[Federal Register Volume 60, Number 117 (Monday, June 19, 1995)]
[Proposed Rules]
[Pages 31936-31939]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-14904]

[[Page 31937]]


National Highway Traffic Safety Administration

49 CFR Part 531

[Docket No. 95-45; Notice 1]

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

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

ACTION: Proposed decision.


SUMMARY: This proposed decision responds to a petition filed by MedNet 
Incorporated requesting that it be exempted from the generally 
applicable average fuel economy standard of 27.5 miles per gallon (mpg) 
for model years 1996 through 1998, and that lower alternative standards 
be established. In this document, NHTSA proposes that the requested 
exemption be granted and that an alternative standard of 17.0 mpg be 
established for MY 1996, MY 1997, and MY 1998, for MedNet.

DATES: Comments on this proposed decision must be received on or before 
August 3, 1995.

ADDRESSES: Comments on this proposal must refer to the docket number 
and notice number in the heading of this notice and be submitted, 
preferably in ten copies, to: Docket Section, Room 5109, National 
Highway Traffic Safety Administration, 400 Seventh Street, S.W., 
Washington, DC 20590. Docket hours are 9:30 a.m. to 4 p.m., Monday 
through Friday.

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


Statutory Background

    Pursuant to 49 U.S.C. section 32902(d), NHTSA may exempt a low 
volume manufacturer of passenger automobiles from the generally 
applicable average fuel economy standards if NHTSA concludes that those 
standards are more stringent than the maximum feasible average fuel 
economy for that manufacturer and if NHTSA establishes an alternative 
standard for that manufacturer at its maximum feasible level. Under the 
statute, a low volume manufacturer is one that manufactured (worldwide) 
fewer than 10,000 passenger automobiles in the second model year before 
the model year for which the exemption is sought (the affected model 
year) and that will manufacture fewer than 10,000 passenger automobiles 
in the affected model year. In determining the maximum feasible average 
fuel economy, the agency is required under 49 U.S.C. 32902(f) to 
    (1) Technological feasibility
    (2) Economic practicability
    (3) The effect of other Federal motor vehicle standards on fuel 
economy, and
    (4) The need of the Nation to conserve energy.
    The statute at 49 U.S.C. 32902(d)(2) permits NHTSA to establish 
alternative average fuel economy standards applicable to exempted low 
volume manufacturers in one of three ways: (1) a separate standard for 
each exempted manufacturer; (2) a separate average fuel economy 
standard applicable to each class of exempted automobiles (classes 
would be based on design, size, price, or other factors); or (3) a 
single standard for all exempted manufacturers.

Background Information on MedNet

    MedNet Incorporated (MedNet) is a small company that will produce 
the Dutcher Paratransit Vehicle (PTV). Dutcher Motors, Inc. (Dutcher), 
the previous manufacturer of these vehicles, was chartered in 1984 to 
manufacture a limited quantity of special purpose vehicles--Dutcher 
PTV. Since its establishment, Dutcher produced only two vehicles. 
MedNet recently acquired Dutcher's assets. Dutcher's willingness to 
sell to MedNet was based on its own inability to produce the Dutcher 
PTV vehicles. MedNet now intends to produce the Dutcher PTV. The 
Dutcher PTV is a large passenger car intended to be used in providing 
transportation for mobility-impaired individuals. MedNet intends to 
begin production of the Dutcher PTV in the summer of 1995 and 
anticipates manufacturing 100, 250, and 500 vehicles, respectively for 
MYs 1996, 1997, and 1998.

MedNet's Petition

    On June 27, 1994, MedNet petitioned NHTSA for exemption from CAFE 
standards for model years (MYs) 1996, 1997, and 1998. MedNet's petition 
was filed less than 24 months prior to the beginning of model year 1996 
as required by 49 CFR Part 525.6. The petition can be accepted late if 
``good cause for late submission is shown'' as stated in 49 CFR 525.6. 
The reason for MedNet's late submission for MY 1996 is its recent 
acquisition of Dutcher Motors, Inc. (Dutcher) assets. Dutcher's 
willingness to sell to MedNet was based on its own inability to produce 
the Dutcher PTV vehicles. Thereafter, MedNet relocated Dutcher's 
equipment and parts from San Marcos, California to Battle Creek, 
Michigan. Because of new ownership and lack of knowledge of the 
required procedures of 49 CFR 525, MedNet believed that it was exempted 
from the standards based on Dutcher's prior exemption (56 FR 37478). 
Dutcher has filed several petitions requesting exemptions from the 
generally applicable CAFE standards for MYs 1986-1988 and MYs 1992-
1995. Dutcher's most recent petition was submitted on December 5, 1990, 
requesting alternative standards for MYs 1992-1995. The agency granted 
the petition and established an alternate standard of 17.0 miles per 
gallon (mpg) for MYs 1992-1995.
    Under the circumstances outlined above, NHTSA determines good cause 
is shown by MedNet for the submission of its untimely petition.

Classification of Dutcher PTV as a Passenger Automobile

    Due to differences in the definitions used by this agency under the 
Cost Savings Act for CAFE purposes and the Environmental Protection 
Agency under the Clean Air Act for emissions control purposes, the 
Dutcher PTV is classified differently by these two agencies. The 
Environmental Protection Agency (EPA) classified the predecessor to the 
Dutcher PTV, the Transitaxi, as a ``light duty truck'' for emissions 
compliance due to that model's derivation from existing truck 
components. (40 CFR 86.02-2). However, NHTSA concluded that the 
Transitaxi was a ``passenger automobile'' for fuel economy purposes. 
Both the Transitaxi and the Dutcher PTV are passenger automobiles under 
the definition in 49 CFR 523.4 since each transports not more than 10 
individuals and does not meet any configurational or usage criteria for 
light trucks given in 49 CFR 523.5. MedNet plans to produce the Dutcher 
PTV without substantial change from the design used by Dutcher for the 
Transitaxi. NHTSA therefore concludes that the Dutcher PTV to be 
produced in MY's 1996-1998 is a ``passenger automobile'' for fuel 
economy purposes.

Methodology Used To Project Maximum Feasible Average Fuel Economy Level 
for MedNet

Baseline Fuel Economy

    To project the level of fuel economy which could be achieved by 
MedNet in MYs 1996-1998, the agency considered whether there were 
technical or other improvements that would be feasible for these 
vehicles, and whether or not the company currently plans to incorporate 
such improvements in the vehicles. The [[Page 31938]] agency reviewed 
the technological feasibility of any changes and their economic 
    NHTSA interprets ``technological feasibility'' as meaning that 
technology which would be available to MedNet for use on its MY 1996 
through 1998 automobiles, and which would improve the fuel economy of 
those automobiles. The areas examined for technologically feasible 
improvements were weight reduction, aerodynamic improvements, engine 
improvements, drive line improvements, and reduced rolling resistance.
    The agency interprets ``economic practicability'' as meaning the 
financial capability of the manufacturer to improve its average fuel 
economy by incorporating technologically feasible changes to its MYs 
1996 through 1998 automobiles. In assuming that capability, the agency 
has always considered market demand as an implicit part of the concept 
of economic practicability.
    In accordance with the concerns of economic practicability, NHTSA 
has considered only those improvements which would be compatible with 
the basic design concepts of MedNet automobiles. Since NHTSA assumes 
that MedNet will continue to sell vehicles exclusively designed to be 
used for transporting the wheelchair bound or other mobility-impaired 
individuals, design changes that would impair the ability of the 
vehicle to perform this function were not considered. Such changes to 
the basic design would be economically impracticable since they might 
well significantly reduce the demand for these automobiles, thereby 
reducing sales and causing significant economic injury to the low 
volume manufacturer.

Technology for Fuel Economy Improvement

    Due to MedNet's limited financial resources, small engineering 
staff, very low production volume, and assemblage of stock components, 
few opportunities for technological improvement for fuel economy exist. 
MedNet uses General Motors 3.8 liter electronically fuel injected V-6 
engines and four speed automatic transmissions for its MYs 1996-1998 
prototypes. Therefore, MedNet depends entirely on the supplier of the 
engine and drivetrain for technological improvements in fuel efficiency 
of the engine and drivetrain.
    MedNet uses a four-speed automatic transmission with lockup torque 
converter clutch, one of the more efficient transmission designs. The 
constant velocity universal joints are a low friction design.
    MedNet incorporates in its Dutcher PTV flush windows and door 
handles, a bottom cover, and a smooth front cowl, all of which reduce 
drag on the vehicle. MedNet's low dynamometer horsepower setting for 
certification testing, as shown in the table below, when compared to 
other small passenger vans and wagons, illustrates that the Dutcher PTV 
uses good aerodynamic design equivalent to current industry standards.

                     Dynamometer Setting Comparison                     
                          Model                             dynamometer 
Dutcher PTV.............................................            12.5
Ford Aerostar*..........................................            11.2
GM Astro*...............................................            17.9
Toyota Previa*..........................................            14.0
Chrysler Caravan/Voyager*...............................            11.8
Mercury Villager*.......................................            10.1
Chevrolet Caprice Wagon.................................            8.5 
*These vehicles are classified by EPA as light trucks.                  

    To achieve maximum weight reduction, the body is made primarily of 
    MedNet's only significant opportunity for improvement will be the 
result of any improvements which GM decides for its own purposes to 
make in the engine and drivetrain it will supply for MedNet. MedNet's 
role will be limited to attempting to modify the drivetrain to meet 
emissions requirements.

Model Mix

    Since only one vehicle model will be built for MY's 1996-1998, the 
MedNet corporate average fuel economy is based on the fuel economy of 
that one model, the Dutcher PTV, and cannot be averaged in with the 
fuel economy of any other models.

The Effect of Other Vehicle Standards

    The new more stringent California emission standards enacted in MY 
1995 and the similarly stringent Federal Clean Air Act Amendments will 
apply in MY 1996. MedNet may achieve lower fuel economy due to 
compliance with these standards. In addition, a portion of its limited 
engineering resources will have to be expended to comply with these 
more stringent emissions standards including, but not limited to, 
evaporative emission standards.
    Federal safety standards also have an adverse effect on fuel 
economy of Dutcher PTV vehicles. These standards include 49 CFR Part 
581 Energy absorbing bumpers, Standard No. 214 Side impact protection, 
and Standard No. 208, Occupant crash protection. These standards tend 
to reduce achievable CAFE levels, since they result in increased 
vehicle weight. As previously noted, MedNet is a small company, and 
engineering resources are limited. Priority must be given to meeting 
mandatory standards to remain in the marketplace.

The Need of the Nation to Conserve Energy

    The agency recognizes there is a need to conserve energy, to 
promote energy security, and to improve balance of payments. However, 
as stated above, NHTSA has tentatively determined that it is not 
technologically feasible or economically practicable for MedNet to 
achieve an average fuel economy in MYs 1996 through 1998 above the 
levels set forth in this proposed decision. Granting an exemption to 
MedNet and setting an alternative standard at that level would result 
in only a negligible increase in fuel consumption and would not affect 
the need of the Nation to conserve energy.

Maximum Feasible Average Fuel Economy for MedNet

    The agency has tentatively concluded that it would not be 
technologically feasible and economically practicable for MedNet to 
improve the fuel economy of its MY 1996 through 1998 above an average 
of 17.0 mpg for MY 1996, 17.0 mpg for MY 1997, and 17.0 mpg for MY 
1998. Federal automobile standards would not adversely affect 
achievable fuel economy beyond the amount already factored into 
MedNet's projections, and the national effort to conserve energy would 
not be affected by granting the requested exemption and establishing an 
alternative standard.
    Consequently, the agency tentatively concludes that the maximum 
feasible average fuel economy for MedNet is 17.0 mpg in MY 1996, 17.0 
mpg in MY 1997, and 17.0 mpg in MY 1998.
    NHTSA tentatively concludes that it would be appropriate to 
establish a separate standard for MedNet for the following reasons. For 
MY 1996, the agency has already granted petitions for an alternative 
standard of 14.6 mpg for Rolls-Royce. The agency has also received a 
petition from Rolls-Royce for an alternative standard for MY 1997. 
Therefore, the agency cannot use the second (class standards) or third 
(single standard for all exempted manufacturers) approaches for MYs 
1996 and 1997. In order to avoid undue hardship to MedNet, given its 
limited ability to improve the fuel economy of its vehicles, the use of 
a single standard will be allowed by MY 1998 as well. [[Page 31939]] 

Regulatory Impact Analyses

    NHTSA has analyzed this proposal and determined that neither 
Executive Order 12866 nor the Department of Transportation's regulatory 
policies and procedures apply. Under Executive Order 12866, the 
proposal would not establish a ``rule,'' which is defined in the 
Executive Order as ``an agency statement of general applicability and 
future effect.'' The proposed exemption is not generally applicable, 
since it would apply only to MedNet, Inc., as discussed in this notice. 
Under DOT regulatory policies and procedures, the proposed exemption 
would not be a ``significant regulation.'' If the Executive Order and 
the Departmental policies and procedures were applicable, the agency 
would have determined that this proposed action is neither major nor 
significant. The principal impact of this proposal is that the exempted 
company would not be required to pay civil penalties if its maximum 
feasible average fuel economy were achieved, and purchasers of those 
vehicles would not have to bear the burden of those civil penalties in 
the form of higher prices. Since this proposal sets an alternative 
standard at the level determined to be MedNet's maximum feasible level 
for MYs 1996 through 1998, no fuel would be saved by establishing a 
higher alternative standard. NHTSA finds that because of the minuscule 
size of the MedNet fleet, that incremental usage of gasoline by MedNet 
customers would not affect the nation's need to conserve gasoline. 
There would not be any impacts for the public at large.
    The agency has also considered the environmental implications of 
this proposed exemption in accordance with the National Environmental 
Policy Act and determined that this proposed exemption if adopted, 
would not significantly affect the human environment. Regardless of the 
fuel economy of the exempted vehicles, they must pass the emissions 
standards which measure the amount of emissions per mile traveled. 
Thus, the quality of the air is not affected by the proposed exemptions 
and alternative standards. Further, since the exempted passenger 
automobiles cannot achieve better fuel economy than is proposed herein, 
granting these proposed exemptions would not affect the amount of fuel 
    Interested persons are invited to submit comments on the proposed 
decision. It is requested but not required that 10 copies be submitted.
    All comments must not exceed 15 pages in length (49 CFR 553.21). 
Necessary attachments may be appended to these submissions without 
regard to the 15 page limit. This limitation is intended to encourage 
commenters to detail their primary arguments in a concise fashion.
    If a commenter wishes to submit certain information under a claim 
of confidentiality, three copies of the complete submission, including 
purportedly confidential business information, should be submitted to 
the Chief Counsel, NHTSA, at the street address given above, and seven 
copies from which the purportedly confidential business information has 
been deleted, should be submitted to the Docket Section. A request for 
confidentiality should be accompanied by a cover letter setting forth 
the information specified in the agency's confidential business 
information regulation. 49 CFR part 512.
    All comments received before the close of business on the comment 
closing indicated above for the proposal will be considered, and will 
be available for examination in the docket at the above address both 
before and after that date. To the extent possible, comments filed 
under the closing date will also be considered. Comments received too 
late for consideration in regard to the final rule will be considered 
as suggestions for further rulemaking action. Comments on the proposal 
will be available for inspection in the docket. NHTSA will continue to 
file relevant information as it becomes available in the docket after 
the closing date, and it is recommended that interested persons 
continue to examine the docket for new material.
    Those persons desiring to be notified upon receipt of their 
comments in the rules docket should enclose a self- addressed, stamped 
postcard in the envelope with their comments. Upon receiving the 
comments, the docket supervisor will return the postcard by mail.

List of Subjects in 49 CFR Part 531

    Energy conservation, Gasoline, Imports, Motor vehicles.

    In consideration of the foregoing, 49 CFR part 531 would be amended 
to read as follows:


    1. The authority citation for part 531 would be revised to read as 

    Authority: 49 U.S.C. 32902, delegation of authority at 49 CFR 

    2. In Sec. 531.5, the introductory text of paragraph (b) is 
republished for the convenience of the reader and paragraph (b)(12) 
would be added to read as follows:

Sec. 531.5  Fuel economy standards.

* * * * *
    (b) The following manufacturers shall comply with the standards 
indicated below for the specified model years:
* * * * *
    (12) MedNet, Inc.

                                                           Average fuel 
                       Model year                            standard   
                                                            (miles per  
1996....................................................            17.0
1997....................................................            17.0
1998....................................................            17.0

    Issued on: June 14, 1995.
Barry Felrice,
Associate Administrator for Safety Performance Standards.
[FR Doc. 95-14904 Filed 6-16-95; 8:45 am]