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Petitions and Plans for Relief Under the Automobile Fuel Efficiency Act of 1980

American Government Special Collections Reference Desk

American Government

Petitions and Plans for Relief Under the Automobile Fuel Efficiency Act of 1980

Christopher A. Hart
National Highway Traffic Safety Administration
May 17, 1994

[Federal Register Volume 59, Number 94 (Tuesday, May 17, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 94-11918]

[[Page Unknown]]

[Federal Register: May 17, 1994]


National Highway Traffic Safety Administration

49 CFR Part 526

[Docket No. 93-25; Notice 2]
RIN 2127-AE65


Petitions and Plans for Relief Under the Automobile Fuel 
Efficiency Act of 1980

AGENCY: National Highway Traffic Safety Administration (NHTSA), 
Department of Transportation (DOT).

ACTION: Final rule.


SUMMARY: This rule addresses the agency regulations setting forth 
content requirements for petitions to be submitted by automobile 
manufacturers to obtain relief from certain aspects of the Corporate 
Average Fuel Economy (CAFE) program. NHTSA is rescinding those portions 
of the regulations that are no longer needed, and updating certain 

DATES: The amendments made by this rule are effective June 16, 1994. 
Petitions for reconsideration should be submitted by June 16, 1994.

addresses: Submit petitions for reconsideration to: Administrator, 
National Highway Traffic Safety Administration, 400 Seventh Street SW., 
Washington, DC 20590.

Incentives, National Highway Traffic Safety Administration, room 5313, 
400 Seventh Street SW., Washington, DC 20590, (202) 366-0846.


I. History

    In 1972, Congress enacted the Motor Vehicle Information & Cost 
Saving Act (``the Act'') (15 U.S.C. 1901, et seq.). Title V, Improving 
Automotive Efficiency (15 U.S.C. 2001-13) was added to the Act in 1975. 
Title V established the CAFE program.
    The Act specifies that, in general, each manufacturer's 
domestically manufactured (i.e., those with at least 75 percent U.S. or 
Canadian content) and imported passenger automobiles must comply 
separately with CAFE standards. This provision was originally enacted 
to discourage domestic auto manufacturers from merely importing 
increasing numbers of fuel efficient, foreign produced cars to comply 
with standards.
    In 1980, Congress determined that the original provision regarding 
domestic content could have two undesired effects. First, it could 
discourage foreign manufacturers that wished to begin U.S. production. 
Second, it could discourage manufacturers that wished to transfer a 
non-domestic automobile to their domestic fleets by gradually 
increasing the domestic content of the automobile. In response to these 
and other concerns, Congress passed the Automobile Fuel Efficiency Act 
(AFEA), amending Title V of the Act by adding a number of provisions 
intended to facilitate compliance with the CAFE standards.
    To address the first situation, Congress adopted a provision, found 
in section 503(b)(3) of the Act, applicable to foreign manufacturers 
that began U.S. production either (1) after December 22, 1975 and 
before May 1, 1980 or (2) on or after May 1, 1980 and for at least one 
model year ending on or before December 31, 1985. Such manufacturers 
could be exempted from the Act's requirements that their fleets be 
separated into domestic and non-domestic subfleets for CAFE compliance 
purposes if they submitted, and NHTSA approved, a petition 
demonstrating that granting the exemption would not adversely affect 
employment in the U.S. automobile industry.
    To address the second situation, Congress added section 503(b)(4) 
to the Act. It applies to a manufacturer that wishes to convert a 
vehicle from non-domestic to domestic status over a period of several 
model years, and to begin including the vehicle in its domestic fleet 
from the very beginning of the conversion period. There is no model 
year limitation on exercising this provision. To obtain exemption from 
the domestic content provision under section 503(b)(4), a petitioner 
must show that (among other things) it would achieve at least 75 
percent domestic content within four model years.
    The AFEA also made a number of other amendments to the Act. It 
added section 502(k) to the Act to authorize special relief for 
manufacturers that were unable to comply with one or more of the 4-
wheel drive (4WD) light truck fuel economy standards in MYs 1982-85.
    Finally, the AFEA added section 502(l) to the Act to authorize 
special relief for manufacturers that fell short of a fuel economy 
standard in one year, but expected to exceed a fuel economy standard in 
a future model year. Section 502(l) provides that the credits that a 
manufacturer expects to earn for a future model year can be made 
available up to three years in advance of that year in order to offset 
civil penalties which would otherwise be assessed for a shortfall in 
one of those three years, provided that the manufacturer submits (and 
the agency approves) a plan for earning the necessary credits in the 
future, and that the manufacturer actually earns the credits.
    On July 29, 1982, the agency published a final rule establishing 
part 526 setting forth requirements for the contents of petitions to 
obtain the various types of relief authorized by the AFEA's amendments 
to the Act. (47 FR 32721). The principal provisions of part 526 are:
      Section 526.2, specifying requirements relating to 
section 503(b)(3) (commencement of U.S. production);
      Section 526.3, specifying requirements relating to 
503(b)(4) (transfer of models from non-domestic to domestic fleet);
      Section 526.4, specifying requirements relating to 
section 502(k) (adjustment of CAFE standards for 4-wheel drive light 
trucks); and
      Section 526.5, specifying requirements relating to 
section 502(l) (offsetting compliance shortfall with future credits).
    On May 20, 1993, the agency published a NPRM (58 FR 29378) 
proposing to rescind those sections of the implementing regulation that 
were no longer required because the passage of time rendered them 
obsolete, and to amend certain language in the regulation that was 
inconsistent (e.g., different ways of referring to the same statutory 
    Since NHTSA did not receive any comments in response to the NPRM, 
it is adopting the amendments as proposed. This final rule rescinds 
certain parts of the implementing regulation, and makes the other minor 
changes that are fully described below.

II. Changes to Part 526

A. Rescission of Sec. 526.4, Relating to the Adjustment of Fuel Economy 
Standards for 4-Wheel Drive Light Trucks

    Section 526.4 describes the procedures for manufacturers to 
petition for relief from light truck CAFE standards applicable to 4WD 
light trucks for MYs 1982-85. This procedure implements section 502(k) 
of the Act.
    To be granted the relief provided by section 502(k) with respect to 
one or more of those model years, a manufacturer must demonstrate that 
it cannot meet the fuel economy standard for that year without 
suffering a severe economic impact, such as plant closures or layoffs. 
Although the timing of the petition is not expressly specified, the use 
of the subjunctive mood regarding the finding to be made by the agency 
indicates that the petition had to be filed before the start of the 
model year for which the relief was requested. No petitions were filed 
under this section for these long past model years.
    Accordingly, NHTSA believes that section 502(k) and its 
implementing regulatory provision in Sec. 526.4 are moot. The agency is 
therefore rescinding this provision.

B. Deletion of Final Sentence of Sec. 526.5(a) Relating to Separation 
of Light Truck Fleets Into 2-Wheel and 4-Wheel Drive Fleets

    Section 526.5 specifies the content of manufacturers' plans for 
earning CAFE credits in future years to offset current year penalties. 
The provision implements section 502(l) of the Act. As noted above, 
under section 502(l), a manufacturer may avoid violating the Act and 
paying a civil penalty for falling short of a standard in one model 
year if the manufacturer submits to the agency a plan showing that it 
reasonably anticipates earning enough credits during the next three 
model years to offset the shortfall.
    A portion of Sec. 526.5 has become moot. The last sentence in 
Sec. 526.5(a) provides that the information specified in Sec. 526.4(e) 
is to be submitted in connection with any contemplated transfer of CAFE 
credit between classes of light trucks. As noted above, all of 
Sec. 526.4 is being rescinded by this notice. Accordingly, the agency 
is also deleting the last sentence of Sec. 526.5(a). The meaning of 
Sec. 526.5(a) will remain unchanged.

C. Redesignation of Citations to AFEA

    Although the regulatory relief provisions of the AFEA were added by 
the AFEA to the Act, part 526 does not uniformly cite the Act. For 
example, the part references the relevant sections of the AFEA whenever 
it discusses petitions and plans specified by the AFEA, but references 
the Act in other places. The lack of consistency in the citations is a 
potential source of confusion and inconvenience to the public. 
Therefore, the agency is converting all references in part 526 to the 
AFEA into references to the corresponding sections of the Act.

D. Change to Title of 49 CFR 526.3

    The title of Sec. 526.3 is being changed from ``Transfer of vehicle 
from foreign to U.S. production'' to ``Transfer of vehicle from non-
domestic to domestic fleet.'' Section 526.3 implements section 
503(b)(4) of the Act, which allows manufacturers to average certain 
non-domestic models with their domestic fleets if (1) these models have 
not been previously domestically manufactured, (2) these models have at 
least 50 percent domestic content, and (3) the manufacturer will raise 
the domestic content of these models to a minimum of 75 percent within 
four model years. Section 503(b)(4) of the Act says nothing about 
actually ``transferring'' a vehicle from foreign to domestic 
``production''. A vehicle assembled in the U.S. or Canada, but 
containing less than 75 percent domestic content, could be eligible 
under this provision. Additionally, there is no reference to any 
specific country as a production site. The change in the title of 
Sec. 526.3 will therefore reflect more accurately the language of the 

E. Change in Text of 49 CFR 526.3(a)

    Section 503(b)(4)(A)(ii) of the Act states that at least 50 percent 
of the cost to the manufacturer of each automobile covered by the 
manufacturer's petition regarding transfer from non-domestic fleet to 
domestic fleet should be attributable to ``value added in the United 
States or Canada.'' By adding the words ``or Canadian'' to the phrase 
``those with 50 to 75 percent U.S. value added,'' the text of 
Sec. 526.3(a) will accurately reflect the meaning of the Act. 
Additionally, for the sake of clarification, the wording of 
Sec. 526.3(a) will read ``those with at least 50 percent, but less than 
75 percent.''

III. Regulatory Analysis

A. Executive Order 12866, Regulatory Planning and Review, and DOT 
Regulatory Policies and Procedures

    This notice was not reviewed under Executive Order 12866. The 
agency has considered the economic implications of these amendments and 
determined that these amendments are not significant within the meaning 
of the DOT Regulatory Policies and Procedure. No regulatory evaluation 
was prepared by the agency because the amendments to the regulation 
will not have any economic effects. The primary effect of the 
amendments will be to remove from the Code of Federal Regulations 
content requirements for a type of petition that can no longer by 
submitted to the agency.

B. Regulatory Flexibility Act

    In accordance with the Regulatory Flexibility Act, the agency has 
considered the impact that this rulemaking 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. As noted above, 
these amendments will not have any economic effects. In the case of 
small businesses, small organizations, and small governmental units 
which purchase automobiles and light trucks, these amendments will not 
affect the availability of fuel efficient automobiles or light trucks 
or have any significant effect on the overall cost of purchasing and 
operating an automobile or light truck.

C. Impact of Federalism

    This action has been analyzed in accordance with the principles and 
criteria contained in Executive Order 12612, and it has been determined 
that the action does not have sufficient Federalism implications to 
warrant the preparation of a Federalism Assessment.

D. Executive Order 12778 (Civil Justice Reform)

    This rule does not have any retroactive effect. Under section 
509(a) of the Act (15 U.S.C. 2009(a)), whenever a Federal motor vehicle 
fuel economy standard is in effect, a state may not adopt or maintain 
separate fuel economy standards applicable to vehicles covered by the 
Federal standard. Section 504 of the Act (15 U.S.C. 2004) sets forth a 
procedure for judicial review of final rules establishing, amending or 
revoking Federal average fuel economy standards. That section does not 
require submission of a petition for reconsideration or other 
administrative proceedings before parties may file suit in court.

E. Environmental Impacts

    The agency has analyzed the environmental impacts of the amendments 
to part 526 in accordance with the National Environmental Policy Act, 
42 U.S.C. 4321 et seq. The agency has concluded that they will not have 
a significant effect on the quality of the human environment.

List of Subjects in 49 CFR Part 526

    Energy conservation, Motor vehicles.


    In consideration of the foregoing, 49 CFR part 526 is amended to 
read as follows:

    1. The authority citation for part 526 is revised to read as 

    Authority: 15 U.S.C. 2002 and 2003; delegation of authority at 
49 CFR 1.50.

    2. Section 526.1(b) and (c) are revised to read as follows:

Sec. 526.1  General provisions.

* * * * *
    (b) Address. Each petition and plan submitted under the applicable 
provisions of sections 502 and 503 of the Motor Vehicle Information and 
Cost Savings Act must be addressed to the Administrator, National 
Highway Traffic Safety Administration, 400 Seventh Street, SW., 
Washington DC 20590.
    (c) Authority and scope of relief. Each petition or plan must 
specify the specific provision of the Motor Vehicle Information and 
Cost Savings Act under which relief is being sought. The petition or 
plan must also specify the model years for which relief is being 

    3. The introductory text of Sec. 526.2 is revised to read as 

Sec. 526.2  U.S. production by foreign manufacturer.

    Each petition filed under section 503(b)(3) of the Motor Vehicle 
Information and Cost Savings Act must contain the following 
* * * * *
    4. The heading, introductory text and introductory text of 
paragraph (a) of Sec. 526.3 are revised to read as follows:

Sec. 526.3  Transfer of vehicle from non-domestic to domestic fleet.

    Each plan submitted under section 503(b)(4) of the Motor Vehicle 
Information and Cost Savings Act must contain the following 
    (a) For each model year for which relief is sought in the plan and 
for each model type of automobile sought to be included by the 
submitter in its domestic fleet under the plan (i.e., those with at 
least 50 percent but less than 75 percent U.S. or Canadian value 
added), provide the following information:
* * * * *

Sec. 526.4  [Removed and Reserved]

    5. Section 526.4 is removed and reserved.
    6. The introductory text and paragraph (a) of Sec. 526.5 is revised 
to read as follows:

Sec. 526.5  Earning offsetting monetary credits in future years.

    Each plan submitted under section 502(l) of the Motor Vehicle 
Information and Cost Savings Act must contain the following 
    (a) Projected average fuel economy and production levels for the 
class of automobiles 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.
* * * * *
    Issued: May 11, 1994.
Christopher A. Hart,
Deputy Administrator.
[FR Doc. 94-11918 Filed 5-16-94; 8:45 am]

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