[Federal Register Volume 59, Number 66 (Wednesday, April 6, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-8133]


[[Page Unknown]]

[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