[Federal Register Volume 61, Number 2 (Wednesday, January 3, 1996)]
[Proposed Rules]
[Pages 145-155]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-4]



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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Part 533

[Docket No. 94-20; Notice 2]
RIN 2127-AF16


Light Truck Average Fuel Economy Standard, Model Year 1998

AGENCY: National Highway Traffic Safety Administration (NHTSA).

ACTION: Notice of proposed rulemaking.

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SUMMARY: This document proposes to establish an average fuel economy 
standard for light trucks manufactured in model year (MY) 1998. The 
issuance of a standard is required by statute. The agency is proposing 
to set a combined standard for all light trucks at 20.7 miles per 
gallon (mpg) for MY 1998.

DATES: Comments must be received on or before February 20, 1996.

ADDRESSES: Comments must refer to the docket and notice number set 
forth above and be submitted (preferably in 10 copies) to Docket 
Section, National Highway Traffic Safety Administration, Room 5109, 400 
Seventh Street SW, Washington, DC 20590. The Docket is open 9:30 a.m. 
to 4 p.m., Monday through Friday. Submission containing information for 
which confidential designation is requested should be submitted (in 
three copies) to Chief Counsel, National Highway Traffic Safety 
Administration, Room 5219, 400 Seventh Street SW, Washington, DC 20590, 
and seven additional copies from which the purportedly confidential 
information has been deleted should be sent to the Docket section.

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:

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 title V, ``Improving Automotive Efficiency,'' to the 
Motor Vehicle Information and Cost Saving Act. Title V has been amended 
and recodified without substantive change into Chapter 329 of Title 49 
of the United States Code. Chapter 329 provides for the establishment 
of average fuel economy standards for cars and light trucks.
    Section 32902(a) of Chapter 329 requires the Secretary of 
Transportation to issue light truck fuel economy standards for each 
model year. Chapter 329 provides that the fuel economy standards are to 
be set at the maximum feasible average fuel economy level. In 
determining the maximum feasible average fuel economy level, the 
Secretary is required under section 32902(f) to consider four criteria: 
technological feasibility, economic practicability, the effect of other 
motor vehicle standards of the Government on fuel economy, and the need 
of the United States 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)). Such standards must be established no later than 18 months 
prior to the beginning of the model year in question. Pursuant to this 
authority, the agency has set Corporate Average Fuel Economy (CAFE) 
standards through MY 1997. The standard for MY 1997 is 20.7 mpg.
    Following the establishment of the light truck fuel economy 
standards through 1997, the process of establishing standards for model 
years after MY 1997 began with the publication of an Advance Notice of 
Proposed Rulemaking (ANPRM) in the Federal Register (59 FR 16324) on 
April 6, 1994. The ANPRM outlined the agency's intention to set 
standards for some or all of model years 1998 to 2006. The ANPRM 
solicited comments through, among other things, nine questions designed 
to assist the agency in developing the proposed standards.
    Comments were submitted by six manufacturers: Ford, General Motors 
(GM), Chrysler, Nissan, Toyota, and the Rover Group. Comments were also 
submitted by the American Automobile Manufacturers Association (AAMA), 
the American Council for an Energy Efficient Economy (ACEEE), the 
Coalition for Vehicle Choice (CVC), the Competitive Enterprise 
Institute, and many other organizations and private individuals.
    On November 15, 1995, Congress enacted the Department of 
Transportation and Related Agencies Appropriations Act for Fiscal Year 
1996, P.L. 104-50. A provision in that Act precludes the agency from 
using any funds appropriated for that year to

prepare, propose, or promulgate any regulations * * * prescribing 
corporate average fuel economy standards for automobiles * * * in 
any model year that differs from standards promulgated for such 

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automobiles prior to enactment of this section. (Section 330, P.L 104-
50)

    Since CAFE standards must be set no later than eighteen months 
before the model year in question, the agency must adopt the MY 1998 
standard during FY 1996.
    The possibility of setting light truck CAFE standards for a multi-
year period raises complex issues, many of which were addressed by the 
comments on the ANPRM. Faced with a statutory deadline of approximately 
April 1, 1996, for promulgating a standard for MY 1998, the agency has 
decided to defer rulemaking for MY's 1999-2006. In this notice, the 
agency is therefore proposing a standard only for MY 1998.

II. Overview of Proposal

    This notice proposes to establish an average fuel economy standard 
for light trucks of 20.7 mpg for MY 1998. The agency's proposal is 
based on information derived from a variety of sources. One major 
source is the submissions received in response to the April 6, 1994, 
ANPRM, which are available in Docket No. 94-20-No.1. The agency's 
decision is, of course, constrained by the provisions of P.L. 104-50 
noted above.
    As a part of proposing a standard, this notice discusses a variety 
of issues which are being considered by the agency, all of which are 
relevant to the statutory criteria in Chapter 329. In providing a 
comment on a particular matter, commenters are requested to provide all 
relevant factual information to support conclusions or opinions, 
including but not limited to statistical and cost data, and the source 
of such information.

III. Manufacturer Capabilities for MY 1998

    In evaluating manufacturers' fuel economy capabilities for MY 1998, 
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 
Preliminary Regulatory Impact Analysis (PRIA), which has been placed in 
the docket for this notice. Some of the information included in the 
PRIA, 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 
PRIA omits the confidential information.

A. Manufacturer Projections

1. General Motors
    In an August 1994 submission General Motors projected CAFE within a 
range of 21.1 to 21.9 mpg for the 1998 model year. GM submitted a 
revised estimate on May 31, 1995, indicating that certain technological 
improvements and other changes it had anticipated could not be 
implemented in the time period outlined in its first submission. The 
May 31, 1995, submission projected a range of 20.6 to 21.3 mpg. This 
compares to a projection of 19.8 mpg for MY 1995 from GM's mid-model 
year report of July 31, 1995.
2. Ford
    Ford projected in August 1994 that it could achieve a CAFE level 
within a range of 20.4 to 21.0 mpg for MY 1998. This compares to a July 
1995 mid-model year report projection of 20.6 mpg for MY 1995.
3. Chrysler
    Chrysler projected in August 1994 that it could achieve a CAFE 
level of 21.0 mpg for MY 1998. This compares to a mid-model year report 
projection of 20.1 mpg for MY 1995. Chrysler submitted a revised 
estimate for MY 1998 of 20.1 mpg on September 18, 1995, which was 
received (13 months after the end of the comment period) too late to be 
considered for this NPRM. However, the agency will consider these new 
data prior to taking final action on the MY 1998 Standard.
4. Other Manufacturers
    Most of the other light truck manufacturers exceed the CAFE levels 
of the large domestic manufacturers. The exceptions are the Rover 
Group, which projected 16.3 mpg for the 1995 model year in July 1995, 
and Volkswagen, a manufacturer of passenger vans, which projected 18.6 
mpg for the 1995 model year in July 1995. Mercedes-Benz plans to enter 
the light truck market with a sport utility vehicle whose CAFE level is 
unknown.
    Nissan, Toyota and the Rover Group submitted comments in response 
to NHTSA's April 6, 1994 notice.
    Nissan's submission did not contain any projections for specific 
model years. Its 1995 mid-model year report indicated a 1995 CAFE level 
of 22.5 mpg. The Rover Group's submission also did not contain any 
projections for the 1998 model year. The Rover Group indicated in its 
August 1994 submission that it could not attain significant 
improvements in fuel economy until MY 2002 or later. Toyota's August 
1994 submission projected a 1998 MY CAFE of 22.4-23.0 mpg. This 
compares to a July 1995 mid-model year report projection of 21.2 mpg 
for MY 1995.

B. Possible Additional Actions Affecting MY 1998 CAFE

1. Further Technological Changes
    NHTSA has considered whether manufacturers can use further 
technological changes to improve their CAFE beyond their August 1994 
projections for MY 1998. 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 PRIA discusses the fuel efficiency enhancing 
technologies which are expected to be available during the MY 1998 time 
period. A significant potential constraint on the increased use of 
these technologies for MY 1998 is the limited leadtime. 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 1996-97, once a new 
design is established and tested as feasible for production, the 
leadtime necessary to design tools and establish quantity production is 
typically 30 to 36 months. Some potential major changes may take even 
longer. 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.
    Given the leadtime constraints, the agency does not believe that 
manufacturers can achieve a significant improvement in these projected 
CAFE levels for MY 1998 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 effects on vehicle sales, or 
industry-wide employment, if consumers elected to retain older vehicles 
longer than usual or purchase the product of a competitor that was not 
similarly constrained. If consumers 

[[Page 147]]
chose instead to purchase vehicles over 8,500 pounds GVWR, which are 
not subject to CAFE standards, this shift would have the additional 
effect of defeating the energy-saving aims of the CAFE program. The 
agency's preliminary analysis of manufacturer capabilities indicates 
that 20.7 mpg is an appropriate level for the least capable 
manufacturer with a significant market share.
    Application of a standard that would require product restrictions 
could have a substantial economic impact. In its most recent previous 
light truck CAFE rulemaking, the agency estimated the loss of 
production associated with sufficient product restrictions to raise the 
CAFE of the least capable manufacturer by 0.5 mpg. This analysis, 
contained in the final rule establishing MY 1996-97 light truck CAFE 
standards published in the Federal Register on April 6, 1994 (59 FR 
16312), indicated that product restrictions could result in significant 
losses in production. This loss of production would cause hardship in 
the automobile industry and result in the loss of jobs and other 
economic effects. In addition to the adverse impacts on the automotive 
industry, the analysis concluded that a wide range of businesses could 
be seriously affected to the extent that they could not obtain the 
light trucks they need for business use. Also, such product 
restrictions could unduly limit consumer choice.
    Given these considerations, which the agency believes are equally 
applicable to MY 1998, NHTSA tentatively concludes that product 
restrictions should not be considered as part of manufacturers' 
capabilities to improve MY 1998 CAFE.

C. Manufacturer-Specific CAFE Capabilities

    Of the manufacturers producing light trucks for sale in the U.S. in 
MY 1995, only two were projecting a CAFE lower than the large major 
domestic manufacturers: the Rover Group and Volkswagen. The Rover Group 
imports a small number of luxury 4WD utility vehicles and Volkswagen 
imports a small number of passenger vans. Because none of these fleets 
have a significant share of the U.S. market, and because the agency 
must set standards on an ``industry-wide'' basis, the discussion in 
this section will be limited to the capabilities of the three large 
domestic light truck manufacturers: Chrysler, Ford, and GM. Each of 
these manufacturers has at least 20 percent of the light truck market, 
which NHTSA considers a representation of ``industry-wide'' effects.
1. Chrysler
    Chrysler's projected CAFE level is 21.0 mpg for MY 1998. In its 
submission, Chrysler discussed uncertainties associated with specific 
technologies and risks in forecasting future CAFE capabilities. It did 
not, however, quantify the fleet-wide effect of these risks and 
uncertainties except in the case of Federally mandated emissions and 
safety requirements.
    Chrysler calculated a weight increase for each of the new safety 
and emissions requirements that will become effective during MY 1998 
and derived a fuel economy effect for each of them. The agency accepts 
these figures except as discussed below.
    The agency does not agree with any weight penalty for Federal Motor 
Vehicle Safety Standard (FMVSS) 214 for MY 1998 because compliance with 
the newly issued standard (60 FR 38749; July 28, 1995) should not add 
additional weight and the final rule will not apply until MY 1999. 
Similarly, the agency also will not consider any weight penalty for 
Federal Motor Vehicle Safety Standard (FMVSS) 206, as compliance with 
the requirements of recent amendments (60 FR 50124; September 28, 1995) 
should not add additional weight. The agency also will not consider 
projected penalties for safety rulemakings for which it has not issued 
a proposal, namely enhanced frontal impact (FMVSS 208) and side glazing 
ejection protection (FMVSS 205), since these standards, if amended, are 
unlikely to apply to MY 1998. However, if Chrysler plans to improve, 
voluntarily, the safety of its vehicles in these areas, NHTSA will 
consider the specific improvements and their CAFE effects.
    Chrysler also projected a fuel economy effect for Federal Test 
Procedure (FTP) emissions test changes that will penalize fuel economy 
performance as measured in the laboratory. These test procedure changes 
include the effect of testing California cars with California Phase II 
fuel and the conversion to the 48--inch electric dynamometer.
    The California Phase II fuel has a lower energy content than the 
reference fuel used for fuel economy testing for vehicles not meeting 
the California requirements. EPA intends to apply a correction to 
account for this energy loss, but Chrysler believes that the correction 
accounts for only half of the penalty, leaving a 2 to 3 percent net 
loss. EPA, however, has advised NHTSA that manufacturers may still run 
the fuel economy test using the present Indolene fuel, so there is no 
need for a manufacturer to count a fuel economy penalty for fuel 
changes. Chrysler also estimates the change to the 48 inch dynamometer 
will produce fuel economy losses of 3 to 6 percent, although this is 
preliminary. EPA has indicated that its proposed test procedure 
revisions, including the 48-inch electric dynamometer, are unlikely to 
be in effect for MY 1998.
    Eliminating Chrysler's provision for weight effects attributed to 
FMVSS 214, FMVSS 208 enhanced frontal impact, FMVSS 205, FMVSS 206, FTP 
revision, and the use of the 48-inch dynamometer leaves Chrysler's 
projected MY 1998 CAFE of 21.0 mpg unchanged. Without consideration of 
Chrysler's revised submission of September 18, 1995, the agency 
tentatively concludes that Chrysler's fuel economy capability for MY 
1998 is 21.0 mpg.
2. Ford
    In its submission in response to the ANPRM, Ford projected a MY 
1998 CAFE of 21.0 mpg and presented information in support of its 
contention that a combination of risks and opportunities applicable to 
MY 1998 result in CAFE of only 20.4 mpg.
    Ford quantified a number of risks and minor opportunities, 
allocating much of the total risk to safety and emissions requirement 
effects. Ford also noted that there may be additional unquantified 
risks.
    The safety portion of the risk is described in Ford's comment as 
due to additional weight to meet the proposed dynamic side impact test 
in FMVSS 214. As discussed above, this standard will not take effect in 
MY 1998. In regard to emissions, NHTSA requested that EPA review the 
emissions risk contained in Ford's proposal. EPA's response was that it 
is unlikely that the electric 48-inch dynamometer and its other 
proposed test procedure revisions will apply to 1998 model year 
vehicles. Based on these supporting comments, NHTSA removes the 48-inch 
dynamometer and FMVSS 214 risks.
    The net of technological (non-regulatory) risks and opportunities 
for MY 1998 is also outlined in Ford's submission. NHTSA believes that 
these are reasonable corrections to the Ford nominal projections 
because there is an acknowledged risk that technologies will not always 
achieve their expected benefit and that, in combination with other 
technologies, the total gain does not equal the sum of the individual 
improvements taken alone.
    Using the net of technological risks and opportunities and 
discarding the 

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claimed emissions and safety penalties leads NHTSA to estimate the MY 
1998 Ford fleet CAFE capability to be 20.9 mpg.
3. General Motors
    In its revised response to the ANPRM, General Motors projected a MY 
1998 CAFE of 21.3 mpg along with a ``higher confidence'' estimate of 
20.6 mpg. This represents a reduction of its prior estimate, submitted 
in August of 1994, of a projected 1998 MY CAFE of 21.1 to 21.9 mpg. GM 
attributed the change in its projection to the unavailability of 
technical improvements and other changes it had previously believed 
would be implemented by MY 1998.
    GM provided a general discussion of the uncertainties about 
actually meeting the projected 21.3 mpg level. These uncertainties 
included the possibility of falling fuel prices causing consumer 
resistance to the purchase of the more fuel efficient models, an 
increased demand for higher performance, and the availability of fuel 
efficient technologies in competition with emission and alternative 
fuels mandates. In assessing the risks of each projected technology, GM 
accumulated certain estimated risks for MY 1998. These adjustments 
include possible detrimental mix shifts and under performance or delays 
of various new technologies. GM stated that it used a ``probabilistic 
approach'' to develop the risks that result in its ``higher 
confidence'' CAFE projection of 20.6 mpg for MY 1998. GM has not 
revealed the details of this analysis to the agency. Nonetheless, the 
agency agrees that there are risks to the introduction of new models 
and technologies on schedule and the achievement of the full potential 
of new technologies. NHTSA believes that the GM risk estimate, much of 
which is attributable to further mix shifts and the possible 
underachievement of technical improvements in earlier years, is 
excessive by at least 0.1 mpg. Thus, the agency tentatively concludes 
that GM's baseline capability for MY 1998 is 20.7 mpg.
    GM also pointed out in its May 31, 1995, submission that its model 
mix puts it at a disadvantage relative to other manufacturers for CAFE 
performance. GM included a computation that showed that if GM produced 
the same model mix in MY 1994 as Ford did, its CAFE would be 1.16 mpg 
higher. (Ford's fleet most nearly matches GM's in array of models 
offered.) The agency was able to replicate this value using its own 
databases from manufacturers' fuel economy reports.
    Thus, the baseline ``higher confidence'' GM fleet projection of 
20.6 mpg may be increased by discarding 0.1 mpg of the risk used by GM 
to establish the differential between its higher confidence estimate of 
20.6 mpg and its lower confidence estimate of 21.3 mpg. As noted above, 
the agency believes that this risk, set by GM as 0.7 mpg, is overstated 
by 0.1 mpg and fails to account for control over mix shifts and the 
complete development of technical improvements. Adding this 0.1 mpg to 
the higher confidence estimate of 20.6 mpg yields a CAFE capability of 
20.7 mpg for General Motors for MY 1998.
     In summary, the agency tentatively concludes that the CAFE 
capability of the three domestic manufacturers for MY 1998 is as 
follows:

------------------------------------------------------------------------
                         Manufacturer                           MY 1998 
------------------------------------------------------------------------
Chrysler.....................................................       21.0
Ford.........................................................       20.9
GM...........................................................       20.7
------------------------------------------------------------------------

    There are, of course, uncertainties, as well as new information in 
late-filed comments, which may require these projections to be 
adjusted. NHTSA notes that variations may occur in the light truck mix 
in response to consumer demand, fuel prices and fuel availability. 
Also, as noted elsewhere, application of fuel saving technologies and 
other improvements involving substantial redesign may not be possible 
for the 1998 model year due to leadtime considerations.

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 manufacturers' fuel economy capability for MY 1998.

A. Safety Standards

    NHTSA has adopted several safety standards that have been analyzed 
for their potential impact on light truck fuel economy capabilities for 
MY 1998. They are discussed below.
FMVSS 208 (Automatic Restraints)
    On March 26, 1991, NHTSA published (56 FR 12472) a final rule 
requiring automatic restraints on trucks with a Gross Vehicle Weight 
Rating of 8,500 pounds or less and an unloaded vehicle weight of 5,500 
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. 
Although light truck manufacturers may comply with the automatic 
restraint requirements by using automatic belts, ``passive interiors,'' 
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 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 (P.L. 102-240) required NHTSA to amend its automatic restraint 
requirements to mandate that 80 percent of MY 1998 light trucks be 
equipped with both driver and passenger-side air bags, and that 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.
    In the 1991 Final Regulatory Impact Analysis for the light truck 
automatic restraint rulemaking, NHTSA estimated weight increases per 
vehicle of 35.7 pounds for the combination of driver and right-front 
passenger air bags (including ``secondary weight''--i.e., weight added 
for supporting structure, etc.). Fuel economy would be reduced by about 
0.12 mpg.
    The manufacturers' estimates of the average weight effect of 
mandatory air bags were generally consistent with the agency's estimate 
of 35.7 pounds. The weight effects of FMVSS 208 are included in the 
manufacturers' fuel economy projections, so there is no need for NHTSA 
to adjust their projections to consider the impact of this standard. In 
addition, because NHTSA expects manufacturers to rely on driver- and 
passenger-side air bags to meet the requirement that 90 percent of MY 
1997 light trucks be equipped with some form of passive restraint, the 
incremental effect of going from 90 percent passive restraints to 100 
percent automatic restraints (and at least 80 

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percent airbags) in MY 1998 is very small. This incremental increase in 
air bag usage should reduce MY 1998 fuel economy capabilities by only 
about 0.012 mpg.
FMVSS 208 (Safety Belt Comfort and Fit)
    On August 3, 1994, NHTSA published a final rule (59 FR 39472) 
requiring that lap/shoulder belts installed for adjustable seats in 
vehicles with a GVWR of 10,000 pounds or less either be integrated with 
the seat or be equipped with a means of adjustability to improve the 
fit and increase the comfort of the belt for a variety of different-
sized occupants. The effective date for the rule is September 1, 1997 
(or, essentially, MY 1998). This rule was issued in response to an 
Intermodal Surface Transportation Efficiency Act requirement that NHTSA 
address the matter of improved design for safety belts.
    The agency believes that adjustable upper anchorages and seat-
frame-mounted anchorages are the most likely compliance measures. 
Integrated seats (in which a belt design is incorporated into the seat) 
are another compliance option, but high costs are expected to delay 
their widespread use. NHTSA expects that this rule will result in an 
average weight increase of about one pound per vehicle. This translates 
into a fuel economy loss of less than 0.004 mpg.
FMVSS 214 (Side Impact Protection)
    On July 28, 1995 NHTSA issued a final rule (60 FR 38749) extending 
dynamic testing requirements for side impact protection to light 
trucks, multipurpose passenger vehicles and buses with a GVWR of 6,000 
pounds or less manufactured after September 1, 1998. The test will 
require a light truck to provide occupant protection in a side-impact 
crash test.
    The new side impact rule incorporates the moving deformable barrier 
used in the passenger car requirements of FMVSS 214, with no change in 
height or weight.
    NHTSA has concluded that the extension of the passenger car dynamic 
side impact requirements to light trucks will not result in weight 
increases to the average vehicle, and certainly will not cause any 
weight increases in MY 1998. Accordingly, the agency does not believe 
that there is a CAFE penalty imposed by the new requirements of 
Standard 214.
FMVSS 216 (Roof Crush Resistance)
    FMVSS 216 is intended to reduce deaths and injuries due to the 
crushing of the roof into the passenger compartment in rollover 
crashes. The standard establishes strength requirements for the forward 
portion of the roof to increase the resistance of the roof to intrusion 
and crush.
    NHTSA is researching the area of improved roof crush strength. 
Chrysler mentioned the possibility of upgraded requirements in this 
area. Ford also noted that ``[r]esearch is also being conducted which 
could result in more stringent roof crush for rollover protection.'' 
Because NHTSA has not issued a proposal in this area, no CAFE effect is 
assumed for MY 1998.
FMVSS 201 (Interior Head Impact Protection)
    The Intermodal Surface Transportation Efficiency Act of 1991 
required that NHTSA initiate and complete rulemaking to address 
``improved head impact protection from interior components of passenger 
cars (i.e., roof rails, pillars, and front headers).'' On August 18, 
1995, NHTSA issued a final rule amending FMVSS 201 (58 FR 7506) to 
require passenger cars and light trucks with a GVWR of 10,000 pounds or 
less to provide protection when an occupant's head hits upper interior 
components (such as A-pillars and side rails) during a crash. The 
estimated weight effects for trucks from changes to this standard would 
be 6-9 pounds per vehicle. A weight increase of 9 pounds per light 
truck would translate into a fuel economy penalty of about 0.03 mpg. 
However, as the amendments call for phase-in beginning with MY 1999 
vehicles, the FMVSS 201 amendments will have no impact on MY 1998 CAFE.
Anti-Lock Brakes
    The Intermodal Surface Transportation Efficiency Act of 1991 
required that NHTSA initiate rulemaking to ``consider the need for any 
additional brake performance standards for passenger cars, including 
antilock brake standards.'' On January 4, 1994, NHTSA issued an ANPRM 
(see 59 FR 281) to request information on the desirability of requiring 
that passenger cars and light trucks be equipped with anti-lock brake 
systems (ABS). For MY 1993, 52 percent of domestic and imported light 
trucks were equipped with 2-wheel ABS and 31 percent were equipped with 
4-wheel ABS.
    In the Preliminary Economic Assessment accompanying the ABS ANPRM, 
NHTSA estimated that 4-wheel ABS would add 13 pounds to the weight of a 
non-ABS vehicle. A rear-wheel-only ABS was estimated to add 7.2 pounds. 
These estimates do not include any consideration of secondary weight. 
If all light trucks were equipped with 4-wheel anti-lock brakes, the 
fleet average increase in weight relative to MY 1993 installation rates 
would be about nine pounds. This would reduce the average CAFE level by 
about 0.03 mpg.
    Manufacturers are voluntarily increasing the installation of ABS on 
light trucks in response to consumer demand. In their responses to the 
ANPRM, Ford, General Motors and Chrysler all included CAFE weight 
penalties for equipping varying proportions of their fleets with anti-
lock brakes. As the agency does not wish to impede voluntary adoption 
of safety improvements, it will accept the manufacturers' projected 
penalties rather than apply a single reduction in setting MY 1998 light 
truck CAFE.
FMVSS 206 (Door Locks and Door Retention Components)
    On September 5, 1995 (60 FR 50124), NHTSA issued a final rule to 
extend the existing side door requirements of FMVSS 206 to the back 
doors of passenger cars, as well as multi-purpose vehicles with gross 
vehicle weight ratings below 8,500 pounds. This includes sport utility 
vehicles and passenger vans. The purpose of the amendment is to reduce 
the likelihood of occupants being ejected through rear hatches, 
tailgates, and other rear doors of these vehicles in crashes. This 
standard becomes effective on September 1, 1997.
    NHTSA also is considering a general upgrade in the stringency of 
FMVSS 206 to reduce door openings and associated ejections. In August 
1988, NHTSA published an ANPRM describing alternative measures to 
reduce ejection and, on July 12, 1995, NHTSA published a Federal 
Register notice (60 FR 35889) announcing a public meeting on a 
potential upgrade of FMVSS 206. NHTSA has conducted studies of crash-
involved vehicles where door latch failures may have occurred. NHTSA 
also has conducted tests to determine the strength of latches on 
various vehicles. However, at this point, NHTSA has not issued a 
specific proposal to amend the standard.
    For MY 1998 CAFE, NHTSA is assuming no measurable CAFE impact for 
upgrading latch strength in response to the agency's final rule. Agency 
comparisons of complying and non-complying latches showed no 
significant weight differences. Also, no specific proposal has been 
issued on a more general upgrade of FMVSS 206; thus, any potential 
weight or CAFE impacts would be purely speculative.

[[Page 150]]

FMVSS 205 (Glazing Materials)
    NHTSA published two ANPRMs in 1988 announcing that the agency was 
considering proposing requirements for passenger vehicles to reduce the 
risk of ejections in side impact crashes. One notice (53 FR 31712, 
August 19, 1988) dealt with passenger cars. The other (53 FR 71716, 
August 19, 1988) dealt with light trucks. The agency reported that a 
significant number of fatalities and serious injuries involved partial 
or complete ejection of occupants through doors and side windows.
    In addition, a Rulemaking Plan entitled ``Planning Document for 
Rollover Prevention and Injury Mitigation'' was published for public 
comment on September 29, 1992 (57 FR 44721). This document included a 
section concerning ejection mitigation using glazing. It noted that the 
agency was considering rulemaking to reduce ejections through side 
window glazing.
    Because NHTSA has not issued a proposal in this area, no CAFE 
effect is assumed for MY 1998.
FMVSS 301 (Fuel System Integrity)
    On April 12, 1995, NHTSA published an advance request for comment 
(60 FR 18566) on upgrading FMVSS 301 in a 3-phased approach. In the 
notice, the agency stated its desire to reduce the number of fire-
related casualties to occupants of passenger cars and light trucks.
    This is another area where NHTSA has not issued a specific proposal 
to upgrade the existing standard. Therefore, no estimate can be made of 
possible impacts on MY 1998 light truck fuel economy capabilities.
Bumpers
    Toyota's response to the ANPRM indicated a possible fuel economy 
loss due to upgraded bumpers in response to a bill introduced in 
Congress in 1994. NHTSA has not proposed any upgrading of the bumper 
standard (nor has this bill passed) and has therefore not included any 
effect for this item in determining manufacturers' light truck fuel 
economy capabilities.

B. Voluntarily-Installed Safety Equipment

    In their comments on the ANPRM, a number of light truck 
manufacturers indicated they would be installing some safety equipment 
that is not required by Federal Motor Vehicle Safety Standards.
Daytime Running Lights
    On January 11, 1993, NHTSA published a final rule (58 FR 3500) 
facilitating the introduction of daytime running lights (DRLs) as items 
of optional motor vehicle lighting equipment. The rule was designed to 
ensure that auto manufacturers may offer DRLs in all 50 states, and to 
adopt specifications so that DRLs do not reduce the current level of 
highway safety.
    In its ANPRM response, General Motors indicated that it would begin 
the voluntary phase-in of DRLs in MY 1995. The company said the weight 
increase would be about one pound. EPA has decided to conduct fuel 
economy and emissions testing with the DRL system deactivated until 
further information is available on the actual safety benefits of the 
system. GM stated, ``Since the DRLs will not be energized during fuel 
economy testing and since the additional weight of the system is 
negligible, GM's truck CAFE will not be significantly impacted. 
However, if the policy for fuel economy testing is changed a CAFE 
penalty would occur.''
Other Voluntarily-Installed Safety Equipment
    The effect of other voluntarily-installed safety equipment (i.e., 
traction control, and built-in child restraints) on fuel economy is 
estimated to be negligible for MY 1998. Any impact for each company is 
included in the manufacturers' estimates of fuel economy capability.

Conclusions

    The great majority of light truck safety standards that have been 
promulgated in recent years will be in full effect before MY 1998. New 
safety standards known to be going into effect during MY 1998 (or for 
which NHTSA has issued an NPRM) will have a negligible impact on light 
truck manufacturers' fuel economy capabilities. The anticipated 
reduction in MY 1998 CAFE capability attributable to these standards is 
less than 0.02 mpg, with 0.012 mpg attributed to mandatory air bags 
(FMVSS 208), 0.004 mpg attributed to improved belt fit (FMVSS 208), and 
no fuel economy penalty for dynamic side impact (FMVSS 214) or the 
application of FMVSS 206 to rear doors.
    Based on manufacturer responses to the ANPRM, the post-1997 CAFE 
effect of voluntarily-installed safety equipment will be negligible. 
Typical safety equipment that light truck manufacturers are voluntarily 
installing on some models today (such as greater-than-required use of 
air bags, anti-lock brakes, built-in child restraints, and traction 
control) will be in widespread use before MY 1998. Thus, there will be 
little impact from additional voluntary installations of such equipment 
in the post-1997 period.

C. Environmental Requirements

Revised Federal Exhaust Emissions Standards
    The Clean Air Act Amendments of 1990 impose more stringent exhaust 
emissions standards on light trucks. Under the Clean Air Act 
Amendments, new standards (so-called ``Tier I'' standards) for trucks 
apply to all MY 1996 and later trucks with GVWRs up to 6,000 pounds. 
All light trucks over 6,000 pounds GVWR must meet the new standards in 
MY 1997 and later.
    In its response to the ANPRM, General Motors stated that, ``* * * 
initial indications are that there will be some lost opportunities to 
improve fuel economy when redesigning our powertrains in 1996 MY to 
comply with these standards.''
    Chrysler stated, ``The combination of calibrating to the tighter 
emission standards and the increase in weight due to the additional 
hardware necessary to meet standards will have a negative effect on 
fuel economy.'' This loss appears to be included in Chrysler's MY 1998 
baseline fuel economy. Ford did not specifically address Tier I 
emission requirements in its ANPRM response.
    NHTSA believes that compliance with the Tier 1 requirements does 
not impose any significant CAFE penalty. In addition, because these 
standards are in full effect before MY 1998, they should cause no 
additional loss in MY 1998 light truck fuel economy capabilities.
Evaporative Emission Standards and Onboard Vapor Recovery
    The Clean Air Act Amendments also required EPA to promulgate 
regulations covering evaporative emissions (1) during operation (so-
called ``running losses'') and (2) over two or more days of non-use. 
These revised regulations begin taking effect in MY 1996, applying to 
20 percent of vehicles in that model year, increasing to 40 percent in 
MY 1997, 90 percent in MY 1998, and 100 percent for MY 1999 and 
subsequent model years. Onboard vapor recovery requirements begin 
taking effect in MY 2001.
    In its ANPRM response, General Motors said that the weight gains 
associated with meeting both of these requirements are small and the 
corresponding truck CAFE impact would be negligible. Ford did not 
specifically address either item in its response. Chrysler's response 
contains estimates for fuel economy loss in meeting these requirements.
    NHTSA asked EPA to review the manufacturers' comments on the 
possible fuel economy effects of 

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upcoming and potential light truck emission regulations. In its 
response, EPA addressed a number of emission regulations.
    With regard to enhanced evaporative and onboard refueling vapor 
recovery requirements, EPA indicated that new evaporative procedures 
and on-board vapor recovery standards are likely to require larger 
canisters to comply. The larger canisters add an estimated 2 pounds for 
enhanced evaporative requirements and somewhat less than 10 pounds for 
on-board vapor recovery systems. EPA also indicated that different test 
procedures governing canisters in tests for emissions and fuel economy 
will negate any potential fuel economy loss involving onboard 
canisters. NHTSA estimates that EPA's projection of about a 12-pound 
weight increase for enhanced evaporative and onboard refueling vapor 
recovery requirements would translate into a fuel economy loss of about 
0.04 mpg. However, only the evaporative requirements would affect MY 
1998 fuel economy levels; their impact would be less than 0.01 mpg.
Potential Revisions to the Federal Test Procedure
    The 1990 Clean Air Act Amendments require EPA to review (and revise 
as necessary) the Federal Test Procedure (FTP) to ensure that vehicles 
are tested under circumstances reflecting actual driving conditions. 
EPA published an NPRM on the FTP on February 7, 1995.
    In its ANPRM response, General Motors stated, ``It is likely that 
the FTP might change during the period considered in [NHTSA's light 
truck fuel economy] ANPRM. If changes are enacted that impact fuel 
economy testing, CAFE would be impacted unless EPA fully compensates 
for any CAFE penalty.''
    Ford stated that the use of the electric 48-inch dynamometer may 
significantly decrease measured fuel economy. In Ford's view, the 
proposed FTP revisions would have a negative impact on fuel economy.
    Chrysler stated that additional hardware may be needed to meet the 
new standards, thus increasing weight and negatively impacting fuel 
economy testing if the requirements result in additional vehicle weight 
or higher applied engine loads. Chrysler claimed fuel economy losses of 
3-6 percent have been measured using the electric dynamometer.
    Chrysler claimed a substantial fuel economy loss for potential test 
procedure changes including losses of 0.6-1.2 mpg in MY 1998.
    In EPA's response to NHTSA with regard to revised FTP requirements, 
EPA stated:

Revised FTP standards are not likely to reduce the fuel economy 
during fuel economy testing. The additional off-cycle tests required 
will likely have lower fuel economy; however, only the FTP would be 
used for fuel economy purposes.

NHTSA believes that the possible higher speed/higher acceleration and 
air conditioning tests will not have a significant effect on MY 1998 
light truck CAFE capabilities. As EPA indicates that it is unlikely 
that its proposed test procedure revisions, including the use of 48-
inch dynamometers, will apply to 1998 model year vehicles, NHTSA is not 
making any correction for their use in determining the MY 1998 light 
truck fuel economy standards.

California Requirements

    In 1991, the California Air Resources Board approved Low-Emission 
Vehicle (LEV) and Clean Fuels regulations. These regulations establish 
stringent emissions standards for four new classes of low-emission 
vehicles and require auto manufacturers to meet an annual, increasingly 
stringent, fleet-average standard for non-methane organic gas (NMOG) 
emissions. In addition, California ``Phase II'' reformulated gasoline 
is required to be available at the pump by January 1, 1996. The Phase 
II fuel has a number of different characteristics from the Indolene 
fuel currently used for fuel economy testing. EPA indicates that the 
energy content (BTUs/gallon) of California Phase II fuel is about 2-3 
percent lower than Indolene. Lower energy content results in lower 
measured fuel economy, in miles per gallon.
    In its response to NHTSA's fuel economy ANPRM, Ford indicated that 
compliance with California's NMOG standards would result in fuel 
economy penalties relative to a MY 1997 baseline. With regard to the 
California emissions standards, General Motors stated that if an 
electrically heated catalyst (EHC) is used to meet the LEV/ULEV 
requirement, it would cause at least a 3 percent fuel economy loss in 
these vehicles. Nissan claimed a 2.1 percent fuel economy penalty for 
``Emissions (LEV).'' Chrysler did not claim that the California LEV 
emissions control requirements would have any impact in MY 1998.
    The impacts of the California emissions standards are somewhat 
uncertain. The fuel economy losses claimed by Ford and Chrysler are 
specifically outlined in their submissions. However, because 
essentially all of their impacts occur in the post-1998 period, NHTSA 
has not included these adjustments in determining these companies' fuel 
economy capabilities. In addition, the claims made by GM and Nissan for 
California-standards-induced fuel economy losses in their ANPRM 
responses were not specific enough for the agency to make any 
adjustment to their fuel economy projections.
    Chrysler also raised an issue about the impacts of California 
reformulated gasoline on fuel economy. The company stated that the fuel 
economy values for vehicles tested using California Phase II gasoline 
will be 4-6% lower than if tested using Indolene but that existing EPA 
fuel economy test procedures do not adequately address this deficit. 
The result, according to Chrysler, is a 2-3% decrease in fuel economy. 
Chrysler contends that since no action is currently being taken by EPA 
to correct the adjustment procedure, the fuel economy penalty must be 
taken into account by NHTSA in setting future standards.
    NHTSA does not agree with Chrysler that the agency must make an 
adjustment for California Phase II fuel in setting future light truck 
fuel economy standards. EPA has addressed this issue through allowing 
the use of Indolene for fuel economy testing.
Section 177
    States may voluntarily adopt the more stringent California 
emissions standards under Section 177 of the Clean Air Act Amendments 
of 1990. None of the manufacturers providing submissions provided any 
specific data outlining fuel economy losses for other states adopting 
the California LEV program. As in the case of California emissions 
standards, because the impacts of the Section 177 emissions standards 
are uncertain and the fuel economy impacts for MY 1998 are negligible, 
NHTSA has not made any adjustment for the impact of Section 177 
standards.

B. Other Light Truck Fuel Economy Studies

    In 1992, the National Academy of Sciences (NAS) published a report 
jointly commissioned by the Federal Highway Administration and NHTSA 
entitled Automotive Fuel Economy--How Far Should We Go? This report 
included a discussion of ``technically achievable'' fuel economy levels 
for light trucks for MYs 1996, 2001, and 2006. Additionally, the 
Department of Energy published a report in January 1994 prepared by its 
contractor, Energy and Environmental Analysis, Inc. (EEA) entitled 
Domestic Manufacturers' Light 

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Truck Fuel Economy Potential to 2005 (Docket No. 94-20-NO1-003).
    Both the NAS and the EEA studies have limitations in providing 
guidance for setting CAFE standards. The NAS study does not completely 
replicate the new light truck fleet in that its model fleet does not 
include large vans and utility vehicles. Its use of expensive fuel 
saving technologies may go beyond what the market will accept; and at 
the same time, it may not fully recognize the growing demand for more 
power, accessories, and weight in light trucks. The NAS study also 
treats the entire light truck fleet together, rather than analyzing 
individual companies as the agency must in setting standards. It should 
be noted that the Academy itself stated that its ``technically 
achievable'' fuel economy estimates should not ``be taken as its 
recommendation on future fuel economy standards.'' A detailed 
discussion of the Academy's estimates is contained in the agency's 
Preliminary Regulatory Evaluation which has been placed in the docket.
    The EEA study is more useful in that it discusses the prospects of 
the domestic manufacturers individually. However, the EEA study has 
limited application to setting a 1998 MY CAFE standard as it envisions 
CAFE improvement derived from design and technical improvements that 
would be difficult to implement by the 1998 model year.
    The Department of Transportation Appropriations Act for FY 1995, 
directed the Department to conduct a study of the unique capabilities, 
uses, and utility requirements of light trucks to determine if such 
requirements would result in design constraints that would limit fuel 
economy improvements. That study is underway and should be completed in 
time to be considered prior to taking final action for MY 1998.

V. The Need of the United States 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 the Energy Policy 
and Conservation Act (EPCA) was passed, and rose to 46.4 percent in 
1977. 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, reaching 44.3 
percent in 1990 and an estimated 48.2 percent in 1994.
    Similarly, the percentage of oil imported from OPEC sources, which 
peaked at 70 percent in 1977, and declined to a low of 36 percent in 
1985, has since risen to the point where OPEC supplies about half of 
the nation's imported oil. Imports from OPEC reached 53.6 percent of 
imports in 1991 and accounted for 47 percent of 1994 imports.
    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 generally have fallen. In 1990, 
petroleum prices were affected by the conflict in the Persian Gulf, and 
prices for crude oil and petroleum rose and fell in response to Middle 
East events. In 1994, the average refiner acquisition cost of imported 
crude oil was $15.51 per barrel, 6 percent below the average 1993 
level. The cost of domestic crude oil in 1994 was $15.68, four percent 
less than the 1993 average.
    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 designed to 
spur the use of alternatve fuels, gasoline will likely remain the 
predominant fuel in the transportation sector. Sales of alternative-
fueled vehicles are forecast to account for only 3.0 percent of light-
duty vehicle sales in 2000. Domestic oil production has declined 
steadily since reaching a peak of 10.6 million barrels per day in 1985 
to 9.1 million barrels per day in 1991. Domestic crude oil production 
is expected to drop by 170,000 barrels per day (2.6 percent) in 1995 
and an additional 220,000 barrels per day (3.4 percent) in 1996. 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, 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 $22 (1994 
dollars) per barrel in the year 2000, and will rise to between $15 and 
$30 per barrel by 2010. DOE projects a continuing decline in domestic 
oil production to between 3.58 and 6.20 million barrels per day in 
2010, with imports rising to between 48 percent and 78 percent of total 
use. Two-thirds of the projected increase in total petroleum 
consumption in the United States during the next 20 years will be in 
the transportation sector. This is in spite of the fact that DOE's 
projections assume that significant improvements in vehicle fuel 
efficiency will take place as motor gasoline prices rise.
    The level of petroleum imports is only one aspect of the total 
energy conservation picture. Under the Energy Policy and Conservation 
Act and the National Environmental Protection Act, for example, 
national security, energy independence, resource conservation, and 
environmental protection must all be considered.
    The increase in market share of light trucks points to the 
importance of fuel economy for this class of vehicle. Light trucks are 
less fuel efficient and, on average, are driven more miles over their 
lifetime than passenger automobiles. In 1991, over half of the energy 
in the transportation sector was used by light-duty vehicles 
(automobiles and light trucks). Light trucks have steadily increased 
their share of petroleum use in the transportation sector. Between 1976 
and 1994, the market share for passenger cars decreased from 78 percent 
to 60 percent of total light-duty vehicle sales, while market share for 
light trucks rose from 22 percent to 40 percent.
    Light trucks meeting the standard proposed by this notice would be 
more fuel-efficient than the average vehicle in the current light truck 
fleet in service, thus making a positive contribution to petroleum 
conservation.

VI. Determining the Maximum Feasible Average Fuel Economy Level

    As discussed above, section 32902(a) requires that light truck fuel 
economy standards be set at the maximum feasible average fuel economy 
level. In 

[[Page 153]]
making this determination, the agency must consider the four factors of 
section 32902(f): technological feasibility, economic practicability, 
the effect of other motor vehicle standards of the Government on fuel 
economy, and the need of the United States to conserve energy. In 
addition, for this rulemaking, the agency is constrained by the 
provision of P.L. 104-50 which states that the agency may not set a 
standard that ``differs from standards promulgated for such automobiles 
prior to [November 15, 1995].''

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 reports on the 1975 
Act provide guidance on the meaning of ``maximum feasible average fuel 
economy level.''
    The Conference Report on 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. 
For MY 1998, NHTSA estimates that Chrysler, Ford, and GM each have more 
than 20 percent of the light truck market. NHTSA deems this percentage 
significantly large so as to represent ``industry wide'' effects. Thus, 
the agency does not plan to set the MY 1998 standard above the 
``maximum feasible'' level of any of these manufacturers.

C. Petroleum Consumption

    The precise magnitude of energy savings associated with alternative 
light truck fuel economy standards is difficult to ascertain. The 
potential savings associated with a MY 1998 standard above 20.7 mpg 
would be highly uncertain. Depending on the level of the standard, one 
or more of the three large domestic manufacturers could likely meet the 
level of the standard only by restricting the sales of its large light 
trucks (given the short leadtime before MY 1998 begins). 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.

D. The Proposed MY 1998 Standard

    Several manufacturers provided general recommendations for the MY 
1998 standard in their responses to the ANPRM. Chrysler did not suggest 
a fuel economy standard for the year, but did state that the standards 
should be set at levels that can be achieved under any set of likely 
scenarios of economic practicability. As noted previously, Chrysler 
submitted a revised analysis of its CAFE capability too late to be 
included in this NPRM. However, the agency will fully analyze 
Chrysler's late submission prior to reaching a final decision for MY 
1998. Ford did not suggest any specific CAFE standard for future years, 
but cautioned against setting high standards. In its May 31, 1995, 
update, GM stated that NHTSA did not give adequate consideration to the 
risks of product introduction delays and technology shortfalls in 
evaluating a manufacturer's product plans for establishing fuel economy 
standards. GM noted that this lack of consideration is particularly 
harmful to the manufacturer that is determined to be the ``least 
capable'' for standards setting. GM also discussed how manufacturers' 
forecasts of CAFE decline as the actual production date approaches, 
i.e., the forecast in response to the NPRM is often lower than the 
forecast in response to the ANPRM for a given model year.
    In response to the latter GM comment, NHTSA always bases the final 
rule on an assessment of the latest manufacturers' forecasts. Earlier 
projections are of interest for the changes that have occurred in the 
manufacturers' product plans, but they are not determinative when later 
information is available.
    In regard to the GM argument on NHTSA's consideration of 
manufacturers' risks and product timing problems, which are addressed 
in detail in the agency's Preliminary Regulatory Evaluation (PRIA), the 
NHTSA estimates of each manufacturer's capability have been close to 
the manufacturer's own estimates for MY's 1990 through 1995, except for 
GM for MY 1995. Also, Ford and Chrysler have each achieved CAFE 
performance similar to their estimates, except in the case of 
Chrysler's mid-model year report values for MYs 1994 and 1995. (This 
discrepancy may be due to higher than expected sales of the new 
Chrysler standard pickup which is one of the least fuel-efficient 
models in the Chrysler fleet.) On average over these six model years, 
Chrysler has overestimated its final CAFE by 0.2 mpg; Ford's range of 
estimates averaged from 0.1 mpg too high to 0.4 mpg below the final 
value; and GM's range of estimates averaged from 0.1 to 0.3 mpg above 
the final value.
    GM also notes that import manufacturers are not constrained, as 
yet, by the standards because of their model mix that is dominated by 
small trucks. Because of this, the import manufacturers do not have to 
employ expensive technologies to meet the standards, and they are able 
to produce fleets that have a larger share of their vehicles with 4WD. 
An alternative to this situation is to set class standards 

[[Page 154]]
that, for instance, might require different levels of fuel economy 
performance for specific vehicle types or weight subclasses. While such 
a system might be feasible were CAFE standards adopted with long lead 
times, as considered in the ANPRM, it is not feasible in the short lead 
time available for MY 1998.
    Based on its analysis described above and on manufacturers' 
projections, NHTSA has tentatively concluded that the major domestic 
manufacturers can achieve the light truck fuel economy levels listed in 
the following table:

------------------------------------------------------------------------
                                                Approximate             
                                                   market               
                                                   share      CAFE (mpg)
                 Manufacturer                    (percent,     MY 1998  
                                                based on MY             
                                                   1994)                
------------------------------------------------------------------------
GM............................................           33         20.7
Ford..........................................           30         20.9
Chrysler......................................           24         21.0
------------------------------------------------------------------------

    As indicated above, most light truck manufacturers other than GM, 
Ford and Chrysler are expected to achieve CAFE levels above those 
companies. Only two or three light truck manufacturers, Range Rover, 
Volkswagen, and possibly Mercedes-Benz, are expected to have fuel 
economy levels lower than the major domestic manufacturers. Since these 
companies have extremely small market shares, NHTSA believes 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 the above table demonstrates, NHTSA has tentatively concluded 
that GM is the least capable manufacturer with a substantial share of 
sales for MY 1998. NHTSA has also tentatively concluded that 20.7 mpg 
is the maximum feasible standard for MY 1998. For the reasons discussed 
below, the agency believes this level would balance 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 
MY 1998 would make a positive contribution to petroleum conservation by 
promoting continued production of fuel efficient vehicles. Moreover, it 
would encourage GM, which has a large market share, to achieve its 
projected CAFE level.
    The agency believes that a 20.7 mpg standard would not unduly 
restrict consumer choice or have adverse economic impacts on the large 
domestic manufacturers. The current product plans submitted by Ford, GM 
and Chrysler indicate that they expect to achieve a MY 1998 CAFE level 
at or above 20.7 mpg. Therefore, they will not have to make any changes 
in their product plans to achieve the level of the standard.
    NHTSA believes that a higher standard than 20.7 mpg for MY 1998 
could result in serious economic difficulties for GM. Product 
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 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 tentatively 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 Ford or Chrysler. These three companies combined will sell over 
85 percent of all new light trucks sold in the U.S. in MY 1998. 
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 overwhelming majority of the 
industry.
    NHTSA believes that a 20.7 mpg standard would balance the 
potentially serious adverse economic consequences for GM that could 
result from a higher standard with the potential for continued 
petroleum savings. The agency has tentatively concluded, 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.
    A number of organizations and individuals have requested that NHTSA 
evaluate the safety effects of its CAFE decisions. 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, the safety effects of a particular weight change, if 
they exist, would likely be smaller than for cars.
    The available evidence indicates that a MY 1998 standard of 20.7 
mpg would not have any impact on safety. NHTSA notes that, in setting 
the light truck CAFE standards for recent model years, the agency has 
not included 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 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. Moreover, as discussed 
above, Ford, GM and Chrysler do not need to change their product plans 
to meet or exceed the level of the proposed MY 1998 light truck CAFE 
standard. Thus, a 20.7 mpg light truck CAFE standard for MY 1998 would 
not lead to significant changes in light truck size or weight, or 
shifts toward less safe vehicles. The agency, therefore, has 
tentatively concluded that it would not likely have any impact on 
safety.
    This proposed rule would not have any retroactive effect. Under 
section 32919 of Chapter 329 of Title 49, (49 U.S.C. 32919), whenever a 
Federal motor vehicle fuel economy standard is in effect, a state may 
not adopt or maintain separate fuel economy standards applicable to 
vehicles covered by the Federal standard. Under section 32919(b) of 
Chapter 329 of Title 49 (49 U.S.C. 32919(b)), a state may not require 
fuel economy labels on vehicles covered by section 32908 of Chapter 329 
of Title 49 (49 U.S.C. 32908) which are not identical to the Federal 
standard. Section 32919 does not apply to vehicles procured for the 
State's use. Section 32909 of Chapter 329 of Title 49 (49 U.S.C. 32909) 
sets forth a procedure for judicial review of final rules establishing, 
amending or revoking 

[[Page 155]]
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.

VII. Impact Analyses

A. Economic Impacts

    The agency has considered the economic implications of the proposed 
standard and determined that the proposal is significant within the 
meaning of Executive Order 12866 and significant within the meaning of 
the Department's regulatory procedures. The agency's detailed analysis 
of the economic effects is set forth in a Preliminary Regulatory 
Evaluation (PRE), copies of which are available from the Docket 
Section. The contents of that analysis are generally described above.

B. Impacts on Small Entities

    Pursuant to the Regulatory Flexibility Act, the agency has 
considered the impact this rulemaking would have on small entities. I 
certify that this action would not have a significant economic impact 
on a substantial number of small entities. Therefore, a regulatory 
flexibility analysis is not required for this action. Few, if any, 
light truck manufacturers subject to the proposed rule would be 
classified as a ``small business'' under the Regulatory Flexibility 
Act.

C. Impact of 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 proposed rule would not have sufficient Federalism 
implications to warrant the preparation of a Federalism Assessment.

D. Department of Energy Review

    In accordance with section 32902(i) of Chapter 329 of Title 49, the 
agency submitted this proposal to the Department of Energy (DOE) for 
review. The Department has concurred in the level proposed for MY 1998.

VIII. Comments

    NHTSA is providing a comment period, ending on March 4, 1996 for 
interested parties to present data and views on the issues raised in 
this notice and the accompanying PRE, as well as any other issues 
commenters believe are relevant to this proceeding. It is requested but 
not required that 10 copies be submitted.
    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 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 date 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 
after 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 533

    Energy conservation, Motor vehicles.

PART 533--[AMENDED]

    In consideration of the foregoing, 49 CFR Part 533 would be amended 
as follows:
    1. The authority citation for part 533 would be amended to read as 
follows:

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

    2. Section 533.5(a) would be amended by revising Table IV to read 
as follows:


Sec. 533.5  Requirements.

* * * * *

                                Table IV                                
------------------------------------------------------------------------
                         Model year                            Standard 
------------------------------------------------------------------------
1996........................................................        20.7
1997........................................................        20.7
1998........................................................        20.7
------------------------------------------------------------------------

* * * * *
    Issued on: December 26, 1995.
Barry Felrice,
Associate Administrator for Safety Performance Standards.
[FR Doc. 96-4 Filed 1-2-96; 8:45 am]
BILLING CODE 4910-59-P