Light Truck Average Fuel Economy Standards; Model Years 1996-2006; Final Rule and Proposed Rule |
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Christopher A. Hart
April 6, 1994
[Federal Register: April 6, 1994]
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Part III
Department of Transportation
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National Highway Traffic Safety Administration
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49 CFR Part 533
Light Truck Average Fuel Economy Standards; Model Years 1996-2006;
Final Rule and Proposed Rule
DEPARTMENT OF TRANSPORTATION
National Highway Traffic Safety Administration
49 CFR Part 533
[Docket No. 91-50; Notice 4]
RIN 2127 AE42
Light Truck Average Fuel Economy Standards; Model Years 1996-1997
AGENCY: National Highway Traffic Safety Administration (NHTSA).
ACTION: Final rule.
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SUMMARY: This final rule establishes the average fuel economy standard
for light trucks manufactured in model years (MY) 1996-97. The issuance
of the standard is required by Title V of the Motor Vehicle Information
and Cost Savings Act. The (combined) standard for all light trucks
manufactured by a manufacturer is 20.7 mpg for both MY 1996 and MY
1997. The agency also refers interested parties to an Advance Notice of
Proposed Rulemaking (ANPRM), addressing light truck CAFE standards for
MYs 1998-2006, published in today's Federal Register.
DATES: The amendment is effective May 6, 1994. The standard applies to
the 1996 and 1997 model years. Petitions for reconsideration must be
submitted within 30 days of publication.
ADDRESSES: Petitions for reconsideration should be submitted to:
Administrator, National Highway Traffic Safety Administration, 400
Seventh Street SW., Washington, DC 20590.
FOR FURTHER INFORMATION CONTACT: Mr. Orron Kee, Office of Market
Incentives, National Highway Traffic Safety Administration, 400 Seventh
Street SW., Washington, DC 20590 (202-366-0846).
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Background
II. Summary of Decision
III. Manufacturer Capabilities for MYs 1996-97
A. Manufacturer Projections
B. Possible Additional Actions to Improve MYs 1996-97 CAFE
C. Manufacturer-Specific CAFE Capabilities
IV. Other Federal Standards
A. Safety Standards
B. Revised Emissions Standards
C. Test Weight for Light Trucks over 6,000 Pounds GVWR
D. Phase-out of Chlorofluorocarbons
V. Domestic/Import Fleet Distinction
VI. The Need of the Nation to Conserve Energy
VII. Determining the Maximum Feasible Average Fuel Economy Level
A. Interpretation of ``Feasible''
B. Industry-wide Considerations
C. Petroleum Consumption
D. The MYs 1996-97 Standard
VIII. Rulemaking Analyses and Notices
A. Economic Impacts
B. National Environmental Policy Act
C. Regulatory Flexibility Act
D. Executive Order 12612 (Federalism)
E. Civil Justice Reform
F. Department of Energy Review
I. 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
Conservation Act. Congress included a provision in that Act
establishing an 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 (the
Act). Title V provides for the establishment of average fuel economy
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.
Standards are required to be set at least 18 months prior to the
beginning of the model year. The Act provides that the fuel economy
standards are to be set at the maximum feasible average fuel economy
level. In determining maximum feasible average fuel economy level, 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 program was delegated by the Secretary of Transportation
to the Administrator of NHTSA (41 FR 25015, June 22, 1976)).
On October 8, 1991, NHTSA published in the Federal Register (56 FR
50694) a questionnaire concerning fuel economy standards for MYs 1995-
1997. The comments received in response to the questionnaire are
available in Docket No. 91-50.
After analyzing the responses to the questionnaire and reviewing
other available data, NHTSA published a notice of proposed rulemaking
(NPRM) proposing average fuel economy standards for light trucks for
MYs 1995-97. 57 FR 61377 (December 24, 1992). The agency proposed to
select the standards from within a range of 20.5-21.0 mpg for MY 1995,
and 20.5-21.5 mpg for MYs 1996 and 1997. These ranges were based on the
agency's tentative evaluation of manufacturer capabilities.
In response to the December 24, 1992 NPRM, the agency received
comments from General Motors (GM), Ford, Chrysler, the American
Automobile Manufacturers Association (AAMA, formerly the Motor Vehicle
Manufacturers Association), Rover Group, the National Automobile
Dealers Association, and about 50 organizations concerned about the
continuing availability to consumers of a full range of light trucks,
including, among others, the Coalition for Vehicle Choice, Consumer
Alert, and the Competitive Enterprise Institute (CEI). The issues
raised by the commenters are addressed below.
On April 7, 1993, the agency published a final rule establishing a
20.6 mpg combined average fuel economy standard for light trucks
manufactured in MY 1995 (58 FR 18019). The limited time then available
to promulgate a final rule for MY 1995 precluded a thorough
consideration of the issues related to light truck CAFE standards for
MYs 1996-97. Therefore, NHTSA announced that it would reach a decision
later with respect to the light truck standard for those model years.
Subsequent to publication of the final rule establishing the CAFE
standard for MY 1995, NHTSA received another comment from Ford, in
which the manufacturer revised some of the risks and opportunities it
believed it faced in MYs 1996-97. This resulted in revised CAFE
projections for those years. The Department also received a letter from
the Energy Conservation Coalition (ECC) recommending that light truck
CAFE for those years be sharply increased. ECC's letter was signed by
ECC, itself, as well as the Environmental & Energy Study Institute,
Public Citizen, Sierra Club, American Council for an Energy-Efficient
Economy, Center for Auto Safety, and U.S. Public Interest Research
Group.
II. Summary of Decision
Based on its analysis, the agency is establishing a combined
average fuel economy standard for MYs 1996 and 1997 at 20.7 mpg. The
agency notes that the relatively short leadtime for MYs 1996-97
precludes significant technological changes beyond that which
manufacturers have already planned. Given the continuing need to
conserve energy, as discussed elsewhere in this notice, and the
increasing ratio of light truck to passenger car sales, NHTSA desires
to insure that feasible light truck CAFE improvements will continue to
be made. To achieve this goal, the agency has published an ANPRM in
today's Federal Register addressing light truck CAFE standards for MYs
1998-2006.
NHTSA is eliminating the requirement that captive imports and other
light trucks be required to meet CAFE standards separately. Beginning
in MY 1996, there will be a combined standard that will apply to each
manufacturer's light truck fleet in its entirety.
III. Manufacturer Capabilities for MYs 1996-97
In evaluating manufacturers' fuel economy capabilities for MYs
1996-97, 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. A
more detailed discussion of these issues is contained in the agency's
Regulatory Evaluation, which is being placed in the docket for this
notice. Some of the information included in the Regulatory Evaluation,
including the details of manufacturers' future product plans, has been
determined by the agency to be confidential business information whose
release could cause competitive harm. The public version of the
Regulatory Evaluation omits the confidential information.
A. Manufacturer Projections
1. General Motors
As discussed in the NPRM, General Motors (GM) projected in December
1991 that it could achieve a light truck CAFE level of 20.7 mpg for MYs
1996-97. In its February 1993 comment on the NPRM, GM revised its
projection slightly downward, to 20.5 mpg. By comparison, in a mid-
model year report submitted in July 1992, GM projected a MY 1992 CAFE
of 20.2 mpg. In its mid-model year report submitted in July 1993, it
projected a MY 1993 CAFE of 19.8 mpg.
GM stated in its February 1993 comment that the light truck CAFE
standard for MYs 1996-97 ``should be set no higher than 20.5 mpg, and
even that may be too high.''
2. Ford
Ford projected in January 1992 that it could achieve a light truck
CAFE level of 21.6 mpg for MY 1996, and 21.5 mpg for MY 1997. These
projections were revised by Ford in a May 1993 letter updating its
comment to the NPRM, which stated that, after re-evaluating the risks
and opportunities it faced in those model years, it could achieve a
light truck CAFE level of 21.1 mpg in MY 1996 and 21.6 mpg in MY 1997.
Ford stated that the risk factors could reduce its CAFE level for MY
1996 to as low as 20.8 mpg, and for MY 1997 to 21.0 mpg. By comparison,
in its final model year data submitted to the Environmental Protection
Agency (EPA), Ford reported a MY 1992 CAFE of 20.3 mpg. In its mid-
model year report submitted to NHTSA in July 1993, that company
projected a MY 1993 CAFE of 20.7 mpg.
Ford recommended in its comment on the NPRM that the agency
establish the MY 1996 standard at the same level as the MY 1994
standard, 20.5 mpg. It commented that the agency could raise the MY
1997 standard to a level no higher than 21.0 mpg.
3. Chrysler
Chrysler projected in December 1991 that it could achieve a light
truck CAFE level of 21.0 mpg for MYs 1996-97. In its January 1993
comment on the NPRM, Chrysler revised its projection slightly downward,
to 20.8 mpg for MY 1996 and 20.9 mpg for MY 1997. By way of comparison,
Chrysler achieved a CAFE level of 21.2 mpg for MY 1992 according to its
final model year data as reported to the EPA, and projected a CAFE
level of 21.0 mpg for MY 1993 in its July 1993 mid-model year report to
NHTSA.
Chrysler commented that it supports a standard of 20.5 mpg for MYs
1996-97 because it does not anticipate any major improvements in light
truck fuel economy through new technological applications.
4. Other Manufacturers
Most light truck manufacturers other than GM, Ford and Chrysler
only compete in the small vehicle portion of the light truck market and
are therefore expected to achieve CAFE levels well above those three
companies. By way of example, in their mid-model year reports for 1993,
Toyota projected a light truck CAFE of 21.8 mpg, Isuzu 21.8 mpg, Mazda
23.6 mpg, Mitsubishi 21.2 mpg, Subaru 29.1 mpg, Suzuki 28.9 mpg, and
Volkswagen 21.0 mpg.
In the NPRM, NHTSA noted that two companies, Range Rover and PAS,
projected MY 1992 light truck CAFE levels that are well below those of
the large domestic manufacturers. In their mid-model year reports for
MY 1992, Range Rover projected a CAFE level of 16.3 mpg and PAS 18.6
mpg. The agency notes that in their mid-model year reports for MY 1993,
Range Rover projected a CAFE level of 15.4 mpg and PAS 18.5 mpg. Both
of these companies sell a small number of light trucks in the U.S., on
the order of about 5,000 vehicles or less. PAS modifies GM light
trucks.
One other company which has a CAFE capability below that of the
large domestic manufacturers is UMC, a small domestic producer of
delivery vans. That company projects selling 950 light trucks in MY
1993, with a CAFE of 18.8 mpg.
B. Possible Additional Actions To Improve MYs 1996-97 CAFE
The agency analyzed the additional actions which manufacturers may
be able to take to improve their CAFE levels above those that they
currently project for MYs 1996-97. These actions may be divided into
two categories: further technological changes and product restrictions.
1. Further Technological Changes
The ability to improve CAFE by further technological changes to
product plans is dependent on the availability of fuel efficiency
enhancing technologies that manufacturers are able to apply within the
available time.
The agency's Regulatory Evaluation discusses the fuel efficiency
enhancing technologies which are expected to be available by MYs 1996-
97. However, for MYs 1996-97, limited leadtime is a significant
constraint 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 at least three years. Also, as the agency discussed in
establishing its final rule for MYs 1993-94, once a new design is
established and tested as feasible for production, the leadtime
necessary to design tools and test components is typically 30 to 36
months. Some potential major changes may take even longer. Leadtimes
for new vehicles are usually at least three years. Further, light
trucks have a long model life, i.e., 8-10 years or more. If a
manufacturer must make a major model change ahead of its normal
schedule, this change may have a significant, unprogrammed financial
impact. NHTSA notes that AAMA stated in its comment that the above
leadtimes, which the agency cited in the NPRM, are more typical for
passenger cars and that truck leadtimes are even longer.
Given the leadtime constraint, the agency does not believe that
manufacturers can achieve significant improvements in their projected
MYs 1996-97 CAFE levels by additional technological actions.
2. Product Restrictions
As an alternative to technological improvements, manufacturers
could improve their CAFE by restricting their product offerings, e.g.,
limiting or deleting production of particular larger light truck models
and larger displacement engines. Such product restrictions, if made
necessary by selection of a CAFE standard that is above manufacturers'
capabilities, could result in adverse economic impacts on the industry
and the economy as a whole.
To develop an independent indicator of the potential impacts of a
standard that could be met only by product restrictions, the agency
estimated the loss of production associated with sufficient production
restrictions by GM to raise its CAFE by 0.5 mpg. To estimate this
effect, the agency eliminated production of GM's least fuel efficient
models until the desired improvement in CAFE was achieved. NHTSA stated
in the NPRM that this approach tends to yield the maximum possible
negative impacts, because it does not include the possibility of
consumers accepting a smaller truck or engine, or switching to vehicles
over 8500 pounds GVWR. Also, it ignores the possibility of additional
technological improvements to these truck fleets, or compliance through
the use of credits earned in other model years.
For MY 1996, the NHTSA analysis indicates that to increase its CAFE
by 0.5 mpg by restricting sales, GM could suffer a sales loss of up to
151,000 units of its projected light truck production for that year.
The potential job losses under this scenario in manufacturer and
supplier industries could total roughly 25,000. For MY 1997, a similar
increase in CAFE of 0.5 mpg could cause GM a sales loss of up to
142,000 units, with a concurrent potential loss to the industry of
nearly 24,000 jobs.
GM commented that it takes issue with NHTSA's statement that its
analysis of job losses is necessarily an upper bound. That company
stated that it could be that a manufacturer's product restrictions
would not be done by eliminating the least fuel efficient vehicles
first from its CAFE fleet, but a manufacturer could instead choose to
restrict products based not only on their fuel efficiency but also
their profit contributions. GM stated that this strategy could lead to
larger lost sales and jobs.
Given the considerations discussed above, NHTSA concludes that
significant product restrictions should not be considered as part of
manufacturers' capabilities to improve their MYs 1996-97 CAFE levels.
C. Manufacturer-Specific CAFE Capabilities
As discussed later in this notice, NHTSA takes ``industrywide
considerations'' into account in setting fuel economy standards. In
carrying this out, the agency has traditionally focused on the least
capable manufacturer with a substantial share of light truck sales. For
MYs 1996-97, the agency has determined that GM is the least capable
manufacturer with a substantial share of sales.
1. GM
As indicated above, GM currently projects its MYs 1996-97 light
truck CAFE level at 20.5 mpg. It has also identified certain risks
related to technology and mix which it says could reduce its CAFE level
by as much as 0.5 mpg in MY 1996 and 0.3 mpg in MY 1997. As discussed
in the Regulatory Evaluation, however, the agency has analyzed these
potential risks and believes that they are unlikely to have as large an
effect as GM believes. In addition, GM has identified an additional
product action it is considering which could also reduce its CAFE.
However, NHTSA believes the issues of whether GM will actually take the
product action, and if so, what the fleet penetration would be for MYs
1996-97, are too speculative to justify an adjustment to GM's CAFE
capability. NHTSA notes that it is not identifying the product action
because it is confidential business information.
After carefully evaluating GM's product plan, NHTSA believes that
company is capable of achieving a light truck CAFE of 20.7 mpg in both
MYs 1996 and 1997. The factors explaining the difference between GM's
projection and the agency's estimate of its capability are discussed
below.
First, as discussed in the NPRM, GM projects that a much larger
portion of its MYs 1996-97 fleet will have four-wheel drive (4WD) than
it has had in recent years, or than its competitors are projecting. The
agency stated in the NPRM that it is not aware of any reason to expect
that the 4WD market will continue to increase. NHTSA also stated that
it believes there are alternatives to 4WD, including traction control.
GM commented that it believes its forecast of MYs 1996-97 4WD
penetration is realistic, stating that competitors' actions in the 4WD
segments, the use of all-wheel drive configurations and market data for
future years support its projections. GM also argued that traction
control is not an alternative to 4WD trucks since it has little benefit
for off-road applications.
The agency continues to believe that it is unlikely that the 4WD
market share will increase appreciably for the fleet in general, or for
GM in particular, over the timeframe between now and MYs 1996-97. Since
the mid-1980's, the 4WD share of total light truck sales for each model
year has consistently been within the range of 32-35 percent. No data
have been presented to the agency which demonstrate that this share
will significantly change by MYs 1996-97. The agency notes that, while
it agrees that traction control isn't an alternative to 4WD for off-
road applications, it would be a reasonable alternative for on-road use
for many consumers. No evidence has been presented to the agency which
shows that there will be increased need or demand for more 4WD or off-
road vehicles.
As discussed in the Regulatory Evaluation, since NHTSA believes
that GM's MYs 1996 and 1997 product plans overstate the percentage of
4WD vehicles that it will sell, the agency has adjusted that company's
CAFE projections to reflect what it believes is a more realistic share.
In making this adjustment, the agency assumed that GM's 4WD percentage
for MYs 1996-97 will be the same as for MY 1993, the model year in
which GM had its highest 4WD share ever. NHTSA also refined the
analysis presented in the Preliminary Regulatory Impact Analysis (PRIA)
to more accurately reflect the particular vehicles that GM is likely to
sell more of and less of. With this adjustment, and assuming that the
4WD share of GM's light truck fleet for MYs 1996-97 is consistent with
both that company's and its competitors' historical levels, its CAFE
would be more than 0.1 mpg higher in MY 1996, although it would be less
than half that amount higher in MY 1997.
NHTSA stated in the NPRM that the GM fleet leads the other
manufacturers in every engine performance calculation carried out by
the agency and that GM's performance levels are detrimental to its fuel
economy performance. The agency indicated, for example, that if GM's
light truck fleet for MY 1995 were closer to the values achieved by
other manufacturers for the various performance measurements, GM's CAFE
values in that model year might be improved by between 0.3 and 0.4 mpg.
GM commented that it disagrees with the agency's assessment in the
NPRM that GM's CAFE could be boosted 0.4 mpg by lowering engine
performance. That company stated that it believes that NHTSA's
performance adjustment was based on an incorrect sales weighted
analysis of GM's performance levels compared to its competitors. GM
stated that a manufacturer's average performance level, like many other
vehicle attributes such as average weight or engine displacement, is a
function of the mix it sells. That company stated that when its mix is
compared to its competitors' mix, GM's performance levels do not appear
to be out of line with other manufacturers.
As discussed in the Regulatory Evaluation, the agency has evaluated
GM's comment concerning comparative performance levels. NHTSA has also
reviewed revised MYs 1996-97 fleet projections submitted by GM and
Ford, which resulted in reduced fleet average values for almost all
performance measures. In light of these adjustments, NHTSA has
concluded that the performance level of the GM fleet is only slightly
greater than its competitors and that GM can make a small improvement
in its MYs 1996-97 light truck CAFE by bringing its performance levels
more in line with its competitors. The value of a CAFE adjustment if GM
were to reach comparable levels of performance would be nearly 0.2 mpg
in both MYs 1996 and 1997.
NHTSA believes that there are few other opportunities available to
GM to make small improvements in its MYs 1996-97 light truck CAFE.
There is little time left before the start of the MY 1996 production
in, roughly, July 1995. It is unlikely that GM can make any significant
technological change to its products to increase its average fuel
economy in this period, and the agency is unable to discern any
technology plans for MY 1997 that might be pulled ahead for earlier
introduction in MY 1996. The additional leadtime before MY 1997
production begins may allow for some minor technological improvements.
The agency estimates that these could increase GM's CAFE by up to 0.1
mpg in MY 1997.
GM faces certain technological risks during MYs 1996-97 that could
lower its CAFE in those model years. Based on its evaluation of
information submitted by GM, NHTSA estimates that these risks could
decrease GM's MYs 1996-97 CAFE by more than 0.1 mpg in each year.
By adjusting GM's MYs 1996 and 1997 product plans to reflect all of
the factors stated above, NHTSA has concluded that GM is capable of
achieving a CAFE of 20.7 mpg in both model years.
2. Ford
As indicated above, Ford currently projects its MY 1996 light truck
CAFE level at 21.1 mpg, and its MY 1997 light truck CAFE level at 21.6
mpg. It has also identified certain volume sales and technological
risks which it says could reduce its CAFE level by as much as 0.3 mpg
in MY 1996 and 0.6 mpg in MY 1997. Ford has also identified several
opportunities which could slightly increase its CAFE.
As discussed in the Regulatory Evaluation, NHTSA has evaluated the
risks and opportunities identified by Ford, as well as other means that
may be available to Ford to improve its CAFE. The agency believes that
Ford overstates the risks that can reasonably be expected to occur in
both years. NHTSA expects the risks that negatively affect Ford's CAFE
to be offset by sufficient opportunities to result in a capability of
21.2 mpg in MY 1996 and 21.6 mpg in MY 1997.
3. Chrysler
As indicated above, Chrysler currently projects its MY 1996 light
truck CAFE level at 20.8 mpg, and its MY 1997 light truck CAFE level at
20.9 mpg. After evaluating Chrysler's product plan, NHTSA has concluded
that Chrysler can achieve CAFE levels of at least 20.8 mpg in MY 1996
and 21.0 mpg in MY 1997. The agency believes that the additional
leadtime available before MY 1997 vehicles begin production may allow
Chrysler to make technological refinements or improvements, or to move
certain planned improvements forward to MY 1997. This could increase
Chrysler's MY 1997 CAFE by up to 0.1 mpg, thus allowing the company to
attain a CAFE level of 21.0 mpg.
While NHTSA has focused its analysis on GM, the least capable
manufacturer with a substantial share of sales, the agency does not
believe that company's capability is significantly below that of
Chrysler, although it is well below that of Ford. As indicated above,
the agency believes that Ford has the capability to achieve a MY 1996
CAFE of 21.2 mpg and a MY 1997 CAFE of 21.6 mpg, and that Chrysler can
achieve a MY 1996 CAFE of 20.8 mpg and a MY 1997 CAFE of 21.0 mpg. The
agency believes that the ability of Ford and Chrysler to improve their
CAFE levels above their projections is small.
The agency must, therefore, disagree, with the comment received
from ECC that argued that CAFE levels of 23 mpg in MY 1996 and 24 mpg
in MY 1997 would be within the capability of manufacturers. The ECC
cited a study of fuel economy by the National Academy of Sciences
(NAS). The study, which was jointly commissioned by NHTSA and the
Federal Highway Administration in 1991, stated that a 22 mpg CAFE
standard would be within manufacturers' capabilities. ECC also cited
``best-in-class'' analysis performed by the EPA, purportedly showing
that light trucks could achieve a 24.3 mpg CAFE level.
ECC failed to address the agency's discussion of the limitations of
the NAS study in the NPRM (see 57 FR 61384), which noted that the
methodology used by the NAS in its study ``has little relevance as a
reference value for this rulemaking.'' The figure used by the NAS in
reaching its conclusion that a 22 mpg level was possible in MY 1996 was
intended to represent the entire light truck fleet, and not the
capability of one or two manufacturers with a significant share of the
market. As NHTSA has noted, individual large manufacturers may have
light truck fleets with a mix toward larger, less fuel efficient trucks
that have the effect of lowering their overall CAFE. In addition, the
model mix used in the study was derived from EPA preliminary data for
MY 1990, and did not bear a close relationship to the actual mix
produced in MY 1991, much less the projected mix for MY 1996. Nor did
the study include large vans and utility vehicles, which are a
significant segment of the light truck market, and have lower fuel
economy levels. The agency stated in the NPRM that it could not use the
NAS study as a blueprint for setting CAFE standards, and ECC did not
rebut the agency's statement.
The best-in-class analysis does not take into account sales or
popularity in the market. Most vehicles that get best-in-class fuel
economy ratings have the poorest sales in their class as well. NHTSA
cannot force consumers to buy best-in-class light trucks, which often
suffer from the disadvantage that they do not possess the power, room,
or other attributes that light truck purchasers find desirable. Nor,
given the very short leadtime between now and MYs 1996-97, would
manufacturers have the chance to redesign their light trucks to more
closely be capable of achieving best-in-class fuel economy levels.
Based on its own analysis and in light of the lack of evidence
presented by ECC, the agency rejects that commenter's argument that
CAFE levels of 23 mpg in MY 1996 and 24 mpg in MY 1997 would be within
manufacturers' capabilities.
IV. 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 following section discusses other government
regulations, both in process and recently completed, that may have an
impact on fuel economy capability.
A. Safety Standards
As discussed in the Regulatory Evaluation, NHTSA has evaluated
several safety rulemakings for their potential impacts on light truck
fuel economy in MYs 1996-97. These include revisions to FMVSS Nos. 208,
Occupant Crash Protection; 214, Side Impact Protection; 216, Roof Crush
Resistance; 108, Lamps, Reflective Devices and Associated Equipment;
and 201, Occupant Protection in Interior Impacts. In addition, the
agency is considering whether to propose a safety standard to improve
rollover protection.
1. FMVSS 208
On March 26, 1991, NHTSA published (56 FR 12472) a final rule
requiring automatic restraints on trucks with a gross vehicle weight
rating of 8500 pounds or less and an unloaded vehicle weight of 5500
pounds or less. These requirements phase in at the following rate for
each manufacturer: 20 percent of light trucks manufactured from
September 1, 1994 to August 31, 1995; 50 percent of light trucks
manufactured from September 1, 1995 to August 31, 1996; 90 percent of
light trucks manufactured from September 1, 1996 to August 31, 1997;
and all light trucks manufactured on or after September 1, 1997. Thus,
the requirement will affect 50 percent of MY 1996 light trucks and 90
percent of MY 1997 light trucks. Although light truck manufacturers may
comply, as passenger car manufacturers have in the past, with the
automatic restraint requirements by using automatic belts or air bags,
NHTSA expects that essentially all light truck manufacturers will
comply by using air bags.
To encourage the use of more innovative automatic restraint systems
(primarily air bags) in light trucks, during the first four years of
the phase-in (i.e., through MY 1998) manufacturers may count each light
truck equipped with such a restraint system for the driver's position,
and a dynamically tested manual safety belt for the right-front
passenger's position, as a vehicle complying with the automatic
restraint requirements. Beginning with MY 1999, however, all light
trucks are required to provide automatic restraints for both the driver
and right-front passenger positions.
Title II of the Intermodal Surface Transportation Efficiency Act of
1991 required NHTSA to amend its automatic restraint requirements to
mandate that 80 percent of MY 1998, and all MY 1999 light trucks be
equipped with driver and passenger-side air bags. On September 2, 1993,
NHTSA published a final rule in the Federal Register (58 FR 46551) to
implement this requirement. Since NHTSA expects that essentially all
manufacturers will rely on air bags for compliance with the light truck
automatic restraints requirements, this provision should have a
negligible substantive impact, and will not affect MYs 1996-97 fuel
economy capabilities.
In the Final Regulatory Impact Analysis for the 1991 light truck
automatic restrain rulemaking, which is available in the public docket
at NHTSA, the agency estimated weight increases per vehicle ranging
from 15.3 pounds for a driver's-side air bag to 35.7 pounds for both
driver and right-front passenger air bags (including ``secondary
weight,'' i.e., weight added for supporting structure, etc.). Using
these figures, NHTSA estimated that fuel economy could be reduced by
about 0.05 to 0.11 mpg.
The automatic restraint weight estimates provided by the
manufacturers in their responses to the Request for Comments, and the
NPRM for this rulemaking were generally consistent with those
previously developed by the agency. NHTSA calculates that the
manufacturers' estimates translate into fuel economy penalties of 0.07-
0.12 mpg for MY 1996 and 0.11-0.14 mpg for MY 1997. These weight
effects are reflected in the manufacturers' fuel economy projections,
so there is no need for NHTSA to add an explicit adjustment to their
projections to consider the impact of this standard.
2. FMVSS 214
On June 14, 1991, NHTSA published (56 FR 27427) a final rule
extending the ``quasi-static'' test requirements of FMVSS 214 to
trucks, multipurpose vehicles, and buses with a GVWR of 10,000 pounds
or less. On July 13, 1992, NHTSA published (57 FR 30917) a final rule
establishing a brief phase-in for the requirements of this rule.
Manufacturers must meet the requirements for all of their light trucks
as of September 1, 1994. The ``quasi-static'' requirements have the
effect of requiring each side door to be designed to mitigate occupant
injuries in side impacts. It measures performance in terms of the
ability of each door to resist a piston pressing a rigid steel cylinder
against it. Manufacturers generally comply with the standard by
reinforcing the side doors with metal beams or rods.
In the Regulatory Evaluation accompanying the rule, NHTSA estimated
that the requirements of FMVSS 214 would result in an average weight
increase of 24.8 to 26.7 pounds (including secondary weight). This
weight increase could result in a fuel economy degradation of 0.1 mpg.
The weight estimates provided by the manufacturers for quasi-static
side impact protection translate, according to NHTSA calculations, into
fuel economy penalties of approximately 0.04-0.07 mpg for each model
year, MYs 1996 and 1997. These weight effects are included in the
manufacturers' fuel economy projections, so there is no need for NHTSA
to add an explicit adjustment to their projections to consider the
impact of this standard.
The agency is also considering other regulatory requirements to
protect light truck occupants in side impacts. The agency addressed a
number of possible requirements in an ANPRM published on August 19,
1988 (53 FR 31716). In addition, on June 5, 1992, pursuant to the
Intermodal Surface Transportation Efficiency Act of 1991, NHTSA
published (57 FR 24009) an ANPRM concerning whether passenger car
dynamic side impact protection requirements should be extended to light
trucks. Since any additional requirements in this area would take
effect after MY 1997, there will be no impact on MYs 1996-97 fuel
economy capabilities.
3. FMVSS 216
On April 17, 1991, NHTSA published a final rule (56 FR 15510)
amending FMVSS 216, Roof Crush Resistance, to extend its requirements
to light trucks with GVWRs of 6,000 pounds or less. Previously, the
standard applied only to passenger cars. The effective date of the rule
is September 1, 1994.
FMVSS 216 is intended to reduce deaths and injuries due to the
crushing of the roof into the passenger compartment in rollover
crashes. This standard established strength requirements for the
forward portion of the roof to increase the resistance of the roof to
intrusion and crush.
The agency believes that this requirement will have a negligible
impact on light truck manufacturers' MYs 1996-97 fuel economy
capabilities. Most light trucks already meet the standard. NHTSA
calculates that the manufacturers' weight impact estimates translate
into fuel economy penalties of about 0.003-0.030 mpg for MYs 1996-97.
These weight effects are included in the manufacturers' fuel economy
projections.
4. FMVSS 108
On April 19, 1991, NHTSA published (56 FR 16015) a final rule
requiring new light trucks to be equipped with center high-mounted
stoplamps (CHMSLs). The effective date was September 1, 1993. With an
estimated weight effect of about one pound, this rule has a negligible
CAFE effect.
5. FMVSS 201
On February 8, 1993, NHTSA published (58 FR 7506) a notice
proposing to amend FMVSS 201 to require passenger cars and light trucks
to meet a new in-vehicle component test to provide protection when an
occupant's head impacts upper interior components (such as A-pillars
and side rails) during a crash. The estimated weight effect for light
trucks for this proposed requirement averages six to nine pounds per
vehicle, for a fuel economy effect of 0.03 mpg. Currently, it is still
indeterminate as to whether the proposed requirement will affect light
trucks in MYs 1996-97. At this time, therefore, the agency cannot take
potential fuel economy effects into consideration when establishing
fuel economy standards for MYs 1996-97.
6. Rollover Prevention
The Intermodal Surface Transportation Efficiency Act of 1991
required NHTSA to publish an ANPRM or NPRM by May 31, 1992 to provide
``protection against unreasonable risk of rollovers of passenger cars,
multipurpose passenger vehicles, and trucks with a gross vehicle weight
rating of 8,500 pounds or less and an unloaded vehicle weight of 5,500
pounds or less.'' On January 3, 1992, NHTSA published (57 FR 242) an
ANPRM announcing that the agency is considering whether to propose a
safety standard to reduce the casualties associated with rollovers of
passenger cars, pickup trucks, vans, and utility vehicles. In addition,
on September 29, 1992, NHTSA published a notice (57 FR 44721)
announcing the availability of a document describing the agency's
planned rulemaking effort, data analyses, and physical research to
address the problem of rollover crashes and resulting injuries and
fatalities.
Since NHTSA has not yet proposed any requirements in this area, it
will not have an impact on MYs 1996-97 CAFE capabilities.
B. Revised Emissions Standards
The Clean Air Act Amendments of 1990 (CAAA) impose more stringent
exhaust emissions standards on light trucks. Standards are also
becoming tighter in California. Under the CAAA, new standards for light
trucks with GVWRs up to 6,000 pounds have begun phasing-in. The phase-
in provides for compliance by 40 percent for MY 1994, 80 percent for MY
1995, and 100 percent for MY 1996 and afterwards. For light trucks over
6,000 pounds GVWR, more stringent standards begin to take effect in MY
1996. Fifty percent of these vehicles must comply with the new
standards in MY 1996; all light trucks over 6,000 pounds GVWR must meet
the new standards for MY 1997 and later.
Current standards for exhaust emissions will tighten substantially
under the CAAA. Over the ``full useful life'' of a vehicle, emissions
standards will be 0.80 grams/mile for total hydrocarbons, and will
range (depending on vehicle and test weight) from 0.31 to 0.56 grams/
mile for non-methane hydrocarbons, from 4.2 to 7.3 grams/mile for
carbon monoxide, from 0.6 to 1.53 grams/mile for oxides of nitrogen,
and from 0.10 to 0.12 grams/mile for particulate matter.
The CAAA also require EPA to establish standards for carbon
monoxide emissions at 20 degrees Fahrenheit, which came into effect in
the current model year. Further, for all gasoline-fueled motor
vehicles, the CAAA require EPA to promulgate regulations covering
evaporative emissions (1) during operation (``running losses'') and (2)
over two or more days of non-use.
In their questionnaire responses, none of the auto companies
provided substantial detail on the possible impacts of these standards
on MY 1996-97 light truck fuel economy capabilities. GM stated, ``The
total impact of the Clean Air Act Tier I and the California emissions
standards on truck fuel economy is unknown at this time. * * * Although
not quantified, preliminary indications are that there will be some
lost opportunities to improve fuel economy when redesigning our
powertrains to comply with these standards.''
Ford stated that, ``[M]ost troublesome is the effect of compliance
with the amended Clean Air Act. We project that compliance has reduced
the average truck fuel economy by 0.3 mpg after inclusion of technology
which has an offsetting effect * * * and it negates other technology
benefits.''
NHTSA indicated in the NPRM and PRIA that it believes the net
impact on CAFE capabilities due to changes in emissions requirements is
likely to be minimal. Some of the new requirements will lead to fuel
savings, while others may lead to fuel economy losses. Benefits will be
obtained from enhanced evaporative controls and the ``low temperature''
carbon monoxide standards because manufacturers will sharpen their
fuel-control systems, using techniques such as sequential port fuel
injection. Slight fuel economy losses may result from tighter
hydrocarbon and nitrous oxides emissions standards, particularly for
larger engines.
In their comments on the NPRM, the manufacturers did not provide
data indicating that new emissions requirements would have a
significant effect on MYs 1996-97 CAFE capabilities. GM stated the
following:
The impact of tighter Federal emissions standards enacted by the
1990 Clean Air Act Amendments is not expected to have a direct fuel
economy impact related to engine efficiency. However, there will be
weight increases on some engines if dual catalytic converters are
required.
* * * California TLEV emissions standards will most likely
impact fuel economy. However, these impacts * * * have not yet been
reflected in GM's CAFE forecasts.
* * * Tighter evaporative emission standards requiring larger
canisters and adding purge controls will add weight to the vehicle
and impact fuel economy.
In its comment, Ford stated:
Ford believes that NHTSA's list of other Federal standards that
might have an impact on light truck fuel economy during MYs 1995-97
is insufficient. A more comprehensive list would include Potential
Revisions to the Federal Test Procedure (FTP) such as higher speeds
and accelerations and electric dynamometer true road load
calibration, IM240 Short Test Requirements, Onboard Diagnostics,
Cold CO Testing, Enhanced Evaporative Testing Requirements, Section
177 States, [and] Fuels or Fuel Additives such as reformulated
gasoline and MMT.
At this point, Ford has not allocated resources to collectively
assess the fuel economy implications, of required emission control
system calibration strategies and hardware, that may be associated
with the above requirements. However, it is reasonable to believe
that several of these potential requirements will have a significant
impact on light truck fuel economy.
NHTSA believes that the actual and potential Federal standards
identified by Ford will not have any significant impact on MYs 1996-97
light truck fuel economy capabilities. The agency's specific analysis
of the impacts of each of these standards is presented in the
Regulatory Evaluation. A summary of the agency's analysis follows:
1. Potential Revisions to the Federal Test Procedure
EPA has not to date proposed any revisions to the FTP, so no impact
is expected for MYs 1996-97.
2. IM240 Short Test Requirements
EPA has issued new inspection and maintenance test procedures to
help ensure that vehicle emission controls function properly in real-
world use, and has proposed a new Certification Short Test procedure.
It has also issued a rule, effective for MY 1996, outlining new
Certification Short Test procedures to ensure that properly maintained
passenger cars and light trucks have no elements of design that would
cause ``pattern failure'' in inspection and maintenance programs.
However, EPA's analyses have not indicated that there would be any
impact on manufacturers' fuel economy capabilities as a result of these
rulemakings.
3. Onboard Diagnostics
EPA has issued a final rule on onboard diagnostics that applies to
MY 1994 and later passenger cars and light trucks, but EPA believes
that this will not affect fuel economy. There may even be some actual
fuel economy benefits due to earlier identification of malfunctioning
emissions control equipment.
4. Cold CO Testing
EPA has issued new low temperature carbon monoxide testing
requirements which will apply to all MY 1996 and later model year
passenger cars and light trucks, but EPA believes that the requirements
will not result in any fuel economy loss and may actually result in a
slight fuel economy benefit.
5. Enhanced Evaporative Testing Requirements
EPA has recently issued enhanced evaporative emissions standards.
Any negative impact on fuel economy (due to increased weights of
upgraded evaporative emissions control system) would be very slight.
EPA estimates that larger evaporative canisters, vapor lines, and purge
valves will add an average of 2.9 pounds to the weight of a light duty
truck. Using NHTSA's secondary weight multiplier of 1.7, this would
mean a total increase of 4.9 pounds, which would reduce fuel economy by
approximately 0.017 mpg. However, this requirement only applies to 20
percent of MY 1996 vehicles and 40 percent of MY 1997 vehicles, so the
total respective fuel economy penalties would not be greater than 0.003
mpg and 0.007 mpg. EPA, however, expects offsetting fuel economy
benefits, which it has not yet quantified.
6. Section 177 States
The term ``Section 177 States'' refers to states which voluntarily
adopt the more stringent California emissions standards. At this time,
Massachusetts, Maine, Maryland, New York, and other Northeastern and
Mid-Atlantic states have either passed legislation to adopt the
California emissions standards during the mid-1990s, or are considering
enacting such legislation. However, there are ongoing legal challenges
to adoption of the California emissions standards. NHTSA has not
received any data showing any impact on MYs 1996-97 light truck fuel
economy capabilities as a result of states other than California
adopting the California emissions standards.
7. Fuels or Fuel Additives Such as Reformulated Gasoline and MMT
EPA has not proposed any changes in the current certification test
fuel, so NHTSA does not expect any fuel economy impact for MYs 1996-97
light trucks.
NHTSA has not made any adjustments to the manufacturers' CAFE
projections to account for any impacts of changing emissions standards
during MYs 1996-97. The agency notes that Ford appears to be the only
manufacturer that explicitly included a potential fuel economy loss (an
average of 0.3 mpg) in its MYs 1996-97 CAFE projection. Since Ford is
not the ``least capable'' manufacturer and NHTSA is not basing the
selection of the MYs 1996-97 light truck CAFE standard primarily on
Ford's capability, it is unnecessary to resolve whether Ford's
capability should be adjusted upward because of Ford's inclusion of
this estimated fuel economy loss in its projection.
C. Test Weight for Light Trucks Over 6,000 Pounds GVWR
The CAAA require that, beginning with MY 1996, many light trucks
over 6,000 pounds GVWR be tested, for emissions purposes, at the
average of curb weight and GVWR. This requirement applies to one-half
the ``over 6,000 pound'' fleet in MY 1996 and all of this fleet in MY
1997. Previously, test weights were determined based on ``loaded
vehicle weight,'' (LVW) which is defined as curb weight plus 300
pounds. Loaded vehicle weight has been the sole basis used to calculate
``equivalent test weight,'' which is the weight used for dynamometer
testing. EPA has defined the average of vehicle curb weight and GVWR to
be ``adjusted loaded vehicle weight'' (ALVW) (see 56 FR 25739), which
will be used as the basis for determining equivalent test weight for
emission testing of the ``over 6,000 pound'' test fleet described
above. ALVW is higher than the LVW, and if light trucks are tested at
ALVW, there will be a loss in the estimated fuel economy.
The CAAA do not require fuel economy testing to be performed at
ALVW. However, because exhaust emissions testing must be done at ALVW
for light trucks over 6,000 pounds GVWR, use of a different test weight
system for fuel economy could require manufacturers and EPA (when
conducting confirmatory tests) to test each of these trucks twice: once
at its ``equivalent test weight'' based on LVW for fuel economy
purposes and once based on ALVW for exhaust emissions purposes. Another
approach would be for EPA to mandate that trucks over 6,000 pounds GVWR
be fuel economy tested at ALVW and for NHTSA to consider any resulting
deleterious fuel economy effect in establishing CAFE standards for the
affected model years. A third approach would be to have a manufacturer-
specific test procedure adjustment to account for the proportion of its
fleet affected by this requirement.
Domestic auto manufacturers have pointed out that testing at the
higher weights would have a negative fuel economy impact. Using MY 1992
data, GM claimed a potential impact in MY 1997 of at least 0.5 mpg.
Ford estimated a possible loss in MY 1997 of 0.2-0.3 mpg. Chrysler did
not give a specific number but agreed that fuel economy would be
lowered. Import manufacturers are unlikely to have any significant
penalty from this test procedure change because they produce few, if
any, light trucks with a GVWR exceeding 6,000 pounds.
In a letter dated February 18, 1992, EPA stated that NHTSA should
set CAFE standards with the heavier test weight in mind and stated that
dual testing would entail increased expenses. EPA also noted that EPCA
requires integrated fuel economy and emissions testing, although this
requirement is limited by the language ``to the extent practicable.''
After the EPA letter was sent, MVMA (now AAMA) indicated to EPA
that requiring the heavier test weight would also increase testing
expenses, by forcing separate fuel economy tests for light trucks above
and below 6,000 pounds GVWR. In addition, MVMA raised concerns that
changing the basis for determining fuel economy on only a portion of
the light truck fleet (i.e., those above 6,000 pounds GVWR) would cause
consumer confusion and affect the competitiveness of manufacturers with
a higher proportion of the sales of the heavier light trucks.
In the NPRM, NHTSA requested comments on the appropriate means of
handling this issue in the context of setting the MY 1995-97 light
truck fuel economy standards. The agency stated that if EPA mandates
fuel economy testing at ALVW, NHTSA would account for the impacts of
this testing in establishing light truck fuel economy standards.
In January 7, 1993 letters to AAMA and AIAM, EPA stated,
Manufacturers should be aware of the NHTSA proposed rule on
light truck average fuel economy standards * * * Included in the
proposal is a request for comments on the consequences of performing
fuel economy testing for heavy light-duty trucks under two different
equivalent test weight approaches. The EPA will consider all
relevant comments made during the NHTSA proposal comment period when
developing an EPA guidance document or rulemaking on this subject.
* * * The EPA plans to defer to NHTSA's policy decisions on
issues such as the competitiveness effects of the alternatives. Once
NHTSA determines the desirable CAFE solution and puts it into place,
the EPA will follow with conforming amendments to either its
regulations or policy as required.
In commenting on the NPRM, GM, Ford, Chrysler, AAMA and Rover Group
all supported the continuation of fuel economy testing at LVW. AAMA's
comment was typical, ``Retention of the LVW criteria will avoid
needless test and CAFE data base complexities, avoid added customer
confusion when comparing fuel economy labels and avoid creation of
unrealistic competitive fuel economy rating differences.''
After considering the comments on the new emissions test procedure
requirements, NHTSA has concluded that the simplest and most equitable
procedure for both manufacturers and the Federal government is to
continue fuel economy certification using LVW values for all classes of
vehicles. NHTSA has informed EPA of its decision and, in a March 4,
1993 letter to NHTSA, EPA agreed to abide by NHTSA's decision and
stated that it would undertake ``the regulatory and guidance revisions
needed to allow dual testing.''
D. Phase-Out of Chlorofluorocarbons
Under terms of the international Montreal Protocol, the United
States and other industrialized nations have agreed to halt production
of chlorofluorocarbons (CFCs) by the year 2000. In February 1992,
President Bush announced that the United States would phase out
production by the end of 1995.
Both Ford and General Motors identified weight penalties for
eliminating the use of CFCs in their vehicles' air conditioning systems
of seven pounds or less for each MY 1995-97. NHTSA estimated that these
weight additions could result in an average fuel economy penalty of
0.02 mpg. These weight effects are included in the manufacturers' fuel
economy projections.
V. Domestic/Import Fleet Distinction
In the NPRM, NHTSA proposed to eliminate the requirement that
captive imports and other light trucks be required to meet light truck
CAFE standards separately. This requirement has been in effect since MY
1980 (see 42 FR 63184, Federal Register, December 15, 1977). At the
time the agency introduced these separate categories, it believed that
the division would prevent light truck CAFE standards from acting as an
incentive for the domestic manufacturers to increase the numbers of
captive import vehicles in their fleets.
Over the past decade, however, the captive import sector of the
fleet has become insignificant. Whereas in 1980, captive imports
accounted for 14.7 percent of the overall light truck market, in 1992
they made up less than 0.5 percent of that market. GM and Ford no
longer have any captive import light trucks. Chrysler's captive import
fleet consisted, for MY 1993, of only about 6,000 vehicles (compact
pickups produced in Japan by Mitsubishi). Given the changes in market
conditions, NHTSA tentatively concluded in the NPRM that there is no
need or reason to continue to maintain the separate categories. While
the Act specifies a similar two-fleet rule for passenger automobiles,
it does not require the agency to provide similar treatment to light
trucks.
In their comments to the NPRM, the domestic manufacturers and the
AAMA supported elimination of the captive import category. The agency
did not receive any other comments that addressed the issue.
For the reasons discussed above and in the NPRM, and in light of
the comments, beginning in MY 1996, the agency will no longer require
light trucks to meet the CAFE standard separately, based on whether
they are captive imports. A new Table IV is being added to the
regulatory text, which indicates a single CAFE standard for all light
trucks without category distinctions.
Since CAFE credits cannot ordinarily be applied across classes of
light trucks, the agency proposed a method of accommodating the 3-year
carryforward and carryback of credits for light trucks after the
elimination of the two-fleet requirement. Only Chrysler commented on
the proposal, stating that it agreed with the agency. No other comments
addressed the issue.
The manner in which NHTSA will allow CAFE credits to be carried
forward or backward once the captive import and other fleets are
combined is the same as that used by the agency during the transition
from 2WD and 4WD standards for MYs 1980-81 to optional combined
standards for MY 1982 and later (45 FR 83233, December 18, 1990), as
well as the subsequent termination of any 2WD/4WD option in favor of a
single combined standard for all configurations in MY 1992 (55 FR
12487, April 4, 1990). For MY's 1993-95, a manufacturer's captive
import and other light truck credits can be applied to offset
shortfalls in the combined fleet incurred up to three model years later
(i.e., MYs 1996-98). If, on the other hand, a manufacturer wished to
use credits earned in the three years after elimination of the two-
fleet requirement to offset a shortfall incurred between MY 1993 and MY
1995, the manufacturer would have to separate its MYs 1996-98 CAFE
credits into ``captive import'' and ``other'' components based on each
fraction of the fleet's share of total production.
NHTSA notes that it does not foresee any manufacturer making use of
carryforward or carryback credits for captive imports, however. As
mentioned above, in the relevant years, only Chrysler has had even a
minimal number of captive imports, and it has not needed to use any
credits during that time. Nor does the agency expect any manufacturer
to establish a captive import fleet in the MY 1996-98 timeframe.
VI. The Need of the Nation To Conserve Energy
The United States imported 15 percent of its oil needs in 1955. The
import share reached 36.8 percent in 1975, the year EPCA was passed,
and peaked at 46.4 percent in 1977, at a cost of $91 billion (stated in
1992 dollars). Although the share declined to below 30 percent in the
mid-1980's, lately the United States has again become increasingly
dependent on imported oil. Over 40 percent of the country's petroleum
needs have been imported in every year since 1988. In 1992, imports
totaled 43.6 percent. Sharply lower oil prices in the past decade,
however, cut the value of oil imports to $50.5 billion in 1992.
Similarly, the percentage of imported oil purchased from OPEC
sources, which peaked at 70 percent in 1977, and declined to a low of
36 percent in 1985, has been steadily rising since then, and has been
over 50 percent every year since 1989.
The average cost of crude oil imports jumped from $4.08 per barrel
in 1973 to $12.52 in 1974 as a result of the oil embargo against
selected countries, including the United States, by Arab members of
OPEC. Additional increases in the cost of oil occurred in 1979-80, due
to unrest in Iran (which eliminated a substantial portion of that
country's oil output), and in 1980-81, when the outbreak of the Iran-
Iraq war reduced supply from the area. In 1981, the United States
adopted a policy of reliance on market forces and decontrolled the
price of oil. Since 1981, prices have fallen as conservation efforts
continue. In 1990-91, petroleum prices were affected by the conflict in
the Persian Gulf. In the beginning of 1992, the continued worldwide
economic recession and high levels of crude oil production by OPEC
member countries together held down oil prices. The average refiner
acquisition cost of imported crude oil in 1992 was $17.75 per barrel,
which was 4.2 percent below the average 1991 level (in 1992 dollars).
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 oil needs than it did during 1975, the year
EPCA was passed, and the percentage of its oil supplied by OPEC is
similar to that of 1975. Oil continues to account for over 40 percent
of all energy used in the United States, and 97 percent of the energy
consumed in the transportation sector. Despite legislation such as the
Clean Air Act Amendments of 1990 and California's strict ``clean fuel''
and emissions standards, gasoline will likely remain the predominant
fuel in the transportation sector. Domestic oil production has declined
steadily since reaching a peak of 10.6 million barrels per day in 1985
and dropping to 9.0 million barrels per day in 1992. Domestic
production is expected to continue declining by roughly 200,000 barrels
per day each year through the year 2000. While the United States is
currently the world's second largest oil producer, it contains only
about three percent of the world's known oil reserves. Persian Gulf
countries contain 63 percent of known world reserves, and former
communist countries contain 9 percent.
Long-term projections of petroleum prices, supply, and demand are
now influenced by a wide range of uncertainties associated with
sweeping economic and political changes in the former U.S.S.R. and in
Eastern Europe, environmental issues, and the role of Middle East
countries in determining the world's future oil supplies and prices,
and future energy demands in populous developing countries. The
Department of Energy projects that oil prices will be between $14 and
$30 (1992 dollars) per barrel in the year 2000, and will rise to
between $19 and $39 per barrel by 2010. DOE projects a continuing
decline in domestic oil production to between 3.54 and 6.73 million
barrels per day in 2010, with imports rising to between 52 percent and
72 percent of total use.
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 submitted a report to the
President entitled ``Energy Security.'' NHTSA believes that the
following quotation from that report continues to represent 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 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 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 current world energy situation and the outlook 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 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.
Based on the above, NHTSA concludes that there is a continuing need
for the nation to conserve energy.
The increase in market share of light trucks points to the need for
enhanced fuel economy for this class of vehicle. Light trucks are less
fuel efficient and are driven more miles over their lifetime than
passenger automobiles. Currently, more than half of the energy in the
transportation sector is used by light-duty vehicles (automobiles and
light trucks). Light trucks have steadily increased their share of
petroleum use in the transportation sector. In 1973, light trucks
accounted for approximately 12 percent of transportation petroleum use,
a figure which increased to roughly 20 percent by 1991.
Light trucks meeting the MYs 1996-97 standard will be more fuel-
efficient than the average vehicle in the current light truck fleet in
service, thus making a positive contribution to petroleum conservation.
VII. 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 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 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. Industry-wide 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
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. 154-55 (1975)) states:
Such determination [of maximum feasible average 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 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 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 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 industry-wide considerations into
account in determining the maximum feasible average fuel economy level.
NHTSA has traditionally set light truck standards at a level that
can be achieved by manufacturers whose vehicles constitute a
substantial share of the market. 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 MYs
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 energy savings that could result from the MYs 1996-97 standard
can be illustrated by considering the potential effects of a standard
set at different levels. Since Ford and Chrysler project CAFE levels
for both MY 1996 and 1997 above 20.7 mpg, a standard set at 20.7 mpg
would not likely have any effect on those companies. Since GM currently
projects a CAFE level of 20.5 mpg for both model years, a standard set
at 20.7 mpg, the level NHTSA has determined to be GM's capability,
would encourage it to achieve a higher CAFE level. If a 20.7 mpg
standard resulted in GM achieving a CAFE level 0.2 mpg above its
current projection, there would be a savings of 102 million gallons of
gasoline over the lifetime of GM's fleet for each model year. (This
assumes GM would sell the same number of light trucks in MY 1996 and MY
1997 as it did in MY 1993.)
The potential savings associated with a MY 1996-97 standard above
20.7 mpg are highly uncertain. Assume, for example, that a standard
could be set at 21.2 mpg, 0.5 mpg above GM's capability for both model
years and 0.4 mpg above Chrysler's capability for MY 1996 and 0.2 mpg
above its capability for MY 1997. Since Ford projects CAFE levels of
21.1 mpg and 21.6 mpg for MY 1996-97, such standards would likely have
little or no impact on that company. GM and Chrysler could likely meet
the levels of the standards 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,
consumers might purchase still larger trucks that are not subject to
CAFE standards. Therefore, the agency believes that any additional
energy savings associated with alternative higher fuel economy
standards above 20.7 mpg (the level the agency has determined to be
GM's capability) would be uncertain and speculative.
D. The MYs 1996-97 Standard
Based on its analysis described above and on manufacturers'
projections, the agency concludes that the major domestic manufacturers
can achieve the light truck fuel economy levels listed in the following
table:
------------------------------------------------------------------------
Approximate CAFE (mpg)
market share -------------
Manufacturer (percent,
based on MY MY MY
1993) 1996 1997
------------------------------------------------------------------------
GM........................................ 30 20.7 20.7
Ford...................................... 31 21.2 21.6
Chrysler.................................. 23 20.8 21.0
------------------------------------------------------------------------
As indicated above, most light truck manufacturers other than GM,
Ford and Chrysler only compete in the small vehicle portion of the
light truck market and are therefore expected to achieve CAFE levels
well above those companies. Only three light truck manufacturers, Range
Rover, PAS and UMC, are expected to have fuel economy levels lower than
the major domestic manufacturers. Since these companies have an
extremely small market share, NHTSA concludes that setting a standard
based on their capabilities would be inconsistent with a determination
of maximum feasibility that takes industry-wide considerations into
account, as required by statute.
As indicated above, NHTSA has concluded that GM is the least
capable manufacturer with a substantial share of sales for MYs 1996-97.
NHTSA also concludes that 20.7 mpg is the maximum feasible standard for
both MYs 1996 and 1997. For the reasons discussed below, this level
balances the potential petroleum savings associated with a higher
standard against the difficulties of manufacturers facing a potentially
higher standard.
The agency believes that a 20.7 mpg light truck CAFE standard for
MYs 1996-97 will make a positive contribution to petroleum conservation
by encouraging GM, which has a large market share, to achieve a higher
CAFE level than it currently projects while remaining within its fuel
economy capability. The agency notes that a 20.7 mpg standard is 0.2
mpg higher than GM's current MYs 1996-97 CAFE projection.
A 20.7 mpg standard will not unduly restrict consumer choice or
have adverse economic impacts on the large domestic manufacturers. The
current product plans of Ford and Chrysler indicate that they expect to
achieve MYs 1996-97 CAFE levels that are above 20.7 mpg. Therefore,
they will not have to make any changes in their product plans to
achieve the level of the standard.
While GM's current product plan shows expected MYs 1996-97 CAFEs of
20.5 mpg in each model year, NHTSA's analysis indicates that company
can achieve a CAFE of 20.7 mpg in both years. As discussed above, this
conclusion is based on the following assumptions: (1) The 4WD share of
the market will not significantly increase between now and MYs 1996-97,
(2) GM will make successful efforts to maintain market share of certain
vehicles, (3) GM can make minor changes in the performance levels of
its vehicles to bring them more in line with its competitors, and (4)
GM can make small improvements by increasing the penetration of some
engine and transmission technology improvements that are not projected
for full implementation. All of these actions are very minor and, the
agency believes, within GM's capability.
NHTSA believes that a higher standard than 20.7 mpg for MYs 1996-97
could result in serious economic difficulties for GM. While GM can
achieve 20.7 mpg CAFE without significant product restrictions, such
restrictions could be required to achieve a CAFE higher than 20.7 mpg.
Given leadtime constraints, NHTSA believes that the first potential
fuel-efficiency actions that GM or any other manufacturer would
consider in response to a higher standard would consist of marketing
actions. For the reasons discussed in other notices, however, the
agency does not believe that marketing actions can be relied upon to
significantly improve a manufacturer's CAFE. See, e.g., MY 1993-94
light truck CAFE final rule (56 FR 13775, April 4, 1991). If such
marketing actions were unsuccessful in whole or in part, GM would
likely have to engage in significant product restrictions to achieve
the level of a higher CAFE standard. Such product restrictions could
result in adverse economic consequences for GM, its employees and the
economy as a whole and limit consumer choice, especially with regard to
the load-carrying needs of light truck purchasers.
As indicated above, while NHTSA has concluded that GM is the least
capable manufacturer with a substantial share of sales, the agency
believes that GM's capability is not significantly below that of
Chrysler. GM and Chrysler, combined, sell over 50 percent of all new
light trucks each model year. Therefore, even if the agency were to set
a standard above GM's capability, the standard could not be much above
20.7 mpg and still remain within the capability of the majority of the
industry.
NHTSA believes that the 20.7 mpg standard balances the potentially
serious adverse economic consequences for GM that could result from a
higher standard with the potential for increased petroleum savings. The
agency concludes, in view of the statutory requirement to consider
specified factors, that the relatively small and uncertain energy
savings associated with setting a standard above GM's capability would
not justify the potential harm to that company and the economy as a
whole.
Consumer Alert and CEI requested that NHTSA consider the safety
effects of its decision. Those commenters stated that the agency should
not in any way avoid analyzing the potential safety consequences of a
decision to increase the CAFE standards for light trucks. Consumer
Alert and CEI cited the record of NHTSA's rulemaking concerning the MY
1990 passenger car CAFE standard, although they recognized that the
safety consequences of a decision to raise the CAFE standard for light
trucks may differ somewhat.
In the context of passenger car CAFE standards, NHTSA has
recognized that CAFE standards could adversely affect safety to the
extent that they result in significant reductions in car size and/or
weight. This issue was discussed at length in the agency's notice
terminating rulemaking on the MY 1990 passenger car CAFE standard (see
58 FR 6939, February 3, 1993).
An analysis of the extent to which significantly higher light truck
CAFE standards could affect safety is more complex than for passenger
car standards, since purchasers would have many more options for
substitution (e.g., different kinds of light trucks, trucks with a high
enough GVWR that they are not subject to CAFE standards, etc.) The
agency notes that since light trucks are generally significantly larger
and heavier than passenger cars, any safety effects of a particular
weight reduction would likely be smaller than for cars.
While NHTSA recognizes that significantly higher light truck CAFE
standards could adversely affect safety, to the extent that they
resulted in significant reductions in light truck size and/or weight,
the available evidence indicates that MYs 1996-97 standard of 20.7 mpg
will not have any impact on safety. NHTSA notes that, in setting the
light truck CAFE standards for recent model years, the agency did not
include in its analyses of manufacturer capabilities any product plan
actions that would significantly affect the weight, size or cost of the
vehicles the manufacturers planned to offer. The agency also notes that
the average equivalent test weight of light trucks has increased from
3,805 pounds in MY 1984 to 4,169 pounds in MY 1992. Therefore, NHTSA
believes that CAFE standards during this period have not had any
measurable effect on light truck weight or size.
The agency also notes that the levels of the light truck CAFE
standards have not varied significantly for more than a decade. The
light truck CAFE standards for MY 1987-89 and MY 1994 were set at 20.5
mpg, and, as far back as MY 1984, the standard was 20.0 mpg.
NHTSA therefore believes that the size and weight of current and
planned light trucks are not significantly different from what would
have occurred in the absence of CAFE standards. As discussed above,
Ford and Chrysler will exceed the level of the 20.7 mpg standard for
MYs 1996-97 without making any changes in their product plans. While GM
will need to make some changes in its product plan to achieve a CAFE of
20.7 mpg, the agency does not believe that it is necessary, or likely,
for that company to take actions that would have any adverse effect on
safety, in order to achieve that CAFE level.
As indicated above, in determining that GM can achieve MYs 1996-97
CAFE levels of 20.7 mpg, NHTSA adjusted GM's projected CAFE level of
20.5 mpg based on several factors. First, the agency adjusted it upward
to reflect more realistic mix assumptions with respect to 4WD market
share and maintaining market share of certain more fuel-efficient
vehicles. Since this adjustment simply reflects the agency's judgment
of what GM is likely to be able to sell, based on historical
experience, the adjustment does not induce or compel any actions with
safety implications.
NHTSA also concluded that GM can improve its projected MYs 1996-97
CAFE by a slight reduction in vehicle performance. This would involve
changes in such things as axle ratios. The agency believes that a
slight reduction in performance would not have any adverse safety
consequences.
Finally, the agency concluded that GM could improve its MYs 1996-97
CAFE by increasing the penetration of some engine and transmission
technology improvements that are not projected for full implementation.
This action would not result in reduced vehicle weight.
Since the 20.7 mpg light truck CAFE standard for MYs 1996-97 will
not lead to significant reductions in light truck size or weight, or
shifts toward less safe vehicles, the agency concludes that it is not
likely to have any impact on safety.
VIII. Rulemaking Analyses and Notices
A. Economic Impacts
The agency has considered the economic implications of the standard
for MYs 1996-97 and determined that it is significant within the
meaning of Executive Order 12866, and significant within the meaning of
the Department's regulatory procedures. This rulemaking was reviewed
under Executive Order 12866. The agency's detailed analysis of the
economic effects is set forth in a Regulatory Evaluation, copies of
which are available from the Docket Section. The contents of that
analysis are generally described above.
B. National Environmental Policy Act
The agency has analyzed the environmental impacts of the MY 1996-97
light truck average fuel economy standard in accordance with the
National Environmental Policy Act, 42 U.S.C. 4321 et seq. Copies of the
Environmental Assessment are available from the Docket Section. The
agency has concluded that no significant environmental impact will
result from this rulemaking action.
C. Regulatory Flexibility Act
Pursuant to the Regulatory Flexibility Act, the agency has
considered the impact 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. No light truck
manufacturer subject to the standard will be classified as a ``small
business'' under the Regulatory Flexibility Act. In the case of other
small businesses, small organizations, and small governmental units
which purchase light trucks, the standard will not affect the
availability of the full range of light trucks or have a significant
effect on the overall cost of purchasing and operating light trucks.
D. Executive Order 12612 (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 MYs 1996-97 standard will not have sufficient Federalism
implications to warrant the preparation of a Federalism Assessment.
E. Civil Justice Reform
This final rule will not have any retroactive effect. Under section
509(a) of the Motor Vehicle Information and Cost Savings Act (the Cost
Savings Act; 15 U.S.C. 2009(a)), whenever a Federal motor vehicle fuel
economy standard is in effect, a state may not adopt or enforce any law
or regulation relating to fuel economy standards or average fuel
economy standards applicable to vehicles covered by the Federal
standard. Under section 509(b) of the Cost Savings Act (15 U.S.C.
2009(b)) a state may not require fuel economy labels on vehicles
covered by section 506 of the Cost Savings Act (15 U.S.C. 2006) which
are not identical to the Federal standard. Section 509 does not apply
to vehicles procured for the State's use. Section 504 of the Cost
Savings 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.
F. Department of Energy Review
In accordance with section 502(j) of the Act, NHTSA submitted a
pre-publication copy of this rule to the Department of Energy for
review. The Department made no unaccomodated comments.
List of Subjects in 49 CFR Part 533
Energy conservation, 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: 15 U.S.C. 2002; delegation of authority at 49 CFR
1.50.
2. Section 533.5(a) is amended by adding Table IV immediately
following Table III to read as follows:
Sec. 533.5 Requirements.
* * * * *
Table IV
------------------------------------------------------------------------
Model year Standard
------------------------------------------------------------------------
1996....................................................... 20.7
1997....................................................... 20.7
------------------------------------------------------------------------
* * * * *
Issued: March 31, 1994.
Christopher A. Hart,
Deputy Administrator.
[FR Doc. 94-8133 Filed 3-31-94; 4:00 pm]
BILLING CODE 4910-59-P