy
the performance criteria. Honda and Jaguar both
stated that they will have to inscribe the markings
on their replacement parts, to allow for painting
and rustproofing. This may well be true, but the
standard does not require it. If these manufac-
turers can devise a way to protect the labels during
painting and rustproofing, and satisfy the other
performance requirements, they are free to use
labels. However, they may inscribe the parts, if
they determine that to be the easiest means of
complying with the standard.
Mazda stated that its replacement parts are
shipped just primed, and the part must be painted
and rustproofed by the dealer before it is installed
on a vehicle. Mazda noted that the markings may
not be clearly visible after these operations have
been performed on the replacement part. There-
fore, Mazda suggested that the proposed require-
ment that replacement part markings be protected
from damage during maintenance and repair be
modified to require such protection "to the
maximum extent possible".
NHTSA has not adopted this comment in this
final rule. As noted above, many commenters at
the public hearing stated that this theft preven-
tion standard will only be as effective as the re-
placement parts marking requirement. NHTSA
concurs in that judgment. If the theft standard
were to allow replacement part markings not to
be clearly visible to invesigators, those inves-
tigators would have no way of determining if the
marking had been obliterated during normal
maintenance and repair or if it had been obliterated
by thieves. This would offer a loophole in the
standard for the unscrupulous. Since NHTSA
strongly believes no such loophole should exist, it
did not adopt the Mazda comment.
VW commented likewise that replacement parts
are shipped either unpainted or just primed, and
must be painted and rustproofed by the entity that
installs the part. VW stated that in some cases
"the agency must recognize that it may not be
possible to maintain the label." VW must recognize
that it cannot certify compliance with this theft
prevention standard for its replacement parts, un-
less it can certify that the marking of those parts
will remain permanently attached to the part and
will be clearly visible after normal dealer prepara-
tion of the replacement part, which includes paint-
ing and rustproofing. If VW cannot devise a
method that will enable it to certify such com-
pliance using labels, it will have to use some other
means of marking those replacement parts, such
as stamping or etching.
Both Saab and Mazda asked the agency to con-
firm that it was acceptable under the provisions
of this theft standard for a manufacturer to mark
all of its covered major parts with the replacement
part markings. Those parts then used as original
equipment parts would also be marked with the
VIN for the vehicle on which they were used. It
was asserted that these "dual markings" would
PART 567-PRE 68
greatly simplify the manufacturer's task and re-
duce its costs for complying with this standard.
NHTSA agrees that such dual markings would
be simpler for vehicle manufacturers, but the
agency cannot allow such dual markings under
the theft prevention standard. Dual markings
would give thieves the opportunity to present
stolen original equipment parts as properly
marked replacement parts. Once the original
equipment part identification (the VIN) had been
obliterated from those stolen parts, a legitimate
replacement part marking would remain. Assum-
ing that the obliteration of the VIN were per-
formed reasonably proficiently, repair shops and
investigators would have little reason to suspect
that this part was anything other than a properly
identified replacement part. This would not serve
the purpose of the Theft Act of "decreasing the
ease with which certain stolen vehicles and their
major parts can be fenced". H. Rept. at 2. To make
this absolutely clear, this final rule incorporates
a provision prohibiting manufacturers from mark-
ing a part both as an original equipment part and
as a replacement part.
Saab also commented that replacement parts
should only have to be marked while the high theft
line the parts are designed to fit is in production.
This suggestion has not been adopted. The re-
placement parts will be designed to fit vehicles
which have been selected as high theft lines. All
available evidence suggests that cars which are
subject to high theft rates remain so for a signifi-
cant period of time. If markings are not required
on replacement parts after the manufacturer has
ceased production of the corresponding high theft
line, thieves could steal those cars and chop the
cars into parts. The chop shops could devote their
cunning and energy to obliterating the original
equipment marking on those parts, and then sell
the parts as replacement parts. Since replacement
parts for these cars would no longer have to be
marked by the manufacturer, the chop shops
would not have to bother counterfeiting the re-
placement part marking. The absence of this
marking would give less notice to both repair
shops and investigators that the parts were, in
fact, stolen. Allowing this would be inconsistent
with the purposes of the Theft Act. Accordingly,
it is not permitted under this final theft prevention
standard. Once a line is selected as a high theft
line, each covered major replacement part designed
for use on that line must be identified as a replace-
ment part. That requirement remains in effect as
long as those replacement parts are produced.
With respect to the location of the replacement
part markings, the NPRM proposed that those
markings be placed in the same size target area
as was proposed for original equipment parts (5
cm X 5 cm) and that this target area be 15 cm
away from the target area for original equipment
parts. The reasons for proposing the target area
were the same two explained above for original
equipment parts. Briefly repeated, a target area
would alert an investigator as to precisely where
he or she should examine the part for the marking
and it would ensure that a thief could not obliter-
ate a legitimate marking and place a counterfeit
marking on top of the obliterated area, in an effort
to hide the obliterated legitimate marking.
The comments on the proposed 5 cm X 5 cm X
5 cm target area for replacement parts were very
similar to those for the same target area for orig-
inal equipment parts, i.e., the area was too small.
NHTSA is adopting a less restrictive target area
which will achieve the same goals as the proposed
target area, but do so in a less burdensome man-
ner. As explained above, the vehicle manufac-
turers will now be required to designate a target
area not to exceed 50 percent of the surface area
on the surface for the original equipment parts to
be marked with the VIN. Each of those vehicle
manufacturers are also the major producers of re-
placement parts for their vehicles. Accordingly, in
conjunction with the target area designations for
original equipment parts, those manufacturers
will also designate a target area for replacement
parts.
There are two limitations on the designation of
the target area for replacement parts, to ensure
that there will be an adequate separation between
the original equipment part markings and the re-
placement part markings. First, the target area
for replacement parts may not exceed 25 percent
of surface area on the surface of the part where
the replacement marking will appear. If both the
original equipment marking target area and the
replacement part marking target area were 50
percent of the surface area of the part, and the
target areas were on the same surface of the part,
the boundaries of the two target areas would touch
each other. This would not result in any significant
separation of the target areas. Accordingly, one of
PART 567-PRE 69
the target areas must be less than 50 percent of
the surface area of the part. NHTSA believes it is
more appropriate to limit the size of the target
area for replacement part marking. This is be-
cause replacement part marking will not be done
on an assembled vehicle, but will be done on the
individual part. This makes it easier to position
the marking more precisely.
Second, the target area for replacement parts
must be at least 10 cm at all points from the target
area for original equipment parts. NHTSA be-
lieves it is vitally important that investigators be
able to see the area in which a thief may have
attempted to obliterate an identification marking.
This would not be feasible if those thieves could
remove an original equipment part label and then
apply a replacement part label over the same area.
Therefore, the agency has concluded that there
must be an adequate separation of the areas in
which original equipment and replacement parts
will be marked.
A 15 cm separation was proposed to ensure that,
even if a manufacturer slightly missed the 5 cm
X 5 cm target area, the investigators in the field
would have a chance to examine the target area
in which a marking may have been obliterated.
In response to that proposed requirement,
Chrysler commented that a 15 cm separation
might eliminate locations for replacement parts
marking which would be optimal for visibility or
protection of the marking. Jaguar stated that the
proposed 15 cm separation could prove unduly re-
strictive to manufacturers, without furthering the
agency's purpose. Jaguar suggested that a 5 cm
separation would serve the same purpose in a less
restrictive manner.
NHTSA believes that the greatly enlarged
target areas in this final rule respond to both these
commenters' concerns. Moreover, the required
separation has also been lessened to 10 cm in re-
sponse to these concerns. A further reduction to
Jaguar's suggested 5 cm would make it more dif-
ficult for investigators to quickly determine that
a part was not marked within a designated target
area, and would increase the chances for a thief
to successfully hide the removal of a proper iden-
tification and the application of a counterfeit one.
In NHTSA's judgment, the 10 cm separation re-
flects the best balance between its need to ensure
adequate separation of the markings and its desire
to give the manufacturers as much flexibility as
possible in complying with this standard.
The Specialty Equipment Market Association
and the Auto Internacional Association com-
mented that this final rule ought to include a pro-
vision to allow replacement parts manufacturers
to object to the target areas designated by the
original vehicle manufacturer. No such provision
is included in this rule, because NHTSA has con-
cluded that such a provision is unnecessary. The
covered major parts specified in this theft preven-
tion standard do not include parts such as oil fil-
ters and air filters which are made by many manu-
facturers for a particular vehicle. The original veh-
icle manufacturers produce the majority of the
covered major replacement parts, and most of
those which are not produced by the original
vehicle manufacturers are made by parties that
have leased the original manufacturer's molds for
those parts. Thus, the original vehicle manufac-
turers have no reason to select target areas for
replacement parts marking that will make it dif-
ficult for them or their lessors to properly mark
the part. In fact, those manufacturers have every
incentive to ensure that the target area will meet
the performance criteria of this standard and
allow easy access to the party applying the mark-
ing.
2. Cost Limitations of the Replacement Part
Standard.
Section 604(aK2) of the Cost Savings Act limits
the costs which may be imposed on replacement
parts manufacturers by the marking require-
ments of this standard, in that those requirements
"may not impose costs upon any manufacturer of
major replacement parts to comply with such
standard in excess of such reasonable lesser
amount per major replacement part as the Secre-
tary specifies in such standard." The NPRM noted
the difference between this per part cost limitation
and the specific $15 per vehicle cost limitation for
marking the original equipment parts. The agency
believes these differing statutory requirements re-
flect the difference in economies of scale for orig-
inal equipment parts manufacturers and replace-
ment parts manufacturers. The amount specified
in this standard for replacement parts would be
adjusted for inflation in the same manner as the
$15 per car cost limitation.
The NPRM solicited comment on what "reason-
able lesser amount" should be specified, and spe-
cifically asked for comments on levels of $1 and
i
t
PART 567-PRE 70
$5 per part. The Specialty Equipment Market
Association and the Auto Internacional Associa-
tion suggested a complex formula for determining
the reasonable lesser amount. They urged the
agency to determine the relationship between $15
and the price of the vehicle for which the parts
are made. That percentage of $15 should be
adopted as the limit for all 14 replacement parts,
and one-fourteenth of that number would be the
maximum cost that could be added by the marking
requirements for an'individual part. For example,
if a new vehicle sold for $15,000, the $15 cost limit
would represent 0.1 percent of the cost of the
vehicle. Under this suggested formula, the total
cost for marking all 14 replacement parts would
be limited to 1.5 cents. Each part could cost no
more 0.1 cent to mark.
The agency has not adopted this formula in this
final rule. It would result in no replacement parts
being marked, and would directly contradict the
explicit requirements of, and intent underlying,
the Theft Act. If this suggested formula were not
adopted in the theft prevention standard, these
commenters asked the agency not to specify any
cost limit for marking replacement parts. This
course of action is not possible because section
604(a)(2) of the Cost Savings Act explicitly re-
quires the agency to specify a cost limit for the
marking of replacement parts in the theft preven-
tion standard.
CHAT commented that the suggested $5 limit
for marking replacement parts seemed to be an
excessive cost to impose on manufacturers. At the
same time, CHAT said that the suggested $1 level
might be too restrictive for marking purposes,
since these manufacturers would not have the
economies of scale the vehicle manufacturers
would have. CHAT stated that NHTSA should
specify a cost limit of $2 or $3 for marking a re-
placement part. Ford stated its belief that a $1
limit for marking a replacement part was reason-
able. GM commented that manufacturers should
not be required to incur costs of more than $1 to
mark a replacement part, and that the suggested
$5 limit per part was excessive.
The agency has reexamined this question in
light of these comments. NHTSA has concluded
that setting a cost limit of $1 to mark replacement
parts would be unreasonably restrictive. The
statutory limit of $15 to mark 14 covered parts on
a vehicle in effect allows an average cost of $1.07
per part. Setting a $1 limit for the costs of marking
replacement parts would require that it cost less
to mark those parts than Congress allowed for
original equipment parts. In fact, the cost of mark-
ing replacement parts will be greater than the
costs of marking original equipment parts, be-
cause of the lesser economies of scale the replace-
ment parts manufacturers experience. Further,
some parts may cost more than others to mark
because of individual characteristics, such as the
geometry of the part and its ability to withstand
stamping loads. A cost limit of $1 per replacement
part would force the agency to revise the standard
to allow the manufacturers to mark these more
costly parts for less than the cost limit. Accord-
ingly, this limit has been rejected as unreasonably
low.
As noted above, the agency believes that re-
placement parts marking is crucial if this standard
is to be effective. The replacement parts markings
required in this standard are exactly those sug-
gested in the legislative history. NHTSA has con-
cluded that a lessening of these markings would
undermine the purpose of those markings, by
making it simpler for thieves to falsely mark stolen
parts as legitimate replacement parts. Because
this standard is directed at very sophisticated
criminal enterprises, it must give investigators
every opportunity to detect counterfeit markings.
Fewer markings make it easier for a criminal to
apply counterfeit markings which appear to be
legitimate, and give investigators less of an oppor-
tunity to detect the counterfeit nature of those
markings. Therefore, NHTSA believes it would be
inconsistent with the intent of the Theft Act to
specify a cost limit for these markings that could
not be met by each replacement parts manufacturer.
As with the $15 cost limit to mark the parts on
a new vehicle, NHTSA has no authority to exempt
a manufacturer or particular parts from the re-
placement parts marking requirement because of
an inability to comply with these requirements by
some reasonable means at a cost of this specified
limit or less. If a replacement parts manufacturer
can show that it is unable to reasonably comply
with these markings requirements within such
limit for any covered part, the marking require-
ments of the standard will have to be amended to
permit each replacement parts manufacturer to
mark each covered major replacement part for the
specified limit.
The information currently available to the
agency indicates that it could cost a low volume
PART 567-PRE 71
manufacturer or importer of replacement parts as
much as $3.96 to mark certain replacement parts.
Accordingly, if the cost limit for marking replace-
ment parts were set below this level, the require-
ments for such markings would have to be made
less stringent, and NHTSA believes this would be
inconsistent with the purposes of the Theft Act.
To allow for possible error in this agency estimate,
this final rule establishes a cost limit of $5 (in
1984 dollars) for marking replacement parts.
NHTSA believes this amount is a "reasonable
lesser amount" than $15. The cost to vehicle manu-
facturers to mark these parts will be well under
$1 for each replacement part, and these manufac-
turers are the source of the vast majority of re-
placement parts. All available information to the
agency indicates that the vehicle manufacturers
will not approach this cost limit. As stated above,
the limit is directed at the reasonable costs which
will be incurred by the smallest manufacturers
and importers. These replacement parts are gen-
erally chosen by vehicle owners because they cost
significantly less than those same parts produced
by the vehicle manufacturers and the large re-
placement parts manufacturers. A $5 price in-
crease for the replacement parts produced by the
smallest manufacturers and importers will not sig-
nificantly reduce the demand for their products,
because the major replacement parts covered by
this standard are very expensive parts and usually
have large retail price mark-ups. Further, the
specialty cars for which most of the smaller entities
produce major replacement parts generally cannot
get parts from junk yards or other salvage opera-
tions. This leaves the parts manufacturers with a
virtual monopoly on the replacement parts market.
Appendices Setting Forth Lines Selected as
High Theft Lines and the Criteria Considered in
Selecting High Theft Lines.
The NPRM explained how the agency would
select lines as high theft lines. Since then, NHTSA
has published a final rule setting forth the pro-
cedures for selecting high theft lines from those
lines introduced after January 1, 1983 (50 FR 3483;
August 28, 1985) and theft data for lines intro-
duced before January 1, 1983 (50 FR 18708; May
2, 1985, 50 FR 32871; August 15, 1985). The issues
associated with those selections have been dis-
cussed at length in those notices and need not be
repeated herein.
Appendix A in the NPRM was proposed simply
to create a place for listing the lines which would
be selected as high theft lines. No commenters
suggested any reasons for not including such an
appendix to this theft prevention standard.
Accordingly, it is included in this final standard.
Proposed Appendix B listed the criteria the
agency would consider in limiting to 14 the number
of lines introduced by an individual manufacturer
before the effective date of the theft prevention
standard that may be selected as high theft lines
because of actual or likely high theft rates. This
limitation is set forth in section 603(a)(3) of the
Cost Savings Act. As announced in the August 28,
1985 notice establishing the final rule for the selec-
tion of high theft lines, one of the proposed criteria
for that appendix has not been adopted in this
theft prevention standard. It was proposed that a
manufacturer's plans for installation of an original
equipment anti-theft device in a line would be con-
sidered as a factor militating against choosing that
line as one of the 14 to be subject to this theft
prevention standard. As explained at 50 FR 34834-
34835, NHTSA has concluded that it would be
inappropriate to consider such plans to lessen the
possibility of a line being chosen as one of the 14
subject to the standard. All the other parts of Ap-
pendix B have been adopted as proposed in the
NPRM.
Proposed Appendix C contained criteria for
selecting likely high theft lines from those lines
introduced after January 1, 1983. Since no com-
menters objected to these criteria, they are
adopted as proposed.
Certification of Compliance with the Theft Pre-
vention Standard.
Section 606(c)(1) of the Cost Savings Act [15
U.S.C. 2026(c)(1)] provides that "[e]very manufac-
turer of a motor vehicle subject to the standard ...
and every manu facturer of any major replacement
part subject to such standard, shall furnish at the
time of delivery of such vehicle or part a certifica-
tion that such vehicle or replacement part con-
forms to the applicable motor vehicle theft preven-
tion standard." It further provides that NHTSA
may issue rules prescribing the manner and form
of such certification.
Section 607(a) of the Cost Savings Act prohibits
any person from importing into the United States
any motor vehicle or part covered by this standard,
unless it is in conformity with the standard. The
House Committee Report states that "[a]ny motor
%
PART 567-PRE 72
vehicle not in compliance will be refused admis-
sion into the United States." H. Kept, at 18. On
that same page of the report. NHTSA is directed
to take "into consideration its present certification
practices in the case of safety" in determining the
method and form of certification for the theft pre-
vention standard.
A. Who May Certify
As noted above, Title VI of the Cost Savings Act
requires every "manufacturer" to certify that its
motor vehicles and/or covered major parts comply
with the requirements of this standard. The term
manufacturer is defined in section 2(7) of the Cost
Savings Act |15 U.S.C. 1901(7)| as "any person en-
gaged in the manufacturing or assembling of pass-
enger motor vehicles or passenger motor vehicle
equipment including any person importing motor
vehicles or motor vehicle equipment for resale."
Because of concerns about maintaining the sec-
urity of marking technologies and about enforce-
ment of this standard, the question which arises
is whether each and every "manufacturer", as that
term is defined in section 2( 7 ), should be permitted
to certify that a motor vehicle or part complies
with the requirements of this theft prevention
standard.
This question arises primarily in connection
with "direct importers". These direct importers are
individuals and commercial enterprises which ob-
tain foreign cars not originally manufactured for
sale in the United States, bring them into this
country, and modify them so that they can be cer-
tified as being in compliance with the U.S. vehicle
safety, emissions, and bumper standards. Under
the Federal statutes mandating the vehicle safety,
emissions, and bumper standards (15 U.S.C.
1397(b)(3), 42 U.S.C. 7522(b)(2), and 15 U.S.C.
1916(b)(3)) and the implementing regulations (19
CFR 12.73 and 12.80), vehicles not in compliance
with those standards may be brought into this
country under bond. The bond is released when a
statement is submitted showing that the neces-
sary modifications to achieve compliance with
those standards have been made. However, Title
VI of the Cost Savings Act does not specifically
provide for the importation of noncomplying veh-
icles under bond. Therefore, all vehicles must be
certified as complying with requirements of this
theft prevention standard before they are "im-
ported".
The NPRM proposed to limit those persons who
would be authorized to certify compliance with
the theft prevention standard to a narrower subset
of the universe of "manufacturers". Instead of al-
lowing all persons who are "manufacturers"
within the meaning of section 2(7) (both direct
importers and original manufacturers of the veh-
icles and parts) to certify compliance with the re-
quirements of the theft prevention standard, the
NPRM proposed to limit access to marking techol-
ogy by providing that only original manufacturers
of the vehicles and parts would be allowed to cer-
tify such compliance.
The language of Title VI and its legislative his-
tory neither expressly endorses nor repudiates the
definition of "manufacturer" in section 2(7). On
the one hand, certain portions of Title VI seem to
indicate that Congress did not contemplate that
direct importers would be involved in complying
with the theft prevention standard. Section
602( a )( 1 ) provides that the standard applies to "the
covered major parts which are installed by man-
ufacturers into passenger motor vehicles," and
602(d)(1) refers to "major parts installed by the
motor vehicle manufacturer." [Emphasis added to
both). Direct importers may alter, but do not in-
stall major parts. Hence, Congress did not seem
to be specifically referring to direct importers as
manufacturers for purposes of the Theft Act.
Moreover, Senator Percy, the original sponsor of
the Senate version of the anti-theft bill, stated
during the fioor debate that,"|u|nder the bill,
motor vehicle manufacturers would be required
to apply these numbers before each vehicle leaves
the factory." 130 Cong. Rec. S13585, Oct. 4, 1984.
This statement could be viewed as support for the
concept of limiting certification to original manu-
facturers, since direct importers could not apply
numbers before the vehicle leaves the factory.
Additionally, Congress did not explicitly provide
for importing noncomplying vehicles under bond,
as it had done for the safety, emissions, and
bumper statutes. Earlier versions of the legisla-
tion which became the Theft Act contained bond-
ing provisions which were dropped before the law's
enactment. The absence of express authority to
"import" noncomplying vehicles, particularly
when compared with the presence of such author-
ity under the other statutes requiring Federal
vehicle standards, might be said to suggest that
Congress intended to absolutely prohibit the im-
PART 567-PRE 73
portation of noncomplying vehicles.
On the other hand, Congress amended the gen-
eral definitions in section 2 of the Cost Savings
Act(15 U.S.C. 1901) so that those definitions apply
for the purpose of the Cost Savings Act "(except
title V and except as provided in section 601 of this
Act)". (Emphasis added). In section 601, Congress
set forth the definitions which applied solely for
the purposes of the Theft Act (Title VI of the Cost
Savings Act). However, it did not amend the def-
inition of "manufacturer" set forth in section 2 of
the Cost Savings Act. Had Congress intended to
change the definition of manufacturer to exclude
direct importers, it would presumably have done
so explicitly. This seems particularly true when
Congress did, in section 601, change the definition
of "passenger motor vehicle" set forth in section 2
for the purposes of Title VI of the Cost Savings Act.
Further, the legislative history explicitly stated
that the requirements of the Theft Act were de-
signed to curb motor vehicle thefts "while trying
to minimize regulation of the domestic and foreign
motor vehicle manufacturing industry, including
the aftermarket motor vehicle industry." H. Rept.
at 2. It would appear to be inconsistent with this
stated goal for the Theft Act requirements to force
a small, but recognized, portion of the industry
out of that business.
Since the statutory requirements and legislative
history appear to give conflicting signals as to the
underlying Congressional position on whether
direct importers should be allowed to certify com-
pliance with the requirements of this theft preven-
tion standard, the agency had to determine whether
the policy goals underlying Congressional passage
of the Theft Act would be better served by allowing
or prohibiting certification of compliance by direct
importers. In the NPRM, the agency tentatively
concluded that such certification would be incon-
sistent with the law enforcement goals of the Theft
Act, and proposed to limit certification of com-
pliance with the requirements of this theft preven-
tion standard to original vehicle manufacturers
and major replacement part manufacturers.
This proposal was explained at length at 50 FR
19738-19740, and need not be repeated herein.
However, NHTSA was sensitive to the economic
consequences for direct importers if the theft
prevention standard were to prevent their impor-
tation of high theft lines, by barring them from
certifying the compliance of those vehicles. Accord-
ingly, the NPRM asked for comments on whether
there was some scheme consistent with the Theft
Act that would permit direct importers to certify
compliance with this theft prevention standard,
without impeding the enforcement of this standard.
In response to this proposal and request for com-
ments, NHTSA received numerous and voluminous
comments on this proposed limitation. Many form
letters were submitted by direct importers, oppos-
ing the proposed limitation, and by law enforce-
ment groups supporting the proposed limitation.
Original vehicle manufacturers unanimously
supported the proposed limitation, and the
strongest supporters of that proposal were the
foreign manufacturers. These comments ampli-
fied the practical enforcement difficulties and sub-
stantially reduced effectiveness of the marking
requirements which they believed would ensue
if direct importers were allowed to mark vehicles.
CHAT commented that the security problems
associated with the marking technologies would
expand considerably if each direct importer had
access to those technologies, and supported the
proposed limitation. The National Automobile
Dealers Association agreed with the proposed
limitation, and emphasized the "serious problems
for franchised dealers " which have arisen in con-
nection with vehicles imported by the direct impor-
ters.
An association of direct importers, the Auto-
mobile Importers Compliance Association,
strongly opposed the proposed limitation, arguing
that if Congress had mtended to limit certification
authority to original manufacturers, it would have
done so explicitly. That group suggested what it
felt were a number of ways in which direct impor-
ters could be allowed to certify compliance with
the theft prevention standard without sacrificing
the law enforcement objectives of that standard.
These included controlled labeling, in which only
one party would obtain the labels to be affixed to
direct imports and would distribute these labels
to the direct importers once the direct importer
had shown proper credentials for the labels. Alter-
natively, that group suggested that all direct im-
port vehicles be exempted from the marking re-
quirements of this standard, on condition that the
vehicles all be equipped with original equipment
anti-theft devices. This suggestion arose from the
agency's authority to exempt lines from the mark-
ing requirements, under section 605(a)(1) of the
Cost Savings Act, if the agency determines that
the original equipment anti-theft devices on those
«
PART 567-PRE 74
lines are likely to be as effective as parts marking
in reducing and deterring vehicle thefts. Finally,
this group indicated its belief that "NHTSA has
inherent authority to establish limited exemptions
from (the theft prevention standard's) require-
ments to assure reasonableness and practicabil-
ity." The group urged NHTSA to use this inherent
authority to exempt direct importer's vehicles
from the requirements of the theft prevention
standard.
The Justice Department (DOJ) also objected to
the proposal to allow only original manufacturers
to certify compliance with the theft prevention
standard. DOJ stated its belief that the benefits
associated with prohibiting direct importers from
marking vehicles would be significantly out-
weighed by the consumer costs resulting from such
a prohibition. Absent a clear Congressional direc-
tive to eliminate certification by direct importers,
and in consideration of the "significant negative
economic impact" which would be associated with
NHTSA's proposed limitation of certification au-
thority, DOJ suggested that NHTSA should not
adopt its proposed limitation.
DOJ agreed with NHTSA that access to marking
technologies should be carefully controlled, in
order to serve the law enforcement objectives of
the Theft Act. DOJ observed that it may be better
from a law enforcement standpoint if the markings
by direct importers were done in the U.S., since
such marking operations could be better moni-
tored. Accordingly, DOJ stated that NHTSA
should use its administrative discretion to admit
non- complying vehicles under bond, and allow
the theft prevention standard's markings to be
done at the same time as the modification of the
vehicle so that it satisfies the requirements of the
vehicle safety and emissions standards. To ensure
the effectiveness of the theft prevention standard,
DOJ suggested that four additional limitations be
placed on direct importers for purposes of the theft
prevention standard. These were:
(1) All direct importers would be required to re-
gister with NHTSA;
(2) Direct importers must use a numbering sys-
tem for parts that will uniquely identify both the
vehicle parts and the importer. They suggested
the use of the Euro-VIN with a prefix code and
logo to identify the direct importer;
(3) Direct importers should not be allowed to
use labels, since that might present special sec-
urity problems; and
(4) Direct importers would be required to main-
tain the records required of all manufacturers
under section 606(a) of the Cost Savings Act.
With these additional requirements, DOJ be-
lieved that the theft prevention standard would
be effective for law enforcement purposes while
not banning direct imports of high theft lines.
In response to these comments, NHTSA has
thoroughly reexamined this subject. The agency
has concluded that this regulation should not pro-
hibit direct imports of vehicles. Accordingly, this
final rule allows all entities which are "manufac-
turers" within the meaning of the Cost Savings
Act to certify compliance with the requirements
of this standard. This is consistent with existing
practice under the Safety Act, the Clean Air Act,
and Title I of the Cost Savings Act.
However, NHTSA also believes that the
rulemaking record supports its policy concerns
about the security of the marking technologies and
the enforcement of this standard. The lengthy dis-
cussion in the NPRM shows why the issue of direct
imports poses special problems for achieving the
law enforcement purposes of the Theft Act. Accord-
ingly, this theft prevention standard sets forth the
following special provisions for the purposes of
certification of compliance by direct importers.
1. Direct imports must be marked with the Euro-
VIN.
As noted above, the NCIC computer system for
recording and tracking stolen vehicles is set up so
that it requires the entry of a full 17-character
U.S. VIN. Thus, at first glance, it would seem to
be most useful for law enforcement purposes if
these vehicles were assigned a U.S. VIN. However,
the NPRM sought comments on the use of Euro-
VINs for marking direct imports subject to the
requirements of this theft prevention standard,
because of the problems which might be associated
with direct importers assigning U.S. VINs to these
vehicles.
The NATB stated that there are reported in-
stances under the current VIN regulations where
a direct importer has assigned and affixed new
17-character U.S. type VINs to vehicles with Euro-
VINs. "Homemade" VINs give all appearances of
having been actually assigned by the vehicle man-
ufacturer, but were actually assigned by the direct
importer, without identifying the direct importer.
Such "homemade" VINs assign the proper charac-
ters to accurately identify the actual manufacturer
PART 567-PRE 75
of the vehicle. Most even include an accurate
check-digit, so it is not apparent that they are
"homemade". However, according to NATB, such
"homemade" VINs present law enforcement offic-
ers with the situation where a vehicle cannot be
traced ( or its production verified ) either to the orig-
inal manufacturer or to the direct importer. This
substantially negates one of the main purposes of
the VIN. NATB concluded its comment on this
point by repeating its preference for a full 17-
character VIN, but stated that vehicles with accu-
rate Euro-VINs could be traced to the actual man-
ufacturer and have the production verified, albeit
with additional effort and time delays. Since this
could not be done with "homemade" U.S. VINs,
NATB urged this agency to require the use of
Euro-VINs by direct importers.
NHTSA is persuaded by this comment. While
the NCIC tracking system could more readily
handle full 17-character VINs, the usefulness of
those VINs would be substantially diminished if
they do not allow law enforcement personnel to
trace the vehicle to its manufacturer. The Euro-
VINs are more difficult for the NCIC to enter, but
will serve to trace the vehicle to its manufacturer.
Further, if the agency were to permit or require
assigning U.S. VINs by direct importers, such
"homemade" VINs would not be recorded by the
manufacturer as assigned. This could result in a
situation where a VIN was assigned to two differ-
ent vehicles (once by the vehicle manufacturer and
once by the direct importer). Duplicative VINs
would completely fail to serve the purpose of pro-
viding a unique identifier for a vehicle for 30 years.
Therefore, NHTSA has determined that vehicles
imported by direct importers should be marked
with the original Euro- VIN assigned to the vehicle
by the original manufacturer.
2. Direct imports must have the markings
inscribed on the parts.
The 3M Corporation's representatives have re-
peatedly expressed their concerns that producers
of security labeling technology, such as 3M, are
able to guarantee the usefulness of their product
only when the distribution of the product can be
tightly controlled. That corporation has stated
that the security labeling system's integrity and
uniqueness will be easily compromised if they are
required to make their security tape more widely
available in the marketplace.
Because of these concerns, DOJ commented that
direct importers should not be permitted to use
labels to mark the parts of their vehicles. Accord-
ing to those comments, "It is reasonable to impose
some additional costs on importers to prevent the
security risks perceived in a wide availability of
labeling technology."
The Automobile Importers Compliance Associa-
tion acknowledged in its comments that it was
necessary to reduce the number of parties in pos-
session of all or some part of the security marking
technologies, and suggested that a procedure be
set up whereby one party would secure and dis-
tribute labels to direct importers. That group
suggested that either it or the Department of
Transportation should be the party that secures
and distributes those labels.
NHTSA has not adopted the suggested pro-
cedure for having one party secure and distribute
labels to all direct importers. It would be inap-
propiate for the Department to perform this func-
tion, for the reasons stated in the NPRM. Briefly
repeated, such a procedure would differ radically
from practices under the Safety Act, and the legis-
lative history of the Theft Act directs NHTSA,
when establishing procedures for certification, to
"take into consideration its present certification
practices in the case of safety." H. Rept. at 18. No
resources are available for establishing such a pro-
cedure in the agency's budget, and the agency does
not believe it should seek an increase in its budget
to allow it to become involved in the certification
of vehicles.
The agency also believes it would be inappro-
priate to designate the Automobile Importers
Compliance Association, or any other group of
direct importers, as the sole source of labels for
direct importers' vehicles. By choosing a single
group as the source of labels for all direct impor-
ters, the agency would give it an unintended "gov-
ernment sanction" as the official representative
for all direct importers. Conversely, it would have
the effect of denigrating the standing of any other
direct importers" groups.
In view of these potential problems with desig-
nating some group outside of the Department of
Transportation as the sole source for labels for
direct importers' vehicles, NHTSA has not adopted
this suggested approach.
3M has specifically stated that the usefulness
of their labels can be guaranteed only when the
PART 567-PRE 76
distribution is tightly controlled. If a chop shop or
some other criminal enterprise were to make a
direct import of only one vehicle and were able to
obtain an excess supply of security labels, the in-
tegrity of the labels would be seriously com-
promised. If a number of criminal enterprises were
to do this, the value of the labels would be even
further diminished. The information currently av-
ailable to the agency suggests that nearly all orig-
inal manufacturers intend to comply with the
parts marking requirements of this theft preven-
tion standard by using those security labels. If
criminal enterprises were able to pose as legiti-
mate direct importers and readily obtain access
to these labels, the security and effectiveness of
these labels on all imported vehicles subject to
this theft prevention standard would be seriously
compromised, or perhaps rendered useless. This
theft prevention standard cannot permit such a
result.
Under general legal principles, the Theft Act
must be interpreted so as to give NHTSA implied
authority to set marking performance require-
ments that are essential to achieve the purposes
of the Theft Act. NHTSA is well aware of the direc-
tive in the legislative history that this is to be a
performance standard, and that the agency is to
establish the "tests or general criteria which the
identification must meet, but not how it is to be
inscribed or affixed". H. Rept. at 10. Clearly each
"manufacturer" was to be allowed to choose how
to comply with the requirements of this theft pre-
vention standard.
However, the agency believes that the require-
ment for a performance standard, read in the con-
text of the Theft Act, means that NHTSA must
draft its requirements as broadly as possible, but
may also be relatively specific if necessary to en-
sure that the Theft Act achieves it purposes. The
Vehicle Safety Act, on which much of this Act is
modeled, contains a similar requirement for per-
formance requirements. The agency has re-
peatedly interpreted the Safety Act in the manner
set forth above.
Moreover, there is a familiar principle of statu-
tory interpretation called "restrictive interpreta-
tion". That principle is explained thusly: "When
the natural or literal meaning of statutory lan-
guage embraces applications which would not
serve the policy or purpose for which the statute
was enacted or help to remedy the mischief at
which it was aimed, the courts may construe it
restrictively in order not to give it an effect beyond
its equity or spirit. ... A restricted interpretation
is usually applied when the effect of a literal inter-
pretation will make for injustice and absurdity..."
A. Sutherland, Statutes and Statutory Construc-
tion, .'5>'54.06 (4th ed. CD. Sands 1973). NHTSA
has concluded that the principles of restrictive
interpretation must be applied to this performance
standard requirement as it applies to direct
importers.
According to the legislative history of the Theft
Act, it is:
a comprehensive package of proposals designed
to curb the theft of motor vehicles by preventing
thefts and decreasing the ease with which cer-
tain stolen vehicles and their major parts can
be fenced, while trying to minimize regulation
of the domestic and foreign motor vehicle manu-
facturing industry, including the aftermarket
motor vehicle industry. It also gives law enforce-
ment officials at all levels of government the
much-needed prosecutory tools to crack criminal
theft rings and related racketeering activities.
H. Rept. at 2.
These are truly the essential purposes of the
Theft Act. If criminal elements can readily com-
promise the security and effectiveness of labels,
the essential purposes will not be achieved. There
is no reasonable basis for supposing that Congress
intended the agency to require the original auto-
mobile manufacturers to undertake the perma-
nent identification of the covered major parts on
all their high theft lines, but also to permit the
security and effectiveness of such markings to be
readily compromised.
After considering this analysis, NHTSA believes
that it has authority to require direct importers
to mark their vehicles subject to this theft preven-
tion standard by inscribing the markings on the
covered major parts, and not allowing direct im-
porters to affix the markings on the covered major
parts by means of labels. There are no security
concerns related to the current stamping or etch-
ing technologies, because these are already widely
available. Hence, allowing direct importers to use
such technologies will not reduce the effectiveness
of such markings.
PART 567-PRE 77
This final rule does not adopt DOJ's suggestion
that direct importers be required to mark their
vehicles with a prefix code for the part and the
importer's logo, along with the Euro-VIN. Section
602(d)(1)(A) provides that the theft prevention
standard may not require original equipment
parts to have more than a single identification. In
the case of covered major parts on vehicles im-
ported by direct importers, NHTSA believes that
the most useful single identification will be the
Euro-VIN, as explained above, and that is what
is required in this standard.
The DOJ further suggested that direct importers
be required to stamp those covered major parts
with "positive identification" characters. The
agency has no basis for mandating the use of one
specific means of inscribing the markings made
by direct importers. NHTSA has no data which
show that stamping with "positive identification"
characters will produce markings which are more
difficult to alter or more readily legible for inves-
tigators than markings produced by laser etching,
sandblasting, stamping with different characters,
and so forth. If there were such evidence, it would
perhaps be more appropriate to amend the per-
formance requirements for the markings on all
replacement parts, so that all such parts' mark-
ings would offer these benefits. Accordingly, this
theft prevention standard allows direct importers
to use any means of inscribing markings into the
covered major parts, provided that those markings
comply with the applicable performance require-
ments.
3. The required markings must be inscribed be-
fore the vehicle or parts are "imported into the
United States".
Both DOJ and the Automobile Importers Com-
pliance Association asserted in their comments
that NHTSA has authority under the Theft Act
to allow non-complying vehicles to be imported
under bond and marked so as to comply with the
requirements of this theft prevention standard.
These comments were made in spite of the broad
prohibition of section 607(a)(1) that, "No person
shall ... import into the United States any motor
vehicle subject to the [theft prevention standard],
or any major replacement part subject to such
standard, which is manufactured on or after the
date the [theft prevention standard] takes effect
under this title for such vehicle or major replace-
ment part unless it is in conformity with such
standard." The only exception to this broad pro-
hibition expressed in the Theft Act is in section
607(b), which provides that section 607(a)(1) "shall
not apply to any person who establishes that he
did not have reason to know in the exercise of due
care that the vehicle or replacement part is not
in conformity with an applicable theft prevention
standard."
The agency concludes that it has no authority
to adopt a program to admit noncomplying vehicles
under bond, for essentially the same reasons as it
reached that tentative conclusion in the NPRM.
Congress expressly granted the agency such
authority in Title I of the Cost Savings Act (15
U.S.C. 1916) and in the National Traffic and Motor
Vehicle Safety Act (15 U.S.C. 1397), but did not
grant such authority in Title VI of the Cost Savings
Act, relating to the theft prevention standard. The
legislative history of the Theft Act referred to the
agency's procedures for certification under the Na-
tional Traffic and Motor Vehicle Safety Act, which
contains an express provision authorizing the
agency to admit non-complying vehicles under
bond. Moreover, earlier versions of the bill which
ultimately became the Theft Act contained bond-
ing provisions, but those provisions were dropped
from the final bill. For these reasons, NHTSA
concludes that Congress did not intend bonding
procedures to be used in connection with this
standard.
NHTSA would like to emphasize that it is
unaware of any policy reason why a program to
admit noncomplying vehicles under bond, which
is appropriate in the case of the National Traffic
and Motor Vehicle Safety Act, the Clean Air Act,
and Title I of the Cost Savings Act, should not be
permitted under the Theft Act. The agency cannot
dispute DOJ's comment that: "If an unsafe or pol-
luting car can be admitted under bond, it is hard
to find a public policy justification for irrevocably
banning a car lacking $15 theft prevention mark-
ings." It would be simpler and more efficient for
the direct importers if they were allowed to have
the required theft prevention markings inscribed
in the U.S. at the same time as the vehicle was
being modified to comply with the Federal
bumper, safety, and emissions standards. Pro-
hibiting theft prevention markings from being in-
scribed in the U.S. could encourage more of the
required modifications work, with the associated
PART 567-PRE 78
jobs, to be shifted overseas. Even without consid-
ering the negative effects that this possible shift
could have on U.S. employment and balance of
trade, there would be a small positive impact on
U.S. employment and balance of trade if the neces-
sary markings were inscribed after the vehicle was
admitted into the U.S. under bond. Notwithstand-
ing these advantages, the agency is constrained
from implementing any bonding program by the
Theft Act, as explained above.
The Automobile Ipiporters Compliance Associa-
tion also raised the issue of when a vehicle is im-
ported into the United States. That group asserted
that vehicles admitted under bond are not "im-
ported" until that bond has been released. To re-
solve this issue, NHTSA obtained a legal opinion
from the Chief Counsel of the United States Cus-
toms Service as to when a vehicle is considered
"imported" into the United States. A copy of this
letter is available in the docket.
The Customs Service stated that, as a general
rule, a vehicle is imported as soon as it enters the
customs territory of the United States with the
intent by the importer that it remain within the
customs territory. Hence, vehicles imported under
bond are imported before that bond is liquidated.
The Automobile Importers Compliance Associa-
tion further commented that vehicles entering
foreign-trade zones in the United States would
not be "imported" until the vehicles leave such a
zone to enter the customs territory of the United
States. Foreign-trade zones may be established in
or adjacent to ports of entry under the jurisdiction
of the United States, and are not deemed to be
within the customs territory of the United States.
See 19 U.S.C. 81a et seq. and 19 CFR Part 146.
Under this reasoning, the commenter stated its
belief that direct importers could, consistent with
the provisions of section 607 of the Cost Savings
Act (15 U.S.C. 2027), bring vehicles directly into
foreign-trade zones, make the necessary markings
while the vehicles were inside the zones, and then
formally bring the vehicles into the customs territ-
ory of the United States.
In a separate opinion from the Customs Service,
also available in the public docket, that agency
stated that "this suggestion on the part of the im-
porters is clearly incorrect. Foreign merchandise
brought into a foreign-trade zone in the United
States is indeed imported for Customs purposes."
Accordingly, the required markings must be in-
scribed onto directly imported vehicles before
those vehicles are brought into the customs territ-
ory of the United States or a foreign-trade zone.
The U.S. Customs Service will be the agency
enforcing the Theft Act's prohibition against im-
porting noncomplying vehicles and parts, just as
that agency enforces all other statutory prohibi-
tions against importing noncomplying vehicles
and items of motor vehicle equipment. Therefore,
any further questions about when a product is
"imported" into the United States should be ad-
dressed to the U.S. Customs Service. Their ad-
dress is: Office of the Chief Counsel, United States
Customs Service, 1301 Constitution Avenue, N. W.,
Washington, D.C. 20229.
NHTSA has not adopted the Automobile Impor-
ters Compliance Association suggestions that all
direct imports be excluded from the requirements
of this standard on condition that they install an
original equipment anti-theft device or that all
direct imports be excluded. The exemption from
the marking requirements of this standard for
vehicles equipped with original equipment anti-
theft devices is contained in section 605 of the
Cost Savings Act (15 U.S.C. 2025), and requires
the agency to make a determination that such
anti-theft device "is likely to be as effective in re-
ducing and deterring motor vehice theft as com-
pliance with the requirements of this standard."
NHTSA has no basis for making such a determi-
nation for all anti-theft devices on all direct im-
ports. Absent some basis for making the requisite
determination, NHTSA has no authority to
exempt those vehicles under section 605 of the
Cost Savings Act.
With respect to the suggestion that all direct
imports be excluded from the theft prevention
standard. NHTSA has no authority to exempt veh-
icles except under section 605 of the Cost Savings
Act. Although it was suggested that the agency
has "inherent authority to establish limited
exemptions from its requirements", no authority
was cited for the suggestion. NHTSA believes that
when Congress explicitly provides one basis for
exempting vehicles from the requirements of this
theft prevention standard, as it did in section 605
of the Cost Savings Act, the expression excludes
any other bases for exempting vehicles. The appli-
cation of the legal principle, "Expressio iinius est
exclusio alterlus" is as apt here as it was when
NHTSA considered Ferrari's request that low vol-
ume manufacturer's vehicles be exempted from
the requirements of this standard, as set forth
PART 567-PRE 79
above in this preamble.
B. Manner of Certification
1. Vehicles Subject to the Theft Prevention Stan-
dard.
The NPRM proposed a simple amendment to
the certification procedures applicable under the
Safety Act. At present, the Safety Act requires
manufacturers to affix a permanent plate or label
to each vehicle providing a number of items of
information, including the following statement:
"This vehicle conforms to all applicable Federal
motor vehicle safety standards in effect on the
date of manufacture shown above." For all passen-
ger cars manufactured on or after September 1,
1978, the phrase "and bumper" is required to ap-
pear in the above statement immediately following
the word "safety".
The NPRM proposed that, in the case of passen-
ger cars manufactured on or after the effective
date of the theft prevention standard and subject
to the requirements of this standard, the expres-
sion "bumper, and theft prevention" be substituted
in the statement immediately following the word
"safety". Ford commented that the proposal should
be revised, because it would require separate cer-
tification labels for cars subject to the theft preven-
tion standard and cars not subject to this stan-
dard. Ford stated that separate certifications
would "cause disruption of the assembly plant pro-
cess", particularly in a plant which produced some
lines subject to the standard and others which
were not. Ford concluded this comment by noting
that the statement that the vehicle conforms to
all "applicable" theft prevention standards would
ensure that it was accurate in the case of vehicles
not subject to this standard.
NHTSA did not intend to require separate cer-
tifications for passenger cars, and has adopted
Ford's comment for the reasons stated in that com-
ment.
As a related matter, VW, Mazda, and Saab noted
that a few of their vehicles are damaged so badly
in shipment that a major part may be among those
that need to be replaced before the vehicles are
offered for sale to the public. The commenters
asked if the manufacturer was required to replace
the damaged part with a part marked with the
VIN, as is required for original equipment parts,
or if the dealer could replace the part with a re-
placement part. The commenters noted the certifi-
cation difficulties they would have if a VIN mark-
ing were required on the replacement part. Mazda
further commented that if those VIN markings
were required, it would have to provide each of
its dealers with the labeling technology.
Section 606(c)(1) of the Cost Savings Act re-
quires that "every manufacturer of a motor vehicle
subject to the [theft prevention standard). ..shall
furnish at the time of delivery of such vehicle ...
a certification that such vehicle conforms to the
applicable motor vehicle theft prevention stan-
dard. Such certification shall accompany such
vehicle. ..until delivery to the first purchaser."
This latter sentence is consistent with the posi-
tion NHTSA has taken for purposes of the Safety
Act; i.e., it is not sufficient for a vehicle to satisfy
the applicable safety standards at the time it
leaves the assembly line. Instead, the manufac-
turer must certify that the vehicle satisfies all
applicable safety standards at the time it is
delivered to the first purchaser.
However, NHTSA does not understand these
commenters to be suggesting that this theft pre-
vention standard should permit new vehicles to
be delivered which do not comply with this stan-
dard; i.e., with unmarked covered major parts. It
is implicit in these comments that all vehicles
must comply with this theft prevention standard.
The question, however, is whether all parts of new
vehicles must comply with the vehicle standard
(marked with the VIN) at the time of delivery to
the first purchaser, or whether some parts of the
new vehicle may comply with the replacement part
standard (marked with the letter "R" and the
manufacturer's logo) at the time of delivery to the
first purchaser.
Section 606(c)(1) specifies that the vehicle man-
ufacturer must certify that the vehicle complies
with the vehicle standard (all covered major parts
marked with the VIN) "at the time of delivery of
such vehicle". This requirement leaves two ques-
tion concerning the manufacturer's certification
to be resolved:
(1) what is the "time of delivery"?; and
(2) the "delivery" to whom?
Neither the language of section 606 nor its legis-
lative history makes clear the answers to these
questions. However, the legislative history does
specify that: "The method and form of certification
PART 567-PRE 80
shall be prescribed by the DOT by rule, taking
into consideration its present certification prac-
tices in the case of safety." H. Rept. at 18. Section
114 of the National Traffic and Motor Vehicle
Safety Act (15 U.S.C. 1403) states that: "Every
manufacturer or distributor of a motor vehicle or
motor vehicle equipment shall furnish to the dis-
tributor or dealer at the time of delivery of such
vehicle or equipment by such manufacturer or dis-
tributor the certification that each such vehicle or
item of motor vehicle equipment conforms to all
applicable Federal motor vehicle safety stan-
dards." This certification practice with respect to
the Safety Act suggests that Congress was refer-
ring to a delivery to the dealer or distributor as
the point when a certification must be made by
the vehicle manufacturer.
That conclusion is reinforced by section
606(c)(l)'s reference to "delivery to the first purch-
aser" in the next sentence. Had Congress intended
to refer to delivery to the first purchaser in both
instances, it would presumably have used the
same phrase. Since it did not refer to "delivery to
the first purchaser" as the point when the vehicle
manufacturer must certify that the vehicle com-
plies with this theft prevention standard, Con-
gress must have intended that the "delivery" in
question be that to a dealer or distributor. This is
because there are no other parties to whom the
manufacturer could be said to deliver a vehicle.
Accordingly, NHTSA has determined that the de-
livery referred to in the first sentence of section
606(c)(1) is a delivery by a vehicle or replacement
parts manufacturer to a dealer or distributor.
This determination means that the vehicle
manufacturer satisfies its certification respon-
sibilities under the Theft Act when it delivers to
a dealer or distributor a vehicle with all covered
major parts marked with the VIN and conforming
to the performance requirements set forth for
those markings. Thus, a manufacturer will not be
subject to civil penalties under section 607(a)(4)(B),
which prohibits the issuance of false or misleading
certifications of compliance, if it delivers such a
vehicle to a distributor or dealer. However, as
noted above, section 606(c)(1) of the Cost Savings
Act makes the vehicle manufacturer responsible
for delivering to the first purchaser a vehicle that
complies with the applicable requirements of this
theft prevention standard. Therefore, a manufac-
turer that delivers a complying vehicle to a dealer
or distributor may be subject to civil penalties
under section 607(a)(1), which prohibits the manu-
facture or sale of a noncomplying vehicle, if the
vehicle does not comply with the theft standard
when it is delivered to the first purchaser. In such
an instance, the manufacturer could assert the
defense set forth in section 607(b) that it did not
have reason to know in the exercise of due care
that the vehicle was not in conformity with this
standard. If some person actually altered or
obliterated the markings, such person would have
violated section 201 of the Theft Act (18 U.S.C. 511 ).
This leaves open the question of what the time
of delivery of a vehicle is, for the purposes of the
Theft Act. NHTSA has not specifically addressed
the "time of delivery" of a vehicle for the purposes
of the Safety Act, so there is no general practice
for the agency to consider. Absent clear legislative
guidance or any clearly established practice under
the Safety Act, the agency must examine other
sources and consider the purposes of the Theft Act
to determine what the "time of delivery" means
under the Theft Act.
Delivery is a concept used for commercial trans-
actions, and has been defined in the Uniform Com-
mercial Code (U.C.C). The U.C.C. has been
adopted in whole or in part by all 50 states and
the District of Columbia. NHTSA believes that
the generally accepted definition of "delivery", as
set forth in the U.C.C, is a useful indicator of
what Congress intended when it used that term
in section 606 of the Theft Act.
The rule under the Uniform Commercial Code
is that when a seller ships goods by carrier, the
delivery occurs when the goods are delivered by
the seller to the carrier, unless the contract requires
the seller to deliver the goods to the purchaser at
a particular destination. U.C.C. i:t2-504 and §2-509
(1977). If this rule were applied in the case of a
vehicle, the delivery to the dealer or distributor
would occur when the manufacturer shipped the
vehicle, unless the contract specifies delivery
occurs when the vehicle is tendered to the dealer.
In the interests of ease of administration, NHTSA
believes it is appropriate to define "delivery" so
that it occurs at the same point in any given trans-
action. It would be unwise policy and an onerous
burden on the agency and the regulated parties
if the agency were forced to examine the contrac-
tual terms between every manufacturer and each
of its dealers and distributors to determine when
PART 567-PRE 81
"delivery" occurs in each case. Therefore, NHTSA
has concluded that, for the purposes of this theft
prevention standard, delivery occurs when the
vehicle manufacturer delivers the vehicle to a
shipper to be transported to a dealer or distributor.
As noted above, this is the general rule under the
U.C.C.
In practical terms, this means that, if a vehicle
is so badly damaged that a covered major part
needs to be replaced before the manufacturer has
delivered the vehicle to the shipper, the vehicle
manufacturer will have to mark a part with the
VIN of that vehicle and install that part before
delivering the vehicle to a dealer or distributor.
If, on the other hand, a vehicle is so badly damaged
after the manufacturer has delivered a properly
marked and certified vehicle to the shipper that
a covered major part needs to be replaced before
the first sale of the vehicle for purposes other than
resale, the dealer or distributor may install a
replacement part on the vehicle. The replacement
part must comply with the applicable require-
ments for replacement parts, and need not have
the VIN marked on it, as would be necessary if
it were subject to the original equipment part
requirements.
The certification which the first purchaser of
the vehicle must receive, pursuant to section
606(c)(1), will indicate that the vehicle conforms
to all applicable Federal theft prevention stan-
dards. This statement will not be misleading, be-
cause the undamaged original equipment parts
must comply with the requirements applicable to
original equipment parts, while the substituted
replacement parts must comply with the require-
ments applicable to replacement parts.
NHTSA believes that this definition of "delivery"
is the only one consistent with the purposes of the
Theft Act to require markings of vehicle parts
while imposing nominal burdens on the motor
vehicle manufacturing industry. The agency
recognizes that replacement parts installed on
vehicles will be particularly attractive to thieves,
since they can remove that part from the vehicle
and sell it as a legitimate replacement part. How-
ever, vehicles are very infrequently damaged so
badly before sale to the public that a major part
would need to be replaced. If a major part were
replaced with a replacement part, thieves will not
be alerted to the fact that the vehicle has only 13
parts marked with the VIN and one marked with
an "R" and the manufacturer's logo. Even if a thief
were to learn this fact, the 13 marked parts would
still show that a vehicle had been stolen by that
person.
On the other hand, had the agency concluded
that delivery to a dealer or distributor occurs when
the dealer or distributor takes physical possession
of the vehicle, enormous burdens would result for
the dealers and distributors. Section 607(a)(1) of
the Cost Savings Act specifies that no person shall
sell or offer for sale a vehicle subject to this theft
prevention standard that does not conform to this
standard. Accordingly, dealers and distributors
would have to hold the vehicle until the vehicle
manufacturer had marked a part with the vehicle's
VIN and shipped the part to the dealer or dis-
tributor. This would create a financial burden for
the dealer or distributor holding the vehicle, since
it would be paying interest on the vehicle from
the date it received the vehicle, but could not offer
to sell the vehicle until it had received and in-
stalled a properly marked part from the manufac-
turer. It would also create a burden on the manu-
facturer to produce one part not marked as a
replacement part, label that part with the proper
VIN, and ship the part to the dealer or distributor.
NHTSA would like to note that Mazda's com-
ment that it would have to provide its dealers with
labels and marking technology is incorrect. The
Theft Act places the burden of marking the parts
exclusively on the manufacturer, not the dealer.
Therefore, any necessary marking of parts under
this theft prevention standard is the responsibility
of the vehicle's manufacturer.
NHTSA also wishes to emphasize that this
determination of when delivery occurs is solely
applicable for the purposes of determining com-
pliance with the requirements of the theft preven-
tion standard. It does not affect any contractual
provisions concerning which party bears the risk
of loss for vehicle damaged in shipment, nor is it
applicable to the provisions of the Safety Act or
any other statutes administered by the agency.
Those statutes may have differing underlying
policy considerations from those of the Theft Act,
and those considerations might mandate a con-
trary determination of when delivery occurs.
This final rule must also establish rules for cer-
tification of direct imports subject to the require-
ments of this standard. The NPRM noted that
PART 567-PRE 82
requiring alterations in the certification plate
should prove feasible for all affected parties,
since that notice proposed to limit certification
authority to original manufacturers only.
However, this procedure would not be feasible
for direct importers. The safety certification label
can not be affixed to the vehicle until the vehicle
is certified as complying with the applicable safety
standards. In the case of direct imports, that cer-
tification is not made until after the vehicle has
been imported under bond and the necessary mod-
ifications have been made. As noted above, the
Theft Act does not permit any vehicles to be
imported which do not conform to the require-
ments of this standard. Therefore, a separate cer-
tification label will have to be affixed to these
vehicles before they are "imported".
The agency believes that the direct importers'
certification should be simple for the benefit of
both Customs officials and the direct importers.
Accordingly, the theft prevention standard re-
quires that direct imported vehicles have a label
permanently attached to each vehicle subject to
this theft prevention standard, in the same posi-
tions on the vehicle and with the same lettering
size and contrast requirements as is required for
the safety certification labels by Part 567, with
the statement: "This vehicle conforms to the
applicable federal theft prevention standard in ef-
fect on the date of manufacture." Additionally, the
label must identify the model year and line of the
vehicle. Finally, the label must display the corpo-
rate or individual name of the direct importer that
is certifying the vehicle's compliance with the theft
prevention standard's requirements, preceded by
the words "Imported by". This will be sufficient to
inform Customs officials that the vehicle has been
properly marked and identify the party which is
certifying the conformity of the markings.
NHTSA wishes to emphasize that this separate
certification is necessary only for those directly
imported vehicles subject to this theft prevention
standard. Those vehicles not subject to this stan-
dard need not be so certified. The other informa-
tion required to appear on the Part 567 certifica-
tion label will be affixed to the vehicle when that
certification label is affixed, i.e., after the direct
importer certifies that the vehicle complies with
the applicable safety and bumper standards.
2. Replacement Parts.
Again relying on the legislative instructions
that the agency take into account current certifi-
cation practices under the Safety Act, NHTSA
proposed in the NPRM that certification of com-
pliance with the replacement parts standard be
accomplished by marking each replacement part
with the symbol "DOT", and that the "DOT" sym-
bol appear immediately adjacent to the "R" and
manufacturer's logo required to appear on replace-
ment parts.
Ford supported the proposed certification, noting
that the DOT symbol has been effectively used as
a certification of compliance with many standards
applicable to motor vehicle equipment. Ford listed
lighting equipment, brake hoses, brake fluids,
automotive glazing, new and retreaded pneumatic
tires, and motorcycle helmets as examples of
motor vehicle equipment which must display the
DOT symbol as the manufacturer's certification
of compliance with the applicable safety standard.
GM objected to the requirement to mark the DOT
symbol on replacement parts as a certification of
compliance. GM explained its objection by stating
that the addition of the DOT symbol would not
"add to the effectiveness of the marking, but it
would increase its cost". GM concluded by recom-
mending that should NHTSA decide to require the
DOT marking to appear on replacement parts, it
should delete the requirement to mark either the
logo or the "R" on the parts. No other commenters
addressed this proposed certification requirement.
The agency has decided to adopt the certification
requirement proposed for replacement parts. Sec-
tion 606(cKl) of the Cost Savings Act requires
manufacturers of covered major replacement
parts to furnish a certification that the part con-
forms to this standard at the time of delivery. For
purposes of the Safety Act, the agency has used
the DOT symbol as the certification of compliance
for most of its motor vehicle equipment standards.
Accordingly, it is appropriate to require this sim-
ple but effective certification for purposes of the
Theft Act.
GM's comments are not persuasive. The agency
intends that this standard impose the lowest costs
necessary to comply with the requirements of the
Theft Act. However. NHTSA has concluded that
the costs of marking the letters "DOT" in addition
PART 567-PRE 83
to the letter "R" and the manufacturer's logo will
be minimal, whether the markings are inscribed
or affixed. The agency is unaware of, and GM did
not explain, how the addition of these three letters
would present any difficulties in either designing
the replacement part markings or in ensuring that
the markings are within the designated target
area.
Further, GM's suggestion that either the letter
"R" or the manufacturer's logo could serve as the
certification of compliance was unsupported by
any reasoning or precedent in the safety stan-
dards. The letter "R" and the manufacturer's logo
were suggested by Congress and are adopted in
this standard as the means of complying with the
replacement parts marking requirement. It is still
necessary to certify that those means of com-
pliance have been used, under the requirements
of section 606. If the means of compliance were
also interpreted as a certification, the agency
would be ignoring the Congressional admonition
to take into account its certification practices
under the Safety Act when establishing the cer-
tification practices under this theft prevention
standard. Most of the agency's equipment stan-
dards require the manufacturer either to affix the
letters "DOT" as a certification or to furnish a full
statement that the equipment complies with the
applicable standard, in the case of child restraint
systems or slide-in campers. There are no exam-
ples under the Safety Act where the required
markings also serve as a certification of com-
pliance. For these reasons, the GM suggestion has
not been adopted.
No special provisions have been made for direct
imports of covered major parts. Such direct im-
ports must be properly marked and so certified
before they are imported into the United States,
per section 607(aKl) of the Cost Savings Act. This
means that the markings and the "DOT" symbol
must be inscribed on the part outside the customs
territory of the United States. The NPRM pro-
posed that the "DOT" symbol be the certification
of compliance with this standard. This require-
ment, adopted in this final rule, poses no special
problems for direct importers of covered major re-
placement parts similar to those which would have
been posed for direct importers of vehicles under
the proposed vehicle certification requirements.
Effective Date of this Theft Prevention Standard
Section 602(c)(4) of the Cost Savings Act
specifies that this theft prevention standard shall
take effect not earlier than 6 months after the
date this final rule is published, except that an
earlier effective date may be specified if the agency
finds good cause for an earlier effective date, and
publishes the reasons for that finding. In the legis-
lative history, it was emphasized that "the Com-
mittee expects the Secretary to promulgate the
Itheft prevention] standard as expeditiously as
possible so that major parts may begin to be num-
bered by the earliest possible model year." H. Rept.
at 11. In consideration of these facts, the NPRM
proposed that this standard would become effec-
tive 6 months after this final rule was issued, and
that it would apply to new passenger cars and
their covered major replacement parts beginning
in the 1987 model year.
In response to this proposal, Mazda asked that
the standard's effective date be set at September
1, 1986. They asserted that an effective date in the
spring of 1986 would have severe consequences
for manufacturers planning to introduce new 1987
models in the spring of 1986. The available lead
time would, according to Mazda, force postpone-
ment of the model introduction for no reason other
than the requirements of the theft prevention
standard and the manufacturer's need for more
lead time. Additionally, Mazda hypothesized that
the manufacturer could advance the introduction
of that new model to the fall of 1985 and designate
it as a 1986 model year vehicle. This would result
in the vehicle not being subject to the standard
until its 1987 model year. Mazda asserted that
this earlier introduction would not satisfy the in-
tent of the theft prevention standard, because the
manufacturer would not be able to offer the same
level of theft deterrence on the vehicle.
NHTSA is not persuaded by this comment. In
the legislative history. Congress expressly stated:
"The standard cannot apply to a car in the middle
of the model year." H. Rept. at 11. It is generally
known that the various manufacturers have dif-
ferent model years and that the various lines pro-
duced by the same manufacturer have different
introduction dates, and, therefore, different model
years. Given that this standard cannot apply to a
car in the middle of a model year, setting an effec-
tive date of September 1, 1986 would allow manu-
PART 567-PRE 84
facturers to avoid being subject to the standard
in the 1987 model year, simply by introducing their
high theft lines before September 1, 1986. Such a
result would delay the marking of high theft lines
until the 1988 model year. This is plainly incon-
sistent with the Congressional intent that this
standard be effective as soon as possible. H. Rept.
at 11. Accordingly, this suggestion has not been
adopted.
Parenthetically, it is worth noting that Congress
provided that manufacturers do not have to begin
to comply with the theft prevention standard for
a line which is selected for coverage under this
standard less than 6 months before the start of
the model year; section 603(a)(5) of the Cost
Savings Act (15 U.S.C. 2023(a)(5)|. If Mazda is
asserting that it needs more than 6 months lead
time, its assertion is directed at the language of
the Theft Act itself, and not this theft prevention
standard.
VW commented that no effective date should be
set for this theft prevention standard until the
agency had responded to the petitions for reconsid-
eration of this rule, which petitions were "highly
likely" in VW's view. NHTSA understands VW's
concerns, but does not believe it would be appro-
priate to adopt this comment. Based on the com-
ments and other information available to NHTSA
at this time, the effective date for this standard
is reasonable. With this rule, as with any other
published by the agency, NHTSA sets an effective
date for the requirements and allows the public
to file petitions for reconsideration of those
requirements. If, in response to such petitions,
NHTSA concludes that the requirements should
be significantly amended or the effective date no
longer appears reasonable, the agency has authority
to amend the effective date. 49 CFR §553.35(d).
This procedure has worked well for all of NHTSA's
rules, and NHTSA sees no reason to alter it for
this theft prevention standard.
Honda commented that the effective date for thi.s
standard should be set so that dealers can use up
their inventory of unmarked replacement parts with-
out violating this standard. The effective date for this
standard means that the covered major parts of high
theft lines will have to be marked in the 1987 model
year and thereafter, while covered major replace-
ment parts which are manufactured after the effec-
tive (late of this standanl and for use on 19H7 or
suhsc(iuent model year high (heft line vehicles will
hav(> to be marked. All major replacement parts in
dealers" stock asof tlu' I'tfective date of this standard
will have been manufactured before that effective
date, and are not subject to the requiremtMits of tliis
standard. Dealers are free to u.se such parts without
violating any of the requirements of this .standard.
Refiuhilorji Impacts
A. Costs and lienefits to Manufacturers and Con-
sumers.
NHTSA has analyzed this rule and determined that
it is not "major" within the meaning of Executive
Order 12291. It is, however, "significant" within the
meaning of the I)ei)artment of Transportation reg-
ulatory policies and procedures, because of the higli
level of public and Congressional interest. A regulat-
ory evaluation, analyzing in detail the impacts of the
theft prevention standard has been placed in Docket
No. T84-()l, Notice 7. A copy of this evaluation may
be obtained by any interested person by writing to:
NHTSA Docket Section, Room 5109, 400 Seventh
Street, S.W., Washington, D.C. 20590, or by calling
the Docket Section at (202) 42(i-27()8.
To summarize that evaluation, the agency esti-
mates that about 48 percent of all cars produced will
be selected as high theft lines. As.suming 10 million
passenger cars are manufactured in a model year,
4.8 million cars will be covered by this standard each
model year. Some of these cars may eventually be
equipped with original e(iuipment anti-theft devices,
instead of being marked. P^jr the large manufactur-
ers, NHTSA estimates that the costs of marking parts
as required by this standard will he $9.80 per vehicle,
if the parts are stamped, and $5.00 per vehicle, if the
parts are labeled. The total annual flet-t costs are
thus estimated at $47 million for stamped identifiers
and $24 million for labeled identifiers. Low volume
manufacturers will probably use other technologies,
such as hand stamping, hand engraving, or sand blast-
ing. Their total costs will still be well under $15 per
vehicle.
The benefits associated with this theft prevention
.standard depend upon the effectiveness of the mark-
ing requirements in reducing thefts. Assuming that
these marking requirements will reduce thefts of high
theft lines by 10 perc'ent, NHTSA estimates that
25,000 vehicle thefts per year will be averted by this
standard. Since the average value of a stolen vehicle
is $3,900, the annual value of a 10 percent reduction
in thefts of high theft lines is $98 million. However,
this estimate should be considered preliminaiy, be-
PART 567-PRE 85
cause no data exist to show the effectiveness of a
full-scale marking system as mandated by this rule.
Honda commented that the effective date for
this standard should be set so that dealers can
use up their inventory of unmarked replacement
parts without violating this standard. The effec-
tive date for this standard means that the covered
major parts of high theft lines will have to be
marked in the 1987 model year and thereafter,
while covered major replacement parts which are
manufactured after the effective date of this stan-
dard and for use on 1987 or subsequent model year
high theft line vehicles will have to be marked. All
major replacement parts in dealers" stock as of the
effective date of this standard will have been
manufactured before that effective date, and are
not subject to the requirements of this standard.
Dealers are free to use such parts without violat-
ing any of the requirements of this standard.
Regulatory Impacts
A. Costs and Benefits to Manufacturers and
Consumers.
NHTSA has analyzed this rule and determined
that it is not "major" within the meaning of Execu-
tive Order 12291. It is, however, "significant"
within the meaning of the Department of Trans-
portation regulatory policies and procedures, be-
cause of the high level of public and Congressional
interest. A regulatory evaluation, analyzing in de-
tail the impacts of the theft prevention standard
has been placed in Docket No. T84-01, Notice 7.
A copy of this evaluation may be obtained by any
interested person by writing to: NHTSA Docket
Section, Room 5109, 400 Seventh Street, S.W.,
Washington, D.C. 20590, or by calling the Docket
Section at (202) 426-2768.
To summarize that evaluation, the agency esti-
mates that about 48 percent of all cars produced
will be selected as high theft lines. Assuming 10
million passenger cars are manufactured in a
model year, 4.8 million cars will be covered by this
standard each model year. Some of these cars may
eventually be equipped with original equipment
anti-theft devices, instead of being marked. For
the large manufacturers, NHTSA estimates that
the costs of marking parts as required by this stan-
dard will be $9.80 per vehicle, if the parts are
stamped, and $5.00 per vehicle, if the parts are
labeled. The total annual fleet costs are thus esti-
mated at $47 million for stamped identifiers and
$24 million for labeled identifiers. Low volume
manufacturers will probably use other technologies,
such as hand stamping, hand engraving, or sand
blasting. Their total costs will still be well under
$15 per vehicle.
The benefits associated with this theft preven-
tion standard depend upon the effectiveness of the
marking requirements in reducing thefts. Assum-
ing that these marking requirements will reduce
thefts of high theft lines by 10 percent, NHTSA
estimates that 25,000 vehicle thefts per year will
be averted by this standard. Since the average
value of a stolen vehicle is $3,900, the annual value
of a 10 percent reduction in thefts of high theft
lines is $98 million. However, this estimate should
be considered preliminary, because no data exist
to show the effectiveness of a full-scale marking
system as mandated by this rule.
B. Small Business Impacts
The agency has also considered the impacts of
this rulemaking action as required by the Regu-
latory Flexibility Act. I hereby certify that this
rule will not have a significant economic impact
on a substantial number of small entities. Few of
the passenger car or replacement part manufac-
turers subject to this standard are small entities.
This theft prevention standard will not signifi-
cantly increase the production or certification
costs for those manufacturers which do quality as
small entities. Small organizations and gov-
ernmental jurisdictions will be affected as pur-
chasers of new passenger cars. However, the cost
impacts of this standard will be minimal. Accord-
ingly, a regulatory fiexibility analysis has not been
prepared.
C. Environmental Impacts
NHTSA has considered the environmental im-
plications of this rule, in accordance with the Na-
tional Environmental Policy Act, and determined
that it will not significantly affect the human en-
vironment. Accordingly, an environmental impact
statement has not been prepared.
D. Paperwork Reduction Act
The Office of Management and Budget (0MB)
has already approved the NHTSA requirement
that VINs appear on all new vehicles ( 0MB #2127-
0051). However, this rule expands the scope and
uses for the VIN. It also requires vehicle manufac-
turers to designate target areas for marking orig-
inal equipment and replacement parts. Both these
#
PART 567-PRE 86
requirements are considered to be information col-
lection requirements, as that term is defined by
0MB in 5 CFR Part 1320. Accordingly, these re-
quirements will be submitted to 0MB for its ap-
proval, pursuant to the requirements of the Paper-
work Reduction Act (44 U.S.C. 3501 et seqj. A
notice will be published in the Federal Register
when 0MB makes its decision on this request.
List of Subjects
49 CFR Part 541
Administrative practice and procedure, Label-
ing, Motor vehicles, Reporting and recordkeeping
requirements.
49 CFR Part 567
Labeling, motor vehicle safety, reporting, and
recordkeeping requirements.
Part 567 is amended as follows:
2. The authority citation for Part 567 is revised
to read as follows:
Authority: 15 U.S.C. 1392, 1401, 1403, and 1407;
15 U.S.C. 1912 and 1915; 15 U.S.C. 2021, 2022, and
2026; delegation of authority at 49 CFR 1.50.
3. Section 567.1 is revised to read as follows:
§567.1 Purpose.
The purpose of this part is to specify the content
and location of, and other requirements for, the
certification label or tag to be affixed to motor
vehicles as required by section 114 of the National
Traffic and Motor Vehicle Safety Act of 1966 (15
U.S.C. 1403) (the Safety Act) and by sections
105(c)(1) and 606(c) of the Motor Vehicle Informa-
tion and Cost Savings Act (15U.S.C. 1915(c) and
2026(c))(the Cost Savings Act), and to provide the
consumer with information to assist him or her
in determining which of the Federal Motor Vehicle
Safety Standards (Part 571 of this chapter) and
Federal Theft Prevention Standards (Part 541 of
this chapter) (standards) are applicable to the veh-
icle.
Section 567.4 is amended by revising paragraph
(g)( 5 ) and adding paragraph ( k ) to read as follow:
§567.4 Requirements for manufacturers of
motor vehicles.
*****
(g) * * *
(5) The statement: "This vehicle conforms to all
applicable Federal motor vehicle safety standards
in effect on the date of manufacture shown above."
The expression "U.S." or "U.S.A." may be inserted
before the word "Federal".
( i ) In the case of passenger cars manufactured
on or after September 1, 1978, the expression "and
bumper" shall be included in the statement follow-
ing the word "safety".
( ii ) In the case of 1987 model year passenger
cars manufactured on or after April 24, 1986 the
expression "safety, bumper, and theft prevention"
shall be substituted in the statement for the word
"safety".
(k) In the case of passenger cars admitted to
the United States under 19 CFR 12.80(b)(1) to
which the label required by this section has not
been affixed by the original producer or assembler
of the passenger car, a label meeting the require-
ments of this paragraph shall be affixed by the
importer before the vehicle is imported into the
United States, if the car is from a line listed in
Appendix A of Part 541 of this chapter. This label
shall be in addition to, and not in place of, the
label required by paragraphs (a) through (j), inclu-
sive, of this part.
(1) The label shall, unless riveted, be perma-
nently affixed in such a manner that it cannot be
removed without destroying or defacing it.
(2) The label shall be affixed to either the hinge
pillar, door-latch post, or the door edge that meets
the door-latch post, next to the driver's seating
position, or, if none of these locations is prac-
ticable, to the left side of the instrument panel. If
that location is also not practicable, the label shall
be affixed to the inward-facing surface of the door
next to the driver's seating position. The location
of the label shall be such that it is easily readable
without moving any part of the vehicle except an
outer door.
(3) The lettering on the label shall be of a color
that contrasts with the background of the label.
(4) The label shall contain the following state-
ments, in the English language, lettered in block
capitals and numerals not less than three thirty-
seconds of an inch high, in the order shown:
( i ) Model year and line of the vehicle, as reported
by the manufacturer that produced or assembled
the vehicle. "Line" is used as defined in §541.4 of
this chapter.
(ii) Name of the importer: The full corporate or
individual name of the importer of the vehicle shall
be spelled out, except that such abbreviations as
"Co." or "Inc." and their foreign equivalents and
the middle initial of individuals, may be used. The
name of the importer shall be preceded by the
words "Imported By".
(iii) The statement: "This vehicle conforms to
the applicable Federal motor vehicle theft preven-
tion standard in effect on the date of manufacture."
Issued on: October 17, 1985.
Diane K. Steed
Administrator
50 FR 43166
October 24, 1985
PART 567-PRE 87-88
•
PREAMBLE TO AN AMENDMENT TO PART 567 AND
FEDERAL MOTOR VEHICLE SAFETY STANDARD NO. 115
Vehicle Identification Number; Basic Requirements
(Docket No. 88-08; Notice 2)
RIN:2127-AC65
ACTION: Final Rule.
SUMMARY: In this final rule, NHTSA changes vehicle
identification number and certification requirements
for motor vehicles that were not originally man-
ufactured for sale in this country, do not comply with
the Federal motor vehicle safety standards, and are
imported into the United States by businesses un-
affiliated with the original manufacturer. This final
rule would make it clear that the importer of such
vehicles would be required to use one of the unique
coding identifiers that the original manufacturer as-
signed to the vehicle, in lieu of using the 17-character
U.S. vehicle identification number (VIN) required to be
placed on vehicles originally manufactured for sale in
this country. The direct importer must place the
original manufacturer's identifier on a plate that
would appear inside the passenger compartment of the
motor vehicle, so that the number may be observed
through the glazing, and adjacent to the left windshield
pillar.
EFFECTIVE DATE: December 4, 1989.
SUPPLEMENTARY INFORMATION: Background.
Under section 108(b)(3) of the National Traffic and
Motor Vehicle Safety Act (15 U.S.C. 1397(b)(3)), a
vehicle that does not conform with applicable safety
standards may nonetheless enter the United States
under "such terms and conditions" as the Secretaries
of Transportation and Treasury prescribe. Title 19
CFR 12.80 is a joint Transportation/Treasury regula-
tion setting forth those terms and conditions. Sub-
paragraph (b)(l)(iii) of that regulation requires that a
person seeking to bring a nonconforming import (direct
import vehicle) into the United States file a declaration
that the vehicle will be modified so as to conform with
applicable Federal Motor Vehicle Safety Standards.
Among those Standards is 115, Vehicle Identification
Number— Basic Requirements.
In order to comply with Standard 1 15 requirements,
many direct importers have been applying a "home-
made" VIN plate to their imported vehicles. The VINs
added by direct importers are so different in appearance
from VINs on similar vehicles manufactured for sale in
the United States that law enforcement officials have
mistaken them for altered VINs. Other concerns
presented by these "homemade" VIN plates are
identification problems that have been created for
insurance investigators and encoding errors that
compromise the integrity of the VIN system.
This rulemaking arose when the agency granted a
petition submitted by the National Automobile Theft
Bureau (N ATB or petitioner) to amend Standard 1 15 to
address problems arising when direct importers create
a VIN and a VIN plate using an identification number
and plate production process other than the ones
which the original vehicle manufacturer uses. Among
problems noted by the NATB were an increased
prospect of encoding errors in a homemade VIN, law
enforcement officials mistaking homemade VIN plates
for altered plates, and the resulting risk that individuals
lawfully possessing direct import vehicles may be
subjected to criminal charges.
The petitioner recommended that NHTSA take
action to prevent the direct importer from creating its
own VIN. In place of its own VIN, the importer would
be required to follow one of two alternative means of
identifying a vehicle. First, if the original manufacturer
had placed any kind of identification number plate in
the passenger compartment where Standard 115 would
otherwise require a 17-character VIN plate, the
importer would retain the original manufacturer's
plate as the vehicle's VIN plate. Among the original
manufacturer identification numbers that one might
use in place of the United States VIN are the European
vehicle identification number (EuroVIN), the World
Market vehicle identification number (WorldVIN), the
chassis number, or the vehicle serial number.
Second, if the original manufacturer had not affixed
a plate of the type and in the location described at S4.6
of Standard 115 (49 CFR 571.115), then the importer
would be required to affix a plate in that location
stating that the vehicle is "partially exempt" from
Standard 115. This plate would refer a person to the
driver's door post, where the importer would be
required to affix a label with information that cited the
Joint Transportation/Treasury regulation under which
a person directly imports a noncomplying vehicle,
identified the location on the vehicle of the original
PART 567-PRE 89
manufacturer's number to be used in lieu of the 17
character VIN, gave the name and address of those
bringing the vehicle into compliance with Standard
1 15, stated the date of importation and of certification,
and gave the name and address of the person who made
the certification.
Notice of Proposed Rulemaking. In the notice of
proposed rulemaking (NPRM) published May 13, 1988
(53 Federal Register 17088), the agency acknowledged
the problems with VINs on direct import vehicles and
proposed to amend Standard 115 so that a direct
importer need not create a VIN or VIN plate in order to
comply with United States vehicle identification
requirements under Standard 115. NHTSA could not
agree that any extant original manufacturer identifier
in the S4.6 location would obviate the need for some
notice that the vehicle is partially exempt from
Standard 115.
The agency believed it would be a relatively simple
matter to affix a plate informing an interested person
that a vehicle is partially exempt, and refer the person
to another label on the door post that would specify the
unique identifying number for the vehicle. The agency
therefore proposed to require such a plate on any
vehicle that did not have the 17-character United
States VIN. Because of this proposed approach, the
agency believed it was unnecessary to consider NATB's
suggestion that a EuroVIN, WorldVIN, chassis, or
serial number be exempted from the readability and
location requirements in S4.6.
A second way in which NHTSA's proposal varied
from the NATE petition was that the agency did not
propose to require a lengthy label with a citation to 19
CFR 12.80, and information about the person per-
forming work to bring the vehicle into compliance with
Standard 115. The agency proposed instead to require
a simplified label that stated where an interested
person could find the unique manufacturer identifying
number that would be used in lieu of the United States
VIN. Further, for consistency, the agency proposed to
include labeling requirements under Part 567. It was
proposed that paragraph (k) of section 567.4 be deleted
and that sections 567.5, 567.6 and 567.7 be redesignated
as sections 567.6, 567.7, and 567.8, respectively. Under
a new section 567.5 (for the most part former section
567. 4(k)), the language regarding labeling requirements
for high theft lines imported into the United States
would be retained, with minor changes, as section
567.5(a). The proposed section 567.5(b) outlined a
requirement for a label for direct import vehicles that
would be affixed in one of three locations. This label
would state: "Original Manufacturer's Identification
Number Substituting for U.S. VIN is located," and
direct the reader to the location on the vehicle where
the original manufacturer's identification number,
placed by the original manufacturer, could be found.
NHTSA also sought comment, particularly from law
enforcement officials, on two issues:
(1) Whether the proposed changes could, in some
circumstances, increase the fraudulent use of VINs or
impede law enforcement actions. As an example, the
agency noted that in certain circumstances, vehicles
with the proposed FMVSS 115 exemption label would
no longer have a VIN visible through the glazing.
NHTSA requested comment on whether this situation
would create a law enforcement problem by precluding
the inspection of VINs on parked and locked vehicles.
(2) Whether the proposal could lead to improper use
of VIN exemption plates (e.g., replacing a legitimate
VIN\ since, under certain circumstances, it would
allow an exemption plate where the VIN would be if it
had been a p i3senger car built for the U.S. market.
The Comments and the Agency Response. The
agency received eight responses to the NPRM. Four
commenters addressed the first question presented in
the NPRM, concerning using an exemption plate in
lieu of a VIN or other identification number in the S4.6
location. The Automobile Importers of America, Inc.
(AIA), Porsche, the International Association of Auto
Theft Investigators (lAATI), and the National Auto-
motive Theft Bureau (NATB) recommended that
NHTSA require each vehicle to have an identification
number visible from the outside of the vehicle. In
response to these comments, the agency has adopted a
requirement for a plate or label containing the original
manufacturer's identification number in the S4.6
location, with a reference to Standard 115.
The agency believes that this solution addresses the
agency's initial concern about the possibility of
transcription errors while at the same time main-
taining an identification number in the place where
law enforcement officials are accustomed to see it. In
cases where the original manufacturer's identification
number is in the S4.6 location and does not conform to
Part 565, the presence of the identifying notice along-
side it will serve to inform law enforcement personnel
that the vehicle is a direct import vehicle that has been
modified to conform to U.S. safety standards. Any
transcription errors would be immediately evident,
since the number on the identifying notice should be
identical to the original number alongside it. Where
the original manufacturer's identification is located
elsewhere, the identifying notice will provide the
number and also alert an investigating officer that the
number is a substitute for the number ordinarily
required by FMVSS 115.
Further investigation by the agency has not found
any evidence indicating that direct importers have
been using a 17-character VIN that they have created
themselves; conformity bonds are not released if they
do. However, they do create another plate using the
original manufacturer's identification number that
PART 567-PRE 90
they install behind the windshield, in the S4.6 location.
In the interest of clarity and to the extent direct
imports have been a problem to theft investigators and
other interested parties, the requirement is being
amended. Also, in the NPRM, the notice in the S4.6
location was proposed to read: "FMVSS 115 EXEMPT
VEHICLE. SEE DRIVER'S SIDE DOOR POST." After
reevaluation, the agency had determined that the
wording "FMVSS 115 EXEMPT VEHICLE" may
imply that direct importers are being exempted from
all aspects of FMVSS 115. It is more accurate to state
that the original manufacturer's identification number
is used as a substitute for a VIN, required by FMVSS
115.
The following language will therefore be required in
the final rule:
SUBSTITUTE FOR U.S. VIN:
SEE FMVSS 115.
With this alternative, law enforcement officials would
also know that the passenger car in question does not
have a U.S. VIN.
The second question raised in the NPRM, whether
the proposal would lead to improper use of VIN
exemption plates, was addressed by one commenter.
The NATB expressed a belief that it would be very
important to prevent any VIN exemption plate from
being overlaid on the original manufacturer's identifier
in the S4.6 position. NATB commented: "Unless there
is a specific anti-overlayment provision included in
FMVSS 115 it is a virtual certainty that organized
theft perpetrators will take advantage of the situation
and affix the VIN exemption notice over the location of
the legitimate VIN plate." NATB suggested that the
notice be required to be affixed in a location other than
the location used by the vehicle's original manufacturer
for affixing VIN plates in the same or similar vehicle
lines. The agency agrees, and has accordingly adopted
the following language in the final rule as Paragraph
S4.9(c) to ensure the original manufacturer's identi-
fication number will not be covered, obscured, or
overlaid:
(c) The plate or label by (b) shall be permanently
affixed in a location that conforms to S4.6, in such
manner as not to cover, obscure, or overlay any part of
any identification number affixed by the original
manufacturer, and shall conform to S4.7 and S4.8.
Two commenters expressed concern about the lack
of a check digit in the original manufacturer's
identification number. Besides noting that lack of a
check digit could be a problem, AIA cited errors in
transcription which are not caught despite a check
digit system, resulting in vehicles with incorrect VINs.
AIA suggested that the solution to this problem is to
ensure that all entries are transcribed correctly, and
that all other regulations are complied with.
In noting that original manufacturer's identification
numbers from various makes would not have the
benefit of a check digit, Porsche asserted that "[t]his
lack of a check-digit negates another of the prime
features of the current VIN — the ability to rapidly
check for transcription mistakes." Although the agency
believes that a check-digit is useful in preventing
transcription errors, it regards the risk of error from
"homemade" VINs as significantly greater. It has
therefore concluded that the original manufacturer's
identification number should be retained by the direct
importer.
Besides the comments summarized above, AIA
pointed out to the agency that there is no concept of
"model year" in Europe. AIA believed that for this
reason, "gray market importers cannot possibly discern
a model year to put on the label." NHTSA has accepted
this comment from AIA. Accordingly, § 567.4(kX4)(i)
has been amended to read: "Model year (if applicable)
or year of manufacture, and line of the vehicle as
reported by the manufacturer that produced or as-
sembled the vehicle." Also included is a statement that
" 'Model year' is used as defined in § 565.3(h) of this
chapter."
lAATI also recommended a separate label that
would provide information on the person who per-
formed the work bringing the vehicle into compliance
with Standard 115. The rationale for this recom-
mendation is that it would give an investigator a
starting point to trace the vehicle through the person
performing the compliance work and back to the
original manufacturer. The agency believes it is already
requiring enough information, on as many as three
labels at the door post or alternate positions, without
requiring this information also. In the few instances
where law enforcement officers or other investigators
need this information, they would obtain information
about who did the compliance work by contacting the
direct importer or NHTSA.
In addition to the comments recommending specific
changes in the final rule, the agency also received
several comments from Allstate Insurance Company
and the Highway Loss Data Institute in general
support of the rulemaking. The National Automobile
Dealers Association supported the NHTSA proposal
and urged NHTSA "to consider the need to readily and
clearly identify these vehicles as being direct imports."
They believed that the proposed amendments to the
VIN standards would "serve to establish a nationally
recognized gray market identifier on each vehicle."
Volkswagen of America, Inc. encouraged NHTSA to
"promote enforcement of the safety standards for all
vehicles regardless of who the manufacturer or im-
porter may be." They noted that although the proposal
would eliminate encoding errors in "homemade" VINs,
the same result could be had by enforcement of the
existing regulation requiring display of the correct
VIN on all vehicles.
PART 567-PRE 91
The agency is aware that this rule will be more
effectual for original manufacturer identifiers utilizing
Roman letters or Arabic numerals than for man-
ufacturer identifiers which may be used in countries
with non-Roman letters. If the use of non-Roman
letters becomes a source of confusion, the agency may
undertake further remedial action.
Other Changes In the Final Rule.
Redesignation of Sections in Part 567.
The NPRM proposed that Section 557.4(k) be dropped,
that Sections 567.5, 567.6, and 567.7 be redesignated as
Sections 567.6, 567.7, and 567.8, respectively, and that
a new Section 567.5 Special requirements for motor
vehicles admitted under 19 CFR 12.80 be added. Upon
reevaluation, the agency has decided that rather than
redesignating existing provisions in Part 567, and
adding new sections with whole paragraphs that are
identical to old paragraphs, the same end would be
accomplished more simply by adding a new
567.4(1) (that would require identification on the
vehicle of the original manufacturer's number) after
§567. 4(k). This new §567.4(1) is the same in sub-
stance as §567.5(b) in the notice of proposed rule-
making.
High Theft Lines.
49 CFR Part 541 requires that 14 major parts of
designated passenger motor vehicle lines be marked
with Vehicle Identification Numbers, even if the vehicle
was not originally manufactured for the U.S. market.
FMVSS 115 does not exempt importers of vehicles not
manufactured for sale in the U.S. from complying with
the parts-marking requirements of 49 CFR Part 541 for
the car lines listed in Appendix A to Part 541. As a
result of the agency's decision to require retention of
the original manufacturer's VIN, the fourteen desig-
nated major parts (Section 541.5(a)) must be marked
with the original VIN assigned to the car by its original
manufacturer. The subject vehicle must be in com-
pliance with the theft prevention standard before it is
imported into the United States. The markings must
be affixed or inscribed in accordance with the target
area requirements designated by the manufacturer
that is the original producer who installs or assembles
the covered major parts on a line.
Section 567. 5(k) applies to direct import high theft
lines. §567.5(1) refers to the direct import vehicles
without 17-character U.S. VINs. Therefore, if there
should be high theft lines that are brought to the U.S.
by direct importers, they would have to have three
labels in the positions in the passenger car designated
in §567. 4(c), namely, the certification label required
by §567.4(a), the compliance with Federal motor
vehcile theft prevention standard label required by
§567. 4(k), and the label designating where the orig-
inal manufacturer's identification number may be
found, as required by §567.4(1).
In consideration of the foregoing. Title 49 CFR 567,
Certification, and 49 CFR571.115, Vehicle Identification
Number— Basic Requirements, are amended as follows:
1. The authority citation for Part 567 is revised to
read as follows:
Authority: 15 U.S.C. 1392, 1397, 1401, 1403, and
1407; 15 U.S.C. 1912 and 1915; 15 U.S.C. 2021, 2022,
and 2026; delegation of authority at 49 CFR 1.50.
567.4 [Amended]
2. Subparagraph (k)(4)(i) of 567.4 is revised to
read as follows:
(k)
(4)
(i) Model year (if applicable) or year of manufacture
and line of the vehicle, as reported by the manufacturer
that produced or assembled the vehicle. "Model year"
is used as defined in 565.3(h) of this chapter.
"Line" is used as defined in 541.4 of this chapter.
3. A new paragraph (1) is added to 567.4 as
follows:
(1)( 1) In the case of a passenger car imported into the
United States under 19 CFR 12.80(bXlXiii) or 49 CFR
Part 591 which does not have an identification number
that complies with paragraph S4.2, S4.3, and S4.7 of 49
CFR 571.115 at the time of importation, the importer
shall permanently affix a label to the vehicle in such a
manner that, unless the label is riveted, it cannot be
removed without being destroyed or defaced. The label
shall be in addition to the label required by subsection
(a) of this section, and shall be affixed to the vehicle in a
location specified in subsection (c) of this section.
(2) The label shall contain the following statement,
in the English language, lettered in block capitals and
numerals not less than three thirty-seconds of an inch
high, with the location on the vehicle of the original
manufacturer's identification number provided in the
blank: ORIGINAL MANUFACTURER'S IDENTIF-
ICATION NUMBER SUBSTITUTING FOR U.S. VIN
IS LOCATED
PART 571 [AMENDED]
4. The authority citation for Part 571 would continue
to read as follows:
Authority: 15 U.S.C. 1392, 1401, 1403, 1407; delega-
tion of authority at 49 CFR 1.50.
571.115 [AMENDED]
5. S.2 is revised by adding the words "or 49 CFR
591" after the words "19 CFR 12.80(b)(lXiii)."
6. A new paragraph S4.9 is added to 571.115 to
read as follows:
S4.9(a) A passenger car imported into the United
States under 19 CFR 12.80(bXl)(iii)or 49 CFR Part 591
shall retain any identification number affixed by the
original manufacturer.
(b) A vehicle described in (a) shall have a plate or
label that contains the following statement in char
PART 567-PRE 92
»
(c) The plate or label required by (b) shall be per- Barry Felrice
manently affixed in a location that conforms to S4.6, in Associate Administrator foi
such manner as not to cover, obscure, or overlay any Rulemaking
part of any identification number affixed by the
original manufacturer, and shall conform to S4.7 and
S4.8. 54 F.R. 46253
Issued on: October 26, 1989 November 2, 1989.
I
i
PART 567-PRE 93—94
#
•
#
PREAMBLE TO AN AMENDMENT TO PART 567
Certification
(Docket No. 91-24; Notice 1)
ACTION: Technical amendments; final rule.
SUMMARY: This notice makes several technical
amendments to conform the language of Part 567,
Certification, to new regulations, issued in September
1989, regarding the importation of motor vehicles not
originally manufactured in compliance with the Fed-
eral Motor Vehicle Safety Standards. As amended.
Part 567 cites the new regulations, instead of the prior
ones, and refers to "Registered Importers" instead of
"importers."
EFFECTIVE DATE:
May 15, 1991.
The amendments are effective on
i
SUPPLEMENTARY INFORMATION: The Imported
Vehicle Safety Compliance Act of 1988, (the 1988 Act),
Public Law 100-562, amended the National Traffic and
Motor Vehicle Safety Act (the Vehicle Safety Act) to
give the Department of Transportation sole rulemak-
ing authority regarding regulations governing the
importation of vehicles not originally manufactured to
comply with the Federal motor vehicle safety stand-
ards. Among the amendments made by the 1988 Act
were ones revoking sections 108(b)(3) and (b)(4) of the
Vehicle Safety Act, effective January 31, 1990. These
sections authorized the issuance of regulations jointly
by the Secretaries of Transportation and Treasury to
prohibit the importation of motor vehicles and equip-
ment not complying with the Federal motor vehicle
safety standards, except under such terms and condi-
tions as the two Departments may specify to ensure
that a noncomplying vehicle or equipment item will be
brought into conformance or will be exported or aban-
doned to the United States. Pursuant to this author-
ity, the two Secretaries issued an implementing
regulation, 19 CFR 12.80, which governed the impor-
tation of merchandise subject to Federal motor vehi-
cle safety standards beginning in 1968, and continued
to do so through January 31, 1990. In place of the
deleted sections, the 1988 Act added new sections
which include authority vested alone in the Secretary
of Transportation to establish new regulations regard-
ing importation.
In addition, the 1988 Act amended the Vehicle
Safety Act to permit a motor vehicle not originally
manufactured to conform to Federal motor vehicle
safety standards to be imported only by a person who
has registered with this agency, or by an individual who
has a contract with a registered importer for making
the modifications necessary for bringing the vehicle
into conformance with applicable safety standards.
Pursuant to the amendments made to the Vehicle
Safety Act by the 1988 Act, the agency issued final
rules on September 29, 1989, establishing 49 CFR Part
591, "Importation of Vehicles and Equipment Subject
to Federal Motor Vehicle Safety Standards" (54 F.R.
40078), and Part 592, "Registered Importers of Vehi-
cles Not Originally Manufactured to Conform to the
Federal Motor Vehicle Safety Standards" (54 F.R.
40063). Part 591 superseded the prior joint regulation
of the Departments of Treasury and Transportation on
importation statements and documentation at 19 CFR
§ 12.80 promulgated jointly by the Customs Service,
Department of the Treasury, and NHTSA. In Part 592,
the agency set forth procedures and requirements
regarding the registration of importers and the duties
and obligations of Registered Importers.
To supplement those 1989 final rules, the agency
needs to make conforming amendments to another
NHTSA regulation referring to or relying on NHTSA's
importation regulations. Specifically, it desires to
amend 49 CFR Part 567, "Certification." Part 567
specifies requirements for certification by manufac-
turers, including importers, of the compliance of mo-
tor vehicles with applicable Federal Motor Vehicle
Safety Standards, the Bumper Standard (Part 581) and
the Theft Prevention Standard (Part 541), as required
by Section 114 of the Vehicle Safety Act (15 U.S.C.
1403) and by sections 105(cXl) and 606(c) of the Motor
Vehicle Information and Cost Savings Act (15 U.S.C.
PART 567-PRE 95
1915(c) and 2026(c)). Part 567 contains special certifi-
cation requirements for importers of motor vehicles
that were not originally manufactured to conform to
the Federal Motor Vehicle Safety Standards and Theft
Prevention Standard, but are nevertheless presented
for importation into the United States. However, those
special requirements currently contain references to
19 CFR § 12.80 instead of Part 592, and to "import-
ers," instead of "Registered Importers."
This notice amends Part 567 to reflect the super-
session of 19 CFR § 12.80 by Part 591 and the neces-
sity for an importer to be a Registered Importer or to
have a contract for modification wdth a Registered
Importer.
1. Section 567.2(b) is revised to read as follows:
(b) In the case of imported motor vehicles, the
requirement of affixing a label or tag applies to
Registered Importers of vehicles admitted to the
United States under 49 CFR 591.5(f) to which the
required label or tag is not affixed.
§ 567.4 [Amended]
2. The last sentence of Section 567.4(gXl) is re-
vised to read as follows:
(g)(1) * * * In the case of imported vehicles, where
the label required by this section is affixed by the
Registered Importer, the name of the Registered Im-
porter shall also be placed on the label in the manner
described in this paragraph, directly below the name
of the final assembler.
3. The first sentence of Section 567.4(1)(1) is
revised to read as follows:
(1X1) In the case of a passenger car imported into
the United States under 49 CFR 591.5(f) which does
not have an identification number that complies with
paragraph S4.2, S4.3, and S4.7 of 49 CFR 571.115 at
the time of importation, the Registered Importer shall
permanently affix a label to the vehicle in such a
manner that, unless the label is riveted, it cannot be
removed without being destroyed or defaced. * * *
•
Issued on: May 10, 1991
Jerry Ralph Curry
Administrator
56 F.R. 22355
IVIay 15, 1991
•
PART 567-PRE 96
PART 567— CERTIFICATION
(Dockets No. 73-31 and 75-28)
§ 567.1 Purpose.
The purpose of this part is to specify the content
and location of, and other requirements for, the
certification label or tag to be affixed to motor
vehicles as required by section 114 of the National
Traffic and Motor Vehicle Safety Act of 1966 (15
U.S.C. 1403) (the Safety Act) and by sections
105(c) (1) and 606 (c) of the Motor Vehicle Informa-
tion and Cost Savings Act (15 U.S.C. 1915(c) and
2026(c))(the Cost Savings Act), and to provide the
consumer with information to assist him or her in
determining which of the Federal Motor Vehicle
Safety Standards (Part 571 of this chapter) and
Federal Theft Prevention Standards (Part 541 of
this chapter) (standards) are applicable to the
vehicle.
§ 567.2 Application.
(a) This part applies to manufacturers and
distributors of motor vehicles to which one or more
standards are applicable.
(b) [In the case of imported motor vehicles, the
requirement of affixing a label or tag applies to
Registered Importers of vehicles admitted to the
United States under 49 CFR 591.5(f) to which the
required label or tag is not affixed. (56 F.R.
22355— May 15, 1991. Effective: May 15, 1991)]
§ 567.3 Definitions.
All terms that are defined in the Act and the
rules and standards issued under its authority are
used as defined therein. The term "bumper" has
the meaning assigned to it in Title I of the Cost
Savings Act and the rules and standards issued
under its authority.
"Chasis-cab" means an incomplete vehicle, with
a completed occupant compartment, that requires
only the addition of cargo-carrying, work-
performing, or load-bearing components to per-
form its intended functions.
§ 567.4 Requirements for manufacturers of
motor vefiicles.
(a) Each manufacturer of motor vehicles (ex-
cept vehicles manufactured in two or more
stages) shall affix to each vehicle a label, of the
type and in the manner described below, contain-
ing the statements specified in paragraph (g) of
this section.
(b) The label shall, unless riveted, be per-
manently affixed in such a manner that it cannot
be removed without destroying or defacing it.
(c) Except for trailers and motorcycles, the
label shall be affixed to either the hinge pillar,
door-latch post, or the door edge that meets the
door-latch post, next to the driver's seating posi-
tion, or if none of these locations is practicable,
to the left side of the instrument panel. If that
location is also not practicable, the label shall be
affixed to the inward-facing surface of the door
next to the driver's seating position. If none of
the preceding locations is practicable, notification
of that fact, together with drawings or photo-
graphs showing a suggested alternate location in
the same general area, shall be submitted for
approval to the Administrator, National High-
way Traffic Safety Administration, Washington,
D.C. 20590. The location of the label shall be
such that it is easily readable without moving
any part of the vehicle except an outer door.
(d) The label for trailers shall be affixed to a
location on the forward half of the left side,
such that it is easily readable from outside the
vehicle without moving any part of the vehicle.
(e) The label for motorcycles shall be affixed
to a permanent member of the vehicle as close
as is practicable to the intersection of the steer-
ing post with the handle bars, in a location such
that it is easily readable without moving any
part of the vehicle except the steering system.
(Rev. 5/15/91)
PART 567-1
(f) The lettering on the label shall be of a
color that contrasts with the background of the
label.
(g) The label shall contain the following
statements, in the English language, lettered in
block capitals and numerals not less than three
thirty-seconds of an inch high, in the order
shown:
(1) Name of manufacturer: Except as pro-
vided in (i), (ii), and (iii) below, the full
corporate or individual name of the actual as-
sembler of the vehicle shall be spelled out, ex-
cept that such abbreviations as "Co." or "Inc."
and their foreign equivalents, and the first and
middle initials of individuals, may be used.
The name of the manufacturer shall be pre-
ceded by the words "Manufactured By" or
"Mfd By." In the case of imported vehicles,
where the label required by this section is
affixed by the Registered Importer, the name of
the Registered Importer shall also be placed on
the label in the manner described in this
paragraph, directly below the name of the final
assembler. (56 F.R. 22355— May 15, 1991. Effec-
tive: May 15, 1991)
(i) If a vehicle is assembled by a cor-
poration that is controlled by another cor-
poration that assumes responsibility for con-
formity with the standards, the name of the
controlling corporation may be used.
(ii) If a vehicle is fabricated and de-
livered in complete but unassembled form,
such that it is designed to be assembled with-
out special machinery or tools, the fabricator
of the vehicle may affix the label and name
itself as the manufacturer for the purposes
of this section.
(iii) If a trailer is sold by a person who is
not its manufacturer, but who is engaged in
the manufacture of trailers and assumes
legal responsibility for all duties and liabil-
ities imposed by the Act with respect to that
trailer, the name of that person may appear
on the label as the manufacturer. In such
a case the name shall be preceded by the
words "Responsible Manufacturer" or "Resp
Mfr."
(2) Month and year of manufacture: This
shall be the time during which work was com-
pleted at the place of main assembly of the
vehicle. It may be spelled out, as "June 1970,"
or expressed in numerals, as "6/70."
(3) "Gross Vehicle Weight Rating" or
"GVWR" followed by the appropriate value in
pounds, which shall not be less than the sum of
the unloaded vehicle weight, rated cargo load,
and 150 pounds times the vehicle's designated
seating capacity. However, for school buses the
minimum occupant weight allowance shall be
120 pounds.
(4) "Gross Axle Weight Rating" or
"GAWR" followed by the appropriate value
in pounds, for each axle, identified in order
from front to rear (e.g., front, first inter-
mediate, second intermediate, rear). The rat-
ings for any consecutive axles having identical
gross axle weight ratings when equipped with
tires having the same tire size designation may,
at the option of the manufacturer, be stated as
a single value, with the label indicating to
which axles the ratings apply.
EXAMPLES OF COMBINED RATINGS
GAWR:
(a) All axles-4080 with 7.00-15 LT(D) tires.
(b) Front-12,000 with 10.00-20 (G) tires.
First intermediate to rear— 15,000 with
12.00-20 (H) tires.
(5) The statement: "This vehicle conforms
to all applicable Federal motor vehicle safety
standards in effect on the date of manufacture
shown above." The expression "U.S." or
"U.S.A." may be inserted before the word
"Federal."-
(i) In the case of passenger cars manufac-
tured on or after September 1, 1978, the ex-
pression "and bumper" shall be included in the
statement following the word "safety."
(ii) In the case of 1987 and subsequent
model year passenger cars manufactured on or
after April 24, 1986 the expression "safety,
bumper, and theft prevention" shall be
substituted in the statement for the word
"safety."
(6) Vehicle identification number.
(7) The type classification of the vehicle as
defined in § 571.3 of Title 49 of the Code of
Federal Regulations {e.g., truck, MPV, bus,
trailer).
#
•
(Rev. 5/15/91)
PART 567-2
(h) Multiple GVWR-GAWR ratings.
(1) (For passenger cars only) In cases where
different tire sizes are offered as a customer op-
tion, a manufacturer may at his option list more
than one set of values for GVWR and GAWK, in
response to the requirements of paragraphs
(g) (3) and (4) of this section. If the label shows
more than one set of weight rating values, each
value shall be followed by the phrase "with
tires," inserting the proper tire size designa-
tions. A manufacturer may at his option list one
or more tire sizes where only one set of weight
ratings is provided.
Passenger Car Example
GVWR:
4400 LB with G78-14B Tires. 4800 LB with
H78-14B Tires.
GAWR:
Front-2000 LB with G78-14B Tires at 24 psi,
2200 LB with H78-14B Tires at 24 psi.
Rear-2400 LB with G78-Tires at 28 psi, 2600
LB with H78-14B Tires at 28 psi.
(2) (For multipurpose passenger vehicles,
trucks, buses, trailers, and motorcycles) The
manufacturer may, at its option, list more than
one GVWR-GAWR-tire-rim-combination on the
label, as long as the list conforms in content and
format to the requirements for tire rim-inflation
information set forth in Standard No. 120 of this
chapter (§ 571.120).
(3) At the option of the manufacturer, addi-
tional GVWR-GAWR ratings for operation of
the vehicle at reduced speeds may be listed at the
bottom of the certification label following any in-
formation that is required to be listed.
(i) Reserved
(j) A manufacturer may, at his option, provide
information concerning which tables in the docu-
ment that accompanies the vehicle pursuant to
§ 575.6(a) of this chapter apply to the vehicle. This
information may not precede or interrupt the in-
formation required by paragraph (g).
(k) In the case of passenger cars admitted to the
United States under 19 CFR 12.80(b) (1) to which
the label required by this section has not been
affixed by the original producer or assembler of the
passenger car, a label meeting the requirements
of this paragraph shall be affixed by the importer
before the vehicle is imported into the United
States, if the car is from a line listed in Appendix A
of Part 541 of this chapter. This label shall be in
addition to, and not in place of, the label required
by paragraphs (a) through (j), inclusive, of this
part.
(1) The label shall, unless riveted, be per-
manently affixed in such a manner that it cannot
be removed without destroying or defacing it.
(2) The label shall be affixed to either the
hinge pillar, door-latch post, or the door edge
that meets the door-latch post, next to the
driver's seating position, or, if none of these loca-
tions is practicable, to the left side of the instru-
ment panel. If that location is also not prac-
ticable, the label shall be affixed to the inward-
facing surface of the door next to the driver's
seating position. The location of the label shall be
such that it is easily readable without moving any
part of the vehicle except an outer door.
(3) The lettering on the label shall be of a color
that contrasts with the background of the label.
(4) The label shall contain the following
statements, in the English language, lettered in
block capitals and numerals not less than three
thirty-seconds of an inch high, in the order showm:
(i) Model year (if applicable) or year of
manufacture and line of the vehicle, as
reported by the manufacturer that produced
or assembled the vehicle. "Model year" is used
as defined in § 565.3(h) of this chapter. "Line"
is used as defined in § 541.4 of this chapter.
(ii) Name of the importer: The full cor-
porate or individual name of the importer of
the vehicle shall be spelled out, except that
such abbreviations as "Co." or "Inc." and
their foreign equivalents and the middle initial
of individuals, may be used. The name of the
importer shall be preceded by the words "Im-
ported By."
(iii) The statement: "This vehicle con-
forms to the applicable Federal motor vehicle
theft prevention standard in effect on the date
of manufacture."
(1) (1) (In the case of a passenger car imported
into the United States under 49 CFR 591.5(f)
which does not have an identification number that
complies with paragraph S4.2, S4.3, and S4.7 of 49
(Rev. 5/15/91)
PART 567-3
#
CFR 571.115 at the time of importation, the
Registered Importer shall permanently affix a
label to the vehicle in such a manner that, unless
the label is riveted, it cannot be removed without
being destroyed or defaced. The label shall be in
addition to the label required by subsection (a) of
this section, and shall be affixed to the vehicle in
a location specified in subsection (c) of this sec-
tion. (56 F.R. 22355— May 15, 1991. Effective: May
15, 1991.)!
(2) The label shall contain the following state-
ment, in the English language, lettered in block
capitals and numerals not less than three thirty-
seconds of an inch high, with the location on the
vehicle of the original manufacturer's identifica-
tion number provided in the blank: ORIGINAL
MANUFACTURER'S IDENTIFICATION
NUMBER SUBSTITUTING FOR U.S. VIN. IS
LOCATED
§ 567.5 Requirements for manufacturers of
vehicles manufactured in two or more
stages.
(a) Except as provided in paragraph (e) of this
section, each manufacturer of a chassis-cab shall
affix a label to each chassis-cab manufactured on
or after July 25, 1978, in the location and form
specified in § 567.4, that contains the following
statements, to the extent that they are applicable.
(1) "This chassis-cab conforms to Federal
Motor Vehicle Safety Standard Nos.
" The statement shall be com-
pleted by inserting the numbers of the safety
standards {e.g. ,101, 207) to which the chassis-cab
conforms.
(2) "This vehicle will conform to Standard
Nos. if it is completed in accord-
ance with the instructions contained in the in-
complete vehicle document furnished pursuant
to 49 CFR Part 568." The statement shall be
completed by inserting the numbers of the safety
standards conformity to which is substantially
affected by both the design of the chassis-cab and
the manner in which the vehicle is completed
{i.e., the standards listed under category (ii) in
paragraph 568.4(a) (7) of this chapter).
(3) "Conformity to the other safety standards
applicable to this vehicle when completed is not
substantially affected by the design of the
chassis-cab."
(4) Name of chassis-cab manufacturer pre-
ceded by the words "CHASSIS-CAB
MANUFACTURED BY" or "CHASSIS-CAB
MFD BY."
(5) Month and year of manufacture of chassis-
cab. This may be spelled out, as in "June 1970,"
or expressed in numerals, as in "6/70." No
preface is required.
(b) Except as provided in paragraphs (e) and (f)
of this section, each intermediate manufacturer of
a vehicle manufactured in two or more stages shall
affix a label, in the location and form specified in
§ 567.4, to each chassis-cab respecting which he is
required by § 568.5 to furnish an addendum to the
incomplete vehicle document described in § 568.4.
However, this paragraph applies only to chassis-
cabs that have been certified by a chassis-cab
manufacturer in accordance with paragraph (a) of
this section. The label shall contain the following
statements as appropriate:
(1) (i) "With respect to Standard Nos.
, the instructions of prior manufac-
turers have been followed so that the chassis-cab
now conforms to these standards." The state-
ment shall be completed by inserting the
numbers of all or less than all of the standards,
and only those standards, respecting which the
latest prior certification statement was in the
form prescribed in paragraphs (a) (2) or (b) (2) of
this section.
(ii) "This chassis-cab conforms to Federal
Motor Vehicle Safety Standard Nos.
." The statement shall be completed
by inserting the numbers of the other stand-
ards to which the chassis-cab conforms, ex-
cluding those standards respecting which the
latest prior certification statement was in the
form prescribed in paragraphs (a) (1),
(b) (1) (i), or this paragraph.
(2) "This vehicle will conform to Standard
Nos. if it is completed in accordance
with the instructions contained in the amended
incomplete vehicle document furnished pursuant
to 49 CFR Part 568." The statement shall be
completed by inserting the numbers of the stand-
ards conformity to which is substantially af-
fected by both the design of the chassis-cab (as
modified by the intermediate manufacturer) and
the manner in which the vehicle is completed.
•
•
(Rev. 5;i5;91)
PART 567-4
(3) "Conformity to Standard Nos.
IS
no longer substantially affected by the design of
this chassis-cab." The statement shall be com-
pleted by inserting the numbers of all or less
than all of the standards, and only those stand-
ards, respecting which the latest prior certifica-
tion statement was in the form prescribed in
paragraphs (a) (1), (a) (2), (b) (1) (i), (b) (1) (B), or
(b) (2) of this section.
(4) Name of intermediate manufacturer, pre-
ceded by the words "INTERMEDIATE
MANUFACTURE BY" or "INTERMEDIATE
MFR BY".
(5) Month and year in which the intermediate
manufacturer performed his last manu facturing
operation on the chassis-cab. This may be spelled
out, as "JUNE 1970", or expressed as numerals,
as "6/70". No preface is required.
(c) Except as provided in paragraphs (e) and (f)
of this section, each final-stage manufacturer, as
defined in § 568.3 of Title 49 of the Code of Federal
Regulations, of a vehicle manufactured in two or
more stages shall affix to each vehicle a label, of
the type and in the manner and form described in
§ 567.4 of this part, containing the following
statements:
(1) Name of final-stage manufacturer, pre-
ceded by the words "MANUFACTURED BY"
or "MFD BY".
(2) Month and year in which final-stage
manufacture is completed. This may be spelled
out, as in "JUNE 1970", or expressed in
numerals, as in "6/70". No preface is required.
(3) Name of original manufacturer of the in-
complete vehicle, preceded by the words "IN-
COMPLETE VEHICLE MANUFACTURED
BY" or "INC VEH MFD BY". This item and
item (4) may be omitted in cases where the in-
complete vehicle was a chassis-cab.
(4) Month and year in which the original
manufacturer of the incomplete vehicle per-
formed his last manufacturing operation on
the incomplete vehicle, in the same form as (2)
above.
(5) "GROSS VEHICLE WEIGHT
RATING" or "GVWR", followed by the ap-
propriate value in pounds, which shall not be
less than the sum of the unloaded vehicle
weight, rated cargo load, and 150 pounds
times the vehicle's designated seating capacity.
However, for school buses the minimum occupant
weight allowance shall be 120 pounds.
(6) "GROSS AXLE WEIGHT RATING" or
"GAWR", followed by the appropriate value in
pounds for each axle, identified in order from front
to rear {e.g., front, first intermediate, second in-
termediate, rear). The ratings for any consecutive
axles having identical gross axle weight ratings
when equipped with tires having the same tire size
designation may be stated as a single value, with the
label indicating to which axles the ratings apply.
Examples of Combined Ratings
GAWR:
(a) All axles-4080 with 7.00-15 LT(D) tires.
(b) Front-12,000 with 10.00-20 (G) tires.
First intermediate to rear— 15,000 with
12.00-20 (H) tires.
(7) [One of the following statements as ap-
propriate. Statements (i),(ii), and (iii) are alter-
native certification statements. Statement (i)
may be used by manufacturers meeting the re-
quirements described in the instruction portion
of that paragraph. Statements (ii) and (iii) may
be used by any final-stage manufacturer.
(i) "Conformity of the chassis-cab to
Federal Motor Vehicle Safety Standards,
which have been previously fully certified by
the incomplete vehicle manufacturer or in-
termediate vehicle manufacturer, has not been
affected by final-stage manufacture. The vehi-
cle has been completed in accordance with the
prior manufacturer's instructions, where ap-
plicable. This vehicle conforms to all other
applicable Federal Motor Vehicle Safety
Standards in effect in (month, year)."
The preceding statement shall be used only
in cases in which the final-stage manufacturer
has: (A) not affected conformity to standards
compliance with which has been fully certified
by a chassis-cab manufacturer pursuant to
paragraph (a) (1) of this section or by an in-
termediate manufacturer pursuant to para-
graphs (b) (1) (i) or (b) (1) (ii) of this section,
and (B) has completed the vehicle in accord-
ance with the prior manufacturer's instruc-
tions in regard to standards listed, as
appropriate, in a chassis-cab manufacturer's
conditional statement under paragraph (a) (2)
(Rev. 11/8/83)
PART 567-5
•
of this section or in an intermediate
manufacturer's conditional statement under
paragraph (b) (2) of this section. The date
shown in the third sentence of the statement
shall be not earlier than the manufacturing
date of the incomplete vehicle, and not later
than the date of completion of final-stage
manufacture.
(ii) "Conformity of the chassis-cab to
Federal Motor Vehicle Safety Standards
Nos. has not been affected
by final stage manufacture. With respect to
Standards Nos. , the vehicle
has been completed in accordance with the
prior manufacturer's instructions. This vehi-
cle conforms to all other applicable Federal
Motor Vehicle Safety Standards in effect in
(month, year)."
The first sentence of the preceding state-
ment shall be completed by inserting the
numbers of all or less than all of the stan-
dards, and only those standards, respecting
which the latest prior certification statement
was made by a chassis-cab manufacturer
pursuant to paragraph (a) (1) of this section
or by an intermediate manufacturer piu--
suant to paragraphs (b) (1) (i) or (b) (1) (ii) of
this section. The second sentence of the
statement shall be completed by inserting
the numbers of all or less than all of the stan-
dards and only those standards, respecting
which the latest prior certification statement
was a chassis-cab manufacturer's condi-
tional statement under paragraph (a) (2) of
this section or an intermediate manufac-
turer's conditional statement under
paragraph (b) (2) of this section. The date
shown in the third sentence of the statement
shall be not earlier than the manufacturing
date of the incomplete vehicle, and not later
than the date of completion of final-stage
manufacture.
(iii) "This vehicle conforms to all ap-
plicable Federal Motor Vehicle Safety Stan-
dards in effect in (month, year)."
The date shown shall be not earlier than the
manufacturing date of the incomplete vehicle
and not later than the date of completion of
final-stage manufacture. (48 F.R. 51308—
November 8, 1983. Effective: November 8. 1983)]
(8) Vehicle identification number.
(9) The type classification of the vehicle as
defined in § 571.3 of Title 49 of the Code of
Federal Regulations {e.g., truck, MPV, bus,
trailer).
(d) More than one set of figures for GVWR and
GAWR, and one or more tire sizes, may be listed in
satisfaction of the requirements of paragraphs
(c) (5) and (6) of this section, as provided in
§ 567.4(h).
(e) If an incomplete vehicle manufacturer
assumes legal responsibility for all duties and
liabilities imposed by the Act, with respect to the
vehicle as finally manufactured, the incomplete
vehicle manufacturer shall ensure that a label is af-
fixed to the final vehicle in conformity vfith
paragraph (c) of this section, except that the name
of the incomplete vehicle manufacturer shall ap-
pear instead of the name of the final-stage
manufacturer after the words "MANUFAC-
TURED BY" or "MFD BY" required by sub-
paragraph (c) (1) of this section, the additional
manufacturer's name required by subparagraph
(c) (3) of this section shall be omitted, and the date
required by subparagraph (c) (4) of this section
shall be preceded by the words "INCOMPLETE
VEHICLE MANUFACTURED" or "INC VEH
MFD."
(f) If an intermediate manufacturer of a vehicle
assumes legal responsibility for all duties and
liabilities imposed on manufacturers by the Act,
with respect to the vehicle as finally manufactured,
the intermediate manufacturer shall ensure that a
label is affixed to the final vehicle in conformity
with paragraph (c) of this section, except that the
name of the intermediate manufacturer shall ap-
pear instead of the name of the final -stage
manufacturer after the words "MANUFAC-
TURED BY" or "MFD BY" required by sub-
paragraph (c) (1) of this section.
§ 567.6 Requirements for persons who do not alter
certified vehicles or do so with readily at-
tachable components.
A person who does not alter a motor vehicle or
who alters such a vehicle only by the addition,
substitution, or removal of readily attachable com-
ponents such as mirrors or tire and rim assemblies.
•
•
(Rev. 3/24/80)
PART 567-6
or minor finishing operations such as painting, in
such a manner that the vehicle's stated weight
ratings are still valid, need not affix a label to the
vehicle, but shall allow a manirfacturer's label that
conforms to the requirements of this part to re-
main affixed to the vehicle. If such a person is a
distributor of the motor vehicle, allowing the
manufacturer's label to remain affixed to the vehi-
cle shall satisfy the distributor's certification
requirements under the Act.
§ 567.7 Requirements for persons who alter certi-
fied vehicles.
A person who alters a vehicle that has previously
been certified in accordance with § 567.4 or
§ 567.5, other than by the addition, substitution, or
removal of readily attachable components such as
mirrors or tire and rim assemblies, or minor
finishing operations such as painting, or who alters
The vehicle in such a manner that its stated weight
ratings are no longer valid, before the first pur-
chase of the vehicle in good faith for purposes
other than resale, shall allow the original certifica-
tion label to remain on the vehicle, and shall affix
to the vehcile and additional label of the type and in
the manner and form described in § 567.4, contain-
ing the following information:
(a) [The statement: "This vehicle was altered by
(individual or corporate name) in (month and year
in which alterations were completed) and as
altered it conforms to all applicable Federal Motor
Vehicle Safety Standards affected by the altera-
tion and in effect in (month, year)."] The second
date shall be no earlier than the manufacturing
date of the original vehicle, and no later than the
date alterations were completed. However, in the
case of passenger cars, the expression "and
bumper"-(45 F.R. 18928— March 24, 1980. Effec-
tive: March 24, 1980)
(1) May, at the option of the manufacturer, be
included in the statement following the word
"safety"; and
(2) Shall be included in the statement follow-
ing the word "safety" in the case of passenger
cars manufactured on or after September 1,
1978.
(b) If the gross vehicle weight rating or any of
the gross axle weight ratings of the vehicle as
altered are different from those shown on the
original certification label, the modified values
shall be provided in the form specified in
§ 567.4(g) (3) and (4).
(c) If the vehicle as altered has a different type
classification from that shown on the original
certification label, the type as modified shall be
provided.
36 F.R. 7054
April 14, 1971
(Rev. 3/24/80)
PART 567-7-8
#
#
#
Effcctiv*: Jonuoiy 1, 1972
PREAMBLE TO PART 568— VEHICLES MANUFAaURED IN TWO OR MORE STAGES
(Dockets No. 70-6, 70-8, and 70-15)
This notice adopts a new Part 568 in Title 49,
Code of Federal Regulations, to require the fur-
nishing of information relevant to a vehicle's
conformity to motor vehicle safety standards,
and makes complementary changes in the cer-
tification regulations in Part 567 of that title
and in Part 571. It also amends the certification
regulations with respect to the manufacturer
whose name must appear on the label for trailers
and with respect to the infonnation that must
appear on the label for all vehicles. Notices of
proposed rulemaking on these subjects were pub-
lished on Maix-h 17, 1970 (35 F.R. 4639), May 1,
1970 (35 F.R. 6969), and June 13, 1970 (35 F.R.
9293). The comments received in response to
these notices, and the statements made at the
public meeting on vehicles manufactured in two
or more stages (September 18, 1970; 35 F.R.
13139) have been considered in this issuance of a
final rule.
In adopting the new Part 568, Vehicles Manu-
factured in Two or More Stages, in a form sim-
ilar to that proposed in the March 17 notice, the
Administration has determined that there is a
need to regulate the relationsliips between manu-
facturers of multi-stage vehicles to the extent
those relationships affect the conformity of the
final vehicle to the motor vehicle safety stand-
ards, and that the regulation will meet this need
with a minimum disruption of established in-
dustry practices. Comments received from per-
sons who would occupy the positions of inter-
mediate and final-stage manufacturers were sub-
stantially in favor of the proposal.
The definitions by which the regulation estab-
lishes the categories of "incomplete vehicle,"
"completed vehicle," and the three categories of
vehicle manufacturers provide a framework
within which each may categorize himself and
his products. Of necessity, the definitions are
broad and may not clearly define individual
situations. The primary distinction between the
incomplete vehicle and the completed vehicle is
whether the vehicle can perform its intended
function without further manufacturing opera-
tions other than the addition of readily attach-
able components or minor finishing operations.
The comments indicated there may sometimes be
a close question as to whether or not a missing
component is "readily attachable." How the
question is answered may determine the vehicle's
status as a "completed vehicle," or an "incom-
plete vehicle" and the corresponding status of
the manufacturers involved. It has not been
found feasible or desirable at this time to regu-
late the numerous variations in relationships
that may develop. In the usual case, it will be
possible for the affected manufacturers to reach
agreement between themselves as to their re-
spective obligations.
The largest number of comments were directed
at the section (§ 568.4) establishing requirements
for incomplete vehicle manufacturers. That sec-
tion provides, first, that an incomplete vehicle
manufacturer must furnish a document with the
vehicle to contain the information specified by
the section. The document may be attached to
the vehicle in such a manner that it will not be
inadvertently detached, or it may be sent directly
to a subsequent manufacturer or a purchaser for
purposes other than resale. Several comments
requested that the information be placed on a
permanent label, although the commenters dis-
agreed as to the amount of information to be so
placed. Some chassis-cab manufacturers wanted
to retain the chassis-cab label, perhaps with the
addition of weight ratings, while several body as-
semblers wanted to have a label containing all
the information specified in the regulation.
Apart from the greater amount of infonnation
PART 568— PRE 1
Effective: January 1, 1972
required, which could make a label incon-
veniently large, there will often be a need for the
final-stage manufacturer to retain copies of the
document in his files. A detachable document
would meet this much better than a label affixed
to the vehicle. Despite complaints from some
final-stage manufacturers that detachable docu-
ments are too easily lost, there was ample in-
dication at the public meeting that other final -
stage manufacturers do not experience such prob-
lems. It is the Administration's position that
the transmittal of the required documents can
be reasonably assured by secure attachment and
prominent identification, and that no further
regulation of the transmittal jirocess is necessary.
The listing of ratings for the gross vehicle
weight and the gross axle weight was not ob-
jected to except with respect to multipurpose
passenger vehicles. It was suggested that "ve-
hicle capacity weight" or a similar term reflecting
the passenger capacity be used. After review of
the suggestions, the Administration has con-
cluded that the GVWR-GAWR usage, though
perhaps not current in some parts of the in-
dustry, is nonetheless the ;:implest and most
accurate means of informing subsequent manu-
facturers of the vehicle's weight characteristics.
After review of the numerous comments on the
subject, the Administration has decided not to
require manufacturers to provide information on
gross combination weight ratings. The term
is not in general use in the country and its ap-
plication is not clear with respect to certain types
of combinations. For this reason, and because
there are no existing or proposed standards that
refer to gross combination weight ratings, it is
not now appropriate to require GCWR informa-
tion.
The regulation adopts the requirement that
the incomplete vehicle manufacturer must list
in the document each standard, applicable to the
types of vehicles into which the incomplete ve-
hicle may be manufactured, that is in effect at
the time of manufacture of the incomplete ve-
hicle. He must pro\nde, with respect to each of
these standards, one of the three types of state-
ments proposed in the notice, depending on the
degree to which his vehicle complies with each
standard. If compliance is complete, and cer-
tification of the completed vehicle requires only
that the final-stage vehicle manufacturer not alter
certain portions of the vehicle, the incomplete
vehicle manufacturer may so state. There is no
need for parts to be listed in detail, as suggested
by one commenting party. The portions of the
\ehicle may be referred to by part, system, di-
mensions, or any other method sufficient to ob-
jectively identify them.
At the other extreme, an incomplete vehicle
manufacturer may state that the design of the
incomplete vehicle does not substantially deter-
mine the completed vehicle's conformity with a
standard. This would be the case, for example,
with respect to Standard No. 205, Glazing Ma-
terials, if the incomplete vehicle is a stripped
chassis. Some comments stated that it appeared
unnecessary to recite such standards if the in-
complete vehicle manufacturer has nothing to do
with them. It is the Administration's position,
however, that such a recitation serves as useful
notice to final-stage vehicle manufacturers, many
of whom may be less familiar with the standards
than the incomplete vehicle manufacturers.
Between these two extremes are the situations
in which the work of the incomplete vehicle
manufacturer partially determines the con-
formity of the final vehicle, but in which the in-
put of subsequent manufacturers will necessarily
affect such conformity. It may be that the main
system components are furnished and installed
by the incomplete vehicle manufacturer, as in the
case of the recently adopted standard on air
brake systems, but that the final-stage vehicle
manufacturer must necessarily perform opera-
tions that affect the performance of the com-
ponents, such as placing a body on the chassis,
thereby affecting the vehicle's weight distribu-
tion and center of gravity. In some cases, as
under the lighting standard, the incomplete ve-
hicle manufacturer will suppy some components
that will be installed by the final-stage manu-
facturer, with or without additional components.
In either case, the ultimate conformity of the
vehicle is determined by more than one manu-
facturer, and the regulation deals with this
problem by requiring the incomplete vehicle
manufacturer to set forth specific conditions un-
der which the completed vehicle will conform to
the standard. It is not intended that the in-
complete vehicle manufacturer should indicate
t
•
PART 568— PRE 2
EfftcHv*: January I. 1972
all possible conditions under which a vehicle will
or will not conform. He must, however, specify
at least one set of conditions under which the
completed vehicle will conform. A final-stage
manufacturer who wishes to act outside these
conditions will be on notice that he should con-
sult further witli the incomplete vehicle manu-
facturer, or accept responsibility for conformity
with the standard in question. Since the in-
formation that the incomplete vehicle manufac-
turer is required to gather will be developed in
tlie course of liis engineering development pro-
gram, the requirement that this information be
supplied to subsequent manufacturers does not
appear unduly burdensome, and the requirement
is adopted as proposed.
The obligations of the final-stage manufac-
turer have also been adopted without change
from the notice of March 17. The major objec-
tion expressed in the comments was that the
final-stage manufacturer was often a small com-
pany wliose input was small relative to that of
the incomplete vehicle manufacturer and that
he should not bear the burden of certifying that
the vehicle fully conforms to the standards. This
objection confuses certification with liability. Al-
thougli the certifying manufacturer may be ap-
proached first in the event of his vehicle's non-
conformity, if the nonconforming aspect of the
vehicle is a component or system supplied by the
incomplete vehicle manufacturer, the final-stage
manufacturer may establish that he exercised due
care by showing that he observed the conditions
stated by the incomplete vehicle manufacturer.
To the extent that the final vehicle's conformity
is determined by work done by the incomplete
vehicle manufacturer, the final manufacturer's
burden is thus reduced.
Several comments stated that considerable time
may elapse between the date of manufacture of
the incomplete vehicle and the date of comple-
tion of the final-stage vehicle. The regulation
deals with this situation by permitting the final-
stage manufacturer to select either date or any
date in between as the certification date. Al-
though this aspect of the regulation appears to
be generally understood, the question arose at
the September 18 meeting as to whether a manu-
facturer may certify compliance with standards
as they are effective at different dates between
initial and final manufacture. This question has
been answered in the negative. The regulation
requires manufacturers to conform to all the
standards in effect on a particular date, between
the two limits. The NHTSA may repeal certain
requirements while instituting others, and those
in effect at a particular time must be viewed, and
conformed to, as a system. A manufacturer
who wishes to comply with a standard before its
effective date may do so, of course, even though
he is not required to certify. "Where amendments
to an existing standard are such that a vehicle
complying with the amended standard will not
comply with the earlier version, the Administra-
tion will ordinarily provide in the standard that
a manufacturer may elect to comply with the
amendment before its effective date, if such a
course is considered acceptable.
A further question raised in the comments
concerns the status of a manufacturer who does
not have title to the vehicle on which he performs
manufacturing operations. The Administra-
tion's response, as stated at the September 18
meeting, is that if a manufacturer produces a
completed vehicle from the incomplete stage,
he is a final-stage manufacturer, regardless of
title. Basing responsibility for conformity on
title would present too many opportunities for
evasion, and the actual assembler is the party
most likely to have the technical knowledge
necessary for effective exercise of responsibility.
Another question concerns the magnitude of
the manufacturing operation (hat makes the ve-
hicle a completed vehicle and its manufacturer
a final-stage manufacturer. By its definition a
completed vehicle is one that requires no further
manufacturing operations in order to perform
its intended function, other than the attachment
of readily attachable components and minor
finishing operations. If a manufacturer installs
a component that is not readily attachable, such
as a fifth wheel, then he is a final-stage manu-
facturer even though his contribution to the over-
all vehicle may appear small. In any case, how-
ever, an incomplete vehicle or intermediate manu-
facturer may assume legal responsibility for the
PART 56&— PRE 3
M*<tlvt! Jgnuory 1, 1973
vehicle and affix the appropriate label under
567.5(b) or 567.5(c) of the certification regula-
tions.
In the event that a "readily attachable com-
ponent" is a component regulated by the stand-
ards, such as a mirror or a tire, the final-stage
manufacturer must assume responsibility and
certify the vehicle even though he does not in-
stall the particular component. Otherwise, the
installers of mirrors and tiros would be con-
sidered final-stage manufacturers, a status that
they would probably find unacceptable and that
would tend to make certification less meaningful.
In consideration of the above, Title 49, Code of
Federal Regulations, is amended as follows:
A new part 568, Vehicles Manufactured in Two
or .Vore Stages, is added, reading as set forth
below.
Section 571.3 is amended by deleting the
definition of "chassis cab."
Sections 571.5(b) and 571.13. and the Ruling
Regarding Chassis-cabs appearing at 33 F.R.
29 (January 3, 1968), are revoked.
Issued on April 8, 1971.
Douglas W. Toms
Acting Administrator
36 F.R. 7054
April 14, 1971
#
f
#
PART 668— PRE 4
ElhcMv*: Jun* 1, 1973
PREAMBLE TO AMENDMENT TO PART 568— VEHICLES MANUFACTURED IN
TWO OR MORE STAGES
This notice extends the applicability of the
definitions used in the Federal Motor Vehicle
Safety Standards to other regulations contained
in Chapter V of Title 49, Code of Federal Regu-
lations, and deletes the definitions of "Gross axle
weight rating" and "Gross vehicle weight rating"
from the regulations governing vehicles manufac-
tured in two or more stages.
49 CFR 571.3(b) contains the definitions used
in the Federal Motor Vehicle Safety Standards.
Some of the regulations other than standards con-
tain their own definition sections defining terms
unique to the regulation, and otherwise in-
corporating by reference the definitions of Part
571. An example of this is the definition section
in the Certification Regulation, 49 CFR 567.3:
"All terms that are defined in the Act and the
rules and standards issued under its authority
are used as defined therein." However, there is
no reverse applicability of 49 CFR 571.3(b),
which applies only to terms "as used in this
part." One result has been that duplicate defini-
tions appear in certain regulations, specifically,
the identical definitions of "Gross axle weight
rating" and "Gross vehicle weight rating" found
in both Part 571 and the regulation on Vehicles
Manufactured in Two or More Stages, Part 568.
To prevent unnecessary duplication and the pos-
sibility of confusion in the future, the Admin-
istration has determined that the definitions used
in Part 571 should apply to all regulations in
Chapter V, and also that Part 568 should be
amended by deleting the definitions of "Gross
axle weight rating" and "Gross A-ehicle weight
rating." In consideration of the foregoing 49
CFR 568.3 is amended . . .
Effective date: June 1, 1972. Since this
amendment is administrative and interpretive in
nature and imposes no additional burden upon
any person, notice and public procedure thereon is
unnecessary and it may be made effective in less
than 30 days after publication in the Federal
Register.
This notice is issued under the authority of
section 103 and 119 of the National Traffic and
Motor Vehicle Safety Act of 1966 (15 U.S.C.
1392, 1407), and the delegation of authority from
the Secretary of Transportation to the National
Highway Traffic Safety Administration 49 CFR
1.51.
Issued on May 9, 1972.
Douglas W. Toms
Administrator
37 F.R. 10938
June 1, 1972
PART 568— PRE 5-6
#
^
•
EffccHv*: February 1, 1974
PREAMBLE TO AMENDMENT TO PART 568—
VEHICLES MANUFACTURED IN TWO OR MORE STAGES
(Docket No. 72-27; Notice 2)
This notice establishes certification and label-
ing responsibilities for persons who alter "com-
pleted vehicles" after their certification as
conforming to applicable motor vehicle safety
standards. The requirements are based on those
proposed in a notice of proposed rulemaking
published October 25, 1972 (37 F.R. 22800).
Under the new requirements, a person who
alters a completed vehicle, other than by the
attachment, substitution, or removal of "readily
attachable components", will be required to as-
certain conformity to all applicable standards as
of any date between the manufacture date of the
completed vehicle and the manufacture date of
the altered vehicle. That person will be required
to affix a label (leaving the certification label in
place) that identifies the alterer, the date of
alteration, the date as of which conformity is
determined, and any changes the alteration pro-
duces in either gross weight ratings or vehicle
classification. A person who does not alter the
vehicle, or who adds, substitutes, or removes only
readily attachable components will be required
to leave the certification label in place, but will
not be required, unless the alteration invalidates
the stated weight ratings, to provide an addi-
tional label. Distributors who ao not alter the
vehicle, or who alter it using only readily attach-
able components and do not invalidate the stated
weight ratings will meet the certification require-
ments by leaving the certification label in place.
The requirements will place persons who alter
completed vehicles on the same basis as final -
stage manufacturers, by allowing the former to
choose as the date by which vehicle conformity
is determined any date between the date on which
the completed vehicle is manufactured and the
date on which the vehicle is altered. Under
previously existing statutory and regulatory pro-
visions, alterers of vehicles were required to use
only the date of completion of the altered vehicle
as the date by which conformity could be deter-
mined.
General Motors, Truck Body and Equipment
Association, and Stutz Motor Car of America
supported the proposal without qualification.
Other comments generally approved the proposal
with some suggested changes.
Several comments argued that the limiting
concept of "readily attachable components", the
addition, removal, or substitution of which does
not create a requirement to affix a label, should
not include "mirrors or tire and rim assemblies",
as the language appears in §§ 567.6 and .7, and
§ 568.8. It was argued that these items directly
affect the vehicle's conformity to the standards
or the weight ratings, and should therefore not
be alterable without, in effect, a recertification
by the alterer. It was variously suggested that
explicit inclusion of these items as examples of
readily attachable components might cause a
safety problem, a false certification, or a mis-
leading of persons such as dealers as to their
responsibilities under the Act and the standards.
The NHTSA does not accept these arguments.
The provisions for alteration of vehicles, like the
larger certification scheme of which they are a
part, are intended to reflect the realities of manu-
facture and distribution. It is a fact that the
substitution of tires by a dealer takes place in a
substantial fraction of all vehicle sales. More-
over, a large proportion of the components that
are in fact frequently altered at the dealer level
are directly affected by standards: mirrors, tires,
rims, lighting accessories, bumper guards and
attachments, windshield wipers and washers, hub
PART 568— PRE 7
Eihctiva: Febniary 1, 1974
caps and wheel nuts, seat belts, and interior
components such as air conditioners or radios
that come within the head impact area, to name
a few. If these items were not included in the
concept of readily attachable components, for
which an alteration label is not required, it is
safe to say that virtually every dealer in the
country would be aflixing labels to many of the
vehicles he sold.
It was not the intent of this agency to create
such a manifold expansion of labeling require-
ments. The altered-vehicle label is designed
primarily to reach those cases where a completed
vehicle is significantly altered, in a manner, and
with components, not provided by the original
manufacturer. The substitution or addition of
parts such as tires, rims, and mirrors is a routine
aspect of typical vehicle distribution systems,
and the cost burden of affixing a permanent label
to the vehicle has not been found to be justified
in that situation. For these reasons the language
of the regulation has in these respects been re-
tained as proposed.
The requirement to keep a vehicle in conform-
ity to the standards and the weight ratings ap-
plies throughout the chain of distribution
regardless of any labeling requirements, and this
agency has no intent of downgrading the im-
portance of that requirement. The conmients did
reveal a justifiable concern of manufacturers for
situations where the vehicle might be altered, as
by substitution of tires, in a way that its stated
weight ratings are no longer valid. Also, there
may well be cases where a customer wants a
vehicle to have lighter components for its in-
tended purpose, and would accept lowered weight
ratings. To deal with these cases, language has
been added to sections 567.6 and .7, and 568.8, to
require the affixing of an alteration label when-
ever any type of alteration is made that would
invalidate the stated weight ratings.
American Motors and Jeep argued that re-
quiring alterers to certify conformity discrimi-
nates against manufacturers' dealers. They
pointed out that dealers, who generally alter ve-
hicles before sale, are required to maintain con-
formity, while aftermarket installers of equip-
ment, because the additions they make are to
"used" vehicles, need not. They suggested that
#
"special add-on accessories" be excepted from the
requirements, that a new category of "Special
Motorized Equipment" be created to which some
of the standards would not apply, that equipment
standards be issued to cover aftermarket install-
ers, and that highway safety program standards
prohibit the alteration of vehicles such that they
would not conform to the standards. These com-
ments are not, in the view of this agency, within
the scope of the rulemaking. Requests of this
nature should be submitted as petitions for rule-
making, with supporting data, in accordance with
the procedures of 49 CFR Part 553.
British Leyland suggested that an exemption
to the labeling requirements be made for persons
installing accessories which the original vehicle
manufacturer makes available, and whose instal-
lation he knows will not aflFect vehicle conform-
ity. The NHTSA expects that most accessories
meeting this description will be readily attach-
able within the sense of the regulation, and no
further labeling in these cases will be required.
It should be noted that the category of "readily
attachable components" cannot be sharply de-
fined, and in any marginal case the NHTSA will
accept the reasonable judgment of the parties
concerned, especially where the original manu-
facturer and the alterer are in agreement. In
cases where components of this type are not
foimd to be readily attachable, the burden on
the alterer to determine that the alteration does
not destroy conformity is minimized, leaving him
with essentially no more than the attachment of
the alterer label.
Certain comments pointed out that while pro-
posed sections 567.7 and 568.8 are not limited in
their application to distributors, that limitation
had been retained in section 567.6. The com-
ments suggested that, as sections 567.7 and 568.8
applied to dealers, section 567.6 should likewise
so apply. The substance of the suggestion has
been adopted in the final rule, by modifying
§ 567.6 to apply to any "person".
The Recreation Vehicle Institute (RVI) sug-
gested that manufacturers of completed vehicles
be required to supply a document when requested
by a vehicle alterer, similar to that provided
final-stage manufacturers, that advises alterers
how to achieve or retain conformity. This sug-
•
#
PART 668— PRE 8
Eff*<tlv«: February 1, 1974
gestion has not been adopted. If a vehicle manu-
facturer wishes to provide information on the
alteration of his vehicles, he of course may do so.
Once a completed, certified vehicle has been pro-
duced, however, the NHTSA does not believe it
reasonable to require manufacturers to provide
persons who might alter that vehicle with addi-
tional certification information. The requirement
to provide information concerning incomplete
vehicles (Part 568) is founded on the fact that
an incomplete vehicle manufacturer has marketed
his vehicles with the express intent of having
them completed by other persons. This is not
the case with completed vehicles.
RVI also suggested that the regulation spe-
cifically provide that alterers be allowed to base
their conclusions as to conformity on the original
certification. The NHTSA does not consider
such a provision to be meaningful. The extent
to which the alterer's conformity assurance may
be based on the original certification depends
entirely on what the alterer does to the vehicle,
which is a fact peculiarly within his knowledge.
Certain comments suggested that compliance
with the requirements be permitted before the
specified effective date. The NHTSA believee
this request to be meritorious. Alterers will be
able to conform to existing requirements or to
those issued by this notice at any time up to the
effective date.
In light of the above, amendments are made
to 49 CFR Parts 567 and 568 ... .
E-ffective date: February 1, 1974. However,
persons who alter vehicles may at any time before
that date conform to the provisions issued in this
in lieu of existing provisions of 49 CFR Parts
567 and 568.
Sections 103, 112, 114, 119, Pub. L. 89-563,
80 Stat. 718; 15 U.S.C. 1392, 1401, 1403, 1407;
delegation of authority at 38 F.R. 12147.
Issued on June 13, 1973.
James E. Wilson
Associate Administrator
Traffic Safety Programs
38 F.R. 15961
June 19, 1973
PART 668— PRE 9-10
f
•
#
PREAMBLE TO AN AMENDMENT TO PART 568
VEHICLES MANUFACTURED IN TWO OR MORE STAGES
[Docket No. 75-28; Notice 3]
ACTION: Final rule.
SUMMARY: This notice amends the regulations
that specify how a truck manufacturer meets its
statutory responsibility to certify compliance of its
products with Federal Motor vehicle safety stan-
dards. Most trucks are constructed in at least two
separate stages and these regulations have re-
quired the basic "chassis-cab" manufacturer to
provide necessary engineering calculations to the
subsequent manufacturer that permits him to
finish the vehicle and certify compliance. The deci-
sion in Rex Chainbelt v. Brinegar, 511 F. 2d 1215
(7th Cir. 1975) directed the NHTSA to amend this
regulation so that both manufacturers certify com-
pliance to the degree their work affects the vehicle.
DATE: Effective date July 25, 1977.
SUPPLEMENTARY INFORMATION: This notice
amends 49 CFR Part 567, Certification, by adding
a labeling requirement for chassis-cab manufac-
turers and modifying the labeling requirements
for final stage manufacturers, in accordance with
the decision in Rex Chainbelt, Inc. v. Brinegar, 511
F. 2d 1215 (7th Cir. 1975). Conforming amend-
ments are made to 49 CFR Part 568, Vehicles
Manufactured in Two or More Stages. Certifica-
tion labeling requirements for intermediate
manufacturers are proposed in a companion notice
issued today (Notice 4, 42 FR 37831).
The notice is based on a proposal that was
published as Notice 1 on October 3, 1975 (40 FR
45847). Seventeen comments were received in
response to the proposal. The amendments are
adopted essentially as proposed. The major change
is that the list of permissible locations for the re-
quired certification labels has been extended to in-
clude the inward-facing surface of the driver's
door, in order to accommodate the larger sizes of
labels that can now be expected. Any submitted
suggestions for changes that are not specifically
mentioned herein are declined for action or pro-
posal at this time, on the basis of all the informa-
tion presently available to the agency.
The existing scheme for the certification of
multistage vehicles is found in Parts 567 and 568
of Title 49, Code of Federal Regulations. Briefly, it
requires a final-stage manufacturer to certify that
his completed vehicle complies with all applicable
Federal motor vehicle safety standards, on the
basis of (i) the work he has performed, and (ii) the
information concerning the incomplete vehicle's
conformity status with respect to each standard,
found in a document (the "Part 568 document")
supplied by those who have previously performed
work on the incomplete vehicle. This scheme is
more fully described in the notice of proposed
rulemaking at 40 FR 45847.
Petitioners in the Rex Chainbelt case attacked
the validity of the scheme as it applied to a com-
pany mounting cement mixers on chassis-cabs.
The U.S. Court of Appeals for the Seventh Circuit,
in its first opinion in this case, invalidated the
scheme to the extent that it required a final-stage
manufacturer who builds on a chassis-cab to make
the "sole certification of compliance of the entire
vehicle." Rex Chainbelt, Inc. v. Volpe, 486 F. 2d
757, 761-762 (7th Cir. 1973). In its last opinion, the
Court restated its holding as meaning that "in in-
stances where the customer purchases a chassis-
cab from its manufacturer and thereafter the mix-
er from the mixer manufacturer, and with the mix-
er manufacturer certifying its mixer and the effect
of the mounting, if any, to thus obtain effective cer-
tification of the 'entire vehicle.' " Rex Chainbelt,
Inc. v., Brinegar, 511 F. 2d 1215, 1216 7th Cir.
1975).
PART 568-PRE 11
Parts 567 and 568 are amended today to conform
to this decision. The basic change in Part 567 is to
require the manufactui-er of a chassis-cab to affix a
certification label to his incomplete vehicle, certi-
fying its conformity status with respect to each
standard that will be applicable to the vehicle as
completed. He will divide the standards into three
categories, according to the degrees to which con-
formity with them is approached in his product,
and certify essentially the same facts about them
as have merely, up to now, been required to be in-
dicated in the Part 568 document. The final stage
manufacturer who uses the chassis-cab will then
make a three-part certification statement (to the
extent that the three parts are applicable), cor-
responding to the three statements made by the
chassis-cab manufacturer.
More specifically, in the first category on its
label, the chassis-cab manufacturer will state,
"This chassis-cab conforms to Federal Motor Vehi-
cle Safety Standard Nos. ," listing the numbers
of the standards for which the statement is correct.
In the corresponding first categoiy on its label, the
final-stage manufacturer will state, "conformity of
the chassis-cab to Federal Motor Vehicle Safety
Standard Nos. has not been affected by final-
stage manufacture." This couplet conforms pre-
cisely to the mandate of the Court that the chassis-
cab manufacturer certify its chassis-cab, and the
final-stage manufacturer certify as to the "effect"
of its work. It is not necessary for all the standards
that were placed in the first category by the
chassis-cab manufacturer to be similarly included
by the final-stage manufacturer in his first
category. The latter manufacturer is free to "af-
fect" the manner in which the completed vehicle
conforms to any such standards, e.g., by removing
and replacing mirrors or lights, as long as he
ultimately certifies in his third (final) statement
conformity to those affected standards. In the ex-
treme case, if the final-stage manufacturer wishes
to exclude all of the standards from the first
category, he may omit this statement altogether.
The second category of standards, those that are
necessarily strongly affected by what both the
chassis-cab and final-stage manufacturers do, is
the main target of the regulatory scheme. In its se-
cond statement the chassis-cab manufacturer will
certify, "This vehicle will conform to Standard
Nos. if it is completed in accordance with the
instructions contained in the incomplete vehicle
document furnished pursuant to 49 CFR Part
568." The final-stage manufacturer's cor-
responding statement will be, "With respect to
Standard Nos. , the vehicle has been completed
in accordance with the chassis-cab manufacturer's
instructions." This statement also conforms to the
Court's opinion, although the treatment of this
category cannot be as simple. The final-stage
manufacturer, in considering a standard such as
the one on air brakes that its work must crucially
"affect," will thus have a choice. He may conform
his completion work to the instructions of the
chassis-cab manufacturer, in which case he need
only make a statement to that effect, thereby
throwing the burden of conformity onto the
chassis-cab manufacturer. Or, he may deviate from
those instructions, in which case the second state-
ment becomes inapplicable as far as that standard
is concerned, and instead include the standard in
the residual third statement. Thus, the final-stage
manufacturer will describe the "effect of (his)
mounting, if any" either by saying he had remain-
ed within the Part 568 document's limits, thereby
actuating the chassis-cab manufacturer's certifica-
tion, or by making an original certification of con-
formity. Again, if the final-stage manufacturer
chooses to omit all standards from this second
category, the second statement may be omitted.
The third statement by the chassis-cab manufac-
turer will be, "Conformity to the other safety stan-
dards applicable to this vehicle when completed is
not substantially affected by the design of the
chassis-cab." The expression "substantially af-
fected" replaces "substantially determined",
which appeared in the notice of proposed rulemak-
ing, in order to clarify the meaning of this third
statement. This subject is discussed further below.
The third statement by the final-stage manufac-
turer will be, "This vehicle conforms to all other
applicable Federal Motor Vehicle Safety Stan-
dards in effect in (month, year)." Obviously, confor-
mity to standards concerning which the chassis-
cab manufacturer makes no representation
whatever, or to those where the final-stage
manufacturer chooses not to follow the chassis-cab
manufacturer's instructions, must be assumed by
the final-stage manufacturer. The regulation pro-
vides that where the first two statements are omit-
ted, the word "other" be omitted from the third
statement. In this form it covers both the cases
where the final-stage manufacturer chooses not to
follow the chassis-cab manufacturer's instructions
concerning any standards, and the cases involving
incomplete vehicles other than chassis-cabs, to
which the dual-certification scheme is inap-
plicable. Finally, it covers the cases where the
final-stage manufacturer considers the simple con-
PART 568-PRE 12
formity statement to adequately represent his
rights and duties.
The Motor Vehicle Manufacturers Association
(MVMA) and several chassis manufacturers ob-
jected to the chassis-cab manufacturer's type (1)
certification, "[tjhis chassis-cab conforms to
Federal Motor Vehicle Safety Standard Nos. ",
on several grounds. The essence of these objections
was that such a certification would be both
misleading and beyond the statutory authority of
the NHTSA to require, because there are no stan-
dards applicable to chassis-cabs. These comment-
ers have referred to Section 114 of the National
Traffic and Motor Vehicle Safety Act of 1966, as
amended (15 U.S.C. 1391 et seq.) (the Act), which
requires certification that each "(motor) vehicle or
item of motor vehicle equipment conform to all ap-
plicable Federal Motor vehicle safety standards."
They have correctly pointed out that chassis-cab,
because it is an incomplete vehicle, is not a "motor
vehicle" as that term is defined in section 102(3) of
the Act. A chassis-cab is an item of "motor vehicle
equipment", as that term is defined in section
102(4). While Federal motor vehicle safety stan-
dards have been issued for certain types of motor
vehicle equipment, e.g., tires and motorcycle
helmets, no such standards have been issued for
chassis-cabs or other incomplete vehicles. The
NHTSA agrees that the chassis-cab manufac-
turer's type (1) certification specified in the rule
adopted today is therefore not the certification that
is explicitly required by section 114 of the Act.
Even so, the NHTSA considers the former cer-
tification to be meaningful and appropriate as part
of a scheme for ensuring the full certification of
completed motor vehicles by the proper manufac-
turing parties. Conformity of a physical object (in
this case, a chassis-cab) to a safety standard is a
concept distinct from that standard's legal applic-
ability to the object. For example, a chassis-cab is
not statutorily required to conform to Standard
No. 101, Control Location, Identification, and Il-
lumination, because chassis-cabs are not listed in
S3, Application of that standard. Nevertheless, a
chassis-cab that does in fact meet the substantive
requirements of the standard is accurately des-
cribed as "conforming" to it.
The NHTSA does not consider the type (1) cer-
tification to be misleading provided that it is fac-
tually accurate. Any intimation to the reader of
such a statement that the safety standards
enumerated in it are applicable to the chassis-cab
is outweighed by the need for full certification of
completed motor vehicles. An untrue type ( 1 ) state-
ment, of course, would be considered a non-
compliance with 49 CFR Part 567.
Ford Motor Company has suggested that,
through the new certification scheme, the NHTSA
seeks to impose safety standards on chassis-cabs
indirectly— without a statutorily required con-
sideration of whether they are "reasonable, prac-
ticable, or appropriate for the particular type of
motor vehicle or item of motor vehicle equipment
for which (they are) prescribed." This characteriza-
tion of the new scheme is incorrect. With the three
part certification statement, the chassis-cab
manufacturer is merely certifying his product's
status of conformity with respect to each of the
safety standards that apply to the completed vehi-
cle. The only standards to which a chassis-cab
must actually conform are those that he has placed
in the first category, and he is free to leave that
category empty by including all the standards in
the succeeding two.
Indeed, the NHTSA has specifically rejected the
concept, urged by Ford and others, of Federal
motor vehicle safety standards that apply to
chassis-cabs. It is the completed motor vehicle with
which the NHTSA is most concerned, because that
is what is driven on the public highways. The per-
formance capabilities of a chassis-cab affect motor
vehicle safety only through their effect on the per-
formance of the vehicle into which the chassis-cab
is completed. The consequent inappropriateness of
standards applicable to chassis-cabs was discussed
fully in the notice of proposed rulemaking.
The MVMA and several chassis manufacturers
also objected to the second type of chassis-cab cer-
tification—that the chassis-cab will conform to
enumerated standards if it is completed in accor-
dance with the instructions found in the in-
complete vehicle document. These commenters
argued that such a certification statement would
require the chassis-cab manufacturer to anticipate
conduct over which he has no control. Because con-
ditions on subsequent manufacturing are con-
tained within a chassis-cab manufacturer's type (2)
certification statement, however, the statement's
truth or falsehood is established at the time of
chassis-cab manufacture. The work that is actually
performed on a chassis-cab following such a certifi-
cation has no bearing on that truth or falsehood.
These objections are thus without foundation. The
chassis-cab manufacturer is protected against the
wide variety of possible methods of completion
over which the NHTSA readily agrees he has no
control.
In a similar vein, the MVMA suggested that the
PART 568-PRE 13
chassis-cab certification statements would be
susceptible to amendments made to the standards
between the time of manufacture of the chassis-cab
and the completion of the vehicle, and would thus
be unacceptably open-ended. The MVMA is mis-
taken. The NHTSA interprets all the statements
on the chassis-cab manufacturer's label as made
with respect to the Federal motor vehicle safety
standards in effect at the time of manufacture of
the chassis-cab, as that time is indicated on the
label.
As noted in the notice of proposed rulemaking,
there is a factual limitation on the chassis-cab
manufacturer's use of the third type of certifica-
tion. Where the chassis design is an important
determinant of a vehicle's ability to conform to a
given standard, it is incorrect to state (whether on
a certification label or in a Part 568 document)
that conformity to that standard is "not substan-
tially determined by the design of the chassis-cab."
Ford and General Motors objected to this position,
arguing that where the work of the final-stage
manufacturer substantially determines conformi-
ty, the design of the chassis-cab must of necessity
not substantially determine conformity. The
NHTSA rejects these objections. It is possible for a
completed vehicle's conformity to a standard to be
substantially determined by both the design of the
chassis-cab and the manner of completion by the
final-stage manufacturer. Indeed, this is often the
case with the braking standards and the fuel sys-
tem integrity standard, among others. To more
precisely characterize the agency's intention and
to eliminate further confusion on this subject, the
expression "substantially determined" in the
chassis-cab manufacturers' type (3) certification is
replaced by "substantially affected". In addition,
an interpretive amendment is made to the descrip-
tion in Part 568 of the incomplete vehicle docu-
ment, to effect the same substitution.
Rexnord, Inc. (formerly Rex Chainbelt) argued
that the proposed certification scheme would not
comply with the Rex Chainbelt holding because it
would require "that the Final Mfr. certify the
Chassis Mfr.'s materials, workmanship and design
in some situations." The situations referred to are
those in which a final-stage manufacturer affects
the manner of conformity to a standard to which
the chassis-cab has been certified in category ( 1 ) or
departs from the completion instructions for a
standard respecting which the chassis-cab has
been certified in category (2). Rexnord objects to
the requirement that, in these situations, the final-
stage manufacturer "unconditionally" certify the
completed vehicle in category (3), on the ground
that he should be able to "preserve so much of the
prior certification as he has a right to rely on"
despite his departure from the anticipated manner
of completion.
The infinite number of modifications that can be
made by a final-stage manufacturer in departing
from the incomplete-vehicle manufacturer's dis-
position make "preservation" of the remnants of a
prior certification extremely difficult under the
general allocation provisions of Part 567. For this
reason, the final-stage manufacturer must rely on
the requirement that the chassis-cab manufac-
turer's certification is permanently affixed to the
vehicle and thereby "preserves" that portion of the
prior certification that can continue to be relied
upon.
Rexnord also argued that the completion instruc-
tions supplied by chassis-cab manufacturers are
often unreasonably restrictive. It urged that a new
regulation be established to require those manu-
facturers to test and certify various "approved
modifications" of their chassis-cabs. The NHTSA
considers such an approach to be as unwise as the
establishment of chassis-cab standards. While
there may be many instances in which the chassis
manufacturer is in a better position than the final-
stage manufacturer to take responsibility for the
safety of a modification to the chassis, the variety
of manufacturing situations militates against gov-
ernment interference with the freedom of manu-
facturers to allocate responsibility among them-
selves as they find it most appropriate.
In response to Rexnord 's suggestion, the rule
specifies that the name of the chassis-cab manu-
facturer be preceded on the label affixed by him by
the words "CHASSIS-CAB MANUFACTURED
BY" or "CHASSIS-CAB MFD BY". Omission of
these words from the proposed rule was an over-
sight. The additional suggestion that the final-
stage manufacturer's name be preceded on his
label by "FINAL STAGE MANUFACTURE BY"
(or an abbreviation) rather than "MANUFAC-
TURED BY" (or an abbreviation), however, is not
adopted. Even though the latter designation may
oversimplify the final-stage manufacturer's status,
such a characterization is necessitated by the Act.
In any event, the intimation that he is responsible
for the entire vehicle is negated by the accompany-
ing identification of the chassis-cab manufacturer.
The NHTSA declines the suggestion of Mack
Trucks that Gross Vehicle and Gross Axle Weight
Ratings be required, or at least permitted as an op-
tion, to appear on the chassis-cab label. There is
PART 568-PRE 14
great potential for user confusion if chassis-cab
and final-stage manufacturers' labels indicate dif-
ferent weight ratings. The need to avoid this confu-
sion outweighs an interest in placarding weight
ratings other than those of the completed vehicle.
Therefore, Rexnord's request— that the final stage
manufacturer who does not depart from a chassis-
cab manufacturer's weight ratings be permitted to
refrain from "restating" those ratings— cannot be
granted.
The Recreation Vehicle Industry Association
(RVIA) suggested a change in the definition of
"chassis-cab" to include certain incomplete
vehicles that are completed as motor homes. These
"chopped vans" and "Type C" motor home chassis,
however, appear to lack the prerequisite completed
occupant compartments of the proposed definition.
Because completeness of the occupant compartment
is what sets chassis-cabs apart from other incom-
plete vehicles, the RVIA suggestion is declined.
Accordingly, the definition is adopted as proposed.
For convenience, it is located in §567.3 rather than
the definitions section of Part 571 of this title.
Manufacturers are reminded that Part 568 con-
tinues to require the provision of a document with
every incomplete vehicle, regardless of whether
the incomplete vehicle, by virtue of being a
chassis-cab, is also required by the rule issued to-
day to be certified.
The new chassis-cab certification requirements
will take effect in one year. This is longer than all
the lead times requested by commenters. It pro-
vides ample time for chassis-cab manufacturers to
prepare for compliance. It also enables the NHTSA
to evaluate the comments and take final action on
the accompanying proposal to add certification re-
quirements for intermediate manufacturers with
sufficient lead time remaining for those manufac-
turers.
Issued on July 8, 1977.
Joan Claybrook
Administrator
42 F.R. 37814
July 25, 1977
PART 568-PRE 15-16
#
PREAMBLE TO AN AMENDMENT TO PART 568— VEHICLES MANUFACTURED IN
TWO OR MORE STAGES
(Docket No. 80-04; Notice 1)
ACTION: Interpretive amendment, final rule.
SUMMARY: This notice amends the certification
regulations to modify the certification statement
required to be made on alterers' labels. This notice
responds to a petition by the National Truck
Equipment Association to change the certification
statement to show that alterers are only responsible
for the compliance of their vehicles with standards
that are affected by their alteration. The agency has
frequently issued interpretations taking that posi-
tion and accordingly modifies the certification
statement to reflect this interpretation. Since this
amendment merely incorporates an existing inter-
pretation, it is being made without notice and
opportunity for comment.
EFFECTIVE DATE: Since this amendment incor-
porates an existing interpretation, it is effective
immediately upon publication, March 24, 1980.
However, since manufacturers and alterers need
time to modify their labels in accordance with this
change and may have supplies of labels with the old
language, the NHTSA will permit the use of either
the new or the existing label language.
FOR FURTHER INFORMATION CONTACT:
Mr. David Fay, Engineering Systems Staff,
National Highway Traffic Safety
Administration, 400 Seventh Street, S.W.,
Washington, D.C. 20590 (202-426-2817).
SUPPLEMENTARY INFORMATION:
In response to the decision in Rex Chainbelt v.
Brinegar, 511 F.2d 1215 (7th Cir. 1975), the agency
issued several amendments to its certification regula-
tions bringing them into compliance with the court's
mandate. The court ordered the agency to establish a
certification scheme that would require each
manufacturer of a vehicle to be responsible for the
standards affected by its manufacturing process.
During the amendment of the certification regula-
tion, the agency did not change the label used by
vehicle alterers. Vehicle alterers are those businesses
or individuals that alter previously certified
vehicles prior to their first sale. The agency
concluded that the simplicity of the alterers' label
should be retained, and that, as it was then
worded, the alterers' label was sufficient to
indicate that alterers were only responsible for the
compliance of standards that might have been
affected by their alteration.
The National Truck Equipment Association
(NTEA) first petitioned the agency in December
1978 to amend the alterers' label stating that the
language in fact made the alterer responsible for
the entire compliance of the vehicle with all
standards even though the alterer may not have
affected any of those standards by its alteration.
To accomplish its goal, the NTEA proposed a
complicated alterers' label that would have listed
the standards affected by the alteration as well as
listing those standards for which the alterer claimed
no responsibility. The label would have looked
much like the current incomplete- or intermediate-
manufacturer's labels.
The agency objected to this proposal, because it
would have overly complicated the alterers' label.
Alterers frequently are small businesses and the
alterations they perform are often minor. Many of
these small businesses are aware of their respon-
sibilities and know that their alterations do not
affect the compliance of a vehicle with safety
standards. However, many of these businesses are
not familiar with all of the agency's safety
standards. Accordingly, it would have burdened
them extensively to have familiarized themselves
to the point where they could list all of the
standards on their labels indicating which, if any,
were affected by their alterations. In light of this
problem, the agency denied the NTEA's petition
while indicating that the agency would be respon-
sive to the suggestion of an amendment that would
achieve their goals without adding complexity to
the alterers' label.
PART 568; PRE 17
On August 16, 1979, the NTEA again petitioned
the agency to amend the label. This time, however,
the NTEA asked the agency simply to add several
words to the alterers' label to indicate that the
alterer is responsible only for the standards
"affected by the alteration." The NTEA argued
that this would accomplish their goal of ensuring
that an alterer would not be held responsible for
compliance of vehicles with safety standards that
are not affected by an alterer's modifications. This
notice g^nts their petition.
The agency has indicated by letter in the past that
it considers each manufacturer or alterer only to be
responsible for the compliance of the standards that
it affects by its manufacture or alteration. Thus, the
agency would not hold an alterer responsible for the
compliance of the entire vehicle when.in acutality the
final-stage manufacturer or some other manufac-
turer in -the manufacturing chain might have been
responsible for a noncompliance with a standard. The
agency can understand, however, how some people
might read the existing language of the label more
broadly than intended. To avoid any such
misunderstandings, the agency is amending Part
567, Certification, and Pjirt 568, Vehicles Manufac-
tured in Two or More Stages, to incorporate the
agency's interpretation of an alterer's respon-
sibilities for compliance with safety standards.
In consideration of the foregoing. Title 49 of the
Code of Federal Regulations is amended as
follows:
1. Part 567, Certification, is amended by
chang^g the first sentence of $ 567.7(a) to read:
(a) The statement: "This vehicle was altered
by (individual or corporate name) in (month and
year in which alterations were completed) and as
altered it conforms to all applicable Federal Motor
Vehicle Safety Standards affected by the
alteration and in effect in (month, year)."
2. Part 568, Vehicles Manufactured in Two or
More Stages, is amended by revising section 568.8
as follows:
S 568.8 Requirements for persons who alter
certified vehicles.
A person who alters a vehicle that has been
previously certified in accordance with $ 567.4 or
$ 567.5, other than by the addition, substitution, or
removal of readily attachable components such as
mirrors or tire and rim assemblies, or minor
finishing operations such as painting, or who alters
a vehicle in such a manner that its stated weight
ratings are no longer valid, before the first
purchase of the vehicle in good faith for purposes
other than resale, shall ascertain that the vehicle
as altered conforms to the standards which are
affected by the alteration and are in effect on the
original date of manufacture of the vehicle, the
date of final completion, or a date between those
two dates. That person shall certify the vehicle in
accordance with $ 567.7 of this chapter.
* • • * •
Since this modification of the alterers' label
merely incorporates an existing interpretation of
the certification regulations, the Administrative
Procedure Act (5 U.S.C. 553) permits the NHTSA
to make the amendment without notice and
opportunity to comment. Further, the change is
being made effective immediately since it does not
change the certification responsibilities of any
manufacturer or alterer.
The agency realizes that alterers preprint their
labels, and accordingly, any change in the
language on the alterers' label requires some
leadtime for manufacturers to obtain new
complying labels. Accordingly, the agency will
permit the use of either the old or new language on
the alterers' label until existing supplies of labels
are depleted. This will allow those alterers who
wish to change their labels immediately the
opportunity to do so while providing for an orderly
transition for those alterers that wish to use their
existing supply of labels. The agency has reviewed
this amendment in accordance with E.O. 12044
and implementing departmental guidelines and
concludes that it is not significant within the
meaning of the Order. The agency has concluded
further that preparation of a regulatory evaluation
is not warranted. This amendment permits
alterers to exhaust their current label supply and
to obtain modified labels with their next order.
Further, the new labels will be no more costly than
the current ones. Accordingly, there should be
minimal costs associated with the implementation
of this amendment.
The principal authors of this notice are David
Fay of the Engineering Systems Staff and Roger
Tilton of the Office of Chief Counsel.
Issued on March 17, 1980.
Joan Claybrook
Administrator
45 F.R. 18926
March 24, 1980
PART 568; PRE 18
PART 568— VEHICLES MANUFACTURED IN TWO OR MORE STAGES
(Dockets No. 70-6, 70-8, and 70-15)
§ 568.1 Purpose and scope.
The purpose of this part is to prescribe the
method by which manufacturers of vehicles man-
ufactured in two or more stages shall ensure con-
formity of those vehicles with the Federal motor
vehicle safety standards ("standards") and other
regulations issued under the National Traffic
and Motor Vehicle Safety Act.
"Intermediate manufacturer" means a person,
other than the incomplete vehicle manufacturer
or the final-stage manufacturer, who performs
manufacturing operations on an incomplete ve-
hicle.
"Incomplete vehicle manufacturer" means a
person who manufactures an incomplete vehicle
by assembling components none of which, taken
separately, constitute an incomplete vehicle.
§ 568.2 Application.
This part applies to incomplete vehicle manu-
facturers, intermediate manufacturers, and final-
stage manufacturers of vehicles manufactured in
two or more stages.
§ 568.3 Definitions.
"Completed vehicle" means a vehicle that re-
quires no further manufacturing operations to
perform its intended function, other than the
addition of readily attachable components, such
as mirrors or tire and rim assemblies, or minor
finishing operations such as painting.
"Final-stage manufacturer" means a person
who performs such manufacturing operations
on an incomplete vehicle that it becomes a com-
pleted vehicle.
"Incomplete vehicle" means an assemblage
consisting, as a minimum, of frame and chassis
structure, power train, steering system, suspen-
sion system, and braking system, to the extent
that those systems are to be part of the com-
pleted vehicle, that requires further manufac-
turing operations, other than the addition of
readily attachable components, such as mirrors
or tire and rim assemblies, or minor finishing
operations such as painting, to become a com-
pleted vehicle.
§ 568.4 Requirements for incomplete vehicle
manufacturers.
(a) The incomplete vehicle manufacturer shall
furnish with the incomplete vehicle, at or before
the time of delivery, a document that contains
the following statements, in the order shown, and
any other information required by this chapter
to be included therein.
(1) Name and mailing address of the in-
complete vehicle manufacturer.
(2) Month and year during which the in-
complete vehicle manufacturer performed his
last manufacturing operation on the incom-
plete vehicle.
(3) Identification of the incomplete ve-
hicle(s) to which the document applies. The
identification may be by serial number, groups
of serial numbers, or otherwise, but it must be
sufficient to ascertain positively that a docu-
ment applies to a particular incomplete vehicle
after the document has been removed from the
vehicle.
(4) Gross vehicle weight rating of the com-
pleted vehicle for which the incomplete vehicle
is intended.
(5) Gross axle weight rating for each axle
of the completed vehicle, listed and identified
in order from front to rear.
PART 568-1
(6) Listing of the vehicle types as defined in 49
CFR § 571.3 (e.g., truck, MPV, bus, trailer) into
which the incomplete vehicle may appropriately
be manufactured.
(7) Listing by number of each standard, in ef-
I feet at the time of manufacture of the incomplete
vehicle, that applies to any of the vehicle types
listed in subparagraph (6) of this paragraph,
followed in each case by one of the following
three types of statement, as applicable:
(i) A statement that the vehicle when com-
pleted will conform to the standard if no altera-
tions are made in identified components of the
incomplete vehicle.
EXAMPLE:
"107— This vehicle when completed will
conform to Standard 107, Reflecting Sur-
faces, if no alterations are made in the wind-
shield wiper components or in the reflecting
surfaces in the interior of the cab."
(ii) A statement of specific conditions of
final manufacture under which the manu-
facturer specifies that the completed vehicle
will conform to the standard.
EXAMPLE:
"121— This vehicle when completed will
conform to Standard 121, Air Brake Sys-
tems, if it does not exceed any of the gross
axle weight ratings, if the center of gravity
at GVWR is not higher than nine feet above
the ground, and if no alterations are made
in any brake system component.
(iii) A statement that conformity with
the standard is not substantially affected
by the design of the incomplete vehicle, and
that the incomplete vehicle manufacturer
makes no representation as to conformity
with the standard.
(b) The document shall be attached to the
incomplete vehicle in such a manner that it will not
be inadvertently detached, or alternatively, it may
be sent directly to a final-stage manufacturer, in-
termediate manufacturer or purchaser for pur-
poses other than resale to whom the incomplete
vehicle is delivered.
§568.5 Requirements for intermediate manu-
facturers.
(a) Each intermediate manufacturer of an in-
complete vehicle shall furnish the document re-
quired by § 568.4 inthe manner specified in that
section. If any of the changes in the vehicle made
by the intermediate manufacturer affect the valid-
ity of the statements in the document as provided
to him he shall furnish an addendum to the docu-
ment that contains his name and mailing address
and an indication of all changes that should be
made in the document to reflect changes that he
made in the vehicle.
(b) Each intermediate manufacturer shall, in ac-
cordance with § 567.5 of this chapter, affix a label
to each chassis-cab respecting which he is required
by paragraph (a) above to furnish an addendum to
the document required by § 568.4.
§ 568.6 Requirements for final-stage manufac-
turers.
(a) Each final-stage manufacturer shall com-
plete the vehicle in such a manner that it conforms
to the standards in effect on the date of manufac-
ture of the incomplete vehicle, the date of final
completion, or a date between those two dates.
This requirement shall, however, be superseded by
any conflicting provisions of a standard that ap-
plies by its terms to vehicles manufactured in two
or more stages.
(b) (Each final-stage manufacturer shall affix a
label to the completed vehicle in accordance with
567.5 of this chapter. (42 F.R. 37817-July 25,
1977-Effective: July 25, 1977)1
§ 568.7 Requirements for manufacturers who as-
sume legal responsibility for tfie vehicle.
(a) If an incomplete vehicle manufacturer
assumes legal responsibility for all duties and
liabilities imposed on manufacturers by the Na-
tional Traffic and Motor Vehicle Safety Act (15
U.S.C. 1381-1425) (hereafter referred to as "the
Act"), with respect to the vehicle as finally
manufactured, the requirements of §§ 568.4, 568.5
and 568.6(b) of this part do not apply to that vehi-
cle. In such a case, the incomplete vehicle manufac-
turer shall ensure that a label is affixed to the final
vehicle in conformity with § 567.5(e) of this
chapter.
(Rev. 7/25/77)
PART 568-2
(b) If an intermediate manufacturer of a vehicle
assumes legal responsibility for all duties and
liabilities imposed on manufacturers by the Act,
with respect to the vehicle as finally manufactured,
§ § 568.5 and 568.6(b) of this part do not apply to
that vehicle. In such a case, the manufacturer
assuming responsibility shall ensure that a label is
affixed to the final vehicle in conformity vi^ith
§ 567.5(f) of this chapter. The assumption of
responsibility by an intermediate manufacturer
does not, however, change the requirements for
incomplete vehicle manufacturers in 568.4.
§568.8 Requirements for persons who alter
certified vehicles.
[A person who alters a vehicle that has been
previously certified in accordance with § 567.4 or
§ 567.5, other than by the addition, substitution, or
removal of readily attachable components such as
mirrors or tire and rim assemblies, or minor
finishing operations such as painting, or who alters
a vehicle in such a manner that its stated weight
ratings are no longer valid, before the first pur-
chase of the vehicle in good faith for purposes
other than resale, shall ascertain that the vehicle
as altered conforms to the standards which are
affected by the alteration and are in effect on the
original date of manufacture of the vehicle, the
date of final completion, or a date between those
two dates. That person shall certify the vehicle in
accordance with § 567.7 of this chapter. (45 F.R.
18928-March 24, 1980. Effective: March 24,
1980)1
April14, 1971
36 F.R. 7054
(Rev. 3/24/80)
PART 568-3-4
•
MkMv*: April 1, 19««
PREAMBLE TO PART 569— REGROOVED TIRES
(Docket No. 20; Notice No. 4)
The purpose of this amendment is to establish
criteria under which regrooved tires may be sold
or delivered for introduction into interstate com-
merce. The regulation allows only tires designed
for the regrooving process to be regrooved;
specifies dimensional and conditional require-
ments for the tire after the regrooving process;
and sets forth labeling requirements for the tire
which is to be regrooved.
Section 204(a) of the National Traffic and
Motor Vehicle Safety Act of 1966 (15 U.S.C.
1424) provides that no person shall sell, offer for
sale, or introduce for sale or delivery for intro-
duction into interstate commerce, any tire or
motor vehicle equipped with any tire which has
been regrooved but gives the Secretary the au-
thority to permit the sale of regrooved tires and
motor vehicles equipped with regrooved tires
when the regrooved tires are designed and con-
structed in a manner consistent with the pur-
poses of the Act.
A Notice was published (32 F.R. 11579) af-
fording interested persons an opportunity to
present views, information and data to form the
basis for permitting the sale and delivery for
introduction into interstate commerce of re-
grooved tires and motor vehicles equipped with
regrooved tires.
After considering the comments, data, infor-
mation received and the state-of-the-art a pro-
posed regulation setting forth criteria to govern
the regrooving of tires was published (33 F.R.
8603). All comments received have been con-
sidered.
As proposed, it was not clear that the defini-
tion of regroovable and regrooved tires would
allow the regrooving of retreaded tires. Two
comments asked whether the regulation would
allow the established practice of regrooving a
retreaded motor vehicle tire. The Administrator
has determined that regrooving sound retreaded
tires does not affect their level of safety per-
formance. Accordingly, the regulation as issued
is clarified so as to allow regrooving of both
original tread and retreaded motor vehicle tires.
There is presently under consideration a Federal
motor vehicle safety standard for retreaded tires.
When this standard is established, retreaded tires
that are regrooved will have to conform to the
retread requirements as well as the regrooved
tire regulations.
•The Notice of Proposed Rule Making appearing In
June 12, 1968, Issue of the Federal Regitter (33 F.R.
8603) was Issued under 23 CFR 256, Parts of the Code
of Federal Regulations relating to motor vehicle safety
were transferred to Title 49 by Part II of the Federal
RegMer of Decemt)er 25, 1968 (33 F.R. 19700).
Section 256.5(a)(3) as contained in the Notice
of Proposed Rule Making would have required
that, after the regrooving process, there be a
protective covering of tread material at least
%2-inch thick over the tire cord. Four comments
asked that this requirement be deleted. It was
argued that this would require the removal of
regrooved tires with "many usable miles" re-
maining on the tires.
The %2-inch undertread requirement is di-
rectly comparable to the undertread of a new
tire. It is considered necessary that there be
%2 of an inch of rubber over the cord material
as a protection against road hazard damage.
Furthermore, this protection is considered essen-
tial in order to prevent moisture entering the ply
material and subsequently causing deterioration
of the tire fabric and ply adhesion. For these
reasons, it is concluded that to allow an under-
tread of less than %2 of ^^ iiich would not be in
the public interest.
One comment argued that a tire would have to
be completely cut to determine the thickness of
the undertread. Since it is acceptable practice
to determine undertread depth by use of an awl
and only a very limited degree of expertise is
PART 569— PRE 1
Effcctlva: April 1, 1969
needed to make this measurement without caus-
ing damage to the tire, this argument has been
rejected.
Section 256.5(a) (4) as contained in the Notice
of Proposed Rule Making would have required
tliat after regrooving, the tire have a minimum
of 90 linear inches of tread edges per linear foot
of tire circumference. Four comments requested
clarification of this requirement as to whether the
original molded tread was to be included in the
measurements for this requirement. The initial
intent of this requirement was to include only
the newly cut grooves. However, after consid-
ering the fact that residual existent grooves offer
tread edges which contribute to the traction of
the tire, the regulation as issued is revised to
allow that portion of the original tread pattern
of a regroovable tire which is at least as deep
as the new regroove depth to be included within
the calculation of the 90 linear inches of tread
edges required in each foot of tire circumference.
Section 256.5(a)(5) as contained in the Notice
of Proposed Rule Making would have required
that, after regrooving, the groove width be a
minimum of Yie-inch and a maximum of yie-i^^ch.
Four comments requested clarification whether
this requirement applied to the original molded
tread pattern as well as the tread pattern created
by regrooving. It was not intended that this
requirement apply to the original molded tread
pattern and the regulation as issued is revised
to make this clear.
One comment pointed out that the use of the
term "tractionizing" within Section 256.5(b) was
too general and that the proper term for cross-
cutting the tread without rubber removal is
"siping." Accordingly, the regulation as issued
is revised to reflect this suggestion.
Section 256.7 as contained in the Notice of
Proposed Rule Making specified certain labeling
requirements for regroovable and regrooved tires.
Four comments contended that the labeling re-
quirements should not be included within the
regulation. Two other comments stated that the
proposed labeling was too large and requested
smaller size symbols and letters. The Adminis-
trator recognizes that several names or brands
are used to identify regroovable tires and has
therefore determined that concise identification
of regroovable tires is needed. For this reason
the regulation as issued requires molding on a
regroovable tire the word "Regroovable," but
permits lettering one half the size proposed in
the Notice of Proposed Rule Making. However,
with regard to the proposed requirement that
each regrooving be indicated on the tire, it was
found that such a requirement was not necessary
in view of the minimum undertread requirement
in the regulation and that proposed requirement
has been deleted.
In consideration of the foregoing. Part 369 —
Regrooved Tire Regulation set forth below is
added to Title 49 — Transportation, Chapter III —
Federal Highway Administration, Department of
Transportation, Subchapter A — Motor Vehicle
Safety Regulations. [This regulation becomes
effective April 1, 1969. (34 F.R. 3687— March
1, 1969.)!
This regulation is issued under authority of
Sections 119 and 204 of the National Traffic and
Motor Vehicle Safety Act of 1966 (15 U.S.C.
1407 and 1424) and the delegation from the
Secretary of Transportation, Part I of the Regu-
lations of the Office of the Secretary (49 CFR
§ 1.4(c)).
Issued January 17, 1969.
Lowell K. Bridwell,
Federal Highway Administrator
34 F.R.
January
1149
24, 1969
SECTION
369.1 Purpose and Scop*
369.3 Daflnitlons
369.5 Applicability
369.7 Roqulromonti
369.9 Laboling of RogroovabU Tiro*
PART 669— PRE 2
Effactiv*: April 1, 1969
PREAMBLE TO AMENDMENT TO PART 569— REGROOVED TIRES
(Docket No. 20; Notice 5)
Extension of Effective Date
On January 24, 1969, the Federal Highway
Administrator published in the Federal Register
(34 F.R. 1149) a regulation setting forth the
conditions under which regrooved tires would be
allowed to be sold, offered for sale, introduced
for sale, or delivered for introduction into inter-
state commerce. As published the regulation had
an effective date of February 28, 1969.
Several petitions have been received requesting
reconsideration of the regrooved tire regulation.
The Administrator finds that the petitions do
not raise either substantial arguments that have
not been carefully considered in issuing the regu-
lation or matters that would require a change in
the regulation, and, therefore, the petitions are
denied.
Several petitioners have requested that the
effective date of the regulation be postponed.
Upon consideration of these requests, I find that
good cause exists for postponing the effective
date of the regrooved tire regulation, 49 CFR
Part 369, from February 28, 1969, to April 1,
1969.
Issued on February 28, 1969.
John R. Jamieson,
Federal Highway Administrator
34 F.R. 3687
March 1, 1969
PART 569— PRE 3-4
•
•
i
Mtoctlvai April 30, 1974
PREAMBLE TO AMENDMENT TO PART 569--REGROOVED TIRES
(Docket 74-19; Netic* 1)
i
This notice amends regulations applicable to
regrooved and regroovable tires in response to
an opinion of the United States Court of Appeals
in NAM BO v. Volpe 484 F.2d 1294 (D.C. Cir.,
1973), cert, denied US (1974).
The Regrooved Tire regulation was published
January 24, 1969 (34 F.R. 1149).
In light of the decision in the case cited, 49
CFR Part 569, "Regrooved Tires," is revised. . . .
Effective date: April 30, 1974. This amend-
ment is issued in response to a decision of the
United States Court of Appeals, and in accord-
ance therewith imposes restrictions required by
statute. Accordingly, notice and public proce-
dure thereon are unnecessary and good cause is
found for an effective date less than 30 days from
publication.
(Sees. 119, 204, Pub. L. 89-563, 80 Stat. 718,
15 U.S.C. 1407, 1424; delegation of authority at
49 CFR 1.51.)
Issued on April 24, 1974.
James B. Gregory
Administrator
39 F.R. 15038
April 30, 1974
PART 669— PRE 6-6
•
Effacllve: March 7, 1977
PREAMBLE TO AMENDMENT TO PART 569— REGROOVED TIRES
(Docket No. 74-19; Notice 2)
This amendment of the refnjiation jjoveming
the sale and use of regrooved tires implements
a provision of the National Traffic and Motor
Vehicle Safety Act (the Act) that the lease as
well as the sale of certain regrooved tires be
permitted. The Act was amended in 1974 to
permit lease as well as sale, following a court
decision which construed the Act to permit only
the sale of regrooved tires.
Effective Date : March 7, 1977.
For Further Information Contact :
Tad Herlihy, Office of Chief Counsel,
National Highway Traffic Safety Admin-
istration,
Washington, D.C. 20090.
(202-i26-9oll)
Supplementary Information: Section 204(a)
of the National Traffic and Motor ^'ehicle Safety
Act (the Act) (ir) U.S.C. § 1424(a)) governs
the sale and use of regrooved tires. Regrooved
tires are defined in the Act as tires on which a
new tread has been produced by cutting into the
tread of a worn tire. As enacted originally.
§ 204(a) provided:
Sec. 204. (a) No person shall sell, olfer for
sale, or introduce for sale or deliver for intro-
duction in intei-state conunerce, any tire or
motor vehicle equipped with any tire which
has been regrooved, except that the Secretary
may by order permit the sale of regrooved tires
[designed and constructed in accordance with
the Act's intent].
Part .')69 of NHTSA regulations was issued
(34 FR 1149, January 24, 1969) to implement
tiiis provision, and its addressed both the cir-
cumstances under which lease and sale of re-
grooved tires would be permissible. A United
States Court of Appeals found this aspect of
Part 569 impermissibly broad, and held invalid
that portion of the regulation which would au-
thorize the introduction in interstate commerce
of regrooved tires by means other than by sale.
{National Association of Motor Bus Owners v.
BHnegar, 483 F2d 1284 (7th Cir 1973)) Sub-
sequently, the agency amended Part 569 to con-
form to the court's decision (39 FR 15038, April
30, 1974).
Section 204(a) was amended in 1974 so that
the Secretary may by order pennit the sale,
offer for sale, introduction for sale, or delivery
for introduction in interstate commerce of re-
grooved tires that are properly designed and
constructed. (Pub. L. 93^92, § 110(c) (October
27, 1974)) The agency hereby amends §569.1
and 569.7(a) to reflect this statutory change.
In consideration of the foregoing, 49 CFR Part
569, "Regrooved Tires," is amended. . . .
Effective Date Finding: Because this amend-
ment implements a statutory provision and
creates no additional requirement for any person,
it is found that notice and public procedure
thereon are unnecessary and that an immediate
effective date is in the public interest.
(Sec. 119, Pub. L. 89-563, 80 Stat. 718 (15
U.S.C. 1407); Sec. 110(c), Pub. L. 93-492, 88
Stat. 1484 (15 U.S.C. 1424) ; delegation of au-
thority at 49 CFR 1.50.)
Issued on February 28, 1977.
Jolin AV. Snow
Administrator
42 F.R. 21612
April 28, 1977
PART 569— PRE 7-8
•
•
PART 569— REGROOVED TIRES
§ 569.1 Purpose and Scope.
This part sets forth the conditions under which
regrooved and regroovable tires manufactured or
regrooved after the effective date of the regulation
may be sold, offered for sale, introduced for sale or
delivered for introduction into interstate
commerce.
§ 569.3 Definitions.
(a) Statutory Definitions. All terms used in
this part that are defined in Section 102 of the
National Traffic and Motor Vehicle Safety Act
of 1966 (15 U.S.C. 1391) are used as defined in
the Act.
(b) Motor Vehicle Safety Standard Defini-
tions. Unless otherwise indicated, all terms used
in this part that are defined in the Motor Vehicle
Safety Standards, Part 371, of this subchapter
(hereinafter "The Standards") are used as de-
fined therein without regard to the applicability
of a standard in which a definition is contained.
(c) "Regroovable tire" means a tire, either
original tread or retread, designed and con-
structed with sufficient tread material to permit
renewal of the tread pattern or the generation
of a new tread pattern in a manner which con-
forms to this part.
(d) "Regrooved tire" means a tire, either
original tread or retread, on which the tread
pattern has been renewed or a new tread has
been produced by cutting into the tread of a
worn tire to a depth equal to or deeper than the
molded original groove depth.
§ 569.5 Applicability.
(a) General. Except as provided in paragraph
(b) of this section, this part appHes to all motor
vehicle regrooved or regroovable tires manufac-
tured or regrooved after the effective date of the
regulation.
(b) Export. This part does not apply to re-
grooved or regroovable tires intended solely for
export and so labeled or tagged.
§ 569.7 Requirements.
(a) Regrooved tires.
(1) Except insofar as permitted by para-
graph (a) (2) of this section, no person shall
sell, offer for sale, or introduce or deliver for
introduction into interstate commerce regrooved
tires produced by removing rubber from the
surface of a worn tire tread to generate a new
tread pattern. Any person who regrooves tires
and leases them to owners or operators of
motor vehicles and any person who regrooves
his own tires for use on motor vehicle is con-
sidered to be a person delivering for introduc-
tion into interstate commerce within the
meaning of this part.
(2) A regrooved tire may be sold, offered
for sale, or introduced for sale or delivered
for introduction into interstate commerce only
if it conforms to each of the following require-
ments:
(i) The tire being regrooved shall be a
regroovable tire;
(ii) After regrooving, cord material be-
low the grooves shall have a protective cov-
ering of tread material at least %2-inch thick.
(iii) After regrooving, the new grooves
generated into the tread material and any
residual original molded tread groove which
is at or below the new regrooved groove
depth shall have a minimum of 90 linear
inches of tread edges per linear foot of the
circumference:
(iv) After regrooving, the new groove
width generated into the tread material shall
PART 569-1
be a minimum of yie-inch and a maximum
of %6-inch.
(v) After regrooving, all new grooves
cut into the tread shall provide unobstructed
fluid escape passages; and
(vi) After regooving, the tire shall not
contain any of the following defects, as de-
termined by a visual examination of the tire
either mounted on the rim, or dismounted,
whichever is applicable:
(A) Cracking which extends to the
fabric,
(B) Groove cracks or wear extending
to the fabric, or
(c) Evidence of ply, tread, or sidewall
separation.
(vi) If the tire is siped by cutting the
tread surface without removing rubber, the
tire cord material shall not be damaged as
a result of the siping process, and no sipe
shall be deeper than the original or retread
groove depth.
(b) Siped regroovable tires. No person shall
sell, offer for sale, or introduce for sale or de-
liver for introduction into interstate commerce
a regroovable tire that has been siped by cutting
the tread surface without removing rubber if the
tire cord material is damaged as a result of the
siping process, or if the tire is siped deeper than
the original or retread groove depth.
§ 569.9 Labeling of Regroovable Tires.
(a) Regroovable Tires. After August 30,
1969, each tire designed and constructed for re-
grooving shall be labeled on both sidewalls with
the word "Regroovable" molded on or into the
tire in raised or recessed letters .025 to .040 inches.
The word "Regroovable" shall be in letters 0.38
to 0.50 inches in height and not less than 4 inches
and not more than 6 inches in length. The let-
tering shall be located in the sidewall of the tire
between the maximum section width and the
bead in an area which will not be obstructed by
the rim flange.
34F.R. 1150
January 24, 1969
•
PART 569-2
Effactiv*: SaptomlMr 28, 1973
PREAMBLE TO PART 570— VEHICLE IN USE INSPEaiON STANDARDS
(Docket No. 73-9; Notice 2)
This notice adds Part 570, Vehicle In Use In-
spection Standards to Chapter V, Title 49, Code
of Federal Regulations.
Part 570 does not in itself impose requirements
on any person. It is intended to be implemented
by the States through the highway safety pro-
gram standards issued under the Highway Safety
Act (23 U.S.C. 402) with respect to inspection
of motor vehicles with a gross vehicle weight
rating of 10,000 pounds or less, except motor-
cycles and trailers. Greneral provisions regard-
ing vehicle inspection are set forth in NHTSA
Highway Safety Program Manual Vol. 1 Pe-
nodic Motor Vehicle Inspection. Standards and
procedures are adopted for hydraulic service
brake systems, steering and suspension systems,
tire and wheel assemblies.
Interested persons have been afforded an op-
portunity to participate in the making of these
amendments by a notice of proposed rulemaking
published in the Federal Register on April 2,
1973 (38 F.R. 8451), and due consideration has
been given to all comments received in response
to the notice, insofar as they relate to matters
within the scope of the notice. Except for edi-
torial changes, and except as specifically dis-
cussed herein, these amendments and the reasons
therefore are the same as those contained in the
notice.
Policy considerations. A total of 120 comments
were received in response to the notice. These
comments were submitted by State motor vehicle
agencies, national safety organizations, motor
vehicle associations, vehicle and equipment manu-
facturers, antique car clubs and owners, public
interest groups, and individual citizens. The
commenters were predominantly in favor of
periodic motor vehicle inspection (PMVT) and
the establishment of uniform motor vehicle in
use safety standards throughout the United
States.
As the NHTSA stated in the prior notice,
cost-benefit factors were the primary policy con-
sideration in developing the inspection standards
and procedures. The primary concern of the
States was the socioeconomic impact on the
motoring public as well as the impact on the
State itself. The general consensus was that the
proposed inspection requirements would require
a significant increase in facilities, operating per-
sonnel, and equipment. Though cost effective-
ness was a predominant concern the States
nevertheless felt that inspections should include
vehicles over 10,000 pounds gross vehicle weight
and be extended to include other vehicle sys-
tems. Several States expressed concern for the
cost of implementing the proposed standards,
estimating it at from $10 to $14 per car. Even
though these States favored PMVI and now
have PMVI or random inspection they felt that
implementation costs would have a decided eco-
nomic impact.
NHTSA has responded to these comments
allowing an optional road test as a check of
service brake system performance, adopting
neither of the proposed parking brake proce-
dures, and simplifying test procedures where pos-
sible so that tests may be conducted with a
minimiun added expenditure for equipment, per-
sonnel, and facilities. These matters will be
discussed subsequently.
The establishment of the proposed standards
as "minimum requirements" was questioned by
several States as leading to a "watering down"
of current requirements in those States which
currently meet or exceed them. The NHTSA
repeats its intent that the standards are not in-
tended to supplant State standards that estab-
lish a higher performance, or to discourage them
from establishing or maintaining standards for
other vehicle systems not covered by NHTSA.
PART 570— PRE 1
Effaclive: September 28, 1973
A number of comments were received from
antique car clubs and individual owners who be-
lieve that antique, special interest, and vintage
cars should be exempt from the proposed stand-
ards. These comments should be directed to the
States. Each State has its own definitions and
registration requirements for vehicles of this
nature, and the NHTSA intends the States to
implement Part 570 to the extent that it is com-
patible with its current requirements for these
special vehicles.
Several respondents commented that the pro-
posed standard should be expanded to include
lighting, glazing, exhaust, wipers, horns, con-
trols, and instrumentation systems. The con-
sensus was that the cost -benefit ratio would
materially increase if these systems were in-
cluded in the proposed standard since inspection
of these systems does not require time-consuming
procedures or special tools, and corrective meas-
ures are less costly to the owner. Some con-
sidered it contradictory that safety systems
covered by the Federal standards must meet
safety performance requirements at the time of
manufacture and not during the service life of
the vehicle. As the NHTSA stated in the prior
notice, the initial Federal effort is intended to
cover those vehicles and vehicle systems whose
maintenance in good order has proven critical
to the prevention of traffic accidents. Require-
ments for motorcycles and trailers, and for less
critical systems, are under study, and the NHTSA
intends to take such rulemaking action in the
future as may be appropriate to cover them.
Applicability. A frequent comment was that
the standards and procedures should be expended
to cover vehicles whose GVWR exceeds 10,000
pounds. Because braking and steering and sus-
pension systems on these vehicles differ mate-
rially from those on lighter vehicles, different
criteria must be established and the proposed
standards simply cannot be extended to cover
them. The NHTSA, however, is developing ap-
propriate inspection standards and procedures
for heavy vehicles and will propose them in a
notice to be issued by mid-October 1973.
Brake systems. Several comments were re-
ceived questioning the procedure for determining
operability of the brake failure indicator lamp.
In some vehicles the parking brake indicator
and service brake system failure indicator use
the lamp and the methods of simulating failure
vary.
It is realized that the procedure specified by
the standard is general in nature and cannot
cover all possible systems. In those vehicles
where a lamp test cannot be executed in the nor-
mal manner the test will have to be conducted
in accordance with the manufacturer's specifica-
tions, as determined by the vehicle inspector.
The brake system integrity test for fluid leak-
age has been modified on the basis of comments
that it was not stringent enough. It was pro-
posed that decrease in pedal height under 125
pounds force for 10 seconds should not exceed
one-quarter of an inch. The requirement adopted
is that there be no perceptible decrease in pedal
height when 125 pounds of force is applied to
the brake pedal and held for 30 seconds.
The brake pedal reserve test has been adopted
substantially as proposed, and specifies that the
engine be operating at the time of the test. Ve-
hicles with full power (central hydraulic) brake
systems are exempted from this test as the service
brake performance test will be adequate to test
such systems.
The service brake performance test offers the
option of a road test, or testing upon a drive-on
platform or roller-type brake analyzer (origi-
nally proposed under the title "Brake equaliza-
tion"). States that conduct random inspections,
and those that designate agents to perform ve-
hicle inspections, objected strenuously to a test
requiring the use of roller-type or drive-on test
equipment. Consequently, an alternate test has
been adopted which requires vehicles to stop from
20 mph in 25 feet or less without leaving a 12-
foot wide lane. It is intended that this option
be used only by States where it is current prac-
tice, and it is hoped that such States where
practicable will change to the drive-on brake
platform or roller-type brake analyzer tests. The
terms "crimped" and "damaged" have been elimi-
nated as causes for rejection of brake hoses, as
redundant. If brake discs and drums are not
embossed with safety tolerances, the require-
ment has been added that they be within the
manufacturer's recommended specifications.
PART 570— PRE 2
Effacllv*: S«pl«nib*r 28, 1973
The primary concern regarding power assist
units was that the brake pedal will rise instead
of falling on a full-power brake system when
tested according to the procedure proposed. In
view of the basic design of a full-power brake
system this test would not be a proper check of
system operation, and will not be required. As
noted earlier, the service brake performance test
will be used as the primary test of the full-
power brake performance. To accord with the
terminology of Standard No. 105a this section
has been renamed "Brake power units."
The parking brake system inspection proposal
proved controversial. The NHTSA proposed
two objective, alternate tests, the first requiring
the system to hold the vehicle on a 17 percent
grade, and the second requiring the system to
stop the vehicle from 20 mph within 54 feet.
The first was objected to principally on the
ground that each inspection station would have
to construct a 17 percent grade. This would
present problems for both inline and bay type
inspection facilities. The stopping distance test,
on the other hand, was opposed as a dynamic
test more appropriate for service brake evalua-
tion. In view of these objections, the parking
brake inspection requirements were not adopted.
Steering and suspension, systems. The primary
objections to the steering wheel test for free
play concerned the test condition with the engine
off on vehicles equipped with power steering, the
linear measure of system free play (instead of
angular measure to eliminate the variance due
to steering wheel diameters), and the 2-inch free
play limit for rack and pinion type steering gear.
The tolerance proposed and adopted for steer-
ing wheel free play is 2 inches for wheels of
16 inches diameter or less, since few passenger
car steering wheels exceed this diameter. How-
ever, a table of free play values for older vehicles
with steering wheels over 16 inches in diameter
has been added to the standard. The require-
ment to have the engine running is being added
to the procedure since steering wheel play can
be greater with the engine off than with the en-
gine on for cars equipped with power steering.
Steering play on cars eqiiipped with rack and
pinion type steering will require further review
to determine if the 2-inch tolerance should be
changed.
Some comments argued that wheel alignment
tolerances were considered too restrictive in the
toe-in condition, and too lenient in toe-out. Some
comments recommended visual inspection of tire
wear as criteria to determine alignment. How-
ever, visual inspection of tire wear is not con-
sidered a valid method of checking alignment,
and therefore was not adopted as an alternate
method. No consensus of alternative values could
be derived from the comments, and the proposed
tolerances of 30 feet per mile have been adopted.
The requirements for the condition of shock
absorber mountings, shackles, and U-bolts have
been changed from "tight" to "securely attached"
as a clarification.
Tire and wheel assembly standards and in-
spection procedures. Several comments were re-
ceived suggesting that rim deformation in excess
of one-sixteenth of an inch be permitted, as the
proposed tolerance would result in rejection of
otherwise safe vehicles. The primary concern
of the requirement is air retention, and since
vehicles with wheel deformation of one-sixteenth
of an inch apparently perform satisfactorily in
service without hazard the deformation tolerance
has been increased to three thirty-seconds of an
inch runout for both lateral and radial bead seat
areas.
Ejfectivity. Several commenters questioned the
proposed effective date, 30 days after publica-
tion of the final rule. The NHTSA considers
it in the public interest that minimum Federal
standards for motor vehicles in use become effec-
tive without further delay. Implementation by
the States will take place within the context of
their highway safety programs, and the plans
approved by the NHTSA under the Highway
Safety Act, 23 U.S.C. 402.
In consideration of the foregoing. Title 49,
Code of Federal Regulations is amended by add-
ing Part 570 to read as set forth below.
Eifective date. Sept. 28, 1973. Since this part
does not in itself impose requirements on any
person it is determined for good cause shown
that an effective date earlier than 180 days after
PART 570— PRE 3
EffKtlvc: S*pl«mb«r 28, 1973
publication of the final rule is in the public Issued on : Aug. 29, 1973.
interest. James B. Gregory
(Sec. 103, 108, 119, Pub. L. 89-563, 80 Stat. Administrator
718, 15 U.S.C. 1392, 1397, 1407; delegation of 38 F.R. 23949
authority at 49 CFR 1.51.) September 5, 1973
PART 570— PRE 4
Effacllv*: May 9, 1974
PREAMBLE TO AMENDMENT TO PART 570— VEHICLE IN USE INSPEQION STANDARDS
(Docket No. 73-9; Notice 4)
This notice responds to petitions for reconsid-
eration of Vehicle In Use Inspection Standards
and amends the standards in certain minor
respects.
The Vehicle In Use Inspection Standards, 49
CFR Part 570, were published on September 5,
1973 (38 F.R. 23919). Thereafter, p\irsuant to
49 CFR 553.35, petitions for reconsideration of
the rule were received from Motor Vehicle Manu-
facturers Association (MVMA), Rubber Manu-
facturers Association (RMA), Firestone Tire
and Rubber Company (Firestone), General
Motors Corporation (GM), and Ford Motor
Company (Ford). This notice discusses the
major issues raised by these petitions and their
resolution.
Ford called NHTSA's attention to an over-
sight in the inspection procedure for brake pedal
reserve in § 570.5. Notice 1 proposed a force of
25 pounds for power-assisted brake systems and
50 pounds for all other brake systems. These
forces were inadvertently omitted in Notice 2,
and, accordingly, § 570.5 is amended to include
them.
GM and the MVMA requested that the period
during which a 125-pound force is applied to the
brake pedal be reduced from 30 seconds to 10
seconds. Since the purpose of the standard is to
check for brake fluid leakage, and this can be
determined during a 10-second period, the peti-
tion is granted.
Ford requested that § 570.5(e) "Service Brake
System — Brake Hoses and Assemblies" be
amended to allow "rub rings," installed as hose
protection devices, to come in contact with a
vehicle body or chassis. The purpose of these
devices as stated by Ford is to prevent damage
to hose or tubing and thus promote motor vehicle
safety. NKTSA, after investigation, lias deter-
mined that rub rings or similar protective devices
do provide brake hose and tube protection, and
§ 570.5(e) is amended accordingly. However,
should the rub rings wear or abrade to the extent
that the hoses or tubing contact the chassis or
vehicle body, the vehicle should be rejected.
GM requested that the procedure for inspect-
ing steering wheel lash in § 570.7(a) be revised
so as to yield more consistent results between
examiners and inspection stations. It was GM's
contention that the term "perceptible movement"
was too subjective, and that the many intangible
factors involved in the inspection procedure
would not provide an objective and repeatable
test. Tlie procedure recommended by GM would
involve applying a specified force in one direction
to remove lash and provide a small amount of
torsional wind up, releasing the wheel, and ap-
plying another force in the same direction to
establish a reference point. The process would
be repeated in the opposite direction to establish
a second reference point. The distance between
the two points would then be measured.
Although the inspection procedure proposed by
GM may provide a more objective test of steer-
ing system play, it is the belief of NHTSA that
additional time will be required to evaluate their
proposal under field test conditions with various
steering wheel diameters. Therefore, action on
this request will be held in abeyance pending
completion of such a study.
Ford and GM requested a change in the toe-in
alignment specifications listed in § 570.7(d),
stating that several vehicles currently in service
would exceed the 30 ft/mi toe-in limits estab-
lished in the standard. For example, 1974 Ford
Service Specifications — Tire Scrub (based on a
29-in diameter tire/wheel assembly) shows a
maximum toe-in for certain Ford vehicles of
82.5 ft /mi based on 11.78 ft/mi tire scrub for
each Vie-in toe-in. In its submission to Docket
PART 570— PRE 5
Iffactlva: May 9, t974
No. 73-9, Ford recommended that the toe-in re-
quirement be no more stringent than 1.5 times
the manufacturer's maximum toe-in specification.
In consideration of the wide variance between
manufacturers' toe-in specification, the limits of
±30 ft/mi currently used in some State inspec-
tions appear to be reasonable for some vehicles
and unduly restrictive for others. § 570.7(d),
therefore, is amended to make the requirement
more equitable.
The NHTSA, however, believes that wheel
alignment designs with high toe-in values are not
in the best interests of the consumer, as both tire
wear and fuel economy are aflFected adversely
with high toe-in/toe-out conditions. For this rea-
son, industry siction to alleviate this problem will
Ije carefully ol>served.
RMA and Firestone petitioned for a clarifica-
tion of the language of § 570.9(b) concerning tire
type. It was suggested that "tire size designa-
tion" would be more explicit than tire "nominal
size." NHTSA believes the suggested phrase
more clearly defines the intent of the standard,
and the petition is granted.
The petitioners additionally contend that the
language in § 570.9(b) (i), notably "major mis-
match" and "major deviation," could lead the
inspector to reject tires that do not have exactly
the tire size designation (s) specified by the ve-
hicle manufacturer. NHTSA disagrees with this
interpretation of the inspection procedure. The
language allows the inspector to pass any vehicle
equipped with tires that meet the published
vehicle-manufacturer or RMA criteria for tire
replacement. Tires with special characteristics
such as extra wide sport type tires, "slicks", and
extra low profile tires would not meet the criteria
for replacement tires. The petition is, therefore,
denied.
Both RMA and Firestone requested a change
in the language of § 570.9(d) (i) which specified
the use of an awl to probe cuts on tires as a
method for evaluating the extent of tire damage.
Firestone strongly recommended the use of a
•
"blunt instrument" rather than an awl to prevent
further damage to the tire. The NHTSA feels
that this is a constructive request, and the peti-
tion is granted.
RMA and GM requested a change in § 570.10
(b) regarding the limits and the procedure for
checking lateral and radial runout of wheel as-
semblies. GM contended, based on a survey of
500 vehicles of its employees, that the %2 ^^
runout specification is too restrictive and that
owners of vehicle with runouts of 0.050 to 0.225
in did not experience loss of air pressure or any
detectable vibration. GM recommended a runout
specification of at least i/g in. After reviewing
the GM data, NHTSA has determined that the
request is reasonable and, therefore, the petition
is granted. Accordingly § 570.10(b) is amended
to reflect the 14-in radial and lateral runout
limits.
Finally there were several requests to include
provisions for non-matching spare or emergency
tires, prohibition of radial-ply tire mix with any
other tire type on the same vehicle, and recom-
mendations for inclusion of minimum criteria for
accuracy of test devices. Since these topics were
not included in prior rulemaking notices, these
recommendations will be considered for future
action.
In consideration of the foregoing, 49 CFR
Part 570, Vehicle In Use Inspection Standards,
is amended. . . .
Effective date : May 9, 1974.
(Sec. 103, 108, 119, Pub. L. 89-563, 80 Stat.
718, 15 U.S.C. 1392, 1397, 1401; delegation of
authority at 49 CFR 1.51.)
Issued on April 3, 1974.
James B. Gregory
Administrator
39 F.R. 12867
April 9, 1974
PART 570— PRE 6
Effcctiv*: August 14, 1974
PREAMBLE TO AMENDMENT TO PART 570— VEHICLE IN USE
INSPECTION STANDARDS
(Docket No. 73-9; Notice 7)
This notice amends Part 570, Vehicle in Use
Inspection Standards, Chapter V, Title 49, Code
of Federal Regulations by adding inspection
standards and procedures for brake systems,
steering and suspension systems, and tire and
wheel assemblies for all motor vehicles with a
gross vehicle weight rating that exceeds 10,000
pounds.
Interested persons have been afforded an op-
portunity to participate in the making of these
amendments by a notice of proposed rulemaking
published in the Federal Register on October 11,
1973 (38 CFR 28077), and due consideration has
been given to all comments received in response
to the notice.
A total of twenty-nine comments were re-
ceived in response to the notice. These comments
were submitted by State motor vehicle agencies,
motor vehicle manufacturers, tire and brake
equipment manufacturers, the Motor Vehicle
Manufacturers Association, and the American
Association of Motor Vehicle Administrators.
The comments were predominantly in favor of
periodic motor vehicle inspection, although prob-
lem areas in the inspection of vehicles over
10,000 pounds were presented.
An exemption for mobile homes from the pro-
posed rulemaking action was requested by the
Mobile Home Manufacturers Association who
contended that since mobile homes are mcrved
about 2.3 times during their life span and are
constructed for use primarily as residential
dwellings and not as motor vehicles for use on
the highways, they should be excluded from the
proposed regulation. The Recreational Vehicle
Institute, however, suggested that different in-
spection frequencies for motor homes and recrea-
tional trailers as related to other commercial
vehicles would be appropriate. The NHTSA
concludes that motor homes and recreational ve-
hicles should not be excluded from periodic in-
spection, but the period between inspections
should be determined by the States based on the
requirements that may be unique to their par-
ticular jurisdiction.
The Professional Drivers Council suggested
that inspection intervals should be based upon
vehicle use, in lieu of calendar periods, in order
to ensure adequate inspection frequency. They
suggested 20,000 miles between inspections as a
feasible criterion. Although NHTSA agrees
that distance as well as time is an important
criterion in determining inspection intervals, it
has concluded that each State should determine
inspection intervals based upon the driving con-
ditions experienced by motor vehicles within its
jurisdiction.
Many comments questioned the time required
to check the brake system integrity of a hy-
draulic brake system, and suggested that the time
of application be changed to 10 seconds. Since
the purpose of this check is to determine whether
there is any leakage of hydraulic fluid during
operational conditions, and the consensus of
comments indicates that this can be accomplished
equally well during a 10-second test, the sugges-
tion is adopted and § 570.55 will be worded
accordingly.
Ford and MVMA requested that a brake pedal
force be included in the brake pedal reserve
check, and that a note be added regarding the
effect of a vacuum booster on test validity. The
suggestion to include a pedal force is considered
valid, and § 570.55(c) will include a brake pedal
force of 50 lbs. NHTSA concludes, however,
that the terminology "full power (central hy-
draulic) brake system and brake systems de-
PART 570— PRE 7
EffacHvc: Augut* 14, 1974
signed to operate with greater than 80% pedal
travel" properly describes brake systems, and
that a note to include a reference to a vacuum
booster is not required.
Several comments suggested exemption of
protective rings from consideration as part of a
hose or tubing assembly. These have been found
to have merit, and § 570.55(d) exempts protec-
tive rings or devices from consideration in re-
gard to contact with vehicle body or chassis.
Several comments were received requesting
clarification of the requirements of truck and
trailer vacuum system checks in § 570.56. In
response, this section has been rewritten to re-
quire the capability of at least one service brake
application at a 50-pound brake pedal pressure
after the engine has been turned off to verify
operation of vacuum system. The inspection
procedure has been revised to cover trailers
equipped either with brake chamber rods or with
enclosed chambers and hydraulic systems.
A large number of comments were received
regarding § 570.57 (Air Brake System Integ-
rity). This section has been altered from the
proposal to change air pressure limits, time of
test, and engine idling speed, thus clarifying the
terminology and allowing test limits to more
properly reflect operating conditions.
Comments on § 570.58 were submitted by Wag-
ner and MVMA regarding wire gage and current
capacity, sensing of surge force during test, and
comparison of GVIVR to capacity and number
of brakes. The NHTSA concludes that § 570.58
properly covers these areas and that no change
from the proposal is necessary.
Several comments were received on § 570.59,
service brake system testing, regarding the feasi-
bility of roller-type or drive-on platform testers
for large vehicles, and questioning the 25-percent
allowable imbalance of braking forces between
wheels on same axle. Since the test procedure
is designed to locate a serious imbalance condi-
tion, the NHTSA concludes that the recom-
mended 25 percent or less imbalance requirement
will provide the desired safety benefit. How-
ever, if future test data show that upgrading the
requirement to a 20 percent maximum imbalance
is warranted, NHTSA shall propose that the
requirement be made more stringent.
The feasibility of inspection of brake linings
and other internal components as compared to
road testing was questioned by several com-
mentors. While the optimum inspection of
brake assemblies would require the removal of
the wheels, the NHTSA has found that the re-
moval of a wheel in most vehicles in the 10,000
pound and over GV^VR class requires special
skills and training, as well as replacement of oil
seals, for reassembly. Therefore, this inspection
procedure is limited to wheels which are
equipped with inspection ports or access open-
ings, thereby avoiding the need to remove the
wheels.
Several comments were received regarding
stopping distances of 35 feet versus 40 feet for
combination vehicles and truck tractors for the
road test at 20 mph. The present Bureau of
Motor Carrier Safety standard is 40 feet, and
NHTSA has decided that this value is adequate
for safety purposes. The standard is worded
accordingly.
In response to the comments received, the in-
spection procedure for checking front wheel
steering linkage free play in § 570.60 is changed
from the proposal to provide for proper testing
of vehicles with and without power steering.
Alignment limits are increased to 1.5 times the
value listed in the vehicle manufacturer's service
specification for alignment setting to allow for
variations in vehicles due to age and differences
in test equipment readouts.
Commentors on § 570.61, suspension system,
requested clarification of the proposed require-
ment that "Springs shall not be broken or ex-
tended by spacers." This sentence is reworded
to read "Springs shall not be broken and coil
springs shall not be extended by spacers."
Several comments were received regarding
tread depth requirements in § 570.62, and the
number of places around the circumference of a
tire where measurements should be taken. The
standard is worded so as to measure tread depth
in two adjacent major grooves at three locations
spaced approximately 120 degrees apart for tires
without tread wear indicators. A clarification
was requested of the use of the terms "construc-
tion", "profile", and "nominal size" in describing
tires and of the % in. limit on overall diameter.
PART 570— PRE 8
Effactiv*: August 14, 1974
In response, this section is worded to read "Ve-
hicles should be equipped with tires on the same
axle that are matched in construction and size
designation, and dual tires shall be matched for
overall diameter within one-half inch."
In consideration of the foregoing, 49 CFR
Part 570, Vehicle In Use Inspection Standards,
is amended by denoting the existing sections
570.1 through 570.10 as Subpart A, Vehicles with
GVWR of lOpOO Pounds or Less, and by adding
a new Subpart B, Vehicles with GVWR of More
Than 10,000 Pmmds
Effective date: August 14, 1974. Since this
part consists of standards for State inspection
programs and does not directly impose require-
ments on any person, it is determined for good
cause Siiown that an effective date earlier than
180 days after publication of the final rule is in
the public interest.
(Sees. 103, 108, 119, Public Law 89-563, 80
Stat. 718, 15 U.S.C. 1392, 1397, 1407; delegation
of authority at 49 CFR 1.51.)
Issued on July 9, 1974.
James B. Gregory
Administrator
39 F.R. 26026
July 16, 1974
PART 570— PRE 9-10
•
Ellactlve: August 13, 1974
PREAMBLE TO AMENDMENT TO PART 570— VEHICLE IN USE
INSPECTION STANDARDS
(Docket No. 73-9; Notice 8)
This notice amends Part 570, Subpart B, Ve-
hicle in Use Inspection Standards, Motor Ve-
hicles with a GT\VR of More Than 10,000
Pounds, in Title 49, Code of Federal Regula-
tions, by making it clear that the standard does
not apply to mobile structure trailers.
On July 16, 1974, NHTSA promulgated Sub-
part B to Part 570 which consisted of vehicle in
use standards for motor vehicles with a GVWR
of more than 10,000 pounds (39 F.R. 26026).
In response to the notice of proposed rulemaking
which preceded it (38 F.R. 28077), the Mobile
Homes Manufacturers Association (MHMA)
commented that their data indicated that the
average mobile home is moved once every 40
months or about 2.3 times during its life, that it
spends less than 12 hours on the public roads
during its 18 to 20 year life span, and that it
spends 0.055% of its useful life on the highway.
NHTSA concluded, therefore, that mobile struc-
ture trailers should not fall within the ambit of
the standard at this time.
By letter of July 19, 1974, the Mobile Homes
Manufacturers Association (MHMA) pointed
out that while motor homes and recreational ve-
hicles were specifically made subject to the
standard, no reference was made to mobile struc-
ture trailers except to reiterate MHMA's com-
ments to the proposed rule. To clarify this
ambiguity and the agency's intent, § 510.53 is
hereby amended ....
Effective date: August 13, 1974. Since this
amendment does not impose requirements on any
person and is meant to clarify a preceding rule,
it is found for good cause shown that an imme-
diate effective date is in the public interest.
(Sees. 103, 108, 119, Public Law 89-563, 80
Stat. 718, 15 U.S.C. 1392, 1397, 1407; delegation
of authority at 49 CFR 1.51.)
Issued on August 7, 1974.
James B. Gregory
Administrator
39 F.R. 28980
August 13, 1974
PART 570— PRE 11-12
Effective: February 4, 1975
PREAMBLE TO AMENDMENT TO PART 570— VEHICLE IN USE INSPECTION STANDARDS
(Docket No. 73-9; Notice 9)
This notice responds to petitions for recon-
sideration of Vehicle in Use Inspection Stand-
ards for vehicles with a GVIVR of more than
10,000 pounds.
NHTSA issued on July 16, 1974, the vehicle
in use inspection standards to be implemented
by the States for vehicles with a GVAVR of more
than 10,000 pounds (39 F.R. 26026). Subse-
quently, petitions for reconsideration were re-
ceived from Ford Motor Company (Ford),
General Motors Corporation (GM), the Motor
Vehicle Manufacturers Association (MVMA),
the Midland-Ross Corporation (Midland) and
the Bendix-Westinghouse Corporation (Bendix).
The NHTSA response to matters raised in these
petitions will be given by subject grouping.
Brake Pedal Reserve
Ford has called the attention of NHTSA to a
typographical error in the formula shown in sub-
paragraph 570.55(c)(1) and used for computing
the brake pedal reserve. Instead of the rela-
tionship A-B , the formula should be shown
AxlOO
A-B
as — r— x 100. The standard will be corrected
A
accordingly.
Midland petitioned to revise the wording in
paragraph 570.55(c) to require vehicles with
modified vehicle brake systems, such as with an
additional tag axle utilizing existing hydraulic
brake fluid capacity, to meet the requirements
of the brake pedal reserve test. Currently, this
test is waived for all vehicles with brake systems
designed to operate with greater than 80 percent
pedal travel, whether through original design or
modification. Since it was NHTSA's original
intent that the waiver apply only when the
original manufacturer's design criteria estab-
lished pedal travel at greater than 80%, this
petition is granted, and the second sentence of
paragraph 570.55(c) is amended to read:
"The brake pedal reserve test is not required
for vehicles with brake systems designed by the
original vehicle manufacturer to operate with
greater than 80 percent pedal travel."
Air Brake System Integrity
Ford petitioned to expand Table 1 (Air brake
system pressure build-up time) to include ve-
hicles equipped with reservoirs of .smaller ca-
pacities and varying designs, such as vehicles
that use wedge brakes and the newly-developed
compact brake chambers. Further, GM recom-
mended that the values in Table 1 representing
total reservoir volume be separated by 1 cubic
inch to avoid column overlapping and resultant
errors in utilizing the tables. The NHTSA con-
curs with these suggestions, and Table 1 is ex-
panded to include requirements for 9-inch and
12-inch brake chambers and the columnar reser-
voir volume range values are separated by 1 cubic
inch.
GM questioned the chamber volumes used in
Table 1 as "not reflecting a substantial portion
of industry usage." This question was also dis-
cussed by Midland-Ross, which submitted cham-
ber area volume figures ranging from 16 inches
to 36 inches. Likewise, Bendix submitted volume
figures which were consistent with those sub-
mitted by Midland-Ross. The Midland-Ross
petition also suggested that to be fair to all
manufacturers, the reservoir build-up times as
shown in Table 1 should be increased by a factor
of 20 percent to compensate for normal com-
pressor wear and deterioration. NHTSA con-
curs in these views, and Table 1 is amended to
utilize composite volume figures deemed repre-
sentative of industry practice for the representa-
tive brake chambers as shown in Table 2 below :
PART 570— PRE 13
Effacllva: February 4, 1975
Table 2. — Chamber Volumes for Representative
Brake Chambers
Chamber Size (Inches)
Volume (Cubic Inches)
12
16
20
24
30
36
18
25
43
51
66
88
125
Further, the following formula is established to
compute the time in seconds:
Time ( Seconds) = Actual Reservoir Capacity x 25 x 1.20
Required Reservoir Capacity
Bendix petitioned for the use of only a single
maximum time figure of 30 seconds for an in-
crease in the air pressure from 85 to 100 {jsi in
the reservoirs with the engine running at the
vehicle manufacturer's maximum recommended
number of revolutions per minute. Although
this requirement would simplify Table 1, it would
not cover all of the combinations of brake cham-
bers and reservoirs used in the trucking industry.
NHTSA therefore concludes that Table 1 is
necessary, and Bendix's petition is accordingly
denied.
MVMA in its petition pointed out the prob-
lems involved in requiring the inspector to iden-
tify the number and size of brake chambers and
the number and size of the reservoirs before he
could use Table 1. In the judgment of this
agency, it is not an unreasonable burden on the
truck owner or operator to provide this readily-
available information to an inspector at the time
of inspection. MVMA's petition is therefore
denied.
Midland petitioned to revise paragraph 570.57
(a)(1) to assure conformity of test conditions
between FMVSS 121 and the air brake system
pressure build-up test of Table 1. This request
is considered valid, and paragraph 570.57(a)(1)
is revised to read: "The air brake system com-
pressor shall increase the air pressure in the
truck or truck tractor reservoir (s) from 85 to 100
psi in not more than the time specified in Table
1, with the engine running at the vehicle manu-
facturer's maximum recommended number of
revolutions per minute."
Ford petitioned for the elimination of
570.61(b), Shock absorber condition, contending
that shock absorbers do not affect the safety of
all large motor vehicles, are offered only to im-
prove operator comfort and have only a minimal
effect on vehicle stability. Although the rela-
tionship between comfort and control may be
hard to define, NHTSA concludes that the op-
erator's response to varying loads, weather con-
ditions, and road conditions is affected by the
condition of the shock absorbers on the motor
vehicle being driven. Further, results of two
test programs carried out by NHTSA indicate
that shock absorber degradation does have an
effect on the handling characteristics of motor
vehicles. Therefore, based on currently available
data, NHTSA concludes that the shock absorbers
are a contributing factor to safe motor vehicle
operations, and Ford's petition is denied.
In consideration of the foregoing, 49 CFR
Part 570, Subpart B, Motor Vehicles With a
GVWR of More Than 10,000 Pounds, is amended
as follows:
Ejfective date: February 4, 1975. Because the
amendments correct errors and modify inspec-
tion procedures, but create no additional burden,
it is found for good cause shown that they should
be effective immediately on publication.
(Sees. 103, 108, 119, Pub. L. 84-563, 80 Stat.
718; 15 U.S.C. 1392, 1397, 1401; delegation of
authority at 49 CFR 1.51)
Issued on January 24, 1975.
Noel C. Bufe
Acting Administrator
40 F.R. 5159
February 4, 1975
PART 570— PRE 14
Effective: April 1, 1976
PREAMBLE TO AMENDMENT TO PART 570— VEHICLE
IN USE INSPECTION STANDARDS
(Docket No. 73-9; Notice 10)
This notice amends 49 CFR Part 570, Subpart
B, Vehicle in Use Inspection Standards for Ve-
hicles With GVWR of More Than 10.000 Pounds,
and responds to a petition to amend 49 CFR
Part 570, Subpart A, Vehicle in Use Inspection
Standards for Vehicles With GVWR of 10,000
Pounds or Less.
On December 17, 1974, the Illinois Department
of Transportation on behalf of the American
Association of Motor Vehicle Administrators
petitioned the National Hi<rhway Traffic Safety
Administration (NHTSA) to revise the toe-in
ali<rnment tolerances found in § 570.7(d) of the
Vehicle in Use Inspection Standards (49 CFR
570.7(d)). In support of its petition, Illinois
forwarded a report written by the Amerco Tech-
nical Center, a wholly-owned subsidiary of the
firm which also owns the U-Haul rental system
and Kar-Go manufacturing service, and vehicle
repair centers. The report recommended that
the Vehicle in Use Inspection Standards should
be amended to establish maximum toe-in read-
ings based on vehicle type rather than vehicle
model and manufacturer.
Section 570.7(d), Steering systems alignment,
requires that toe-in and toe-out measurements
for motor vehicles with a GVWR of 10,000
pounds or less shall not be greater than 1.5 times
the values listed in the vehicle manufacturer's
service specifications for alignment settings. This
tolerance was established to allow for the degra-
dation that occurs in the vehicle alignment sys-
tem due to wear, while maintaining a reasonable
safety standard for wheel alignment.
Toe-in settings are established by and are
available through vehicle manufacturers for the
specific vehicle under consideration. For ease
of usage, these specifications have also been sinn-
marized in chart form by manufacturers of test
and alignment equipment, and are readily avail-
able to inspection stations, service stations, wheel
alignment centers, and other businesses or agen-
cies that perform toe-in inspection or wheel align-
ment adjustment services. Applying a factor of
1.5 times the manufacturers toe-in specifications
is relatively simple and should not lead to con-
fusion on the part of persons performing vehicle
inspections or adjustment services.
The NHTSA concludes that the recommenda-
tion of Amerco to establish one specification for
all American made passenger cars (1960-1974),
one specification for all light duty trucks under
10,000 pounds GVWR (1962-1974), and one
specification for the majority of all foreign made
vehicles would be unreasonable in light of the
wide variations in toe-in specifications for these
vehicles. Each vehicle manufacturer tailors the
wheel alignment specifications to obtain optimum
vehicle handling characteristics. Although stand-
ardization in the area of toe-in alignment toler-
ances might be desirable, the wide variance of
specific toe-in settings required for the different
makes, models, and years of manufacture of ve-
hicles covered under this section precludes stand-
ardization by regidatory fiat. Therefore, the
petition of the Illinois Department of Transpor-
tation is denied.
On February 4, 1975, amendments to Part 570.
Subpart B, Vehicle in Use Inspection Standards
for Vehicles With GVWR of More Than 10,000
Pounds, were published in the Federal Register
(40 F.R. 5159). Requests for clarification, the
correction of clerical errors and petitions for
reconsideration were received from Midland-
Ross Corporation (Midland), Bendix Corpora-
tion (Bendix). American Trucking Association
(ATA) and Mack Truck Co. (Mack).
PART 570— PRE 15
Effective: April 1, 1976
Petitions for reconsideration of § 570.57, Air
brake system and air-over-hydraulic hrake sub-
system, were received from ATA, Bendix, Mack,
and Midland-Boss. The petitioners were con-
cerned with the air brake system pressure build-
up time requirements and the as.sociated inspec-
tion procedures.
The ATA petition pointed out the problems
involved with inspector identification of the
number and type of brake chambers and the size
of the air reservoir used with existing air brake
systems on certain vehicles. It suggested tliat
it may be difficult for an inspector to obtain the
required reference information prior to his being
able to use Table 1, "Air Brake System Pressure
Build-Up Time." Placarding truck units with
this information would be difficult, inasmuch as
there are no existing standards relative to the
placement of or requirements for placards.
Retrofitting older vehicles with placards is
equally difficult. Combination vehicles would
pose additional problems because a tractor manu-
facturer could not anticipate the type of trailer
that miglit be coupled to his tractor, thus mak-
ing it difficult to label it with the information
necessary to utilize Table 1 and Table 2.
Bendix and Mack petitioned for clarification
of the values used in the calculation of Table 2,
"Chamber Volumes for Representative Brake
Chambers," as well as the use of the values from
Table 2 in calculating the build-up time values
in Table 1. The petitioners were concerned with
the values used because the chamber volumes
utilized in Table 2 were developed for use with
air reservoir systems using an 8:1 ratio of air
reservoir volume to brake chamber volume,
rather than the present 12:1 ratio required by
Standard Xo. 121 for vehicles manufactured on
or after March 1, 1975. The petitioners were
also concerned with the problems in inspection
of brake systems, caused by the fact that the
majority of trucks on the road were built prior
to March 1, 1975, and would not have adequate
reservoir capacity in relation to brake chamber
volume.
The ATA suggested adoption of the industry
accepted procedure of combining the pressure
drop test with the pressure recovery test, thereby
eliminating all questions concerning reservoir
size, compressor capacity, and the number and
size of brake chambers. By doing this, the in-
spection procedure will be greatly simplified
without sacrificing the effectiveness of the in-
spection. With the elimination of the require-
ment for the determination of brake chamber
volumes and reservoir capacities, the necessity
for Table 1 and Table 2 no longer exists in the
determination of air brake system build-up time.
For the reasons discussed, the petitions from
ATA, Bendix, Mack, and Midland-Ross are
hereby granted. In addition, other subpara-
graphs of § 570.57(a) are reworded to clarify
their meaning.
In consideration of the foregoing, 49 CFR
Part 570, Subpart B, Vehicle in Use Inspection
Standards for Vehicles With GV^VR of More
Tlian 10,000 Poimds, is amended ....
Effective date: April 1, 1976. Because the
amendments create no additional burden on any
person, it is foimd for good cause shown that
an immediate effective date is in the public
interest.
(Sec. 103, 108, 119, Pub. L. 89-563, 80 Stat.
718 (15 U.S.C. 1392, 1397, 1407) ; delegation of
authority at 49 CFR 1.50.)
Issued on March 29, 1976.
James B. Gregory
Administrator
41 F.R. 13923
April 1, 1976
•
PART 570— PRE 16
PART 570— VEHICLE IN USE INSPECTION STANDARDS
Subpart A— Vehicles With GVWR of
Pounds or Less
570.1
Scope
570.2
Purpose
570.3
Applicability
570.4
Definitions
570.5
Service brake system
570.6
Brake power unit
570.7
Steering systems
570.8
Suspension systems
570.9
Tires
570.10
Wheel assemblies
10,000
Authority: Sees. 103, 108, 119, Public Law 89-
563, 80 Stat. 718, 15 U.S.C. 1392, 1397, 1407;
delegation of authority at 49 CFR 1.51.
§570.1 Scope. This part specifies standards
and procedures for inspection of hydraulic serv-
ice brake systems, steering and suspension sys-
tems, and tire and wheel assemblies of motor
vehicles in use.
§570.2 Purpose. The purpose of this part is
to establish criteria for the inspection of motor
vehicles by State inspection systems, in order
to reduce death and injuries attributable to
failure or inadequate performance of motor ve-
hicle systems.
§ 570.3 Applicability. This part does not in
itself impose requirements on any person. It is
intended to be implemented by States through
the highway safety program standards issued
under the Highway Safety Act (23 U.S.C. 402)
with respect to inspection of motor vehicles with
gross vehicle weight rating of 10,000 pounds or
less, except motorcycles or trailers.
§ 570.4 Definitions. Unless otherwise indi-
cated, all terms used in this part that are defined
in 49 CFR Part 571, Motor Vehicle Safety
Standards, are used as defined in that part.
§570.5 Service brake system. Unless other-
wise noted, the force to be applied during inspec-
tion procedures to power-assisted and full-power
brake systems is 25 lb., and to all other systems, 50
lb.
(a) Failure indicator. The brake system
failure indicator lamp, if part of a vehicle's
original equipment, shall be operable. (This
lamp is required by Federal Motor Vehicle
Safety Standard No. 105, 49 CFR 571.105, on
every new passenger car manufactured on or
after January 1, 1968, and on other types of
motor vehicles manufactured on or after Sep-
tember 1, 1975.)
Inspection procedure. Apply the parking brake
and turn the ignition to start, or verify lamp
operation by other means indicated by the vehicle
manufacturer that the brake system failure indi-
cator lamp is operable.
(b) Brake system integrity. The brake sys-
tem shall demonstrate integrity as indicated by
no perceptible decrease in pedal height under a
125 pound force applied to the brake pedal or by
no illumination of the brake system failure in-
dicator lamp. The brake system shall withstand
the application of force to the pedal without
failure of any line or other part.
Inspection procedure. With the engine running
on vehicles equipped with power brake systems,
and the ignition turned to "on" in other vehicles,
apply a force of 125 pounds to the brake pedal
and hold for 10 seconds. Note any decrease in
pedal height, and whether the lamp illuminates.
(c) Brake pedal reserve. When the brake
pedal is fully depressed, the distance that the
pedal has traveled from its free position shall
PART 570-1
be not greater than 80 percent of the total dis-
tance from its free position to the floorboard or
other object that restricts pedal travel.
Inspection procedure. Measure the distance (A)
from the free pedal position to the floorboard
or other object that restricts brake pedal travel.
Depress the brake pedal, and with the force
applied measure the distance (B) from the de-
pressed pedal position to the floorboard or other
object that restricts pedal travel. Determine
A-B
the percentage as x 100. The engine must
A
be operating when power-assisted brakes are
checked. The pedal reserve check is not required
for vehicles equipped with full-power (central
hydraulic) brake systems, or to vehicles with
brake systems designed to operate with greater
than 80 percent pedal travel.
(d) Service brake performance. Compliance
with one of the following performance criteria
will satisfy the requirements of this section.
Verify that tire inflation pressure is within the
limits recommended by vehicle manufacturer be-
fore conducting either of the following tests.
(1) Roller-type or drive-on platform tests.
The force applied by the brake on a front
wheel or a rear wheel shall not differ by more
than 20 percent from the force applied by
the brake on the other front wheel or the other
rear wheel respectively.
Inspection procedure. The vehicle shall be tested
on a drive-on platform, or a roller-type brake
analyzer with the capability of measuring equali-
zation. The test shall be conducted in accord-
ance with the test equipment manufacturer's
specifications. Note the left to right brake force
variance.
(2) Road test. The service brake system
shall stop the vehicle in a distance of 25 feet
or less from a speed of 20 miles per hour
without leaving a 12-foot- wide lane.
Inspection procedure. The road test shall be
conducted on a level (not to exceed plus or minus
one percent grade) dry, smooth, hard-surfaced
road that is free from loose material, oil or
grease. The service brakes shall be applied at
a vehicle speed of 20 miles per hour and the
vehicle shall be brought to a stop as specified.
Measure the distance required to stop.
(e) Brake hoses and Assemblies. Brake
hoses shall not be mounted so as to contact the
vehicle body or chassis. Hoses shall not be
cracked, chafed, or flattened. Protective devices,
such as "rub rings," shall not be considered part
of the hose or tubing.
Inspection procedure. Examine visually, inspect-
ing front brake hoses through all wheel positions
from full left to full right for conditions indi-
cated.
[Note: to inspect for (f), (g), and (h) below,
remove at a minimum one front wheel and one
rear wheel.]
(f) Disc and drum condition. If the drum
is embossed with a maximum safe diameter
dimension or the rotor is embossed with a mini-
mum safety thickness dimension, the drum or
disc shall be within the appropriate specifica-
tions. These dimensions will be found on motor
vehicles manufactured since January 1, 1971, and
may be found on vehicles manufactured for
several years prior to that time. If the drums
and discs are not embossed the drums and discs
shall be within the manufacturer's specifications.
Inspection procedure. Examine visually for con-
dition indicated, measuring as necessary.
(g) Friction materials. On each brake the
thickness of the lining or pad shall not be less
than one thirty-second of an inch over the rivet
heads, or the brake shoe on bonded linings or
pads. Brake linings and pads shall not have
cracks or breaks that extend to rivet holes except
minor cracks that do not impair attachment.
Drum brake linings shal be securely attached
to brake shoes. Disc brake pads shall be securely
attached to shoe plates.
Inspection procedure. Examine visually for con-
ditions indicated, and measure height of rubbing
surface of lining over rivet heads. Measure
bonded lining thickness over shoe surface at the
thinnest point on the lining or pad.
(h) Structural and mechanical parts. Back-
ing plates and caliper assemblies shall not be
deformed or cracked. System parts shall not
be broken, misaligned, missing, binding, or show
evidence of severe wear. Automatic adjusters
and other parts shall be assembled and installed
correctly.
PART 570-2
Inspection procedure. Examine visually for con-
ditions indicated.
§570.6 Brake power unit. Vacuum hoses
shall not be collapsed, abraded, broken, improp-
erly mounted or audibly leaking. With residual
vacuum exhausted and a constant 25 pound force
on the brake pedal, the pedal shall fall slightly
when the engine is started, demonstrating integ-
rity of the power assist system. This test is
not applicable to vehicles equipped with full
power brake system as the service brake perform-
ance test shall be considered adequate test of sys-
tem performance.
Inspection procedure. With engine running,
examine hose visually and aurally for conditions
indicated. Stop engine and apply service brakes
several times to destroy vacuum in system. De-
press brake pedal with 25 pounds of force and
while maintaining that force, start the engine.
If brake pedal does not fall slightly under force
when the engine starts, there is a malfunction in
the power assist system.
§ 570.7 Steering systems.
(a) System play. Lash or free play in the
steering system shall not exceed values shown in
Table 1.
Inspection procedure. With the engine on and the
wheels in the straight ahead position, turn the
steering wheel in one direction until there is a
perceptible movement of a front wheel. If a
point on the steering wheel rim moves more than
the value shown in Table 1 before perceptible
return movement of the wheel under observation,
there is excessive lash or free play in the steer-
ing system.
Table l.— Steering System Free Play Values
Steering
Wheel Diameter (In.)
Lash (In.)
16 or less
18
20
22
2
2/4
2%
2y,
(b) Linkage play. Free play in the steering
linkage shall not exceed one-quarter of an inch.
Inspection procedure. Elevate the front end of
the vehicle to load the ball joints. Insure that
wheel bearings are correctly adjusted. Grasp the
front and rear of a tire and attempt to turn the
tire and wheel assembly left and right. If the
free movement at the front or rear tread of the
tire exceeds one-quarter inch there is excessive
steering linkage play.
(c) Free turning. Steering wheels shall turn
freely through the limit of travel in both direc-
tions.
Inspection procedure. Turn the steering wheel
through the limit of travel in both directions.
Feel for binding or jamming in the steering
gear mechanism.
(d) Alignment. Toe-in and toe-out measure-
ments shall not be greater than 1.5 times the
value listed in the vehicle manufacturer's service
specification for alignment setting.
Inspection procedure. Verify that toe-in or toe-
out is not greater than 1.5 times the values listed
in the vehicle manufacturer's service specifica-
tions for alignment settings as measured by a
bar-type scuff gauge or other toe-in measuring
device. Values to convert toe-in readings in
inches to scuff gauge readings in ft/mi side-slip
for different wheel sizes are provided in Table 2.
Tire diameters used in computing scuff gauge
readings are based on the average maximum tire
dimensions of grown tires in service for typical
wheel and tire assemblies.
(e) Power steering system. The power steer-
ing system shall not have cracked or slipping
belts, or insufficient fluid in the reservoir.
Inspection procedure. Examine fluid reservoir
and pump belts for conditions indicated.
§ 570.8 Suspension systems.
(a) Suspension condition. Ball joint seals
shall not be cut or cracked. Structural parts
shall not be bent or damaged. Stabilizer bars
shall be connected. Springs shall not be broken,
or extended by spacers. Shock absorber mount-
ings, shackles, and U-bolts shall be securely at-
tached. Rubber bushings shall not be cracked,
extruded out from or missing from suspension
joints. Radius rods shall not be missing or
damaged.
Inspection procedure. Examine front and rear
end suspension parts for conditions indicated.
PART 570-3
Table 2.— Toe-in Settings From Vehicle MFR's Service Specifications
Wheel
Size
(In)
13
Nominal
Tire
Diameter
(In)
25.2
Readings in
Feet Per
Mile Sideslip
Me"
13.1
26.2
y.6"
39.3
52.4
65.5
%"
78.6
y>6"
91.7
104.8
y.6"
117.9
14
26.4
12.5
25.0
37.5
50.0
62.5
75.0
87.5
100.
112.5
15
28.5
11.5
23.0
34.5
46.0
57.5
69.0
80.5
92.0
103.5
16
35.6
9.3
18.6
27.9
37.2
46.5
55.8
65.1
74.4
83.7
(39 F.R. 12867-April 9, 1974. Effective: 5/9/74)
(b) Shock absorber conditions. There shall be
no oil on the shock absorber housing attributable
to leakage by the seal, and the vehicle shall not
continue free rocking motion for more than two
cycles.
Inspection procedure. Examine shock absorbers
for oil leaking from within, then with vehicle
on a level surface, push down on one end of
vehicle and release. Note number of cycles of
free rocking motion. Repeat procedure at other
end of vehicle.
§ 570.9 Tires.
(a) Tread depth. The tread on each tire shall
be not less than two thirty-seconds of an inch
deep.
Inspection procedure. Passenger car tires have
tread depth indicators that become exposed when
tread depth is less than two thirty-seconds of an
inch. Inspect for indicators in any two adjacent
major grooves at three locations spaced approxi-
mately equally around the outside of the tire.
For vehicles other than passenger cars it may be
necessary to measure tread depth with a tread
gauge.
(b) Type. Vehicle shall be equipped with
tires on the same axle that are matched in tire
size designation, construction, and profile.
Inspection procedure. Examine visually. A
major mismatch in tire size designation, construc-
tion, and profile between tires on the same axle, or
a major deviation from the size as recommended
by the manfuacturer (e.g. as indicated on the
glove box placard on 1968 and later passenger
cars) are causes for rejection.
(c) General condition. Tires shall be free
from chunking, bumps, knots, or bulges evidenc-
ing cord, ply, or tread separation from the cas-
ing or other adjacent materials.
(d) Damage. Tire cords or belting materials
shall not be exposed, either to the naked eye or
when cuts or abrasions on the tire are probed.
Inspection procedures. Examine visually for
conditions indicated, using a blunt instrument if
necesary to probe cuts or abrasions.
§570.10 Wheel assemblies.
(a) Wheel integrity. A tire rim, wheel disc,
or spider shall have no visible cracks, elongated
bolt holes or indication of repair by welding.
Inspection procedure. Examine visually for con-
ditions indicated.
(b) Deformation. The lateral and radial
runout of each rim bead area shall not exceed
one-eighth of an inch of total indicated runout.
Inspection procedure. Using a runout indicator
gauge, and a suitable stand, measure lateral and
radial runout of rim bead through one full wheel
revolution and note runout in excess of one-
eighth of an inch.
(c) Mounting. All wheel nuts and bolts shall
be in place and tight.
Inspection procedure. Check wheel retention for
conditions indicated.
38 F.R. 23949
Septembers, 1973
PART 570-4
Subpart B— Vehicles With GVWR of More Than
10,000 Pounds
570.51 Scope
570.52 Purpose
570.53 Applicability
570.54 Definitions
570.55 Hydraulic brake system
570.56 Vacuum brake assist unit and vacuum
brake system
570.57 Air brake system and air-over-hydraulic
brake subsystem
570.58 Electric brake system
570.59 Service brake system
570.60 Steering system
570.61 Suspension system
570.62 Tires
570.63 Wheel assemblies
AUTHORITY: Sees. 103, 108, 119, Public Law
89-563, 80 Stat 78, 15 U.S.C. 1392, 1397, 1407;
delegation of authority at 49 CFR 1.51.
§ 570.51 Scope. This part specifies standards
and procedures for the inspection of brake,
steering and suspension systems, and tire and
wheel assemblies, of motor vehicles in use with
a gross vehicle weight rating of more than
10,000 pounds.
§ 570.52 Purpose. The purpose of this part
is to establish criteria for the inspection of motor
vehicles through State inspection programs, in
order to reduce deaths and injuries attributable
to failure or inadequate performance of the
motor vehicle systems covered by this part.
§570.53 Applicability. This part does not
in itself impose requirements on any person. It
is intended to be implemented by States through
the highway safety program standards issued
under the Highway Safety Act (23 U.S.C. 402)
with respect to inspection of motor vehicles with
gross vehicle weight rating greater than 10,000
pounds, except mobile structure trailers.
§ 570.54 Definitions. Unless otherwise indi-
cated, all terms used in this part that are defined
in 49 CFR Part 571, Motor Vehicle Safety
Standards, are used as defined in that part.
"Air-over-hydraulic brake subsystem" means a
subsystem of the air brake that uses compressed
air to transmit a force from the driver control
to a hydraulic brake system to actuate the service
brakes.
"Electric brake system" means a system that
uses electric current to actuate the service brake.
"Vacuum brake system" means a system that
uses a vacuum and atmospheric pressure for
transmitting a force from the driver control to
the service brake, but does not include a system
that uses vacuum only to assist the driver in
applying muscular force to hydraulic or me-
chanical components.
§570.55 Hydraulic brake system. The fol-
lowing requirements apply to vehicles with hy-
draulic brake systems.
(a) Brake system failure indicator. The hy-
draulic brake system failure indicator lamp, if
part of a vehicle's original equipment, shall be
operable.
Inspection procedure. Apply the parking brake
and turn the ignition to start to verify that the
brake system failure indicator lamp is operable,
or verify by other means recommended by the
vehicle manufacturer.
(b) Brake system integrity. The hydraulic
brake system shall demonstrate integrity as in-
dicated by no perceptible decrease in pedal
height under a 125-pound force applied to the
brake pedal and by no illumination of the brake
system failure indicator lamp. The brake sys-
tem shall withstand the application of force to
the pedal without failure of any tube, hose or
other part.
Inspection procedure. With the engine running
in vehicles equipped with power brake systems
and the ignition turned to "on" in other vehicles,
apply a force of 125 pounds to the brake pedal
and hold for 10 seconds. Note any additional
decrease in pedal height after the initial de-
crease, and whether the brake system failure
indicator lamp illuminates.
(c) Brake pedal reserve. When the brake
pedal is depressed with a force of 50 pounds, the
distance that the pedal has traveled from its
free position shall be not greater than 80 percent
of the total distance from its free position to the
PART 570-5
floorboard or other object that restricts pedal
travel. The brake pedal reserve test is not re-
quired for vehicles with brake systems designed
by the original vehicle manufacturer to operate
with greater than 80 percent pedal travel.
Inspection procedure. Measure the distance
(A) from the free pedal position to the
floorboard or other object that restricts brake
pedal travel. Depress the brake pedal, and with
the force applied measure the distance (B) from
the depressed pedal position to the floorboard or
other object that restricts pedal travel. Deter-
A-R
mine the pedal travel percentage as — ^ — x 100.
The engine must be operating when power-
assisted brakes are checked.
(d) Brake hoses, master cylinder, tubes and
tube assemblies. Hydraulic brake hoses shall not
be mounted so as to contact the vehicle body or
chassis. Hoses shall not be cracked, chafed, or
flattened. Brake tubes shall not be flattened or
restricted. Brake hoses and tubes shall be at-
tached or supported to prevent damage by vibra-
tion or abrasion. Master cylinder shall not show
signs of leakage. Hose or tube protective rings
or devices shall not be considered part of the
hose or tubing.
Inspection procedure. Examine visually brake
master cylinder, hoses and tubes, including
front brake hoses, through all wheel positions
from full left turn to full right turn for condi-
tions indicated.
§570.56 Vacuum brake assist unit and vac-
uum brake system. The following requirements
apply to vehicles with vacuum brake assist units
and vacuum brake systems.
(a) Vacuum brake assist unit integrity. The
vacuum brake assist unit shall demonstrate in-
tegrity as indicated by a decrease in pedal height
when the engine is started and a constant 50-
pound force is maintained on the pedal.
Inspection procedure. Stop the engine and apply
service brake several times to destroy vacuum in
system. Depress the brake pedal with 50 pounds
of force and while maintaining that force, start the
engine. If the brake pedal does not move slightly
under force when the engine starts, there is a
malfunction in the power assist unit.
(b) Low-vacuum indicator. If the vehicle has
a low-vacuum indicator, the indicator activation
level shall not be less than 8 inches of mercury.
Inspection procedure. Run the engine to
evacuate the system fully. Shut off the engine
and slowly reduce the vacuum in the system by
moderate brake applications until the vehicle
gauge reads 8 inches of mercury. Observe the
functioning of the low-vacuum indicator.
(c) Vacuum brake system integrity. The vac-
uum brake system shall demonstrate integrity by
meeting the following requirements: (1) The
vacuum brake system shall provide vacuum re-
serve to permit one service brake application
with a brake pedal force of 50 pounds after the
engine is turned off without actuating the low
vacuum indicator. (2) Trailer vacuum brakes
shall operate in conjunction with the truck or
truck tractor brake pedal.
Inspection procedure. Check the trailer vacuum
system by coupling trailer(s) to truck or truck
tractor and opening trailer shutoff valves. Start
the engine and after allowing approximately
1 minute to build up the vacuum, apply and
release the brake pedal. In the case of trailer
brakes equipped with brake chamber rods, ob-
serve the chamber rod movement. Run the en-
gine to re-establish maximum vacuum, then shut
off the engine and apply the brakes with a 50-
pound force on the brake pedal. Note the brake
application and check for low-vacuum indicator
activation.
For a combination vehicle equipped with
breakaway protection and no reservoir on the
towing vehicle supply line, close the supply line
shutoff valve and disconnect the supply line.
Apply a 50-pound force to the brake pedal on the
towing vehicle and release. Trailer brakes should
remain in the applied position.
(d) Vacuum system hoses, tubes and connec-
tions. Vacuum hoses, tubes and connections
shall be in place and properly supported. Vac-
uum hoses shall not be collapsed, cracked or
abraded.
Inspection procedure. With the engine running,
examine hoses and tubes for the conditions indi-
cated and note broken or missing clamps.
PART 570-6
§570.57 Air brake system and air-over-
hydraulic brake subsystem. The following re-
quirements apply to vehicles with air brake and
air-over-hydraulic brake systems. Trailer(s)
must be coupled to a truck or truck-tractor for
the purpose of this inspection, except as noted.
(a) Air brake system integrity. The air
brake system shall demonstrate integrity by
meeting the following requirements.:
(1) With the vehicle in a stationary position,
compressed air reserve shall be sufficient to per-
mit one full service brake application, after the
engine is stopped and with the system fully
charged, without lowering reservoir pressure
more than 20 percent below the initial reading.
(2) The air brake system compressor shall
increase the air pressure in the reservoirs) from
the level developed after the test prescribed in
§ 570.57(a)(1) to the initial pressure noted be-
fore the full brake application, with the engine
running at the manufacturer's maximum recom-
mended number of revolutions per minute with
the compressor governor in the cut-off position,
in not more than 30 seconds for vehicles manu-
factured prior to March 1, 1975. For vehicles
manufactured on or after March 1, 1975, the
time allowed for air pressure build-up shall not
exceed 45 seconds.
(3) The warning device (visual or audible)
connected to the brake system air pressure source
shall be activated when air pressure is lowered
to an activating level that is not less than 50 psi.
For vehicles manufactured to conform to Federal
Motor Vehicle Safety Standard No. 121, the low-
pressure indicator shall be activated when air
pressure is lowered to an activating level that is
not less than 60 psi.
(4) The governor cut-in pressure shall be not
lower than 80 psi, and the cut-out pressure shall
be not higher than 135 psi, unless other values
are recommended by the vehicle manufacturer.
(5) Air brake pressure shall not drop more
than 2 psi in 1 minute for single vehicles or
more than 3 psi in 1 minute for combination
vehicles, with the engine stopped and service
brakes released. There may be an additional
1 psi drop per minute for each additional towed
vehicle.
(6) With the reservoir(s) fully charged, air
pressure shall not drop more than 3 psi in 1 minute
for single vehicles or more than 4 psi in 1 minute
for combination vehicles, with the engine stopped
and service brakes fully applied. There may be an
additional 1 psi drop per minute for each additional
towed vehicle.
(7) The compressor drive belt shall not be badly
worn or frayed and belt-tension shall be sufficient
to prevent slippage.
Inspection procedure. With the air system
charged, open the drain cocks in the service and
supply reservoir on the truck or truck-tractor.
Note the pressure at which the visual or audible
warning device connected to the low-pressure
indicator is activated. Close the drain cocks, and,
with the trailer(s) uncoupled, check air pressure
build-up at the manufacturer's recommended
engine speed. Observe the time required to raise
the air pressure from 85 to 100 psi. Continue
running the engine until the governor cuts out and
note the pressure. Reduce engine speed to idle,
couple the trailer(s), if applicable, and make a
series of brake applications. Note the pressure at
which the governor cuts in. Increase engine
speed to fast idle and charge the system to its
governed pressure. Stop the engine and record
the pressure drop in psi per minute with brakes
released and with brakes fully applied.
(b) Air brake system hoses, tubes and
connections. Air system tubes, hoses and
connections shall not be restricted, cracked or
improperly supported, and the air hose shall not be
abraded.
Inspection procedure. Stop the engine and
examine air hoses, tubes and connections visually
for conditions specified.
(c) Air-over-hydraulic brake subsystem
integrity. The air-over-hydraulic brake
subsystem shall demonstrate integrity by meeting
the following requirements:
(1) The air brake system compressor shall increase
the air pressure in the reservoir(s) from the level
developed after the test prescribed in § 570.57(a) (1)
to the initial pressure noted before the fuU brake
application, with the engine running at the manufac-
turer's recommended number of revolutions per
minute and the compressor governor in the cut-out
PART 570-7
position, in not more than 30 seconds for vehicles
manufactured prior to March 1, 1975. For vehicles
manufactured on or after March 1, 1975, the time
for air pressure build up shall not exceed 45
seconds.
(2) The warning device (visual or audible)
connected to the brake system air pressure source
shall be activated when the air pressure is low-
ered to not less than 50 psi.
(3) The governor cut-in pressure shall be not
lower than 80 psi, and the cut-out pressure shall
not be higher than 135 psi, unless other values
are recommended by the vehicle manufacturer.
(4) Air brake pressure shall not drop more
than 2 psi in 1 minute for single vehicles or
more than 3 psi in 1 minute for combination
vehicles, with the engine stopped and service
brakes released. Allow a 1-psi drop per minute
for each additional towed vehicle.
(5) With the reservoir(s) fully charged, air
pressure shall not drop more than 3 psi in 1
minute for single vehicles or more than 4 psi in
1 minute for combination vehicles, with the en-
gine stopped and service brakes fully applied.
Allow a 1-psi pressure drop in 1 minute for each
additional towed vehicle.
(6) The compressor drive belt shall not be
badly worn or frayed and belt tension shall be
sufficient to prevent slippage
Inspection procedure. With the air system
charged, open the drain cocks in the service and
supply reservoir on the truck or truck-tractor.
Note the pressure at which the visual or audible
warning device connected to the low pressure
indicator is activated. Close the drain cocks and,
with the trailers uncoupled, check air pressure
build up at the manufacturer's recommended
engine speed. Observe the time required to raise
the air pressure from 85 to 100 psi. Continue
running the engine until the governor cuts out
and note the pressure. Reduce engine speed to
idle, couple trailers, and make a series of brake
applications. Note the pressure at which the
governor cuts in. Increase engine speed to fast
idle and charge the system to its governed pres-
sure. Stop the engine and record the pressure
drop in psi per minute with brakes released and
with brakes fully applied.
(d) Air-over-hydraulic brake subsystem, hoses,
master cylinder, tubes and connection's. System
tubes, hoses and connections shall not be cracked
or improperly supported, the air and hydraulic
hoses shall not be abraded and the master cylin-
der shall not show signs of leakage.
Inspection procedure. Stop the engine and
examine air and hydraulic brake hoses, brake
master cylinder, tubes and connections visually
for conditions specified.
§ 570.58 Electric brake system.
(a) Electric brake system integrity. The av-
erage brake amperage value shall be not more
than 20 percent above, and not less than 30 per-
cent below, the brake manufacturer's maximum
current rating. In progressing from zero to
maximum, the ammeter indication shall show no
fluctuation evidencing a short circuit or other
interruption of current.
Inspection procedure. Insert a low range (0
to 25 amperes for most 2- and 4-brake systems
and 0 to 40 amperes for a 6-brake system) d.c.
ammeter into the brake circuit between the con-
troller and the brakes. With the controller in
the "off' position, the ammeter should read zero.
Gradually apply the controller to the "full on"
position for a brief period (not to exceed 1
minute) and observe the maximum ammeter
reading. Gradually return the controller to
"full off' and observe return to zero amperes.
Divide the maximum ammeter reading by the
number of brakes and determine the brake
amperage value.
(b) Electric brake wiring condition. Electric
brake wiring shall not be frayed. Wiring clips
or brackets shall not be broken or missing.
Terminal connections shall be clean. Conductor
wire gauge shall not be below the brake manu-
facturer's minimum recommendation.
Inspection procedure. Examine visually for
conditions specified.
§ 570.59 Service brake system.
(a) Service brake performance. Compliance
with any one of the following performance cri-
PART 570-8
teria will satisfy the requirements of this section.
Verify that tire inflation pressure is within the
limits recommended by the vehicle manufac-
turer before conducting either of the following
tests.
(1) Roller-type or drive-on platform tests.
The force applied by the brake on a front wheel
or a rear wheel shall not differ by more than
25 percent from the force applied by the brake on
the other front wheel or the other rear wheel
respectively.
Inspection procedure. The vehicle shall be
tested on a drive-on platform, or a roller-type
brake analyzer with the capability of measuring
equalization. The test shall be conducted in ac-
cordance with the test equipment manufacturer's
specifications. Note the brake force variance.
(2) Road test. The service brake system shall
stop single unit vehicles, except truck-tractors,
in a distance of not more than 35 feet, or combi-
nation vehicles and truck-tractors in a distance
of not more than 40 feet, from a speed of 20
mph, without leaving a 12-foot-wide lane.
Inspection procedure. The road test shall be
conducted on a level (not to exceed plus or minus 1
percent grade), dry, smooth, hardsurfaced road
that is free from loose material, oil or grease. The
service brakes shall be applied at a vehicle speed of
20 mph and the vehicle shall be brought to a stop as
specified. Measure the distance required to stop.
Note. Inspect for (b), (c), and (d) below on
vehicles equipped with brake inspection ports or
access openings, and when removal of wheel is
not required.
(b) Disc and drum condition. If the drum is
embossed with a maximum safe diameter dimen-
sion or the rotor is embossed with a minimum
safe thickness dimension, the drum or disc shall
be within the appropriate specifications. These
dimensions will generally be found on motor
vehicles manufactured since January 1, 1971, and
may be found on vehicles manufactured for sev-
eral years prior to that time. If the drums and
discs are not embossed, they shall be within the
manufacturer's specifications.
Inspection procedure. Examine visually for the
condition indicated, measuring as necessary.
(c) Friction materials. On each brake, the
thickness of the lining or pad shall not be less
than one thirty-second of an inch over the fast-
ener, or one-sixteenth of an inch over the brake
shoe on bonded linings or pads. Brake linings
and pads shall not have cracks or breaks that
extend to rivet holes except minor cracks that
do not impair attachment. The wire in wire-
backed lining shall not be visible on the friction
surface. Drum brake linings shall be securely
attached to brake shoes. Disc brake pads shall
be securely attached to shoe plates.
Inspection procedure. Examine visually for
the conditions indicated, and measure the height
of the rubbing surface of the lining over the
fastener heads. Measure bonded lining thick-
ness over the surface at the thinnest point on the
lining or pad.
(d) Structural and mechanical parts. Back-
ing plates, brake spiders and caliper assemblies
shall not be deformed or cracked. System parts
shall not be broken, misaligned, missing, binding,
or show evidence of severe wear. Automatic
adjusters and other parts shall be assembled and
installed correctly.
Inspection procedure. Examine visually for
conditions indicated.
§ 570.60 Steering system.
(a) System play. Lash or free play in the
steering system shall not exceed the values shown
in Table 3.
Inspection procedure. With the engine on
and the steering axle wheels in the straight
ahead position, turn the steering wheel in one
direction until there is a perceptible movement
of the wheel. If a point on the steering wheel
rim moves more than the value shown in table 3
before perceptible return movement of the wheel
under observation, there is excessive lash or free
play in the steering system.
Table 3. Steering Wheel Free Play Value
Steering
Wheel Diameter (Inches)
Lash (Inches)
16 or less
18
20
22
2
2%
2y,
PART 570-9
(b) Linkage play. Free play in the steering
linkage shall not exceed the values shown in
Table 4.
Inspection procedure. Elevate the front end
of the vehicle to load the ball joints, if the
vehicle is so equipped. Insure that wheel bearing-
ings are correctly adjusted. Grasp the front and
rear of a tire and attempt to turn the tire and
wheel assemble left to right. If the free move-
ment at the front or rear tread of the tire ex-
ceeds the applicable value shown in Table 4,
there is excessive steering linkage play.
Table 4. Front Wheel Steering Linkage Free Play
Nominal bead diameter
or rim size (inches) Play (inches)
16 or less
16.01 through 18.00
18.01 or more
V4
%
(c) Free turning. Steerings wheels shall turn
freely through the limit of travel in both direc-
tions.
Inspection procedure. With the engine running
on a vehicle with power steering, or the steer-
able wheels elevated on a vehicle without power
steering, turn the steering wheel through the
limit of travel in both directions. Feel for
binding or jamming in the steering gear mech-
anism.
(d) Alignment. Toe-in or toe-out condition
shall not be greater than 1.5 times the values
listed in the vehicle manufacturer's service speci-
fication for alignment setting.
Inspection procedure. Drive the vehicle over
a sideslip indicator or measure with a tread
gauge, and verify that the toe-in or toe-out is
not greater than 1.5 times the values listed in the
vehicle manufacturer's service specification.
(e) Power steering system. The power steer-
ing system shall not have cracked, frayed or
slipping belts, chafed or abrated hoses, show
signs of leakage or have insufficient fluid in the
reservoir.
Inspection procedure. Examine fluid reservoir,
hoses and pump belts for the conditions indi-
cated.
NOTE: Inspection of the suspension system
must not recede the service brake performance
test.
§ 570.61 Suspension system.
(a) Suspension condition. Ball joint seals
shall not be cut or cracked, other than superficial
surface cracks. Ball joints and kingpins shall
not be bent or damaged. Stabilizer bars shall be
connected. Springs shall not be broken and coil
springs shall not be extended by spacers. Shock
absorber mountings, shackles, and U-bolts shall
be securely attached. Rubber bushings shall not
be cracked, extruded out from or missing from
suspension joints. Radius rods shall not be
missing or damaged.
Inspection procedure. Examine front and rear
end suspension parts for the conditions indicated.
(b) Shock absorber condition. There shall be
no oil on the shock absorber housings attribut-
able to leakage by the seal.
Inspection procedure. Examine shock absorbers
for oil leakage from within.
§ 570.62 Tires.
(a) Tread depth. The tread shall be not less
than four thirty-seconds of an inch deep on each
front tire of any vehicle other than a trailer and
not less than two thirty-seconds of an inch on all
other tires.
Inspection procedure. For tires with tread-
wear indicators, check for indicators in any
two adjacent major grooves at three locations
spaced approximately 120° apart around the
circumference of the tire. For tires without
treadwear indicators, measure the tread depth
with a suitable gauge or scale in two adjacent
major grooves at 3 locations spaces approxi-
mately 120° apart around the circumference of
the tire at the area of greatest wear.
(b) Type. Vehicles should be equipped with
tires on the same axle that are matched in con-
struction and tire size designation, and dual tires
shall be matched for overall diameter within
one-half inch.
Inspection procedure. Examine visually. A
mismatch in size and construction between
PART 570-10
tires on the same axle, or a major deviation from
the size recommended by the vehicle or tire
manufacturer, is a cause for rejection. On a
dual-tire arrangement the diameter of one of the
duals must be within one-half inch of the other
as measured by a gauge block inserted between
the tire and a caliper.
(c) General condition. Tires shall be free
from chunking, bumps, knots, or bulges evidenc-
ing cord, ply or tread separation from the casing.
Inspection procedure. Examine visually for the
conditions indicated.
(d) Damage. Tire cords or belting materials
shall not be exposed, either to the naked eye or
when cuts on the tire are probed. Reinforcement
repairs to the cord body are allowable on tires
other than front-mounted tires.
Inspection procedure. Examine visually for the
conditions indicated, using a blunt instrument if
necessary to probe cuts and abrasions.
(e) Special purpose tires. Tires marked "Not
For Highway Use" or "Farm Use Only" or other
such restrictions shall not be used on any motor
vehicle operating on public highways.
Inspection procedure. Examine visually for tires
labeled with specific restrictions.
§ 570.63 Wheel assemblies.
(a) Wheel integrity. A tire rim, wheel disc
or spider shall have no visible cracks, elongated
bolt holes, or indications of in-service repair by
welding.
Inspection procedure. Examine visually for the
conditions indicated.
(b) Cast Wheels. Cast wheels shall not be
cracked or show evidence of excessive wear in
the clamp area.
Inspection procedure. Examine \nsually for the
conditions indicated.
(c) Mounting. All wheel nuts shall be in
place and tight.
Inspection procedure. Check wheel retention
for the conditions indicated.
39 F.R. 26026
July 16, 1974
PART 570-11-12
Section Two — The Standards
Alphabetical Listing
Title Standard No.
Accelerator Control Systems 124
Brake Fluids 1 16
Brake Hoses 106
Brakes, Air Systems 121
Brakes, Hydraulic 105
Brakes, Motorcycles 122
Bus Window Retention and Release 217
Child Restraint Systems 213
Controls and Displays 100
Controls and Displays 101
Door Locks and Door Retention Components 206
Flammability of Interior Materials 302
Fuel System Integrity 301
Glazing Materials 205
Headlamp Concealment Devices 112
Head Restraints 202
Hood Latch Systems 113
Impact Protection for the Driver From the Steering Control System 203
Lamps, Reflective Devices and Associated Equipment 108
Mirrors, Rearview HI
Motorcycle Controls and Displays 123
Motorcycle Helmets 218
Occupant Crash Protection 208
Occupant Protection in Interior Impact 201
Reflecting Surfaces 107
Roof Crush Resistance 216
School Bus Body Joint Strength 221
School Bus Pedestrian Safety Devices 131
School Bus Rollover Protection 220
School Bus Seating and Crash Protection 222
Seat Belt Assemblies 209
Seat Belt Assembly Anchorages 210
Seating Systems 207
Side Door Strength 214
Steering Control Rearward Displacement 204
Theft Protection 1 14
Tires, New Pneumatic 109
Tires, New Pneumatic for Vehicles Other Than Passenger Cars 119
Tires, Non-Pneumatic for Passenger Cars 129
Tires, Retreaded Pneumatic 1 17
Tire Selection and Rims 1 10
Tire Selection and Rims, for Vehicles Other Than for Passenger Cars 120
Transmission Shift Lever Sequence, Starter Interlock and Transmission Braking Effect 102
Truck-Camper Loading 126
Vehicle Identification Number 115
Warning Devices 125
Wheel Nuts, Wheel Discs and Hub Caps 211
Window Systems, Power-Operated 118
Windshield Defrosting and Defogging Systems 103
Windshield Mounting 212
Windshield Wiping and Washing Systems 104
Windshield Zone Intrusion 219
Section Two — The Standards
Numerical Listing
Standard No. Title
124
100
Controls and Displays
125
101
Controls and Displays
126
102
Transmission Shift Lever Sequence,
Starter Interlock and Transmission
129
Braking Effect
131
103
Windshield Defrosting and
201
Defogging Systems
104
Windshield Wiping and
202
Washing Systems
203
105
Hydraulic Brake Systems
106
Brake Hoses
204
107
Reflecting Surfaces
205
108
Lamps, Reflective Devices and
Associated Equipment
206
109
New Pneumatic Tires
207
110
Tire Selection and Rims
208
111
Rearview Mirrors
209
112
Headlamp Concealment Devices
210
113
Hood Latch System
211
114
Theft Protection
212
115
Vehicle Identification Number —
213
Basic Requirements
214
116
Motor Vehicle Brake Fluids
215
117
Retreaded Pneumatic Tires
216
118
Power-Operated Windows, Partition, and
217
218
Roof Panel Systems
119
New Pneumatic Tires for Vehicles Other
Than Passenger Cars
219
120
Tire Selection and Rims for Motor
220
Vehicles Other Than Passenger Cars
221
121
Air Brake Systems
222
122
Motorcycle Brake Systems
123
Motorcycle Controls and Displays
301
302
Accelerator Control Systems
Warning Devices
Truck-Camper Loadings
New Non-Pneumatic Tires for Passenger
Cars
School Bus Pedestrian Safety Devices
Occupant Protection in Interior Impact
Head Restraints
Impact Protection for the Driver From
the Steering Control System
Steering Control Rearward Displacement
Glazing Materials
Door Locks and Door Retention
Components
Seating Systems
Occupant Crash Protection
Seat Belt Assemblies
Seat Belt Assembly Anchorages
Wheel Nuts, Wheel Discs, and Hub Caps
Windshield Mounting
Child Restraint Systems
Side Impact Protection
[Reserved]
Roof Crush Resistance — Passenger Cars
Bus Window Retention and Release
Motorcycle Helmets
Windshield Zone Intrusion
School Bus Rollover Protection
School Bus Body Joint Strength
School Bus Passenger Seating and Crash
Protection
Fuel System Integrity
Flammability of Interior Materials
•
fffacMv*: JonuGry 1, 196(
PREAMBLE TO PART 571
Initial Federal Motor Vehicle Safety Standards
(Docket No. 3)
This order establishes Initial Federal Motor
Vehicle Safety Standards for new motor vehicles
and equipment. A notice of rule making pro-
posing the Initial Standards was issued on No-
vember 30, 1966 (31 F.R. 15212, corrected 31
F.R. 15600). All pertinent matter in the written
and oral comments received has been fully con-
sidered. Considerations of time prevent discus-
sion of comments on individual standards.
The motor vehicle safety standards are rules
as that term is defined in 5 U.S.C. sec. 551(4).
The established practice is that the public record
of a rule-making procedure under 5 U.S.C. sec-
tion 553 ( former sec. 4 Administrative Procedure
Act), involving a substantive rule and instituted
upon an agency's own initiative, begins with the
notice of rule making. An agency is under no
legal duty to reveal the internal processes that
shaped the project, and interested persons are
not entitled to comment thereon, 5 U.S.C. section
533(b)(3). Where, as here, the addresses of a
proposed rule are themselves actively engaged
as experts on the subject matter, their under-
standing of the meaning and effect of a rule is
certainly not impaired by the absence of such a
disclosure. As a practical proposition, this
Agency intends to adopt a policy of the greatest
possible disclosure of underlying considerations
in future substantive rule making when it will
not operate under an unusually tight time sched-
ule. In this instance, such disclosure was not
possible, and administrative due process required
no more than publication of the notice. The re-
quirement that the standards be based on a record
does not operate to require insertion in the record
of matter not required as part of a rule-making
notice.
The following findings are made with respect
to all standards —
(1) Each standard is a minimum standard
for motor vehicle or equipment performance
which is practicable and meets the need for
motor vehicle safety, and provides objective
criteria ;
(2) Each standard is reasonable, practicable,
and appropriate for the particular class of motor
vehicle or item of equipment for which it is
prescribed ;
(3) Each standard will contribute substan-
tially to the purpose of reducing traffic accidents,
and deaths and injuries to persons resulting
therefrom, in the United States ; and
(4) The matter incorporated by reference is
reasonably available to the persons affected by
this regulation.
In addition to the vehicle classes of passengers
cars, motorcycles, trucks, buses, and trailers pro-
posed in the Notice, the initial standards as
herein established introduce the new class of
"multipurpose passenger vehicles." Only stand-
ards proposed in the Notice for vehicles now in
this class are made applicable to this class. Each
standard applies only to the class of vehicles to
which it is made applicable by its terms.
The initial standards may be amended from
time to time. Each standard remains in effect
until rescinded or superseded by a Revised
Standard actually becoming effective.
The requirements of Standard No. 209 were
originally published on August 31, 1966 (31 F.R.
11528), as a revision to the existing seat belt
standard that had been promulgated by the
Secretary of Commerce under the authority of
Public Law 88-201. At that time, it was pro-
vided that the revised standards would become
mandatory after February 28, 1967, and would
be an optional alternative to the existing stand-
ard until that date. As a result seat belt manu-
PART 571— PRE 1
lllMtIv*: January 1, I96(
facturers had already taken steps to meet the
March 1, 1967 date before the Notice for the
Initial Federal Motor Vehicle Safety Standards
was issued on December 3, 1966. To preserve the
continuity of this change to the new seat belt
standard, the March 1, 1967 effective date was
included in the proposed Initial Federal Motor
Vehicle Safety Standards. This places no cer-
tification requirement on the vehicle manufac-
turer, however, until the effective date of the
first Standard applicable to a motor vehicle
rather than motor vehicle equipment.
In consideration of the foregoing, Chapter II
of Title 23 [49] of the Code of Federal Regula-
tions is amended by adding a new Subchapter
C — Motor Vehicle Safety Regulations, effective
January 1, 1968 except Motor Safety Standard
No. 209, "Seat Belt Assemblies — Passenger Cars,
Multipurpose Passenger Vehicles, Trucks, and
Buses," which becomes effective March 1, 1967,
to read as set forth below.
This regulation was proposed as Part 245 but
will, for reasons of organization of subject mat-
ter, be issued as Part 371 [255].
This rule-making action is taken under the
authority of sections 103 and 119 of the National
Traffic and Motor Vehicle Safety Act of 1966
(15 tJ.S.C. sec. 1392, 1407) and the delegations
of authority of October 20, 1966 (31 F.R. 13952)
and January 24, 1967 (32 F.R. 1005).
Issued in Washington, D.C., on January 31,
1967.
Lowell K. Bridwell,
Acting Under Secretary
of Commerce for Transportation
(SUBPART A— GENERAL)
Sec.
371.1 Scop*
371 .3 Dtflnitiont
371.5 MaHcr incorporated by reference
371.7 Applicability
371 .9 Separability
371.11 Equivalent demonttration procedure
371.13 Labeling of Chatsis Cabs
SUBPART B— STANDARDS
371.21 Federal Motor Vehicle Safety Standards.
AUTHORITY: The provisions of this part
371 issued under sees. 103, 119, 80 Stat. 719, 728 ;
15 U.S.C. 1392, 1407.
32 F.R. 2408
February 3, 1967
•
PART 571— PRE 2
IffKtlvt: DM«mb«r 29, 1967
PREAMBLE TO AMENDMENTS TO SUBPART A § 571.3b AND § 571.7b
Federal Motor Vehicle Safety Standards Chasslt-Cab
(Docket No. 21)
A proposal to amend Part 371, Initial Federal
Motor Vehicle Safety Standards, by adding a
definition of "incomplete motor vehicles" and
specifying labeling requirements was published
in the Federal Register on December 2, 1967
(32 F.R. 6534), inviting interested persons to
comment.
The proposed amendment has been modified
to take into account the numerous written and
oral conmients received. Under the proposed
amendment an incomplete vehicle was consid-
ered a separable type of motor vehicle. Some
of the comments noted that it was unrealistic to
consider a bare chassis a motor vehicle since it
was no more a motor vehicle and capable of being
used on the public highways than many other
parts which are incorporated into a completed
vehicle. Comments also indicated that the over-
whelming majority of what was called incom-
plete motor vehicles are in the form of a chassis
with a cab attached. As such, chassis-cabs have
the capability of conforming to the standards
but the manufacturer of the chassis-cab cannot
always tell what every end use will be.
Comments from body manufacturers and truck
dealers indicated they did not have the expertise
or the physical apparatus to independently test
for all standards previously met by the manu-
facturer of the incomplete motor vehicle nor did
they think they should have to certify that these
standards have been met. The consensus of the
comments indicated that a manufacturer or dealor
should only be responsible for that which he
manufactures or affects in assembling the com-
pleted vehicle.
On the basis of the comments it appears in-
appropriate to require persons who merely add
to a chassis-cab a body or work-performing or
load-carrying structure to certify and to accept
legal responsibility for the chassis-cab's conform-
ance with all motor vehicle safety standards.
Additionally, it appears inappropriate to con-
sider bare chassis and similar assemblages motor
vehicles until they reach the chassis-cab stage at
which they are capable of meeting standards
applicable to their principal end use. Accord-
ingly, the regulation defines a chassis-cab as a
vehicle and imposes the obligation of conforming
to all standards applicable to its principal end
use upon the manufacturer of the chassis-cab
with a limited exception for the lighting
standard.
Chassis-cabs, manufactured on or after January
1, 1968, are required to meet all motor vehicle
safety standards applicable to the principal end
use intended by its manufacturer, except that
where the chassis-cab is equipped with only part
and not all of the items of lighting equipment
referred to in Standard 108, it need not meet
such standard. The chassis-cab is required to
meet Standard No. 108 whenever all of the items
of lighting equipment referred to in Standard
108 are installed on the chassis-cab. Frequently
the manufacturer of the chassis-cab will install
only a part of the lighting equipment because
he either will not know what end use will be
made of the vehicle or because the body or other
structure to be added to the chassis-cab will bo
required to bear the balance of the lighting
equipment referred to in Standard No. 108.
In order to provide a means of identifying the
chassis-cab, its date of production, the Federal
motor vehicle safety standards to which it con-
forms, and to insure that the person combining
the chassis-cab with a body or other structure
has adequate information with which to meet
his statutory responsibilities, the regulation re-
quires that chassis-cabs manufactured on or after
PART 671— PRE 8
EffKtiv*: D*c*mb«r 29, 1967
January 1, 1968, have a label affixed which sup-
plies this information.
Concurrent with the issuance of this amend-
ment the Federal Highway Administration has
issued an interpretation (1) describing the re-
sponsibility under the National Traffic and Motor
Vehicle Safety Act of 1966 of persons who com-
bine bodies or other structures with chassis-cabs
and sell the same. In brief, the interpretation
requires that persons combining such a chassis-
cab with a body or other like structure will be
responsible for compliance with the lighting
standard and for certification of such compliance
under section 114 where such person sells the
combined assemblage to another dealer. Addi-
tionally, under section 108(a)(1) the person
combining the chassis-cab with a body or other
like structure will be responsible for assuring
that the completed assemblage complies with all
applicable standards in effect on the date of
manufacture of the chassis-cab, compliance with
which has not been previously certified by the
manufacturer of the chassis-cab and for assuring
that compliance with standards previously met
by the chassis-cab have not been adversely af-
fected by reason of the addition of the body or
like structure.
The interpretive ruling, however, does not re-
quire a truck, bus, or multipurpose vehicle con-
sisting of a chassis-cab manufactured prior to
January 1, 1968, and a body or like structure
manufactured at any time, to meet any standard.
For further details interested persons are re-
ferred to the text of the ruling.
It is recognized that the problems associated
with the multistage manufacture of trucks, buses,
and multipurpose passenger vehicles are various
and complex. . . . Requests for interpretations
or modifications will be given appropriate con-
sideration.
Because the Motor Vehicle Safety Standards
issued pursuant to the National Traffic and Motor
Vehicle Safety Act of 1966 become effective
January 1, 1968, it is found for good cause that
this regulation becomes effective upon issuance.
(1) F.R. Doc. 67-15175, in Notices Section, Infra.
(Sees. 103, 119, National Traffic and Motor
Vehicle Safety Act of 1966; 15 U.S.C. 1392,
1407; delegation of authority of Mar. 31, 1967
(32 F.R. 5606), Apr. 6, 1967 (32 F.R. 6496),
July 27, 1967 (32 F.R. 11276), and Oct. 13, 1967
(32 F.R. 14277)).
Issued in Washington, D.C., on December 29,
1967.
Lowell K. Bridwell,
Federal Highway Administrator
33 F.R. 18
January 3, 1968
PART 571— PRE 4
PREAMBLE TO AMENDMENT TO PART 571
Subpart A — General
"Mobile Structure Trailer"
A mobile home for purposes of the Federal
motor vehicle safety standards is considered a
"trailer" which is defined in 49 CFR 571.3(b) as
a "motor vehicle with or without motive power,
designed for carrying persons or property and
for being drawn by another motor vehicle." On
August 15, 1968, a notice of request for comments
was published (33 F.R. 11604) announcing that
rulemaking was being considered "which would
either exclude mobile homes, offices, classrooms,
etc. from applicability of the Federal Motor
Vehicle Safety Standards * * * or classify them
as a separate category of vehicle subject to regu-
lation." Comments were requested pertinent to
these issues and Docket No. 26 was established to
receive them.
The Federal Highway Administrator has
evaluated these comments and is of the opinion
thaat a mobile home towed on its own wheels is
a "motor vehicle" within the meaning of section
102(3) of the National Traffic and Motor Vehicle
Safety Act of 1966 (hereafter the Act), and is
properly categorized as a trailer. However, dif-
ferences between mobile homes and cargo and
travel trailers are believed significant enough
to warrant the creation of a subcategory of
trailer covering mobile homes only. This new
subcategory is designated "mobile structure
trailer."
The mobile home industry has asserted that its
products are not "motor vehicles" in view of the
infrequent use of the average mobile home upon
the public streets, roads, and highways. Com-
ments to Docket No. 26 state that the average
mobile home is moved once every 40 months, that
it spends less than 12 hours on the public roads
in 18 to 20 years, and that it only spends 0.055
percent of its useful life on the highway. Thus,
it is contended that mobile homes are not "manu-
factured primarily for use on the public streets,
roads, and highways" and hence are not "motor
vehicles" for purposes of the Act.
The undisputed fact is that mobile homes as
their name implies, are constructed with a view
towards over-the-road operations; their capa-
bility for travel on public highways is their
principal advantage over fixed-site structures.
Further, no one denies that mobile homes can
present a significant safety hazard when they
perform that function.
The Administrator views his conclusion that a
mobile home towed on its own wheels is a motor
vehicle as being consistent with the criteria ex-
pressed in the opinion on mini-bikes published
October 3, 1969 (34 F.R. 15416). It is note-
worthy that many States in significant ways
accord mobile homes the same treatment as con-
ventional motor vehicles. Registration, licensing,
or other permission for use on the public roads
is generally required. A number of jurisdictions
have standards for mobile home lighting, braking,
hitching, tire loading, and axle number and
location.
Not only is a mobile home towed on its own
wheels operationally capable of being used on
public thoroughfares, it is almost exclusively so
used in traveling from plant to dealer to owner
site. Even assuming an infrequent move for the
average mobile home, mobile homes as a class are
foimd with increasing frequency on the public
roads; industry production in 1967 was 240,000
imits and the estimate for 1969 production was
400,000 units. The demand for low-cost housing
makes the industry optimistic that there will be
similar increases in years to come.
PART 571— PRE 5
Clearly, when on the public highways, a mobile
home towed on its own wheels will present a
hazard if its tires, brakes, connection to the
towing vehicle, and other factors affecting road-
worthiness and traffic safety do not meet
minimum standards. While some States, in
recognition of this problem, have adopted their
own safety standards, the Administrator believes
that the decision published , today may result in
eventual uniformity of safety standards for
mobile homes', and for that reason should be
welcomed both by the motoring public and by
the industry.
The current definition of trailer in f 571.3(b)
is sufficient to encompass mobile homes. Yet,
because of its size (10 to 14 feet in overall
width), construction (a walled and roofed struc-
ture), and purpose (general off-road dwelling or
commercial use) a mobile home is different from
a conventional cargo or travel trailer. Separa-
tion by subclassification will allow exclusion of
mobile homes from future rulemaking actions
relating to trailers which may be inappropriate
for mobile homes.
The sole standard presently applicable to
trailers (No. 108-Lamps, Reflective Devices, and
Associated Equipment) continues to be con-
sidered appropriate for mobile homes. In rec-
ognition of the limited road use of mobile homes,
manufacturers have been advised for some time
that compliance may be achieved by use of a
lighting harness removable upon completion of
transit.
The Administrator believes that mobile homes,
offices, classrooms, etc. or modular portions
thereof, should be termed mobile structures. In
consideration of the foregoing, 49 CFR 571.3(b)
is hereby amended effective immediately to add
the following:
"Mobile structure trailer" means a trailer that
has a roof and walls, is at least 10 feet wide, and
can be used offroad for dwelling or commercial
purposes.
Since this amendment merely establishes a sub-
category of trailer without imposing any addi-
tional burden on any person I find that notice
and public procedure are unnecessary and that
good cause exists for making it effective on less
than 30 days notic*.
Issued on March 20, 1970.
F. C. Turner,
Federal Highway Administrator.
35 F.R. 5333
March 31, 1970
#
•
PART 571— PRE 6
Eff*cirv«: S«ptemb«r 1, 1970
PREAMBLE TO AMENDMENT TO PART 571
Subpart A — General
"Fixed Collision Barrier"
(Docket No. 69-26)
On December 24, 1969, a proposal to amend
§ 571.3, Definitions, of Title 49, Code of Federal
Regulations, by adding a definition for "Fixed
collision barrier" was published in the Federal
Register (34 F.R. 20212). The proposed defini-
tion was intended to replace present references in
the motor vehicle safety standards to SAE Rec-
ommended Practice J850, "Barrier Collision
Tests," and to be used in future standards con-
taining performance requirements tested by
impacting a vehicle into a stationary barrier.
The intent of the definition is to establish a
firm basis upon which performance character-
istics of a vehicle may be measured and the re-
quirements of the standards enforced. Such a
definition allows manufacturers to have flexi-
bility in constructing barriers and testing their
vehicles, since the focus is on the vehicle require-
ments rather than on the test equipment.
The core of the definition is that the barrier
absorbs "no significant portion of the vehicle's
kinetic energy". It should be remembered that
this is not intended to be a description of an
actual test barrier. It is a device used in various
standards to establish required quantitative per-
formance levels of a vehicle in a crash situation,
and means simply that the vehicle must meet the
requirement no matter how small an amount of
energy is absorbed by the barrier.
So viewed, the comment that the use of the
word "significant" injects an element of sub-
jectivity into the definition is without merit.
The question whether an amount of energy ab-
sorbed by a barrier is significant is to be
answered by comparing it with the extent to
which the vehicle exceeds the performance re-
quirement. A vehicle that exceeds the require-
ments by 50 percent, for example, when impacted
into a barrier that absorbs less than 1 percent of
its kinetic energy, will probably meet the require-
ments in any case. Obversely, if a vehicle ex-
ceeds the requirements by an amount on the
order of only 1 percent when tested, energy
absorption of the same order will cast doubt on
the validity of the test or the conformity of the
vehicle. Thus, it would be inconsistent with the
purposes of the definition to follow the sugges-
tion that was made of allowing a specified per-
centage of energy absorption such as 1 percent.
Furthermore, it would be necessary for the
Bureau to test vehicles against a barrief that
absorbed at least 1 percent of the energy in each
case, in order to conclusively establish noncon-
formity. Since the precise amounts of energy
absorbed in an impact are virtually impossible
to establish, this would be a serious hindrance
to enforcement of the standards.
It was suggested that the definition allow a
plywood facing material to be used on a barrier.
It is not necessary, however, to make such a
specification, since no construction method what-
ever is prescribed, and manufacturers may use
such facings or other materials as they see fit.
Their responsibility is simply to insure that their
vehicles will meet the performance requirements
when they are impacted into a barrier whose
energy absorption approaches zero.
One comment requested that the first para-
graph be changed to make it clear that the di-
mensions of the barrier need not be such as to
prevent the passage of parts of the vehicle that
become separated during impact. Presumably
the passage of separated parts mentioned by the
commenter would not affect the measured per-
PART 571— PRE 7
EffacHva: S«pl«mb«r 1, 1970
formance (steering wheel displacement, wind-
shield retention, etc.). If it would not affect the
performance, then the vehicle would perform in
the same way when it impacted an "infinitely
large" barrier, and such a provision would be
unnecessary. If it would affect performance,
then the provision would be inappropriate, since
the point of the definition is to eliminate ambi-
guity by requiring the vehicle to meet the re-
quirements upon impact with a barrier large
enough to intercept the entire vehicle. The sug-
gestion has therefore not been adopted.
A comment questioned the phrase "level
vehicle attitude" in the second paragraph of the
proposal. The intent of this paragraph was not
to impose requirements as to vehicle attitude on
a horizontal surface, but to specify a horizontal
approach surface large enough to allow complete
damping of transient transverse or vertical
vehicle motion. The paragraph has accordingly
been reworded to specify that the approach sur-
face be large enough for the vehicle to "attain
a stable attitude" during the approach.
The third paragraph has been editorially re-
worded for clarification without change in its
substance or intent.
Issued on July 8, 1970.
Douglas W. Toms,
Director,
National Highway Safety Bureau.
35 F.R. 11242
July 14, 1970
•
•
•
PART 571— PRE 8
tntrtvt: Nbruory S, 1971
PREAMBLE TO AMENDMENT TO PART 571
Subpart A — General
"Definitions"
The purpose of this notice is to amend Sub-
part A, Greneral, of Part 571, Federal Motor
Vehicle Safety Standards, in Title 49, Code of
Federal Regulations, by adding certain defini-
tions and an explanatory section with respect to
drafting usage in the standards and regulations
issued under the National Traffic and Motor
Vehicle Safety Act.
1. A problem that arises frequently in the
drafting and interpretation of standards is ex-
pression of the concept that a vehicle or item of
equipment must meet specified requirements
within a range of values, or in connection with
all the items in a set, not simultaneously, but at
whatever point within the range or with what-
ever item in the set the Administration selects
for testing. Normal English usage describes this
concept by use of the word "any," as in the
following examples: "The vehicle must meet the
requirements of S4.1 when tested at any point
between 18 and 22 inches above the ground."
"Each tire shall be capable of meeting the re-
quirements of this standard when mounted on
any rim specified by the manufacturer as suitable
for use with that tire."
The interpretive difficulty arises because, al-
though the requirements of the standards are
drafted as descriptions of the limits within
which the Administration will test the vehicles
and equipment to which the standards apply,
some members of the public fail to recognize
this, and tend to view the standards (errone-
ously) as descriptions of the tests that manu-
facturers must perform. Thus, in the above ex-
amples, persons may mistakenly consider the
requirement as requiring only that the vehicle
must meet the requirements at some one point
between 18 and 22 inches from the ground, or
that a tire need only meet the requirements when
mounted on a particular one of the rims recom-
mended by the manufacturer. To correct any
such misconceptions, and to simplify the draft-
ing and interpretation of standards and regula-
tions, an explanatory section is hereby added to
the "General" subpart of Part 571.
2. To simplify the drafting and organization
of standards and regulations, definitions are
hereby added to the list in 49 CFR 571.3 for the
terms "longitudinal" or "longitudinally," gross
vehicle weight rating" or "GWVR," "gross axle
weight rating" or "GAWR," "gross combina-
tion weight rating" or "GCWR," and "unloaded
vehicle weight."
Since these amendments are clarifying and in-
terpretative in nature, notice and public pro-
cedure thereon are unnecessary, and they are
effective upon publication in the Federal
Register (2-5-71).
In consideration of the foregoing, Subpart A,
Greneral, of Part 571, Federal Motor Vehicle
Safety Standards, in Title 49, Code of Federal
Regulations, is amended. . . .
Issued on February 2, 1971.
Douglas W. Toms,
Acting Administrator.
36 F.R. 2511
February 5, 1971
PART 571— PRE &-10
#
•
•
EffccHvc: S«pl«inb«r I, 1971
PREAMBLE TO AMENDMENT TO PART 571— FEDERAL MOTOR VEHICLE
SAFETY STANDARDS
(Docket No. 71-8; Notice 2)
The purpose of this notice is to amend section
571.3(b) to add a definition of "firefighting ve-
hicle," and to add new section 571.8 to provide
for delayed effective dates of future standards
to which firefighting vehicles must conform.
The notice of proposed amendment upon which
this amendment is based was published in the
Federal Register on April 16, 1971, (36 F.R.
7259). This amendment is responsive to the
potential problems of manufacturers of fire-
fighting vehicles that may be caused if Federal
motor vehicle safety standards are issued after
purchase contracts are signed, to be effective be-
fore the manufacture of the vehicles in question
is completed. As noted in the prior notice, many
of these vehicles are custom-built to the buyer's
specifications and require up to 18 months or
more to complete after the contract is signed, and
the buyer, typically a unit of municipal govern-
ment, is often not in a position to renegotiate the
contract and appropriate additional funds. The
amendment specifies that the effective date for
any standard or amendment of a standard to
which a firefighting vehicle must conform shall
be 2 years after the date that notice of such
standard or amendment is published in the Fed-
eral Register, or the effective date specified in
the notice, whichever is later, unless such stand-
ard or amendment otherwise specifically provides
with respect to firefighting vehicles. This will
assure manufacturers and buyers that the ve-
hicles for which contracts are signed need only
conform to standards on which the final rules
have been issued at the time the contract is
signed, as long as the vehicles are completed
within 2 years of the signing date.
No objections to the proposal were received.
In consideration of the foregoing, 49 CFR 571
is amended ....
Effective date: September 1, 1971.
Issued on July 21, 1971.
Douglas W. Toms
Acting Administrator
36 F.R. 13926
July 28, 1971
PABT 671— PRE 11-12
•
•
#
Elhctiv*: February 12, 1972
PREAMBLE TO AMENDMENT TO PART 571— FEDERAL MOTOR VEHICLE SAFETY STANDARDS
This notice amends the definition of "Gross
axle weight rating" to reflect more clearly the
intended meaning of the phrase.
Gross axle weight rating is defined in 49 CFR
571.3 as follows:
"Gross axle weight rating" or "GAWR:
means the value specified by the vehicle
manufacturer as the loaded weight on a
single axle measured at the tire-ground
interfaces.
GAWR, as it has been interpreted by this
agency in response to questions from interested
persons, is intended to reflect the load carrying
capacity of the axle system, and not necessarily
the actual load that they may be imposed on an
axle system by a vehicle in use. The capacity
should normally be at least equal to the imposed
load, of course, but it may exceed the imposed
load to any extent desired by the vehicle manu-
facturer.
In order to express this intent more clearly,
the definition of "Gross axle weight rating" in
49 CFR § 571.3, Definitions, is hereby amended.
Effective date : February 12, 1972.
Since this amendment is interpretative in na-
ture, and reflects current understanding and
practice, it is found for good cause that notice
and public procedure thereon are unnecessary,
and that an immediate effective date is in the
public interest.
This amendment is issued under the authority
of sections 103 and 119 of the National TraflSc
and Motor Vehicle Safety Act, 15 U.S.C. 1392,
1407, and the delegation of authority at 49 CFR
1.51.
Issued on February 8, 1972.
Douglas W. Toms
Administrator
37F.R. 3135
February 12, 1972
PART 571— PRE 13-14
•
•
EffacHvai Jun* 1, 1973
PREAMBLE TO AMENDMENT TO PART 571
Subpart A — General
"Definitions"
This notice extends the applicability of the
definitions used in the Federal Motor Vehicle
Safety Standards to other regulations contained
in Chapter V of Title 49, Code of Federal Regu-
lations, and deletes the definitions of "Gross axle
weight rating" and "Gross vehicle weight rating"
from the regulations governing vehicles manu-
factured in two or more stages.
49 CFR 571.3(b) contains the definitions used
in the Federal Motor Vehicle Safety Standards.
Some of the regulations other than standards con-
tain their own definition sections defining terms
unique to the regulation, and otherwise incor-
ixjrating by reference the definitions of Part 571.
An example of this is the definition section in the
Certification Regulation, 49 CFR 567.3: "All
terms that are defined in the Act and the rules
and standards issued under its authority are used
as defined therein." However, there is no reverse
applicability of 49 CFR 571.3(b), which applies
only to terms "as used in this part." One result
has been that duplicate definitions appear in cer-
tain regulations, specifically, the identical defini-
tions of "Gross axle weight rating" and "Gross
vehicle weight rating" found in both Part 571
and the regulation on Vehicles Manufactured
in Two or More Stages, Part 568. To prevent
unnecessary duplication and the ix)ssibility of
confusion in the future, the Administration has
detennined that the definitions used in Part 571
should apply to all regulations in Chapter V, and
also that Part 568 should be amended by deleting
the definitions of "Gross axle weight rating" and
"Gross vehicle weight rating." In consideration
of the foregoing 49 CFR 571.3(b) is amended . . .
Effective date: Jime 1, 1972. Since this
amendment is administrative and interpretive in
nature and imix)ses no additional burden upon
any person, notice and public procedure thereon is
unnecessary and it may be made effective in less
than 30 days after publication in the Federal
Register.
This notice is issued under the authority of
section 103 and 119 of the National Traffic and
Motor Vehicle Safety Act of 1966 (15 U.S.C.
1392, 1407), and the delegation of authority from
the Secretary of Transportation to the National
Highway Traffic Safety Administration 49 CFR
1.51.
Issued on May 9, 1972.
Douglas W. Toms
Administrator
37 F.R. 10938
Jun* 1, 1972
PART 571— PRE 15-16
HtocHvai A^fll I, 1*79
PREAMBLE TO AMENDMENT TO PART 571— FEDERAL MOTOR VEHICLE SAFETY STANDARDS
Subpart A— ^•n«ral
This notice deletes the definition of "Occupant"
from the general definitions applicable to the
Federal motor vehicle standards.
At present, "Occupant" is defined in § 571.3
Definitions, (applicable to all standards) as "a
person or manikin seated in the vehicle, and, un-
less otherwise specified in an individual standard,
having the dimensions and weight of the 95th
percentile adult male." However, where the word
"occupant" is used in this chapter, the weight has
generally been specified if it is a necessary part
of the requirement. Thus, the definition is super-
fluous. Moreover, in instances where the use of a
weight other than that of a 95th percentile male
is assumed, the definition could be misleading.
Since this amendment is clarifying and inter-
pretative in nature, and does not affect any re-
quirements, notice and public procedure thereon
are found to be unnecessary.
Accordingly, 49 CFR § 571.3(b) is hereby
amended by deleting the definition of "occupant".
Effective date: April 1, 1973.
(Sec. 108, 119, Pub. L. 89-563, 80 Stat. 718, 15
U.S.C. 1892, 1407; delegation of authority at 49
CFR 1.51.)
Issued on February 23, 1978.
Douglas W. Toms
Administrator
38 F.R. 5636
March 2, 1973
PART 671— PRE 17-18
Efftctiv*: Jgnuory 1, 1974
PREAMBLE TO AMENDMENT TO PART 571— FEDERAL MOTOR VEHICLE SAFETY STANDARDS
Subpart A — General
This notice amends the Federal Motor Vehicle
Safety Standards, 49 CFR Part 571, by removing
the general provision excepting motor vehicles of
1,000 pounds or less curb weight other than
trailers and motorcycles (hereafter referred to as
"lightweight vehicles'') from the applicability of
the safety standards.
The NHTSA published a notice of proposed
rule making on August 16, 1972 (37 F.R. 16553)
proposing that the motor vehicle safety standards
apply to all vehicles regardless of weight. Com-
ments generally favored the proposal. Those who
opposed the proposal expressed concern that
standards compliance would hinder development
of small urban vehicles. It was recommended
that different performance requirements be
adopted for lightweight passenger cars in some
areas of the standards, such as those related to
structural crashworthiness. One commenter re-
quested that exemption not be discontinued, but
be made available for vehicles with a curb weight
of up to 1500 pounds.
The NHTSA has determined that the general
exception of lightweight vehicles from conformity
with the standards can no longer be justified, and
is hereby amending 49 CFR § 571.7(a) to remove
it. In so doing, it is mindful of the potential
effect of this action upon the development of
small, economical vehicles. As it observed in
the notice:
"It remains true that vehicles in this weight
class have inherent disadvantages in meeting
standards requiring, for example, structural
strength or considerable crush distance. Many
other important standards, on the other hand,
such as those on lighting, braking, and glazing,
should be attainable by lightweight vehicles
virtually as easily as by heavier ones. It thus
appears in the public interest to consider the
needs and problems of lightweight vehicles on
a standard-by-standard basis (as is presently
done in the case of heavy vehicles, which re-
ceive differential treatment in several stand-
ards), rather than by an across-the-board
exception."
A manufacturer has the option of petitioning
for amendment of any standard it feels is im-
practicable or inappropriate for lightweight ve-
hicles. Alternatively, it may be eligible to peti-
tion for temporary exemption from one or more
standards upon one of the bases provided in
Section 123 of the National Traffic and Motor
Vehicle Safety Act (Pub. L. 92-548).
An additional comment concerned the inequity
in treatment between three- and four-wheeled ve-
liicles, the former categorized as "motorcycles"
for purposes of the standards and required to
comply with fewer standards. By a separate
notice published today (38 F.R. 12818) the
NHTSA is seeking to correct this inequity by
proposing a redefinition of "motorcycle" which
would exclude most three-wheeled vehicles.
In consideration of the foregoing, 49 CFR
571.7(a) is revised. . . .
Effective date: January 1, 1974.
(Sec. 103, 119, Pub. L. 89-563, 80 Stat. 718,
15 U.S.C. 1392, 1407; delegation of authority at
38 F.R. 12147).
Issued on May 10, 1973.
James E. Wilson
Associate Administrator
Traffic Safety Programs
38 F.R. 12808
May 16, 1973
PART 571— PRE 19-20
•
Eff*cllv«: S«pUmb*r 1, 1974
PREAMBLE TO AMENDMENT TO PART 571— FEDERAL MOTOR VEHICLE SAFETY STANDARDS
Subpart A — General
(Docket No. 73-12; Notice 2)
This notice amends 49 CFR 571.3(b), Defini-
tions, of the Federal motor vehicle safety stand-
ards, by revising the definition of "motorcycle".
The NHTSA proposed in the Federal Register
on May 16, 1973 (38 F.R. 12818) that a "motor-
cycle" be defined as a "two-wheeled motor vehicle
with motive power, or a three-wheeled motor
vehicle with motive power and without a full or
partial passenger enclosure".
Interested persons have been afforded an op-
portunity to participate in the making of this
amendment and due consideration has been
given to all comments received in response to
the notice, insofar as they relate to matters
within its scope.
The issue raised most frequently in the com-
ments was the concern that the addition of a
sidecar to a two-wheeled motorcycle would create
a combination vehicle not classifiable as a "mo-
torcycle". The NHTSA considers a sidecar to
be an item of motor vehicle equipment which,
when added to a two-wheeled vehicle, does not
change that vehicle's original classification as a
"motorcycle".
As the agency had anticipated, comments were
submitted by manufacturers and potential manu-
facturers of three-wheeled vehicles that would
be excluded from categorization as "motor-
cycles". These commenters generally objected
to the imposition of passenger car and truck
standards on their vehicles, on the grounds that
these are inappropriate for low-speed lightweight
vehicles. One manufacturer argued that it could
not meet seating and restraint requirements.
Others suggested that a special category be es-
tablished for three-wheelers. To one commenter,
the options of petitioning for amendment of
"inappropriate" standards, or for temporary
exemption from "appropriate" ones pending
compliance did not appear to offer an adequate
solution, arguing that it represented "a lengthy
procedure with doubtful outcome".
Only one petition has been received for amend-
ment of standards applicable to lightweight or
three-wheeled vehicles, and pending its resolu-
tion no separate categories or special require-
ments for these vehicles have been established.
Under the certification scheme imposed by the
National Traffic and Motor Vehicle Safety Act,
a manufacturer has the responsibility of deter-
mining whether his vehicle meets the Federal
standards, and petitioning if an appropriate
change appears necessary. The NHTSA believes
that the goals of motor vehicle safety in this
area are more likely to be realized by considera-
tion of problems with the standards as they are
raised by individual manufacturers, than by at-
tempting to establish a comprehensive regulatory
scheme for lightweight vehicles on the basis of
the scanty data presently available.
The definition that NHTSA proposed was
opposed on substantive grounds as well. Several
commenters said the phrase "partial passenger
enclosure" was ambiguous and would create
problems of interpretation. It was suggested
that reference be made to such characteristics of
two-wheeled motorcycles as saddle seating and
handlebars. The agency has decided that these
comments have merit, and that a definition of
"motorcycle" should emphasize features of three-
wheeled vehicles to be included in the definition,
rather than those to be excluded. Accordingly
the definition is being adopted that three-
wheeled motorcycles are those "utilizing a han-
dlebar for steering and having a seat that is
straddled by the driver".
PART 571 ; PRE 21
Effactiv*: S»pl*mb*r I, 1974
The NHTSA considers the adoption of this
amendment dispositive of recent petitions of the
Motorcycle Industry Council and Cushman
Motors for a redefinition of "motorcycle", and
to the extent that those requests differ from the
definition adopted today the petitions are denied.
In consideration of the foregoing the defini-
tion of "Motorcycle" in 49 CFR 571.3(b) is
revised
•
Effective date: September 1, 1974.
(Sees. 103, 119, Pub. L. 89-563, 80 Stat. 718,
15 U.S.C. 1392, 1407; delegation of authority at
49 CFR 1.51)
Issued on November 19, 1973.
James B. Gregory
Administrator
38 F.R. 32580
November 27, 1973
PART 571; PRE 22
Iffactlvt: April 30, 1974
PREAMBLE TO AMENDMENT TO PART 571— FEDERAL MOTOR VEHICLE SAFETY STANDARDS
Subpart A — General
(Docket No. 73-12; Notice 3)
This notice responds to petitions for reconsid-
eration of the recent redefinition of "motorcycle"
(38 F.R. 32580), and amends 49 CFR 571.3(b),
Definitions, by revoking that redefinition. In a
notice issued today, the NHTSA has proposed
an amendment to 49 CFR 571.3(b) that would
redefine the vehicle category "motorcycle."
In a notice published on May 16, 1973, (38
F.R. 12818) the NHTSA proposed that a "motor-
cycle" be defined as "a two- wheeled motor vehicle
with motive power, or a three-wheeled motor
vehicle with motive power and without a full or
partial passenger enclosure." On the basis of
comments received, on November 27, 1973, (38
F.R. 32580) 49 CFR 571.3(b) was amended, ef-
fective September 1, 1974, to define "motorcycle"
as a "two-wheeled motor vehicle with motive
power, a handlebar for steering, and a seat that
is straddled by the driver." This definition is
being revoked in light of the agency's decision
to propose a new definition, leaving the original
definition in force pending further rulemaking
action.
Petitions for reconsideration were submitted
by White Motor Corporation, EVI, Inc., Otis
Elevator, and Cushman Motors, all of whom ob-
jected to the revised definition. Cushman Motors.
Otis Elevator, and EVI, Inc. argued that the
revised definition was inappropriate in that no
safety need had been demonstrated to warrant
its adoption. The NHTSA does not agree with
this contention. Safety demands that the exist-
ing standards apply to vehicle types which have
similar characteristics and end uses. For in-
stance, vehicles that are used as passenger cars
and whose configurations display basic passenger
car characteristics should, in the interest of
safety, be subject to passenger car standards.
Cushman Motors and Otis Elevator asserted
that the effect of the revised definition, subject-
ing their three-wheeled vehicles to passenger car
or truck standards, would be to force their ve-
hicles out of production since it would be impos-
sible for them to comply with the applicable
safety standards. This issue was discussed in a
notice published May 16, 1973, (38 F.R. 12808)
removing the provision excepting motor vehicles
of 1,000 pounds or less curb weight from the
applicability of the safety standards. The
NHTSA explained in that notice :
A manufacturer has the option of petition-
ing for amendment of any standard it feels is
impracticable or inappropriate for lightweight
vehicles. Alternatively, it may be eligible to
petition for temporary exemption from one or
more standards upon one of the bases provided
in section 123 of the National Traffic and Mo-
tor Vehicle Safety Act (Public Law 92-548).
Petitioners' most substantial objection was
that the definition excluded certain vehicles
whose overall configurations are closer to those
of motorcycles than of passenger cars or trucks,
while including others for which regidation as
motorcycles appears inappropriate. Petitioners
argued that the presence of a steering wheel and
a bench seat would subject a lightweight, unen-
closed three-wheeled vehicle to passenger car or
truck requirements, regardless of other character-
istics which might render it more suited to regu-
lation as a motorcycle. They contended that the
definition also had the effect of allowing fully
enclosed vehicles, if equipped with handlebars
and a straddle seat, to meet only the requirements
applicable to motorcycles regardless of their
overall similarity to a passenger car or truck.
PART 571; PRE 23
Effective: April 30, 1974
The NHTSA lias concluded that some of these
arguments have merit. Three-wheeled vehicles,
though low in volume of production, span a
variety of types that range from vehicles vir-
tually identical to motorcycles forward of their
rear axles to those that have every characteristic
of small passenger cars except for the number of
wheels on the ground. The most reasonable and
appropriate dividing line appears to be one based
on a vehicle feature crucial to the application of
conventional passenger car or truck standards —
an enclosed passenger compartment. The peti-
tion from White Motor Corporation suggested a
definition that would divide motorcycles from
other vehicle types on the basis of a passenger
enclosure above the level of the handlebars. The
NHTSA has concluded that the suggestion is
meritorious, and it forms the basis for the pro-
posed redefinition published today.
Several commenters objected to the amendment
on grounds that it differed from the proposal
(38 F.R. 12818). In light of the fact that the
redefinition is being revoked on the merits and a
new definition is proposed, the NHTSA consid-
ers that issue moot.
In light of the foregoing, the definition of
"motorcycle" in 49 CFR 571.3(b), Definitions,
published November 27, 1973, (38 F.R. 32580),
to be effective September 1, 1974, is hereby
deleted.
Effective date: April 30, 1974. Since this ac-
tion revokes an amendment that was not yet
effective, it is found for good cause shown that
an immediate effective date is in the public
interest.
(Sec. 103, 119, Pub. L. 89-563, 80 Stat. 718
(15 U.S.C. 1392, 1407); delegation of authority
at 49 CFR 1.51.)
Issued on April 24, 1974.
James B. Gregory
Administrator
39 F.R. 15039
April 30, 1974
PART 571; PRE 24
EffacHve: August 7, 1974
PREAMBLE TO AMENDMENT TO PART 571— FEDERAL MOTOR VEHICLE SAFETY STANDARDS
Subpart A — General
(Docket No. 74-27; Notice 1)
The purpose of this notice is to amend 49 CFR
Part 571 by deleting § 571.11, Equivalent Dem-
onstration Procedure, which refers to the sub-
stitution of test procedures by manufacturers for
those prescribed in the safety standards.
Section 571.11, which was a part of the origi-
nal procedural rules, provides that an "approved
equivalent" demonstration procedure may be
substituted for the testing procedure specified in
a particular standard. The implication of this
provision is that the manufacturer must obtain
from the NHTSA approval of any testing pro-
cedures he intends to utilize that deviate from
the procedures prescribed in the standards. This
agency's interpretations of the National Traffic
and Motor Vehicle Safety Act since the promul-
gation of § 571.11, however, are at variance with
the requirement implied by that section.
The safety standards establish required per-
formance levels for motor vehicles and motor
vehicle equipment. The test procedures in the
safety standards are simply objective ways of
phrasing the performance requirements. Gen-
erally, they represent the procedures that will
be followed by the agency in its compliance test-
ing. The manufacturer is not legally obligated
to follow these test procedures when determining
the compliance of his products for the purposes
of certification. The legal requirement is that
he exercise due care in assuring himself that his
product is capable of meeting the performance
requirements of applicable standards when
tested in the manner prescribed. He may do this
by whatever means he determines to be reliable
and necessary.
Accordingly, 49 CFR Part 571 is amended by
deleting § 571.11, Equivalent Demonstration Pro-
cedure.
Effective date: August 7, 1974. This amend-
ment is clarifying and interpretative in nature,
and it is therefore found for good cause shown
that notice and public procedure are unnecessary,
and that an immediate effective date is in the
public interest.
(Sec. 103, 119 Pub. L. 89-563, 80 Stat. 718
(15 U.S.C. 1392, 1407); delegation of authority
at 49 CFR 1.51.)
Issued on August 2, 1974.
James B. Gregory
Administrator
39 F.R. 28437
August 7, 1974
PART 571; PRE 25-26
EfFactlve: October 22, 1975
PREAMBLE TO AMENDMENT TO PART 571— FEDERAL MOTOR VEHICLE
SAFETY STANDARDS
(Docket No. 75-9; Notice 2)
This notice amends 49 CFR 571.7, Applica-
bility, by the addition of a new paragraph to
specify the conditions under which a truck as-
sembled by combining major new components
with some used components will be considered
used for the purpose of the motor vehicle safety
standards, associated regulations, and the Na-
tional Traffic and Motor Vehicle Safety Act.
The NHTSA proposed a modification of its
existing interpretation of what constitutes the
manufacture of a new motor vehicle when used
components from an existing vehicle are involved
(40 F.R. 19485, May 5, 1975). Up to this time,
the NHTSA has considered that the addition of
new components (such as a truck body) to the
chassis of a used vehicle does not constitute the
manufacture of a new vehicle, but that the addi-
tion of used components to a new chassis which
has never been certified in a vehicle constitutes
the manufacture of a new vehicle, subject to the
safety standards in effect for that vehicle class
on the dat« of manufacture. This criterion has
been relied on in the area of chassis-cab multi-
stage manufacture.
Two truck manufacturers, the American Truck-
ing Associations and the National Automobile
Dealers Association, requested reconsideration of
this criterion, because the high value of some
components of a chassis makes their reuse feasible
although the entire chassis may not be reusable.
They stressed the savings to an owner in com-
bining a "glider kit" (typically a cab, frame rails,
and front suspension) and the used power train
of a wrecked or badly worn vehicle instead of
purchasing a complete new vehicle from a truck
manufacturer. Standard No. 121, Air Brake
Systems, has heightened the importance of the
question of what constitutes a new vehicle, since
bringing vehicles with pre- 121 axles into con-
formity with the standard appears to be econom-
ically impracticable.
The NHTSA proposed a statement of what
constitutes manufacture of a vehicle in these
cases which agreed with the suggestions of the
two petitioning manufacturers. International
Harvester and White Motor Corporation. The
agency considered it important that the retention
of a minimum number of valuable used com-
ponents be required as a justification in each case,
and that retention of the identity of the used
vehicle, with respect to model year and identifica-
tion number, be required as evidence that the
reassembly is a bona fide salvage operation, to
avoid creating any undue economic incentives
for evasion of Standard No. 121.
Manufacturers and users supported the clar-
ification that permits the continued use of glider
kits in combination with pre-121 rear axles, but
International Harvester, Mack, PACCAR, Trans-
pac, and the State of California objected to the
second criterion that vehicles be identified as the
old vehicle. The comments indicate that re-
quiring the identity of the old vehicle to continue
in the rebuilt vehicle would have real and unin-
tended disadvantages in the area of vehicle reg-
istration by the States. As proposed by the
NHTSA, the registration would reflect a vehicle
identification number that would not appear on
the new vehicle frame or in the new vehicle cab,
with resulting difficulty in verifying the true
identity of the vehicle. The external identifica-
tion on the cab would, in many cases, also dis-
agree with the vehicle identification documents.
The NHTSA agrees that State registration prac-
tices to avoid this confusion should be supported
PART 571— PRE 27
Effective: October 22, 1975
as long as the practice does not encourage the
salvage of old vehicle components in order to
avoid safety standards. Therefore, the NHTSA
issues the provision in a form which includes
only the requirement for at least two used drive
train components.
Rockwell International cautioned the NHTSA
against a decision that would encourage the re-
use of unsafe components on the liighway. The
NHTSA always considers the possibility its reg-
ulations might encourage continued use of ve-
hicles on the highway after they would normally
be replaced. As in other cases, the NHTSA will
monitor the effect of its decision on glider kits
to ensure that their use without requiring com-
pliance with all applicable standards does not
result in a pattern of conscious avoidance of
Standard No. 121 or other standards. In the
event the agency should discover evidence of
such abuse, it will move decisively to appropri-
ately revise the new statement of applicability.
Oshkosh Truck Corporation and Mack Trucks,
Inc., both suggested that the scope of the pro-
posal be modified to broaden its coverage.
Oshkosh concluded that because a new cab was
mentioned, the provision would prohibit the use
of used cabs in vehicle assembly operations.
Mack believed that the term "glider kits" would
better describe the rebuilding operations being
described.
The NHTSA would like to make clear to
Oshkosh and others that the proposed paragraph
(e) is not intended to regulate all truck rebuild-
ing operations, but only those in which so many
major new components are utilized (such as a
glider kit) that the vehicle is in many respects
a newly-manufactured vehicle. This provision is
intended to distinguish the legitimate rebuilding
operation in which many new vehicle components
are used from the typical assembly-line produc-
tion of new vehicles. Oshkosh and other manu-
facturers may rebuild trucks with used com-
ponents without falling under § 571.7(e).
In consideration of the foregoing, a new
paragraph (e) is added to 49 CFR 571.7,
Applicability ....
Effective date : October 22, 1975. Because this
amendment has the effect of relaxing a require-
ment for the compliance of vehicles to applicable
motor vehicle safety standards, it is found for
good cause shown that an immediate effective
date is in the public interest.
(Sec. 103, 119, Pub. L. 89-563, 80 Stat. 718
(15 U.S.C. 1392, 1407) ; delegation of authority
at 49 CFR 1.51).
Issued on October 16, 1975.
Gene G. Mannella
Acting Administrator
40 F.R. 49340
October 22, 1975
PART 571— PRE 28
Effective: October 37, 1976
PREAMBLE TO AMENDMENT TO PART 571 —
FEDERAL MOTOR VEHICLE SAFETY STANDARDS
(Docket No. 75-24; Notice 2)
This notice amends the definition of "school
bus" that appears in 49 CFR 571.3, to conform
to the mandate of the Motor Vehicle and School-
bus Safety Amendments of 1974 (The Act),
Pub. L. 93-492, by expanding the present defini-
tion used by the NHTSA in establishing safety
requirements.
The NHTSA's present definition of "school
bus" (49 CFR 571.3) is based on the design of
the vehicle:
"School bus" means a bus designed primarily
to carry children to and from school, but not
including buses operated by common carriers in
urban transportation of school children.
The Act included a definition of "school bus"
based on its usage for transporting students, in-
stead of its design :
(14) "schoolbus" means a passenger motor ve-
hicle which is designed to carry more than 10
passengers in addition to the driver, and which
the Secretary determines is likely to be signifi-
cantly used for the purpose of transporting pri-
mary, pre-primary, or secondary school students
to or from such schools or events related to such
schools ;
The legislative history of the Act specifically
emphasizes Congress' view that the existing defini-
tion based on vehicle design is too narrow and
should be expanded to include vehicles likely to
be used for school student transportation. H.R.
Rep. No. 93-1191, 93rd Cong., 2d Session 42
(1974) :
Your Committee decided that safety regula-
tion should reach the wide varietj' of passenger
motor vehicles which are actually and signifi-
cantly used to transport students, not merely
those which are primarily designed for this pur-
pose.
The Congressional definition directs the
NHTSA (by reference to a Secretarial determi-
nation) to establish a regulatory definition that
encompasses a described category of bus used
for student transportation. The NHTSA sub-
sequently proposed a definition that would accom-
plish the Congressional intent within the regula-
tory and enforcement framework of the Act (40
FR 40854, September 4, 1975) :
"School bus" means a bus which is equipped
to carry more than 10 passengers in addition to
the driver and which is sold, or introduced, or
delivered for introduction in interstate commerce,
for purposes that include carrying students to
and from school or related events, but does not
include buses designed and sold for operation as
a common carrier in urban transportation.
Comments were received from manufacturers
and users of school buses (and their associa-
tions) , the States of Wisconsin and Montana, the
California Department of Highway Patrol
(CHP), the Vehicle Equipment Safety Commis-
sion (VESC), and Mr. George Chambers. The
major issue in these comments was the degree
to which the proposed definition conformed to
Congressional intent. The Motor Vehicle Manu-
facturers Association (MVMA), Chrysler Cor-
poration, International Harvester (IH), General
Motors, and the State of Montana argued that
the Congressional expectation of regulating most
student-carrying 11-or-more-passenger motor ve-
hicles on the basis of anticipated use could not
be reasonably effectuated under the authority of
the Act.
The Act provides that "no person shall . . .
manufacture for sale, sell, offer for sale, or in-
troduce or deliver for introduction in interstate
commerce . . . any motor vehicle . . . unless it is
PART 571— PRE 29
Effacliva: October 27, 1976
in conformity with [applicable] standard [s]. . . ."
(15 U.S.C. § 1397(a)(1)(A)). This provision
authorizes placement of responsibility on a seller
for compliance with standards that apply to
school buses. The Congressional definition
clearly directs that the likely use of the vehicle
as well as its design be considered in the deter-
mination of its status as a school bus. The
NHTSA remains convinced that, of all the per-
sons in the chain of distribution who are sub-
ject to the Act, the seller is most likely to have
knowledge of the likely use of the vehicle.
In essence, the NHTSA proposed that "school
bus" be defined as a bus that is sold for pur-
poses that include student transportation. Thus
the determination of vehicle classification, in close
cases, can be made on the basis of the sales
transaction. It would not, however, be based
solely on an event that occurs after sale, such as
the actual use of the vehicle. The MVMA and
others assumed from a reference in the proposal
to the "intent" of either party that the seller
would be held responsible for the unexpressed
intent of the purchaser to use the vehicle for
student transportation, although this purpose was
unknown to the seller. This is not the case. The
seller is not held responsible for more than its
Icnowledge of the purpose of the sale. If the
seller has reason to believe that a vehicle will be
used for student transportation, it can easily
ascertain intended use by requesting a written
statement of purpose from the purchaser.
The MVMA suggested that "school bus" be
defined as a bus that is equipped for the pur-
pose of carrying primary, pre-primary, or sec-
ondary school students to or from schools or
related events. This definition falls short of the
Congressional mandate to cover vehicles that are
"likely to be significantly used for the purpose
of transporting . . . students". For example, all
buses purchased for more than a single purpose
(e.g., student and faculty transportation) would
be excluded from the definition and from cov-
erage by the standards. Also the criterion
"equipped for the purpose" of student trans-
portation does not make clear what equipment
(e.g., warning lights, school bus seating) would
be determinative of the purpose. General Motors'
suggested "designed or equipped for the pur-
pose" is also vague as to the meaning of what
element of design or equipment would be deter-
minative of the vehicle's classification.
General Motors and Wayne Corporation im-
plied that it is unreasonable to hold manufac-
turers responsible for what happens to a vehicle
in the hands of dealers. There is no intent to
do this, however. A manufacturer or other entity
in the chain of distribution is only to be held
responsible for what it knows. If a vehicle is
originally produced as a non-school vehicle (a
van-type multipurpose passenger vehicle (MPV),
for example), and subsequently is sold by a
dealer for school transportation purposes, it is
the dealer who will be held for any non-com-
pliance with school bus standards, not the manu-
facturer. Actually, final-stage manufacturers
(in some cases dealers) have always undertaken
modification of tracks and MPVs that result in
different requirements from the factory installa-
tion. This responsibility has not created an
impossible burden on the original manufacturer.
Wayne suggested that "school bus'' be defined
to mean only those vehicles that a user or regula-
tory authority designates as a school bus by use
of exterior identification such as a label or dis-
tinctive lighting or color. This criterion, like
MVMA's, falls short of Congress' evident interest
in any vehicle likely to be significantly used for
student transportation. Evidently vehicles op-
erated by private schools are not, in many cases,
given the exterior identification markings sug-
gested by Wayne.
In conforming its proposal to the Congres-
sional definition, the NHTSA limited "school
bus" to a bus that carries at least 11 passengers
in addition to the driver. Based on comments
received from Wayne and CHP, it appears that
the definition should be expanded slightly to
include buses that carry 10 passengers. This
eliminates a departure from previous NHTSA
vehicle categorization that classifies vehicles with
10 or fewer occupant seating positions as MPVs
or passenger cars and vehicles with 11 or more
seating positions as buses. To adhere strictly
to the Congressional definition would leave the
small group of vehicles that transport 10 students
without coverage under either the scliool bus, the
MPV, or the passenger car standards.
PART 571— PRE 30
Effective: October 27, 1976
Some commenters incorrectly assumed that the
Congressional definition of "school bus" estab-
lished an outer limit on tlie XHTSA's authority
to repulate veliicles that transport students as
suoh. To the contrary, the Congressional defini-
tion is a direction to the NHTSA that the new
standards in this area must not be applied to a
narrower category of vehicle. As long as that
direction of Congress is satisfied, the NHTSA
is, however, authorized to decide the scope of its
standards, and in this case to expand on the
Congressional definition to implement the man-
date eifectively.
In response to Mr. George Chambers' concern
that the NHTSA definition is too broad, the
NHTSA considers it reasonable to regulate all
buses significantly used for transportation of
students to and from all schools and related
events, not just pre-primar\', primary, and sec-
ondary schools. The NHTSA concludes that its
rewording of the Act's "schools or events related
to such schools" as "schools or related events"
does not contradict Congressional direction.
AVayne and the National School Transporta-
tion Association (NSTA) suggested that buses
used in urban transportation must be included
in the definition of "school bus" because they are
used in some circumstances to transport students
to and from school. It is true that the phrase
"likely to be significantly used for the purpose
of transporting . . . students to or from . . .
schools" could arguably be considered to cover
transit buses on regular common-carrier routes.
Such buses have been explicitly excluded from
the NHTSA's definition for several years, how-
ever. In light of the major standard-setting
activity mandated by Congress in the Act, it is
unlikely that such a broad change of regulatory
direction would be contemplated by Congress
without explicit discussion at some point in the
legislative history. The legislative history con-
tains no indication of such a Congressional intent,
and this agency therefore concludes that such
coverage was not intended. The boundaries of
coverage are explicitly left by the statute to
agency determination. In light of the purposes
for which the school bus standards are being
developed, their expected costs and benefits, and
the modes of use of transit buses, the NHTSA
has concluded that the continued exclusion of
buses designed and sold for operation as common
carriers in urban transportation is in the public
interest.
Mr. George Cliambers suggested that limiting
the exclusion of transit-type buses to those in
urban areas appeared to be illogical. The
NHTSA has satisfactorily used this limit for
several years, and no problems have developed.
If difficulties should appear in the future, fur-
ther modification of the definition will be con-
sidered.
The MVIVIA and General Motors suggested
that the existing description of transit-type buses
("operated" as a common carrier) more simply
describes the excluded class than NHTSA's pro-
posed language ("designed and sold"). By limit-
ing the exclusion to buses designed and sold for
use as common carriers, the definition conforms
to the areas (design and sale) over which the
agency has jurisdiction under the statute.
Wayne and the States of "Wisconsin and
Montana questioned the wisdom of limiting the
definition to buses (10 passengers or more), when
some school vehicles for handicapped students
are equipped for fewer than 10 passengers and
would not be required to meet the standards.
The NHTSA has carefully considered extension
of school bus standards to vehicles other than
buses, but concludes that the standards in ques-
tion have been developed for vehicles with bus
seating and loading characteristics. For example,
the proposed bus passenger seating and crash
protection standard is calculated for cab-chassis-
and van-type vehicles with seating for 10 pas-
sengers or more.
The VESC asked that only buses primarily
used for transportation of students be considered
school buses, so that buses used primarily for
other purposes would not be able to display the
distinctive school bus markings or be used to
transport students after their systems had deter-
iorated in some more abusive use. The agency
views the Congi'essional emphasis on "signifi-
cant" use of a vehicle as a direction to extend
the school bus standards to all buses that trans-
port students, whether or not it is their primary
purpose. For the same reason, the NHTSA does
not agree with Blue Bird Body Company's
opinion that "activity" buses should be excluded
from the Congressionally-mandated standards.
PART 571— PRE 31
EfFeclive: October 27, 1976
»
It appears that Congress intended all the school
bus standards to apply to buses that carry
students to or from events related to their schools.
The definition basically relies on the sales trans-
action for determination of a vehicle's status.
In some cases vehicles are leased for the purpose
of transporting students, and it is for this reason
that the definition refers to "introduction in
interstate commerce" as well as sale. The de-
scription of this "no-sale" event has been simpli-
fied somewhat in response to the comments.
The California Department of Highway Patrol
asked whether motor vehicles with a capacity
of less than 11 occupants (12 as proposed) that
transport students are preempted from regulation
by the States as school buses. The answer is no.
Since motor vehicles with a capacity of fewer
than 11 occupants are not regulated as school
buses biy the NHTSA, State school bus regula-
tions, to the extent that they apply to such
smaller vehicles, would not be preempted by the
NHTSA school bus standards. For instance,
brake systems of MPVs are not regulated by the
NHTSA and may be governed by State regula-
tions. Of course, State regulations may not con-
flict with standards applicable to these vehicles as
passenger cars or MPVs.
The State of Montana believed that the defini-
tions of Type I and Type II school buses would
be affected by this redefinition. In fact neither
the present definition nor the new definition con-
flict with State or Highway Safety Standard
definitions (such as the Pupil Transportation
Standard No. 17) that regulate the operation of
the vehicle, so long as those operational regula-
tions do not dictate the design and performance
of the vehicle to the degree that it is subject to
a safety standard.
In consideration of the foregoing, the defini-
tion of "school bus" in Title 49 of the Code of
Federal Regulations (49 CFR § 571.3) is
amended ....
Effective date: October 27, 1976.
(Sec. 102, 103, 119, Pub. L. 89-563, 80 Stat. 718,
as amended by Pub. L. 93-492, 88 Stat. 1470 (15
U.S.C. 1391, 1392, 1407) ; delegation of authority
at 49 CFR 1.50)
Issued on December 23, 1975.
James B. Gregorj'
Administrator
December 31, 1975
40 F.R. 60033
PART 571— PRE 32
Effective: July 1, 1976
PREAMBLE TO AMENDMENT TO PART 571— FEDERAL
MOTOR VEHICLE SAFETY STANDARDS
(Docket No. 75-9; Notice 4)
This notice amends section 571.7 of Title 49 of
the Code of Federal Kegulations by addino- a
new paragraph that specifies the conditions undei-
which a trailer assembled from new and used
components will be considered used for the pur-
poses of the motor vehicle safety standards, asso-
ciated regulations, and the National Traffic and
Motor Vehicle Safety Act.
The National Highway Traffic Safety Admin-
istration (NHTSA) proposed the new pai'agiapli
(40 F.E. 58154, December 15, 1975) in response
to petitions from two trailer manufacturers to
modify the existing NHTSA opinion of what
constitutes the "manufacture" of a motor vehicle
under the National Traffic and Motor Vehicle
Safety Act (the Act) (15 U.S.C. § 1381, et seq.).
The Act authorizes the issuance of motor vehicle
safety standards and prohibits, among other
things, the manufacture of a motor vehicle on or
after the date any applicable standard takes
effect unless the vehicle conforms to the stand-
ard, and is so certified (15 U.S.C. §§1397
(a)(1)(A), 1403). Until now. the agency gen-
erally has distinguished "manufacture" from I'e-
building by requiring retention of at least the
chassis to constitute a rebuilding operation. In
the case of trailers, the chassis consists of the
running gear and main frame members.
A running gear asembly is the axle or axles,
wheels, suspension and related components that
support the frame and upper portions of the
trailer. Since implementation of Standard No.
121, Air Brake SysteTns (which applies to the
manufacture of most air-braked trailers), it has
been impractical to certify a trailer manufactured
from new components and a used running gear.
l>ecause the used limning gear is not designed
to satisfy the requirements of the standard. Be-
cause many trailers do not have distinct "main
frame members," rebiiilding without recertifica-
tion also has been difficult. Recently the NHTSA
eased the requirements for rebuilding tinicks by
an amendment that permits the use of "glider
kits" in truck assembly without recertification
mider most circumstances.
With a view to further reducing the costs of
Standard No. 121 without compromising safety,
the agency tentatively concluded that reuse of
ti-ailer lunning gear assemblies was justified to the
degree that they were reutilized in the past. To
safeguard against evasion of the safety standards,
the agency proposed an 8-year limit on the use
of nmning gear assemblies for rebuilding opera-
tions. Additionally, it was proposed that a re-
built trailer must be sold to the original owner
imder its original identity to prevent large-scale
evasion of the standard by parties who might
attempt to recycle old. unreliable equipment that
would normally be junked.
The comments filed by trailer manufacturers
and usei-s imifonnly supported the general nature
of the revision. The Truck Trailer Manufac-
turers Association (TTMA) disagi'eed with the
proposal, ai'guing that the agency's restriction
on rebuilding should be somewhat strictei- con-
cerning increases in volumetric capacity (stretch-
ing) tank trailers. Fniehauf Corporation sug-
gested a 4-year limit on rebuilding while others
suggested a 10- or 12-year limit. Atlantic Con-
tainer Line recommended a 15-year limit. The
American Trucking Associations (ATA) con-
sidered the 8-year limit and the requirement for
retained identity to be unworkable in view of
current industry' practices. Several commenters
suggested a limit on rebuilding based on a per-
centage of the value of a comparable new trailer.
Firestone stated that an 8-year limit on reuse
of wheels and rims had no basis in safetv. The
PART 571— PRE 33
Effective: July 1, 1976
National Motor Vehicle Safety Advisory Council
did not take a position on the proposal.
The Agency has considered each of the com-
ments and concludes that trailer rebuilding can
be somewhat expanded without interfering witli
the mandate of the Act that eacli vehicle "manu-
factui'ed" on or after the effective date of an
applicable standard must comply with it and be
so certified. The cautionary approach of the
TTMA appears to be limited to the potential
hazards of increasing volumetric capacity of tank
trailers, particularly those hauling hazardous
materials. The XHTSA is not advocating unsafe
rebuilding of truck trailers by this amendment,
and relies on regulations of the Department of
Transportation's Bureau of Motor Camer Safety
and Office of Hazardous Materials (49 CFK
Parts 177, 178, 397) to specifically address safety
of tank-type highway vehicles.
The agency proposed an 8-year limit on the
rebuilding of trailers to prevent significant eva-
sion of applicable safety standards by repeated
reuse of a running gear assembly. The 8-year
limit was suggested by the trailer manufacturer
that petitioned for the proposed change. Com-
ments generally stressed the difficulty in estab-
lisliing a realistic approximation of trailer life,
particularly in the case of "piggyback" or con-
tainer chassis trailers where yearly highway mile-
age is low.
Practices for rebuilding trailers vary so sig-
nificantly that the agency concludes that an age
limit would not pennit the legitimate reutiliza-
tion of running gear assemblies that existed prior
to the implementation of Standard 121. There-
fore, the agency has withdrawn the age criterion
for reuse of running gear assemblies.
The ATA along with a number of trucking
companies such as Interway Corporation, Glen-
denning, and I&S McDaniel objected to the
proposed requirement that the reassembled ve-
hicle keep the identity of the vehicle from which
the running gear was taken. Glendenning claims
that such would restrict a user's flexibility to meet
existing needs. I&S McDaniel said such a cri-
terion would greatly reduce its flexibility in re-
building trailers to different specifications. The
Interway Corp. pointed out the warranty, parts
replacement, and repair problems associated with
maintaining a trailer rebuilt by one company but
identified as being built by another company.
The agency has considered the problems of
maintaining everj- aspect of vehicle identity in
the process of rebuilding. It is concluded that
the requirement for use of the identification
niunlier of the existing vehicle in the reassembled
vehicle will alone serv-e adequately to prevent
avoidance of manufacturing responsibilities for
newly manufactured vehicles. Therefore, the re-
quirement for retention of identity is withdrawn
with the exception of a requirement for continued
use of the trailer's Vehicle Identification Number.
The third proposed restriction on rebuilding
would require that the owner or lessor of the
existing trailer also be the owner or lessor of
the rebuilt trailer. The owner or lessor of the
trailer in this case is the party who utilizes the
trailer in its own operations and not someone
who has bought the trailer simply to have it
rebuilt for sale. Little comment was received
on this restriction, and it appears to accord with
the economic considerations underlying trailer re-
building. Tlierefore, the restriction is made final
as proposed. The agency considers that this limit
and the requirement to continue a vehicle's VIN
should adequately discourage rebuilding simply
to avoid safety standards. The NHTSA can
monitor the amount of rebuilding by means of
its investigative authority under § 112 of the Act
(15 U.S.C. § 1401) and can take action if evasion
of the standards occurs.
Firestone Corporation assumed that the effect
of the change would be that trailer rims and
wheels co>ild only be used for the period of the
proposed restriction, and that the agency might
be advocating reuse of wheels and rims for 8
years whatever their condition. Actually, the
agency in no way intends to modify safe main-
tenance and operation practices by its action.
Substitution of new components or reuse of old
components is not advocated or discouraged by
this action. In response to sevei'al suggestions
that "frame attachment components" should not
be mentioned in the description of a running
gear assembly for fear that persons might reuse
damaged attachment hardware, the reference has
been deleted.
PAR 571— PRE 34
Effective: July 1, 1976
In accordance with recently-enunciated De-
partment of Transportation policy encouraginfr
adequate analysis of the costs and other conse-
((iiences of regulatory actions (41 F.R. 16201,
April 16, 1976), the NHTSA herewith publishes
its evaluation of the economic and othei' conse-
quences of this proposal on tlie public and private
sectors, including possible loss of safety benefits.
In this case the change permits trailer users to
continue their present practice of utilizing useable
running gear in rebuilding of theii' trailers. It
is therefore calculated that there are no new costs
to the trucking industry associated with the
change. It is anticipated that the benefits de-
rived from the new braking systems will be
delayed in the case of rebuilt trailers for a limited
period.
In consideration of the foregoing, a new para-
graph (f ) is added to 49 CFR .571.7 Applicability.
E-ffective date; July 1. 1976. Because- this
amendment creates no additional requirement for
any person, and to penuit trailer rebuilding in
cases where it has lieen impractical in the past,
it is found that an immediate effex-tive date is
in the public interest.
(Sec. 103, 119, Pub. L. 89-,563, 80 Stat. 718
(15 U.S.C. 1392, 1407) ; delegation of authority
at 49 CFR 1..50).
Issued on June 23, 1976.
Acting Administratoi-
Robert L. Carter
41 F.R. 27073
July 1, 1976
PART 571— PRE 35-36
EfFective: December 2, 1976
PREAMBLE TO AMENDMENT TO PART 571— FEDERAL
MOTOR VEHICLE SAFETY STANDARDS
This amendment updates tlie addresses given
for the Society of Automotive Engineers, Inc.,
and the United States of America Standards In-
stitute in § 571.5 of 49 CFR Part 571.
Since this amendment is for the purpose of
correcting inaccurate addresses and does not affect
any substantive rights, notice and public proce-
dure are not required and the amendment is made
effective upon issuance.
In consideration of the foregoing, § 571.5 of
Title 49 of the Code of Federal Regulations (49
CFR 571) is amended in part. . . .
Effective date : December 2, 1976.
(Sec. 103, 119, Pub. L. 89-563, 80 Stat. 718 (15
U.S.C. 1392, 1407) ; delegations of authority at
49 CFR 1.50 and 49 CFR 501.8)
Issued on November 24, 1976.
Robert L. Carter
Associate Administrator
Motor Vehicle Programs
41. F.R. 52880
December 2, 1976
PART 571— PRE 37-38
Effective March 9, 1978
PREAMBLE TO AMENDMENT TO PART 571 —
FEDERAL MOTOR VEHICLE SAFETY STANDARDS
DEFINITIONS
(Docket No. 78-06; Notice 1)
This notice amends the general definitions sec-
tion of Part 571 (49 CFR Part 571.3) by adding
the definitions of "speed attainable in 1 mile" and
"speed attainable in 2 miles." These definitions
are currently contained in several motor veliicle
safety standards. Since the terms are used in the
requirements of more than one standard, it is
appropriate to define them in the general defini-
tional section which applies to all safety stand-
ards in Part 571.
Effective Date : March 9, 1978.
For further information contact :
Kathleen DeMeter, Office of Chief Counsel,
National Highway Traffic Safety Adminis-
tration, 400 Seventh Street, S.W., Washing-
ton D.C. 20590 (202-426-1834).
Supplementary Information : Part 571.3 of
Title 49, Code of Federal Regulations, contains
definitions of terms used in the various motor
vehicle safety standards. Many safety standards
also contain their own definitional section which
defines terms used only in the particular stand-
ard. WHien a term is used in more than a single
standard, it is appropriate that its definition be
relocated in the generally applicable Part 571.3
definitions section. This eliminates the need to
republish the definition of a particular term in
each standard in which the term is used.
The terms "speed attainable in 1 mile" and
"speed attainable in 2 miles" are each defined in
more than one safety standard. For the afore-
mentioned reasons, this notice deletes the defini-
tions of the terms from the standards in which
they appear and adds them to 571.3. Accord-
ingly, 49 CFR Part 571 is amended :
(Sec. 102, 103, 119, Pub. L. 89-563, 80 Stat. 718
(15 U.S.C. 1391, 1392, 1407) ; delegation of au-
thority at 49 CFR 1.50.)
Issued on February 28, 1978.
Joan Claybrook
Administrator
43 F.R. 9606
March 9, 1978
PART 571— PRE 39-40
Effective: March 9, 1978
PREAMBLE TO AMENDMENT TO PART 571 —
FEDERAL MOTOR VEHICLE SAFETY STANDARDS
DEFINITIONS
(Docket No. 78-02; Notice 1)
This notice is an interpretative amendment of
tlie agency's definition of "unloade^l vehicle
weight." It grants petitions from several manu-
facturers asking the agency to amend the defini-
tion of this term to reflect an existing agency
interpretation concerning the definition.
Effective Date : March 9, 1978.
For further information contact:
Mr. William Smith, Office of Vehicle Safety
Standards, National Highway Traffic Safety
Administration, 400 Seventh Street, S.W.,
Washington, D.C. 20590 (202^26-2242).
Supplementary Infonnation: This notice
amends Title 49, Code of Federal Regulations,
Part 571.3 by clarifying the meaning of "un-
loaded vehicle weight." "Unloaded vehicle
weight" is currently defined as "the weight of a
vehicle with maximum capacity of all fluids nec-
essary for operation of the veliicle, but without
cargo or occupants."
In July 1976, the NHTSA issued a letter of
interpretation in response to a request from the
Jeep Corporation concerning the definition of
"unloaded vehicle weight." In that interpreta-
tion, the agency stated that the unloaded weight
of a vehicle does not include the weight of those
accessories that are ordinarily removed from a
vehicle when they are not in use.
The Chrysler Corporation and the Truck Body
and Equipment Association (TBEA) subse-
quently petitioned the NHTSA to amend the
definition of "unloaded vehicle weight" to reflect
the existing agency interpretation. Further,
TBEA and Chrysler requested an even broader
classification of the accessories whose weight
would not be included in the computation of
"unloaded vehicle weight." Chrysler and TBEA
asked that the weight of accessories which are not
normally removed from a vehicle when they are
not in use also be excluded from the computation
of "unloaded vehicle weight." The agency
granted the petitions to amend the definition to
reflect the existing agency interpretation but de-
nied the portions of both petitions requesting an
extension of that interpretation.
The agency has interpreted "unloaded vehicle
weight" as excluding the weight of accessories
ordinarily removed from a vehicle when they are
not in use in order to approximate more closely
the actual unloaded weight of a vehicle. The
type of equipment or accessories not to be in-
cluded in computing "unloaded vehicle weight"
includes: snow plows, spreaders, and tow bars,
among others.
To codify the existing agency interpretation,
the definition of "unloaded vehicle weight" in 49
CFR Part 571.3, definitions is hereby amended. . . .
Since this amendment is interpretative in na-
ture, and reflects current understanding and prac-
tice, it is found for good cause that notice and
public procedures thereon are unnecessary, and
that an immediate effective date is in the public
interest.
The principle author of this notice is Roger
Tilton of the Office of Chief Counsel.
(Sees. 103 and 109, Pub. L. 89-563, 80 Stat. 718
(15 U.S.C. 1392, 1407); delegation of authority
at 49 CFR 1..50.)
Issued on March 1, 1978.
Joan Claybrook
Administrator
43 F.R. 9605
March 9, 1978
PART 571— PRE 41-42
PREAMBLE TO AMENDMENT TO PART 571
FEDERAL MOTOR VEHICLE SAFETY STANDARDS
Subpart A — General
(Docket No. 78-13; Notice 2)
Action: Final rule.
Summary: The purpose of this notice is to
amend the definition of "designated seating po-
sition" (49 CFR 571.3) to clarify that the terai
includes any position likely to be used for seating
accx>mmodation while the vehicle is in motion.
This amendment is based on a notice of proposed
rulemaking issued September 21, 1978 (43 FR
44556). Dimensional parameters are specified in
the amended definition to ensure proper and con-
sistent designations of seating positions. This
clarification is intended to ensure that all posi-
tions likely to be used for seating accommodation
will be equipped with occupant restraint systems
for the protection of the persons using those
positions and to ensure that vehicles are safely
designed to accommodate their actual occupant
capacity.
Effective date : September 1, 1980.
Addresses: Any petitions for reconsideration
should refer to the docket number and notice
number and be submitted to: Docket Section,
Room 5108 — Nassif Building, 400 Seventh Street,
S.W., Washington, D.C. 20590.
For further information contact:
Guy Hunter, Office of Vehicle Safety Stand-
ards, National Highway Traffic Safety
Administration, Washington, D.C. 20590
(202-426-2265).
Supplementary information: Safety Standard
No. 208 (49 CFR 571.208) requires manufac-
turers to provide occupant crash protection for
each "designated seating position" in motor ve-
hicles. That term is defined in 49 CFR 571.3 as :
"[A]ny plan view location intended by the
manufacturer to provide seating accommoda-
tion while the vehicle is in motion, for a
person at least as large as a fifth percentile
adult female, except auxiliary' seating accom-
modations such as temporary' or folding jump
seats."
(Note: "plan view" means an overhead view
looking down)
Last year, the NHTSA published a notification
to vehicle manufacturers concerning the agency's
interpretation of the term "designated seating
position", because of concern that certain recent
vehicle models have improperly designated seat-
ing capacities (43 FR 21893, May 22, 1978). The
front or rear seats in these models have been
designated by their manufacturers as having only
two seating positions even though the seats are
clearly capable of accommodating three adult oc-
cupants and are being so used. This, of course,
represents a safety threat to the center-seat pas-
senger since no restraint system is provided.
These designations are not only improper but
also inconsistent with other designations because
the manufacturei-s designate other models with
equivalent seating space as having three positions
and provide three sets of restraint systems.
The earlier notification emphasized that al-
though it is the manufacturer which designates
the number of seating positions under the current
definition, the manufacturer's intent will be de-
termined by the agency on the basis of all facts
and his declarations of intent will not be accepted
by the agency if they are inconsistent with the
PART 571— PRE 43
i
actual vehicle design. NHTSA letters of inter-
pretation have always emphasized that the manu-
facturer's designation must be made in good faith
and must conform to the basic policies and tenor
of the National Traffic and Motor Vehicle Safety
Act (15 U.S.C. 1381, et seq.).
Manufacturers' comments to the notification
led the agency to issue a proposal to amend the
definition of "designated seating position" to pro-
vide an adequate number of occupant restraints,
to secure greater consistency in the seating ca-
pacity designations by the manufacturers, and to
assure consumers contemplating buying a new
vehicle that comparable vehicle sizes ai"e similarly
designated (43 FR 44556, September 28, 1978).
As pointed out in the proposal, an investigation
of the criteria used by manufacturers to desig-
nate seating capacities of current models indicates
that manufacturers' designations often involve
many purely marketing considerations. The pro-
posal cited the example of one manufacturer that
stated to the agency it changed the front and
rear seating configuration on one of its models
from 3 front-2 back to 2 front/3 back (number
of positions) because competitive cars witli simi-
lar dimensions for front-seat shoulder and hip
room were being designated with only two front
seat positions. This designation change was made
even though the front and rear seats remained
virtually the same in tenns of available seating
space.
Manufacturers have pointed to seat width, hip
room, shoulder room, leg room, seat trim and
seat padding among other things to demonstrate
their "intent" concerning the number of positions
that should be used for seating accommodation.
For example, even thougli a particular model
might have sufficient hip room for tliree adult
passengers, the manufacturer points to seat trim
and lack of comparable padding in the center
position as evidence that the manufacturer does
not intend for that position to be used. As noted
in the proposal, however, this reasoning does not
take into account the realities of the vehicle's
actual use and what the manufacturer can expect
if he has provided sufficient room for a tliird
passenger, even if the center position is not as
comfortable as the two outside seat positions.
If there is sufficient space on a bench or split
bench seat for a center seat passenger, and no
rigid obstruction such as a console, it must be
said that the manufacturer "intended" that space
to be used as a seating position, since the center
position will likely be used by a substantial num-
ber of persons.
In order to clarify the existing definition of
"designated seating position" and to codify the
agency's interjjretations of that definition, the
previous notice proposed to amend the definition
as follows to remove reference to the manufac-
turer's "intent" and to specify dimensional cri-
teria to assure proper and consistent designations
of seating capacity :
" 'Designated seating position' means any
plan view location capable of accommodating
a person at least as large as a 5th percentile
adult female, if the overall seat configuration
and design and veliicle design is such that
the position is likely to be used as a seating
position while the vehicle is in motion, ex-
cept for auxiliary seating accommodations
such as temporary or folding jump seats.
Any bench or split-bench seat in a passenger
car, truck, or multipurpose passenger vehicle
with a G^^A'R less than 10,000 pounds, hav-
ing greater than 50 inches of hip space shall
have not less than three designated seating
positions."
The agency has analyzed and given due con-
sideration to the twenty-one comments that were
received from interested persons concerning the
proposed amendment of "designated seating po-
sition". All comments have been considei-ed.
Several modifications of the amended definition
have been made in response to those comments.
The great majority of comments did not disagree
with the intended purpose of the proposed amend-
ment. For example, General Motors Corporation
stated that it does not oppose the concept that a
vehicle manufacturer should provide occupant
restraint systems for persons who use the seating
accommodations provided in the vehicle.
American Motors Corporation did question the
need for a revision of the definition and stated
that the proposal contained "only unsubstantiated
allegations of improper designation of seating
positions". In response to this comment, the
agency is placing in the public docket a copy of
the Motor Vehicle Manufacturers Association
PART 571— PRE 44
specifications for various 1978 and 1979 model
vehicles. These data list vehicle models and
specify their hip-room and the number of posi-
tions currently designated by manufacturers.
These specifications demonstrate the inconsisten-
cies in many current designations and illustrate
that bench and split-bench seats in some vehicle
models have only two designated seating posi-
tions even though a similar vehicle model of the
same make has three designated positions with
less seating space.
Neither American Motors nor any other com-
menter refuted the fact that there are many
vehicle models with usable center seats that are
not designated as "seating positions". However,
American Motors charged that the proposal only
contained "baseless assertions of the NHTSA's
perception of real-world uses of cent«r front
seating positions". It is the NHTSA's position
that every center seating position that is likely
to be used should be equipped with a restraint
system regardless of the overall statistical rate
of use of center positions, since every potential
occupant should be afforded protection in the
event of a vehicle crash. The existing definition
of "designated seating position" is based on this
premise. The agency is, however, placing copies
of vehicle accident statistics in the docket which
show that the number of center-seat passengers
in motor vehicles and the number of center-seat
fatalities and injuries is substantial. Data from
the NHTSA's Fatal Accident Reporting System
show that in 1977, 588 front center-seat passengers
and 365 rear center-seat passengers were killed
in vehicle accidents. Further, the use rate of
center-seat positions will be affected by the future
design of vehicles. Therefore, the clarified defi-
nition of "designated seating position" will en-
sure that future designs do not encourage center-
seat use unless occupant crash protection is
afforded those positions.
While the majority of comments agreed with
the concept of the proposed change, there were
numerous complaints about the language of the
proposed definition. Several commenters ob-
jected to the phrase, "the position is likely to be
used as a seating position", arguing that the
word "likely" is subjective. Holiday Rambler
Corporation stated that neither the manufacturer
nor NHTSA can reasonably anticipate where
occupants of a vehicle are likely to sit while the
vehicle is in motion, as vehicles are often subject
to misuse or abuse by their occupants. Other
commenters stated that manufacturers would not
be certain their determination of "likely use"
would be the same as the agency's determination.
The agency does not agree that the definition
is subjective, since the definition does not only
provide that any position likely to be used is a
designated seating position, it also provides the
criteria for making that determination. Those
criteria relate to vehicle design and the overall
seat configuration. Further, the amended defini-
tion is more objective than the existing definition
which is based on manufacturer's intent, which
has not given rise to any complaints of sub-
jectivity. NHTSA interpretations have empha-
sized that "intent" does not mean that manufac-
turers have "carte blanche" to designate seating
capacities, but rather, that the manufacturer's
intent is determined by the seat configuration
and vehicle design.
International Harvester suggested that the
word "likely" be dropped from the definition
and that the phrase "«s to be used as a seating
position" be substituted. The agency does not
believe this would be a meaningful change, how-
ever, since the manufacturer's determination
would still be based on the particular vehicle
design and seat configuration. Further, the word
"likely" indicates that the use must be more than
minimal or chance use. As noted by General
Motors, Webster's New World Dictionaiy defines
the word "likely" to mean probable or fairly
certain. In response to Holiday Rambler's com-
ment, the agency notes that the word "likely"
relieves manufacturers of the responsibility of
providing for abusive or unorthodox use of a
particular position in a motor vehicle. For ex-
ample, people would not "likely" sit on a rigid
console even though a few individuals might mis-
use this position from time to time. Under the
definition, a manufacturer would not be required
to consider the console as a designated seating
position.
General Motors suggested that the same phrase
be changed to read, "Likely to be used by a sub-
stantial number of people". However, the agency
believes that such a change is unnecessary for
PART 571— PRE 45
the reasons set forth in the immediately preced-
ing paragraph.
Rover Triumph recommended that the phrase
be changed to read, "any plan view location
provided with an upholstered seat and backrest
capable of accommodating a person at least as
large as a 5th percentile adult female". The
agency believes that such a change would be un-
duly stringent, however, since the overall vehicle
design would not be considered in detennining
designated seating capacity under such a defini-
tion. There may be some locations capable of
accommodating a .5th percentile female that are
not likely to be used because of the overall veliicle
design (a protruding dash board at the center
position, for example). The agency has con-
cluded that any definition of "designated seating
position" must necessarily be subjective to a cer-
tain extent, to avoid being too restrictive or
harsh on manufacturers.
The proposed definition change of "designated
seating position" included the following caveat
to ensure proper and consistent designations of
seating capacity:
". . . Any bench or split-bench seat in a pas-
senger car, truck or multipurpose passenger
vehicle with a GVWR less than 10,000
pounds, having greater than 50 inches of hip
space shall have not less than three desig-
nated seating positions."
There were numerous coimnents concerning
this caveat. Nissan, Toyota, Toyo Kogyo, and
Mercedes-Benz pointed out that the caveat speci-
fies no procedure for measuring hip room, and
suggested that the SAE Standard J 11 00 (a) pro-
cedure be used. The NHTSA agrees that a
procedure should be specified and intended for
the measurement to be according to the SAE
Standard JllOO(a). This is the same procedure
used in the regulations of the Environmental
Protection Agency for providing fuel economy
information for comparable vehicles. Accord-
ingly, that procedure is included in the caveat as
set forth in this notice. Also, in response to a
comment by General Motors the phrase "hip
space" is changed to read "hip room", to cor-
respond with the language of SAE Standard
JllOO(a).
Many commenters stated that "hip room"
should not be the only determinative factor in
the caveat. Commenters argued that shoulder
room, leg room, head clearance, and other factors
should also be considered in determining the
number of designated seating positions on a bench
or split-bench seat. Ford Motor Company stated
that hip room is not as useful a decriptor as
shoulder room in determining the number of po-
sitions that can be used. Ford stated that a hip
room of 51.1 inches and a shoulder room of 53.8
inches are required to seat side-by-side three per-
sons of randomly selected sizes at least 50 percent
of the time. Volkswagen and Toyota also dis-
agreed with the hip-room criteria and argued
that the driver must be afforded more room for
safe and comfortable operation of tlie vehicle
than is provided if a 50-inch liip room criteria
is used without also specifying shoulder room.
The NHTSA agrees that shoulder room, leg
room, and head clearance are factore which may
influence the number of persons who will use a
bench or split-bench seat. However, the agency
has concluded that hip room is the primary fac-
tor that determines the number of persons who
will likely use a seat. Also, data obtained from
the Motor Vehicle Manufacturers Association
indicates that the vast majority of vehicles have
more shoulder room than hip room. Thus, a
vehicle that has 50 inches of hip room will nearly
always have at least 50 inches of shoulder room
and in all probability more than 50 inches of
shoulder room. The shoulder width of a 5th
percentile adult female is 15.7 inches. Therefore,
three occupants of that size could easily sit
abreast on a bench or split-bench seat having
only 50 inches of shoulder room. In setting the
hip-room criteria in the proposed definition, the
agency used the dimension that is approximately
three times the width of a 16.6-inch hip, 95th
percentile adult male (a male weighing 215
pounds). As the agency pointed out in the pro-
posal, this would be sufficient hip space for three
large-size adults to sit side-by-side. In basing
the 50-inch criteria on the 95th percentile male
rather than on the hip width of 5th percentile
females, the agency proposed a liberal limit on
the manufacturer's designation of seating capac-
ity. Fifty inches of hip space is not only ade-
quate to sit three large-size adults side-by-side.
PART 571— PRE 46
but more than adequate to sit random size riders
side-by-side, particularly if one of the occupants
is a child. If one of the occupants is smaller
than a 95th percentile male, shoulder room would
be more than ample if the hip room is ^eater
than 50 inches. In either case, there would be
more than ample room for the driver to comfort-
ably and safely operate the vehicle.
The agency has concluded that manufacturers
must assume that three persons will likely use a
bench or split-bench seat if there is over 50 inches
of usable hip room. The agency rejects Ford's
recommendation that the criteria be 51.1 inchas
of hip room, since Ford offers no data to indicate
50 inches is an unrealistic limit. We do note,
however, that one current Ford model has a
front bench seat with 55.9 inches of hip room
and yet only two designated seating positions.
The agency has concluded that the addition of
a shoulder room or leg room specification in the
caveat is an unnecessary complication of the cri-
teria since the 50 inch hip room specification is a
liberal limit on manufacturers' discretion in this
area. The Australian Design Rule No. 5A is
more stringent. It specifies that, in the case of
bench seats, the number of seating positions shall
be the number of complete multiples of 16 inches.
Therefore, under the Australian i-ule three posi-
tions are required to be designated if a bench
seat has only 48 inches of hip room.
Toyo Kogyo questioned whether, in the case of
liip room less than 50 inches, designating only
two seating positions is "unconditionally per-
mitted." The notice proposing this amendment
stated that the 50-inch specification does not
mean that some vehicle seats with less than 50
inches of hip space should not also have more
than two designated seating positions, if the ve-
hicle and seat design is such that three positions
would likely be used. It was pointed out that
the specification is merely the amount of space
the agency will consider as conclusive evidence
that there should be at least three designated
seating positions. These statements are not in-
tended to imply that the agency would require
seating position designations for each space
capable of accommodating a 5th percentile female
if the overall vehicle design and seat configura-
tion is such that three positions would not likely
be used. However, the seat design should be such
that it is obviously to be used by only two persons
if the manufacturer only designates two positions.
For further guidance, see the discussion below of
obstructions and impediments that will affect
designations.
Several commenters requested other changes in
the 50-inch hip room caveat of the proposed
definition. American Motors stated that a speci-
fied hip room caveat is unnecessary due to the
first part of the proposed definition : "Given the
fact that unless the overall vehicle/seat configura-
tion is such that a third dsp (designated seating
position) is impracticable, any 50-inch-wide seat
will have the capability of accommodating at
least three 5th percentile adult females and be so
designated. Therefore, a specified hip space cri-
terion of 50 inches is redundant to the first part
of the proposed definition." Wliile the NHTSA
acknowledges American Motors' statement that
any 50-inch-wide seat will have the capability
of accommodating at least three occupants, the
agency does not agree that such a seat would
always be designated as having three positions
if the caveat were not present. Past industry
practice in some cases supports this conclusion,
as evidenced, for example, by American Motors'
1977 "Pacer" model vehicle, which has 55.8 inches
of hip room in the front seat, yet only two desig-
nated seating positions. As the agency stated in
the notice proposing this amendment, the caveat
is intended to emphasize the amount of space the
agency will consider as conclusive evidence that
there should be at least three designated seating
positions.
Ford Motor Company stated that the caveat,
as proposed, implies that vehicles with bench or
split-bench seats having over 50 inches of hip
room must have three designated seating posi-
tions, "regardless of the existence of impediments
such as consoles, shift levers, fixed ann rests,
trays, integral occupant restraint mountings or
hardware, hard unsprung or unupholstered sur-
faces, or center depressions or elevations." Ford
suggested that any limiting caveat be accom-
panied with the provision that it is "applicable
only to seating obviously designed for three or
more occupants." The NHTSA, of course, did
not intend for the definition to imply that a rigid
console should be considered a seating position,
PART 571— PRE 47
as the agency noted in the preamble of the pro-
posal. Therefore, the space occupied by a rigid
console or a fixed, stationary armrest, for ex-
ample, would not be considered hip room and
would not be included in the measurement of the
50-inch limitation. This does not mean, however,
that small, upholstered elevations or depressions
in a bench seat should not be Included in the
measurement since these designs do not impede
the use of center positions. To be excepted from
the measurement there would have to be an ob-
vious obstruction or impediment to sitting in the
position, such that the position is obviously not
intended to be used as a seat. A movable armrest
that can be raised to the seat back would not
constitute an impediment to use of the position.
Likewise, the presence of a floor gear-shift lever
would not normally be sufficient to discourage or
make use of a center position on a bench seat
impossible, even if the bench seat has a slightly
indented contour for the shift lever. However,
there could conceivably be a veliicle design in
which the lever would constitute an impediment
to sitting (if the lever extends to within a few
inches of the seat back, for example). Regarding
"integral occupant restraint mountings or hard-
ware", if there is greater than 50 inches of hip
room on the bench or split-bench seat there gen-
erally must be three designated seating positions,
and the hardware will be situated in a manner
not to create an impediment to seating. If no
padding or upholstery is provided on the seat
and if no back rest is provided, it is not likely
that the position would be used and the agency
would not include the space in measurement of
hip room. Also, if there is a movable armrest
that can be lifted to substitute as a backrest that
position on the bench seat would likely be used
and the space would be included in the measure-
ment of hip room.
Fiat and several other commenters requested
that the meaning of bench seat and split-bench
seat be defined, one requesting that a definition
be included. Fiat requested, specifically, that the
agency specify that if a central armrest is pro-
vided a seat should not be considered a "bench"
seat. The agency does not believe it is necessarj'
to add a definition of "bench" and "split-bench"
seat to the definition of "designated seating posi-
tion". Bench and split-bench seats are seats
other than conventional bucket seats. Bucket
seats are separated by a substantial amount of
space and are two distinct seats. Split-bench
seats are generallj" separated, if at all, only
slightly to the extent necessary for independent
movement of the separate portions. Therefore,
any seat design having greater than 50 inches of
continuous hip room, even if interrupted slightly
to allow independent movement of separate por-
tions, would be considered a bench or split-bench
seat and would have to have three designated
seating positions.
In order to respond to the concerns of Fiat,
Ford, and other commenters, the agency has de-
tennined that the caveat should be changed to
clarify that if rigid obstructions or other designs
preclude the use of the center position, that posi-
tion need not be designated as a seating position
and, therefore, need not be equipped with re-
straints regardless of the overall width of the
seat. Therefore, tlie caveat as issued in this
notice includes the phrase, "unless the seat design
or vehicle design is such that the center position
cannot be used for seating." This exception to
the caveat would include, for example, a bench
seat having greater than 50 inches of actual hip
space if the vehicle's design is such that the dash
board at the center position, extends out to near
the seat back, precluding use of the seat
space. Likewise, the exception would include a
fxed armrest or a rigid, fxed console located in
the center of the bench or split-bench seat.
General Motore requestetl that the 50-inch
caveat be modified to allow onlj- two designated
seating positions in vehicles having bencli or
split-bench seats equipped with passive seat belts
at the outboard positions. General Motors stated
that the proposed definition would preclude the
use of passive belts in full-size cars equipped
with bench seats, presumably because there are
currently no designs for center- posit ion passive
belts. General Motoi-s argued that bench seats
are somewhat cheaper tlian bucket seats, and that
passengers are not likely to crawl under the out-
side passive belt to occupy the center position.
The agency does not agi'ee that the center posi-
tion of a bench seat equipped with passive belts
would not be used. If there is sufficient space on
a bench or split-bench for three passengers, a
substantial number of persons are likely to use
PART 571— PRE 48
the center position, even if the seat has passive
belts. Passengers could move around the passive
belt to gain access to the center j^wsition and
parents could easily place children in such posi-
tions. Further, there is a good possibility that
the exception requested by General Motors would
lead to defeat of passive belts so that the center
position could be used more conveniently. While
the agency is sympathetic with the marketing
and cost concerns of manufacturers, we believe
there are alternatives which will ensure the
safety of the motoring public. As General
Motors stated in its comments, a vehicle's design
can "make the two passenger designation more
clear". For example, a manufacturer that wishes
to use bench seats in vehicles equipped with pas-
sive belts can include a fixed armrest in the
center position of the bench seat to emphasize
that the location is not a seating position. As
just noted, the definition set forth in this notice
makes clear that such a center position need not
be designated as a seating position. It could
be argued that parents may also sit children on
fixed consoles, but manufacturers will not be
held responsible, with respect to designating a
seating position, for abusive or unlikely use of
their vehicles.
Nissan Motor Company requested that the
NHTSA examine the "cost/benefit" concerns of
requiring three seating positions for rear seats
having greater than 50 inches of hip room.
Nissan is currently designating only two seating
positions in the rear seat of its Datsun models
and is concerned that the new definition will re-
quire the addition of a third seat belt in the rear
seat and an upgrading of the braking perform-
ance of those vehicles. Nissan stated that it
assumes there is little possibility that three pas-
sengers occupy rear seats.
After considering Nissan's comments and re-
viewing data concerning the use of the center
position in rear seats, the agency has concluded
that rear seats should not be excluded from the
50-inch hip room caveat in the definition of
"designated seating position". While it may be
true that, statistically, fewer persons use the
center rear seating position than use the center
front seating position, there are substantial
numbers who do use the rear position. As men-
tioned earlier, the agency believes that all pas-
sengers should be provided with a restraint
system for occupant crash protection. If a rear
seat has greater than 50 inches of unobstructed
hip room, that seat is likely to be used by three
passengers and the third passenger should be pro-
tected. If a manufacturer chooses to use a large
rear seat and wishes to designate only two posi-
tions, it must design the seat for only two pas-
sengers. This too can be accomplished by the
installation of a fixed armrest or other impedi-
ment to use of the center position.
General Motors, American Motors, and Aston
Martin Lagonda challenged NHTSA's statement
in the proposal preceding this amendment that
the changed definition will have no inflationary
impact. The manufacturers state that they will
be forced to make changes in seat design, to in-
stall additional restraint systems, and to upgrade
braking and other systems due to increased
weight if the existing definition is altered. They
charged that the cost of these changes will have
a definite inflationary impact. The agency
cannot agree with these statements. The
amended definition is a clarification of the exist-
ing definition and a codification of its interpre-
tation, and does not create a "demonstrably more
stringent standard" as stated by General Motors.
As pointed out by the agency in the earlier
"Notification to Manufacturers", manufacturers
have improperly and inconsistently designated
seating capacity on some vehicles and failed to
comply with the existing definition of "desig-
nated seating position" and its interpretations.
Manufacturers have failed to designate positions
in their vehicles that were obviously intended
to be used for seating while the vehicle is in
motion, as demonstrated by vehicle and seat
design and by designations in comparable ve-
hicle models. While the agency acknowledges
that there will be costs associated with modi-
fications that will have to be made on some
vehicles, these costs will be the result of bring-
ing vehicles into compliance with an existing
standard. When the agency requires a recall
campaign for noncompliance with a Federal
safety standard there are, of course, often tre-
mendous cost impacts on manufacturers. This
does not mean, however, that the agency action
is inflationary rulemaking. Further, the past
failure of the NHTSA to adequately enforce
PART 571— PRE 49
standards dependent on the definition of "desig-
nated seating position" does not preclude clarifi-
cation of how that definition will effect enforce-
ment of those standards in the future.
The amended definition issued today does not
require manufacturers to use any particular ve-
hicle design or seat configuration or, for example,
to upgrade braking performance levels. Manu-
facturers are free to use any seat configuration
they choose, just as they are free to build any
size car they desire, with any materials they
desire. The definition does not require the use
of more costly bucket seats. The definition does
provide, however, that if a manufacturer chooses
to use a bench seat or a split-bench seat, it shall
designate the number of seating positions that
seat actually contains. This has been the require-
ment since the definition was first issued. If
a manufacturer "intends" for a position to be
used he should provide restraints and ensure
that the other vehicle systems are safely con-
structed to accommodate the passenger weight
capacity. The inclusion of the phrase "likely
to be used" in the amended definition does not
change the requirement or add subjectivity to
the requirement. If a manufacturer does not
intend for a position to be used, the design of
the vehicle should be such that this is obvious
to vehicle users. If the design of a seat posi-
tion is such that it obviously was not intended
for use, it will not "likely be used". Manufac-
turers can easily manifest their true intent by
installing stationary or fixed armrests. Manu-
facturers should, therefore, have no problem
unless they, in fact, want to market the vehicle
with a bench seat capable of seating three per-
sons, yet designate only two seating positions.
Ford Motor Company expressed concern about
the application of the proposed new definition
to vehicles exceeding 10,000 pounds G^^^Vll.
Ford stated that the definition appears to be
based on 5th percentile adult female accommoda-
tion and that this could require four sets of
belts in some of its large trucks having bench
seats with over 58 inches of hip room. The new
definition specifies that any plan view location
capable of accommodating a person at least as
large as a 5th percentile adult female will be
considered a designated seating position if the
overall seat configuration and design and vehicle
design is such that the position is likely to be
used as a seating position while the vehicle is
in motion. In the case of large tractor-trailer
type vehicles greatly over 10,000 pounds GVWE,
the overall vehicle design is not such that four
persons would likely use a bench seat. These
large vehicles are primarily cargo-carrying ve-
hicles, not passenger-carrying veliicles. There-
fore, the agency would not consider the provision
of four seating positions to be necessary or within
the meaning of the phrase "likely to be used",
found in the definition. It was for this reason
that the definition's caveat requiring three seat-
ing positions for bench seats having over 50
inches of hip room was limited to vehicles under
10.000 pounds GVWK.
Holiday Rambler Corporation objected to the
application of the proposed new definition of
"designated seating position" to motor homes.
Holiday pointed out that motor homes are
designed to provide acconmiodations and ac-
couterments for purposes other than transpor-
tation, such as sleeping. Holiday stated that
the proposed definition would require many re-
straint sj'Stems in locations not required by the
current definition. The agency finds no merit
in Holiday's arguments since the effect of the
amended definition as applied to motor homes
is exactly the same as the existing definition.
Motor home manufacturers are currently re-
quired to designate as a seating position any
location intended by the manufacturer to pro-
vide seating accommodation while the vehicle is
in motion. As has been repeatedly pointed out
in past interpretations of this definition, a manu-
facturer's intent will be determined by the agency
on the basis of all facts, and the manufacturer's
declarations will not always be accepted by the
agency if they are inconsistent with actual ve-
hicle design. The amended definition clarifies
and codifies this interpretation by removing
reference to the manufacturer's intent and em-
phasizing that any position likely to be used
while the vehicle is in motion will be considered
a designated seating position. "Wliether a seat
will "likely be used while the vehicle is in
motion" will be determined by the seat configura- 1
tion and design and by the vehicle design. |
The agency is currently investigating noncom-
pliance with the existing definition of "desig-
PART 571— PRE 50
nated seating position" in certain motor homes.
These motor homes have seating positions that
were obviously intended for use while the vehicle
is in motion, yet the seats are not equipped with
restraint systems and do not comply with Safety
Standard No. 207, Seating Systems (49 CFR
571.207). Manufacturers of these motor homes
have abused the meaning of the phrase "intended
by the manufacturer" and placed labels on the
seats stating that they are not intended for use
while the vehicle is in motion, even though the
manufacturers know the seats will in fact be
used. These abuses primarily involve seats at
the front driving portion of the vehicles, not
seats in the rear of the vehicle that are present
for living accommodation when the vehicle is
stationary. One model under investigation has
four pedestal seats at the front driving portion
of the vehicle, yet only the front two seats are
designated as seating positions. It is the agency's
position that a manufacturer must provide desig-
nated seating positions for the number of persons
it advertises its vehicle will accommodate. In
the case of a motor home, this means that if
such a vehicle is advertised to "sleep six," the
manufacturer must assume that the six persons
will ride in the vehicle to their sleeping destina-
tion and thus must designate six seating posi-
tions. These persons should have the benefit of
occupant restraint systems and seats that meet
the crashworthiness performance requirements of
Safety Standard No. 207. It is the agency's
position further that generally all seats in the
front driving area of a motor home must be
among the designated seating positions since
those seats are the ones most likely to be occupied
while the vehicle is in motion. For example, if
a motor home is advertised as sleeping six per-
sons and has four pedestal seats in the front
driving area and several additional seats in the
rear living accommodation area, the four pedestal
seats and two of the seats in the rear area must be
designated as seating positions.
The notice proposing this amendment of the
definition of "designated seating position" speci-
fied an effective date for the proposed change
of September 1, 1979. Nearly all commenters
requested that the effective date of any amend-
ment of the definition be delayed until September
1, 1980, or one year after the issuance of a final
rule and coincident with the beginning of a
model year. Manufacturers stated that this time
would be necessary to make modifications to some
of their models and would reduce the cost of
these modifications. The agency has determined
that these requests have merit since many manu-
facturers have already completed vehicle designs
for their 1980 models, and since the additional
period would minimize the cost of bringing their
vehicles into compliance with the existing and
amended definition of "designated seating posi-
tion". Accordingly, the agency will not enforce
the 50-inch hip room caveat of the new definition
until September 1, 1980. This grace period prior
to enforcement of the caveat does not mean,
however, that the agency will not enforce the
general provisions of the definition prior to that
date, in cases in which a manufacturer has failed
to designate a seat that was obviously intended
for use while the vehicle is in motion and will
likely be so used. General Motors' request that
the effective date of any amendment be phased-in
with the upcoming passive restraint requirements
is hereby denied. The additional one year period
specified in this notice should be ample to allow
manufacturers to make any necessary modifica-
tions.
The agency has determined that this rule-
making has no significant economic or environ-
mental impacts, since it clarifies the existing
definition and its interpretations. However, the
agency is placing in the public docket an evalua-
tion discussing the vehicles that are currently
not in compliance with the existing definition and
discussing the costs manufacturers might have to
incur to bring all of their vehicle models into
compliance with the existing and clarified defini-
tion of "designated seating position".
The engineer and lawyer primarily responsible
for the development of this notice are Guy
Hunter and Hugh Oates.
In consideration of the foregoing, the defini-
tion of "designated seating position" as specified
in 49 CFR 571.3 is amended to read as follows:
"Designated seating position means any plan
view location capable of accommodating a
person at least as large as a 5th percentile
adult female, if the overall seat configura-
PART 571— PRE 51
tion and design and vehicle design is such unless the seat design or vehicle design is
that the position is likely to be used as a such that the center position cannot be used
seating position while the vehicle is in mo- for seating."
tion, except for auxiliary seating accom- .^ mo nn r> i, t on kcq en cj- * -no /ik
' . ^ , *' p ,T (bee. 103, 119, Pub. L. 89-563, 80 btat. <08 (15
modations such as temporary or toldmg tj a r^ lonn i^atn j i t- * ^.u •*. <■
, ^ -l.^ , , * U.b.C. 1392, 1407), delegation of authority at
lump seats. Any bench or split-bench seat .„ ^„-r, i -n \
. ,11^- *«* L-r JK. l.oU.I
in a passenger car, truck or multipurpose
passenger vehicle with a GVWR less than ^^^"^^ °° ^P"^ 12, 1979.
10,000 pounds, having greater than 50 inches Joan Claybrook
of hip room (measured in accordance with Administrator
SAE Standard JllOO(a)) shall have not 44 F.R. 23229
less than three designated seating positions, April 19, 1979
PART 571— PRE 52
PREAMBLE TO AN AMENDMENT TO PART 571 —
FEDERAL MOTOR VEHICLE SAFETY STANDARD
Matter Incorporated by Reference
(Docket No. 81-14; Notice 1)
ACTION: Final rule.
SUMMARY: The Federal Motor Vehicle Safety
Standards issued by NHTSA incorporate by
reference a number of standards and test
procedures adopted by voluntary standards
associations, such as the American Society for
Testing and Materials. Part 571.5 of the agency's
regulations is the procedural rule that incorporates
all of the materials found in the agency's safety
standards. This notice amends the regulation to
specify that the Director of the Federal Register
has approved the agency's incorporations by
reference and to announce that all the materials
are available for inspection and copying at both
the agency and the Office of the Federal Register.
EFFECTIVE DATE:
March 22, 1982.
This amendment is effective
SUPPLEMENTARY INFORMATION: The
Federal Motor Vehicle Safety Standards issued
by the agency incorporate by reference a number
of standards and test procedures adopted by
voluntary standards associations, such as the
American Society for Testing and Materials and
the Society of Automotive Engineers. The legal
effect of incorporation by reference is that the
material is treated as if it were published in full in
the Federal Register and thus has the force and
effect of law. The agency only uses incorporation
by reference when the referenced material is of a
detailed, technical nature and would unnecessarily
add to the volume of matter printed in the
Federal Register. In all instances, the material
incorporated by reference is easily available to
the public for inspection and copying.
In accordance with section 552(a) of the
Administrative Procedure Act (5 U.S.C. 552(a)) and
1 CFR Part 51, the Director of the Federal Register
must review and approve all incorporations by
reference before they are effective. On March 28,
1979 (44 F.R. 18630), the Office of the Federal
Register (OFR) established new procedures that
agencies must follow to maintain approval from
the Director of the Federal Register for the
incorporation of materials by reference in the Code
of Federal Regulations (CFR). Each agency is
required to submit annually to the Director of the
Federal Register a list identifying all material
which the agency has incorporated by reference
in the CFR. Part of the OFR's review of the list is
a check of the incorporating language in the
regulatory text to confirm that it meets OFR's
drafting requirements (1 CFR Part 571.5). NHTSA
is making several editorial changes in 49 CFR
Part 571.5 of its regulations, which is the
provision that incorporates by reference all of the
material cited in the agency's safety standards, to
conform to OFR's drafting requirements.
This notice amends Part 571.5 to add language
stating that the Director of the Federal Register
has approved all of the incorporations by reference.
In addition, the agency is amending Part 571.5 to
state that any proposed changes to material
incorporated by reference will be published in the
Federal Register. When the agency has
incorporated material by reference, it has always
specified the precise version (i.e., date, edition,
etc.) of the material being incorporate by
reference. Subsequent versions of material
incorporated by reference are not automatically
adopted. The agency has always proposed any
change to any incorporated material in the
Federal Register. Part 571.5 also is amended to
state that all of the materials incorporated by
reference are available for inspection and copying
both at the agency and at the Federal Register.
PART 571; PRE 53
The agency has determined that this
procedural amendment is not a major rule within
the meaning of Executive Order 12291. Likewise,
it is not a significant rule within the meaning of
the Department of Transportation's regulatory
policies and procedures. The amendments made
by this notice do not impose any substantive
requirements or restrictions on the public. They
merely make minor modifications in the agency's
incorporation by reference procedure. Since the
amendments concern a procedural matter, the
agency is not required by the Administrative
Procedure Act to provide notice and opportunity
to comment on them. Because of this, the
amendments are also not covered by the
requirements of the Regulatory Flexibility Act.
Since these procedural amendments are so minor
and technical, the agency does not believe that
any useful purpose would be served by voluntarily
providing any opportunity to comment on them.
Issued on February 11, 1982.
Raymond A. Peck, Jr.
Administrator
47 F.R. 7253
February 18, 1982
PART 571; PRE 54
ACTION: Final rule.
PREAMBLE TO AN AMENDMENT TO PART 571-
MATTER INCORPORATED BY REFERENCE
(Docket number not published in Federal Register)
SUMMARY: The purpose of this notice is to add the
Illuminating Engineering Society of North America to
the other standards-setting organizations whose mate-
rials have been approved for incorporation by reference
into the Federal motor vehicle safety standards.
EFFECTIVE DATE: The effective date of this amend-
ment is June 8, 1989.
SUPPLEMENTARY INFORMATION: Section 571.5 of
Title 49 of the Code of Federal Regulations estab-
lishes the procedural requirements for incorporation
by reference into the Federal motor vehicle safety
standards of materials not set forth in full in the
standards. These materials are generally standards,
test methods, and data that do not appear elsewhere
in the Federal Register or Acts of Congress. The
primary examples of this type of material are stan-
dards of the Society of Automotive Engineers (SAE).
This notice amends paragraph (b) Availability of
§ 571.5 to add the Illuminating Engineering Society
of North America ("lES") to the other organizations
listed in that paragraph, and to provide the address
of that organization to interested persons. One of the
test methods of the lES is used in Safety Standard
No. 108, Lamps, Reflective Devices, and Associated
Equipment, to measure the luminous flux of light
sources used in replaceable bulb headlamps.
Because this amendment is technical in nature
and neither establishes nor relieves a Federal regu-
latory requirement, it is hereby found pursuant to 5
U.S.C. 553(b) that notice and public comment upon
the amendment is unnecessary. For the same reason,
the amendment is neither major nor significant
under Departmental guidelines, and has no environ-
mental or federalism impacts, or effect under the
Regulatory Flexibility Act.
In consideration of the foregoing, 49 CFR Part 571
is amended as follows:
In § 571.5, paragraph (bX6) is redesignated as
(bX7).
In § 571.5 a new paragraph (bX6) is added to read
as follows:
§ 571.5 Matter incorporated by reference.
*****
(b) * * *
(6) Test methods of the Illuminating Engineering
Society of North America (lES). They are published
by the Illuminating Engineering Society of North
America. Copies can be obtained by writing to:
Illuminating Engineering Society of North America,
345 East 47th St., New York, NY 10017.
Issued on: April 28, 1989.
Jeffrey R. Miller,
Deputy Administrator
54 F.R. 20082
May 9, 1989
•
PART 571-PRE 55-56
PREAMBLE TO AN AMENDMENT TO MOTOR VEHICLE SAFETY STANDARD NO. 571
Seating Reference Point
(Docket No. 82-05; Notice 4)
RIN: 2127-AD46
ACTION: Final rule.
SUMMARY: This rule amends the definition of "seat-
ing reference point," a term used in this agency's
safety standards. "Seating reference point" identifies
a single adjustment point for each seating position.
That point is used in determining if the vehicle com-
plies with requirements set forth in several of the
safety standards.
This rule amends the definition of "seating reference
point" to clarify that it is not necessarily the absolute
rearmost point to which a seat can be adjusted. This
rule also amends the definition to provide that the
"seating reference point" is established using 95th per-
centile adult male leg segments, instead of the smaller
90th percentile adult male leg segments specified in the
current definition.
DATES: The amendment to the definition of "seating
reference point" made in this rule is effective as of Sep-
tember 1, 1992. At their option, manufacturers may
begin using the post September 1992 definition, in
place of the current one, after September 11, 1997.
SUPPLEMENTARY INFORMATION:
Seating Reference Point
For the purposes of the Federal Motor Vehicle Safety
Standards, the term "seating reference point" is cur-
rently defined in 49 CFR §571.3 as:
The manufacturer's design reference point which—
(a) Establishes the rearmost normal design driving
or riding position of each designated seating position
in a vehicle;
(b) Has coordinates established relative to the
designed vehicle structure;
(c) Simulates the position of the pivot center of the
human torso and thigh; and
(d) Is the reference point employed to position the
two dimensional templates described in SAE Recom-
mended Practice J826, "Manikins for Use in Defining
Vehicle Seating Accommodations," November 1962.
The four conditions set forth in the definition of
"seating reference point" are intended to ensure that
only one point will be the "seating reference point" for
any seating position in a motor vehicle, and to ensure
that all parties can agree where that one point is
located for a particular seating position. The "seating
reference point" is used, either directly or indirectly,
as a reference point in determining compliance with
several of the agency's safety standards. Standards No.
103 and 104 each use the "seating reference point" as
a reference point to define a field of view or certain
areas of the windshield that must comply with speci-
fied requirements. Standards No. 201, 202, 207, and
210 each use the "seating reference point" as a refer-
ence point for determining the components that are
subject to the requirements of the standard or for posi-
tioning the seats to determine compliance with the
requirements of the standard.
Rulemaking History
In 1980, Mercedes-Benz of North America, Inc. (Mer-
cedes) petitioned the agency to amend the definition
of "seating reference point" to specify 95th percentile
thigh and lower leg segments in determining the loca-
tion of the "seating reference point." In 1982, in
response to the Mercedes petition, the agency pub-
lished an advance notice of proposed rulemaking
(ANPRM) stating that the "seating reference point"
is not necessarily the absolute rearmost position to
which a seat can be adjusted and that the agency in-
tended to issue a notice of proposed rulemaking
(NPRM) to change the definition of "seating reference
point" (47 FR 9865; March 8, 1982). The purpose of
the ANPRM was to allow interested parties an oppor-
tunity to raise issues and provide information that the
agency should consider when formulating its proposal.
After evaluating the comments received on the
ANPRM, the agency published an NPRM which
differed substantially from the ANPRM (51 FR 20536;
June 5, 1986). The NPRM stated that the interpreta-
tion in the ANPRM that "seating reference point" was
not necessarily the absolute rearmost position of the
seat was incorrect. The new interpretation was based
on two circumstances. First, Standard No. 210 used
the SRP as its reference point and required the seat
PART 571-PRE 57
to be in its rearmost position. Thus, the location dic-
tated by Standard No. 210 would prevent a manufac-
turer from establishing a seating position rearward of
the SRP. Second, the agency surveyed the location of
the SRP in vehicles in the most recent compliance test-
ing program and discovered that all manufacturers had
determined the SRP with the seat in its rearmost po-
sition. In addition, the agency was concerned that the
ANPRM interpretation could lead a manufacturer to
conclude that a seating position rearward of the SRP
could be occupied while the vehicle was in motion. This
could result in an upper anchorage location being for-
ward of the occupant's shoulder, resulting in increased
head movement and potentially increasing the risk of
head injury.
Because the agency had determined that the location
of the SRP should always be determined with the seat
in its rearmost position, the agency proposed to delete
the reference to leg segment length in the definition.
Leg segment length was used in the current definition
to determine the seat adjustment position used to
locate the SRP. Since the NPRM proposed to specify
the seat adjustment position at which the SRP was
located as the rearmost position, there was no longer
any need to refer to a particular leg segment length.
After further consideration, the agency tentatively
concluded that the NPRM approach was not the best
approach for this rulemaking. The agency decided that
there were simpler, but equally effective, ways of en-
suring that seats are positioned in the rearmost posi-
tion for determining the upper anchorage locations in
Standard No. 210. In April 1990, the agency published
a final rule amending Standard No. 210 so that it no
longer referred to "seating reference point" (55 FR
17970). In September 1990, the agency published a sup-
plementary notice of proposed rulemaking (SNPRM)
on the definition of "seating reference point," propos-
ing to return to the approach originally discussed in
the ANPRM (55 FR 37719). The definition proposed
in the SNPRM was based upon the recommended prac-
tice of the Society of Automotive Engineers (SAE).
(For interested parties, the history of this rulemaking
is explained in greater detail in the SNPRM.)
NHTSA received 10 comments in response to the
SNPRM. Eight of the nine automotive manufacturers
who commented on the SNPRM unanimously sup-
ported adopting the proposed definition. Mercedes sup-
ported "the Agency's approach to clarifying the
inconsistencies related to the definition of the seating
reference point," but recommended the adoption of the
wording they suggested in their comments on the
NPRM. The only other commenter, the Automotive
Occupants Restraints Council, deferred to the
responses of the vehicle manufacturers. Commenters
also raised six other issues relevant to this rulemak-
ing, which are discussed below.
Comments
1. Adopt Mercedes definition for the "seating
reference point. "
Although Mercedes supported "the Agency's ap-
proach to clarifying the inconsistencies related to the
definition of the seating reference point," they recom-
mended adoption of their wording of paragraph (a), as
suggested in their comments of May 5, 1983, to Docket
82-05, Notice 2:
"(a) EstabHshes the rearmost normal design driving
or riding position as stipulated by the manufacturer,
which accounts for all modes of cushion adjustment-
including horizontal, vertical, and tilt— that are avail-
able in the seat, but not to include seat track travel used
for purposes other than normal driving and riding
positions."
The language preferred by Mercedes attempts to fur-
ther clarify that the "seating reference point" is
established by the manufacturer and is not the abso-
lute rearmost point to which a seat can be adjusted.
Paragraphs (a), (b), (c), and (d)(1) of NHTSA's pro-
posed definition are nearly identical with the SAE defi-
nition. In addition, all of the commenters except
Mercedes supported the definition as proposed. Mer-
cedes' recommendation that the agency adopt their
unique language appears based upon preference only,
and does not appear to significantly improve or clarify
the proposed definition. Therefore, the agency is adopt-
ing the definition of "seating reference point" as
proposed.
2. Adoption of "(SqRP)" in the definition of
"seating reference point. "
General Motors (GM) recommended that the agency
adopt the phrase "(SgRP)" that is found after the word-
ing "seating reference point" in SAE JllOO Jun84. GM
stated that this would further clarify the meaning of
the wording used in the standard and parallel current
industry practice. GM stated that the "SRP" acronym
used by NHTSA when referring to "seating reference
point" may create confusion in some situations because
GM and others in the industry use the "SRP" acronym
to refer to the absolute rearmost position for the seat.
In the SNPRM, the agency stated that the proposed
"definition of SRP is similar to the SgRP concept used
by the SAE." In fact, the two definitions are virtually
identical. Since the inclusion of the phrase "(SgRP)"
in the definition would not change its meaning or re-
quire any additional modifications to any safety stand-
ards, the agency has decided to include the phrase to
avoid any possible confusion. Hereinafter, the phrase
"SgRP" will be used for the term "seating reference
point" in this notice.
3. Allow use of either the present or proposed
definition of "seating I reference point. "
In its comments, Volvo requested that manufacturers ^^
be allowed to choose between either the present or
PART 571-PRE 58
proposed definition in the future. Volkswagen stated
that the final rule should allow immediate optional com-
pliance with either the present or proposed definition.
The only reason offered by Volvo to support its sug-
gestion was that manufacturers would not have to
recertify their vehicles. The agency does not find this
to be a compelling argument. Any rulemaking may re-
quire that manufacturers recertify their vehicles. In ad-
dition, four of the commenters (Chrysler, Ford,
Volkswagen, and Freightliner) indicated that this
rulemaking would have little or no effect on their cur-
rent practices.
Volkswagen requested that the Final Rule allow op-
tional use of either definition from publication of the
final rule until the September 1, 1992 effective date.
This would allow manufacturers who can comply with
the 95th percentile location without product design
changes to harmonize with European requirements as
soon as possible. The agency finds this request to be
reasonable.
Since no commenter suggested that the proposed
September 1, 1992 effective date was not reasonable,
it has been adopted. In addition, optional use of the new
definition is permissible effective September 11, 1991.
4. Revision of other safetv standards.
The SNPRM requested comments on whether adop-
tion of the proposed The SNPRM requeste change to
the SgRP definition would create a need to amend
safety standards which currently use the seating refer-
ence point or similar terminology. Commenters raised
issues involving several standards.
CM recommended modifications of Standard No.
104, Windshield Hiping and Washing Systems. GM
stated:
"FMVSS No. 104 and, by reference, FMVSS No.
103 substitute the term "seating reference point"
for the terms "manikin H point" and "H point"
wherever either of those terms appears in any SAE
Standard or Recommended Practice referred to in
the standard. This substitution of terms results in
references to "seating reference point with seat in
rearmost position" (SAE Recommended Practice
J903a, Figure 1). This terminology is potentially in-
ternally contradictory when the "seating reference
point" is defined to permit a location at some point
other than the rearmost position of the seat."
NHTSA agrees vnth GM that the amended definition
of SgRP w\\\ create potentially contradictory refer-
ences in Standard No. 104. Elsewhere in today's edition
of the Federal Register, the agency has published an
NPRM proposing to amend S3 of Standard No. 104.
In its comments, Mercedes requested revisions of
Standards No. 103, 104, 107, and 111 "to permit the
use of the "Eyellipse and Head Contour Locator
Line— Adjustable Seats" as described in the newest
version of SAE J941, October 1985." These standards
all use SAE J941, November 1965 to determine the
location for either the 95th or 99th percentile eye range
contour (eyellipse). This SAE Recommended Practice
requires the seat to be in its rearmost position. Since
"seating reference point" is not referenced, NHTSA
does not believe that it would be appropriate to address
amendment of any of these standards in the rulemak-
ing to amend Standard No. 104.
5. Reference uodated version of SAE JllOO.
Volkswagen commented that SAE JllOO JUN84 was
presently being updated by the SAE, and recom-
mended that the updated version be substituted if avail-
able. NHTSA has contacted the SAE and been
informed that the June 1984 version of SAE JllOO is
the most recently approved version.
6. Correction of Typographical Error.
Volkswagen pointed out that paragraph (b)(4) of the
proposed definition inaccurately references "SAE
J826" as "SEA J826." This typographical error has
been rectified in the final rule.
7. Seat location of Standard No. 210 upper
anchorage requirements.
Mercedes also submitted comments concerning the
April 30, 1990 amendment of Standard No. 210 (Docket
87-02; Notice 2). These comments were also submitted
by Mercedes during the Standard No. 210 rulemaking
and were addressed in the preamble to the Final Rule
(55 FR 17970; April 30, 1990).
In consideration of the foregoing, NHTSA Part 571
of Title 49 of the Code of Federal Regulations is
amended as follows:
Section 571.3 is amended by revising the definition
of "seating reference point" in paragraph (b). The
amendment is effective on and after September 1, 1992
and may be used at the manufacturer's option on or
after September 11, 1991. As amended, the definition
reads as follows:
§571.3 Definitions.
* :t; * * * *
(b) Other definitions.
******
Seating reference point (SgRP) means the unique
design H-point, as defined in SAE JllOO (June 1984),
which:
(a) Establishes the rearmost normal design driving
or riding position of each designated seating position,
which includes consideration of all modes of adjust-
ment, horizontal, vertical, and tilt, in a vehicle;
(b) Has X, Y, and Z coordinates, as defined in SAE
JllOO (June 1984), established relative to the designed
vehicle structure;
PART 571-PRE 59
(c) Simulates the position of the pivot center of the not be positioned in the seating position, is located with
human torso and thigh; and the seat in its most rearward adjustment position
(d) Is the reference point employed to position the
two-dimensional drafting template with the 95th per- Issued on August 6, 1991
centile leg described in SAE J826 (May 1987), or, if 56 p.R. 38084
the drafting template with the 95th percentile leg can- August 12, 1991
PART 571 -PRE 60
PREAMBLE TO AN AMENDMENT TO MOTOR VEHICLE SAFETY STANDARD NO. 571
Seating Reference Point
(Docket No. 87-02; Notice 4)
RIN: 2127-AA43
ACTION: Final rule; response to petitions for recon-
sideration.
SUMMARY: In April 1990, this agency published a
final rule making several amendments to the safety
standard regulating seat belt assembly anchorages.
NHTSA received 7 petitions for reconsideration of this
rule. In response to these petitions, the agency is mak-
ing several changes to the final rule published in April
1990. Specifically, this rule:
1. Excludes the attachment hardware for automatic
belts and for those dynamically tested manual belts that
are the only restraint at a seating position from the
Standard No. 210 strength test;
2. Modifies the regulatory language to specify that
the geometry of the webbing is to be duplicated "at
the initiation of the test."
3. Extends the effective date of the increased lap
belt minimum angle requirement one year for rear
seats;
4. Removes all redundant anchorage requirements;
5. Amends the simultaneous testing requirement;
and
6. Substitutes the term "hip point" for the term
"seating reference point" in the definition of "outboard
designated seating position".
DATES: The amendments made in this rule are effec-
tive September 1, 1992.
Any petitions for reconsideration of this rule must
be received by NHTSA no later than September 1,
1992.
SUPPLEMENTARY INFORMATION:
Background
On April 30, 1990 (55 PR 17970), NHTSA published
a final rule amending Standard No. 210, Seat Belt
Assembly Anchorages (49 CFR 571.210). The rule
made several amendments to the safety standard,
specifically:
1. Increasing the minimum lap belt angle to reduce
the likelihood of occupant submarining in a crash;
2. Excluding front outboard designated seating
positions equipped wdth automatic safety belts from the
requirement that those positions also be equipped with
anchorages for manual shoulder belts;
3. Permitting the optional use of some new test
equipment for compliance testing to make the compli-
ance tests simpler and less costly to perform; and
4. Removing some ambiguities in the current com-
pliance testing procedures so that all parties would
know precisely how compliance testing will be con-
ducted by the agency.
The agency received 7 petitions for reconsideration
of this rule. This notice responds to those petitions. In
addition. General Motors' [GM] petition included five
requests for interpretation of the final rule which will
also be discussed in this notice.
Petition Issues
I. Attachment Hardware Definition and Testing
A. Exclude Attachment Hardware
The final rule extended the applicability of Standard
No. 210 to the attachment hardware of a safety belt
system. Navistar International attachment hardware
Transportation Corporation (Navistarl, Ford Motor
Company [Ford], and the Motor Vehicle Manufacturers
Association of the United States Incorporated [MVMA]
submitted petitions opposing this amendment. All three
petitioners stated that this amendment was unneces-
sary because Standard No. 209, Seat Belt Assemblies,
already specifies performance requirements for the
strength of attachment hardware. All three petition-
ers argued that the Standard No. 208 dynamic test and
the Standard No. 209 static test are reasonable and
sufficient tests, by themselves, to test the performance
of the attachment hardware of safety belt systems. In
addition, MVMA argued that the inclusion of attach-
ment hardware in Standard No. 210 was in conflict
with Standard No. 208, Occupant Crash Protection.
Section S4.5.3.4 of Standard No. 208 excludes auto-
matic safety belt systems, including the attachment
hardware, from the performance requirements of
Standard No. 209. Thus, MVMA argued that the
PART 571-PRE 61
amendment to Standard No. 210 effectively reinstated
a static test performance requirement for the attach-
ment hardware of an automatic safety belt system.
After the April 30, 1990 final rule, the attachment
hardware for different belt systems were subject to
different testing requirements. The attachment hard-
ware for automatic belts that were tested during the
Standard No. 208 crash test, were excluded from
Standard No. 209's static tests, but were subject to
Standard No. 210's static tests. The attachment hard-
ware for dynamically tested manual belts were tested
during the Standard No. 208 crash test and the Stand-
ards No. 209 and 210 static tests. The attachment hard-
ware for other manual belts were not crash tested
under Standard No. 208, but were subject to the static
tests of Standards No. 209 and 210.
On April 16, 1991, NHTSA published a final rule
making the requirements of Standard No. 209 identi-
cal for automatic belts and those dynamically tested
manual belts that are the only occupant restraint at a
seating position (56 FR 15295). As a result of this
rulemaking action, the attachment hardware for both
automatic and dynamically tested manual belts are now
excluded from Standard No. 209's static tests. The
agency explained that Standard No. 209's static test
procedures were a surrogate for Standard No. 208 's
crash test and that the surrogate was unnecessary for
attachment hardware that have been crash tested.
NHTSA has determined that this reasoning is equally
persuasive for attachment hardware under the Stand-
ard No. 210 static tests. Therefore, this rule excludes
the attachment hardware for seat belt assemblies that
meet the frontal crash protection requirements of S5.1
of Standard No. 208. It should be noted, as explained
in the April 16, 1991 notice, the agency does not con-
sider a manual belt installed at a seating position that
is also equipped with an air bag to be dynamically
tested, and, therefore, the attachment hardware for
these belts would be subjected to the Standard No. 210
strength tests.
The requirement to test attachment hardware under
Standard No. 210 is not redundant or unnecessary for
manual safety belt systems that are not dynamically
tested. Attachment hardware is an integral part of the
transfer of safety belt loads to the vehicle structure.
The strength conditions in Standard No. 210 are in-
tended to subject the vehicle anchorage to force levels
that are sufficiently high than one can be reasonably
certain that the safety belt will remain attached to the
vehicle structure, even when exposed to severe crash
conditions. If the attachment hardware were not sub-
jected to those same force levels, during the Standard
No. 210 test, the test would be less useful. A belted
occupant will not be well protected in a crash if the
attachment hardware breaks, but the rest of the
anchorage withstands the crash loading. To minimize
the chances of the attachment hardware breaking
during a crash, the agency is not rescinding the require-
ment to test attachment hardware for non-dynamically
tested safety belts.
In addition, the agency continues to believe that the
attachment hardware originally installed at a seating
position should be used during Standard No. 210 com-
pliance tests for the anchorages for all safety belt sys-
tems, including those whose attachment hardware is
excluded from the requirements of S4.1.1 and S4.1.2.
in order to ensure that the load application onto the
anchorage is as realistic as possible. The agency has
considered conducting the compliance tests using
replacement fixtures which duplicate the geometry.
However, the agency is concerned that developing a
fixture which would accurately simulate every attach-
ment would be very difficult. The agency cannot just-
ify devoting the time necessary to solve this difficult
problem, because such a fixture would be less represen-
tative of the particular attachment hardware in the
vehicle being tested. However, for safety belts excluded
from the requirements of S4.1.1 and S4.1.2. failure of
the attachment hardware will be considered an incom-
plete test, not an apparent non-compliance.
B. Develop a More Objective Test Procedure
Ford's and MVMA's petitions for reconsideration
stated that the final rule did not establish an objective
test procedure for testing attachment hardware. Some
of the issues that Ford indicated needed to be resolved
include: adjusted position of adjustable attachment
hardware for D-rings and automatic belts, status of ad-
justment mechanisms, amount of webbing on the
retractor spools, retractor locking mechanism status,
door latch and lock status, and convertible top and mov-
able window status. As explained below, the agency
does not agree that further clarification of these issues
is necessary, and therefore, denies these aspects of
these petitions.
As a general matter, when a standard does not spec-
ify a particular test condition, there is a presumption
that the requirements of the standard must be met at
all such test conditions. This presumption that the
standard must be met at all positions of unspecified test
conditions may be rebutted if the language of the stand-
ard as a whole or its purposes indicate an intention to
limit unspecified test conditions to a particular condi-
tion or conditions.
In the case of the strength requirements in Standard
No. 210, nothing in the language of the standard sug-
gests that the strength requirements were only to be
measured with the safety belt or other vehicle features
at certain adjustment positions. Indeed, the purpose
of the standard is to reduce the likelihood that an an-
chorage will fail in a crash. To serve this purpose, the
anchorage must be capable of meeting the strength re-
quirements with the safety belt and other vehicle fea-
tures at any adjustment, since those features could be
at any adjustment position during a crash.
PART 571-PRE 62
C. Rescind the Requirement to "Duplicate the
Geometry"
In the final rule, Standard No. 210 was amended to
require that the test setup "duplicate the geometry"
of the original equipment webbing at that seating
position. In its petition for reconsideration. GM re-
quested that the agency reconsider this test require-
ment. GM stated that the agency has not provided any
information regarding the connection of the cables,
chains or webbing to the attachment hardware to allow
vehicle manufacturers to determine objectively that
their compliance test "duplicates the geometry" of the
original equipment webbing. Specifically, they stated
that the agency has provided no clarification regard-
ing what geometry a manufacturer is to simulate for
compliance testing. Therefore, GM concludes, the
manufacturer must either test with the seat belt as-
sembly installed as original equipment or risk that its
own interpretation of "duplicate the geometry" will
agree with NHTSA's interpretation should a question
of Standard No. 210 compliance arise.
The agency continues to believe that the phrase
"duplicate the geometry" is necessary for the enforce-
ment of this standard. The phrase simply means that
the direction of loading and the orientation of the at-
tachment hardware should be the same as it would be
for the original equipment webbing. The phrase was
included in conjunction with the use of substitute web-
^^ bing material to protect vehicle manufacturers from
^m the agency identifying apparent noncompliances based
upon test conditions with unrealistic loading. However,
as evidenced by GM's concern about what geometry
must be simulated, the agency recognizes that the
direction of loading and the orientation of the attach-
ment hardware may change during the course Of the
test. Therefore, to provide clarification, the agency has
modified the regulatory language to specify that the
geometry is to be duplicated "at the initiation of the
test."
II. Lap Belt Minimum Angle
A. Reduce Lap Belt Angle Back to 20 Degrees
In the final rule, based on test data that showed that
the occurrence of occupant submarining is diminished
as the lap belt angle is increased, the agency increased
the minimum lap belt angle from 20 degrees to 30
degrees above the horizontal, measured from the seat-
ing reference point [SgRP] to either the anchorage or
the point where the safety belt contacts the seat frame.
In its petition for reconsideration, GM requested that
the agency rescind this change. While agreeing with
the agency that increasing the lap belt angle will
decrease the possibility of submarining. GM argued
that increasing the lap belt angle from 20 to 30 degrees
cannot be objectively quantified as an enhancement of
motor vehicle safety. In its petition for reconsideration,
Jaguar Cars, Incorporated [Jaguar] also asked the
agency to reconsider this amendment and reduce the
rear lap belt angle back to 20 degrees to harmonize this
requirement with Economic Commission for Europe
[ECE] Regulation No. 14.
Neither petitioner submitted any information to per-
suade the agency that its initial conclusion was incor-
rect. While GM is correct that the agency cannot
precisely quantify the safety benefit of increasing the
minimum lap belt angle 10 degrees, GM did not dis-
pute the agency conclusion that this 10 degree increase
will enhance safety by reducing the likelihood of sub-
marining. Additionally, Jaguar did not submit any
information indicating that the likelihood of submarin-
ing caused by a shallow belt angle is any less for rear
seat occupants, nor is the agency aware of any such
information. Therefore, until a test is available to
specifically evaluate submarining, the agency will con-
tinue to rely on a minimum lap belt angle requirement
in Standard No. 210 to prevent submarining.
B. Extend the Effective Date
In addition to asking the agency to reconsider the
increased lap belt minimum angle requirement, both
GM and Jaguar objected to this amendment on the
grounds that more time is needed for implementation.
GM asserted that, although some seat belt anchorages
may be moved with minimal vehicle modification, other
anchorages cannot be relocated without first address-
ing the overall performance of the seat/restraint sys-
tem at that location. GM also stated that the increased
lap belt angle requirement would significantly affect
rear seating positions in several GM vehicles and
provided a list of 9 body component changes and as-
sembly component changes affected by this amend-
ment. GM did not suggest a possible date that this
requirement should be effective.
Jaguar stated that a one year extension to Septem-
ber 1, 1993 was necessary to meet the new require-
ments, including design and development, compliance
testing, and introduction into production. Like GM,
Jaguar stated that relocation of the safety belt an-
chorages in the rear seats would involve the hardest
and most time intensive design changes.
The agency recognized that the final rule would re-
quire relocation of the safety belt anchorages, and for
this reason provided two and one half years lead time
to implement these changes. However, the agency finds
GM's and Jaguar's explanation of the special difficul-
ties in relocation of the rear seat anchorages persua-
sive. To allow manufacturers sufficient time to
implement the necessary design changes in rear seats,
the agency is extending the effective date one year for
rear seats. The agency believes that the September 1,
1992 effective date should continue to apply for all
front outboard seating positions.
PART 571-PRE 63
III. Seating Reference Point
In the final rule, NHTSA revised S4.3.2 to require
the seat to be adjusted so that the "H" point of the
drafting template is located at "the design "H" point
of the seat for its full rearward and full downward
position," rather than at the seating reference point
(SgRP), when determining if the shoulder belt for that
seat complies with the location requirements of Stand-
ard No. 210. The agency did not reexamine the seat
adjustment specification that is the basis for determin-
ing whether a lap belt or the lap belt portion of a
lap/shoulder belt meets the minimum and maximum
mounting angle requirements in Standard No. 210. The
agency stated that it would continue to use the exist-
ing SgRP, even though the seating adjustment posi-
tion for the SgRP "may not be the rearmost position."
In its petition. Volkswagen requested an amendment
to Standard No. 210 "to provide that the seating refer-
ence point for determining the minimum and maximum
lap belt angles be based on the seating reference point
located with the 95th percentile male dummy leg
length." On August 12th, the agency published a final
rule amending the definition of SgRP (56 FR 38084).
The amended definition establishes that the SgRP is
located using the 95th percentile male dummy leg
length.
In reviewing this petition, however, the agency has
tentatively determined that use of the SgRP may not
be an appropriate means of determining lap belt angle
for rear adjustable seats. Elsewhere in today's edition
of the Federal Register, the agency has published an
NPRM proposing to measure the lap belt angle from
the rearmost seating position for rear adjustable seats.
IV. Redundant Anchorages
Prior to the April 30, 1990 final rule, S4.1.1 of Stand-
ard No. 210 required anchorages for manual lap/shoul-
der belts to be installed for all front outboard seating
positions in passenger cars. Section S4.1.4 of Standard
No. 208 requires that front outboard seating positions
in passenger cars manufactured on or after Septem-
ber 1, 1989 be equipped with automatic crash protec-
tion. As discussed previously, NHTSA has expressly
excluded the anchorages for automatic or dynamically
tested manual safety belts from the anchorage location
requirements in Standard No. 210. Thus, the an-
chorages to which automatic or dynamically tested
manual safety belts originally installed in a vehicle are
attached are not required to comply with the location
requirements of Standard No. 210.
However, if the anchorages for any automatic or
dynamically tested manual safety belts originally
installed at a front outboard seating position in a
passenger car do not comply with the location require-
ments of Standard No. 210, the standard provided
(prior to the April 30, 1990 final rule) that anchorages
for a manual lap/shoulder belt that comply with the an-
chorage location requirements must also be installed
at that seating position. This redundant anchorage re-
quirement was partially rescinded by the final rule by
the addition of section S4. 1.3(b) which stated that
redundant upper anchorages for manual safety belts
were not required in the front outboard seats of pas-
senger cars equipped with dynamically tested or auto-
matic safety belts.
On November 23, 1987, the agency amended Stand-
ard No. 208 to require dynamic testing of manual
lap/shoulder belts installed in the front outboard seat-
ing positions of trucks and multipurpose passenger
vehicles with a gross vehicle weight rating [GVWR] of
8,500 pounds or less [LTV's] manufactured on and after
September 1, 1991. On March 12, 1986, the agency ex-
cluded the anchorages for dynamically tested manual
belts from the anchorage location requirements in
Standard No. 210 (55 FR 9813). However, as explained
for automatic belts, while the anchorages for these
belts are not required to comply with the location re-
quirements of Standard No. 210, if the anchorages do
not comply with the location requirements additional
anchorages which do comply with the location require-
ments must be installed in these vehicles.
Volkswagen of America, Incorporated 's [Volkswa-
gen] and MVMA's petitions for reconsideration re-
quested that the agency extend the deletion of
redimdant upper anchorages to all vehicles equipped ^^^
with dynamically tested or automatic safety belts. In j^^P
addition, Volkswagen noted that S4.1.2 of Standard
No. 210 still requires a redundant or unused (for
manufacturers who have chosen to comply with Stand-
ard No. 208 using a shoulder belt and a knee bolster)
Type 1 safety belt anchorage
The notice of proposed rulemaking (NPRMl for this
rulemaking requested comments about a proposal "to
delete the requirement for providing separate Type 2
safety belt anchorages at designated seating positions
equipped wath automatic and dynamically tested man-
ual belts which meet the occupant crash protection re-
quirements of Standard No. 208." See, 52 FR 3293 at
3296; February 3, 1987. As stated previously, the final
rule deleted only the requirement for redundant upper
anchorages in passenger cars' even though the discus-
sion in the preamble mentioned anchorages for
lap/shoulder belts. See, 55 FR 17970 at 17978. April
30, 1990. The agency also believes that the reasons the
redundant anchorage requirement was deleted for pas-
senger cars are equally applicable to LTV's.
As stated in the final rule, the agency believes that
all redundant anchorages for manual lap or lap/shoul-
der belts are unnecessary, unless they are needed to
secure a child safety seat. Therefore, the agency is
amending S4. 1.3(b) to remove all redundant anchorage
requirements, including the manual shoulder belt an-
chorage in light trucks (S4.1.1) and the manual lap belt
anchorage in S4.1.2.
PART 571-PRE 64
The agency notes that S4.1.3 still requires an-
chorages for a Type 1 or a Type 2 safety belt anchorage
at the right front seat of an automobile or light truck
if the restraint at that seat cannot secure a child safety
seat. The agency intends to leave this requirement in
place.
V. Reduce Test Loads on School Buses
In its petition for reconsideration. Thomas Built
Buses, Incorporated (Thomasl asked the agency to
recons'der a portion of the final rule pertaining to the
anchorage strength requirements on small school buses
(GVWR of 10,000 pounds or less). The final rule re-
quired simultaneous testing of the anchorages on a
small school bus seat, thus requiring the application of
10,000 or 15,000 pounds of force during the test.
Thomas is concerned that it would not be practicable
to design floors to withstand these loads, and asked the
agency to base the new requirement on either 2,500
pounds per seating position or a 30 mph barrier crash
Thomas believes that the 5,000 pound requirement for
each belt's anchorage system is not warranted, because
they have never observed an anchorage failure and be-
cause their testing indicates low crash test loads.
While Thomas did not comment on the NPRM,
another manufacturer of small school buses, Blue Bird
Body Company [Blue Bird] submitted similar comments
to the NPRM. The agency considered the issue of
lowering the anchorage test load requirement for small
school buses in the analysis for the final rule, and
determined that this change would degrade the level
of safety of the school bus. Thomas has not provided
any data that has persuaded the agency to alter this
position.
First, Thomas' petition asserted that the floor
strength will be required to support a load of 30,000
pounds. The agency disagrees with this assertion. The
highest load any floor would be subject to during test-
ing would be 15,000 pounds. This would be during the
anchorage test for a 3-passenger bench seat. Thomas'
assertion appears to be based on an incorrect interpre-
tation that the standard requires simultaneous testing
of the entire row, i.e., two laterally adjacent
3-passenger bench seats.
Second, the agency has seen evidence from two
manufacturers of small school buses, Lewis Manufac-
turing and Blue Bird, that the floors on two different
takes of small school buses can comply with the 15.000
pound load on existing flooring, with only minor rein-
forcement of the bolt holes. The floor structure itself,
even when not the original flooring from the first stage
manufacturer, did not have to be reinforced.
Finally, the agency would like to emphasize that, dur-
ing an actual crash, the floor will be subject to loads
at least this high, if not higher, due to the loading of
all safety belts and seat backs. In the absence of a
dynamic test, the agency feels that the 5,000 pound re-
quirement is warranted. The agency is not convinced
by Thomas, assertions of no known failures or upon
measures of low crash test loads on individual safety
belts.
VI. Simultaneous Testing
Prior to the final rule. Standard No. 210 required all
floor-mounted anchorages for adjacent designated seat-
ing positions to be tested simultaneously for anchorage
strength. ECE Regulation No. 14 requires all an-
chorages common to a single seat assembly, whether
floor-mounted or mounted on a seat frame, to be tested
simultaneously. In the NPRM, the agency proposed:
"Except for seat belt anchorages common to
forward-facing and rearward-facing seats, all floor-
mounted and seat-mounted seat belt anchorages
for a set of laterally adjacent designated seating
positions shall be tested by simultaneously
loading..."
The agency was attempting to clarify the existing re-
quirement. The agency was concerned that the term
"adjacent" in the existing regulation was imprecise and
could be misinterpreted as specifying simultaneous
testing for front and rear outboard seating positions
on the same side of a vehicle, or for buckat seats in the
front separated by a console or some other structure.
In addition, the agency was proposing to extend the
simultaneous testing requirement to seat-mounted seat
belt anchorages.
In the final rule, the reference to "adjacent desig-
nated seating positions" was deleted and a requirement
for simultaneous testing of all designated seating
positions that face in the same direction and are com-
mon to the same occupant seat was substituted. Thus,
the final rule deleted the requirement to test adjacent
bucket seats.
Ford petitioned the agency to reconsider this final
rule for bucket seats. It pointed out that the amend-
ment of S4.2.4 would specify non-simultaneous load-
ing of anchorages for three separate but immediately
adjacent bucket seats, even if those seats used com-
mon floor-mounted anchorages and/or Common attach-
ment hardware. Ford stated that these seating
arrangements are becoming more common in multipur-
pose passenger vehicles, and that S4.2.4 is inadequate
to meet the need for motor vehicle safety for vehicles
using such a seat design.
The agency agrees with Ford that the anchorages for
such seating arrangements should be simultaneously
tested. The intent of S4.2.4 is to require simultaneous
testing for safety belt anchorages that are likely to sig-
nificantly affect the strength of each other. During this
rulemaking, the agency expressly considered the
bucket seats in the front of passenger vehicles. These
seats are usually separated by either the transmission
PART 571-PRE 65
tunnel or an instrument console and, therefore, are un-
likely to significantly affect each other. The agency also
expressly considered the extremely high test loads that
might be required for the floors of small school buses
if an entire row had to be tested simultaneously. The
agency did not see a need to test two bench seats in
a small school bus simultaneously as these are sepa-
rated by an aisle and are, therefore, unlikely to signifi-
cantly affect each other. The agency did not expressly
consider seating positions that are not on the same
seat, but are not separated by an aisle, transmission
tunnel, or the like. Examples of these types of seats
would include the split bench seats in the front seats
of passenger vehicles and the adjacent bucket seats in
the rear of vans and multipurpose passenger vehicles.
Therefore, the agency is amending S4 2.4 to require
simultaneous testing of anchorages for designated seat-
ing positions which are either common to the same
occupant seat or, although not common to the same
occupant seat, are laterally adjacent and have an-
chorages that are within 12 inches of each other. The
agency believes the 12 inch measurement is a practi-
cal means of identifying anchorages whose perfor-
mance is likely to significantly affect the performance
of other anchorages. The agency believes that front
bucket seats are not likely to be affected by this require-
ment because they are separated by a transmission tun-
nel or console and therefore the distance between the
anchorages usually exceeds 12 inches. Similarly, later-
ally adjacent bench seats in a small school bus would
be unaffected as the anchorages are mounted on the
seat and the aisle is required to be at least 12 inches.
VII. Upper Anchorage Zone
In the final rule, the agency redefined the method
for locating the upper anchorage zone. Specifically, the
point of reference was redefined as the H -point rather
than the SgRP. In its petition. Ford stated its belief
"that the only anchorages affected by this amendment
are those in front seats of trucks and MPVs with either
a GVWR of more than B500 pounds but not greater
than 10.000 pounds or with an unloaded vehicle weight
greater than 5500 pounds and an GVWR of 10,000
pounds or less, as well as convertible trucks, walk-in
vans. Postal Service vehicles, motor homes, etc." Ford
requested that the agency rescind this amendment be-
cause "Ford believes that it was not the agency's in-
tent to apply new anchorage location requirements
solely to this low volume, complex, and diverse group
of vehicles."
The agency believes that Ford's request is based
upon two misconceptions. First, the agency does not
perceive the redefinition as having changed the loca-
tion requirements. Prior to the final rule, S4.3.2 of
Standard No. 210 stated that the seat must be in the
rearmost position with the template's "H" point at the
SgRP. The agency has always interpreted this to
require the template to be positioned fully rearward
in the seat. While the SgRP is usually located with the
seat in its rearmost position, the agency substituted
a requirement that the template's "H" point be located
at the design "H" point of the seat, rather than at the
SgRP because of confusion which arose when the SgRP
is not the rearmost position as required by the stand-
ard, for example, if the seat has "extended travel."
Therefore, while the names changed, the positions of
the seat and the template for determining compliance
with the anchorage location requirements did not
change.
Second, Ford apparently overlooked the rear seats
in automobiles, light trucks and MPVs that still must
comply with the upper anchorage zone requirement.
S4.3 of Standard No. 210 states that all anchorages for
automatic seat belt assemblies and for dynamically
tested seat belt assemblies that meet the frontal crash
protection requirements of S5.1 of Standard No. 208
are excluded from the location requirements of Stand-
ard No. 210.
Notwithstanding this exclusion, anchorages at each
of the following outboard seats must comply with the
upper anchorage location requirements:
—the seats behind the first row of seats on auto-
mobiles, MPVs and light trucks;
—trucks with a GVWR above 8,500 pounds but
under 10,000 pounds;
—trucks with an unloaded weight above 5,500 pounds
but a GVWR under 10,000 pounds,
—convertibles, open-body type vehicles, walk-in
van-type trucks, motor homes, vehicles designed
to be exclusively sold to the U.S. Postal Service,
and vehicles carrying chassis-mounted campers.
Ford did not provide any data to show that there was
no degradation of safety when upper anchorages of
non-dynamically tested safety belts are allowed to be
placed outside the specified zone. The agency has
clearly stated its concern with permitting anchorages
forward of the occupant. See, 55 FR 17970, 17975,
April 30, 1990. Since the agency believes that there
would be a negative safety effect as a result of delet-
ing this upper anchorage zone requirement. Ford's
petition is denied.
VIII. Technical Errors
In its petition for rulemaking. Ford pointed out three
errors in the final rule. First, Ford noted that, in S5.2,
the reference to the upper body block, and references
to the published Figure 3 were omitted. Second, Ford
noted that the onset rate and test time is repeated in
S5.2. These errors were corrected in a June 15, 1990
technical amendment (55 FR 24240).
Third, Ford pointed out that the definition of "out-
board designated seating position" at 49 CFR 571.3
references the SgRP and the shoulder reference point
PART 571-PRE 66
"as shown in Figure 1 of Standard No. 210." However,
SgRP is no longer shown in Figure 1. In the final rule,
Figure 1, used to locate the upper anchorage zone, was
amended to substitute the Hip-Point (H-Point) with the
seat in its full rearward and full downward position for
the SgRP. According to Ford, this substitution also
changed the location of the shoulder reference point
in Figure 1.
The agency contacted Ford to determine what
change it saw in the location of the shoulder reference
point. Ford stated that by substituting the H-point for
the SgRP, both the hips and the shoulders of the tem-
plate were moved back in movable seats, to the rear-
most position. In a Ford vehicle, this would typically
be about one inch backwards and one-tenth of an inch
down.
As discussed previously, the agency does not agree
with the Ford's belief that this new Figure 1 changed
the position of the template rearward. However, the
agency agrees it is appropriate to substitute the term
H-point for SgRP in the definition of "outboard desig-
nated seating position" in §571.3.
Finally, in reviewing the Ford petition, the agency
discovered an inadvertent error in S5.2. The end of the
second sentence currently reads, "wath an initial force
application angle of not less than 5 degrees more than
15 degrees above the horizontal." The sentence should
have included the word "nor", as follows: "with an in-
itial force application of not less than 5 degrees nor
more than 15 degrees above the horizontal."
Requests for Interpretation
I. Which seats must comply with the 5,000 oound
test and which must comply with the 3, 000 pound
test?
At the outset, the test requirement for the safety belt
anchorages at any seat is either 5,000 pounds or 6,000
pounds. A technical error in the final rule deleted men-
tion of the upper shoulder restraint body block, creat-
ing the impression of a 3,000 pound test. This error
was corrected in the June 15, 1990 technical amend-
ment. Thus, there is a 3,000 pound test load on the
pelvic body block, and a 3,000 pound test load on the
upper torso body block.
The final rule specifies which load shall be applied
in S4.2.1 and S4.2.2, S4.2.1 requires a minimum load
of 5,000 pounds on the pelvic body block for the an-
chorages for seating positions which may not have a
shoulder belt, or for seating positions whose shoulder
belt anchorages are not required to be tested. This in-
cludes the anchorages for: (1) a Type 1 safety belt. (2)
a shoulder belt which is not required by Standard No.
208 (a "voluntarily installed" shoulder belt) and there-
fore is not subject to Standard No. 210, and (3) a
detachable shoulder belt (permitted for automatic belts
under S4.5.3.2 of Standard No. 208). For other an-
chorages, S4.2.2 requires a test load of 3,000 pounds
on the lap belt body block and 3,000 pounds on the
shoulder belt body block.
II. Clarification of the definition of attachment
hardware.
GM requested an interpretation of the term "attach-
ment hardware" for Standard No. 210. Specifically,
GM was concerned wdth certain Type 2 seat belt as-
sembly designs that incorporate a buckle and latchplate
near the seat belt anchorage. GM stated that, although
these designs meet the requirements of Standard No.
209, it is unclear whether they would be considered
"attachment hardware" and therefore subject to the
performance requirements of Standard No. 210. Else-
where in today's edition of the Federal Register, the
agency has published a final rule amending the defini-
tion of "seat belt anchorage." In that final rule, the
agency stated that the definition did not include the
webbing, straps or similar device, or the buckles which
comprise the seat belt itself.
III. What is the meaning of "duplicate the
geometry?"
For an explanation of this term, see section IC of the
discussion on petition issues.
IV. Define "voluntarily installed. "
The agency considers a "voluntarily installed" safety
belt system to be a system which is neither required
by Standard No. 208 nor necessary to pass the dynamic
test in Standard No. 208. Requests for interpretation
regarding specific safety belt systems should be
directed to the Office of Chief Counsel, NHTSA, 400
Seventh Street S.W., Washington, D.C. 20590.
V. Is a manual 3-point belt installed at a seating
position equipped with a supplemental inflatable
restraint (SIR) system regarded as a synamically
tested belt?
As discussed in the recent rulemaking to exclude
dynamically tested safety belts from static testing
requirements, the agency does not consider a manual
3-point belt installed at a seating position equipped wath
an SIR system to be a dynamically tested belt. See, 56
FR 15295, 15297; April 16, 1991. However, since a
March 14, 1988 interpretation letter to Mr. Karl-Heinz
Faber of Mercedes Benz, the agency has considered a
manual 3-point belt installed at a seating position
equipped with an SIR system to be exempt from the
location requirements, of Standard No. 210. Because
of the confusion associated with the phrase "dynami-
cally tested" the agency is amending S4.3 to clarify,
consistent with agency interpretation of this section,
that the anchorages for all seat belt assemblies that
meet the frontal crash protection requirements of S5.1
of Standard No. 208 are exempt from the location
requirements
PART 571 -PRE 67
In reviewing this request for interpretation, the
agency noted that the final sentence of the introduc-
tory text in S4.3 exempts anchorages for the upper
torso portion of a Type 2 seat belt assembly installed
at a forward facing rear outboard seating position of
a passenger car manufactured on or after December
11, 1989, and before September 1, 1990, from the re-
quirements of S4.3.2. Since this exemption no longer
has any substantive effect, this sentence has been
deleted.
In consideration of the foregoing, 49 CFR 571 is
amended as follows:
2. Section 571.3 is amended by revising the defini-
tion of "outboard designated seating position" in para-
graph (b), to read as follows:
(b) Other definitions.
******
"Outboard designated seating position" means a
designated seating position where a longitudinal ver-
tical plane tangent to the outboard side of the seat
cushion is less than 12 inches from the innermost point
on the inside surface of the vehicle at a height between
the design H-point and the shoulder reference point (as
shown in fig. 1 of Federal Motor Vehicle Safety Stand-
ard No. 210) and longitudinally between the front and
rear edges of the seat cushion.
******
571.210 [Amendedl
3. S4.1.3 of Standard No. 210 is revised to read as
follows:
S4.1 Type.
* « * :4: * *
S4.1.3 (a)
******
(b) The requirement in S4.1.1 and S4.1.2 of this
standard that seat belt anchorages for a Type 1 or a
Type 2 seat belt assembly shall be installed for certain
designated seating positions does not apply to any such
seating positions that are equipped with a seat belt as-
sembly that meets the frontal crash protection require-
ments of S5.1 of Standard No 208 (49 CFR 571.208).
4. S4.2 of Standard No. 210 is amended by revising
S4.2.1, S4.2.2. and S4.2.4 to read as follows:
S4.2 Strength.
S4.2.1 Except as provided in S4.2.5, and except for
side-facing seats, the anchorages, attachment hard-
ware, and attachment bolts for any of the following
seat belt assemblies shall withstand a 5,000-pound force
when tested in accordance with S5.1 of this standard:
(a) Type 1 seat belt assembly;
(b) Lap belt portion of either a Type 2 or automatic
seat belt assembly, if such seat belt assembly is volun-
tarily installed at a seating position; and
(c) Lap belt portion of either a Type 2 or automatic
seat belt assembly, if such seat belt assembly is
equipped with a detachable upper torso belt.
S4.2.2 Except as provided in S4 2.5. the an-
chorages, attachment hardware, and attachment bolts
for all Type 2 and automatic seat belt assemblies that
are installed to comply with Standard No. 208 (49 CFR
571.208) shall withstand 3,000-pound forces when
tested in accordance with S5.2.
******
54.2.4 Anchorages, attachment hardware, and at-
tachment bolts shall be tested by simultaneously load-
ing them in accordance with the applicable procedures
set forth in S5 of this standard if the anchorages are
either:
(a) for designated seating positions that are common
to the same occupant seat and that face in the same
direction, or
(b) for laterally adjacent designated seating positions
that are not common to the same occupant seat, but
that face in the same direction, if the vertical center-
line of the bolt hole for at least one of the anchorages
for one of those designated seating positions is within
12 inches of the vertical centerline of the bolt hole for
an anchorage for one of the adjacent seating positions.
54.2.5 The attachment hardware of a seat belt as-
sembly, which is subject to the requirements of S5.1
of Standard No. 208 (49 CFR 571.208) by virtue of any
provision of Standard No. 208 other than S4.1.2.1(cX2)
of that standard, does not have to meet the require-
ments of S4.2.1 and S4.2.2 of this standard.
5. S4.3 of Standard No. 210 is amended by revising
the introductory text of S4.3 and by adding a new sec-
tion S4.3.1.5, to read as follows:
S4.3 Location. As used in this section, "forward"
means the direction in which the seat faces, and other
directional references are to be interpreted accord-
ingly. Anchorages for seat belt assemblies that meet
the frontal crash protection requirements of S5.1 of
Standard No. 208 (49 CFR 571.208) are exempt from
the location requirements of this section.
******
S4.3.1.5 Notwithstanding the provisions of S4.3.1.1
through S4.3.1.4, the lap belt angle for seats behind
the front row of seats shall be between 20 degrees and
75 degrees for vehicles manufactured between Septem-
ber 1, 1992 and September 1, 1993.
6. S5 of Standard No. 210 is revised to read as
follows:
S5 Test procedures. Each vehicle shall meet the re-
quirements of S4.2 of this standard when tested accord-
ing to the following procedures. Where a range of
values is specified, the vehicle shall be able to meet the
PART 571-PRE 68
requirements at all points within the range. For the
testing specified in these procedures, the anchorage
shall be connected to material whose breaking strength
is equal to or greater than the breaking strength of the
webbing for the seat belt assembly installed as origi-
nal equipment at that seating position. The geometry
of the attachment duplicates the geometry, at the in-
itiation of the test, of the attachment of the originally
installed seat belt assembly.
S5.1 Seats with Type 1 or Type 2 seat belt anchorages.
With the seat in its rearmost position, apply a force
of 5,000 poimds in the direction in which the seat faces
to a pelvic body block as described in Figure 2A, in a
plane parallel to the longitudinal centerline of the
vehicle, with an initial force application angle of not
less than 5 degrees nor more than 15 degrees above
the horizontal. Apply the force at the onset rate of not
more than 50,000 pounds per second. Attain the 5,000
pound force in not more than 30 seconds and maintain
it for 10 seconds. At the manufacturer's option, the
pelvic body block described in Figure 2B may be substi-
tuted for the pelvic body block described in Figure 2A
to apply the specified force to the center set(s) of
anchorages for any group of three or more sets of an-
chorages that are simultaneously loaded in accordance
with S4.2.4 of this standard.
S5.2 Seats with Type 2 or automatic seat belt an-
chorages. With the seat in its rearmost position,
apply forces of 3,000 pounds in the direction in which
the seat faces simultaneously to a pelvic body block,
as described in Figure 2A, and an upper torso body
block, as described in Figure 3, in a plane parallel to
the longitudinal centerline of the vehicle, with an initial
force application angle of not less than 5 degrees nor
more than 15 degrees above the horizontal. Apply the
forces at the onset rate of not more than 30,000 pounds
per second. Attain the 3,000 pound forces in not more
than 30 seconds and maintain it for 10 seconds. At the
manufacturer's option, the pelvic body block described
in Figure 28 may be substituted for the pelvic body
block described in Figure 2A to apply the specified
force to the center set(s) of anchorages for any group
of three or more sets of anchorages that are simul-
taneously loaded in accordance with S4.2.4 of this
standard.
Issued on November 27, 1991
56 F.R. 63676
December 5, 1991
PART 571-PRE 69-70
#
PART 571 — FEDERAL MOTOR VEHICLE SAFETY STANDARDS
SUBPART A— GENERAL
§ 571.1 Scope.
This part contains the Federal Motor Vehicle
Safety Standards for motor vehicles and motor
vehicle equipment established under section 103 of
the National Traffic and Motor Vehicle Safety Act
of 1966 (80 Stat. 718).
§ 571.3 Definitions.
(a) Statutory definitions. All terms defined in
section 102 of the Act are used in their statutory
meaning.
(b) Other definitions. As used in this chapter
Act means the National Traffic and Motor Vehicle
Safety Act of 1966 (80 Stat. 718).
Approved, unless used with reference to another
person, means approved by the Secretary.
Boat trailer means a trailer designed with
cradle-type mountings to transport a boat and con-
figured to permit launching of the boat from the
rear of the trailer.
Biis means a motor vehicle with motive power,
except a trailer designed for carrying more than 10
persons.
Curb weight means the weight of a motor vehicle
with standard equipment: maximum capacity of
engine fuel, oil, and coolant; and, if so equipped, air
conditioning and additional weight optional
engine.
Designated seating capacity means the number
of designated seating positions provided.
Designated seating position means any plan view
location capable of accommodating a person at
least as large as a 5th percentile adult female, if the
overall seat configuration and design and vehicle
design is such that the position is likely to be used as
a seating position while the vehicle is in motion,
except for auxiliary seating accommodations such
as temporary or folding jump seats. Any bench or
split-bench seat in a passenger car, truck or
multipurpose passenger vehicle with a GVWR less
than 10,000 pounds, having greater than 50 inches
of hip room (measured in accordance with SAE
Standard JllOO (a)) shall have not less than three
designated seating positions, unless the seat
design or vehicle design is such that the center
position cannot be used for seating.
Driver means the occupant of a motor vehicle
seated immediately behind the steering control
system.
Emergency brake means a mechanism designed
to stop a motor vehicle after a failure of the service
brake.
5th percentile adult female means a person
possessing the dimensions and weight of the 5th
percentile adult female specified for the total age
group in Public Health Service Publication No.
1000, Series 11, No. 8, "Weight, Height, and
Selected Body Dimensions of Adults."
Fixed collision barrier means a flat, vertical,
unyielding surface with the following
characteristics:
(1) The surface is sufficiently large that when
struck by a tested vehicle, no portion of the vehicle
projects or passes beyond the surface.
(2) The approach is a horizontal surface that is
large enough for the vehicle to attain a stable atti-
tude during its approach to the barrier, and that
does not restrict vehicle motion during impact.
(3) When struck by a vehicle, the surface and its
supporting structure absorb no significant portion
of the vehicle's kinetic energy, so that a perform-
ance requirement described in terms of impact
with a fixed collision barrier must be met no
matter how small an amount of energy is absorbed
by the barrier.
Firefighting vehicle means a vehicle designed ex-
clusively for the purpose of fighting fires.
Forward control means a configuration in which
more than half of the engine length is rearward of
the foremost point of the windshield base and the
steering wheel hub is in the forward quarter of the
vehicle length.
Gross axle weight rating or GAWR means the
value specified by the vehicle manufacturer as the
load-carrying capacity of a single axle system, as
measured at the tire-ground interfaces.
PART 571-1
Gross combination weight rating or GCWR
means the value specified by the manufacturer as
the loaded weight of a combination vehicle.
Gross vehicle weight rating or GVWR means the
value specified by the manufacturer as the loaded
weight of a single vehicle.
H point means the mechanically hinged hip point
of a manikin which simulates the actual pivot
center of the human torso and thigh, described in
SAE Recommended Practice J826. "Manikin for
Use in Defining Vehicle Seating Accommoda-
tions," November 1962.
Head impact area means all non-glazed surfaces
of the interior of a vehicle that are statically con-
tactable by a 6.5-inch diameter spherical head form
of a measuring device having a pivot point to "top-
of-head" dimension infinitely adjustable from 29 to
33 inches in accordance with the following pro-
cedure, or its graphic equivalent:
(a) At each designated seating position, place
the pivot point of the measuring device—
(1) For seats that are adjustable fore and aft,
at—
(i) The seating reference point; and
(ii) A point 5 inches horizontally forward of
the seating reference point and vertically
above the seating reference point an amount
equal to the rise which results from a 5-inch
forward adjustment of the seat or 0.75 inches;
and
(2) For seats that are not adjustable fore and
aft, at the seating reference point.
(b) With the pivot point to "top-of-head" dimen-
sions at each value allowed by the device and the
interior dimensions of the vehicle, determine all
contact points above the lower windshield glass
line and forward of the seating reference point.
(c) With the head form at each contact point,
and with the device in a vertical position if no con-
tact point exists for a particular adjusted length,
pivot the measuring device forward and downward
through all arcs in vertical planes to 90° each side
of the vertical longitudinal plane through the
seating reference point, until the head form con-
tacts an interior surface or until it is tangent to a
horizontal point 1 inch above the seating reference
point, whichever occurs first.
Includes means includes but is not limited to.
Interior compartment door means any door in
the interior of the vehicle installed by the manufac-
turer as a cover for storage space normally used
for personal effects.
Longitudinal or longitudinally means parallel to
the longitudinal centerline of the vehicle.
Motorcycle means a motor vehicle with motive
power having a seat or saddle for the use of the
rider and designed to travel on not more than three
wheels in contact with the ground.
Motor-driven cycle means a motorcycle with a
motor that produces 5-brake horsepower or less.
Multipurpose passenger vehicle means a motor
vehicle with motive power, except a trailer, de-
signed to carry 10 persons or less which is con-
structed either on a truck chassis or with special
features for occasional off-road operation.
Open-body type vehicle means a vehicle having no
occupant compartment top or an occupant com-
partment top that can be installed or removed by
the user at his convenience.
Outboard designated seating position means a
designated seating position where a longitudinal
vertical plane tangent to the outboard side of the
seat cushion is less than 12 inches from the inner-
most point on the inside surface of the vehicle at a
height between [the design H-point and the
shoulder reference point and the shoulder
reference point (as shown in Fig. 1 of Federal
Motor Vehicle Safety Standard No. 210) and
longitudinally between the front and rear edges of
the seat cushion. (56 F.R. 63676— December 5, 1991.
Effective: September 1, 1992.)!
Overall vehicle width means the nominal design
dimension of the widest part of the vehicle, ex-
clusive of signal lamps, marker lamps, outside rear-
view mirrors, flexible fender extensions, and mud
flaps, determined with doors and windows closed
and the wheels in the straight-ahead position.
Parking brake means a mechanism designed to
prevent the movement of a stationary motor
vehicle.
Passenger car means a motor vehicle with motive
power, except a multipurpose passenger vehicle,
motorcycle, or trailer designed for carrying 10 per-
sons or less.
Pelvic impact area means that area of the door
or body side panel adjacent to any outboard
designated seating position which is bounded by
horizontal planes 7 inches above and 4 inches below
the seating reference point and vertical transverse
planes 8 inches forward and 2 inches rearward of
the seating reference point.
(Rev. 12/5/91)
PART 571-2
Pole trailer means a motor vehicle without
motive power designed to be drawn by another
motor vehicle and attached to the towing vehicle
by means of a reach or pole, or by being boomed or
otherwise secured to the towing vehicle, for trans-
porting long or irregularly shaped loads such as
poles, pipes, or structural members capable
generally of sustaining themselves as beams be-
tween the supporting connections.
School bus means a bus that is sold, or introduced
in interstate commerce, for purposes that include
carrying students to and from school or related
events, but does not include a bus designed and
sold for operation as a common carrier in urban
transportation.
[Seating reference point (SgRP) means the uni-
que design H-point, as defined in SAE JllOO (June
1984), which:
(a) Establishes the rearmost normal design driv-
ing or riding position of each designated seating
position, which includes consideration of all modes
of adjustment, horizontal, vertical, and tilt, in a
vehicle;
(b) Has X, Y, and Z coordinates, as defined in
SAE JllOO (June 1984), established relative to the
designed vehicle structure;
(c) Simulates the position of the pivot center of
the human torso and thigh; and
(d) Is the reference point employed to position
the two dimensional drafting templates with the
95th percentile leg described in SAE J826 (May
1987), or, if the drafting template with the 95th
percentile leg cannot be positioned in the seating
position, is located with the seat in its most rear-
ward adjustment position. (56 F.R. 38084— August
12, 1991. Effective: September 1, 1992)1
Semitrailer means a trailer, except a pole trailer,
so constructed that a substantial part of its weight
rests upon or is carried by another motor vehicle.
Service brake means the primary mechanism
designed to stop a motor vehicle.
Speed attainable in 1 mile means the speed
attainable by accelerating at maximum rate from a
standing start for 1 mile, on a level surface.
Speed attainable in 2 miles means the speed at-
tainable by accelerating at a maximum rate from a
standing start for 2 miles, on a level surface.
Torso line means the line connecting the "H"
point and the shoulder reference point as defined
in SAE Recommended Practice J787b, "Motor
Vehicle Seat Belt Anchorage," September 1966.
Trailer means a motor vehicle with or without
motive power, designed for carrying persons or
property and for being drawn by another motor
vehicle.
Trailer converter dolly means a trailer chassis
equipped with one or more axles, a lower half of a
fifth wheel and a drawbar.
Truck means a motor vehicle with motive power,
except a trailer, designed primarily for the
transportation of property or special purpose
equipment.
Truck tractor means a truck designed primarily
for drawing other motor vehicles and not so con-
structed as to carry a load other than a part of the
weight of the vehicle and the load so drawn.
Unloaded vehicle weight means the weight of a
vehicle with maximum capacity of all fluids
necessary for operation of the vehicle, but without
cargo, occupants, or accessories that are ordinarily
removed from the vehicle when they are not in use.
95th percentile adult male means a person
possessing the dimensions and weight of the 95th
percentile adult male specified in Public Health
Service Publication No. 1000, Series 11, No. 8,
"Weight, Height, and Selected Body Dimensions
of Adults."
Vehicle fuel tank capacity means the tank's
unusable capacity (i.e., the volume of fuel left at
the bottom of the tank when the vehicle's fuel
pump can no longer draw fuel from the tank) plus
its usable capacity (i.e., the volume of fuel that can
be pumped into the tank through the filler pipe
with the vehicle on a level surface and with the
unusable capacity already in the tank). The term
does not include the vapor volume of the tank (i.e.,
the space above the fuel tank filler neck) nor the
volume of the fuel tank filler neck.
§ 571.4 Explanation of usage.
The word "any," used in connection with a
range of values or set of items in the requirements,
conditions, and procedures of the standards or
regulations in this chapter, means generally the
totality of the items or values, any one of which
may be selected by the Administration for testing,
except where clearly specified otherwise.
Examples: "The vehicle shall meet the
requirements of S4.1 when tested at any point
between 18 and 22 inches above the ground." This
means that the vehicle must be capable of meeting
the specified requirements at every point between
18 and 22 inches above the ground. The test in
(Rev. 12/5/91)
PART 571-3
question for a given vehicle may call for a single
test (a single impact, for example), but the vehicle
must meet the requirement at whatever point the
Administration selects, within the specified range.
"Each tire shall be capable of meeting the
requirements of this standard when mounted on
any rim specified by the manufacturer as suitable
for use with that tire." This means that, where the
manufacturer specifies more than one rim as
suitable for use with a tire, the tire must meet the
requirements with whatever rim the Administra-
tion selects from the specified group.
"Any one of the items listed below may, at the
option of the manufacturer, be substituted for the
hardware specified in S4.1." Here the wording
clearly indicates that the selection of items is at the
manufacturer's option.
§ 571.5 Matter incorporated by reference.
(a) Incorporation. There are hereby incorpo-
rated, by reference, into this part, all materials
referred to in any standard in Subpart B of this
part that are not set forth in full in the standard.
These materials are thereby made part of this
regulation. The Director of the Federal Register
has approved the materials incorporated by
reference. For materials subject to change, only
the specific version approved by the Director of the
Federal Register and specified in the standard are
incorporated. A notice of any change in these
materials will be published in the Federal Register.
As a convenience to the reader, the materials in-
corporated by reference are listed in the Finding
Aid Table found at the end of this volume of the
Code of Federal Regulations.
(b) Availability. The materials incorporated by
reference, other than acts of Congress and matter
published elsewhere in the Federal Register, are
available as follows:
(1) Standards of the Society of Automotive En-
gineers (SAE). They are published by the Society
of Automotive Engineers, Inc. Information and
copies may be obtained by writing to: Society of
Automotive Engineers, Inc., 400 Commonwealth
Drive, Warrendale, Pennsylvania 15096.
(2) Standards of the American Society for
Testing and Materials. They are published by the
American Society for Testing and Materials. In-
formation on copies may be obtained by writing
to the American Society for Testing and Mate-
rials, 1916 Race Street, Philadelphia, Penn-
sylvania, 19103.
(3) Standards of the American National
Standards Institute. They are published by the
American National Standards Institute. Infor-
mation and copies may be obtained by writing to:
American National Standards Institute, 1430
Broadway, New York, New York 10018.
(4) Data from the National Health Survey,
Public Health Publication No. 1000, Series 11,
No. 8. This is published by the U.S. Department
of Health, Education, and Welfare. Copies may
be obtained for a price of 35 cents from the
Superintendent of Documents, U.S. Government
Printing Office, Washington, D.C., 20402.
(5) Test methods of the American Association
of Textile Chemists and Colorists. They are pub-
lished by the American Association of Textile
Chemists and Colorists. Information and copies
can be obtained by writing to: American Associa-
tion of Textile Chemists and Colorist, Post Office
Box 886, Durham, NC.
1(6) Test methods of the Illuminating
Engineering Society of North America (lES).
They are published by the Illuminating
Engineering Society of North America, 345 East
47th St., New York, N.Y. 10017. (54 F.R.
20082— May 9, 1989. Effective: May 9, 1989)1
§ 571.7 Applicability.
(a) General. Except as provided in paragraphs (c)
and (d) of this section, each standard set forth in Sub-
part B of this part applies according to its terms to all
motor vehicles or items of motor vehicle equipment
the manufacture of which is completed on or after
the effective date of the standard.
(b) Chassis-cabs. Chassis-cabs, as defined in
371.3(b), manufactured on or after January 1,
1968, shall meet all standards in effect on the date
of manufacture of the chassis-cab as are applicable
to the principal end use intended by its manufac-
turer except that where the chassis-cab is equipped
with only part and not all of the items of lighting
equipment referred to in standard No. 108, it need
not meet such standards.
(Revoked 36 F.R. 7055. Effective: 4/14/71)
(c) Military vehicles. No standard applies to a
vehicle or item of equipment manufactured for,
and sold directly to, the Armed Forces of the
United States in conformity with contractural
specifications.
(d) Export. No standard applies to a vehicle or
item of equipment in the circumstances provided in
section 108(b) (5) of the Act (15 U.S.C. 1397 (b) (5)).
(e) Combining and new u^ed components. When a
new cab is used in the assembly of a truck, the
(Rev. 5/9/89)
PART 571-4
truck will be considered newly manufactured for
purposes of paragraph (a) of this section, the
application of the requirements of this chapter, and
the Act, unless the engine, transmission, and drive
axle(s) (as a minimum) of the assembled vehicle are
not new, and at least two of these components
were taken from the same vehicle.
(f) Combining new and used components in
trailer manufacture. When new materials are
used in the assembly of a trailer, the trailer will be
considered newly manufactured for purposes of
paragraph (a) of this section, the application of the
requirements of this chapter, and the Act, unless,
at a minimum, the trailer running gear assembly
(axle(s), wheels, braking and suspension) is not
new, and was taken from an existing trailer—
(1) Whose identity is continued in the reas-
sembled vehicle with respect to the Vehicle Iden-
tification Number; and
(2) That is owned or leased by the user of the
reassembled vehicle.
§ 571.8 Effective date.
Notwithstanding the effective date provisions of
the motor vehicle safety standards in this part, the
effective date of any standard or amendment of a
standard issued after September 1, 1971, to which
firefighting vehicles must conform shall be, with
respect to such vehicles, either 2 years after the
date on which such standard or amendment is
published in the Rules and Regulations section of
the Federal Register, or the effective date specified
in the notice, whichever is later, except as such
standard or amendment may otherwise specifically
provide with respect to firefighting vehicles.
§ 571.9 Separability.
If any standard established in this part or its
application to any person or circumstance is held
invalid, the remainder of the part and the applica-
tion of that standard to other persons or
circumstances is not affected thereby.
Interpretations
General. Compliance with Initial Federal Motor
Vehicle Safety Standards is determined by actual
date of manufacture, rather than model year
designation.
Mini-bikes.
A number of persons have asked the Federal
Highway Administrator to reconsider his February
4, 1969 interpretation of the National Traffic and
Motor Vehicle Safety Act of 1966 concerning mini-
bikes. In that interpretation, the Administrator con-
cluded that mini-bikes are "motor vehicles" within
the meaning of section 102(3) of the Act, and are
regarded as "motorcycles" or "motor-driven
cycles" under the Federal Highway Administration
regulations. Under those regulations, motorcycles
and motor-driven cycles must conform to Motor
Vehicle Safety Standard No. 108, which imposes
performance requirements relating to lamps, reflec-
tive devices, and associated equipment.
The primary basis for the conclusion of the
February 4 interpretation, as stated therein, was
that "[i]n the absence of clear evidence that as a
practical matter a vehicle is not being, or will not
be, used on the public streets, roads, or highways
the operating capability of a vehicle is the most
relevant fact in determining whether or not that
vehicle is a motor vehicle under the Act ..." It was
stated that if examination of a vehicle's operating
capability revealed that the vehicle is "physically
capable (either as offered for sale or without major
additions or modifications) of being operated on
the public streets, roads, or highways, the vehicle
will be considered as having been 'manufactured
primarily for use on the public streets, roads, and
highways'." It was also stated that a manufacturer
would need to show substantially more than that it
has advertised a vehicle as a recreational or private
property vehicle or that use of the vehicle on a
public roadway, as manufactured and sold, would
be illegal in order to overcome a conclusion based
on examination of the vehicle's operating capability.
Petitioners have urged the Administrator to
abandon the operating capability test. They have
argued that many vehicular types, such as self-
propelled riding mowers, have an "operating
capability" for use on the public roads and yet are
obviously outside the class of vehicles which
Congress subjected to safety regulation. True as
that may be, the Administrator has decided to
adhere to the view that the operating capability of
a vehicle is an important criterion in determining
whether it is a "motor vehicle" within the meaning
of the statute. As the above-quoted portion of the
February 4, 1969 interpretation states, however,
PART 571-5
the operating capability test is not reached if there
is "clear evidence that as a practical matter the
vehicle is not being used on the public streets,
roads, or highways. In the case of self-propelled
riding mowers, golf carts, and many other similar
self-propelled vehicles, such clear evidence exists.
It is clear from the definition of "motor vehicle"
in section 102(3) of the Act* that the purpose for
which a vehicle is manufactured is a basic factor in
determining whether it was "manufactured
primarily for use on the public streets, roads, and
highways." However, this does not mean that the
proper classification of a particular vehicle is wholly
dependent on the manufacturer's subjective state
of mind. Instead, the Administrator intends to
invoke the familiar principle that the purpose for
which an act, such as the production of a vehicle, is
undertaken may be discerned from the actor's
conduct in the light of the surrounding
circumstances. Thus, if a vehicle is operationally
capable of being used on public thoroughfares and
if in fact a substantial proportion of the consuming
public actually uses it that way, it is a "motor
vehicle" without regard to the manufacturer's
intent, however manifested. In such a case, it
would be incumbent upon a manufacturer of such a
vehicle either to alter the vehicle's design, con-
figuration, and equipment to render it unsuitable
for on-road use or, by compliance with applicable
motor vehicle safety standards, to render the vehi-
cle safe for use on public streets, roads, and
highways.
In borderline cases, other factors must also be
considered. Perhaps the most important of these is
whether state and local laws permit the vehicle in
question to be used and registered for use on public
highways. The nature of the manufacturer's pro-
motional and marketing activities is also evidence
of the use for which the vehicle is manufactured.
Some relevant aspects of those activities are: (1)
whether the vehicle is advertised for on-road use or
whether the manufacturer represents to the public
that the vehicle is not for use on public roads; (2)
whether the vehicle is sold through retail outlets
that also deal in conventional motor vehicles; and
*" 'Motor vehicle' means any vehicle driven or drawn by
mechanical power manufactured primarily for use on the
public streets, roads, and highways, except any vehicle
operated exclusively on a rail or rails." 15 U.S.C. 1391(3).
(3) whether the manufacturer affixes a label warn-
ing owners of the vehicle not to use it for travel
over public roads.
In the first instance, each manufacturer must
decide whether his vehicles are manufactured
primarily for use on the public streets, roads, and
highways. His decision cannot be conclusive,
however. Under the law, the authority to deter-
mine whether vehicles are subject to the provisions
of the National Traffic and Motor Vehicle Safety
Act is vested in the Secretary. As delegee of the
Secretary, the Administrator will exercise that
power in the light of all of the relevant facts and
circumstances (including the manufacturer's
declaration of his intent) with the objective of
reducing the toll of injuries and deaths on the
public highways.
Analysis of the available data about mini-bikes,
including the contents of petitions for reconsidera-
tion of the February 4, 1969 interpretation, has
convinced the Administrator that, for the most
part, mini-bikes should not be considered motor
vehicles under the above criteria. Mini-bikes do
have an operating capability for use on public
roads. It now appears that incidents of their actual
operation on public streets, roads, and highways,
while undoubtably extant, are comparatively rare.
What is more important, their use and registration
for use on public thoroughfares is precluded by the
laws of virtually every jurisdiction, unless the mini-
bike is equipped with lamps, reflective devices, and
associated equipment of the sort that Safety
Standard No. 108 requires. Most manufacturers of
mini-bikes do not advertise or otherwise promote
them as being suitable for use on public roads, and
some actually attach a label to their vehicles, warn-
ing against on-road use. Those manufacturers do
not furnish retail purchasers with the documenta-
tion needed to register, title, and license the
vehicles for use on public roads under the relevant
State laws. Finally, mini-bikes are commonly sold
to the public through retail outlets that are not
licensed dealers in motor vehicles.
Accordingly, so long as the great majority of the
States do not permit the registration of mini-bikes
for use on the public highways and streets, and
until such time as there is clear evidence that mini-
bikes are being used on public streets to a signifi-
cant extent, the Administrator is of the view that,
at a minimum, persons who manufacture mini-
bikes are not manufacturers of "motor vehicles"
within the meaning of the National Traffic and
Motor Vehicle Safety Act of 1966 if they (1) do not
PART 571-6
equip them with devices and accessories that
render them lawful for use and registration for use
on public highways under state and local laws; (2)
do not otherwise participate or assist in making
the vehicles lawful for operation on public roads (as
by furnishing certificates of origin or other title
documents, unless those documents contain a
statement that the vehicles were not manufactured
for use on public streets, roads, or highways); (3)
do not advertise or promote them as vehicles
suitable for use on public roads; (4) do not generally
market them through retail dealers on motor
vehicles; and (5) affix to the mini-bikes a notice
stating in substance that the vehicles were not
manufactured for use on public streets, roads, or
highways and warning operators against such use.
Cases of manufacturers who fulfill some, but not
all, of the above criteria will be dealt with
individually under those criteria and such others as
may be relevant.
A manufacturer of mini-bikes is, of course, at
liberty to design and construct his products so that
they conform to the provisions of the motor vehicle
safety standards that are applicable to motorcycles
and thereby to manufacture motor vehicles within
the meaning of the National Traffic and Motor
Vehicle Safety Act.
In consideration of the foregoing, the petitions
for reconsideration of the February 4, 1969 inter-
pretation relating to mini-bikes are granted to the
extent set forth above, and that interpretation is
withdrawn.
Issued on Sept. 30, 1969.
Limits on State Enforcement Procedures
The Japan Automobile Manufacturers Associa-
tion has brought to the attention of the NHTSA, in
a petition for reconsideration of Standard No. 209,
some leadtime problems that may be caused by the
safety standard enforcement practices of some of
the States. These States require manufacturers to
submit samples of motor vehicle equipment
covered by one of the standards, such as seat belt
assemblies, to a State-authorized test laboratory.
The test reports from the laboratory are then
submitted to a State agency or an outside agency
such as the American Association of Motor Vehicle
Administrators, which issues an "approval" to the
manufacturer. The problem arises in cases where
the State does not permit the manufacturer to sell
the equipment in that State until the approval is
received. If the leadtime between the issuance of a
fairly short, the manufacturer may not have time
to prepare and submit samples and to obtain the
State-required approval before the effective date
of the standard. Thus, the manufacturer may be
prohibited from selling his product in the State on
and after the effective date, even though it fully
complies with all applicable Federal standards and
regulations.
The substantive relationship between Federal
and State safety standards was established by
Congress in section 103(d) of the National Traffic
and Motor Vehicle Safety Act, which provides:
"Whenever a Federal motor vehicle safety
standard established under this title is in effect,
no State or political subdivision of a State shall
have any authority either to establish, or to con-
tinue in effect, with respect to any motor vehicle
or item of motor vehicle equipment any safety
standard applicable to the same aspect of
performance of such vehicle or item of equipment
which is not identical to the Federal Standard."
Although this section makes it clear that State
standards must be "identical" to the Federal
standards to the extent of the latter's coverage,
the procedural relationship between State and
Federal enforcement of the standard is not
explicitly stated in the Act. It has been the position
of this agency that the Act permits the States to
enforce the standards, independently of the
Federal enforcement effort, since otherwise there
would have been no reason for the Act to allow the
States to have even "identical" standards. The
question raised by the JAMA petition is to what
extent the States may utilize an enforcement
scheme that differs from the Federal one established
by the Act.
The basic structure of the Act places the burden
of conformity to the standards on the manufac-
turers, who must exercise due care to determine
that all their products comply with applicable
standards (§§ 103, 108, 15 U.S.C. 1392, 1397).
They must certify each vehicle and item of covered
equipment as conforming to the standards (§ 114,
15 U.S.C. 1403). No prior approval of a manufac-
turer's products is provided for or contemplated by
the Act. The NHTSA does not issue such
approvals, but tests the products after they come
onto the market to determine whether they con-
form. Thus, the effective date of a standard is
established on the basis of the agency's judgment
PART 571-7
as to the length of time it will take manufacturers
to design and prepare to produce a vehicle or item
of equipment, and is not intended to allow time for
obtaining governmental approval after production
begins.
In this light, a State requirement of obtaining
prior approval before a product may be sold con-
flicts with the Federal regulatory scheme. The
legislative history does not offer specific guidance
on the question, except for general statements
such as the following by Senator Magnuson:
"Some States have more stringent laws than
others, but concerning the car itself we must
have uniformity. That is why the bill suggests to
States that if we set a minimum standard, a car
complying with such standard should be admitted
to all States." 112 Cong. Rec. 13585, June 24,
1966.
"[W]e have provided in the bill for foreign cars,
that they must comply with the standards: and
we have even allowed them to come in under a
free-port arrangement, where, if they are not in
compliance, dealers can bring them up to the
standard." 12 Cong. Rec. 13587, June 24, 1966.
(Emphasis supplied.)
It is true that Senator Magnuson in the above
statements was not directly considering the ques-
tion of State enforcement. But Congress does not
appear to have contemplated the existence of State
procedures that would restrict the free movement
of vehicles and equipment, or place significant
burdens on the manufacturers, in areas covered by
the Federal standards, beyond those imposed by
the standards themselves.
It is the position of this agency, therefore, that
imder the Act and the regulatory scheme that has
been established by its authority a State may not
regulate motor vehicles or motor vehicle equip-
ment, with respect to aspects of performance
covered by Federal standards, by requiring prior
State approval before sale or otherwise restricting
the manufacture, sale, or movement within the
State of products that conform to the standards.
This interpretation does not preclude State
enforcement of standards by other reasonable
procedures that do not impose undue burdens on
the manufacturers, including submission of pro-
ducts for approval within reasonable time limits, as
long as manufacturers are free to market their pro-
ducts while the procedures are being followed, as
they are under the Federal scheme.
Issued on May 13, 1971.
PART 571-8
PREAMBLE TO MOTOR VEHICLE SAFETY STANDARD NO. 100
Controls and Displays
[Docket No. 1-18; Notice 31]
ACTION: Final rule; response to petitions for
reconsideration.
SUMMARY: In a final rule published in the
Federal Register on February 3, 1987, NHTSA
amended a number of the requirements of Stand-
ard No. 101, Controls and Displays. In response to
petitions for reconsideration, this notice amends
Part 571 to permit compliance with either the
earlier version of the standard or the amended
standard until September 1, 1989. The agency will
address other issues raised by petitioners in a
separate notice.
EFFECTIVE DATE: The amendments made by this
rule are effective March 9, 1987.
SUPPLEMENTARY INFORMATION: In a final rule
published in the Federal Register (52 FR 3244) on
February 3, 1987, NHTSA amended a number of
the requirements of Standard No. 101, Controls
and Displays. The agency received several timely
petitions for reconsideration. The petitioners
expressed particular concern about the March 5,
1987, effective date for certain of the amendments.
While the primary purpose of the amendments
was to permit gi-eater flexibility in the illumina-
tion and identification of controls and displays,
NHTSA recognized that some of the amendments
could result in the need for manufacturers to
modify existing designs. The agency adopted an
effective date of September 1, 1989, for these
amendments in order to provide adequate leadtime
for such modifications.
Other amendments relieved restrictions and
were not believed to result in the need for design
modifications. The agency concluded that an effec-
tive date of 30 days after publication in the Federal
Register, i.e., March 5, 1987, was in the public
interest for these amendments. However, several
petitioners stated that some of these latter amend-
ments also result in the need for design modifica-
tions and requested that the effective date for these
amendments be extended to September 1, 1989.
As is clear from the preamble to the February
1987 final rule, it was not NHTSA's intent to
require manufacturers to make design modifica-
tions within 30 days. While the agency is still
analyzing some of the arguments made by peti-
tioners, it has determined that one or more of the
amendments effective March 5, 1987, will require
some design changes. Accordingly, NHTSA has
decided to permit compliance with either the
earlier version of the standard or the amended
standard until September 1, 1989.
NHTSA is reissuing the earlier version of Stand-
ard No. 101, redesignated as Standard No. 100, to
apply to vehicles manufactured before Septem-
ber 1, 1989. The application section of the standard
makes it clear that manufacturers have the option
of meeting the requirements of Standard No. 101
for any control or display as an alternative to
Standard No. lOO's requirements. Conforming
amendments are made to the application section
of Standard No. 101.
While the petitioners were particularly
concerned about the March 5, 1987, effective date
for some amendments, they also raised several
other issues. Those issues will be addressed in a
separate notice.
NHTSA notes that the notice number of the
February 1987 final rule. Docket No. 1-18, Notice
28, had already been used on two occasions. The
number of this notice is therefore 31.
The effect of the amendments made by this notice
is to delay the effective date for the new require-
ments established by the February 1987 final rule
until September 1, 1989. NHTSA finds, for good
cause, it is in the public interest to provide
immediately for optional compliance with the new
requirements and to make those requirements
mandatory on September 1, 1989. In the absence
of an immediate effective date, manufacturers
would be unable to certify that some of their
vehicles currently being produced comply with
Standard No. 101. The amendments impose no new
requirements but instead increase manufacturer
flexibility by extending the effective date for
PART 571; SlOO-PRE 1
certain requirements. The September 1, 1989,
effective date will give sufficient time for manufac-
turers to redesign their vehicles to meet the new
requirements.
The agency has analyzed these amendments and
determined that they are neither "major" within
the meaning of Executive Order 12291 nor "signifi-
cant" within the meaning of the Department of
Transportation regulatory policies and procedures.
The agency has determined that the economic
effects of the amendments are so minimal that a
full regulatory evaluation is not required. Since the
amendments impose no new requirements but
simply add compliance alternatives until Septem-
ber 1, 1989, any cost impacts would be in the
nature of slight, nonquantifiable cost savings.
In consideration of the foregoing, 49 CFR Part
571 is amended as follows:
1. Section 571.100 is added to read:
§ 571.100 Standard No. 100. Controls and displays.
Si. Scope. This standard specifies requirements
for the location, identification, and illumination of
motor vehicle controls and displays.
52. Purpose. The purpose of this standard is to
ensure the accessibility and visibility of motor vehi-
cle controls and displays and to facilitate their
selection under daylight and nighttime conditions,
in order to reduce the safety hazards caused by the
diversion of the driver's attention from the driv-
ing task, and by mistakes in selecting controls.
53. Application.This standard applies to passen-
ger cars, multipurpose passenger vehicles, trucks,
and buses, manufactured before September 1, 1989.
At the option of the manufacturer, motor vehicles
may comply with the requirements of Federal
Motor Vehicle Safety Standard No. 101, Controls
and Displays, instead of the requirements of this
standard, for any control, display, or illumination.
54. Definitions.
"Telltale" means a display that indicates, by
means of a light-emitting signal, the actuation of
a device, a correct or defective functioning or con-
dition, or a failure to function.
"Gauge" means a display that is listed in S5.1
or in Table 2 and is not a telltale.
"Informational readout display" means a display
using light-emitting diodes, liquid crystals, or other
electro illuminating devices where one or more
than one type of information or message may be
displayed.
55. Requirements, (a) Except as provided in
paragraph (b) of this section, each passenger car,
multipurpose passenger vehicle, truck and bus
manufactured with any control listed in S5.1 or in
column 1 of Table 1, and each passenger car,
multipurpose passenger vehicle and truck or bus
less that 10,000 pounds GVWR with any display
listed in S5.1 or in column 1 of Table 2, shall meet
the requirements of this standard for the location,
identification, and illumination of such control or
display.
(b) For vehicles manufactured before September
1, 1987, a manufacturer may, at its option—
(1) Meet the requirements in this standard to use
identifying words or abbreviation or identifying
symbol for a control by using those specified in
Table 1(a) instead of Table 1. If none are specified
in Table 1(a), none need be used for the control.
(2) Meet the requirements in this standard to use
identifying words or abbreviation or identifying
symbol for a control by using those specified in
Table 2(a) instead of Table 2. If none are specified
in Table 2(a), none need be used for the display.
S5.1 Location. Under the conditions of S6, each
of the following controls that is furnished shall be
operable by the driver and each of the following
displays that is furnished shall be visible to the
driver. Under conditions of S6, telltales and infor-
mational readout displays are considered visible
when activated.
HAND-OPERATED CONTROLS
(a) Steering wheel.
(b) Horn.
(c) Ignition.
(d) Headlamp.
(e) Taillamp.
(f) Turn signal.
(g) Illumination intensity,
(h) Windshield wiper.
(i) Windshield washer.
(j) Manual transmission shift lever, except
transfer case,
(k) Windshield defrosting and defogging system.
(1) Rear window defrosting and defogging system,
(m) Manual choke.
(n) Driver's sun visor.
(o) Automatic vehicle speed system.
(p) Highbeam.
(q) Hazard warning signal,
(r) Clearance lamps.
(s) Hand throttle.
(t) Identification lamps.
Foot-Operated Controls
(a) Service brake,
fb) Accelerator.
(c) Clutch.
(d) Highbeam.
(e) Windshield washer.
(f) Windshield wiper.
PART 571; SIOO-PRE 2
Displays
(a) Speedometer.
(b) Turn signal.
(c) Gear position.
(d) Brake failure warning.
(e) Fuel.
(f) Engine coolant temperature.
(g) Oil.
(h) Highbeam.
(i) Electrical charge.
S5.2 Identification.
S5.2.1 Vehicle controls shall be identified as
follows:
(a) Except as specified in S5.2.1(b), any hand-
operated control listed in column 1 of Table 1 that
has a symbol designated in column 3 shall be iden-
tified by that symbol. Any such control for which
no symbol is shown in Table 1 shall be identified
by the word or abbreviation shown in column 2,
if such word or abbreviation is shown. Words or
symbols in addition to the required symbol, word
or abbreviation may be used at the manufacturer's
discretion for the purpose of clarity. Any such con-
trol for which column 2 of Table 1 and/or column
3 of Table 1 specifies "Mfr. Option" shall be iden-
tified by the manufacturer's choice of a symbol,
word or abbreviation, as indicated by that specifica-
tion in column 2 and/or column 3. The identifica-
tion shall be placed on or adjacent to the control.
The identification shall, under the conditions of S6,
be visible to the driver and, except as provided in
S5.2.1.1 and S5.2.1.2, appear to the driver percep-
tually upright.
(b) S5.2.1(a) does not apply to a turn signal con-
trol which is operated in a plane essentially
parallel to the face plane of the steering wheel in
its normal driving position and which is located on
the left side of the steering column so that it is the
control on that side of the column nearest to the
steering wheel face plane.
S5.2.1.1 The identification of the following need
not appear to the driver perceptually upright:
(a) A master lighting switch or headlamp and
tail lamp control that adjusts control and display
illumination by means of rotation, or any other
rotating control that does not have an off position.
(b) A horn control.
S. 5. 2. 1.2 The identification of a rotating control
other than one described by S5.2.1.1 shall appear
to the driver perceptually upright when the con-
trol is in the off position.
S.5.2.2 Identification shall be provided for each
function of any automatic vehicle speed system con-
trol and any heating and air conditioning system
control, and for the extreme positions of any such
control that regulates a function over a quan-
titative range. If this identification is not specified
in Table 1 or 2, it shall be in word or symbol form
unless color coding is used. If color coding is used
to identify the extreme positions of a temperature
control, the hot extreme shall be identified by the
color red and the cold extreme by the color blue.
Example 1. A slide lever controls the temper-
ature of the air in the vehicle heating system over
a continuous range, from no heat to maximum
heat. Since the control regulates a single function
over a quantitative range, only the extreme posi-
tions require identification.
Example 2. A switch has three positions, for
heat, defrost, and air conditioning. Since each posi-
tion regulates a different function, each position
must be identified.
S5.2.3 Except for informational readout
displays, any display located within the passenger
compartment and listed in column 1 of Table 2 that
has a symbol designated in column 4, shall be iden-
tified by that symbol. Such display may, in addi-
tion be identified by the word or abbreviation
shown in column 3. Any such display for which no
symbol is provided in Table 2 shall be identified
by the word or abbreviation shown in column 3.
Informational readout displays may be identified
by the symbol designated in column 4 of Table 2
or by the word or abbreviation shown in column
3. Additional words or symbols may be used at the
manufacturer's discretion for the purpose of clar-
ity. The identification required or permitted by this
section shall be placed on or adjacent to the display
that it identifies. The identification of any display
shall, under the conditions of S6, be visible to the
driver and appear to the driver perceptually
upright.
S5.3 Illumination.
S5.3.1 Except for foot-operated controls or hand-
operated controls mounted upon the floor, floor con-
sole, or steering column, or in the windshield
header area, the identification required by S5.2.1
or S5.2.2 of any control listed in column 1 of Table
1 and accompanied by the word "yes" in the cor-
responding space in column 4 shall be capable of
being illuminated whenever the headlights are
activated. However, control identification for a
heating and air-conditioning system need not be
illuminated if the .system does not direct air
directly upon windshield. If a gauge is listed in
column 1 of Table 2 and accompanied by the word
"yes" in column 5, then the gauge and its iden-
tification required by S5.2.3 shall be illuminated
whenever the ignition switch and/or the headlamps
are activated. Controls, gauges, and their iden-
tifications need not be illuminated when the
PART 571; SlOO-PRE 3
Table 1
Identification and Illumination of Controls
Column 1
Column 2
Column 3
Column 4
Hand Operated Controls
Identifying Words
or Abbreviation
Identifying
Symbol
Illumination
Master Lighting
Switch
Headlamps and
Tail lamps
(Mfr. Option)2
(Mfr. Option)2
Horn
ter '
Turn Signal
«* :
Hazard Warning
Signal
A '
Yes
Windshield Wiping
System
^
Yes
Windshield Washing
System
<&
Yes
Windshield Washing
and Wiping Combined
^
Yes
Heating and or Air
Conditioning Fan
^ - 88
Yes
Windirhield Defrosting
and Defogging System
<i>
Yes
Rear Window Defrosting
and Defogging System
Mi
Yes
Identification, Side
Marker and or Clearance
Lamps
-:oo:- '
5
Yes
Manual Choke
Choke
Engine Start
Engine Start'
Engine Stop
Engine Stop'
Yes
Hand Throttle
Throttle
Automatic Vehicle Speed
(Mfr. Option)
Yes
Heating and Air
Conditioning
System
(Mfr. Option)
(Mfr. Option)
Yes
' Use when engine control is separate from the key locking system
2 Separate identification not required if controlled by master lighting switch.
2 The pair of arrows is a single symbol. When the controls for left and right turn
considered separate symbols and may be spaced accordingly.
■" Identification not required for vehicles with a GVWR greater than 10,000 lbs.
5 Framed areas may be filled.
operate independently, however, the two arrows may be
, or for narrow ring-type controls.
PART 571; SlOO-PRE 4
TABLE 1(a)
Identification and Illumination of Controls
Column 1
Column 2 '. Col. 3
Col. 4
Hand Operated Controls
Identifying Words or Abbreviation
Identifying Symbol
Illumination
Headlamps and
Tail Lamps
Lights
ID :
Turn Signal
o^
Hazard Warning
Signal
Hazard
A '
Yes
Clearance Lamps
System
Clearance Lamps or CI Lps
Yes
Windshield Wiping
System
Wiper or Wipe
V
Yes
Windshield Washing
System
Washer or Wash
^
Yes
Windshield Washing
and Wiping Combined
Wash-Wipe
#
Yes
Heating and/or Air
Conditioning Fan
Fan
»
Yes
Windshield Defrosting
and Defogging System
Defrost, Defog or Def
<5ti>
Yes
Rear Window Defrosting
and Defogging System
Rear Defrost, Rear Defog
or Rear Def
Yes
4«-
Engine Start
Engine Start'
Engine Stop
Engine Stop'
Yes
Manual Choke
Choke
Hand Throttle
Throttle
Automatic Vehicle Speed
(Mfr. Option)
Yes
Identification Lamps
Identification Lamps or Id Lps
Yes
Heating and Air
Conditioning
System
(Mfr. Option)
Yes
' Use when engine control is separate from thie key locking system.
2 Use also when clearance, identification, parking and/or side marker lamps are controlled with the headlamp switch,
3 Use also when clearance lamps, identification lamps and/or side marker are controlled with one switch other than the headlamp switch.
■• Framed areas may be filled.
PART 571; SlOO-PRE 5
Table 2
Identification and Illumination of Displays
Column 1
Column 2
Column 3
Column 4
Column 5
Display
Telltale
Color
Identifying Words
or Abbreviation
Identifying
Symbol
Illumination
Turn Signal
Telltale
Green
Also see
FMVSS 108
<j=o :
Hazard Warning
Telltale
Red"
Also see
Fr\/IVSS 108
A ;
Seat
Belt
Telltale
Red"
Fasten Belts or
Fasten Seat Belts.
Also see
FMVSS 208.
TT or ^!f-
Fuel Level
Telltale
Yellow
Fuel
Bo,ffi
~ Gauge
" ^ ' '
Yes
Oil Pressure
Telltale
Red"
Oil
•tT".
Gauge
Yes
Coolant Temperature
Telltale
Red"
Temp
J-
Gauge
Yes
Electrical Charge
Telltale
Red"
Volts, Charge
or Amp
Q
Gauge
Yes
Highbeam
Telltale
Blue or
Green"
Also see
FMVSS 108
ID •
Malfunction in
Anti-Lock or
Yellow
Antilock or Anti-lock
Also see FMVSS 105
Brake System
Red"
Brake. Also
see FMVSS 105
Brake Air Pressure
Position Telltale
Red"
Brake Air Also
see FMVSS 121
Speedometer
MPH5
Yes
Odometer
3
Automatic Gear
Position
Also see
FMVSS 102
Yes
1 The pair of arrows is a single symbol. When the indicator for left and right turn operate Independently, however, the two arrows will
be considered separate symbols and may be spaced accordingly.
2 Not required when arrows of turn signal telltales that othenwise operate independently flash simultaneously as hazard warning telltale
3 If the odometer indicates kilometers then "KILOfylETERS" or "km" shall appear, otherwise, no identification is required.
' Red can be red-orange. Blue can be blue green
5 If the speedometer is graduated in miles per hour and in kilometers per hour, the identifying words or abbreviations shall be "MPri
and km/h" in any combination of upper or lower case letters.
6 Framed areas may be filled.
PART 571; SlOO-PRE 6
i
Table 2 (a)
Identification and Illumination of Internal Displays
i
Column 1
Col. 2
Column 3
Column 4
Column 5
Display
Telltale
Color
Identifying Words
or Abbreviation
Identifying Symbol
Illuminate
Turn Signal
Telltale
Green
Also see
FMVSS 108
<j3<> :
Hazard Warning
Telltale
Red"
Also see
FMVSS 108
A
Seat Belt
Telltale
Red"
Fasten Belts or
Fasten Seat Belts.
Also see
FMVSS 208.
A
Fuel Level
Telltale
Yellow
Fuel
e^
Gauge
Fuel
Yes
Oil Pressure
Telltale
Red"
Oil
«er^.
^auge
~ ~ Oil "
Yes
Coolant Temperature
Telltale
Red"
Temp
-K
Yes
Gauge
Temp
Electrical Charge
Telltale
Gauge
Red"
Volts, Charge
or Amp
Volts, Charge
or Amp
[i3
Yes
Speedometer
MPH6
Yes
Odometer
Automatic Gear
Position
Also see
FMVSS 102
Yes
High Beam
Telltale
Blue"
or
Green
Also see
FMVSS 108
ID
Brake Air Pressure
Telltale
Red"
Brake Air
Also See
FMVSS 121
Malfunction in
Anti-Lock or
Yellow
Anti-Lock Also see
FMVSS 105 75
Brake System
Red"
Brake Also see
FMVSS 105 75
The pair of arrows is a single symbol. When the incJicator for left and right turn operate independently, however, the two arrows will
be considered separate symbols and may be spaced accordingly.
Not required when arrows of turn signal telltales that otherwise operate independently flash simultaneously as hazard warning telltale
If the odometer indicates kilometers, then "KILOI\^ETERS" or "km" shall appear; otherwise no identification is required.
Red can be red orange. Blue can be blue green.
Framed arrows may be filled.
If the speedometer is graduated in miles per hour and in kilometers per hour, the identifying words or abbreviations shall be "MPH
and km/h" in any combination of upper or lower case letters.
PART 571; SlOO-PRE 7
BOSTON PUBLIC LIbHAM I
3 9999 06313 254 0
headlamps are being flashed. A telltale shall not
emit light except when identifying the malfunction
or vehicle condition for whose indication it is
designed or during a bulb check upon vehicle
starting.
55.3.2 Except for informational readout displays,
each discrete and distinct telltale shall be of the
color shown in column 2 of Table 2. The identifica-
tion of each telltale shall be in a color that contrasts
with the lens, if a telltale with a lens is used. Any
telltale used in conjunction with a gauge need not
be identified. The color of informational readout
displays will be at the option of the manufacturer.
55.3.3 Light intensities for controls, gauges, and
their identification shall be continuously variable
from: (a) A position at which either there is no
light emitted or the light is barely discernible to
a driver who has adapted to dark ambient roadway
conditions to (b) a position providing illumination
sufficient for the driver to identify the control or
display readily under conditions of reduced visibil-
ity. Light intensities for informational readout
systems shall have at least two values, a higher
one for day, and a lower one for nighttime condi-
tions. The intensity of any illumination that is pro-
vided in the passenger compartment when and
only when the headlights are activated shall also
be variable in a manner that complies with this
paragraph. The light intensity of each telltale shall
not be variable and shall be such that, when acti-
vated, that telltale and its identification are visi-
ble to the driver under all daytime and nighttime
conditions.
S6. Conditions. The driver is restrained by the
crash protection equipment installed in accordance
with the requirements of §571.208 of this part
(Standard No. 208), adjusted in accordance with the
manufacturer's instructions. * * *
3. Section 571.101 is amended by revising S3 to
read:
S3. Application. This standard applies to
passenger cars, multipurpose passenger vehicles,
trucks, and buses. At the option of the manufac-
turer, motor vehicles manufactured before Septem-
ber 1, 1989, may comply with the requirements of
Federal Motor Vehicle Safety Standard No. 100,
Controls and Displays, instead of the requirements
of this standard, for any control, display, or
illumination. If no requirements are specified in
Standard No. 100 for a control, display, or illvmiina-
tion, none need be met as a result of this standard
for motor vehicles manufactured before September
1, 1989.
:{: 4: * * *
Issued on March 4, 1987
Diane K. Steed
Administrator
52 F.R. 7150
March 9, 1987
PART 571; SIOO-PRE 8
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