[Federal Register Volume 62, Number 133 (Friday, July 11, 1997)]
[Rules and Regulations]
[Pages 37153-37154]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-18067]


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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Part 531

[Docket No. 96-115; Notice 2]


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

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

ACTION: Final decision.

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SUMMARY: This final decision responds to a petition filed by Lotus Cars 
Ltd. (Lotus) requesting that it be exempted from the generally 
applicable average fuel economy standard of 27.5 miles per gallon (mpg) 
for model years (MYs) 1994, 1995, 1997 and 1998 and that lower 
alternative standards be established. In this document, NHTSA 
establishes an alternative standard for Lotus of 24.2 mpg for MY 1994 
and 23.3 mpg for MY 1995 and denies the requests for MYs 1997 and 1998.

DATES: Effective date: August 25, 1997. This exemption and the 
alternative standards apply to Lotus for MYs 1994 and 1995.
    Petitions for reconsideration: Petitions for reconsideration must 
be received no later than August 25, 1997.

ADDRESSES: Petitions for reconsideration of this rule should refer to 
the docket number and notice number cited in the heading of this notice 
and must be submitted to: Administrator, National Highway Traffic 
Safety Administration, 400 Seventh Street, SW, Washington DC 20590.

FOR FURTHER INFORMATION CONTACT: Ms. Henrietta Spinner, Office of 
Planning and Consumer Programs, NHTSA, 400 Seventh Street, S.W., 
Washington, DC 20590. Ms. Spinner's telephone number is: (202) 366-
4802.

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 United States to conserve energy.
    The statute 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.

Proposed Decision and Public Comment

    This final decision was preceded by a proposal announcing the 
agency's tentative conclusion that Lotus should be exempted from the 
generally applicable MYs 1994, 1995, 1997 and 1998 passenger automobile 
average fuel economy standard of 27.5 mpg, and that alternative 
standards of 24.2 mpg for MY 1994, 23.3 mpg for MY 1995, and 21.2 mpg 
for MYs 1997 and 1998 be established for Lotus. (61 FR 67518; December 
23, 1996). The agency received one comment from a Mr. Lance Tunick, a 
consultant acting on behalf of Lotus, supporting the establishment of 
an alternative standard for Lotus for MYs 1994, 1995, 1997 and 1998.

NHTSA Final Determination

    With the exception of establishing an alternative standard for the 
1997 and 1998 model years, the agency is adopting the tentative 
conclusions set forth in the proposed decision as its final 
conclusions, for the reasons set forth in the proposed decision. Based 
on these conclusions, the maximum feasible average fuel economy level 
for Lotus is 24.2 mpg for MY 1994 and 23.3 mpg for MY 1995. NHTSA has 
determined that other Federal motor vehicle standards will not affect 
achievable fuel economy beyond the extent considered in the proposed 
decision and that the national effort to conserve energy will not be 
affected by granting this exemption. NHTSA hereby exempts Lotus from 
the generally applicable passenger automobile average fuel economy 
standard for the 1994 and 1995 model years and establishes an 
alternative standard of 24.2 mpg for MY 1994 and 23.3 mpg for MY 1995 
for Lotus.
    In regard to the 1997 and 1998 model years, NHTSA notes that in 
October 1996, Perusahaan Otomobil Nasional Berhad (Proton) acquired a 
controlling interest in Lotus Cars Ltd. Proton, which is a manufacturer 
of automobiles operating primarily in Malaysia, has an annual worldwide 
production of more than 10,000 vehicles.
    Section 32902(d) provides that an alternative standard may only be 
established for a manufacturer that manufactured (whether in the United 
States or not) fewer than 10,000 passenger automobiles in the model 
year 2 years before the model year for which the application is made. 
The section further provides that an exemption for a model year applies 
only if the manufacturer manufactures (whether in the United States or 
not) fewer than 10,000 passenger automobiles in the model year.
    On September 21, 1990, the agency published a notice (55 FR 38822) 
containing NHTSA's interpretation that the definition of 
``manufacture,'' derived from section 32902(d)(1)'s phrase 
``manufactured (whether in the United States or not),'' applied for 
purposes of determining eligibility for a low volume exemption under 
that section. In considering whether an entity is eligible for a low 
volume exemption, the agency

[[Page 37154]]

indicated that it must count all of the cars manufactured by that 
entity worldwide, and not merely those imported into the U.S.
    Importers who are controlled by larger ``parent'' manufacturers 
have, by virtue of the relationship with the ``parent,'' access to 
technological and material resources that provide them with the ability 
to manufacture more fuel efficient vehicles. The fact that the 
``parent'' may choose not to import and market cars in the United 
States does not have any bearing on the availability of these 
resources.
    In regard to Lotus' application for an alternative standard for MY 
1997, the agency notes that Lotus submitted materials indicating that 
its 1997 model year began before Lotus was acquired by Proton. Lotus 
contends that because its 1997 model year began before it was acquired 
by Proton, that Proton's October 1996 acquisition of Lotus should not 
preclude the availability of an alternative standard for MY 1997.
    The agency disagrees with this view. Section 32902(d) states that 
``An exemption for a model year applies only if the manufacturer 
manufactures (whether in the United States or not) fewer than 10,000 
passenger automobiles in the model year.'' This sentence follows the 
section's first sentence, which discusses general eligibility for 
exemptions. Read together, the two sentences make it clear that 
manufacturers are only eligible for exemption if they manufacture fewer 
than 10,000 automobiles in the model year 2 years before the model year 
in question and that if an exemption is granted, that exemption applies 
only if the manufacturer manufacturers (whether in the United States or 
not) fewer than 10,000 automobiles in that model year.
    Proton acquired Lotus during the 1997 model year. The combined 
worldwide production of Lotus and Proton will exceed 10,000 vehicles in 
MY 1997 and Lotus would be ineligible for an exemption even in the 
event that one had previously been granted. As the agency has not yet 
granted such an exemption, it will not do so now. Similarly, as Lotus 
and its parent, Proton, will manufacture more than 10,000 vehicles 
annually in the 1998 model year, the agency is denying Lotus' request 
for that year.

Regulatory Impact Analyses

    NHTSA has analyzed this decision and determined that neither 
Executive Order 12866 nor the Department of Transportation's regulatory 
policies and procedures apply. Under Executive Order 12866, the 
decision would not establish a ``rule,'' which is defined in the 
Executive Order as ``an agency statement of general applicability and 
future effect.'' The decision is not generally applicable, since it 
would apply only to Lotus Cars Ltd., as discussed in this notice. Under 
DOT regulatory policies and procedures, the decision is not a 
``significant regulation.'' If the Executive Order and the Departmental 
policies and procedures were applicable, the agency would have 
determined that this decision is neither major nor significant. The 
principal impact of this decision is that the exempted company will 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 decision sets an alternative standard at the level 
determined to be the maximum feasible levels for Lotus for MYs 1994 and 
1995, no fuel would be saved by establishing a higher alternative 
standard. NHTSA finds in the Section on ``The Need of the United States 
to Conserve Energy'' that because of the small size of the Lotus fleet, 
that incremental usage of gasoline by Lotus Cars Ltd.'s customers would 
not affect the United States's need to conserve gasoline. There are not 
any impacts for the public at large.
    The agency has also considered the environmental implications of 
this decision in accordance with the Environmental Policy Act and 
determined that it does 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 
alternative standards. Further, since the exempted passenger 
automobiles cannot achieve better fuel economy than is proposed herein, 
the decision does not affect the amount of fuel used.
    Since the Regulatory Flexibility Act may apply to a decision 
exempting a manufacturer from a generally applicable standard, I 
certify that this decision will not have a significant economic impact 
on a substantial number of small entities. This decision does not 
impose any burdens on Lotus. It relieves the company from having to pay 
civil penalties for noncompliance with the generally applicable 
standard for MY 1994 and 1995. Since the price of 1994 and 1995 Lotus 
automobiles will not be affected by this decision, the purchasers will 
not be affected.

List of Subjects in 49 CFR Part 531

    Energy conservation, Gasoline, Imports, Motor vehicles.

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

PART 531--[AMENDED]

    1. The authority citation for part 531 continues to read as 
follows:

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

    2. In Sec. 531.5, the introductory text of paragraph (b) is 
republished for the convenience of the reader and paragraph (b)(6) is 
amended 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:
* * * * *
    (6) Lotus Cars Ltd.

------------------------------------------------------------------------
                                                               Average  
                                                                 fuel   
                                                               economy  
                         Model year                            standard 
                                                              (miles per
                                                               gallon)  
------------------------------------------------------------------------
1994.......................................................         24.2
1995.......................................................         23.3
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    Issued on: July 3, 1997.
L. Robert Shelton,
Associate Administrator for Safety Performance Standards.
[FR Doc. 97-18067 Filed 7-10-97; 8:45 am]
BILLING CODE 4910-59-P