Revisions to Corporate Average Fuel Economy (CAFE) Calculations Pursuant to the North American Free Trade Agreement Implementation Act of 1993

Carol M. Browner (Federal Register)
January 6, 1994

[Federal Register Volume 59, Number 4 (Thursday, January 6, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 94-181]


[[Page Unknown]]

[Federal Register: January 6, 1994]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 600

[AMS-FRL 4823-1]

 

Revisions to Corporate Average Fuel Economy (CAFE) Calculations 
Pursuant to the North American Free Trade Agreement Implementation Act 
of 1993

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: This action changes the Corporate Average Fuel Economy (CAFE) 
calculation regulations to conform to changes required by section 371 
of the North American Free Trade Agreement Implementation Act of 1993, 
which specifies that costs to motor vehicle manufacturers attributable 
to value added in Mexico be included with the costs attributable to 
value added in the United States and Canada for the purpose of 
separating foreign and domestic fleets.

EFFECTIVE DATE: This action is effective January 1, 1994.

ADDRESSES: Interested parties may submit written comments (in 
duplicate, if possible) to Public Docket No. A-93-52 at: Air Docket 
Section, U.S. Environmental Protection Agency, 401 M Street, SW., 
Washington, DC 20460.
    Materials relevant to this final rule have been placed in Docket 
No. A-93-52. The docket is located at the above address in room M-1500, 
Waterside Mall, and may be inspected weekdays between 8:30 a.m. and 
noon, and between 1:30 p.m. and 3:30 p.m.

FOR FURTHER INFORMATION CONTACT: Cliff Tyree, Certification Division, 
U.S. Environmental Protection Agency, National Vehicle and Fuel 
Emissions Laboratory, 2565 Plymouth Road, Ann Arbor, MI 48105. 
Telephone (313) 668-4310.

SUPPLEMENTARY INFORMATION:

I. Background

    EPA is today promulgating changes to its fuel economy calculation 
regulations to conform to changes in the Motor Vehicle Information & 
Cost Savings Act (MVICSA), 15 U.S.C. 2003(b)(2), made by section 371 of 
the North American Free Trade Agreement Implementation Act of 1993 
(NAFTA Implementation Act), Public Law 103-182 (December 8, 1993). 
Section 104(a)(2) of the NAFTA Implementation Act specifically provides 
that ``appropriate officers of the United States Government may issue 
such regulations * * * as may be necessary to ensure that any * * * 
amendment made by this Act, that takes effect on the date the Agreement 
enters into force is appropriately implemented on such date.''
    The MVICSA, 15 U.S.C. 2003(b)(1), specifies that the EPA 
Administrator is to separate passenger automobiles manufactured by a 
manufacturer into foreign and domestic fleets, and to calculate the 
average fuel economy of each category separately. Prior to the NAFTA 
Implementation Act, 15 U.S.C. 2003(b)(2) specified that an automobile 
is to be considered domestically manufactured in any model year if at 
least 75% of the cost to the manufacturer is attributable to value 
added in the United States or Canada, unless the assembly is completed 
in Canada and the automobile is not imported into the United States 
prior to the expiration of 30 days following the end of the model year.
    Section 371 of the NAFTA Implementation Act simply adds a new 
subparagraph (G) to 15 U.S.C. 2003(b)(2) extending domestic treatment 
to costs to the manufacturer attributable to value added in Mexico, 
according to an explicit phase-in schedule. The statutory change does 
not alter the current treatment of costs to the manufacturer 
attributable to value added in the United States or Canada. Pursuant to 
clause (iii) in new subparagraph (G), the Secretary of Transportation 
is to prescribe reasonable procedures for manufacturers to make 
elections for the phase-in schedules described in today's regulations, 
and the EPA Administrator may prescribe rules for carrying out 
subparagraph (G). Today, EPA is amending its regulations governing the 
determination of domestic production to include the provisions of new 
subparagraph (G) in 15 U.S.C. 2003(b)(2).

II. Environmental Effects and Economic Impacts

    Because the NAFTA Implementation Act does not give EPA discretion 
as to the content of these regulations and because Congress required 
the regulations to become effective less than a month after enactment 
of this Act, the Agency has not conducted detailed analyses of the 
environmental and economic impacts separate from the analyses that were 
done on the North American Free Trade Agreement.

III. Public Participation and Effective Date

    Pursuant to section 553(b)(3)(B) of the Administrative Procedure 
Act, the Agency is not using notice and comment rulemaking procedures 
to promulgate this rule because the Agency has found that notice is 
unnecessary and impracticable. Comment is unnecessary because the rule 
issued today merely conforms pre-existing regulations as required by 
the NAFTA Implementation Act and does not involve an exercise of 
discretion by the Administrator. Furthermore, comment is impracticable 
because the NAFTA Implementation Act allowed the Administrator less 
than one month between the date of enactment and the date by which the 
regulations must be effective. It is impracticable to have notice-and-
comment rulemaking completed in such a short time. This short time 
period is consistent with EPA's view that it is performing a 
ministerial act that is not subject to notice and comment rulemaking.
    The rule is being made effective sooner than 30 days after 
publication or service. This is permitted by section 553(d) of the 
Administrative Procedure Act when the Agency finds good cause and 
publishes it with the rule. The Agency finds that there is good cause. 
The regulation needs to be effective on January 1, 1994, to avoid 
having the statute (which goes into effect on January 1, 1994) differ 
from the implementing regulations. In addition, the statutory provision 
itself will go into effect less than 30 days after it was enacted, 
which precludes EPA from providing 30 days between publication or 
service and the effective date.
    The Agency does not believe that notice-and-comment rulemaking is 
required and does not expect this change to be controversial, as it 
directly incorporates the explicit provisions of the statutory 
amendment into the current regulations. Nonetheless, EPA will accept 
comments on these regulatory changes and will consider making changes 
if justified by the comments.

IV. Statutory Authority

    Authority for the actions promulgated in this final rule is granted 
to EPA by section 371 of the North American Free Trade Agreement 
Implementation Act of 1993, Public Law 103-182.

V. Administrative Designation

    Under Executive Order 12866, the Agency must determine whether the 
regulatory action is ``significant'' and, therefore, subject to OMB 
review and the requirements of the Executive Order. The order defines a 
``significant regulatory action'' as one that is likely to result in a 
rule that may:
    (1) Have an annual effect on the economy of $100 million or more or 
adversely affect in a material way the economy, productivity, 
competition, jobs, the environment, public health or safety, or State, 
local, or tribal governments or communities;
    (2) create a serious inconsistency or otherwise interfere with an 
action taken or planned by another agency;
    (3) Materially alter the budgetary impact of entitlements, grants, 
user fees, or loan programs or the rights and obligations of recipients 
thereof; or
    (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
the Executive Order.
    It has been determined that this rule is not a ``significant 
regulatory action'' under the terms of Executive Order 12866 and is 
therefore not subject to OMB review.

VI. Regulatory Flexibility Act

    The Regulatory Flexibility Act of 1990, which requires federal 
agencies to identify potentially adverse impacts of federal regulations 
upon small entities, does not apply to this rulemaking. Section 604 of 
the Regulatory Flexibility Act requires analyses only for final rules 
for which a general notice of proposed rulemaking is required. As 
discussed in section III, a general notice of rulemaking would be 
unnecessary and impracticable and, thus, is not required for this rule.

VII. Reporting and Recordkeeping Requirements

    Under the Paperwork Reduction Act of 1980, 44 U.S.C. 3501 et seq., 
EPA must obtain Office of Management and Budget clearance for any 
activity that will involve collecting substantially the same 
information from ten or more non-Federal respondents. This regulation 
does not impose any new information requirements or contain any new 
information collection requirements and will result in no change in the 
reporting burden.

List of Subjects in 40 CFR Part 600

    Environmental protection, Administrative practice and procedure, 
Energy conservation, Fuel economy, Gasoline, Imports, Labeling, Motor 
vehicles, Reporting and recordkeeping requirements.

    Dated: December 30, 1993.
Carol M. Browner,
Administrator.

    For the reasons set forth in the preamble, part 600 of chapter I, 
title 40 of the Code of Federal Regulations is amended as follows:
    1. The authority citation for part 600 is revised to read as 
follows:

    Authority: Title III of the Energy Policy and Conservation Act 
of 1975, Public Law 94-163, 89 Stat. 871, Title IV of the National 
Energy Conservation Policy Act of 1978, Public Law 95-619, 92 Stat. 
3206, Section 371 of the North American Free Trade Agreement 
Implementation Act of 1993, Public Law 103-182, 107 Stat. 2057.

    2. Section 600.502-81 is amended by revising paragraph (a)(1) to 
read as follows:


Sec. 600.502-81  Definitions.

    (a) * * *
    (1) ``Declared value'' of imported components shall be:
    (i) The value at which components are declared by the importer to 
the U.S. Customs Service at the date of entry into the customs 
territory of the United States, or
    (ii) With respect to imports into Canada, the declared value of 
such components as if they were declared as imports into the United 
States at the date of entry into Canada, or
    (iii) With respect to imports into Mexico (when paragraph (b)(3) of 
this section applies), the declared value of such components as if they 
were declared as imports into the United States at the date of entry 
into Mexico.
* * * * *
    3. Section 600.511-80 is amended by revising paragraphs (a) 
introductory text, (a)(1), and (b)(2) introductory text, and adding new 
paragraphs (b)(3), (b)(4) and (b)(5) to read as follows:


Sec. 600.511-80  Determination of domestic production.

    (a) An automobile shall be considered domestically produced in any 
model year if it is included within a domestically produced car line 
(car line includes station wagons for purposes of this paragraph), 
unless the assembly of such automobile is completed in Canada or Mexico 
and such automobile is not imported into the United States prior to the 
expiration of 30 days following the end of the model year. For purposes 
of this paragraph a car line will be considered domestically produced 
if the following ratio is less than 0.25:
    (1) The sum of the declared value, as defined in Sec. 600.502, of 
all of the imported components installed or included on automobiles 
produced within such a car line within a given model year plus the cost 
of transportation and insuring such components to the United States 
port of entry, the Mexican port of entry (when Sec. 600.511-80(b)(3) 
applies), or the Canadian port of entry but exclusive of any customs 
duty, divided by
* * * * *
    (b) * * *
    (2) For automobiles for which paragraph (b)(3) of this section does 
not apply pursuant to the schedule in paragraph (b)(4), components 
shall be considered imported unless they are either:
* * * * *
    (3) For automobiles for which this paragraph applies pursuant to 
the schedule in paragraph (b)(4) of this section, components shall be 
considered imported unless they are either:
    (i) Wholly the growth, product, or manufacture of the United States 
and/or Canada and/or Mexico, or
    (ii) Substantially transformed in the United States and/or Canada 
and/or Mexico into a new and different article of commerce.
    (4) Paragraphs (b)(4) (i) through (v) of this section set forth the 
schedule according to which paragraph (b)(3) of this section applies 
for all automobiles manufactured by a manufacturer and sold in the 
United States, wherever assembled.
    (i) With respect to a manufacturer that initiated the assembly of 
automobiles in Mexico before model year 1992, the manufacturer may 
elect, at any time between January 1, 1997, and January 1, 2004, to 
have paragraph (b)(3) of this section apply to all automobiles it 
manufactures, beginning with the model year commencing after the date 
of such election.
    (ii) With respect to a manufacturer initiating the assembly of 
automobiles in Mexico after model year 1991, paragraph (b)(3) of this 
section shall apply to all automobiles it manufactures, beginning with 
the model year commencing after January 1, 1994, or the model year 
commencing after the date that the manufacturer initiates the assembly 
of automobiles in Mexico, whichever is later.
    (iii) With respect to a manufacturer not described by paragraph 
(b)(4) (i) or (ii) of this section assembling automobiles in the United 
States or Canada but not in Mexico, the manufacturer may elect, at any 
time between January 1, 1997, and January 1, 2004, to have paragraph 
(b)(3) of this section apply to all automobiles it manufactures, 
beginning with the model year commencing after the date of such 
election, except that if such manufacturer initiates the assembly of 
automobiles in Mexico before making such election, this paragraph shall 
not apply, and the manufacturer shall be subject to paragraph 
(b)(4)(ii) of this section.
    (iv) With respect to a manufacturer not assembling automobiles in 
the United States, Canada, or Mexico, paragraph (b)(3) of this section 
shall apply to all automobiles it manufactures, beginning with the 
model year commencing after January 1, 1994.
    (v) With respect to a manufacturer authorized to make an election 
under paragraph (b)(4) (i) or (iii) of this section which has not made 
that election within the specified period, paragraph (b)(3) of this 
section shall apply to all automobiles it manufactures, beginning with 
the model year commencing after January 1, 2004.
    (5) All elections under paragraph (b)(4) of this section shall be 
made in accordance with the procedures established by the Secretary of 
Transportation pursuant to 15 U.S.C. 2003(b)(2)(G)(iii).
* * * * *
[FR Doc. 94-181 Filed 1-5-94; 8:45 am]
BILLING CODE 6560-50-P