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


American Government Topics:  National Highway Traffic Safety Administration

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

L. Robert Shelton
February 4, 1998

[Federal Register: February 4, 1998 (Volume 63, Number 23)]
[Proposed Rules]               
[Page 5774-5777]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr04fe98-24]

=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Part 531

[Docket No. NHTSA-97-3205; Notice 1]

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

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

ACTION: Proposed decision.

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

SUMMARY: This proposed decision responds to a joint petition filed by 
Lamborghini and Vector requesting that each company be exempted from 
the generally applicable average fuel economy standard of 27.5 miles 
per gallon (mpg) for model years 1998 and 1999, and that lower 
alternative standards be established. In this document, NHTSA proposes 
that the requested exemption be granted and that alternative standards 
of 12.4 mpg be established for MYs 1998 and 1999, for Lamborghini and 
Vector.

DATES: Comments on this proposed decision must be received on or before 
April 6, 1998.

ADDRESSES: Comments on this proposal must refer to the docket number 
and notice number in the heading of this document and be submitted, 
preferably in two copies, to: US Department of Transportation Docket 
Management, PL-401, 400 Seventh Street, S.W., Washington, DC 20590. 
Docket hours are 10:00 a.m. to 5:00 p.m., Monday through Friday.

FOR FURTHER INFORMATION CONTACT: Ms. Henrietta Spinner, Office of 
Market Incentives, NHTSA, 400 Seventh Street, SW, Washington, DC 20590. 
Ms. Spinner's telephone number is: (202) 366-4802.

SUPPLEMENTARY INFORMATION:

Statutory Background

    Pursuant to 49 U.S.C. section 32902(d), NHTSA may exempt a low 
volume manufacturer of passenger automobiles from the generally 
applicable average fuel economy standards if NHTSA concludes that those 
standards are more stringent than the maximum feasible average fuel 
economy for that manufacturer and if NHTSA establishes an alternative 
standard for that manufacturer at its maximum feasible level. Under the 
statute, a low volume manufacturer is one that manufactured (worldwide) 
fewer than 10,000 passenger automobiles in the second model year before 
the model year for which the exemption is sought (the affected model 
year) and that will manufacture fewer than 10,000 passenger automobiles 
in the affected model year. In determining the maximum feasible average 
fuel economy, the agency is required under 49 U.S.C. 32902(f) to 
consider:

(1) Technological feasibility
(2) Economic practicability
(3) The effect of other motor vehicle standards of the Government on 
fuel economy, and
(4) The need of the United States to conserve energy

    The statute at 49 U.S.C. 32902(d)(2) permits NHTSA to establish 
alternative average fuel economy standards applicable to exempted low 
volume manufacturers in one of three ways: (1) A separate standard for 
each exempted manufacturer; (2) a separate average fuel economy 
standard applicable to each class of exempted automobiles (classes 
would be based on design, size, price, or other factors); or (3) a 
single standard for all exempted manufacturers.

Background Information on Lamborghini and Vector

    Vector Aeromotive Corporation (Vector) and Automobili Lamborghini 
S.p.A. (Lamborghini) are small automobile manufacturers that each 
produce a single model of high priced, uniquely designed exotic sport 
vehicles. Lamborghini is an Italian manufacturer of passenger cars, 
which concentrates exclusively on the production of high quality, high 
performance, prestige sports cars. Lamborghini currently produces one 
model, the Diablo. Vector, a domestic low volume manufacturer, also 
marketing exotic high performance sports cars, was originally founded 
as the ``Vector Car'' Company. The assets of Vector Car were purchased 
by the Vector Aeromotive Corporation in 1987, and Vector completed 
redesign and engineering of its first production car, the Vector W8. 
The W8 has been partially redesigned and is now sold as the Avtech/M12. 
Vector produced a total of 43 automobiles in the 1996 and 1997 model 
years while Lamborghini imported 54 cars into the U.S. in the same time 
period.

Need for a Joint Petition for Lamborghini and Vector

    Although they manufacture different automobile lines, Lamborghini 
and Vector are both controlled by V-Power Corporation. V-Power is the 
largest shareholder of Vector, owning 57 percent of the stock; the 
remaining 43 percent of Vector is publicly traded on NASDAQ. V-Power 
also has a

[[Page 5775]]

controlling interest in Lamborghini, owning 50 percent of Lamborghini's 
stock. For MYs 1998 and 1999, Lamborghini's and Vector's combined 
worldwide production will be less than 10,000 automobiles. As both 
companies are controlled by V-Power, any alternative CAFE standard 
would apply to Lamborghini and Vector together, and a single petition 
can be submitted for a single alternative standard, applicable to the 
combined fleet of these companies.
    NHTSA's regulations on low volume exemptions from CAFE standards 
state that petitions for exemption are to be submitted ``not later than 
24 months before the beginning of the affected model year, unless good 
cause for later submission is shown.'' (49 CFR 525.6(b).)
    NHTSA received a petition from Vector Aeromotive Corporation on 
August 14, 1996 seeking an exemption for Lamborghini and Vector for the 
1998 model year. A second petition, seeking an exemption for the 1999 
model year, was submitted by Lamborghini and Vector August 27, 1997.
    These petitions were timely filed under 49 CFR 526.6(b). This 
section requires that petitions ``be submitted not later than 24 months 
before the beginning of the affected model year, unless good cause for 
late submission is shown.'' Agency action regarding the MY 1998 
petition was delayed at the request of Lamborghini and Vector. Due to 
this delay, NHTSA is now acting on both the 1998 and 1999 model year 
petitions.

Methodology Used to Project Maximum Feasible Average Fuel Economy Level 
for Lamborghini/Vector

Baseline Fuel Economy

    To project the level of fuel economy which could be achieved by 
Lamborghini/Vector in MYs 1998 and 1999, the agency considered whether 
there were technical or other improvements that would be feasible for 
these vehicles, and whether or not the company currently plans to 
incorporate such improvements in the vehicles. The agency reviewed the 
technological feasibility of any changes and their economic 
practicability.
    NHTSA interprets ``technological feasibility'' as meaning that 
technology which would be available to Lamborghini/Vector for use on 
its MY 1998 and 1999 automobiles, and which would improve the fuel 
economy of those automobiles. The areas examined for technologically 
feasible improvements were weight reduction, aerodynamic improvements, 
engine improvements, drive line improvements, and reduced rolling 
resistance.
    The agency interprets ``economic practicability'' as meaning the 
financial capability of the manufacturer to improve its average fuel 
economy by incorporating technologically feasible changes to its 
automobiles. In evaluating that capability, the agency has always 
considered market demand as an implicit part of the concept of economic 
practicability. Consumers need not purchase what they do not want.
    In accordance with the concerns of economic practicability, NHTSA 
has considered only those improvements which would be compatible with 
the basic design concepts of Lamborghini and Vector automobiles. Since 
NHTSA assumes that Lamborghini and Vector will continue to build exotic 
high performance cars, design changes that would remove items 
traditionally offered on these cars, such as reducing the displacement 
of their engines, were not considered. Such changes to the basic design 
would be economically impracticable since they might well significantly 
reduce the demand for these automobiles, thereby reducing sales and 
causing significant economic injury to the low volume manufacturer.

Technology for Fuel Economy Improvement

    The nature of Lamborghini and Vector vehicles generally do not 
result in high fuel economy values. Also, Lamborghini and Vector lag in 
having the latest developments in fuel efficiency technology because 
suppliers generally provide components and technology to small 
manufacturers only after supplying large manufacturers.
    Lamborghini/Vector state that the requested alternative fuel 
economy value represents the best possible CAFE that Lamborghini/Vector 
can achieve for MYs 1998 and 1999. However, the joint alternative fuel 
economy values sought, 12.4 mpg, represents a decrease from 12.5 mpg in 
MY 1997. The fuel economy decrease from MY 1997 is attributed to 
Lamborghini/Vector's projection that Vector sales will increase in MY 
1998 from the MY 1997 level and remain steady for MY 1999 while 
Lamborghini sales will remain constant. Therefore, fuel economy will 
decrease from the 1997 level because of the projected increased sales 
of Vectors, which have lower fuel economy values than Lamborghinis.
    Despite these qualifications, the following describes how 
Lamborghini and Vector maximize their respective vehicles' fuel economy 
by using state of the art materials and technologies for their 
vehicles.
    Lamborghini and Vector vehicles share a common engine designed and 
produced by Lamborghini. This engine is a 5.7 liter V-12 that produces 
550 horsepower. Fuel is delivered to the engine through a computer-
controlled multipoint fuel injection system. Aluminum alloy is used for 
all major castings like the engine crankcase, cylinder heads, induction 
manifold, gearbox, and axle. The Lamborghini V-12 is a highly efficient 
engine which produces extremely high output for its displacement. While 
the fuel efficiency of the Lamborghini and Vector vehicles could be 
improved through the use of a smaller engine, redesign or replacement 
of the current engine would require Lamborghini and Vector to invest 
resources in an endeavor which would most likely reduce the demand for 
their vehicles.
    In keeping with the high performance character, Lamborghini and 
Vector vehicles are designed to provide a structure that is both strong 
and lightweight. Vector uses a semi-monocoque structure and a steel 
roll cage with body panels fabricated from carbon-reinforced composite 
fiber glass. Front suspension consists of independent, unequal length 
A-arms with concentric coil shock absorbers and anti-dive 
characteristics. Rear suspension is parallel link, concentric coil 
springs with anti-squat characteristics. The hydraulic brake system 
includes vacuum assist, quad cylinder calipers and ventilated discs.
    The Lamborghini Diablo chassis uses space frame construction with 
the unstressed panels, such as the doors and trunk, made of aluminum 
alloy and plastic composite. Composite and steel beams were recently 
adopted for the energy absorbing bumpers.
    All Lamborghini/Vector vehicles have a rear engine driving rear 
wheels through five speed manual transmissions in which fifth gear 
serves as an overdrive gear. Additionally, Vector vehicles are equipped 
with ZF transaxle and constant velocity driveshaft joints. Both 
Lamborghinis and the Vectors rely on wide low aspect ratio tires to 
provide maximum traction and performance.
    Lamborghini/Vector vehicles achieve a very high level of 
performance by incorporating an efficient powerplant with a lightweight 
structure. Much of the technology used to improve fuel economy in other 
vehicles is already employed by Lamborghini/Vector to enhance 
performance. Any further improvements in fuel economy in these vehicles 
through the use of a smaller powerplant, tires with less rolling 
resistance, or lower axle ratios would be

[[Page 5776]]

contrary to the essential characteristics of the vehicles and their 
position in the marketplace.

Model Mix

    The Vector Avtech/M12 and Lamborghini Diablo are similarly sized 
vehicles sharing a common V-12 engine. Therefore, any opportunity to 
improve fuel economy by changing model mix would be dependent on 
introduction of new models or engines. In any event, changing the model 
mix would have a negligible effect on fuel economy due to the 
inherently low fuel economy of these ultra high performance coupes.

The Effect of Other Vehicle Standards

    Federal Motor Vehicle Safety Standards and other regulations have 
an adverse effect on fuel economies of Lamborghini and Vector vehicles. 
These standards include 49 CFR part 581, Bumper Standard, Standard No. 
214, Side impact protection, Standard No. 208, Occupant crash 
protection and Standard No. 201, Occupant protection in interior 
impact. These standards tend to reduce achievable CAFE levels, since 
they result in increased vehicle weight. Engineering resources are 
necessarily devoted to meeting the standards, since, in order to remain 
in the market, Lamborghini/Vector must meet these mandatory standards.

The Need of the United States to Conserve Energy

    The agency recognizes there is a need to conserve energy, to 
promote energy security, and to improve balance of payments. However, 
as stated above, NHTSA has tentatively determined that it is not 
technologically feasible or economically practicable for Lamborghini/
Vector to achieve an average fuel economy in MYs 1998 and 1999 above 
the levels set forth in this proposed decision. Granting an exemption 
to Lamborghini/Vector and setting an alternative standard at that level 
would result in only a negligible increase in fuel consumption and 
would not affect the need of the United States to conserve energy. In 
fact, there would not be any increase since Lamborghini/Vector cannot 
attain the generally applicable standards. Nevertheless, the agency 
estimates that the additional fuel consumed by operating the MYs 1998 
and 1999 fleets of Lamborghini/Vector vehicles at the projected CAFE of 
12.4 mpg for MYs 1998 and 1999 is insignificant compared to the fuel 
used each day by the entire U.S. motor vehicle fleet for passenger cars 
in 1996.

Maximum Feasible Average Fuel Economy for Lamborghini/Vector

    The agency has tentatively concluded that it would not be 
technologically feasible and economically practicable for Lamborghini/
Vector to improve the fuel economy of their MY 1998 and 1999 fleets 
above an average of 12.4 mpg, and that the national effort to conserve 
energy would not be affected by granting the requested exemption and 
establishing an alternative standard.

Proposed Level and Type of Alternative Standard

    NHTSA tentatively concludes that the maximum feasible average fuel 
economy for Lamborghini/Vector is 12.4 mpg in MY 1998 and 12.4 mpg in 
MY 1999. The agency also tentatively concludes that it would be 
appropriate to establish a separate standard for Lamborghini/Vector 
rather than to set standards for a vehicle class or a single standard 
for exempt manufacturers. Neither of these two options are available 
for the model years in question because of actions previously taken by 
the agency.
    NHTSA has already established an alternative standard for Rolls 
Royce of 16.3 mpg for MYs 1998 and 1999. The agency has also granted a 
petition from Mednet, Inc. (successor company to Dutcher Motors) for an 
alternative standard of 17.0 mpg for MYs 1996-98. Therefore, the agency 
cannot set a standard for a class or a single standard for all exempted 
manufacturers for MYs 1998 and 1999.

Regulatory Impact Analyses

    NHTSA has analyzed this proposal and determined that neither 
Executive Order 12866 nor the Department of Transportation's regulatory 
policies and procedures apply. Under Executive Order 12866, the 
proposal would not establish a ``rule,'' which is defined in the 
Executive Order as ``an agency statement of general applicability and 
future effect.'' The proposed exemption is not generally applicable, 
since it would apply only to Lamborghini Automobili and Vector 
Aeromotive as discussed in this notice. Under DOT regulatory policies 
and procedures, the proposed exemption would not be a ``significant 
regulation.'' If the Executive Order and the Departmental policies and 
procedures were applicable, the agency would have determined that this 
proposed action is neither major nor significant. The principal impact 
of this proposal is that the exempted company would not be required to 
pay civil penalties if its maximum feasible average fuel economy were 
achieved, and purchasers of those vehicles would not have to bear the 
burden of those civil penalties in the form of higher prices. Since 
this proposal sets an alternative standard at the level determined to 
be the maximum feasible levels for Lamborghini/Vector for MYs 1998 and 
1999, no fuel would be saved by establishing a higher alternative 
standard. NHTSA finds in the Section on ``The Need of the United States 
to Conserve Energy'' that because of the small size of the Lamborghini/
Vector fleet, the incremental usage of gasoline by Lamborghini/Vector's 
customers would not affect the nation's need to conserve gasoline. 
There would not be any impacts for the public at large.
    The agency has also considered the environmental implications of 
this proposed exemption in accordance with the National Environmental 
Policy Act and determined that this proposed exemption, if adopted, 
would not significantly affect the human environment. Regardless of the 
fuel economy of the exempted vehicles, they must pass the emissions 
standards which measure the amount of emissions per mile traveled. 
Thus, the quality of the air is not affected by the proposed exemptions 
and alternative standards. Further, since the exempted passenger 
automobiles cannot achieve better fuel economy than is proposed herein, 
granting these proposed exemptions would not affect the amount of fuel 
used.
    Interested persons are invited to submit comments on the proposed 
decision. It is requested but not required that two copies be 
submitted.
    All comments must not exceed 15 pages in length (49 CFR 553.21). 
Necessary attachments may be appended to these submissions without 
regard to the 15 page limit. This limitation is intended to encourage 
commenters to detail their primary arguments in a concise fashion.
    If a commenter wishes to submit certain information under a claim 
of confidentiality, three copies of the complete submission, including 
purportedly confidential business information, should be submitted to 
the Chief Counsel, NHTSA, at the street address given above, and two 
copies from which the purportedly confidential business information has 
been deleted, should be submitted to the Docket Section. A request for 
confidentiality should be accompanied by a cover letter setting forth 
the information specified in the agency's confidential business 
information regulation [49 CFR Part 512].
    All comments received before the close of business on the comment 
closing indicated above for the proposal

[[Page 5777]]

will be considered, and will be available for examination in the docket 
at the above address both before and after that date. To the extent 
possible, comments filed after the closing date will also be 
considered. Comments received too late for consideration in regard to 
the final rule will be considered as suggestions for further rulemaking 
action. Comments on the proposal will be available for inspection in 
the docket. NHTSA will continue to file relevant information as it 
becomes available in the docket after the closing date, and it is 
recommended that interested persons continue to examine the docket for 
new material.
    Those persons desiring to be notified upon receipt of their 
comments in the rules docket should enclose a self-addressed, stamped 
postcard in the envelope with their comments. Upon receiving the 
comments, the docket supervisor will return the postcard by mail.

List of Subjects in 49 CFR Part 531

    Energy conservation, Fuel economy, Gasoline, Imports, Motor 
vehicles.

    In consideration of the foregoing, 49 CFR Part 531 is proposed to 
be amended as follows:

PART 531--[AMENDED]

    1. The authority citation for part 531 would continue to read as 
follows:

    Authority: 49 U.S.C. 32902; Delegation of authority at 49 CFR 
1.50.

    2. In section 531.5, the introductory text of paragraph (b) is 
republished for the convenience of the reader and paragraph (b)(10) 
would be revised to read as follows:


Sec. 531.5  Fuel economy standards.

* * * * *
    (b) The following manufacturers shall comply with the standards 
indicated below for the specified model years:
* * * * *
    (10) Automobili Lamborghini S.p.A./Vector Aeromotive Corporation.

------------------------------------------------------------------------
                                                                Average 
                                                                  fuel  
                                                                economy 
                          Model year                            standard
                                                                 (miles 
                                                                  per   
                                                                gallon) 
------------------------------------------------------------------------
1995.........................................................       12.8
1996.........................................................       12.6
1997.........................................................       12.5
1998.........................................................       12.4
1999.........................................................       12.4
------------------------------------------------------------------------

* * * * *
    Issued on: January 29, 1998.
L. Robert Shelton,
Associate Administrator for Safety Performance Standards.
[FR Doc. 98-2695 Filed 2-3-98; 8:45 am]
BILLING CODE 4910-59-P

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