[Federal Register Volume 60, Number 141 (Monday, July 24, 1995)]
[Proposed Rules]
[Pages 37861-37864]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-18044]



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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Part 531

[Docket No. 95-51; Notice 1]


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

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

ACTION: Proposed decision.

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SUMMARY: This proposed decision responds to a petition filed by Rolls-
Royce Motors, Ltd. (Rolls-Royce) requesting that it be exempted from 
the generally applicable average fuel economy standard of 27.5 miles 
per gallon (mpg) for model year 1997, and that a lower alternative 
standard be established. In this document, NHTSA proposes that the 
requested exemption be granted and that an alternative standard of 15.1 
mpg be established for MY 1997 for Rolls-Royce.

DATES: Comments on this proposed decision must be received on or before 
September 7, 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: Mr. Orron Kee, Office of Market 
Incentives, NHTSA, 400 Seventh Street, SW, Washington, DC 20590. Mr. 
Kee's telephone number is: (202) 366-0846.

SUPPLEMENTARY INFORMATION:

Statutory Background

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

[[Page 37862]]


Background Information on Rolls-Royce

    Rolls-Royce is a small company concentrating wholly on the 
production of high quality, prestigious cars. Rolls-Royce markets cars 
under the Bentley and Rolls-Royce nameplates and currently seeks an 
exemption for both Bentley and Rolls-Royce cars. The annual production 
rate for these cars is approximately 1,600 automobiles, of which one-
third are sold in the United States. The corporate philosophy 
concentrates on this limited production as the only way to maintain 
their reputation for producing what is widely perceived as the best car 
in the world. It believes that its customers will continue to demand 
substantial cars, craftsman-built, using traditional materials and 
equipped to the highest standards. Rolls-Royce operates as an 
independent unit within the Vickers group of companies and is required 
to generate its own financial resources. The limited financial 
resources of this small company and its market position preclude Rolls-
Royce from improving fuel economy by any means involving significant 
changes to the basic concept of a Rolls-Royce car.
    Fuel economy improvements are particularly difficult in the short 
run. Rolls-Royce manufactures its own engine and bodies and is a very 
low volume manufacturer. Because of this integration of component 
manufacturing and low volume, model changes are much less frequent than 
with larger manufacturers. Rolls-Royce may manufacture a body shell for 
fifteen years before making a major change. The opportunities for 
improving fuel economy through changing the model mix are also quite 
limited as Rolls-Royce manufactures only one basic model in different 
configurations and all have similarly low fuel economy.
    Roll's Royce's ability to make long term fuel economy improvements 
is also very limited. Any change in the basic concept of its cars to 
reduce size or downgrade the specifications would not, according to the 
petitioner, be acceptable to its customers.
    Nevertheless, Rolls-Royce states that it is making every effort to 
achieve the lowest possible fuel consumption consistent with meeting 
emission, safety, and other standards while maintaining customer 
expectations of its product. In the 17-year period from 1978, when 
Federal fuel economy standards were introduced, Rolls-Royce has 
achieved a fuel economy improvement of approximately 30 percent by 
substituting lighter weight components and tuning its powertrain while 
leaving basic features of the vehicles unchanged.
    Rolls-Royce states that technical innovation and switching to 
lighter weight materials should result in worthwhile improvements in 
its vehicles. The company believes that it has been conscious of the 
need for weight saving for many years, and since the introduction of 
the Silver Shadow, has made many parts of aluminum. These include the 
engine block and cylinder heads, transmission and axle casings, doors, 
hood and deck lid.
    In addition to discussing opportunities for weight reduction, 
Rolls-Royce also included in its petition discussions of improving its 
fuel economy through mix shifts, engine improvements, and drive train 
and transmission improvements.

Rolls-Royce's Petition

    On November 30, 1994, Rolls-Royce petitioned NHTSA for an exemption 
from the average fuel economy standards for vehicles to be manufactured 
by Rolls-Royce in model year (MY) 1997. A number of petitions have been 
filed by Rolls-Royce covering all model years from 1978. The last was 
submitted October 1992, which resulted in Rolls-Royce being granted an 
exemption from the generally applicable fuel economy standard for MYs 
1995 through 1996.

Methodology Used to Project Maximum Feasible Average Fuel

Economy Level for Rolls-Royce

Baseline Fuel Economy

    To project the level of fuel economy which could be achieved by 
Rolls-Royce in MY 1997, the agency considered whether there were 
technical or other improvements that would be feasible for these Rolls-
Royce vehicles, whether or not the company currently plans to 
incorporate such improvements in those vehicles. The agency reviewed 
the technological feasibility of any changes and their economic 
practicability.
    NHTSA interprets ``technological feasibility `` as meaning that 
technology which would be available to Rolls-Royce for use on its MY 
1997 automobiles, and which would improve the fuel economy of those 
automobiles. The areas examined for technologically feasible 
improvements were weight reduction, engine improvements, and drive line 
improvements.
    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 MY 
1997 automobiles. In assessing that capability, the agency has always 
considered market demand since it is an implicit part of the concept of 
economic practicability. Consumers need not purchase what they do not 
want.
    In accordance with the concerns of economic practicability, NHTSA 
has considered only those improvements which would be compatible with 
the basic design concepts of Rolls-Royce automobiles. NHTSA assumes 
that Rolls-Royce will continue to produce a five-passenger luxury car. 
Hence, design changes that would make the cars unsuitable for five 
adult passengers with luggage or would remove items traditionally 
offered on luxury cars, such as air conditioning, automatic 
transmission, power steering, and power windows, were not examined. 
Such changes to the basic design could 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.

Mix Shift

    Rolls-Royce has little opportunity for improving fuel economy by 
changing the model mix since it makes only one basic model in various 
configurations, all with similarly low fuel economy. The differences in 
fuel economy values among the different models available in MY 1997 
will likewise be small. For the 1997 model year, Rolls-Royce and 
Bentley cars will fall into five fuel economy configurations, three 
from the naturally aspirated engine family and two from the 
turbocharged engine family with the range of curb weights from 5,360 
lbs to 6,100 lbs. The differences in fuel economy values between the 
different models are small, and the models with the lower projected 
fuel economies have significantly lower projected volumes. The Rolls-
Royce model mix is essentially fixed by the market demand, and 
variations in sales percentages between the models would produce 
negligible improvement in CAFE.

Weight Reduction

    Rolls-Royce is conscious of the need to improve automotive fuel 
economy of its passenger vehicles. Work had begun to design a lighter 
and more fuel efficient model which included new features such as a 
lighter bodyshell, engine, transmission, suspension, and other 
components. However, the company's financial resources are limited 
compared to other manufacturers, therefore its plans had to be re-
evaluated. 

[[Page 37863]]

    In addition, Rolls-Royce had to modify its passenger cars to 
accommodate a number of safety standards and environmental regulations 
which resulted in an increase in vehicle weight. A front passenger air 
bag was introduced to comply with the requirements of FMVSS No. 208 for 
passive restraints. The air conditioning system was substantially 
revised to enable the use of HC 134a refrigerant in place of the 
previously used CFC 12.
    Rolls-Royce, being a small manufacturer of prestigious automobiles, 
cannot afford to change the design of its cars by downsizing since its 
customers desire traditional size cars.

Engine Improvements

    The current petition from Rolls-Royce restates past efforts to 
improve fuel economy in addressing engine improvements. Past 
developmental activities include test and evaluation of various 
technologies applied to the Rolls-Royce engine. These included the 
Texaco Controlled Combustion system, the Honda Compound Vortex 
Controlled Combustion system, diesel engines, cylinder disablement, 
increased engine displacement (to reduce NO emissions and permit timing 
for improved fuel economy), the May ``Fireball'' combustion chamber, 
and overall downsizing of the engine and car incorporating all new 
features including bodyshell, engine, transmission, and suspension. 
Each of these approaches was discarded in turn as failing to provide a 
feasible option for simultaneously meeting fuel economy and emission 
requirements, and exacting customer expectations.
    For MY 1994, Rolls-Royce introduced a package of engine and 
emission system improvements. The principal feature was a revised 
induction system incorporating a multi-point sequentially pulsed fuel 
injection system, and an advanced ignition system with an individual 
coil for each cylinder. Both systems are controlled by a central engine 
management microprocessor. The fuel injection system improves control 
and precision of fuel metering for improved emission control and fuel 
economy during warm-up. The ignition system improvements anticipate 
regulatory requirements for emission control diagnostics.
Transmission and Drive Train Improvements

    Rolls-Royce uses the General Motors 4L80-E four-speed automatic 
transmission with torque converter lockup clutch on all models 
beginning in MY 1992. Use of the fourth gear as an overdrive ratio has 
shown the capability of improving fuel economy by approximately 14 
percent under highway driving conditions. The rear axle ratio was 
reduced on the Bentley Turbo R and Bentley Continental R, thereby 
improving the top gear engine-to-vehicle speed ratio from 28.5 rpm/mph 
to 24.9 rpm/mph. This improved the highway fuel economy of this model 
by about 5 percent.

Effect of Other Motor Vehicle Standards

    The Rolls-Royce petition cites exhaust emission standards as having 
the greatest effect on fuel economy, and for this reason the company 
considers the fuel economy program to be an integral part of its 
emission control program. It states that, historically, emission 
standards have placed a severe strain on its limited technical 
resources; and only with the introduction of new emission control 
techniques such as oxidation and three way catalysts has the trend to 
higher fuel consumption been reversed.
    As a small volume manufacturer, Rolls-Royce was not subject to the 
recently agreed upon stringent California emission standards until the 
1995 model year. The more stringent Federal Clean Air Act Amendment 
standards will not apply until the 1996 model year.
    Of the Federal regulations having an adverse effect on fuel 
economy, Rolls-Royce considers the most significant ones to be 49 CFR 
Part 581 (energy absorbing bumpers), FMVSS 214 (side intrusion beam in 
doors), and FMVSS 208 (passive restraints). The passive restraint 
systems (air bags) forced some models to move into the 6,000 lbs and 
6,500 lbs inertia weight classes. The effect of these regulations 
increased vehicle weight despite efforts to reduce weight. Rolls-Royce 
is a small company and engineering resources are limited and priority 
must be given to meeting mandatory standards in order to remain in the 
marketplace. Conflict often exists between the priority of meeting 
standards and the need to remain competitive.

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 Rolls-Royce to 
achieve an average fuel economy in MY 1997 above 15.1 mpg. Granting an 
exemption to Rolls-Royce 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. In 
fact, there would not be any increase since Rolls-Royce cannot attain 
those generally applicable standards. Nevertheless, for illustrative 
purposes the agency estimates that the additional fuel consumed by 
operating the MY 1997 fleet of Rolls-Royce vehicles at the company's 
projected CAFE of 15.1 mpg (compared to an hypothetical 27.5 mpg fleet) 
over 106,952 miles is 36,378 bbls. of fuel. This averages about 8.30 
bbls. of fuel per day over the 12-year period that these cars will be 
an active part of the fleet. Obviously, this is insignificant compared 
to the daily fuel used by the entire motor vehicle fleet which amounts 
to some 4.90 million bbls. per day for passenger cars in the U.S. in 
1993.

Maximum Feasible Average Fuel Economy for Rolls-Royce

    This agency has tentatively concluded that it would not be 
technologically feasible and economically practicable for Rolls-Royce 
to improve the fuel economy of its MY 1997 automobiles above an average 
of 15.1 mpg, that compliance with other Federal automobile standards 
would not adversely affect achievable fuel economy beyond the amount 
already factored into Rolls-Royce's projections, and that 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 Rolls-Royce in MY 1997 is 15.1 mpg.

Proposed Level and Type of Alternative Standard

    The agency proposes to exempt Rolls-Royce from the generally 
applicable standard of 27.5 mpg and to establish an alternative 
standard for Rolls-Royce for MY 1997 at its maximum feasible average 
fuel economy of 15.1 mpg. NHTSA tentatively concludes that it would be 
appropriate to establish a separate standard for Rolls-Royce for the 
following reasons. The agency has already received a petition and 
published a proposal (60 FR 31937, June 19, 1995) for an alternate 
standard for MedNet, Inc. for MY's 1996, 1997, and 1998 seeking an 
alternate standard for that company of 17.0 mpg. Therefore, the agency 
cannot use the second (class standards) or third (single standard for 
all exempted manufacturers) approaches for MY 1997. 

[[Page 37864]]


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 Rolls-Royce, 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 Rolls-Royce's 
maximum feasible level for MY 1997, no fuel would be saved by 
establishing a higher alternative standard. NHTSA finds that because of 
the minuscule size of the Rolls-Royce fleet, that incremental usage of 
gasoline by Rolls-Royce's and 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 exemption 
and alternative standard. Further, since the exempted passenger 
automobiles cannot achieve better fuel economy than is proposed herein, 
granting this proposed exemption would not affect the amount of fuel 
used.
    Interested persons are invited to submit comments on the proposed 
decision. It is requested but not required that 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 
as follows:

PART 531--[AMENDED]

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

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


Sec. 531.5  [Amended]

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


Sec. 531.5  Fuel economy standards.

* * * * *
    (b) The following manufacturers shall comply with the standards 
indicated below for the specified model years:
* * * * *
    (2) Rolls-Royce Motors, Inc.

------------------------------------------------------------------------
                                                           Average fuel 
                                                              economy   
                       Model year                            standard   
                                                            (miles per  
                                                              gallon)   
------------------------------------------------------------------------
1978....................................................            10.7
1979....................................................            10.8
1980....................................................            11.1
1981....................................................            10.7
1982....................................................            10.6
1983....................................................             9.9
1984....................................................            10.0
1985....................................................            10.0
1986....................................................            11.0
1987....................................................            11.2
1988....................................................            11.2
1989....................................................            11.2
1990....................................................            12.7
1991....................................................            12.7
1992....................................................            13.8
1993....................................................            13.8
1994....................................................            13.8
1995....................................................            14.6
1996....................................................            14.6
1997....................................................            15.1
------------------------------------------------------------------------

* * * * *
    Issued on: July 18, 1995.
Barry Felrice,
Associate Administrator for Safety Performance Standards.
[FR Doc. 95-18044 Filed 7-21-95; 8:45 am]
BILLING CODE 4910-59-P